SKYQ 10-K & 10-Q changes, risk factors and insider trading

We have outstanding debt that is past due and we are not currently making full payments to certain of our lenders pursuant to outstanding loanloans and merchant cash advance agreements which could result in our lenders declaring the loans to be in default.

As of the date hereof, we have outstanding debt in the amount of approximately $5,959,952$7,618,831 that is currently past due. Foreland is party to a loan agreement with LendSpark Corporation, or LendSpark, and a merchant cash advance agreement with Libertas Funding LLC, or Libertas. At present, Foreland is making reduced payments to both LendSpark and Libertas. These payments continue to decrease the outstanding balances owed under the agreements; however, making less than the full payments required payments constitutes a breach of the respective agreements. The Company and Foreland are also party to loan agreements with KF Business Ventures LTD., or KFBV, and ACMO USOS LLC.

As part of these agreements, Foreland has pledged all of its assets as collateral. Consequently, LendSparkLendSpark, Libertas or LibertasKFBV could declare a default and initiate foreclosure proceedings on Foreland’s assets. Such an action would have a materially adverselyadverse impact on our operations, as Foreland currently represents all of our revenue-generating activities. On March 4, 2026, KFBV filed a complaint against us in the Third Judicial District Court of Salt Lake County, Utah, seeking, among other things, repayment and judicial foreclosure/ possession of collateral. Although the Company intends to vigorously defend against the claims asserted in this action, the litigation is in its early stages and no assurance can be given as to the timing or outcome of the proceeding. An unfavorable outcome could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

On September 30, 2022, we acquired the Eagle Springs Refinery and the likelihood of our creation of a viable business must be considered in light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with the integration of a newly acquired operating business, the growth of our business from the PR Spring Facility, operation in a competitive industry, declining revenues at Eagle Springs Refinery, and the continued development of our technology and products. We anticipate that our operating expenses will increase for the near future, and there is no assurance that we will be profitable in the near future,soon, if at all.

For the year ended December 31, 2024,2025, three customers accounted for approximately 35%,31%, 23%33% and 22%,24%, respectively, of our total net sales, and for the year ended December 31, 2023,2024, these customers accounted for approximately 33%,35%, 17%23% and 14%,22%, respectively, of our total net sales. These customers do not have any ongoing commitment to purchase our products. The loss of or a sustained decrease in demand by any one of these customers could result in a substantial loss of revenues and could have a material adverse effect on our results of operations. In addition, should any of these large customers default inon their obligations to pay, our results of operations and cash flows could be adversely affected.

We have historically purchased certain key raw materials from a limited number of suppliers. For the year ended December 31, 2024,2025, threeone vendorsvendor accounted for 20%, 13%, and 11% respectively,17% of our supply of crude oil and other petroleum fuel operational inputs, and for the year ended December 31, 2023,2024, fivethree vendors accounted for 18%, 15%,20%, 13%, 12% and 10%,11%, respectively, of our supply of crude oil and other petroleum fuel operational inputs. A change of vendors, a disruption in supply or a significant change in pricing with any of these suppliers could have a material adverse effect on our business, financial condition and results of operations.

From time-to-time we issue shares of our common stock to officers, directors, employees and consultants for services rendered. A significant issuance of our common stock to any of these recipients would have a dilutive effect on the value of your shares, willwould increase general and administrative expenseexpenses, and willwould have an adverse effect on our earnings, and may require us to make subjective estimates and assumption, all of which could materiallyhave a material impact on our results of operations.

We have entered into financing arrangements that contain covenants that could limit our ability to engage in certain transactions.

We have entered into financing arrangements with lenders that contain covenants that could limit our ability to engage in specified types of transactions. These covenants may limit our ability to, among other things, consolidate, merge, sell, or otherwise dispose of all or substantially all of our assets.

A breach of any of the covenants with our lenders could result in a default under the terms of the financings in which the lender could elect to declare all amounts outstanding thereunder to be immediately due and payable and foreclose on substantially all of our assets which are secured by such financing arrangements. Furthermore, if our current secured financial obligations are repaid, we may need to pledge all of our assets as collateral to secure additional financing in the future.

From time to time, acquisition opportunities may become available to us. Those opportunities may involve the acquisition of specific assets, such as intellectual property or inventory, or may involve the assumption of the business operations of another entity. Our goal with any future acquisition is that any acquisition should be able to contribute neutral to positive EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) to us after integration. To effectmake these acquisitions, we will likely be required to obtain lender financing or issue additional shares of stock in exchange for the shares of the target entity. If the performance of the acquired assets or entity does not produce positive results for us, the terms of the acquisition, whether it is interest rate on debt, or additional dilution of stockholders, may prove detrimental to our financial results or the performance of your particular shares.

Our operations could result in liability for personal injuries, property damage, discharge of hazardous materials, remediation and clean-up costs and other environmental damage. We could be liable for environmental damages caused by previous owners. As a result, we may incur substantial liabilities to third parties or governmental entities, and the payment of such liabilities could have a material adverse effect on our financial condition and results of operations. The release of harmful substances in the environment or other environmental damages caused by our activities could result in us losing our operating and environmental permits or inhibit us from obtaining new permits or renewing existing permits. At such time asWhen we commence operations at our PR Spring Facility and ASR Facility, we intend to obtain and maintain additional insurance coverage for our operations, including limited insurance coverage for sudden environmental damages. Accordingly, we could incur substantial costs to comply with environmental laws and regulations which could affect our ability to operate as planned.

We rely on technology, including proprietary techniques, processes, and intellectual property, as well as closely-held economic models, to develop our plans and estimates and to guide our development, processing, and production activities. We will be required to continually enhance and update our technologies in order to maintain their efficacy and to avoid obsolescence. As such, our business may carry with it a greater degree of technological risk than other projects that employ commercially proven technologies. If major process design changes are required, the costs of doing so may be substantial and may be higher than the costs that we anticipate for technology maintenance and development. If we are unable to maintain the efficacy of our technology, our ability to manage our business and to compete may be impaired. Further, even if we are able to maintain technical effectiveness, our technology may not be the most efficient means of reaching our objectives, in which case we may incur higher operating costs than if we were technology more efficient.

The Consumer Price Index for All Urban Consumers, a widely followed inflation gauge published by the U.S. Bureau of Labor Statistics, increased by 2.8%2.4% from FebruaryJanuary 20242025 to FebruaryJanuary 2025.2026. The general effects of inflation on the global economy can be wide-ranging, evidenced by rising wages and rising costs of consumer goods and necessities. If the inflation rate continues to increase, this will result in, for example, increases in the cost of fuel, labor and other costs, which will adversely affect our expenses, such as employee compensationcompensation, which accounts for a significant portion of our operating expenses.

Our fuel purchase, laborpurchase and airport operationslabor contracts generally do not provide meaningful price protection against increases in costs. Our current policy is not to enter into transactions to hedge our fuel costs, although we review this policy from time to time based on market conditions and other factors. Accordingly, as of December 31, 20242025, and December 31, 2023,2024, we did not have any fuel hedging contracts outstanding to hedge our fuel costs. Additionally, we do not typically enter long-term labor agreements with our pilots or ground service personnel to fix our employee-related costs. We do not intend in the foreseeable future to enter into any future transactions to hedge the cost of fuel, and assuming we do not otherwise fix our labor costs, we will continue to be fully exposed to fluctuations in prices of material operating costs.

As a public reporting company, we are required to establish and periodically evaluate our disclosure controls and procedures with respect to information we file with or submit to the SEC and our internal control over financial reporting with respect to our financial statements and related disclosures. In particular, weWe are required to assess the effectiveness of our internal control over financial reporting at the end of each fiscal year pursuant to Section 404 of the Sarbanes-Oxley Act. If we identify deficiencies in our internal control over financial reporting, we may be unable to accurately report our financial results or report to them within the timeframes required by the SEC. If this occurs, we could become subject to sanctions or investigations by the SEC or other regulatory authorities, or investors and other users of our financial statement may lose confidence in the accuracy and completeness of our financial reports. This may in turn impair our business, restrict our access to the capital markets, and adversely impact our stock price.

The nature of our WASwaste asphalt shingle recycling operations may involve various risks.

The recovery of oil from our bitumen deposit and the process of recycling WASwaste asphalt shingle is dependent on the viability of our proprietary technology, which we refer to as the ECOSolv process. However, the ECOSolv technology has never been used on a commercial scale. If the ECOSolv technology does not perform as expected, our WASwaste asphalt shingle business plan is likely to fail.

The market for asphalt cement, shingle granules, sand aggregate, limestone and/or fiberglass products may be highly competitive, and we can only expect competition to intensify in the future. Numerous well-established companies are focusing significant resources on similar recycling and remediation activities and may be competing with us for opportunities. Competitors include larger companies which, in particular,which may have access to greater resources, may be more successful in the recruitment and retention of qualified employees and may conduct their own marketing operations, which may give them a competitive advantage. Actual or potential competitors may be strengthened through the acquisition of additional assets and interests. As a result, there can be no assurance that we will be able to compete successfully or that competitive pressures will not adversely affect our business, results of operations and financial condition. If we are not able tocannot successfully compete in the marketplace, we could be forced to curtail or even abandon our current business plan, which could cause any investment in us to become worthless.

In order toTo sell the finished asphalt cement, shingle granules, sand aggregate, limestone and fiberglass that we are able tocan produce from the asphalt shingle recycling process, if any, we must be able to make economically viable arrangements for the storage, transportation and distribution of these products. We will rely on local infrastructure and the availability of transportation for storage and shipment of our products, but infrastructure development and storage and transportation facilities may be insufficient for our needs at commercially acceptable terms in the localities in which we operate.

We do not have any supply agreements with landfills and/or private waste haulers to supply us with waste asphalt shingles. As our PR Spring facility is located in a remote location, we may not be able to economically source or have waste asphalt shingles delivered to us form waste haulers, shingles manufacturers or other 3rd parties. If we are unable to source waste asphalt shingles, our business operations and financials would be adversely affected.

Our future financial condition and results of operations will depend, in part, upon the price for oil. Oil prices historically have been volatile and likely will continue to be volatile in the future, especially given current world geopolitical conditions. Our cash flowscashflows from operations will be highly dependent on the prices that we receive for oil. This price volatility also affects the amount of our cash flowscashflows available for capital expenditures and our ability to borrow money or raise additional capital. The price forof oil is subject to a variety of additional factors that are beyond our control. These factors include:

Wholesale diesel prices are directly related to, and fluctuate with, the price of crude oil. Volatility in the price of crude oil, and subsequently wholesale fuel prices, is caused by many factors, including general political, regulatory and economic conditions, acts of war, terrorism or armed conflict, instability in oil producing regions, particularly in the Middle East and South America, refinery capacity and the value of U.S. dollars relative to other foreign currencies, particularly those of oil producing nations. In addition, the supply of fuel and our wholesale purchase costs could be adversely affected in the event of a shortage or oversupply of product, which could result from, among other things, the Russian invasion of Ukraine and the sanctions imposed on Russia and other countries, conflict in the Middle East (including Iran) and the US intervention in Venezuela, interruptions of fuel production at oil refineries, new supply sources, and sustained increases or decreases in global demand for diesel fuels. Significant increases and volatility in wholesale fuel prices could result in lower gross profit, as an increase in the retail price of motor fuel could impact consumer demand for diesel and could result in lower wholesale fuel gross profit dollars. As the market prices of crude oil, and, correspondingly, the market prices of wholesale fuels, experience significant and rapid fluctuations, we attempt to pass along wholesale price changes to our customers; however, we are not always able to do so immediately. The timing of any related increase or decrease in sales prices is affected by competitive conditions in our market areas. As such, our revenues and gross profit can increase or decrease significantly and rapidly over short periods of time and potentially adversely impact our business, financial condition, and results of operations. The volatility in crude oil and wholesale fuel costs and sales prices makes it extremely difficult to forecast future gross profits or predict the effect that future wholesale costs and sales price fluctuations will have on our operating results and financial condition.

Any technological advancements,advances, regulatory changes or changes in consumer preferences causing a significant shift toward alternative products could reduce demand for the conventional petroleum-based fuels we currently produce. Additionally, a shift toward electric, hydrogen, natural gas or other alternative-power vehicles could fundamentally change our customers’ shopping habits or lead to new forms of fueling destinations or new competitive pressures.

We typically experience more demand for diesel in the late spring and summer months than during the fall and winter. Travel, farming, recreation and construction are typically higher in these months in the market areas in which we operate, increasing the demand for fuel that we sell and distribute. Therefore, our revenues and cash flowscashflows are typically higher in the second and third quarters of our fiscal year. As a result, our results from operations may vary widely from period to period, affecting our cash flow.

There is an inherent risk of incurring significant environmental costs and liabilities in the performance of our operations due to our handling of petroleum hydrocarbons and other hazardous substances and wastes,waste, as a result of air emissions related to our operations. Spills or other releases of regulated substances, including such spills and releases that occur in the future, could expose us to material losses, expenditures and liabilities under applicable environmental laws and regulations. Under certain of such laws and regulations, we could be held strictly liable for the removal or remediation of previously released hazardous materials or property contamination, regardless of whether we were responsible for the release or contamination and even if our operations met previous standards in the industry at the time they were conducted. In connection with certain acquisitions, we could acquire, or be required to provide indemnification against, environmental liabilities that could expose us to material losses. In addition, claims for damages to personspeople or property, including natural resources, may result from the environmental, health and safety impacts of our operations. Our insurance may not cover all environmental risks and costs or may not provide sufficient coverage if an environmental claim is made against us. Moreover, public interest in the protection of the environment has increased dramatically in recent years. The trend of more expansive and stringent environmental legislation and regulations applied to the trucking industry could continue, resulting in increased costs of doing business and consequently affecting profitability. Changes in environmental laws and regulations occur frequently, and any changes that result in more stringent or costly storage, transport, disposal or cleanup requirements could require us to make significant expenditures to attain and maintain compliance and may otherwise have a material adverse effect on our industry in general in addition to our own results of operations, competitive position or financial condition. To the extent laws are enacted or other governmental action is taken that restricts development or imposes more stringent and costly operating, disposaldisposal, and cleanup requirements, our business, prospects, financial condition or results of operations could be materially adversely affected.

During the last several years, the global supply and demand for crude oil has experienced periodic downturns and sustained volatility, impacted by such factors as the COVID-19 pandemic and recovery, Russia’s invasion of Ukraine and the related sanctions imposed on Russia, the ongoing conflict in Israel and the Gaza Strip and the ensuing conflict in the Middle East,East (including Iran) and the U.S. intervention in Venezuela, the global response to such conflicts, supply chain constraints and rising interest rates and costs of capital. Furthermore, the United States experienced a significant inflationary environment in 2022 that, along with international geopolitical risks, has caused oil and gas prices to retreat from their earlier highs in 2022 and has created further volatility. In 2023, OPEC announced production cuts to reduce the global oil supply, and in December 2024, OPEC announced that it will extend such cuts through March 2025 and expects to gradually phase out such cuts through September 2026An. The actions of OPEC with respect to oil production levels and announcements of potential changes in such levels, including agreement on and compliance with production cuts,capital may result in further volatility in commodity prices and the oil industry inand general.the boarder economy.

Our common stock is listed on Nasdaq, and we must meet certain financial and liquidity criteria to maintain the listing of our common stock on Nasdaq. If we fail to meet any listing standards or if we violate any listing requirements, our common stock may be delisted. In addition, our board of directors may determine that the cost of maintaining our listing on a national securities exchange outweighs the benefits of such listing. A delisting of our common stock from Nasdaq may materially impair our stockholders’ ability to buy and sell our common stockstock, including through our ATM program and could have an adverse effect on the market price of, and the efficiency of the trading market for, our common stock. The delisting of our common stock could significantly impair our ability to raise capital and the value of your investment.

The market for our common stock may be characterized by significant price volatility when compared to the shares of larger, more established companies that have large public floats, and we expect that our stock price will be more volatile than the shares of such larger, more established companies for the indefinite future. The stock market in general has recently been highly volatile. Furthermore, there have been recent instances of extreme stock price run-ups followed by rapid price declines and stock price volatility following a number ofseveral recent initial public offerings, particularly among companies with relatively smaller public floats. We may also experience such volatility, which may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our common stock.

The market price of our common stock is likely to be volatile due to a number ofseveral factors. First, as noted above, our common stock is likely to be more sporadically and thinly traded compared to the shares of such larger, more established companies. The price for our common stock could, for example, decline precipitously in the event thatif a large number of shares are sold on the market without commensurate demand. Furthermore, we are a speculative or “risky” investment due to our limited operating history. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a larger, more established company that has a large public float. Many of the foregoing factors are beyond our control and may decrease the market price of our common stock regardless of our operating performance. The market price of our common stock could also be subject to wide fluctuations in response to a broad and diverse range of factors, including the following:

We cannot predict the extent to which investorinvestors’ interest in us will sustain a trading market or how active and liquid that market may remain. If an active and liquid trading market is not sustained, you may have difficulty selling any shares of our common stock that you purchase at a price above the price you purchasepurchased them for or at all. The failure of an active and liquid trading market to continue would likely have a material adverse effect on the value of our common stock. An inactive market may also impair our ability to raise capital to continue to fund operations by selling securities and may impair our ability to acquire other companies or technologies by using our securities as consideration.

The trading market for our common stock may be influenced in part by any research reports that securities industry analysts publish about us. We do not currently have and may never obtain research coverage by securities industry analysts. If no securities industry analysts commence coverage of us, the market price and market trading volume of our common stock could be negatively affected. In the event we are covered by analysts, and one or more of such analysts downgrade our securities, or otherwise reports on us unfavorably, or discontinues coverage of us, the market price and market trading volume of our common stock could be negatively affected.

To fund future growth and development, we will need to raise additional funds in the future by offering shares of our common stock and/or other classes of equity, or debt that convert into shares of common stock, any of which offerings could dilute the ownership percentage of our stockholders. We cannot assure you that the necessary funds will be available on a timely basis, on favorable terms, or at all, or that such funds, if raised, would be sufficient. The level and timing of future expenditures will depend on a number ofseveral factors, many of which are outside our control. If we are not able tocannot obtain additional capital on acceptable terms, or at all, we may be forced to curtail or abandon our growth plans, which could adversely impact us, our business, development, financial condition, operating results or prospects.

Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number ofseveral factors. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward- looking statements.

We areoperate ana regional refiner (the Eagle Springs Refinery) producing diesel, VGO, naphtha and liquid paving asphalt from crude oil production,suppliers refining,in the Uintah basin near Nevada and Utah. In addition to our goal of growing the refinery, we have a separate division in the development-stage environmental(P.R. remediation companySprings) formed to deploy technologies to facilitate the recycling of waste asphalt shingles and remediation of oil-saturated sands and soils.soils, providing sustainable refined crude products. We expectanticipate several benefits from the recycling and production of oil from asphalt shingles to reducereducing the dependence on landfills for the disposal of waste and to also reducereducing dependence on foreign and domestic virgin crude oil extraction for industrial uses.oil.

We have developed a process for separating oil from oily sands and other oil-bearing solids utilizing a proprietary solvent, which we refer to as our ECOSolv technology or the ECOSolv process. The solvent is used in a closed-loop distillation and evaporation circuit which results in overup to 99% of the solvent being recoverable for continuous reuse and requires no water. The solvent has demonstrated oil separation rates of overup to 95% in bench testing using samples of both mined crushed ore and ground asphalt shingles. Bench testing was conducted in house, and through unaffiliated third parties which were completed in May and August 2022.

WeCurrently, arewe intend to finish retrofitting our oil sands remediation facility located in PR Spring in eastern Utah in the processnext oftwelve retrofittingmonths from when the PRnecessary Springfunding Facilityis which we expect to complete in fiscal 2025obtained to recycle waste asphalt shingles using our ECOSolv technologytechnology, to produce and sell oil as well as asphalt paving aggregate mined from our bitumen deposit.

Net sales. Our net sales decreased by $27,367,701,$10,873,009, or 53.9%,47%, to $12,491,089 for the year ended December 31, 2025, from $23,364,188 for the year ended December 31, 2024 from $50,731,889 for the year ended December 31, 2023.2024. The decrease in net sales was due to a combination of refinery shutdowns for repairs and refurbishment and the reduction in WTI pricing below the historical average of $85/barrel which correlates to the lower pricing for our end products, including Asphalt by 9%,19%, VGO by 11%,13%, and diesel by 22%.13%. These percentage decreases total $3,962,812resulted in decreaseda $2,288,502 decrease in revenue. The 20242025 reduced production of 209,58377,619 barrels over 20232024 accounts for $19,916,672resulted in decreaseda revenue$8,584,597 decrease in revenue. Management believes purchasing more crude and generating higher production volumes at the refinery will be a driver for anticipated future revenue growth. Please refer to Note 2322 to our audited financial statements for segmented financial information.

Cost of goods sold. Cost of goods sold decreased by $23,632,194,$9,169,893, or 48.8%,37%, to $24,659,971$15,589,637 for the year ended December 31, 20242025, from $48,391,724$24,759,530 for the year ended December 31, 2023.2024. During the years ended December 31, 20242025 and 2023,2024, the Company recorded depreciation expense related to Foreland refinery of $787,560.$1,182,590 and $559,744,$787,560, respectively, as part of cost of goods sold. As a percentage of net sales, cost of goods sold was 106.0%125% and 95.4%106% for the years ended December 31, 20242025 and 2023,2024, respectively. As with our net sales, the decrease in cost of goods sold was due to a reduction in revenues, lower volumes of refined products and lower pricing.pricing and did not decrease at the same rate as revenues due to fixed overhead cost. During fiscal year 2024 the Company recognized $770,915 in costs associated with the refinery refurbishment, which included internal fuel, repairs and maintenance, and lab and safety related costs. Management’s plan to improve our cost of goods sold as a percentage of net sales includes growingincreasing morethe revenuevolume by acquiring more crudeof oil refined to processcreate atbetter oureconomy refinery,of scale and decreasing transportation costs which is anticipated to enhance gross margin.

Gross profit (loss). As a result of the foregoing, our gross profitloss decreasedincreased by $3,735,507,$1,703,206, or 159.6%,122%, to a gross loss of $3,098,548 for the year ended December 31, 2025, from $1,395,342 for the year ended December 31, 2024 from $2,340,165 for the year ended December 31, 2023.2024. As a percentage of net sales, gross profit (loss) was (6.024.8)% and 4.6%(6)% for the years ended December 31, 20242025 and 2023,2024, respectively. Managements plan to improve gross profit by increasing revenues, lowerlowering fixed operational costs and higherincreasing efficiencies resulting fromthrough higher production volumes.

General and administrative expenses. Our general and administrative expenses increased by $2,419,212,$18,180, or 65.3%,(0)%, to $6,140,135 for the year ended December 31, 2025, from $6,121,955 for the year ended December 31, 2024 from $3,702,743 for the year ended December 31, 2023.2024. As a percentage of net sales, general and administrative expenses were 26.2%49.2% and 7.3%26.2% for the years ended December 31, 20242025 and 2023,2024, respectively. During the years ended December 31, 20242025 and 2023,2024, the Company recorded share-based compensation expense of $632,205$659,134 and $634,783,$632,205, respectively, as part of general and administrative expenses. A majorityMost of the increase in general and administrative expense was due to an increase in generalcompensation and administrative expenses related to increased personnel, insurance, repairs and maintenance, and maintenance fuel costs.expense. Management plans to improve general and administrative expenses as a percentage of sales by increasing revenues, reducedreducing repairs and maintenancemaintenance, and maintenance fuel one-time costs that occurred as a result of the 2024 refurbishment program.

Depreciation and amortization. Our depreciation and amortization expense increased by $586,$3,928, or 11.1%,67%, to $9,817 for the year ended December 31, 2025, from $5,889 for the year ended December 31, 2024 from $5,303 for the year ended December 31, 2023.2024. In 20242025 the increase in depreciation and amortization was primarily due to additionthe indepreciation of new fixed assets resulting from additions.assets. As a percentage of net sales, depreciation and amortization was 0.0%0.1% and 0.0% for the years ended December 31, 20242025 and 2023,2024, respectively. In both years, depreciation and amortization consisted solely of depreciation of the Foreland plant, property and equipment.

During the year ended December,December 31, 2024, we recorded a one-time expense related to the initial measurement of our warrant liability,liability and recognized a loss on issuance of private placement warrants, totaling $1,935,934. This loss arisesarose from the difference between the fair value of the warrants issued and the proceeds received from the private placement. The fair value of the warrants was calculated using a valuation model, which takes into accountconsiders various assumptions such as the underlying stock price, volatility, and the time to expiration of the warrants. The issuance of these warrants was part of a broader capital-raising strategy aimed at securing financing to support the Company’s working capital, growth and strategic initiatives. While the issuance of warrants is a common practice in private placements, it also results in a non-cash charge that impacts the Company’s financial results for the period. This charge reflects the accounting treatment of the warrants under applicable accounting standards, which require the recognition of a loss when the fair value of the warrants exceeds the proceeds received from their issuance. The warrant liability is revalued at each reporting date based on changes in the underlying factors influencing the fair value of the warrants, such as our stock price, volatility, and other market conditions, and on December 31, 20242024, a gain on warrant valuation of $1,477,870 was realized. Management believes that this one-time loss related to the warrant liability measurement should be evaluated separately from ongoing operations when assessing our financial performance. During the 20242025 period, we incurred significant increasedecrease in interest expense, versus same period in 2023,2024, related to our term debt. This decrease in interest expense is primarily due to the highconversion financingof costsexisting associated with the term notes, which were utilizeddebt to support ongoing working capital needs and operational expenses. These note terms, characterized by higher interest rates relative to traditional debt instruments, have resulted in a notable impact on our financial performance for the quarter. This increase in interest expense reflects the financial obligations of maintaining liquidity and funding operations, particularly during a phase of substantial investment in refinery refurbishment and related activities.equity. Overall, while this loss impacts the Company’s reported results, it should be viewed in the context of its financing strategy and the overall long-term value it aims to create for shareholders. We continue to evaluate our capital structure to optimize costs and enhance financial stability, considering refinancing options and alternative capital sources where feasible.

During the reporting period, the Company experienced ana increasedecrease in interestother expenseexpenses of $2,876,992,$4,255,426, primarily due to thedebt highinterest costand loss on issuance of itsprivate Merchant Capital Advances (“MCA”) debt.placement. This debt was primarily reduced by converting it to equity and paying down a significant portion of it. This debt was used to finance the Company’s ongoing capital program and crude oil purchases. The decision to utilize this form of debt was driven by the need to fund critical capital expenditures required for operational expansion and procurement of necessary crude inventory. The MCA debt is characterized by higher-than-market interest rates, which have contributed to a significant rise in financing costs. The increased interest burden has impacted the Company’s overall financial performance during the period. Management continues to evaluate alternatives to optimize the capital structure and reduce reliance on higher-cost debt instruments moving forward. In addition, the Company is exploring potential refinancing options and strategic initiatives to mitigate the impact of these elevated interest costs. The funds raised through MCA debt have been instrumental in executing the capital program, which includes key investments in infrastructure upgrades and the acquisition of crude oil, both critical to supporting future growth and operations. The Company remains focused on maintaining liquidity and flexibility while working towards minimizing the long-term financial impact of current financing structures. Moving forward, the Company intends to manage debt levels prudently and explore ways to enhance capital efficiency, including the consideration of lower-cost financing alternatives as market conditions evolve.

Provision for income taxes. We had an income tax benefit of $0 and $185,535$0 forin the years ended December 31, 20242025 and 2023,2024, respectively. The Company has had a history of operating losses,losses; thusthus, the Company has concluded that it more than likely than not thatnot, the benefit of its deferred tax assets will not be fully realized.

Net loss. As a result of the cumulative effect of the factors described above, we had a net loss of $12,198,399 for the year ended December 31, 2025, as compared to a net loss of $14,728,511 for the year ended December 31, 2024, as compared to a net lossdecrease of $4,436,472 for the year ended December 31, 2023, an increase of $10,292,039,$2,530,112, or 232%.(17) %. Management believes net profits will be achieved from increased revenues with purchasing more crude generating higher production volumes, improving gross margins from improving costs of goods as a percentage of sales, as well as improveimproving general and administrative expenses as a percentage of sales by increasing revenues, reduced repairs and maintenance and maintenance fuel one-time costs as a result of the 2024 and 2025 refurbishment program.

As of December 31, 2024,2025, our cash on hand was $385,116.$35,370. We had negative operating cash flows for the year ended December 31, 20242025, and our monthly cash flowcashflow burn rate for the year ended December 31, 20242025, was $624,298.$272,731. In connection with the Foreland Refinery acquisition and PR Spring facility retrofit program, we believe we will continue to have material capital expenditures and face long term cash needs. We anticipate that these needs will be satisfied through the issuance of our debt and/or equity securities until such time as our cash flowscashflows from operations will satisfy our cash needs.

The retrofit of PR Spring facility requires $3,500,000 to $4,000,000 in capital funding to complete the placement of several pieces of equipment, including vortex mixing tanks, conveyers and vapor recovery units, as well as tying this equipment to the facility including piping, MCC, emissions reduction, and HAZOP. We anticipate completing this work, including commissioning and startup in fiscalthe 2025.next twelve months from when the necessary funding is obtained.

The past due debt referred to above is owed to Libertas Funding LLC in the amount of $5,082,977$4,044,687 and is owed to LendSpark in the amount of $1,747,212.$555,650. Provided that neither Libertas nor LendSpark Corporation commence foreclosure proceedings against us, we do not expect any adverse impact on our operations as a result of our past due debt.

Our net cash used in operating activities for the years ended December 31, 20242025 and 20232024, was $7,491,578$3,272,777 and $376,062,$7,491,578, respectively. Our net cash used in operating activities for the year ended December 31, 20242025 consisted of a net loss of $14,728,511,$12,198,399, plus amortization of debt issuance costs if $4,465,636,$1,473,278, loss on issuance of warrants of $1,936,937, ana decrease in accounts receivable of $2,393,572,$1,119,209, shared based compensation of $632,205,$659,134, depreciation and amortization of $793,449,$1,192,407, amortization of right-of-use asset of $ 90,990, and$78,488, an increase in operating lease liability of $69,777, offset primarily by$79,968, an decreaseincrease in accounts payable and accrued expenses of $857,802,$2,332,177, an increasedecrease in inventory of $712,055,$2,470,871, an increase in prepaid expenses of $224,737,$82,633, and gain on revaluation of warrant liabilities of $1,477,870.$361,581. Our net cash used in operating activities for the year ended December 31, 20232024, consisted of a net loss of $4,436,472, plus$14,728,511, primarily amortization of debt issuance costs of $2,568,523$4,465,636 and an increase in inventory of $1,004,383,$712,055, offset primarily by a decrease in accounts payable and accrued expenses of $1,040,860.$857,802.

Our net cash used in investing activities for the years ended December 31, 20242025 and 20232024, was $1,481,253$368,059 and $731,937,$1,481,253, respectively. Our net cash used in investing activities for the year ended December 31, 20242025, consisted of proceeds from sale of assets of $14,060, purchases of property, plant and equipment of $133,636 and purchases of exploration and evaluation assets of $248,483. Our net cash used in investing activities for the year ended December 31, 2024, consisted of purchases of property, plant and equipment of $691,491 and purchases of exploration and evaluation assets of $789,762. Our net cash used in investing activities for the year ended December 31, 2023 consisted of purchases of property, plant and equipment of $1,028,781 and purchases of exploration and evaluation assets of $664,556, offset by proceeds from the sale of assets of $961,400.

Our net cash provided by financing activities for the years ending December 31, 2025 and 2024, was $1,134,708 and $7,615,111, respectively. Our net cash provided by financing activities for the year ended December 31, 20242025, consisted of proceeds from lines of credit of $10,283,930, proceeds from notes payable of $3,025,752, offset by payments on lines of credit of $10,090,920, payments on notes payable of $,1,998,958, and 2023payments wasof $7,491,578debt andissuance $4,458,454,costs respectively.of $85,470. Our net cash provided by financing activities for the year ended December 31, 2024 consisted of proceeds from lines of credit of $36,645,980, proceeds from notes payable of $19,483,052, proceeds on issuance of preferred stock of $308,000, proceeds on issuance of common stock of $6,550,722, proceeds of exercise of warrants of $4,790,919, offset by payments on lines of credit of $38,446,951, payments on notes payable of $17,032,996,$17,032,995, debt discount on note payable of $2,546,660, preferred stock offering costs of $40,874, payments on finance leases of $34,417, and common stock offering costs of $2,061,665. Our net cash provided by financing activities for the year ended December 31, 2023 consisted of proceeds from lines of credit of $61,499,106, proceeds from notes payable of $17,721,772, proceeds on issuance of preferred stock of $614,804 and proceeds on issuance of common stock of $28,739, offset by payments on lines of credit of $58,437,408, payments on note payable of $12,905,339, debt discount on note payable of $3,588,539 and preferred stock offering costs of $474,681.

On December 21, 2022, Foreland entered into an invoice purchase and security agreement and inventory finance rider with an asset basedasset-based lender. Under the terms of the invoice purchase and security agreement, Alterna provides an advance of 85% of the amount of the receivables purchased receivables to Foreland and during the time the receivables remain outstanding, is granted a continuing senior security interest in all assets of Foreland, to the extent and in the amount of the purchasedreceivables receivables. The inventory finance rider provides a standby security for certain letters of credit in place with certain crude oil suppliers to Foreland. The letters of credit are adjusted periodically to correlate with the price and quantities of purchased heavy crude oil.purchased. The agreement is senior secured by the sale-ready and pre-sale petroleum product inventory on hand at Foreland and maturesmatured on December 21, 2025. Funds drawn under the agreement accrue interest at a per annum rate equal to the sum of the Wall Street Journal Prime Rate plus 2.25%. In addition, a collateral monitoring fee of 0.17% on outstanding advances made is due monthly. Repayment of advances shall be payable from collection of Foreland accounts receivable, including those accounts arising from the sale of the inventory to its customers. As of December 31, 2024,2025, the outstanding amount outstanding is $1,260,727.$1,453,737.

For a complete description of the terms of these loans, please see Note 13 to our audited consolidated financial statements for the years ended December 31, 20242025 and 2023.2024. As noted in such financial statements, while several of the notes listed above are past their maturity date, we have not received any noticesnotice of default from the lenders. As of the date of this Form 10-K, approximately $8,238,705$7,618,831 of our outstanding debt is currently past due.

Revenue recognition. We recognize revenue in accordance with Accounting Standards Codification, or ASC, Topic 606, Revenue from Contracts with Customers. Revenue is measured based on the amount defined per the contract and recognized when performance obligations within a contract are satisfiedsatisfied, which generally occurs with the transfer of control of the goods to the customer. Substantially all our revenues are derived from product sales that consist of a single performance obligation satisfied at a point in time. Product sales to customers are made under a purchase order, or in certain cases, in accordance with the terms of a master services agreement or similar arrangement, which defines the rights and obligations of each party. Payment terms and conditions vary by contract, although terms generally include a requirement of payments within 30 days. We account for shipping and handling as activities to fulfill the promise to transfer the goods. As such, shipping and handling fees billed to customers in a sales transaction are recorded in sales and shipping and handling costs incurred are recorded in cost of sales.

Goodwill. Goodwill represents the excess of the purchase price over the fair value of the net assets acquired. Goodwill is accounted for in accordance with ASC 350, Intangibles-Goodwill and Other. We acquired goodwill in our acquisition of Foreland. We evaluate goodwill on an annual basis in the fourth quarter or more frequently if management believes indicators of impairment exist. Such indicators could include,include but are not limited to (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, or (3) an adverse action or assessment by a regulator.

oFinancial Performance and Future Growth Projections: The Company’s financial performance and growth projections, which underpin the stock price at issuance, have been closely tied to the performance of its reporting units. The future stock issuance will provide capital to support the Company’s expected revenue growth, profit margins, and operating cash flow, all of which contribute to the fair value of the reporting unitsunits, and,and by extension, the goodwill associated with them.

Leases. On January 1, 2023, we adopted ASC Topic 842, Leases, which increases transparency and comparability by the recognition of the right-of-use assets and related operating and finance lease liabilities on the balance sheet. As permitted by ASC 842, we elected the adoption date of January 1, 2023, which is the date of initial application. Under ASC 842, all leases are required to be recorded on the balance sheet and are classified as either operating leases or finance leases. The lease classification affects the expense recognition in the income statement. Operating lease charges are recorded entirely in operating expenses. Finance lease charges are split, where amortization of the right-of-use asset is recorded in operating expenses and an implied interest component is recorded in interest expense. Right of use assets represent the lessee’s right to use a leased asset over the lease term. They are initially measured at the present value of lease payments, adjusted for any lease incentives or initial direct costs incurred by the lessee. Subsequently, the right of use assets are typically amortized over the lease term, and the lease liability is reduced as lease payments are made. The lease liability is based on the present value of the remaining minimum lease payments, determined under ASC 842, discounted using our secured incremental borrowing rate at the effective date of the commencement of the lease, using the original lease term as the tenor. As permitted under ASC 842, we elected several practical expedients that permit us to not reassess (1) whether a contract is or contains a lease, (2) the classification of existing leases, and (3) whether previously capitalized costs continue to qualify as initial indirect costs. The application of the practical expedients did not have a significant impact on the measurement of the operating lease liability. We have elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less.

We operate a regional refinery (the Eagle Springs Refinery) producing diesel, VGO, naphtha and liquid paving asphalt from crude oil supplierssupplied infrom the Uintah basin near NevadaEly, and Utah.Nevada. In addition to our goal of growing the refinery, we have a separate division in the development-stage (P.R.PR Springs) formed to deploy technologies to facilitate the recycling of waste asphalt shingles and remediation of oil-saturated sands and soils, providing sustainable refined crude products. We anticipate several benefits from the recycling and production of oil from asphalt shingles reducing the dependence on landfills for the disposal of waste and reducing dependence on foreign oil.

Currently, we intend to finish retrofitting our oil sands remediation facility located in PR SpringSprings in eastern Utah in the 2027 calendar year when the necessary funding is obtained to recycle waste asphalt shingles using our ECOSolv technology, to produce and sell oil as well as asphalt paving aggregate mined from our bitumen deposit.

We filed a Certificate of Amendment to our Certificate of Incorporation with the State of Delaware on March 5, 2026,2026 to affecteffect a one-for-eight (1-for-8) reverse stock split (the “Reverse Stock Split”) of our shares of common stock, par value $0.0001 (the “Common Stock”). The Reverse Stock Split was effective on March 15, 2026, at 11:59 PM Eastern Time.

On April 22, 2026, the Company replaced Cantor Fitzgerald & Co. with Muriel Siebert & Co., LLC (“Siebert” or the “Agent”) as the principal and/or the sole designated sales agent and updated the size of the program to up to $12,600,000. As of MarchJune 31,30, 2026, the Company issued 426,1434,781,795 shares of common stock through its previous ATM sales agent, Cantor Fitzgerald & Co.,agents, generating net proceeds of $747,975.$12,539,949.

Our facilities require ongoing maintenance and from time-to-time certain repairs, improvements and retrofitting, which may require us to temporarily shut down or operate at a diminished capacity. Our Eagle Springs refinery operated by Foreland Refinery Corporation experienced a shut down during the fourth quarter of 2025 and first half of 2026 in connection with a boiler repair.repair and related items. Currently, repairs have been completed, andto the refinery ishave beingbeen preparedcompleted toand resumeinitial operations,feedstock has been procured, subject to thescale procurementup ofoperational feedstock.testing and state inspection. The unscheduled repairs and outages at Foreland’s Eagle Springs Refinery have had a negative impact on our final financial results for the third and fourth quarters of 2025, and financial results for the first quarterand second quarters of 2026. Currently, weWe expect the facility to be operational by the end of the secondthird quarter of 2026.

As a result of our financial condition, we have included in our condensed consolidated financial statements as of MarchJune 31,30, 2026 and December 31, 2025, and for the three and six months ended MarchJune 31,30, 2026 and 2025, a note indicating that there is significant doubt about the Company’s ability to continue as a going concern. The opinion on the December 31, 2025 audited financial statements from our independent registered public accounting firm for those statements also includes an explanatory paragraph describing the uncertainty as to our ability to continue as a going concern. From inception (June 4, 2019) through MarchJune 31,30, 2026, we have incurred accumulated net losses of $38,486,733.$42,542,109. To address our going concern, we aim to increase revenues by securing greater volumes of crude oil for our Foreland refinery, which should enhance our contribution margin. Additionally, we are pursuing opportunities to reduce debt service through refinancing or repayment of existing obligations, establish strategic partnerships, and raise capital through equity or debt offerings, or a combination of these actions. Given our current revenue and cash usage levels, we have pressing working capital needs that necessitate raising funds through equity or debt issuance, coupled with efforts to boost revenue and control operating expenses. However, there is no guarantee that we will be able to raise sufficient capital, grow revenues, and generate the cash flow needed to meet our operating expenses and capital requirements effectively.

Results of Operations for the three and six months ended June 30, 2026 and 2025 Introduction This section includes a summary of our historical results of operations, followed by detailed comparisons of our results for the three and six months ended MarchJune 31,30, 2026 and 2025, respectively. We have derived this data from our unaudited interim condensed consolidated financial statements included in this Quarterly Report.

We had net sales of $0 and $383 for the three and six months ended MarchJune 31,30, 2026, compared to $6,332,967$4,541,472 and $10,874,439 for the three and six months ended MarchJune 31,30, 2025. Our cost of goods sold for the three months ended MarchJune 31,30, 2026, were $389,601,$685,601, compared to $7,059,059$4,658,440 for the three months ended MarchJune 31,30, 2025. Year to date cost of goods sold of $1,075,202 for the six months ended June 30, 2026, compared to $11,717,499 for the six months ended June 30, 2025. Cost of goods sold does not change directly with sales due to certain fixed costfixed-cost allocations across significantly lower production barrels. The significant decrease in our sales werewas the direct result of the company’sCompany’s challenges associated with the outage of our Eagle Springs refinery.

Our operating expenses were $1,215,446$1,888,605 for the three months ended MarchJune 31,30, 2026, compared to $1,937,485$1,623,612 for the three months ended MarchJune 31,30, 2025. Year to date operating expenses were $3,104,051 for the six months ended June 30, 2026, compared to $3,559,370 for the six months ended June 30, 2025. Our operating expenses consisted of general and administrativeadministrative, and depreciation and amortization.

Our net sales, costs of goods sold, gross profit, operating expenses, other income (expense) and net loss for the three and six months ended MarchJune 31,30, 2026 and 2025, were as follows:

The following table shows net sales by category for the three and six months ended MarchJune 31,30, 2026 and 2025:

We had net sales of $0 for the three months ended June 30, 2026, compared to $4,541,472 for the three months ended June 30, 2025, a decrease of $4,541,472. Year-to-date net sales of $383 for the threesix months ended MarchJune 31,30, 2026, compared to $6,332,967$10,874,439 for the threesix months ended MarchJune 31,30, 2025, a decrease of $6,332,584.$10,874,056. Beginning in late June 2025,2025 the Company’s production was limited due to crude supplier disruptions and delays in completing certain maintenance activities. The lack of refinery operational revenue during the first quarterand second quarters of 2026 was the result of refinery repairs that were concluded subsequent to the end of the period. Restart challenges and reconnecting refinery feedstock supply will be the primary focus of the Company in the subsequent quarter to generate revenues from operations. The Company expects production to resume in June ofSeptember 2026.

Additionally, feedstock pricing, based partly on WTI market pricing rose from approximately $57 per barrel on January 1, 2026 to $101$70 per barrel by MarchJune 31,30, 2026, roughly a 77%23% increase according to the US Energy Information AgencyAdministration (EIA). Currently, we believe regional market dynamics may be reflected in the second half of 2026 in crack spreads or refinery margins, based on industry peers’ publicly available comments.

The following table shows cost of goods sold by category for the three and six months ended MarchJune 31,30, 2026 and 2025:

Our cost of goods sold for the three months ended MarchJune 31,30, 2026 was $389,601$685,601 compared to $7,059,059$4,658,440 for the three months ended MarchJune 31,30, 2025, a decrease of $6,669,458.$3,972,839. Our year to date cost of goods sold for the six months ended June 30, 2026, was $1,075,202 compared to $11,717,499 for the six months ended June 30, 2025, a decrease of $10,642,297. Gross margin loss for the three months ended MarchJune 31,30, 2026 was $389,218,$685,601, compared to $726,092$116,968 for the three months ended MarchJune 31,30, 2025, aan decreaseincrease of $336,874$568,633 for the comparative period. The decline in cost of sales for the three months ended MarchJune 31,30, 2026 presented compared to the prior periods was primarily due to the decline in net sales described above.

Cost of goods sold as a percentage of net sales was 101,723%685,601% for the three months ended MarchJune 31,30, 2026, compared to 112%103% for the three months ended MarchJune 31,30, 2025. We believe this comparison is not meaningful as the refinery was not operational during the first quarter of 2026 as described above.

The following table shows general and administrative expenses by category for the three and six months ended MarchJune 31,30, 2026 and 2025:

Our general and administrative expenses decreasedincreased by $722,221$266,260 for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025,2025 primarily due to aan decreaseincrease of $124,897$255,966 in executive compensation attributable to aincreased smallersalaries Boardfor ofexecutive Directors with lower feesofficers expensed in the current year.year, The decreased inincreased general and administrative costs for the three months ended MarchJune 31,30, 2026 compared to 2025 were also due to a $511,968$124,778 decreaseincrease in professional fees,fees primarilyrelated consistingto oflegal matters found in Part II, Item 1, partially offset decreases in advertising and marketing, and business development.development expenses.

Other expense was $715,581$1,481,170 for the three months ended MarchJune 31,30, 2026, compared to $670,117$468,070 for the three months ended MarchJune 31,30, 2025, aan decreaseincrease of $45,464.$1,013,100. In the three months ended MarchJune 31,30, 2026, other income (expense) consisted of interest expense $333,989,$349,476, loss on extinguishment of debt $269,396,$1,015,345, loss on warrant valuation $75,342,$99,540, and other expense $36,854.$16,809. In the three months ended MarchJune 31,30, 2025, other income (expense) consisted of interest expense $901,561,$318,708, loss on warrant valuation $174,354, offset by gain on extinguishment of debt $56,660,$29,093 offset by gain on warrant valuation $274,980,and other income $7,477, and gain on disposal of assets $5,647.$4,101.

Net loss was $2,320,245$4,055,376 or a loss of $(0.650.77) per share, for the three months ended MarchJune 31,30, 2026, compared to net loss of $3,333,694$2,208,650 or $(1.250.82) per share, for the three months ended MarchJune 31,30, 2025. Net loss was $6,375,621 or a loss of $(1.44) per share, for the six months ended June 30, 2026, compared to net loss of $5,542,344 or $(2.17) per share, for the six months ended June 30, 2025.

Our net loss compared to the previous periods’ net loss was primarily driven by a reduction in total production of the refinery attributable to the outageoutage, which resulted in significantly reduced revenues during the period.period, combined with increased losses on extinguishment of debt associated with the Libertas Conversion and Exchange Agreement.

We had negative operating cash flows for the threesix months ended MarchJune 31,30, 2026.2026 of $5,413,699. Our cash on hand as of MarchJune 31,30, 2026, was $66,828. While we had negative net cash from operations for the three months ended March 31, 2026, our monthly cash flow burn rate for the three months ended March 31, 2026, was $196,210.$7,226,564. In connection with the Foreland Refinery acquisition and PR SpringSprings facility retrofit program, we believe we will continue to have material capital expenditures and face long term cash needs. While we anticipate that these needs will be satisfied through the issuance of our debt and/or equity securities until such time as our cash flows from operations will satisfy our cash needs, we cannot provide any assurances of such.

Our cash, current assets, total assets, current liabilities, and total liabilities as of MarchJune 31,30, 2026 and December 31, 2025, respectively, are as follows:

Our cash increased by $31,458$7,191,194 as of MarchJune 31,30, 2026, as compared to December 31, 2025. Our total current assets decreasedincreased by $61,721$9,102,738 primarily because of athe decreaseATM inprogram inventoryduring ofthe $23,453,current and prepaids of $65,038.quarter.

Our total assets increased by $97,282$9,113,067 due to the changes in property,cash plantof $7,191,194 and equipmentinventory of $178,523, and cash $31,458.$828,167.

Our current liabilities as of MarchJune 31,30, 2026 as compared to December 31, 2025, increaseddecreased by $1,275,910 and our total liabilities increased by $1,286,434, both$1,085,369 primarily as a result of ana increasedecrease in accounts payable of $777,065,$390,951 related-partyand payablesa decrease in current portion of $372,212, notes payable of $10,524,$1,016,700, partially offset by increases in warrant liabilities of $174,882 and an increase in lines of credit of $95,401,$160,312. andOur warrantlong liabilityterm liabilities increased by $1,623,330 primarily due to an increase in long term notes payable of $75,342.$1,567,131 as a result of the refinancing of the Company’s previously outstanding sale of future revenue obligations.

In order toTo repay our obligations in full or in part when due, we will be required to raise significant capital from other sources. There is no assurance, however, that we will be successful in these efforts.

On June 27, 2025, the Company’s wholly owned subsidiary, Foreland Refining Corporation, launched a Regulation Crowdfunding (“Reg CF”) offering to raise up to $1.235 million to fund working capital and general corporate purposes. AsThe offering is terminated and raised a total of March 31, 2026, the subsidiary had raised $513,300 in commitments.$513,300. Although the Reg CF is being conducted at the subsidiary level, the proceeds are expected to support business lines that may be consolidated into the Company’s operations. The offering is not expected to have a material near-term impact on the Company’s consolidated liquidity position.

On April 22, 2026, in connection with its ATM Program, the Company filed a prospectus supplement with the SEC, updating the aggregate sales price to up to $12,600,000, pursuant to the A&R Sales Agreement. AsThrough ofthe MarchATM 31, 2026,Program, the Company issued 426,143an aggregate of approximately 4,773,348 shares of commonCommon stockStock, resulting in aggregate gross proceeds of approximately $13,528,940. Of this total, the Company sold approximately 417,696 shares through Cantor underpursuant to the ATMSales Program,Agreement, generating netgross proceeds of $747,975.approximately $1,306,941, and sold 4,355,652 shares through Siebert pursuant to the A&R Sales Agreement, generating proceeds of approximately $12,221,999.

Our cash on hand as of MarchJune 31,30, 2026, was $66,828.$7,226,564. The Company will continue to require additional cash to meet ongoing operational and capital needs. Despite the company’s efforts to increase production capacity at the refinery, as well as ongoing maintenance and refurbishment activities, and the high interest payments, we are not yet generating sufficient cash flow to cover operational costs. The need for cash is driven by both ongoing operating expenses, and costs of indebtedness. We anticipate that these needs will be satisfied through the issuance of debt or the sale of our equity securities, or a combination thereof, until such time as improvements to our cash flows from operations will satisfy our cash flow needs. Management remains committed to securing the necessary resources to ensure the Company can meet its financial obligations and continue executing its long-term objectives. There is no assurance, however, that we will be successful in these efforts.

Our net cash used in operating activities for the threesix months ended MarchJune 31,30, 2026 and 2025, was $588,631$5,413,699, andas $1,963,224,compared to net cash used of $729,401, respectively. Our net cash used in operating activities for the threesix months ended MarchJune 31,30, 2026, consisted of a net loss of $2,320,245,$6,375,621, favorableunfavorable working capital changes of $1,374,593,$4,684,298, adjusted for share based compensation of $87,454,$694,002, depreciation and amortization of $264,857,$492,758, amortization of debt issuance costs of $101,649,$98,976, amortization of right-of-use asset of $20,943,$37,112, loss on extinguishment of debt of $269,396,$1,284,741, and loss on revaluation of warrant liability of $75,342.$174,882. Our net cash used in operating activities for the threesix months,months ended MarchJune 31,30, 2025 consisted of a net loss of $3,333,694,$5,542,344, less unfavorable changes in working capital of $738,676, share-based compensation of $78,880,$309,354, depreciation and amortization of $242,004,$557,454, amortization of right-of-use asset of $24,129,$48,842, amortization of debt issuance costs of $765,793,$807,636, and loss on extinguishment of debt of $56,660.

Our cash flow used in investing activities for the threesix months ended MarchJune 31,30, 2026 and 2025, was $443,380$460,221 and $316,210,$381,296, respectively, an increase of $127,170.$78,925. Our investing activities during six months ended June 30, 2026, consisted of payments for property, plant and equipment of $460,221. Our investing activities during the threesix months ended MarchJune 31, 2026, consisted of a net increase from proceeds of sale of assets of $0, and payments for oil and gas properties of $0, and property, plant and equipment of $443,380. Our investing activities during the three months ended March 31,30, 2025, consisted of a net increase from property, plant and equipment of $297,389,$352,973, purchase of oil and gas development assets of $32,881$42,383, and an increase from proceeds of sale of assets of $14,060.

Our net cash provided by (used in) financing activities for the threesix months ended MarchJune 31,30, 2026 and 2025, was $1,064,894$13,063,714 and ($24,050),$1,226,930, respectively, aan decreaseincrease of $1,088,944.$11,836,784. Our cash flows from financing activities during the threesix months ended MarchJune 31,30, 2026, consisted of proceeds of lines of credit of $97,720,$202,630, proceeds from notes payable of $227,830,$896,866, proceeds from common stock $747,975,$13,907,446, offset by payments on lines of credit of $2,319,$42,318 and payments on notes payable of $6,312.$533,413. Our cash flows from financing activities during the threesix months ended MarchJune 31,30, 2025, consisted of proceeds of lines of credit of $5,339,736, and$8,338,455, proceeds from notes payable of $143,237,$574,380, and issuance of common stock of $0, offset by payments on lines of credit of $4,272,336,$8,465,550, and payments on notes payable of $1,231,214, and payments on finance lease of $3,473.$1,670,741.