Ilustrato Pictures International Inc 10-K for FY2023
Ilustrato Pictures International Inc. (ILUS)
About this 10-K
Ilustrato Pictures International Inc filed this 10-K on May 1, 2024, covering the fiscal year ended December 31, 2023 (FY2023).
Headline figures
Fiscal year ended December 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $6.59M
- down 91.6% from $78.34M a year earlier
- Net loss
- $10.6M
- compared with net income of $4.56M a year earlier
- Diluted EPS
- $0.00
- compared with $0.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the fiscal year ended
OR
For the transition period from to .
GENERAL FORM FOR REGISTRATION OF SECURITIES
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
| (Exact name of registrant as specified in its charter) |
| (State or other jurisdiction of incorporation) | (I.R.S. Employer Identification No.) |
| |
| (Address of principal executive offices and Zip Code) |
| (Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
Common stock, $0.001 par value
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant has filed a report on
and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large, accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
If securities are registered pursuant to Section 12(b) of the Act,
indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to
previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked
price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter $
Indicate the number of shares outstanding of each of the registrant’s
classes of common stock, as of the latest practicable date:
TABLE OF CONTENTS
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CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
Some of the statements contained in this registration statement on Form 10-K of Ilustrato Pictures International, Inc. (hereinafter the “Company,” “Ilustrato Pictures,” “ILUS,” “we,” “us” or “our”) discuss future expectations, contain projections of our plan of operation or financial condition or state other forward-looking information. In this registration statement, forward-looking statements are generally identified by the words such as “anticipate,” “plan,” “believe,” “expect,” “estimate” and the like. Forward-looking statements involve future risks and uncertainties, there are factors that could cause actual results or plans to differ materially from those expressed or implied. These statements are subject to known and unknown risks, uncertainties, and other factors that could cause the actual results to differ materially from those contemplated by the statements. The forward-looking information is based on various factors and is derived using numerous assumptions. A reader should not place undue reliance on these forward-looking statements, which apply only as of the date of this registration statement. Important factors that may cause actual results to differ from projections include, for example:
| ● | the success or failure of management’s efforts to implement the Company’s business plan; | |
| ● | the ability of the Company to fund its operating expenses; | |
| ● | the ability of the Company to compete with other companies that have a similar business plan; | |
| ● | the effect of changing economic conditions impacting our plan of operation; | |
| ● | the ability of the Company to meet the other risks as may be described in future filings with the SEC. |
Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof. We believe the information contained in this Form 10-K to be accurate as of the date hereof. Changes may occur after that date. We will not update that information except as required by law in the normal course of our public disclosure practices.
Additionally, the following discussion regarding our financial condition and results of operations should be read in conjunction with the financial statements and related notes included in this Form 10-K.
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PART 1
ITEM 1. BUSINESS
Business Overview
ILUS is a corporation registered in Nevada and operating out of New York and Dubai. The company is primarily focused on delivering value to its shareholders through innovation and growth. It has acquired and integrated businesses in the global industries of technology, engineering, and manufacturing, with a specific focus on public safety. ILUS has a strong history of developing and manufacturing Emergency Services products, including Emergency Response vehicles, Special Vehicle conversions, Commercial EVs, and IoT Technology. Additionally, the company intends to acquire complimentary companies that have disruptive technology and strong management, with the potential for rapid growth that may benefit from cross-pollination of territories, products, and skills offered by our other group companies.
ILUS operates as a holding company, leveraging its subsidiaries to engage in public safety, technology, engineering, and manufacturing. Each of these subsidiaries is assessed individually based on their performance and operates with relative autonomy. ILUS either wholly owns or has a controlling stake in each of its subsidiaries. The company’s strategic objective is to acquire manufacturing capabilities, routes to market, and technological advancements in well-defined geographic, demographic, and/or product niches within the business sectors it has targeted.
Organizational Structure
The following diagram represents our organizational structure, where ILUS serves as the parent company, and its subsidiaries undertake primary operations. These subsidiaries, depicted in the figure below, are divided into two separate divisions, each housed within its own public entity called Special Purpose Vehicles (SPVs). The SPVs are designed to fulfill each division’s distinct business purpose and activity. The divisions are listed below, followed by the graphic:
| 1. | Emergency Response Technologies (“SAML”) |
| 2. | Industrial & Manufacturing (“QIND”) |
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| ● | ILUS was incorporated in Nevada on April 27, 2010. ILUS functions as a Mergers and Acquisitions company, which concentrates on providing strategic management oversight that includes financial, administration, marketing, and human resources support to its operating companies. Therefore, in terms of revenue generation, ILUS itself relies on fees, dividends, and other distributions from its acquired operating companies as the principal source of cash flow to meet its obligations. Additional information regarding the cash flow and liquidity needs of the Parent can be found in the Liquidity and Capital Resources section of Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
| ● | Firebug Mechanical Equipment LLC was incorporated on May 8, 2017. ILUS acquired 100% of this company on January 26, 2021, under a signed Share Purchase Agreement. This company is engaged in the business of research and development of firefighting technologies as well as the manufacturing firefighting equipment and firefighting vehicles for its customers in the Middle East, Asia, and Africa. |
| ● | Georgia Fire & Rescue Supply LLC (Georgia Fire) was incorporated on the January 21, 2003. ILUS acquired 100% of this company on March 31, 2022, under a signed Share Purchase Agreement. This company is engaged in the business of sales, distribution and servicing/maintenance of Firefighting, Rescue and Emergency Medical Services equipment. |
| ● | Bright Concept Detection and Protection System LLC (BCD Fire) was incorporated on March 18, 2014. ILUS acquired 100% of this company on April 13, 2021, in connection a signed Share Purchase Agreement. This company is engaged in the business of sales, distribution, installation and maintenance of Fire Protection and Security systems. |
| ● | Bull Head Products Inc. was incorporated on June 8, 2007. ILUS acquired 100% of this company on January 1, 2022, under a signed Share Purchase Agreement. This company is engaged in the business of manufacturing of aluminum truck beds and brush truck skid units for firefighting purposes including wildland firefighting. |
| ● | The Vehicle Converters (TVC) was incorporated in 2006. ILUS owns 100% of the company. Ownership was transferred to ILUS after ILUS acquired the brand name, intellectual property, and employees of the company on March 25, 2022. Following ongoing due diligence which determined that the company was in a difficult financial position due to the Covid-19 pandemic, ILUS agreed to take ownership of the company from previous management in order to restructure and rebuild it so that it would cooperate with Firebug Mechanical Equipment LLC out of Dubai, United Arab Emirates. This company is engaged in the business of specialist vehicle conversions and as planned, collaborates closely with Firebug Mechanical Equipment LLC to deliver converted vehicles to their customers. This transaction is classified as an acquisition of an assembled workforce rather than a business acquisition |
| ● | Emergency Response Technologies, Inc. This company was incorporated by ILUS on February 22, 2022, as the company’s Emergency Response Subsidiary. This company is engaged in the business of public safety and emergency response focused mergers and acquisitions. |
| ● |
E-Raptor. This company was incorporated by ILUS as the company’s Commercial Electric Utility Vehicle manufacturer on February 22, 2022. This company is engaged in the business of manufacturing electric utility vehicles for the emergency response, agricultural, industrial, hospitality and transport sectors. |
| ● | Replay Solutions was incorporated by ILUS on March 1, 2022. The company is engaged in the business of recovering precious metals from electronic waste, known as urban mining. |
| ● | Quality Industrial Corp. was originally incorporated on May 4, 1998. Quality Industrial is quoted on the OTC Pink Markets under the symbol “QIND” and is designed as a Special Purpose Vehicle for our industrial and manufacturing division and future acquisitions ILUS acquired 77% of this company on May 28, 2022, under a signed Share Purchase Agreement. This company is engaged in the industrial, oil & gas, and manufacturing sectors. |
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| ● | AL Shola Al Modea Safety and Security LLC is a fire safety company registered in the United Arab Emirates. The company has signed a Share Purchase Agreement to acquire 51% control of AL Shola Al Modea Safety and Security LLC (ASSS) on December 13, 2022. |
| ● | Samsara Luggage Inc. is quoted on the OTC Pink Markets under the symbol “SAML” and is designed as a Special Purpose Vehicle for our Emergency Response Technologies division. ILUS acquired control of this company on January 5, 2024, where ILUS converted a note dated January 3, 2024, into 150,753,425 shares of common stock in the SAML. As a result of such conversion, ILUS acquired control of 91.5% of the outstanding shares in SAML as of January 5, 2024. |
| ● | AL Shola Al Modea Gas and Distribution LLC is a fire safety company registered in the United Arab Emirates. Quality Industrial Corp, the company’s subsidiary signed a Share Purchase Agreement to acquire 51% control of AL Shola Al Modea Gas and Distribution LLC (ASG) on March 27, 2024. |
| ● | On February 23, 2024, Ilustrato Pictures International, Inc., entered into a Stock Purchase Agreement with Samsara Luggage Inc., and sold all its equity interests in seven companies owned by the Company: |
| ● | Firebug Mechanical Equipment LLC |
| ● | Georgia Fire & Rescue Supply LLC |
| ● | Bright Concept Detection and Protection System LLC |
| ● | Bull Head Products Inc |
| ● | E-Raptor |
| ● | The Vehicle Converters |
| ● | AL Shola Al Modea Safety and Security LLC, (51% of the membership interests) |
The consideration for the sale of the equity interests in the foregoing companies was paid by SAML by the issuance of 350,000 restricted shares of Series B stock of SAML convertible into 350,000,000 common stock and further milestone payment/s should applicable performance targets referenced.
As of March 27, 2024, we entered into a definitive Stock Purchase Agreement (the “Stock Purchase Agreement”) with the shareholders of Al Shola Al Modea Gas Distribution LLC (“ASG” or “Al Shola Gas”) to acquire a 51% interest in ASG. The Closing of the transaction took place when both parties signed the definitive Stock Purchase Agreement. Al Shola Gas is an Engineering and Distribution Company in the liquefied petroleum gas (“LPG”) Industry in the United Arab Emirates and was established in 1980. The company is one of the region’s leading suppliers and contractors of LPG centralized pipeline systems and is approved by The General Directorate of Civil Defense, Government of Dubai, as a Central Gas Contractor and LPG Supplier.
On April 1, 2024, after several failed effort negotiations, to restructure the deal and obtain information from the selling shareholders of Quality International, the QI Purchase Agreement with Quality International was terminated by Quality International and subsequently cancelled by the Board of Directors of Quality Industrial Corp. The Company is in the process of unwinding the transaction and this Form 10-K amends the Annual Report on Form 10-K of Ilustrato Pictures International Inc. for the fiscal year ended December 31, 2022, as filed with the Securities and Exchange Commission on April 10, 2023.
We are filing this Form 10-K to restate our financial statements as of December 31, 2022, that were previously reported on the original filing and subsequent amendments. The following items have been amended to reflect the restatements:
Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Part II, Item 8. Financial Statements and Supplementary Data
Part IV, Item 15. Financial Statement Schedules and Footnotes
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In addition, the Company’s Auditor has provided a new Audit Report as of the date of this filing in connection with this Form 10-K.
Corporate Offices
Our offices are located at the following locations:
| 1. | 26 Broadway, Suite 934, New York, NY 10004 |
| 2. | Al Marsa Street 66, 11th Floor, Office 1105, Dubai Marina P.O. Box 32923, Dubai |
Our primary office telephone number is +1 917-522-3202. Our website address is https://ilus-group.com and our email address is ir@ilus-group.com. Information contained on, or accessible through, our website is not a part of, and is not incorporated by reference into this Form 10-K.
Intellectual Property
The following overview concerns the intellectual property matters of our company and its subsidiaries. Specific detail as to each subsidiary, if applicable, is contained in the section titled “Our Operating Subsidiaries” below.
Patents and other proprietary rights are important to our business and can provide us with a competitive advantage. We also rely on trade secrets, design and manufacturing know-how, continuing technological innovations, and licensing opportunities to maintain and improve our competitive position. While the Company uses reasonable efforts to protect its trade and business secrets, the Company cannot assure that its employees, consultants, contractors, or advisors will not, unintentionally, or willfully, disclose the Company’s trade secrets to competitors or other third parties. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Moreover, the Company’s competitors may independently develop equivalent knowledge, methods, and know-how. We periodically review third-party proprietary rights, including patents and patent applications, to avoid infringement on third-party proprietary rights and protect our own, identify licensing or partnership opportunities and monitor the intellectual property claims of others. Any infringement of the Company’s proprietary rights could result in significant litigation costs, and any failure to adequately protect could result in the Company’s competitors offering similar products, potentially resulting in loss of competitive advantage and decreased revenue.
Existing patent, copyright, trademark, and trade secret laws afford only limited protection. In addition, the laws of some foreign countries do not protect the Company’s proprietary rights to the same extent as do the laws of the United States. Therefore, the Company may not be able to protect the Company’s proprietary rights against unauthorized third-party use. Enforcing a claim that a third party illegally obtained and is using the Company’s trade secrets could be expensive and time-consuming, and the outcome of such a claim is unpredictable. Litigation may be necessary in the future to protect the Company’s trade secrets or to determine the validity and scope of the proprietary rights of others. This litigation could result in substantial costs and diversion of resources and could materially adversely affect the Company’s future operating results.
We own a portfolio of intellectual property in our group, including 3 patents in Samsara Luggage Inc., as well as confidential technical information and technological expertise in the manufacturing of firefighting technology. We are currently the process of extending the life of the patents and transferring them to Firebug Mechanical Equipment LLC.
While we consider our patents to be valued assets, we do not believe that our competitive position is dependent primarily on our patents or that our operations are dependent upon any single patent to manufacture our products. We nevertheless face intellectual property-related risks. For more information on these risks, see “Item 1A. Risk Factors.”
The Company owns the trademark ILUS.
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Competition
The following overview covers the competition we encounter within markets we operate in and those we intend to expand into. Specific detail as to each subsidiary, if applicable, is contained in the section titled “Our Operating Subsidiaries” below.
The Public Safety Technology, Engineering, Industrial, Manufacturing sectors are highly competitive and continually evolving as participants strive to distinguish themselves within their markets and compete within their respective industries. While we do face intense competition in our business from companies that have been established long before ours and have a strong global reach, we have also developed our own disruptive technology for which there is no known direct competition within that particular sector. We strive to advance our Technology, Engineering & Manufacturing capabilities in each sector ahead of our competitors to gain market share. Our ability to continue to compete effectively also depends upon our ability to attract the required skills, as well as to retain and motivate our existing employees and to compensate employees competitively. We believe that we have competitive strengths that position us favorably in our lines of business. However, our industry is dominated by long-standing companies, and we are continuously strategizing to increase our market share. These long-standing companies are often larger and have more resources to their disposable to retain market share. We believe that, in many of the sectors where we operate, the technology offered by our competitors is outdated and we have a competitive advantage through the innovative technology we offer.
A list of competitors for our operating companies can be found in the table below:
| Type | Competitor Name |
HQ Location |
Date Founded |
Website | Public/Private | |||||
| Manufacturer | Oshkosh Corp - Pierce Manufacturing | WI, USA | 1917 | https://www.oshkoshcorp.com/ | Public | |||||
| Manufacturer | REV Fire Group - Ferrara, KME, Spartan, E-ONE, Smeal | WI, USA | 2010 | https://revgroup.com/ | Public | |||||
| Manufacturer | IDEX Corporation | IL, USA | 1988 | https://www.idexcorp.com/ | Public | |||||
| Manufacturer | Rosenbauer | Leonding, Austria | 1866 | https://www.rosenbauer.com/en/uae/ rosenbauer-world |
Public | |||||
| Manufacturer | Task Force Tips | IN, USA | 1971 | Task Force Tips - Task Force Tips Home Page (tft.com) | Private | |||||
| Manufacturer | Akron Brass | OH, USA | 1918 | https://www.akronbrass.com/ | Public | |||||
| Manufacturer | Elkhart Brass | IN, USA | 1902 | https://www.elkhartbrass.com/ | Private | |||||
| Manufacturer | Delta Fire | Norwich, USA | 1980 | https://www.deltafire.co.uk/ | Private | |||||
| Manufacturer | Ziegler | Brussels, Belgium | 1908 | https://www.zieglergroup.com/ | Private | |||||
| Manufacturer | Iveco Magirus | Baden-Württemberg Germany | 1864 | https://www.iveco.com/corporate- en/company/pages/magirus.aspx |
Private | |||||
| Supplier/Distributor | WS Darley | IL, USA | 1908 | https://www.darley.com/ | Private | |||||
| Supplier/Distributor | United Fire | AZ, USA | 1968 | https://www.unitedfire.net/ | Private | |||||
| Supplier/Distributor | Safe Fleet | MO, USA | 2013 | https://www.safefleet.net/ | Private | |||||
| Manufacturer | United Safety & Survivability Corp | PA, USA | 1984 | https://unitedsafetycorporation.com/ | Private | |||||
| Supplier/Distributor | MES Fire | TX, USA | 2001 | https://www.mesfire.com | Private | |||||
| Manufacturer | Marioff | Vantaa, Finland | 1991 | http://www.marioff.com/en/ | Private | |||||
| Manufacturer | Ansul | WI, USA | 1915 | www.ansul.com | Private | |||||
| Manufacturer & Supplier | Waterous | MN, USA | 1844 | https://www.waterousco.com/ | Private | |||||
| Manufacturer | Flaim | Melbourne, Australia | 2017 | https://flaimsystems.com/ | Private | |||||
| Supplier/Distributor | Western States Fire Protection | CO, USA | 1985 | https://www.wsfp.com/ | Private | |||||
| Manufacturer | Kidde Fire Systems | MA, USA | 1917 | https://www.kidde-fenwal.com/ | Private | |||||
| Manufacturer | Cascade Fire Equipment | OR, USA | 1985 | https://cascadefire.com/ | Private | |||||
| Manufacturer | Draeger | Lubeck, Germany | 1889 | https://www.draeger.com | Private |
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Below is a list of competitors and ILUS competitive advantages:
| Category | Competitor Name | Competitor of | ERT Advantages | |||
| Firefighting Vehicles | Oshkosh Corp - Pierce Manufacturing | FireBug | patented water mist technology & lightweight polypropylene rapid response vehicle technology | |||
| Firefighting Vehicles | REV Fire Group - Ferrara, KME, Spartan, E-ONE, Smeal | FireBug | patented water mist technology & lightweight polypropylene rapid response vehicle technology | |||
| Firefighting Equipment | IDEX Corporation | FireBug | patented water mist technology & lightweight polypropylene rapid response vehicle technology | |||
| Firefighting Vehicles | Rosenbauer | FireBug | patented water mist technology & lightweight polypropylene rapid response vehicle technology | |||
| Firefighting Equipment | Task Force Tips | FireBug | patented water mist technology in firefighting equipment | |||
| Firefighting Equipment | Akron Brass | FireBug | patented water mist technology in firefighting equipment | |||
| Firefighting Equipment | Elkhart Brass | FireBug | patented water mist technology in firefighting equipment | |||
| Firefighting Equipment | Delta Fire | FireBug | patented water mist technology in firefighting equipment | |||
| Firefighting Vehicles | Ziegler | FireBug | patented water mist technology & lightweight polypropylene rapid response vehicle technology | |||
| Firefighting Vehicles | Iveco Magirus | FireBug | patented water mist technology & lightweight polypropylene rapid response vehicle technology | |||
| Firefighting Equipment | WS Darley | FireBug | patented water mist technology & lightweight polypropylene rapid response vehicle technology | |||
| Fire Safety | United Fire | FireBug | patented water mist nozzle technology for more effective and efficient firefighting equipment & fixed fire suppression systems | |||
| Fire Safety | Safe Fleet | FireBug | patented water mist nozzle technology for more effective and efficient firefighting equipment & fixed fire suppression systems | |||
| Fire Safety | United Safety & Survivability Corp | FireBug | patented water mist nozzle technology for more effective and efficient firefighting equipment & fixed fire suppression systems | |||
| Fire Safety | MES Fire | Georgia Fire & Rescue Supply | exclusive distributors of world’s largest brands and patented technology supported by an experienced team of firefighters, renowned service, and reputation | |||
| Fire Protection | Marioff | FireBug | patented water mist nozzle technology for more effective and effective fixed fire suppression systems | |||
| Fire Protection | Ansul | FireBug | patented water mist nozzle technology for more effective and efficient firefighting equipment & fixed fire suppression systems | |||
| Fire Protection | Western States Fire Protection | FireBug | patented water mist nozzle technology for more effective and efficient firefighting equipment & fixed fire suppression systems | |||
| Fire Protection | Kidde Fire Systems | FireBug | patented water mist nozzle technology for more effective and efficient firefighting equipment & fixed fire suppression systems |
Government Regulations
The following overview concerns government regulations that affect our company and its subsidiaries. Specific detail as to each subsidiary, if applicable, is contained in the section titled “Our Operating Subsidiaries” below.
In certain markets, some of our products require government approvals and some of our companies require specific operating licenses. Our operating companies remain compliant with the required licenses and approvals to operate within their respective markets and/or geographic territories. Approvals may also be required for the award of government contracts, and these are provided accordingly as required.
Environmental, Health and Safety Laws and Regulations
Our ongoing global operations are subject to a wide range of federal, state, local and foreign environmental, health and safety laws and regulations. These laws and regulations relate to the generation, storage, handling, use, release, disposal and transportation of hazardous materials and wastes, environmental cleanup, the health and safety of our employees and the fuel economy and emissions of the vehicles we manufacture. Compliance with these laws, regulations, permits, and approvals is a significant factor in our business. Certain of our operations require permits or other approvals from governmental authorities, and certain of these permits and approvals are subject to expiration, denial, revocation, or modification under various circumstances. We have expended resources, both financial and managerial, to comply with required regulations and we maintain procedures designed to foster and ensure compliance. We are committed to protecting our employees and the environment against any manufacturing-related risks. In addition, we may be responsible under environmental laws and regulations for the investigation, remediation, and monitoring, as well as associated costs, expenses, and third-party damages, including tort liability and natural resource damages, relating to past or present releases of hazardous substances on or from our properties or the properties of our predecessor companies, or third-party sites to which we or our predecessor companies have sent hazardous waste for disposal or treatment. Liability under these laws may be imposed without regard to fault and may be joint and several.
However, our failure to comply with applicable environmental, health and safety laws and regulations or permit or approval requirements could result in substantial liabilities or civil or criminal fines or penalties or enforcement actions, including regulatory or judicial orders enjoining or curtailing operations or requiring remedial or corrective measures, installation of pollution control equipment or other actions, as well as business disruptions, which could have a material adverse effect on our business, financial condition and operating results.
Employees
As of December 31, 2023, Ilustrato Pictures International Inc. had 5 employees in the Parent company and there were approximately 200 that are employees in our subsidiaries. The Parent employees and those employed by their respective subsidiary, are not currently represented by a labor union or collective bargaining agreement. We believe that our relationship with our employees is good.
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Our Operating Subsidiaries
ILUS provides strategic management oversight as well as financial, administration, marketing, and human resources support to the operating companies within its subsidiaries. Therefore, in terms of revenue generation ILUS itself relies on fees, dividends, and other distributions from its acquired operating companies as the principal source of cash flow to meet its obligations. Additional information regarding the cash flow and liquidity needs of the Parent can be found in the Liquidity and Capital Resources section of Management’s Discussion and Analysis of Financial Condition and Results of Operations.
ILUS currently has two distinct Divisions. The respective operating companies within each division are listed below:
| 1. | Emergency & Response Division (Special Purpose Vehicle - SAML) |
| a. | Firebug Mechanical Equipment LLC |
| b. | The Vehicle Converters LLC |
| c. | Bright Concept and protection System LLC |
| d. | Bull Head Products Inc. |
| e. | Georgia Fire & Rescue Supply LLC | |
| f. | AL Shola Al Modea Safety and Security LLC. | |
| g. | E-Raptor |
| h. | AL Shola Al Modea Safety and Security LLC. |
| 2. | Industrial & Manufacturing Division (Special Purpose Vehicle - QIND) |
| a. | AL Shola Al Modea Gas and Distribution LLC |
| 3. | Mining & Renewable Energy (subsidiary under ILUS parent company) |
| a. | Replay Solutions LLC. |
Emergency Response Technologies Inc. (Special Purpose Vehicle - SAML)
SAML is focused on the emergency response sector through its wholly owned subsidiary, Emergency Response Technologies Inc. (“ERT”). SAML aims to provide technology that protects communities, front-line personnel, and assets by acquiring technology and solutions for the emergency response sector. This sector includes Fire and Rescue Services, Law Enforcement, Emergency Medical Services and Emergency Management.
Firebug Mechanical Equipment LLC (Firebug Group – U.A.E.)
FireBug is a firefighting equipment and vehicle manufacturer which specializes in disruptive water mist technology and rapid response vehicles. FireBug’s equipment is designed to offer increased firefighter safety with reduced water consumption. This technology enables smaller, more cost-effective vehicles for rapid fire and emergency response. The company was formed in the U.A.E. and currently operates from the following location:
| ● | Warehouse G04, 79th Street, DIRC Warehouse Complex, DIP 2, Dubai, United Arab Emirates |
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The FireBug range of products consists of the following:
| 1. | MistNozzle handheld firefighting nozzles |
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 |
The MistNozzle handheld firefighting nozzles is a specialist firefighting nozzle/branch, which produces a fine water mist enabling it to extinguish multiple classes of fires without the use of chemical agents. The product is designed to increase efficiency, utilize less water, and increase firefighter safety. The MistNozzle range is designed, developed and manufactured in the UK. It uses proven micron technology from the fixed fire suppression system industry. The MistNozzle uses science to provide superior fire cooling and extinguishing. Its low-pressure water mist technology makes it more efficient than comparative firefighting nozzles. The MistNozzle has one-click switch-function technology, allowing the user to easily transition between Jet Mode and Water Mist Mode, minimizing room for error and ensuring safe mode selection. The plug-and-play functionality of the MistNozzle works with most existing hose types on most existing fire trucks. The nozzle has been specifically designed for ease of use with minimal training required for safe and effective use. With water being a valuable resource the world over, the MistNozzle deliberately uses less water during operation. The water mist produced by the MistNozzle absorbs 2257kj of energy per liter verses conventional technology which absorbs 335kj per liter. The MistNozzle also combats the effects of smoke within the fire environment, providing effective and in some cases, lifesaving smoke scrubbing capability.
| 2. | Mongoose external firefighting lance |
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FireBug’s Mongoose is a handheld firefighting nozzle with an extension lance that allows it to be inserted from the exterior of a structure into an area such as a room (compartment) to cool the area and suppress the fire. The Mongoose system is comprised of the water mist attack nozzle and a battery-operated hole cutting drill. Either the drill or the firefighter’s compartment entry tools are used to breach the structure and create the necessary hole through which the Mongoose is inserted. This method provides safer access to the compartment. The Mongoose has been designed to ensure the correct kinetic energy will overcome the pressures created by the fire. Water mist droplets are transformed into steam by the heat which consumes energy, removes oxygen, and consequently cools the gases and inhibits re-ignition. The Mongoose can deliver 40–50-micron water mist droplets covering a large surface area into a compartment which rapidly cools the area, scrubs the smoke, and suppresses the fire. The Mongoose is unique in that it can operate on an existing fire truck on existing hose lines, without requiring a separate pump and hose reel.
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| 3. | MistMax and Maverick firefighting pumps |
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FireBug’s MistMax is a portable low-pressure water mist fire suppression skid. The self-contained skid unit is designed to fit in a standard pick-up truck or on a UTV such as the E-Raptor electric UTV. The MistMax is an easy-to-use, lightweight, and reliable solution which can be used by both non-technical operators and experienced firefighters. The MistMax uses Firebug’s proprietary technology including a customized eductor mixer, a specialized pulsating diaphragm pump, a front winding geared hose reel, easy to use control panel, custom engineered baffled water tank and the Mini MistNozzle which features Firebug’s water stream colliding and atomizing technology.
FireBug’s Maverick is a self-priming, high-water volume, light portable pump which is designed as a multi-purpose firefighting skid unit that can be portable or permanently fixed in a firefighting vehicle. It can operate a hose reel or lay flat hose connected to a water supply tank or it can lift water from an open water source or obtain it from a pressure-fed supply such as a floating pump.
| 4. | Floating Pumps |
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Firebug offers a range of floating pumps which are designed for pumping water from streams, lakes, hard-to-reach sources of water, or flooded areas. The range of floating pumps offers practical features and easy-to-use operation. Features include high impact resistance, compact size and lightweight, powerful Honda or Briggs & Stratton engines, bronze impellers for marine use where required, specialized strainers and optional external fuel tanks.
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| 5. | Firefighting BacPac. |
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Firebug’s BacPac has been designed to provide rapid response firefighting capabilities using either water, foam or additive. The BacPac system contains a sophisticated internal mechanical rotor, which is used in the generation of WaterMist or foam (RAFS foam). The spindle and impellor rotate at high speeds mixing the foam that allows optimum extinguishing. The device increases the range of the discharge by at least 200% and is 6 times more efficient than any other known foam system, including CAFS.
| 6. | E-Raptor Commercial Electric Utility Vehicle |
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Manufactured by FireBug, the E-Raptor range consists of commercial electric utility vehicles for several rugged applications. The E-Raptor 6x6 is the world’s only 6-wheel electric utility vehicle. With 80km range on a single charge, the E-Raptor is fit for most industrial, agricultural, and rapid emergency response applications. The E-Raptor can carry a maximum load weight of 3500 Lbs. The E-Raptor range is manufactured by FireBug as it complements its rapid response firefighting vehicle solutions for confined and congested spaces.
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| 7. | Rapid Intervention Vehicles |
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FireBug’s rapid intervention vehicle solutions range from small electric utility vehicles with bespoke firefighting systems to pick-up trucks with firefighting and rescue systems, right up to customized firefighting appliances. FireBug specializes in providing bespoke vehicle solutions for rapid emergency response in congested areas, industrial facilities, shopping malls, marinas, airports, resorts, and communities which require their own firefighting or rescue vehicle capability.
| 8. | Lightweight Co-Polymer Vehicle Bodies and Water Tanks |
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FireBug manufactures high-quality, lightweight co-polymer vehicle bodies and tanks primarily for the emergency response sector. Depending on customer requirements, FireBug provides only the tank or vehicle superstructure or the fully equipped complete vehicle. Utilizing the latest in plastic cutting and welding technology, FireBug produces its plastic vehicle bodies and tanks from a highly durable and recyclable plastic material which has a 25-year guarantee.
Intellectual Property
FireBug’s patents are listed below:
| Category | Short title | Long Title | Reference | |||
| Patent | BacPac | Apparatus and method for fighting fires | GB2520561 | |||
| Patent | Spinning Regulating Unit | Fluid mixer device and method | GB2548074 | |||
| Patent | Mongoose | Fire-fighting apparatus and method of firefighting | GB2568684 |
No patents have been licensed from third parties.
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Competition
Below is some of FireBug’s competitors and competitive advantages:
| Competitor Name | Competitor of | FireBug Advantages | ||
| Oshkosh Corp - Pierce Manufacturing | FireBug | patented water mist technology & lightweight polypropylene rapid response vehicle technology | ||
| REV Fire Group - Ferrara, KME, Spartan, E-ONE, Smeal | FireBug | patented water mist technology & lightweight polypropylene rapid response vehicle technology | ||
| IDEX Corporation | FireBug | patented water mist technology & lightweight polypropylene rapid response vehicle technology | ||
| Rosenbauer | FireBug | patented water mist technology & lightweight polypropylene rapid response vehicle technology | ||
| Task Force Tips | FireBug | patented water mist technology in firefighting equipment | ||
| Akron Brass | FireBug | patented water mist technology in firefighting equipment | ||
| Elkhart Brass | FireBug | patented water mist technology in firefighting equipment | ||
| Delta Fire | FireBug | patented water mist technology in firefighting equipment | ||
| Ziegler | FireBug | patented water mist technology & lightweight polypropylene rapid response vehicle technology | ||
| Iveco Magirus | FireBug | patented water mist technology & lightweight polypropylene rapid response vehicle technology | ||
| WS Darley | FireBug | patented water mist technology & lightweight polypropylene rapid response vehicle technology | ||
| United Fire | FireBug | patented water mist nozzle technology for more effective and efficient firefighting equipment & fixed fire suppression systems | ||
| Safe Fleet | FireBug | patented water mist nozzle technology for more effective and efficient firefighting equipment & fixed fire suppression systems | ||
| United Safety & Survivability Corp | FireBug | patented water mist nozzle technology for more effective and efficient firefighting equipment & fixed fire suppression systems | ||
| Marioff | FireBug | patented water mist nozzle technology for more effective and effective fixed fire suppression systems | ||
| Ansul | FireBug | patented water mist nozzle technology for more effective and efficient firefighting equipment & fixed fire suppression systems | ||
| Western States Fire Protection | FireBug | patented water mist nozzle technology for more effective and efficient firefighting equipment & fixed fire suppression systems | ||
| Kidde Fire Systems | FireBug | patented water mist nozzle technology for more effective and efficient firefighting equipment & fixed fire suppression systems |
Employees
As of December 31, 2023, we had approximately 18 employees in Firebug Group. The employees are not currently represented by a labor union or collective bargaining agreement. We believe that our relationship with our employees is good.
The Vehicle Converters LLC
The Vehicle Converters (TVC) is a specialist vehicle converter which is operated from Warehouse G04, 79th Street, DIRC Warehouse Complex, DIP 2, Dubai, United Arab Emirates.
On 25 March 2021 ILUS, our parent company, acquired 100% of the brand name and all other rights, title, and interest in The Vehicle Converters a company beneficially owned by Danny Kourosh (The “Seller”) for the sum of $20,500 (Twenty Thousand Five Hundred) in consideration.
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The Vehicle Converters have operated for more than 15 years fabricating and converting specialized vehicles for specialist applications such as mobile clinics, ambulances, military transportation, oil, and gas, camping vehicles and mobile food trucks. The company focuses on sales in the Middle East and North African markets.
The Vehicle Converters completes various types of vehicle conversions as per customer requirements. Some examples can be found below:
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Competition
A list of TVC’s competitors is provided below:
| ● | Bespoke Trailers | |
| ● | BOTT Vehicle Conversions | |
| ● | DAW Automobile Assembly FZCO | |
| ● | Transtech |
Employees
As of December 31, 2023, we have 1 employee in Vehicle Converters. The employee is currently not represented by a labor union or collective bargaining agreement. We believe that our relationship with our employee is good. Employees from Firebug Mechanical Equipment L.L.C., which operates from the same manufacturing facility in Dubai, United Arab Emirates, are used for vehicle conversions by The Vehicle Converters.
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Bright Concept Detection and Protection System LLC
Bright Concept Detection and Protection System LLC (BCD Fire) designs, installs, commissions, maintains and distributes fire protection, fire detection, evacuation, access control and security systems across the Middle East region. The company is located at Warehouse G04, 79th Street, DIRC Warehouse Complex, DIP 2, Dubai, United Arab Emirates.
BCD Fire delivers turnkey projects which incorporate specification, design, installation, support, and maintenance at sites such as hotels, shopping malls, residential and commercial buildings as well as industrial facilities.
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Competition
A list of BCD Fire’s competitors is provided below:
| ● | MAF Fire Safety & Security LLC | |
| ● | Blue Flame Fire Fighting LLC | |
| ● | Safety Line LLC | |
| ● | BTFS Fire Protection |
Employees
As of December 31, 2023, BCD Fire had approximately 2 employees. The employees are currently not represented by a labor union or collective bargaining agreement. We believe that our relationship with our employees is good.
Bull Head Products Inc.
Bull Head Products Inc. is a specialist aluminum truck bed manufacturer and vehicle converter located at 387 Thorngrove Pike, Kodak Tennessee, 37764, USA.
On January 1, 2022, ILUS, our parent company, acquired 100% of the 1000 (one thousand) shares of Bull Head Products Inc., a company beneficially owned by George Joe Chudina and Dorothy Lee Chudina (The “Sellers”). As consideration, the Buyer agreed to pay the Sellers an aggregate cash purchase price of $500,000 (Five Hundred Thousand) on the condition that certain agreed Targets and Key Performance indices are met. The Buyer paid a fixed sum of $300,000 (Three Hundred Thousand) upon closing and the remaining $200,000 (Two Hundred Thousand) will be paid by the Buyer over a one-year after closing to the extent the business operations of Bull Head Products Inc. meet mutually agreeable performance thresholds referenced in Exhibit B in the SPA filed with this Form 10 and in the schedule below. The Buyer also issued the Sellers 6,750 (Six Thousand Seven Hundred and Fifty) restricted Class F Preferred Shares in Buyer.
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To Qualify for the 2nd Payment of $ 100,000, a minimum turnover of $320,000 (Excluding all taxes) must be achieved for the period from January 1, 2022, to June 30, 2022, or as per the following table. To Qualify for the 3rd Payment of $ 100,000, minimum turnover of $320,000 (Excluding all taxes) must be achieved for the period from 1 July 2022, to December 31, 2022, or as per the following table:
| Turnover Target | Percentage of Target | Aggregate Payment | |||||||
| $ | 320,000 | Greater than 100 | % | $ | 100,000 | ||||
| $ | 320,000 | 90-99 | $ | 90,000 | |||||
| $ | 320,000 | 80-89 | $ | 80,000 | |||||
| $ | 320,000 | 70-79 | $ | 70,000 | |||||
| $ | 320,000 | 60-69 | $ | 60,000 | |||||
| $ | 320,000 | 50-59 | $ | 50,000 | |||||
| $ | 320,000 | less than 50 | % | $ | 0 | ||||
Bull Head Products designs, manufactures and installs its aluminum truck beds and vehicle conversions for customers across the United States. Its customers come from several sectors, including wildland fire fighting. The company’s products are built with 100% aluminum for optimal performance and reliability.
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Bull Head Products operates from its Kodak, Tennessee facility, with many truck beds and conversions being completed and installed in the facility and many being shipped to dealers and distributors for installation.
During the past 18 months, Bull Head Products faced some supply chain issues as a direct result of the disruption in supply chains across the world due to the Covid-19 pandemic. Whilst every effort is made to source materials from additional suppliers, this can sometimes lead to an increase in price. The company has therefore increased its principal suppliers of raw materials to the following suppliers:
| ● | Eastern Metal Supplies | |
| ● | Tennessee Valley Fasteners | |
| ● | Buyers Products Company | |
| ● | Fastenal | |
| ● | McMaster Carr | |
| ● | Joseph T. Ryerson | |
| ● | Triple S Steel |
Bull Head Products manufactures and installs its products for both private individuals and businesses who require a specific type of aluminum flatbed for their truck or fleet of trucks. The company services a wide range of new and repeat customers and there is no dependency on any one single customer.
Intellectual Property
Bull Head Products Inc has a Registered Trademark for the company logo. Originally it was registered under the name of George Chudina, and then changed to Bull Head Products Inc. and has subsequently been renewed.
| Category | Title | Reference | ||||
| Trademark | Bull Head Products Mark | 3397385 | ||||
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The above trademark certificate is provided in the Exhibits.
Competition
As Bull Head Products manufactures all of its truck beds from 100% aluminum, it does not currently have direct competitors to the company’s knowledge. Companies which offer comparable products use a combination of aluminum sheeting and steel frames which are prone to rust and decay. However, a list of some these competitive companies is listed below:
| ● | CM Truck Beds | |
| ● | Hillsboro Industries | |
| ● | Pine Hill Manufacturing | |
| ● | Knapheide Manufacturing |
Employees
As of December 31, 2023, we had approximately 10 employees in Bull Head Products. The employees are currently not represented by a labor union or collective bargaining agreement. We believe that our relationship with our employees is good.
Georgia Fire & Rescue Supply LLC
Georgia Fire & Rescue Supply LLC (Georgia Fire) is a distributor of equipment to the firefighting, law enforcement and Emergency Medical Services industries. The company is located at 107 P Rickman Industrial Drive, Canton, Georgia, 30115, USA.
On February 22, 2022, ILUS, our parent company, acquired 100% of the shares of Georgia Fire & Rescue Supply LLC, a company beneficially owned by Barbara Jean Whidby (The “Seller”). As consideration, the buyer agreed to pay the seller an aggregate cash purchase price of $900,000 (Nine Hundred Thousand Dollars) on the condition that certain agreed Targets and Key Performance indices are met referenced in Exhibit B in the SPA filed with this Form 10. The Buyer paid a fixed sum of $680,000 (Six Hundred Eighty Thousand) upon closing and the remaining $220,000 (Two Hundred Twenty Thousand Dollars) will be paid by the Buyer over a one-year period after closing to the extent the business operations of Georgia Fire & Rescue Supply, LLC meet mutually agreeable performance thresholds displayed in table below. The Buyer also issued the seller 1,500 (One Thousand Five Hundred) restricted Class F Preferred Shares in Buyer.
Minimum Turnover (gross revenue) for 2022 and Quarter 1 (Excluding all taxes)- must be achieved for the period from January 1, 2022, to December 31, 2022, or as per the following table:
| 2022 Turnover Target | Q1 Turnover Target | Percentage of Target | Aggregate Payment | ||||||||||
| $ | 3,200,000 | $ | 800,000 | Greater than 100 | % | $ | 170,000 | ||||||
| $ | 3,200,000 | $ | 800,000 | 90-99 | $ | 153,000 | |||||||
| $ | 3,200,000 | $ | 800,000 | 80-89 | $ | 136,000 | |||||||
| $ | 3,200,000 | $ | 800,000 | 70-79 | $ | 119,000 | |||||||
| $ | 3,200,000 | $ | 800,000 | 60-69 | $ | 102,000 | |||||||
| $ | 3,200,000 | $ | 800,000 | 50-59 | $ | 85,000 | |||||||
| $ | 3,200,000 | $ | 800,000 | less than 50 | % | $ | 0 | ||||||
The company receives enquiries and orders through the following means:
| ● | e-commerce website - https://www.georgiafirerescue.com | |
| ● | retail location in Canton, Georgia | |
| ● | field sales representatives who call on and demonstrate products to potential customers | |
| ● | participation in industry trade shows and events. |
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The company’s products are delivered to the customer from its distribution warehouse in Canton, Georgia or shipped directly from the manufacturer to the end customer.
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Georgia Fire has a customer base of over 1,800 customers and currently distributes over 95 brands as follows:
| AED Superstore | Flamefighter Corp | Pollard Water |
| Agility Tech Corp | Fox Fury | Poly Tech |
| Airstar Space Lighting | FoxFire | Professional Life Support |
| Ajax Rescue Tools | Froggy’s Fog | R & B Fabrications |
| Ansell | Full Source | Ram Air Gear Dryer |
| Black Diamond | Gemtor | Rescue Technology |
| Bluewater | Groves-Ready Rack | Rhyno - We Cut the Glass |
| Boston Leather | Helly Hansen | Ringers Gloves |
| Boswell Oil | Hi-Lift | RIT Safety Solutions |
| Brightstar | Highwater Hose Inc | Rocky Boots |
| Brooks Equipment | Holmatro | RollNRack |
| Bullard | Husky Portable | S&H Fire Products |
| BullDog Hose | Innotex | Sam Carbis Solutions Group |
| C & S Supply | Kroll | SCI Structural Composites |
| CET Fire Pumps Mfg. | Lakeland Fire | Smoke Trainer |
| CMC Rescue | Lakeland Industries Inc | Starrett |
| Con-Space | Leader-Tempest | STC Footwear |
| Council Tool | Lifeliners | Streamlight |
| Cox Reels | Lion Boots by Thorogood | Super Vac |
| Denko Foam | Logistics | Task Force Tips |
| Desert Diamond Industries | Mercedes Textiles Limited | Team Equipment Inc |
| Dewalt | National Foam | Tele-Lite |
| Diablo | Nightstick | Thorogood Boots |
| Dräger | Nupla | Trellchem |
| Dragon Fire Gloves | ORS | True North Gear |
| Duo Safety Ladders | Paratech | Turtle Plastics |
| ESS Eye Safety Systems | Pelican | Unifire |
| EVAC Systems | Performance Adv. Co. | Vanguard Safety Wear |
| Fire Hooks Unlimited | Phillips | Warthog |
| Firefly Signs | Plastix Plus | Wehr Engineering |
| FireQuip | PMI | Zephyr Tools |
| FireBug | Ziamatic Corporation |
Georgia Fire is an official Dealer of Holmatro Products and partakes in the Holmatro Coop Marketing Program. Through this program, Georgia Fire & Rescue Supply has access to logo’s, product images and information, and a dealer reward scheme. All promotions of the Holmatro range of products by Georgia Fire & Rescue Supply have to be reviewed and approved by Holmatro.
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Competition
A list of Georgia Fire’s competitors is provided below:
| ● | Fire Safety USA | |
| ● | MES Fire | |
| ● | Cascade Fire Equipment | |
| ● | All Hands Fire | |
| ● | US Fire & Safety Equipment Co |
Employees
As of December 31, 2023, we had approximately 14 employees in Georgia Fire. The employees are currently not represented by a labor union or collective bargaining agreement. We believe that our relationship with our employees is good.
AL Shola Al Modea Safety and Security LLC
On December 13, 2022, ILUS, our parent company, signed a Share Purchase Agreement to acquire 51% control of AL Shola Al Modea Safety and Security LLC (ASSS), an established fire safety company registered in the United Arab Emirates. The total purchase price is up to $714,000. The first tranche of $100,000 has been paid and the remaining three tranches with a total of $610,00 are conditional upon certain agreed Targets and Key Performance indices are met referenced in clause 1.02 in the SPA filed with this Form 10-K and scheduled below.
| Tranche | Timeframe and Conditions | Amount | Paid By | Paid To | |||||
| 1 | Payment within 7 days of closing proposed transaction – Time of signing SPA. | $ | 100,000 | ILUS | ASSS | ||||
| 2 | To be Paid as a Loan to the Seller within 45 days after signing the SPA and Loan Agreement (Exhibit 3). The loan would be converted into Equity if the Company meets the agreed Revenue Forecast (Exhibit 2) and achieves a valuation of $2,000,000 (Two Million USD), until then it would be considered a loan. Repayment of the Loan shall be made as per the Loan Agreement (Exhibit 3) before disbursement of dividends. | $ | 306,000 | ILUS | ASSS | ||||
| 3 | Paid after end of H1 2023, provided forecasted revenue and EBITDA forecasts are met for the first 6 months of 2023. (Exhibit 2) | $ | 200,000 | ILUS | ASSS | ||||
| 4 | Paid after end of 2023, provided forecasted revenue and EBITDA forecasts are met for 2023. (Exhibit 2) | $ | 200,000 | ILUS | ASSS | ||||
| 5 | Paid after end of H1 2024, provided forecasted revenue and EBITDA forecasts are met for the first 6 months of 2023. (Exhibit 2) | $ | 214,000 | ILUS | ASSS | ||||
Exhibit 2 - Target Financials as per ASSS / Agreed Revenue Forecast to be achieved.
| USD | 2023 | 2024 | 2025 | 2026 | 2027 | |||||||||||||||
| Revenues | 1.987.747 | 2.450.647 | 2.804.629 | 2.940.776 | 3.076.923 | |||||||||||||||
| EBITDA | 238.530 | 367.597 | 420.694 | 470.524 | 523.077 | |||||||||||||||
Competition
A list of ASSS’s competitors is provided below:
| ● | MAF Fire Safety & Security LLC | |
| ● | Blue Flame Fire Fighting LLC | |
| ● | Safety Line LLC | |
| ● | BTFS Fire Protection |
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Employees
As of December 31, 2023, we had approximately 34 employees in AL Shola Al Modea Safety and Security LLC. The employees are currently not represented by a labor union or collective bargaining agreement. We believe that our relationship with our employees is good.
Quality Industrial Corp. (Special Purpose Vehicle - QIND)
On May 28, 2022, Modern Art Foundation Inc. (“Modern Art”) Rene Lauritsen and Fastbase Holding Inc. agreed to transfer 77,669,078 shares of common stock in Wikisoft Corp. to Ilustrato Pictures International Inc. (“Ilustrato”). Pursuant to a Stock Transfer Agreement, the company purchased the shares for an aggregate amount of $500,000. Wikisoft Corp. has since changed its name to Quality Industrial Corp. and its OTC Ticker was changed from WSFT to QIND.
As a result of the above transaction, there was a change in control of the Company. The 77,669,078 shares transferred amounts to approximately 77% of the outstanding shares in Quality Industrial Corp at the time. Consequently, ILUS now unilaterally controls the election of our board of directors and the direction of QIND. As a result of the Change of Control, Mr. Quintal resigned as Chairman of the Board, and Mr. Link was appointed as the Chairman of the Board.
As of March 27, 2024, we entered into a definitive Stock Purchase Agreement (the “Stock Purchase Agreement”) with the shareholders of Al Shola Al Modea Gas Distribution LLC (“ASG” or “Al Shola Gas”) to acquire a 51% interest in ASG. The Closing of the transaction took place when both parties signed the definitive Stock Purchase Agreement. Al Shola Gas is an Engineering and Distribution Company in the liquefied petroleum gas (“LPG”) Industry in the United Arab Emirates and was established in 1980. The company is one of the region’s leading suppliers and contractors of LPG centralized pipeline systems and is approved by The General Directorate of Civil Defense, Government of Dubai, as a Central Gas Contractor and LPG Supplier.
On April 1, 2024, after several failed effort negotiations, with the purpose of restructuring the deal and obtaining information from the selling shareholders of Quality International, the QI Purchase Agreement with Quality International was terminated by Quality International and subsequently cancelled by the Board of Directors of Quality Industrial Corp. The Company is in the process of unwinding the transaction and this Form 10-K amends the Annual Report on Form 10-K of Ilustrato Pictures International Inc. for the fiscal year ended December 31, 2022, as filed with the Securities and Exchange Commission on April 10, 2023.
We are filing this Form 10-K to restate our financial statements as of December 31, 2022, that were previously reported on the Original Filing and subsequent amendments. The following items have been amended to reflect the restatements:
Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Part II, Item 8. Financial Statements and Supplementary Data
Part IV, Item 15. Financial Statement Schedules and Footnotes
In addition, the Company’s Auditor has provided a new Audit Report as of the date of this filing in connection with this Form 10-K.
Al Shola Al Modea Gas Distribution LLC
On March 27, 2024, we entered into a definitive Stock Purchase Agreement with the shareholders of Al Shola Al Modea Gas Distribution LLC (“ASG” or “Al Shola Gas”) to acquire a 51% interest in ASG. The Closing of the transaction took place upon the execution of the definitive Stock Purchase Agreement. Al Shola Gas is an engineering and distribution company in the LPG industry in the United Arab Emirates and was established in 1980. The company is one of the region’s leading suppliers and contractors of LPG centralized pipeline systems and is approved by The General Directorate of Civil Defense, Government of Dubai, as a Central Gas Contractor and LPG Supplier.
Al Shola Gas is ISO 9001 certified and offers a wide range of services including Consultation, Design, Supply, Installation, Maintenance, Distribution and Commissioning of Central Gas Systems. ASG provides a wide range of bespoke solutions across all LPG-related requirements.
The Parties agreed a “Purchase Price” of 51% shares for $10,000,000 (Ten Million USD), which is payable as follows:
| Tranche | Timeframe and Conditions | Amount | Paid By | Paid To | ||||||
| 1 | $9 million in National Exchange listed stock or cash to be paid to Seller. Payment in eight quarterly tranches over a period of 24 months, beginning from the first quarter following uplist to a National Exchange. Stock value to be protected by a make whole agreement/s and each tranche subject to a mutually agreed 12 months leak out agreement. | $ | 9,000,000 | QIND | ASG | |||||
| 2 | Within 12 months of closing and at the soonest possible time, $1 million cash payment to the Seller. | $ | 1,000,000 | QIND | ASG | |||||
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Pursuant to the terms of the Stock Purchase Agreement, QIND will occupy two non-paid board seats including Chairman of the Board of Al Shola Gas and there shall be one other non-paid board seat for existing Al Shola Gas shareholders. QIND obtained immediate control upon execution of the Agreement. Full operational control will be retained by existing shareholders and management unless the new Board of Directors determines otherwise due to a breach of the Stock Purchase Agreement, ongoing poor performance, or if structural changes are recommended in line with the laws governed by the Stock Purchase Agreement which will be decided and approved by the new Board of Directors of the Company.
The current company activities are:
| 1) | CENTRAL GAS SYSTEMS (LPG): |
| ● | Design, Supply, Construction, Operation and Maintenance (with DCD certification) |
| ● | Design Consultancy & Project Management. |
| ● | Repair and Preventive Maintenance |
| ● | Billing & Monitoring Systems |
| 2) | LPG SUPPLY & DISTRIBUTION (Cylinders & Bulk Supply) |
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| 3) | CENTRAL GAS SYSTEM (LPG) PROJECTS |
Activities include design, supply & installation of above & belowground LPG tanks, including all pipeline & instrumentation. ASG specializes in the installation of:
| ● | Installation & Commissioning of LPG, Propane and SNG Compatible Systems |
| ● | Pressure Reducing & Distribution Stations |
| ● | Gas Leak Detection Systems |
| ● | LPG Metering Stations |
| ● | Vaporizer Systems |
| ● | Deluge, Sprinklers systems and related Safety systems. |
ASG designs and develops extensive LPG pipeline networks for Commercial Buildings, Mixed use Apartment Complexes, Shopping Complexes, Food Courts, Heavy Industries, Labor Accommodations, Catering Units, Commercial Kitchens, and Restaurants.
ASG highlights the importance of safety in its projects as per the norms and standards laid out by Dubai Civil Defense. Along with ASG’s projects, ASG issue warranty and safety standard certificates as per the Dubai Civil Defense guidelines. The equipment and accessories used by ASG are as required by International Safety Standards.
LPG DISTRIBUTION - CYLINDERS
ASG has one of the leading LPG distribution networks in Dubai, United Arab Emirates. Currently, the company has 56 trucks operating in Dubai. ASG’s sales team is well supported by a centralized call center and strong support team as well as administration staff. On an average, ASG distributes over 20,000 LPG Cylinders a month.
LPG DISTRIBUTION – BULK GAS
ASG is an approved supplier for Bulk LPG in the market. The company procures its Bulk LPG from Emirates General Petroleum Corporation (EMARAT). Currently, ASG distributes over 500,000L of Bulk LPG in Dubai. As per the expansion plans ASG will be in a position to deliver over 1,000,000L of Bulk LPG every month by the end of 2024. Currently, the fleet has two 18,000L Capacity Trucks, and one 25,000L Capacity Truck for the purpose of Bulk LPG supply.
Intellectual Property
ASG does not own registered intellectual property rights. The Company’s intellectual property resides in its specific engineering processes, manpower, capability, compliance, and certifications that have made it a trusted service provider and supplier in its region.
ASG has the following certifications:
Type
| ISO 9001 - Quality Management System |
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Competition
A list of some of ASG’s competitors is provided below:
Royal Development Gas
Royal Development for Gas Works was established in 1994 and is principally engaged in Design, Supply, and Installation of Central Gas System Works throughout UAE to become the foremost Central Gas System Company in the Middle East, Royal Gas’s family has been an instrumental part of the growth of the organization. We execute projects based on ALL of the applicable international standard and code of practice. Our current projects are being executed in the UAE, Oman, Lebanon, and Africa with a workforce of more than 450 Employees including professionally trained Engineers and Technicians are overlooking ongoing projects. The Company has completed and handed over more than +2400 projects. Royal Gas is Servicing more than 1800 projects all over the UAE including Operation & Maintenance + LPG/Propane/Butane Distribution, CNG, and LNG, maintaining its status as one of the fastest-growing Central Gas Distribution companies within the region.
Al Fanar Gas
Al Fanar Gas is an oil and gas company in the U.A.E.’s leading, specializing in distribution systems for Liquefied Petroleum Gas (LPG), Synthetic Natural Gas (SNG) and Natural Gas (NG) and headquartered in Abu Dhabi since 1990. Al Fanar was the first company in the Emirate of Abu Dhabi to design, procure and install a natural gas network in a residential development in the UAE.
Lahej & Sultan Gas Distribution
Since its establishment in 1981, Lahej & Sultan (L&S) has been a service provider for the following services: Cleaning Services, Security Services, Gas Distribution, Gas Pipeline connection and Pest Control.
Al Shola Gas LLC’s advantages over competitors include but are not limited to:
| ● | Over 34 years of experience within the LPG industry and an extensive track record of delivery to Central Gas customers. |
| ● | Affiliated and approved by the General Directorate of Civil Defence, Government of Dubai, UAE, as a ‘Central Gas Contractor’ and ‘LPG Supplier’. |
| ● | ISO 9001-2015 certification reflects our dedication to quality management systems, ensuring that every aspect of our operations meets the most stringent industry standards |
Employees
We have approximately 96 employees in Al Shola Gas LLC. The employees are currently not represented by a labor union or collective bargaining agreement. We believe that our relationship with our employees is good.
Replay Solutions
Replay Solutions was incorporated by ILUS on March 1, 2022. The company recycles and recovers precious metals from electronic and other forms of waste through the use of mechanical and chemical treatments. The company’s “closed loop” concept utilizes electronic waste (E-Waste) and several other types of waste as resources not only to extract precious metals but to reuse all materials such as the plastics which are obtained. The company recycles cleanly, safely, and sustainably from items such as, but not limited to Print Circuit Boards (PCB), Cable wire and car radiators. The waste is shredded, crushed, and ground into powder form before an airflow and an electrostatic separator are used to separate the materials into metal and fibers. From further refining processes, the various precious metals are obtained.
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Competition
A list of Replay Solution’s competitors is provided below:
| ● | Enviroserve |
| ● | Evciler |
| ● | Mint Innovation |
| ● | Muller Guttenbrunn Group |
Employees
As of December 31, 2023, we had approximately 2 employees in Replay Solutions. The employees are currently not represented by a labor union or collective bargaining agreement. We believe that our relationship with our employees is good.
Corporate History
We were incorporated as Superior Venture Corp. on April 27, 2010, in the State of Nevada for the purpose of selling wine varietals. On November 9, 2012, we entered into an Exchange Agreement with Ilustrato Pictures Ltd., a British Columbia corporation (“Ilustrato BC”), whereby we acquired all of the issued and outstanding common stock of Ilustrato BC and the shareholders of Ilustrato BC received 1,200,000 shares of our common stock, which represented approximately 15% of our outstanding common stock following the acquisition. On November 30, 2012, Ilustrato BC transferred all of its assets and liabilities to Ilustrato Pictures Limited, our wholly owned subsidiary in Hong Kong (“Ilustrato HK”).
Ilustrato BC was in the business of developing, for international release, feature theatrical films to be financed and distributed domestically by Chinese production companies.
On February 11, 2016, Barton Hollow, LLC, a Nevada limited liability company, and stockholder of the Company, filed an Application for Appointment of Custodian pursuant to Section 78.347 of the Nevada Revised Statutes in the District Court for Clark County, Nevada. Barton Hollow was subsequently appointed custodian of the Company by Order of the Court on Apri1 5, 2016. In accordance with the provisions of the Order, Barton Hollow thereafter moved to reinstate the Company with the State of Nevada, provide for the election of interim officers and directors, and call and hold a stockholder meeting.
On April 1, 2016, Barton Hollow, together with the newly elected director of the Company, caused the Company to enter into a Letter of Intent to merge with Cache Cabinetry, LLC, an Arizona limited liability company. Cache Cabinetry was a cabinet and design company headquartered in Scottsdale, Arizona that focused on the design and supply of kitchen furnishings to residential clients. Pursuant to the Letter of intent, the parties thereto would endeavor to arrive at, and enter a definitive merger agreement providing for the Merger. As an inducement to the members of Cache Cabinetry, LLC. to enter into the Letter of Intent and thereafter transact, the Company caused 360,000,000 shares of its common stock to be issued to the members.
Subsequently, on Apri1 6, 2016, the Company and Cache Cabinetry, LLC entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”). As a result, the stockholders of the Company elected Derrick McWilliams the President and Chief Executive Officer of Cache Cabinetry, LLC, who, along with Barton Hollow, ratified and approved the Merger Agreement and Merger
The Merger closed on June 3, 2016. Upon closing, Cache Cabinetry, LLC. merged into a newly created subsidiary of the Company with the members of Cache Cabinetry, LLC receiving shares of common stock of the Company as consideration, therefore. Upon closing of the Merger, Cache Cabinetry, LLC. was the surviving corporation in the merger and a wholly owned subsidiary of the Company.
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In August 2019 the Company amended its Articles of Incorporation to authorize it to issue up to two billion (2,000,000,000) shares, of which all shares are common stock, with a par value of one-tenth of one cent ($0.001) per share. The Company also created the following 30,000,000 preferred shares with a par value of $0.001 to be designated Class A, B and C.
Class A – 10,000,000 preferred shares that convert at 3 common shares for every 1 preferred class A share and voting rights of 500 common shares for every 1 preferred class A share. All 10,000,000 preferred class A shares have been issued to the Company’s CEO.
Class B – 10,000,000 preferred shares that convert at 3 common shares for every 1 preferred class B common share.
Class C – 10,000,000 preferred shares that convert at 2 common shares for every 1 preferred class C common share with voting rights of 100 common shares for every 1 preferred class C share.
On February 14, 2020, the Company designated preferred Class D shares – 60,741,000 preferred shares; par value $0.001 that convert at 500 common shares for every 1 preferred class D common share with voting rights of 500 common shares for every 1 preferred class D share.
On May 28, 2020, the Company designated preferred Class E shares - 5,000,000 preferred shares; par value $0.001; non-cumulative. Dividends are 6% a year commencing a year after issuance. 2.25% must be redeemed per quarter, commencing one year after issuance, and shall be redeemed at 130% premium to the redemption value. These shares do not have voting rights.
On June 10, 2020, the Company entered into a definitive agreement with FB Fire Technologies Ltd. for the conversion of debt. The shareholders were issued 2,500,000 shares of Class E Preferred Stock and BrohF Holdings Ltd., a creditor of the company was issued 672,175 shares.
On May 29, 2020, the 10,000,000 preferred A and preferred 60,741,000 D shares were transferred to FB Technologies Global, Inc.
On August 26, 2021, the company amended Class B Shares to 100,000,000 shares with par value $0.001 that convert at 100 common shares for every 1 preferred Class B Share with voting rights of 100 common shares for every 1 preferred class B share. Dividends to be paid according to the company’s dividend policy agreed by the board from time to time.
On July 20, 2021, the Company designed preferred Class F shares – 50,000,000 preferred shares; par value $0.001 that convert at 100 common shares for every 1 preferred Class F share with no voting rights and no dividends.
The company’s current subsidiaries were acquired on the following dates:
January 26, 2021, acquired Firebug Mechanical Equipment LLC
March 25, 2021, acquired The Vehicle Converters LLC
April 13, 2021, acquired Bright Concept Detection and Protection System LLC
February 11, 2022, acquired Bull Head Products Inc.
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March 31, 2022, acquired Georgia Fire & Rescue Supply LLC
May 28, 2022, acquired Wikisoft Corporation - now Quality Industrial Corp. (“QIND”)
December 13, 2022, acquired Al Shola Al Modea Safety and Security LLC
January 5, 2024, Acquired Samsara Luggage Inc. (“SAML”)
On March 26, 2024, the Company amended its Articles of Incorporation to authorize it to issue up to three and a half billion (3,500,000,000) common shares, with a par value of one-tenth of one cent ($0.001) per share.
Smaller Reporting Company
The Company is a “smaller reporting company” as defined in Rule 12b-2 under the Exchange Act. There are certain exemptions available to us as a smaller reporting company, including: (1) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes Oxley Act; (2) scaled executive compensation disclosures; and (3) the requirement to provide only two years of audited financial statements, instead of three years. As long as we maintain our status as a “smaller reporting company”, these exemptions will continue to be available to us.
Address and Market for Securities
Our offices are located at the following locations:
| 1. | 26 Broadway, Suite 934, New York, NY 10004 |
| 2. | Al Marsa Street 66, 11th Floor, Office 1105, Dubai Marina P.O. Box 32923, Dubai |
Our primary office telephone number is +1 917-522-3202. Our website address is https://ilus-group.com and our email address is ir@ilus-group.com. Information contained on, or accessible through, our website is not a part of, and is not incorporated by reference into this Form 10-K.
Our common shares are quoted on the OTC Pink under the symbol “ILUS.” On December 31, 2023, the closing price for shares of our common shares as reported on the OTC Pink was $0.009 per share.
Additional Information
The public may read and copy any materials the Company files with the SEC in the SEC’s Public Reference Section, Room 1580, 100 F Street N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Section by calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, which can be found at http://www.sec.gov.
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ITEM 1A. RISK FACTORS
An investment in our securities involves a high degree of risk. In addition to the other information contained in this Registration Statement on Form 10-K, prospective investors should carefully consider the following risks before investing in our securities. If any of the following risks actually occur, as well as other risks not currently known to us or that we currently consider immaterial, our business, operating results and financial condition could be materially adversely affected. As a result, the trading price of our common stock could decline, and investors may lose all or part of their investment in our common stock. The risks discussed below also include forward-looking statements, and our actual results may differ substantially from those discussed in these forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements” in this Form 10. In assessing the risks below, you should also refer to the other information contained in this Form 10, including the financial statements and the related notes, before deciding to purchase any of our securities.
Risk Related to Covid 19
Our business and future operations may be adversely affected by epidemics and pandemics, such as the COVID-19 outbreak.
We may face risks related to health epidemics and pandemics or other outbreaks of communicable diseases, which could result in a widespread health crisis that could adversely affect general commercial activity and the economies and financial markets of the world as a whole. For example, the outbreak of COVID-19, which originated in China, was declared by the World Health Organization to be a “pandemic,” and spread across the globe. A health epidemic or pandemic or other outbreak of communicable diseases, such as the COVID-19 pandemic, poses the risk that we, or our current and potential business partners may be disrupted or prevented from conducting business activities for certain periods, the durations of which are uncertain, and may otherwise experience significant impairments of business activities, including due to operational shutdowns or suspensions that may be requested or mandated by national or local governmental authorities or self-imposed by us, our users or other business partners. While it is not possible at this time to estimate the full impact that COVID-19 could have on our business, potential users, or other potential business partners, the continued spread of COVID-19, the measures taken by the local and federal government, actions taken to protect employees, and the impact of the pandemic on various business activities could adversely affect our results of operations and financial condition. COVID-19 has not recently had any material impact on our operations, supply chain, liquidity, or capital resources. During the lockdowns we however saw significant shipping delays, consumer orders on hold due to budgetary restrictions as well as a slow-down in our planned acquisitions due to flight restrictions limiting on site due diligence. The company has as a mitigant to future COVID-19 outbreaks increased its number of suppliers of raw materials to reduce the risk of production capabilities and order back-logs.
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Risks Relating to Macro Conditions and Our Financial Condition
We have a substantial amount of goodwill on our balance sheet. Future write-offs of goodwill may have the effect of decreasing our earnings or increasing our losses.
We have obtained growth through the acquisition of Quality International. Under existing accounting standards, we are required to periodically review goodwill assets for possible impairment. In the event that we are required to write down the value of any assets under these pronouncements, it may materially and adversely affect our earnings. See the more detailed discussion appearing as part of our Management’s Discussion and Analysis of Financial Condition and Results of Operations and in our financial footnotes. The percentage of our goodwill and intangible assets compared to our total assets as of December 31, 2023, and December 31, 2022, were 13.8% and 14.7%, respectively.
Our ability to generate the significant amount of cash needed to service our debt obligations and our ability to refinance all or a portion of our indebtedness or obtain additional financing depends on many factors, many of which may be beyond our control.
As of December 31, 2023, we had $213,073 in cash and cash equivalents as compared to $169,273 as of December 31, 2022. We also had $22,825,113 in accounts receivable as of December 31, 2023. The duration of such receivables extends from 30 days to beyond 12 Months. Full payment is received only when a job/project is completed, and approvals are obtained. Provisions are created based on estimated irrecoverable amounts determined by reference to past default experience.
We normally grant our customers 30–90-day payment terms after credit sales, depending on their trading history and specific tender requirements (if applicable). However, in the fiscal year 2021, some of our distributors were affected by the COVID-19 outbreak which caused delays in their payment. In addition, some of our customers tend to require longer payment terms due to their longer payment processing procedures. Even though we believe that they are unlikely to default because of our long-term business relationships with them and our belief that the collectability risk is low based on our historical experience and collection history with them, there can be no assurances that these receivables will be collected.
Our ability to make scheduled payments on, or to refinance our obligations under, our debt, will depend on our financial and operating performance, which, in turn, will be subject to prevailing economic and competitive conditions and to the financial and business factors, many of which may be beyond our control. We cannot assure you that our business will generate sufficient cash flow from operations, that currently anticipated business opportunities will be realized on schedule or at all, or that future borrowings will be available to us in amounts sufficient to enable us to service our indebtedness and any amounts borrowed under future credit facilities, or to fund our other liquidity needs.
We will use cash to pay the principal and interest on our debt. These payments limit funds otherwise available for working capital, capital expenditures, acquisitions, collaborations, and other purposes. As a result of these obligations, our current liabilities may exceed our current assets. We may need to take on additional debt as we expand in our industry, which could increase our ratio of debt to equity. The need to service our debt may limit funds available for other purposes and our inability to service debt in the future could lead to acceleration of our debt and foreclosure on assets.
We cannot assure that we will be able to refinance any of our indebtedness or obtain additional financing as well as prevailing market conditions. As a result, we could face liquidity problems and might be required to dispose of material assets or operations to meet our indebtedness service and other obligations.
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Our projections are subject to significant risks, assumptions, estimates and uncertainties, including assumptions regarding future legislation and changes in regulations of the jurisdictions in which we operate, or seek to operate, our business. As a result, our projected revenues, market share, expenses and profitability may differ materially from our expectations.
We operate in a rapidly evolving and highly competitive industry and our projections are subject to the risks and assumptions made by management with respect to the respective industry. Operating results are difficult to forecast because they generally depend on our assessment of factors that are inherently beyond our control and impossible to predict with certainty, such as the timing of adoption of future legislation and regulations by different jurisdictions. Furthermore, if we invest in the development of new products or distribution channels that do not achieve commercial success, whether because of competition or otherwise, we may not recover the often material “up front” costs of developing and marketing those products and distribution channels or recover the opportunity cost of diverting management and financial resources away from other products or distribution channels.
Additionally, our business may be affected by reductions in customer acquisition, customer persistency and customer spending as a result of numerous factors which may be difficult to predict. This may result in decreased revenue levels, and we may be unable to adopt timely measures to compensate for any unexpected shortfall in income. Our profitability projections make numerous assumptions about the expected future levels of various expense items. Historically most of these expense items have been relatively stable or predictable either in absolute terms or in relation to revenue but there is no certainty that such stability or predictability will continue into the future. These inabilities could cause our operating results in a given period to be higher or lower than expected. If actual results differ from our estimates, analysts may negatively react, and our share price could be adversely impacted.
If we are unable to successfully identify, complete and integrate acquisitions, our results of operations could be adversely affected.
Acquisitions have been and will continue to be a significant component of our growth strategy. We seek to identify and complete acquisitions and may continue to make strategic acquisitions. Our previous or future acquisitions may not be successful or may not generate the financial benefits that we expected to achieve at the time of acquisition. In addition, there can be no assurance that we will be able to locate suitable acquisition candidates in the future or acquire them on acceptable terms or, because of competition in the marketplace and limitations imposed by the agreements governing our indebtedness or the availability of capital, that we will be able to finance future acquisitions. We may be unable to identify, negotiate, and complete suitable acquisition opportunities on reasonable terms.
Acquisitions involve special risks, including, without limitation, the potential assumption of unanticipated liabilities and contingencies, difficulty in assimilating the operations and personnel of the acquired businesses, disruption of our existing business, dissipation of our limited management resources and impairment of relationships with employees and customers of the acquired business as a result of changes in ownership. For instance, we cancelled the acquisition with Quality International on April 1, 2024. Such incidents can significantly affect our financial and operational outlook.
While we believe that strategic acquisitions can improve our competitiveness and profitability, these activities could have a material adverse effect on our business, financial condition, and operating results. We may incur significant costs such as transaction fees, professional service fees and other costs related to future acquisitions. We may also incur integration costs following the completion of any such acquisition as we integrate the acquired business with the rest of our Company. Although we expect that the realization of efficiencies related to the integration of any acquired businesses will offset the incremental transaction and acquisition-related costs over time, this net financial benefit may not be achieved in the near term, or at all.
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Our ability to generate the significant amount of cash needed to service our debt obligations and our ability to refinance all or a portion of our indebtedness or obtain additional financing depends on many factors, many of which may be beyond our control.
Our ability to make scheduled payments on, or to refinance our obligations under, our debt, will depend on our financial and operating performance, which, in turn, will be subject to prevailing economic and competitive conditions and to the financial and business factors, many of which may be beyond our control. We cannot assure you that our business will generate sufficient cash flow from operations, that currently anticipated business opportunities will be realized on schedule or at all, or that future borrowings will be available to us in amounts sufficient to enable us to service our indebtedness and any amounts borrowed under future credit facilities, or to fund our other liquidity needs.
We will use cash to pay the principal and interest on our debt. These payments limit funds otherwise available for working capital, capital expenditures, acquisitions, collaborations, and other purposes. As a result of these obligations, our current liabilities may exceed our current assets. We may need to take on additional debt as we expand in our industry, which could increase our ratio of debt to equity. The need to service our debt may limit funds available for other purposes and our inability to service debt in the future could lead to acceleration of our debt and foreclosure on assets.
We cannot assure that we will be able to refinance any of our indebtedness or obtain additional financing as well as prevailing market conditions. As a result, we could face liquidity problems and might be required to dispose of material assets or operations to meet our indebtedness service and other obligations. The Company’s current Debt Obligations are mentioned elsewhere in this registration statement. However, a historical debt obligation includes a Note Issued on February 4, 2022, to Discover Growth Fund amounting to $2,000,000 which we were not able to service before maturity. The Company signed a Forbearance Agreement with Discover Growth Fund on May 3, 2023. The Company shall make monthly minimum loan payments to Discover Growth Fund of $450,000.00 commencing on May 30, 2023, and on the 5th day of each month thereafter, until the Note is paid in full. A total of $1,800,000 has been as of this Form 10-K and the note is currently in default. Also, the Company amended the AJB capital investments LLC note on October 18, 2023. The previous convertible note was in the amount of $1,200,000 that matured on June 1, 2023. The amended convertible note filed with this registration statement amounts to $1,450,000 and is maturing on May 1, 2024. Further the convertible note with Jefferson Street for $100,000 matured on July 26, 2023, which we were not able to service before maturity. Jefferson has subsequently converted the note in full.
The lending documents restrict, and any agreements governing future indebtedness may restrict, our ability to dispose of assets and use the proceeds from any such dispositions. We cannot assure we will be able to consummate any asset sales, or if we do, what the timing of the sales will be or whether the proceeds that we realize will be adequate to meet indebtedness service obligations when due.
If we are unable to successfully identify, complete and integrate acquisitions, our results of operations could be adversely affected.
Acquisitions have been and will continue to be a significant component of our growth strategy. We seek to identify and complete acquisitions and may continue to make strategic acquisitions. Our previous or future acquisitions may not be successful or may not generate the financial benefits that we expected to achieve at the time of acquisition. In addition, there can be no assurance that we will be able to locate suitable acquisition candidates in the future or acquire them on acceptable terms or, because of competition in the marketplace and limitations imposed by the agreements governing our indebtedness or the availability of capital, that we will be able to finance future acquisitions. Acquisitions involve special risks, including, without limitation, the potential assumption of unanticipated liabilities and contingencies, difficulty in assimilating the operations and personnel of the acquired businesses, disruption of our existing business, dissipation of our limited management resources and impairment of relationships with employees and customers of the acquired business as a result of changes in ownership. While we believe that strategic acquisitions can improve our competitiveness and profitability, these activities could have a material adverse effect on our business, financial condition, and operating results. We may incur significant costs such as transaction fees, professional service fees and other costs related to future acquisitions. We may also incur integration costs following the completion of any such acquisitions as we integrate the acquired business with the rest of our Company. Although we expect that the realization of efficiencies related to the integration of any acquired businesses will offset the incremental transaction and acquisition-related costs over time, this net financial benefit may not be achieved in the near term, or at all.
Inability to Continue Developing New Products.
Our ability to continue to grow organically is tied in large part to our ability to continue to develop new products. A failure to continue to develop and deliver new, innovative, and competitive products to the market could limit sales growth and negatively impact our Company and our financial condition, results of operations and cash flow.
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Risks associated with climate change and other environmental impacts, and increased focus and evolving views of our customers, shareholders, and other stakeholders on climate change issues, could negatively affect our business and operations.
The effects of climate change create short and long-term financial risks to our business, both in the U.S. and globally. We have significant operations located in regions that have been, and may in the future be, exposed to significant weather events and other natural disasters. Climate-related changes can increase variability in or otherwise impact natural disasters, including weather patterns, with the potential for increased frequency and severity of significant weather events (e.g., flooding, hurricanes, and tropical storms), natural hazards (e.g., increased wildfire risk), rising mean temperature and sea levels, and long-term changes in precipitation patterns (e.g., drought, desertification, and/or poor water quality). We expect climate change could affect our facilities, operations, employees, and communities in the future, particularly at facilities in coastal areas and areas prone to extreme weather events and water scarcity. Our suppliers are also subject to natural disasters that could affect their ability to deliver or perform under our contracts, including as a result of disruptions to their workforce and critical infrastructure. Disruptions also impact the availability and cost of materials needed for manufacturing and could increase insurance and other operating costs.
Increased worldwide focus on climate change has led to legislative and regulatory efforts to combat both potential causes and adverse impacts of climate change, including regulation of greenhouse gas emissions. New or more stringent laws and regulations related to greenhouse gas emissions and other climate change related concerns may adversely affect us, our suppliers, and our customers. Some of our facilities are, for example, engaged in manufacturing processes that produce greenhouse gas emissions, including carbon dioxide, or rely on products from others that do so. We have worked for years to reduce our reliance on fossil-based energy sources, to decrease our greenhouse gas emissions, to reduce our consumption of water and production of waste, and to ensure our compliance with environmental regulations where we operate, enhancing our record of environmental sustainability. However, new, and evolving laws and regulations could mandate different or more restrictive standards, could require capital investments to transition to low carbon technologies, could adversely impact our ongoing operations, and could require changes on a more accelerated time frame. Our suppliers may face similar challenges and incur additional compliance costs that are passed on to us. These direct and indirect costs may adversely impact our results.
We may be adversely affected by the effects of inflation.
Inflation in wages, materials, parts, equipment, and other costs has the potential to adversely affect our results of operations, cash flows and financial position by increasing our overall cost structure, particularly if we are unable to achieve commensurate increases in the prices, we charge our customers for our products and services. In addition, the existence of inflation in the economy has the potential to result in higher interest rates, which could result in higher borrowing costs, supply shortages, increased costs of labor, weakening exchange rates and other similar effects. The Company has currently experienced inflationary pressures on its supply chain due to increased shipping costs, increased energy prices for manufacture of our commercial products as well as increased prices from suppliers of raw materials. We have so far been able to offset inflationary pressure to consumers, but it cannot be guaranteed that that our results of operations will not be adversely affected by inflation in the future and could reduce sales and/or operating margins, and overall financial performance.
We are Dependent on the Availability of Raw Materials, Parts, and Components Used in our Products.
While the Company manufactures certain parts and components used in its products, the Company also requires substantial amounts of raw materials and purchases certain parts and components from suppliers. The availability of and prices for raw materials, parts and components may be subject to curtailment or change due to, among other things, suppliers’ allocations to other purchasers, interruptions in production by suppliers, including due to geopolitical or civil unrest, unfavorable economic or industry conditions, labor disruptions, supply chain disruptions, catastrophic weather events, natural disasters, the occurrence of a contagious disease or illness, changes in exchange rates and prevailing price levels. Any change in the supply of, or price for, these raw materials or parts and components could materially affect the Company and its financial condition, results of operations and cash flow.
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Using the recent example of our acquisition, Bull Head Products Inc., the demand for new trucks has not declined during Covid-19, but instead there was a delay in the delivery of new Pickup trucks due to a shortage of electronic chips. Historically, 68% of the truck beds built by Bull Head Products are for installation of a truck bed on a new pickup truck. There has not been a significant shift to installation on older trucks, but instead, the customers wait for confirmation of the delivery of new trucks before ordering a new truck bed. Bull Head Products Inc. also has order backlogs of over 9 months due to customers waiting for their new trucks to be delivered. One-third of our current enquiries are impacted by a delay in delivery of new pick-up trucks, which presents a risk to Bull Head Products Inc.
Increases in the price of commodities could impact the cost or price of our products, which could impact our ability to sustain and grow earnings.
Our manufacturing processes consume significant amounts of raw materials, the costs of which are subject to worldwide supply and demand factors, as well as other factors beyond our control. Raw material price fluctuations may adversely affect our results. We purchase, directly and indirectly through component purchases, significant amounts of plastic, aluminum, steel, and other raw materials. In the past raw material prices have experienced volatility which has been unforeseen and unexpected. Commodity pricing has fluctuated over the past few years and may continue to do so in the future. Such fluctuations could have a material effect on our results of operations, balance sheets and cash flows and impact the comparability of our results between financial periods.
We May be Subject to Loss in Market Share and Market Acceptance as a Result of Performance Failures, Manufacturing Errors, Delays or Shortages.
There is a risk that for unforeseen reasons we may be required to repair or replace products in use or to reimburse customers for products that fail to work or meet strict performance criteria. To date, we have experienced some product failures related to electronic and mechanical components within equipment and vehicles. These are either repaired under warranty or at cost to the customer or under a maintenance agreement.
Other disruptions in the supply chain process or product sales and fulfilment systems for any reason, including equipment malfunction, failure to follow specific protocols and procedures, supplier facility shut-downs, defective raw materials, wars and conflict, natural disasters such as hurricanes, tornadoes or wildfires, property damage from riots, and other environmental factors and the impact of epidemics or pandemics, such as Covid-19, and actions by businesses, communities and governments in response, could lead to launch delays, product shortage, unanticipated costs, lost revenues and damage to our reputation.
We have taken steps to limit remedies for product failure to the repair or replacement of malfunctioning or non-compliant products or services, and also attempt to exclude or minimize exposure to product and related liabilities by including in our standard agreements warranty disclaimers and disclaimers for consequential and related damages as well as limitations on our aggregate liability. From time to time, in certain sales transactions, we may negotiate liability provisions that vary from such standard forms. There is a risk that our contractual provisions may not adequately minimize our product and related liabilities or that such provisions may be unenforceable. We intend to carry product liability insurance, but coverage we secure may not be adequate to cover potential claims. Moreover, to the extent we have to repair, reimburse, or expend funds to cover customer service issues, our results of operations will be negatively affected.
We Will Rely in Part Upon Sales Reps, Retailers and Distribution Partners to Distribute our Products, and We May Be Adversely Affected if Those Parties do not Actively Promote our Products or Pursue Customers Who Would Have a Potential Demand for our Products.
We estimate that a significant portion of our revenue will come from sales to partners through sales representatives, retailers, distributors, and resellers. Some of these relationships have not been formalized in detailed contracts and may be subject to termination at any time. Even where these relationships are formalized in a detailed contract, the agreements are often terminable with little or no notice and subject to periodic amendment. We cannot control the amount and timing of resources that our partners devote to activities on our behalf.
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We intend to continue to seek strategic relationships to distribute, license and sell certain of our products. We, however, may not be able to negotiate acceptable relationships in the future and cannot predict whether current or future relationships will be successful.
The Markets the Company operates in are Highly Competitive which Could Reduce Sales and Operating Margins.
Most of the Company’s products are sold in competitive markets. Maintaining and improving a competitive position will require continued investment in manufacturing, engineering, quality standards, marketing, customer service and support and distribution networks. The Company may not be successful in maintaining its competitive position. The Company’s competitors may develop products and methods that are more efficient or may adapt quicker to new technologies or evolving customer requirements. The Company may not be able to compete successfully with existing competitors or with new competitors. Pricing pressures may require the Company to adjust the prices of products to stay competitive. Failure to continue competing successfully could reduce sales, operating margins, and overall financial performance.
The Company’s Business Operations May Be Adversely Affected by Information Systems Interruptions or Cybersecurity Intrusions.
The Company depends on various information technologies to administer, store, and support multiple business activities. If these systems are damaged, cease to function properly or are subject to cyber-security attacks, such as those involving unauthorized access, malicious software and/or other intrusions, the Company could experience production downtimes, operational delays, other detrimental impacts on operations or the ability to provide products and services to its customers, the compromising of confidential or otherwise protected information, destruction or corruption of data, security breaches, other manipulation or improper use of the Company’s systems or networks, financial losses from remedial actions, loss of business or potential liability, penalties, fines and/or damage to the Company’s reputation. While the Company attempts to mitigate these risks by employing a number of measures, including having hired an IT manager with cyber security expertise, who reports directly to our management team, employee training, technical security controls and maintenance of backup and protective systems, the Company’s systems, networks, products, and services remain potentially vulnerable to known or unknown threats, any of which could have a material adverse effect on the Company and its financial condition or results of operations. Further, given the unpredictability, nature, and scope of cyber-security attacks, it is possible that potential vulnerabilities could go undetected for an extended period. We have currently not been subject to material cybersecurity breaches in our supply chain, software, or services used in our products, services, or business. A severe future cybersecurity incident in our supply chain could however reduce sales, operating margins, and overall financial performance.
With the strategy establishing and expanding our defense subsidiary, which may become involved in defense contracting, we may face increased cyber and security threats that can range from attacks common to most industries, but could have even greater financial or reputational impact, to advanced persistent threats on our defense programs, which could involve information that is considered a matter of national security.
We are dependent on the availability of raw materials, parts, and components used in our products.
While the Company manufactures certain parts and components used in its products, the Company also requires substantial amounts of raw materials and purchases certain parts and components from suppliers. The availability of and prices for raw materials, parts and components may be subject to curtailment or change due to, among other things, suppliers’ allocations to other purchasers, interruptions in production by suppliers, including due to geopolitical or civil unrest, unfavorable economic or industry conditions, labor disruptions, supply chain disruptions, catastrophic weather events, natural disasters, the occurrence of a contagious disease or illness, changes in exchange rates and prevailing price levels. Any change in the supply of, or price for, these raw materials or parts and components could materially affect the Company and its financial condition, results of operations and cash flow. For instance, the war in Ukraine affected the geopolitical stability in Serbia. Consequently, the company postponed the production of electric vehicles in Serbia temporarily until after the Serbian election and kept our manufacturing of E-Raptor range of commercial electric Utility Vehicles in the UAE to mitigate the risk for operational and supply chain disruptions. ILUS commenced the production after the Serbian election and expects the first E-Raptor 6x6 models to roll off the Kragujevac production line in 2024. We cannot assure in the future that such incidents can significantly affect our supply chain and impact our financial and operational outlook.
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Our long-term success depends, in part, on our ability to operate and expand internationally, and our business is susceptible to risks associated with international operations.
Currently, we maintain operations in the United States, the United Kingdom, the Republic of Serbia and the United Arab Emirates, and plan to continue our efforts to expand globally, in jurisdictions where we do not currently operate including, but not limited to, Spain, Uruguay and South Africa. The Company expects international operations and export sales to continue to constitute the majority of our sales and assets in the foreseeable future.
Managing a global organization is difficult, time-consuming, and expensive, and any international expansion efforts that we undertake may not be profitable in the near or long term. Although we have operating experience in many foreign jurisdictions, we must continue to make significant investments to build our international operations. The Company’s sales from international operations and sales from export are both subject in varying degrees to risks inherent in doing business outside the U.S. These risks include the following:
| ■ | Costs, risks, and uncertainties associated with tailoring our services in international jurisdictions as needed to better address both the needs of customers, and the threats of local competitors; |
| ■ | Risks of economic instability, including due to inflation; |
| ■ | Uncertainties in forecasting revenues and expenses in markets where we have not previously operated; |
| ■ | Costs and risks associated with local and national laws and regulations governing the industries in which we operate, health and safety, climate change and sustainability, and labor and employment; |
| ■ | Operational and compliance challenges caused by distance, language, and cultural differences; |
| ■ | Costs and risks associated with compliance with international tax laws and regulations; |
| ■ | Costs and risks associated with compliance with the U.S. Foreign Corrupt Practices Act and other laws in the United States related to conducting business outside the United States, as well as the laws and regulations of non-U.S. jurisdictions governing bribery and other corrupt business activities; |
| ■ | Costs and risks associated with human trafficking, modern slavery and forced labor reporting, training and due diligence laws and regulations in various jurisdictions; |
| ■ | Being subject to other laws and regulations, including laws governing online advertising and other Internet activities, email and other messaging, collection and use of personal information, ownership of intellectual property, taxation, and other activities important to our online business practices; |
| ■ | Currency exchange rate fluctuations and restrictions on currency repatriation; |
| ■ | Competition with companies that understand the local market better than we do or that have preexisting relationships with regulators and customers in those markets; |
| ■ | Adverse effects resulting from the U.K.’s exit from the European Union (commonly known as “Brexit”) |
| ■ | Reduced or varied protection for intellectual property rights in some countries; |
| ■ | Disruption of operations from labor and political disturbances; |
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| ■ | Withdrawal from or renegotiation of international trade agreements and other restrictions on the trade between the United States and other countries; |
| ■ | Changes in tariff and trade barriers; and |
| ■ | geopolitical events, including natural disasters, climate change, public health issues, political instability (such as war between Ukraine and Russia), terrorism, insurrection, or war. |
Entry into certain transactions with foreign entities now or in the future may be subject to government regulations, including review related to foreign direct investment by U.S. or foreign government entities. If a transaction with a foreign entity is subject to regulatory review, such regulatory review might limit our ability to enter into the desired strategic alliance and thus our ability to carry out our long-term business strategy.
Operating in international markets also requires significant management attention and financial resources. The investment and additional resources required to establish operations and manage growth in other countries may not produce desired levels of revenue or profitability and could instead result in increased costs without a corresponding benefit. We cannot guarantee that our international operations or expansion efforts will be successful.
Any of these events as well as related events not aforementioned, could have a materially adverse impact on the Company and its operations.
Uncertainty Related to Environmental Regulation and Industry Standards, as well as Physical Risks of Climate Change, Could Impact the Company’s Results of Operations and Financial Position.
Increased public awareness and concern regarding environmental risks, including global climate change, may result in more international, regional and/or federal requirements or industry standards to reduce or mitigate global warming and other environmental risks. New climate change laws and regulations could require the Company to change its manufacturing processes or obtain substitute materials that may cost more or be less available for its manufacturing operations. Various jurisdictions in which the Company does business have implemented, or in the future could implement or amend, restrictions on emissions of carbon dioxide or other greenhouse gases, limitations or restrictions on water use, the production of single-use plastics, regulations on energy management and waste management and other climate change-based rules and regulations, which may increase the Company’s expenses and adversely affect its operating results. In addition, the physical risks of climate change may impact the availability and cost of materials, sources and supply of energy, product demand and manufacturing and could increase insurance and other operating costs. The expected future increased worldwide regulatory activity relating to climate change could expand the nature, scope, and complexity of matters that the Company is required to control, assess, and report. If environmental laws or regulations or industry standards are either changed or adopted and impose significant operational restrictions and compliance requirements upon the Company, its suppliers, its customers or its products, or the Company’s operations are disrupted due to physical impacts of climate change on the Company, its customers or its suppliers, the Company’s business, results of operations and financial condition could be adversely impacted.
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Significant Movements in Foreign Currency Exchange Rates May Harm the Company’s Financial Results.
The Company is exposed to fluctuations in foreign currency exchange rates, particularly with respect to the Euro, British Pound, Indian Rupee, UAE Dirham and Serbian Dinar. Any significant change in the value of the currencies of the countries in which the Company does business against the U.S. Dollar could affect the Company’s ability to sell products competitively and control its cost structure, which could have a material adverse effect on results of operations.
A Significant or Sustained Decline in Commodity Prices Could Negatively Impact the Levels of Expenditures by Certain of the Company’s Customers.
Demand for the Company’s products depends, in part, on the level of new and planned expenditures by certain of its customers. The level of expenditures by the Company’s customers is dependent on, among other factors, general economic conditions, availability of credit, economic conditions within their respective industries and expectations of future market behavior. The Company’s profitability may be adversely affected during any periods of unexpected or rapid increases in interest rates and volatility in commodity prices, including oil, can negatively affect the level of these activities and especially impact our Industrial & Manufacturing division and can result in postponement of capital spending decisions or the delay or cancellation of existing orders. The ability of the Company’s customers to finance capital investment and maintenance may also be affected by the conditions in their industries. Reduced demand for the Company’s products could result in the delay or cancellation of existing orders or lead to excess manufacturing capacity, which unfavorably impacts the absorption of fixed manufacturing costs. This reduced demand could have a material adverse effect on the Company and its financial condition and results of operations.
We are dependent on financing for the continuation of our operations.
It can at times be difficult to predict our capital needs on a monthly, quarterly, or annual basis. Our future is dependent upon our ability to obtain profitable operations or financing. We reserve the right to seek additional funds through private placements of our common stock and/or through debt financing. We do not have financing in place at this time for all future planned acquisitions. We may not have access to financing or on terms that are acceptable to us. Any lack of funds from operations or fundraisings for any shortage could be detrimental to our ability to continue operations and negatively impact us and our financial condition, results of operations and cash flow.
Risks Related to Legal, Accounting and Regulatory Matters
An Unfavorable Outcome of Any Pending Contingencies or Litigation Could Adversely Affect the Company.
We have been named as a defendant in a lawsuit, and we may be named in additional litigation, all of which will require significant management time and attention and result in significant legal expenses and may result in an unfavorable outcome, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
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We have been named as a defendant in an action commenced by our former CEO, Larson Elmore. A case also has been filed in the Eight Judicial District Court of the State of Nevada (Case No. A-22-858343-C). Plaintiff alleges that we breached a stock purchase agreement dated May 10, 2020, and promissory notes and is therefore entitled to damages. We have potential counterclaims against the former CEO which are being prepared due to improper action and lack of disclosures. The company has disputed the claim and argue that Larson Elmore has been misleading the company and its shareholders on various matters including but not limited to liabilities, company commitments and due diligence items presented by Larson Elmore during the takeover process. We are in the process of a settlement discussion and have obtained an extension of time to respond while this process occurs.
We have been named as a defendant in an action commenced by Steve Nicol, who claims that he loaned $12,000 on or about May 23, 2017, to Cache Cabinetry, LLC a subsidiary of ILUS under a promissory note, but that ILUS agreed to assume the note. He further claims that he elected to convert the note and that ILUS failed to convert the note into shares of ILUS common stock. He has alleged breach of contract, declaratory relief, and specific performance to require the company to issue 75,000,000 shares of common stock in ILUS. The company obtained a settlement on September 6, 2023, and awaits the final court order.
We have been named as a defendant in an action commenced by Black Ice Advisors LLC, regarding a historic note entered into by the previous CEO, Larson Elmore with a principal amount of $4,000. The company dispute the legitimacy of the note. On June 5, 2023, we got a service of process by Superior Court of California, County of San Diego, with a reschedule hearing on March 3, 2024. On August 22, 2023, the company received information that Black Ice Advisors withdrew their prior demand for shares with a new motion seeking a monetary judgment in Black Ice’s in the amount of $3.772 million for the historic note with a principal amount of $4,000. At a hearing on November 3, 2023, the Court adopted its tentative ruling as the final ruling and denied the motion for summary judgement from Black Ice Advisors LLC. The case has received a trial date for March 8, 2024.
We cannot predict whether the action against involving our former CEO, Black Ice Advisors or Mr. Nicol is likely to result in any material recovery by or expense to our company. In general, we lack much information and evidence to support the assertions of financial statements before the current management taking over and some chances preceding management of the company might have missed compliances for which we are not aware. Thus, the company may have to bear consequences for that from authorities. We cannot reasonably ascertain an amount for those contingencies.
Where it is reasonably possible to do so, the Company accrues estimates of the probable costs for the resolution of these matters. These estimates are based upon an analysis of potential results and settlement strategies. It is possible, however, that future operating results for any particular quarter or annual period could be affected by changes in assumption.
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We may continue to incur legal fees in responding to these and other lawsuits. The expense of defending such litigation may be significant and any sizeable verdict may adversely affect the company. The amount of time to resolve this and any additional lawsuits is unpredictable, and these actions may divert management’s attention from the day-to-day operations of our business, all of which could adversely affect our business, results of operations and cash flows. For additional detail related to this risk, see Item 3, “Legal Proceedings”.
The Sale of our Products Involves Potential Product Liability and Related Risks that Could Expose us to Significant Insurance and Loss Expenses.
We face an inherent risk of exposure to product liability claims if the use of our products results in, or is believed to have resulted in, illness or injury. Any product liability claim may increase our costs and adversely affect our revenue and operating income. Moreover, liability claims arising from a serious adverse event may increase our costs through higher insurance premiums and deductibles for the insurances we have with Firebug Mechanical Equipment LLC, Georgia Fire and Bull Head Products and may make it more difficult to secure adequate insurance coverage in the future. In addition, our product liability insurance may fail to cover future product liability claims, which, if adversely determined, could subject us to substantial monetary damages. Georgia Fire, Bull Head Products and Firebug all have General Liability Cover.
Failure by us to Maintain the Proprietary Nature of our Technology, Intellectual Property and Manufacturing Processes Could Have a Material Adverse Effect on our Business, Operating Results, Financial Condition, Stock Price, and on our Ability to Compete Effectively.
We principally rely upon patent, trademark, copyright, trade secret and contract law to establish and protect our proprietary rights. There is a risk that claims allowed on any patent licenses or trademarks we hold may not be broad enough to protect our technology. In addition, our patent licenses or trademarks may be challenged, invalidated, or circumvented and we cannot be certain that the rights granted thereunder will provide competitive advantages to us. Moreover, any current or future issued or licensed patents, or trademarks, or currently existing or future developed trade secrets or know-how may not afford sufficient protection against competitors with similar technologies or processes, and the possibility exists that certain of our already issued patents or trademarks may infringe upon third party patents or trademarks or be designed around by others. In addition, there is a risk that others may independently develop proprietary technologies and processes, which are the same as, substantially equivalent, or superior to ours, or become available in the market at a lower price.
In addition, foreign laws treat the protection of proprietary rights differently from laws in the United States and may not protect our proprietary rights to the same extent as U.S. laws. The failure of foreign laws or judicial systems to adequately protect our proprietary rights or intellectual property, including intellectual property developed on our behalf by foreign contractors or subcontractors may have a material adverse effect on our business, operations, financial results, and stock price.
There is a risk that we have infringed or in the future will infringe patents or trademarks owned by others, that we will need to acquire licenses under patents or trademarks belonging to others for technology potentially useful or necessary to us, and that licenses will not be available to us on acceptable terms, if at all.
We may have to litigate to enforce our patents or trademarks or to determine the scope and validity of other parties’ proprietary rights. Litigation could be very costly and divert management’s attention. An adverse outcome in any litigation may have a severe negative effect on our financial results and stock price. To determine the priority of inventions, we may have to participate in interference proceedings declared by the United States Patent and Trademark Office or oppositions in foreign patent and trademark offices, which could result in substantial cost and limitations on the scope or validity of our patents or trademarks.
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We also rely on trade secrets and proprietary know-how, which we seek to protect by confidentiality agreements with our employees, consultants, service providers and third parties. There is a risk that these agreements may be breached, and that the remedies available to us may not be adequate. In addition, our trade secrets and proprietary know-how may otherwise become known to or be independently discovered by others.
Compliance with Changing Regulation of Corporate Governance and Public Disclosure May Result in Additional Expenses.
Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and new SEC regulations, are creating uncertainty for companies such as ours. These new or changed laws, regulations and standards are subject to varying interpretations in many cases due to their lack of specificity, and as a result, their application in practice may evolve as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We are committed to maintaining high standards of corporate governance and public disclosure. As a result, we intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new or changed laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, our reputation may be harmed.
If we Fail to Comply with the Rules under the Sarbanes-Oxley Act Related to Accounting Controls and Procedures, or if Material Weaknesses or Other Deficiencies are Discovered in our Internal Accounting Procedures, our Stock Price Could Decline Significantly.
Section 404 of the Sarbanes-Oxley Act requires annual management assessments of the effectiveness of our internal controls over financial reporting. We are in the process of documenting and testing our internal control procedures, and we may identify material weaknesses in our internal control over financial reporting and other deficiencies. If material weaknesses and deficiencies are detected, it could cause investors to lose confidence in our Company and result in a decline in our stock price and consequently affect our financial condition. In addition, if we fail to achieve and maintain the adequacy of our internal controls, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our Common Stock could drop significantly. In addition, we cannot be certain that additional material weaknesses or significant deficiencies in our internal controls will not be discovered in the future.
Failure To Comply with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act or Other Applicable Anti-bribery Laws Could Have an Adverse Effect on the Company.
The U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business. Recent years have seen a substantial increase in anti-bribery law enforcement activity with more frequent and aggressive investigations and enforcement proceedings by both the Department of Justice and the SEC, increased enforcement activity by non-U.S. regulators and increases in criminal and civil proceedings brought against companies and individuals. The Company’s policies mandate compliance with all anti-bribery laws. However, the Company operates in certain countries that are recognized as having governmental and commercial corruption. The Company’s internal control policies and procedures may not always protect it from reckless or criminal acts committed by employees or third-party intermediaries. Violations of these anti-bribery laws may result in criminal or civil sanctions, which could have a material adverse effect on the Company and its financial condition and results of operations.
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Changes in Tax laws or Exposure to Additional Income Tax Liabilities Could have a Material Impact on our Company, the Results of Operations, Financial Conditions and Cash Flows.
We are subject to income taxes, as well as non-income-based taxes in the jurisdictions in which we operate, as well as jurisdictions such as the United States, in which we intend to have operations. The tax laws in these could change on a prospective or retroactive basis, and any such changes could adversely affect us and our effective tax rate.
Taxation regulation in territories around the world can also change very quickly, which may mean that all the implications for businesses may not have been fully thought through by the regulating authorities before final guidelines and laws are issued. Furthermore, any changes made by tax authorities, together with other legislative changes, to the mandatory sharing of company information (financial and operational) with tax authorities on both a local and global basis, could lead to disagreements between jurisdictions with respect to the proper allocation of profits between such jurisdictions. We therefore continuously monitor changes to tax regulation and double tax treaties between the territories in which we operate. We also maintain a comprehensive transfer pricing policy to govern the flow of funds between various tax territories.
We are further subject to ongoing tax audits in the various jurisdictions in which we operate. We regularly assess the likely outcomes of these audits in order to determine the appropriateness of our tax provisions. However, there can be no assurance that we will accurately predict the outcomes of these audits, which could have a material impact on the business, financial condition, results of operations, and cash flows.
While we have recorded reserves for potential payments to various tax authorities related to uncertain tax positions, the calculation of such tax liabilities involves the application of complex tax regulations in many jurisdictions. Therefore, any dispute with a tax authority may result in payment that is significantly different from our estimates. If the payment proves to be less than the recorded reserves, the reversal of the liabilities would generally result in tax benefits being recognized in the period when we determine the liabilities to be no longer necessary. Conversely, if the payment proves to be more than the reserves, we could incur additional charges, and these could have a materially adverse effect on the business, financial condition, results of operations, and cash flows.
Laws and Regulations Governing International Business Operations Could Adversely Impact Our Company.
The US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), and the Bureau of Industry and Security at the US Department of Commerce (“BIS”) administer certain laws and regulations that restrict US persons and, in some instances, non-US persons, in conducting activities, transacting business with, or making investments in certain countries, governments, entities and individuals subject to US economic sanctions.
Our international operations subject us to these laws and regulations, which are complex, restrict business dealings with certain countries, governments, entities, and individuals, and are constantly changing. Further restrictions may be enacted, amended, enforced, or interpreted in a manner that materially impacts our operations. From time to time, certain subsidiaries have limited business dealings in countries subject to comprehensive sanctions.
Certain of our subsidiaries sell products, and may provide related services, to distributors and other purchasing bodies in such countries. These business dealings represent an insignificant amount of our consolidated revenues and income but expose us to a heightened risk of violating applicable sanctions regulations. Violations of these regulations are punishable by civil penalties, including fines, denial of export privileges, injunctions, asset seizures, debarment from government contracts and revocations or restrictions of licenses, as well as criminal fines and imprisonment.
We have established policies and procedures designed to assist with compliance with such laws and regulations. However, there can be no assurance that these will prevent us from violating these regulations in every transaction in which we may engage. As such a violation could adversely affect our reputation, business, financial condition, results of operations and cash flows.
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General Risk Factors
The Company’s Success Depends on Its Executive Management and Other Key Personnel.
The Company’s future success depends to a significant degree on the skills, experience and efforts of its executive management and other key personnel and their ability to provide the Company with uninterrupted leadership and direction. The loss of the services of any of the executive officers or a failure to provide adequate succession plans for key personnel could have an adverse impact on the Company. The availability of highly qualified talent is limited and the competition for talent is robust. However, the Company provides long-term equity awards and certain other benefits for its executive officers which provides incentives for them to make a commit to the Company. The Company’s future success will depend on its ability to have adequate succession plans in place and to attract, retain and develop qualified personnel. A failure to efficiently replace executive management members and other key personnel and to attract, retain and develop new qualified personnel could have an adverse effect on the Company’s operations and implementation of its strategic plan.
Challenges with Respect to Labor Availability Could Negatively Impact the Company’s Ability to Operate or Grow the Business.
The Company’s success depends in part on the ability of its businesses to proactively attract, motivate, and retain a qualified and highly skilled workforce in an intensely competitive labor market. A failure to attract, motivate and retain highly skilled personnel could adversely affect the Company’s operating results or its ability to operate or grow the business. Additionally, any labor stoppages or labor disruptions, including due to geopolitical unrest, unfavorable economic or industry conditions, catastrophic weather events, natural disasters or the occurrence of a contagious disease or illness could adversely affect the Company’s operating results or its ability to operate or grow the business.
Risks Related to Our Management and Control Persons
Our largest shareholder, officer, director, Nicolas Link holds substantial control over the company and is able to influence all corporate matters, which could be deemed by shareholders as not always being in their best interests.
Nicolas Link, our Chief Executive Officer (Principal Executive Officer & Chairman of the Board of Directors) with his company, FB Technologies Global, Inc. Dubai, U.A.E, owns approximately 0.5% of the outstanding shares of common stock, owns all of the outstanding shares of Class A Preferred Stock, Class B Preferred Stock and Class D Preferred Stock and owns 15% of the outstanding shares of Class F Preferred Stock.
Our common stock is entitled to one vote per share on all matters submitted to a vote of the stockholders, including the election of directors. Each share of Class A Preferred Stock is entitled to vote together with the holders of our common stock on all matters submitted to shareholders at a rate of 500 votes, including the election of directors. Each share of Class D Preferred Stock is entitled to vote together with the holders of our common stock on all matters submitted to shareholders at a rate of 500 votes, including the election of directors.
There are 1,954,067,060 shares of common stock outstanding, which amounts to 1,954,067,060 votes on matters requiring a shareholder vote. While Mr. Link owns only 2% of the outstanding common shares, with the Series A Preferred Stock that Mr. Link owns, he has the power over 5,000,000,000 votes and with the Series D Preferred Stock, he has the power to over 30,370,500,000 additional votes on matters requiring a shareholder vote, including the election of directors. He will have voting power over every aspect of our business.
By virtue of his ownership of common stock and preferred stock, Mr. Link is able to exercise significant influence over all matters requiring approval by our stockholders, including the election of directors, the approval of significant corporate transactions, and any change of control of our company.
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Our officers and directors are located outside of the U.S., so it will be difficult to effect service of process and enforcement of legal judgments upon our officers and directors.
Our officers and directors are located outside of the United States and reside in the U.A.E, U.K., and Denmark. As a result, it may be difficult to effect service of process within the United States and enforce judgments of the US courts obtained against our executive officers and directors. Particularly, our shareholders may not be able to:
| ● | Effect service of process in the U.S. on any of our officers and directors; | |
| ● | Enforce judgments obtained in U.S. courts against our officers and directors based upon the civil liability provisions of the U.S. federal securities laws; | |
| ● | Enforce, in a court outside of the U.S., judgments of U.S. courts based on the civil liability provisions of the U.S. federal securities laws; and | |
| ● | Bring an original action in a court in the U.A.E, U.K., or Denmark to enforce liabilities against any of our officers and directors based upon the U.S. federal securities laws. |
We are dependent on the continued services of our Director and Chairman and if we fail to keep them or fail to attract and retain qualified senior executives and key technical personnel, our business may not be able to expand.
We are dependent on the continued availability of Chairman, Nicolas Link and Director, John-Paul Backwell, and the availability of new executives to implement our business plans. The market for skilled employees is highly competitive, especially for employees in our industry. Although we expect that our planned compensation programs will be intended to attract and retain the employees required for us to be successful, there can be no assurance that we will be able to retain all our key employees or a sufficient number to execute our plans, nor can there be any assurance we will be able to continue to attract new employees as required.
Our lack of adequate D&O insurance may also make it difficult for us to retain and attract talented and skilled directors and officers.
In the future we may be subject to litigation, including potential class action and stockholder derivative actions. Risks associated with legal liability are difficult to assess and quantify, and their existence and magnitude can remain unknown for significant periods of time. To date, we have not obtained directors and officers liability (“D&O”) insurance, but the company is currently investigating and plans to obtain one. Without adequate D&O insurance, the amounts we would pay to indemnify our officers and directors should they be subject to legal action based on their service to the Company could have a material adverse effect on our financial condition, results of operations and liquidity. Furthermore, our lack of adequate D&O insurance may make it difficult for us to retain and attract talented and skilled directors and officers, which could adversely affect our business.
Our Officers and Key Personnel may voluntarily terminate their relationship with us at any time, and competition for qualified personnel is lengthy, costly, and disruptive.
If we lose the services of our officers and key personnel and fail to replace them if they depart, we could experience a negative effect on our financial results and stock price. The loss and our failure to attract, integrate, motivate, and retain additional key employees could have a material adverse effect on our business, operating and financial results and stock price.
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Certain of our officers and directors have other business pursuits that might interfere with their work on our business.
Our key management and board are also represented on the management and board of QIND, our subsidiary and our Chairman and CEO Nicolas Link is also the Chairman of the Board of Directors of Dear Cashmere Holding Co. (DRCR), the Chairman of the Board of Directors of CGrowth Capital, Inc. CGRA and the Chairman of the Board of Directors of Samsara Luggage, Inc (SAML) where he also holds the voting control. As a result, at certain points in time, these jointly represented companies may have members of key management and board concentrate their efforts on transactions that focus on one company over the other, which collectively would not amount to work for our company on a full-time basis. Dear Cashmere Holding Co. and CGrowth Capital, Inc. are however not affiliated with ILUS or any of its subsidiaries and each public company is independently responsible for its funding. We estimate that our key management will spend an average of 20% of their time on the company’s Subsidiary QIND and 80% on the parent company ILUS and subsidiary Samsara Luggage Inc. This and other conflicts of interest may arise between us and our officers and director in that they have other business interests currently, concerning ILUS, and in the future to which they devote their attention, such as in the case of acquisitions, and they may be expected to continue to do so although management time must also be devoted to our business. These competing interests could disrupt the focus of our key management and board. As a result, conflicts of interest may arise that can be resolved only through the exercise of such judgment as is consistent with each officer or director’s understanding of his or her fiduciary duties to our company.
Currently we have only four officers and one director. We will seek to add additional officers and/or directors with industry experience and when the proper personnel are located and terms of employment are mutually negotiated and agreed, and we have sufficient capital resources and cash flow to make such appointments.
In an effort to resolve such potential conflicts of interest as between ILUS, SAML and QIND, our officers and director have agreed that any opportunities that they are aware of independently or directly through their association with us would be presented by them solely to ILUS, before determining whether to include the opportunities in SAML or QIND or another subsidiary.
In general, our officers and director are required to present business opportunities to ILUS, which may include QIND, if:
| ● | ILUS could financially undertake the opportunity through SAML, QIND; and |
| ● | the opportunity is aligned with the business of SAML, QIND. |
Potential investors should also be aware of the following potential conflicts of interest:
None of our officers or director is required to commit his or her full time to our company and, accordingly, may have conflicts of interest in allocating his or her time among various business activities.
In the course of their other business activities, our officers and directors may become aware of investment and business opportunities which may be appropriate for presentation to us as well as the other entities with which they are affiliated.
Our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to the combination.
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Below is a table summarizing the entities to which our executive officers and director currently have fiduciary duties or contractual obligations:
| Individual (1) | Entity(2) | Affiliation | ||
| Nicolas Link |
ILUS SAML |
Director & CEO Director | ||
| John-Paul Backwell |
ILUS SAML |
Managing Director CEO & Director | ||
| Louise Bennett | ILUS QIND |
COO COO | ||
| Krishnan Krishnamoorthy | ILUS QIND |
CFO CFO | ||
| Carsten Kjems Falk | ILUS QIND |
CCO CCO |
| (1) | Each person has a fiduciary duty with respect to the listed entities next to their respective names. Each of our Officers only have employment in our Company and our Subsidiary QIND. |
| (2) | Each of the entities listed by trading symbol in this table has priority and preference relative to our company with respect to the performance by each individual listed in this table of his obligations and the presentation by each such individual of business opportunities. |
We cannot provide assurances that our efforts to eliminate the potential impact of conflicts of interest will be effective. We are at risk that our officers and directors will favor their other business interest over the needs of our company. These competing business interests could interfere with our ability to successfully implement our business plan.
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Risks Relating to our Common Stock
We may conduct offerings of our equity securities in the future, in which case your proportionate interest may become diluted.
We may be required to conduct equity offerings in the future to finance our current projects or to finance subsequent projects that we decide to undertake. If our common stock shares are issued in return for additional funds, the price per share could be lower than that paid by our current shareholders but to increase overall value for all shareholders. We anticipate continuing to rely on equity sales of our common stock shares to fund our business operations. If we issue additional common stock shares or securities convertible into shares of our common stock, your percentage interest in us could become diluted.
Our common stock price may be volatile and could fluctuate, which could result in substantial losses for investors.
Our common stock is quoted on the OTC Pink Market under the symbol, “ILUS.” The market price of our common stock is likely to be volatile and could fluctuate in price in response to various factors, many of which are beyond our control, including:
| ● | government regulation of our Company and operations. |
| ● | the establishment of partnerships. |
| ● | intellectual property disputes. |
| ● | additions or departures of key personnel. |
| ● | sales of our common stock. |
| ● | our ability to integrate operations, technology, products, and services. |
| ● | our ability to execute our business plan. |
| ● | operating results below expectations. |
| ● | loss of any strategic relationship. |
| ● | industry developments. |
| ● | economic and other external factors; and |
| ● | period-to-period fluctuations in our financial results. |
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In addition, the securities markets have from time-to-time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.
Sales of a substantial number of shares of our common stock in the public market, or the perception that such sales could occur, could cause our stock price to fall.
The market price of our common stock could decline significantly as a result of sales of a large number of shares of our common stock. If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market after the contractual and securities law restrictions on resale of such common stock lapse, or after those shares become registered for resale pursuant to an effective registration statement, the trading price of our common stock could decline. As of March 31, 2024, a total of 1,891,098,758 shares of our common stock were outstanding. Of those shares, 1,705,260,303 was without restriction, in the public market. Upon the effectiveness of any registration statement, we could elect to file with respect to any outstanding shares of common stock, any sales of those shares or any perception in the market that such sales may occur could cause the trading price of our common stock to decline.
The issuance of shares of our common stock upon conversion or exercise of preferred stock, warrants and convertible notes, will dilute ownership to existing shareholders and may cause our stock price to fall.
Any issuance of additional common stock by us in the future as a result of the conversion or exercise of warrants, convertible notes, preferred stock or debt settlements would result in dilution to our existing shareholders. Such issuances could be made at a price that reflects a discount or a premium to the then-current trading price of our common stock. Moreover, the perception in the public market that shareholders might sell shares of our stock or that we could make a significant issuance of additional common stock in the future could depress the market for our shares. These sales, or the perception that these sales might occur, could depress the market price of our common stock, or make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.
We have issued shares of our common stock, as well as other securities such as warrants, convertible notes, preferred stock, or debt settlements, which are convertible into shares of our common stock, in financing transactions that are deemed to be “restricted securities,” as that term is defined in Rule 144 promulgated under the Securities Act. From time to time, certain of our shareholders or derivative security holders may be eligible to sell all or some of their restricted shares of common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, subject to certain limitations. The resale pursuant to Rule 144 of shares acquired from us in private transactions could cause our stock price to decline significantly.
We have never declared or paid any cash dividends or distributions on our capital stock.
We have never declared or paid any cash dividends or distributions on our capital stock. While we may not anticipate paying a dividend in the short-term and we currently intend to retain short-term earnings for growth, we may do so in the medium to long-term future.
The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance concerning the amount of any such dividend.
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We may become involved in securities class action litigation that could divert management’s attention and harm our business.
The stock market in general, have experienced extreme price and volume fluctuations. These fluctuations have often been unrelated or disproportionate to the operating performance of the companies involved. If these fluctuations occur in the future, the market price of our shares could fall regardless of our operating performance. In the past, following periods of volatility in the market price of a particular company’s securities, securities class action litigation has often been brought against that company. If the market price or volume of our shares suffers extreme fluctuations, then we may become involved in this type of litigation, which would be expensive and divert management’s attention and resources from managing our business.
As a public company, we may also from time to time make forward-looking statements about future operating results and provide some financial guidance to the public markets. Projections may not be timely made and set at expected performance levels and could affect the price of our shares.
Our common stock is currently deemed a “penny stock,” which makes it more difficult for our investors to sell their shares.
Our common stock is currently deemed a “penny stock,” which makes it more difficult for our investors to sell their shares. The SEC has adopted rule 3a51-1 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, Rule 15g-9 requires:
| ● | that a broker or dealer approve a person’s account for transactions in penny stocks, and | |
| ● | the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. |
In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:
| ● | obtain financial information and investment experience objectives of the person, and | |
| ● | make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. |
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form:
| ● | sets forth the basis on which the broker or dealer made the suitability determination and | |
| ● | that the broker or dealer received a signed, written agreement from the investor prior to the transaction. |
Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.
If we do not have sufficient authorized common stock for potential conversion of our outstanding Series B and Series D Preferred Stock, we could be at risk of breaching a forbearance agreement with the shareholder, Nicolas Link.
The company is in the process of entering into a forbearance agreement with Nicolas Link, the affiliate holder of our Series B and Series D Preferred Stock, to restrict him from converting his preferred stock into common stock until the earlier of one year from listing with a national exchange or two years from the date of the agreement. The number of shares of common stock issuable upon conversion or exercise of outstanding preferred stock, warrants and convertible notes upon entering the Forbearance agreement are appx 2.3bn shares and below the 3.5bn authorized number of shares. After the forbearance period ends, we may be required to have sufficient shares of common stock available to accommodate future conversions of the preferred stock.
If we breach our obligations under the forbearance agreement with the holder of our Series B Preferred Stock and our Series D Preferred Stock, including our failure to convert the preferred stock into shares of common stock as a result of an insufficient number of shares of authorized common stock available for issuance, we would be in default of the agreement if Nicolas Link chooses to convert the applicable preferred stock into shares of common stock.
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Risks Relating to Our Company and Industry
The success of our business depends on our ability to maintain and enhance our reputation and brand.
We believe that our reputation in our industry is of significant importance to the success of our business. A well-recognized brand is critical to increasing our customer base and, in turn, increasing our revenue. Since the industry is highly competitive, our ability to remain competitive depends to a large extent on our ability to maintain and enhance our reputation and brand, which could be difficult and expensive. To maintain and enhance our reputation and brand, we need to successfully manage many aspects of our business, such as cost-effective marketing campaigns to increase brand recognition and awareness in a highly competitive market. We cannot assure you, however, that these activities will be successful and achieve the brand promotion goals we expect. If we fail to maintain and enhance our reputation and brand, or if we incur excessive expenses in our efforts to do so, our business, financial conditions and results of operations could be adversely affected.
In the event that we are unable to successfully compete in our industry, we may not see lower profit margins.
We face substantial competition in our industry. Due to our smaller size, it can be assumed that some of our competitors have greater financial, technical, and other competitive resources. Accordingly, these competitors may have already begun to establish superior technologies in our industry. We will attempt to compete against these competitors by developing technology that exceeds what is offered by our competitors. However, we cannot assure you that our technology will outperform competing technology, or that our competitors will not develop new products or services that exceed what we provide. In addition, we may face competition based on price. If our competitors lower the prices on their products, then it may not be possible for us to market our products at economically viable prices. Increased competition could result in:
| ● | Lower than projected revenues; |
| ● | Price reductions and lower profit margins. | |
Any one of these results could adversely affect our business, financial condition, and results of operations.
In addition, our competitors may develop competing products that achieve greater market acceptance. It is also possible that new competitors may emerge and acquire significant market share. Our inability to achieve sales and revenue due to competition will have an adverse effect on our business, financial condition, and results of operations.
If we are unable to successfully manage growth, our operations could be adversely affected.
Our progress is expected to require the full utilization of our management, financial and other resources. Our ability to manage growth effectively will depend on our ability to improve and expand operations, including our financial and management information systems, and to recruit, train and manage personnel. There can be no absolute assurance that management will be able to manage growth effectively.
If we do not properly manage the growth of our business, we may experience significant strains on our management and operations and disruptions in our business. Various risks arise when companies and industries grow quickly. If our business or industry grows too quickly, our ability to meet customer demand in a timely and efficient manner could be challenged. We may also experience development delays as we seek to meet increased demand for our services and platform. Our failure to properly manage the growth that we or our industry might experience could negatively impact our ability to execute on our operating plan and, accordingly, could have an adverse impact on our business, our cash flow and results of operations, and our reputation with our current or potential customers.
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We may fail to successfully integrate acquisitions or otherwise be unable to benefit from pursuing acquisitions.
We believe there are meaningful opportunities to grow through acquisitions and joint ventures across all service categories and we expect to continue a strategy of selectively identifying and acquiring businesses with complementary services. We may be unable to identify, negotiate, and complete suitable acquisition opportunities on reasonable terms. There can be no assurance that any business acquired by us will be successfully integrated with our operations or prove to be profitable to us. We may incur future liabilities related to acquisitions. Should any of the following problems, or others, occur as a result of our acquisition strategy, the impact could be material:
| ● | difficulties integrating personnel from acquired entities and other corporate cultures into our business; difficulties integrating information systems; |
| ● | the potential loss of key employees of acquired companies; |
| ● | the assumption of liabilities and exposure to undisclosed or unknown liabilities of acquired companies; or the diversion of management attention from existing operations. |
The elimination of monetary liability against our directors, officers and employees under our Articles of Incorporation and the existence of indemnification rights to our directors, officers and employees may result in substantial expenditures by our Company and may discourage lawsuits against our directors, officers, and employees.
Our Articles of Incorporation contain provisions that eliminate the liability of our directors for monetary damages to our Company and shareholders. Our bylaws also require us to indemnify our officers and directors. We may also have contractual indemnification obligations under our agreements with our directors, officers, and employees. The foregoing indemnification obligations could result in our company incurring substantial expenditures to cover the cost of settlement or damage awards against directors, officers, and employees that we may be unable to recoup. These provisions and resulting costs may also discourage our company from bringing a lawsuit against directors, officers, and employees for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors, officers, and employees even though such actions, if successful, might otherwise benefit our Company and shareholders.
We provide integrated project management services in the form of long-term, fixed-price contracts that may require us to assume additional risks associated with cost overruns, operating cost inflation, labor availability and productivity, supplier and contractor pricing and performance, and potential claims for liquidated damages.
We provide integrated project management services outside our normal discrete business in the form of long-term, fixed-price contracts. These services include acting as project managers as well as service providers and may require us to assume additional risks associated with cost over-runs. These customers may provide us with inaccurate information in relation to their reserves, which is a subjective process that involves location and volume estimation, that may result in cost over-runs, delays, and project losses. In addition, our customers often operate in countries with unsettled political conditions, war, civil unrest, or other types of community issues. These issues may also result in cost over-runs, delays, and project losses.
Providing services on an integrated basis may also require us to assume additional risks associated with operating cost inflation, labor availability and productivity, supplier pricing and performance, and potential claims for liquidated damages. We rely on third-party subcontractors and equipment providers to assist us with the completion of these types of contracts. To the extent that we cannot engage subcontractors or acquire equipment or materials in a timely manner and on reasonable terms, our ability to complete a project in accordance with stated deadlines or at a profit may be impaired. If the amount we are required to pay for these goods and services exceeds the amount we have estimated in bidding for fixed-price work, we could experience losses in the performance of these contracts. These delays and additional costs may be substantial, and we may be required to compensate our customers for these delays. This may reduce the profit to be realized or result in a loss on a project.
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We may experience unexpected supply shortages.
We distribute products from a wide variety of manufacturers and suppliers. Nevertheless, in the future we may have difficulty obtaining the products we need from suppliers and manufacturers as a result of unexpected demand or production difficulties. Also, products may not be available to us in quantities sufficient to meet our customer demand. Our inability to obtain sufficient products from suppliers and manufacturers, in sufficient quantities, could have a material adverse effect on our business, results of operations and financial condition. For instance, the war in Ukraine affected the geopolitical stability in Serbia. Consequently, the company postponed the production of electric vehicles in Serbia temporarily until after the Serbian election and kept our manufacturing of E-Raptor range of commercial electric Utility Vehicles in the UAE to mitigate the risk for operational and supply chain disruptions. ILUS commenced the production after the Serbian election and expects the first E-Raptor 6x6 models to roll off the Serbian production line in 2024. We cannot assure in the future that such incidents can significantly affect our supply chain and impact our financial and operational outlook.
A substantial decrease in the price of steel could significantly lower our gross profit or cash flow.
We distribute many products manufactured, some of which may contain steel and, as a result, our business may be significantly affected by the price and supply of steel. When steel prices are lower, the prices that we charge customers for products may decline, which affects our gross profit and cash flow. The steel industry as a whole is cyclical and at times pricing and availability of steel can be volatile due to numerous factors beyond our control, including general domestic and international economic conditions, labor costs, sales levels, competition, consolidation of steel producers, fluctuations in the costs of raw materials necessary to produce steel, import duties and tariffs and currency exchange rates. When steel prices decline, customer demands for lower prices and our competitors’ responses to those demands could result in lower sale prices and, consequently, lower gross profit or cash flow.
If steel prices rise, we may be unable to pass along the cost increases to our customers.
We maintain inventories of steel products to accommodate the lead time requirements of our customers. Accordingly, we purchase steel products to maintain our inventory at levels that we believe to be appropriate to satisfy the anticipated needs of our customers based upon historic buying practices, contracts with customers and market conditions. Our commitments to purchase steel products are generally at prevailing market prices in effect at the time we place our orders. If steel prices increase between the time, we order steel products and the time of delivery of such products to us, our suppliers may impose surcharges that require us to pay for increases in steel prices during such period. Demand for the products we distribute, the actions of our competitors, and other factors will influence whether we will be able to pass such steel cost increases and surcharges on to our customers, and we may be unsuccessful in doing so.
We are subject to increased risks associated with our investments in emerging markets, particularly in the Middle East region and specifically in the United Arab Emirates. These risks encompass significant political, social, and economic uncertainties in the region. Given the volatile nature of these markets, instabilities in these regions could significantly adversely affect the value of our investments.
Almost all of ILUS’s operations are conducted, and almost of its assets are, as at the date of this document, located in the UAE, which is defined as an emerging market. While most of the countries in which ILUS conducts business have historically not been affected by political instability, there is no assurance that any political, social, economic or market conditions affecting such countries in the Middle East region generally (as well as outside the Middle East region because of interrelationships within the global financial markets) would not have a material adverse effect on our business, results of operations and financial condition.
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Specific risks in these countries and the Middle East region that may have a material impact on our business, results of operations and financial condition include:
| ● | ongoing macroeconomic uncertainty and disruption due to the COVID-19 pandemic; |
| ● | an increase in inflation and the cost of living; |
| ● | a devaluation in the currency of any country in which ILUS has operations; |
| ● | external acts of warfare and civil clashes or other hostilities involving nations in the region; |
| ● | governmental actions or interventions, including tariffs, protectionism, and subsidies; |
| ● | difficulties and delays in obtaining governmental or other approvals, new permits and consents for our operations or renewing existing ones; |
| ● | potential lack of transparency or reliability in jurisdictions where ILUS operates; |
| ● | cancellation of contractual rights; |
| ● | lack of infrastructure; |
| ● | expropriation or nationalization of assets; |
| ● | inability to repatriate profits and/or dividends; |
| ● | continued regional political instability and unrest, including government or military regime change, riots or other forms of civil disturbance or violence, including through acts of terrorism; |
| ● | military strikes or the outbreak of war or other hostilities involving nations in the region; |
| ● | a material curtailment of the industrial and economic infrastructure development that is currently underway across the Middle East region; |
| ● | increased government regulations, or adverse governmental activities, with respect to price, import and export controls, the environment, customs and immigration, capital transfers, foreign exchange and currency controls, labor policies, land and water use and foreign ownership; |
| ● | changing tax regimes, including the imposition of taxes in currently tax favorable jurisdictions; |
| ● | arbitrary, inconsistent, or unlawful government action, including capricious application of tax laws and selective tax audits; |
| ● | limited availability of capital or debt financing; and |
| ● | slowing regional and global economic environment. |
Any unexpected changes in the political, social, economic, or other conditions in which ILUS operates or neighboring countries may have a material adverse effect on our business, results of operations and financial condition.
It is not possible to predict the occurrence of events or circumstances such as or similar to those outlined above or the impact of such occurrences and no assurance can be given that ILUS would be able to sustain its current profit levels if such events or circumstances were to occur.
Investors should also be aware that emerging markets are subject to greater risks than more developed markets, including in some cases significant legal, economic, and political risks. Accordingly, investors should exercise particular care in evaluating the risks involved and must decide for themselves whether, in light of those risks, their investment is appropriate. Generally, investment in developing markets is only suitable for sophisticated investors who fully appreciate the significance of the risks involved.
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We are exposed to risks from potentially unpredictable legal and regulatory environments in the U.A.E. and Middle East region.
ILUS currently operates in an emerging market economy in the U.A.E., which is in various stages of developing institutions and legal and regulatory systems that are not yet as fully matured and as established as those of Western Europe and the United States. Some of these countries are also in the process of transitioning to a market economy and, as a result, are experiencing changes in their economies and their government policies (including, without limitation, policies relating to foreign ownership, repatriation of profits, property and contractual rights and planning and permit granting regimes) that may affect our business in those countries. Such countries are also characterized by less comprehensive legal and regulatory environments and systems. Existing laws and regulations may be applied inconsistently with anomalies in their interpretation or implementation. Such anomalies could affect our ability to enforce its rights under its contracts or to defend its business against claims by others.
There can be no assurance that if laws or regulations were imposed on the products and services offered by ILUS it would not increase its costs, impact the costs that are associated with buying properties in Dubai and internationally, adversely affect the way in which ILUS conducts its business or otherwise have a material adverse effect on its results of operations and financial condition.
Any of the above factors, alone or in combination, may have a material adverse effect on our business, results of operations and financial condition.
We are subject to risks associated with potential unlawful or arbitrary governmental actions in the UAE, which could negatively impact our operations and financial performance.
Governmental authorities in the U.A.E. in which some of ILUS’s subsidiaries operate may have a high degree of discretion and, at times, act selectively or arbitrarily, without hearing or prior notice, and sometimes in a manner that is contrary to law or influenced by political or commercial considerations. Such governmental action could include, among other things, the withdrawal of building permits, the expropriation of property without adequate compensation or the forcing of business acquisitions, combinations, or sales. Any such action taken may have a material adverse effect on our business, results of operations and financial condition.
We are subject to the risk of international sanctions, which could significantly impact our business activities, results of operations and financial condition.
European, US and other international sanctions have in the past been imposed on companies engaging in certain types of transactions with specified countries or companies or individuals in those countries. Companies operating in certain countries in the Middle East region have been subject to such sanctions in the past. The U.A.E. are not subject to such sanctions as at the date of this transition report. The terms of legislation and other rules and regulations which establish sanctions regimes are often broad in scope and difficult to interpret.
If the U.A.E. were in the future to violate European, US or international sanctions, penalties could include a prohibition or limitation on the U.A.E.’s ability to conduct business in certain jurisdictions or to access the US or international capital markets. Any such sanction could have a material adverse effect on our business, results of operations and financial condition.
ITEM 1B. UNRESOLVED STAFF COMMENTS
This information is not required for smaller reporting companies.
ITEM 2. PROPERTIES
We lease factories and offices in the USA and the U.A.E. The lease agreements are filed as exhibits with this Form 10-K.
Bull Head Products Inc. has a lease at $3000/month, on a month-to-month basis. The property located at 87 Thorngrove Pike, Kodak Tennessee, 37764, USA. has an 8k sq. ft. building used for the manufacture of aluminum truck beds. Bull Head Products Inc. plans to move to a bigger premises to facilitate growth, but there is currently a shortage of industrial buildings for lease with our required minimum of 15k sq. ft. at a reasonable price per square foot (current average rate $17.50/sq. ft.).
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Firebug Mechanical Equipment LLC has a factory with 14k sq. ft located at Warehouse G04, 79th Street, DIRC Warehouse Complex, DIP 2, Dubai, United Arab Emirates with lease payments of $ 3630/month with the right but not the obligation to renew annually on March 28 of each year and has an office located at Matrix@Dinnington Business Centre, Nobel Way Dinnington, Sheffield S25 3QB, United Kingdom.
Ilustrato Pictures International Inc. has offices located at Al Marsa Street 66, 11th Floor, Office 1105, Dubai Marina P.O. Box 32923, Dubai, UAE, 4k sq. ft., with lease payments of $9870/month renewable annually on February 24 of each year and a virtual office at 26 Broadway, Suite 934, New York NY10004, USA. The cost per month is $99.00 and is renewed every 3 months.
Georgia Fire & Rescue Supply has a lease of $6,375 per month renewable on April 10, 2024. The property is 9,250 sq. ft., and used as a warehouse, offices and a section to service and repair tools used in the fire and rescue range of products. The property is located at 107 P Rickman Industrial Drive, Canton, Georgia, 30115, USA.
Quality industrial Corp. has a virtual office at 315 Montgomery Street, 94104 San Francisco, CA, USA. The cost per month is $109 and is renewed annually.
Samsara Luggage Inc. has an office at 135 East 57th Street Suite 18-130, New York, NY 10022, USA. The cost per month is $5,000 and is renewed annually in May. We believe that our current leased property is above our current needs and will from May 2024 have a virtual office at the same location.
Al Shola Gas LLC leases facilities for a term of 1 to 5 years at the addresses. set in table below with the square feet sizes and monthly leasing prices as indicated per facility. In total, ASG leases properties exceeding 17,000 square feet.
| Location | Lease Term | Area SqFt | Annual Rent in USD (3,67 AED) | |||||||
| Office at Hamsah building, O/112, Zabeel road, Dubai, U.A.E. | 1 Year | 1.222 | $ | 25.663 | ||||||
| Warehouse No. 19, Baghdad Street, Al Qusais Industrial Area 2, Al Qusais, Dubai, U.A.E. | 1 Year | 6.400 | $ | 7.115 | ||||||
| Warehouse Plot No: 987-1006, Al Layan 1, DIC, Dubai, U.A.E. | 5 Years | 10,010 | $ | 30,518 | ||||||
| Employee accommodation 17 units Plot No: 438-0, Muhaisanah second, DIC, Dubai, U.A.E. | 1 Year | 2,928 | 94,496 | |||||||
| Total | 20.550 | $ | 157,792 | |||||||
ITEM 3. LEGAL PROCEEDINGS
From time to time, we may become party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. Aside from the below, we are not currently a party, as plaintiff or defendant, to any legal proceedings that we believe to be material or which, individually or in the aggregate, would be expected to have a material effect on our business, financial condition or results of operation if determined adversely to us.
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We have been named as a defendant in an action commenced by our former CEO, Larson Elmore. A case has been filed in the Eight Judicial District Court of the State of Nevada (Case No. A-22-858343-C). Plaintiff alleges that we breached a stock purchase agreement dated May 10, 2020, and promissory notes and is therefore entitled to damages. We have potential counterclaims being prepared against the former CEO, arising due to improper action and lack of disclosures. The company has disputed the claim and argue that Larson Elmore has been misleading the company and its shareholders on various matters including but not limited to liabilities, company commitments and due diligence items presented by Larson Elmore during the takeover process. We have filed a motion to dismiss Larson Elmore’s complaint on the basis that it fails to state a claim and lacks jurisdiction in the Nevada courts. At the hearing on this motion, the court determined that discovery would be required before ruling for the company and denied the motion without prejudice. The company is evaluating a motion for reconsideration once the order has been entered. In the interim, the parties have discussed a tentative discovery schedule and the possibility of a mediation and settlement conference. Request for production of documents is due by April 19, 2024.
We have been named as a defendant in an action commenced by Steve Nicol, who claims that he loaned $12,000 on or about May 23, 2017, to Cache Cabinetry, LLC a subsidiary of ILUS under a promissory note, but that ILUS agreed to assume the note. He further claims that he elected to convert the note and that ILUS failed to convert the note into shares of ILUS common stock. He has alleged breach of contract, declaratory relief, and specific performance to require the company to issue 75,000,000 shares of common stock in ILUS. The company obtained provisional settlement on September 6, 2023, and final details are in negotiation.
We have been named as a defendant in an action commenced by Black Ice Advisors LLC, regarding a historic note entered into by the previous CEO, Larson Elmore with a principal amount of $4,000. The company disputes the legitimacy of the note. On June 5, 2023, we received a service of process by the Superior Court of California, County of San Diego, with a hearing rescheduled for March 8, 2024. On August 22, 2023, the company received information that Black Ice Advisors withdrew their prior demand for shares with a new motion seeking a monetary judgment in Black Ice’s in the amount of $3.772 million for the historic note with a principal amount of $4,000. At a hearing on November 3, 2023, the Court adopted its tentative ruling as the final ruling and denied the motion for summary judgement from Black Ice Advisors LLC. The company is currently trying to conclude a settlement agreement. A hearing date set for September 2024 if a settlement is unable to be negotiated.
We cannot predict whether this action involving our former CEO, or Black Ice Advisors LLC is likely to result in any material recovery by or expense to our company. Where it is reasonably possible to do so, the Company accrues estimates of the probable costs for the resolution of these matters. These estimates based upon an analysis of potential results and settlement strategies. It is possible, however, that future operating results for any particular quarter or annual period could be affected by changes in assumption.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information.
Our common stock is qualified for quotation on the OTC Markets- OTC Pink under the symbol “ILUS” and has been quoted on the OTC Pink since 2013.
Holders
As of December 31, 2023, we had 33 shareholders of record of common stock per transfer agent’s shareholder list with others in street name.
Dividends
The Company has not paid any cash dividends to date and does not anticipate or contemplate paying any dividends in the foreseeable future. It is the present intention of management to utilize all available funds for the growth of the Registrant’s business.
The Company has not declared any cash dividends since inception and does not anticipate paying any cash dividends in the foreseeable future. The payment of cash dividends is within the discretion of the Board of Directors and will depend on the Company’s earnings, capital requirements, financial condition, and other relevant factors. There are no restrictions that currently limit the Company’s ability to pay cash, or other, dividends on its Common Stock other than those generally imposed by applicable state law.
Equity Compensation Plan Information
The Company does not currently have an equity compensation plan in place other than equity compensation described in the individual employee contracts.
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Common and Preferred Stock
Our authorized capital stock consists of 3,500,000,000 shares of common stock and 235,741,000 shares of preferred stock, par value $0.001 per share. As of March 31, 2024, there were 1,864,531,857 shares of our common stock issued and outstanding and 79,732,925 shares of our preferred stock issued and outstanding.
Common Stock
Our common stock is entitled to one vote per share on all matters submitted to a vote of the stockholders, including the election of directors. Except as otherwise required by law or provided in any resolution adopted by our board of directors with respect to any series of preferred stock, the holders of our common stock will possess all voting power. Generally, all matters to be voted on by stockholders must be approved by a majority (or, in the case of election of directors, by a plurality) of the votes entitled to be cast by all shares of our common stock that are present in person or represented by proxy, subject to any voting rights granted to holders of any preferred stock. Holders of our common stock representing fifty percent (50%) of our capital stock issued, outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger, or an amendment to our Articles of Incorporation. Our Articles of Incorporation do not provide for cumulative voting in the election of directors.
Subject to any preferential rights of any outstanding series of preferred stock created by our board of directors from time to time, the holders of shares of our common stock will be entitled to such cash dividends as may be declared from time to time by our board of directors from funds available, therefore.
Subject to any preferential rights of any outstanding series of preferred stock created from time to time by our board of directors, upon liquidation, dissolution or winding up, the holders of shares of our common stock will be entitled to receive pro rata all assets available for distribution to such holders.
In the event of any merger or consolidation with or into another company in connection with which shares of our common stock are converted into or exchangeable for shares of stock, other securities, or property (including cash), all holders of our common stock will be entitled to receive the same kind and amount of shares of stock and other securities and property (including cash). Holders of our common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to our common stock.
In August 2019, the Company’s Amended its Articles of Incorporation to authorize it to issue up to two billion (2,000,000,000) shares, of which all shares are common stock, with a par value of one-tenth of one cent ($0.001) per share.
On March 26, 2024, the Company amended its Articles of Incorporation to authorize it to issue up to three and a half billion (3,500,000,000) common shares, with a par value of one-tenth of one cent ($0.001) per share.
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Preferred Stock
Our board of directors may become authorized to authorize preferred shares of stock and to divide the authorized shares of our preferred stock into one or more series, each of which must be so designated as to distinguish the shares of each series of preferred stock from the shares of all other series and classes. Our board of directors is authorized, within any limitations prescribed by law and our articles of incorporation, to fix and determine the designations, rights, qualifications, preferences, limitations, and terms of the shares of any series of preferred stock including, but not limited to, the following:
| (1) | The number of shares constituting that series and the distinctive designation of that series, which may be by distinguishing number, letter, or title; |
| (2) | The dividend rate on the shares of that series, whether dividends will be cumulative, and if so, from which date(s), and the relative rights of priority, if any, of payment of dividends on shares of that series; |
| (3) | Whether that series will have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights; |
| (4) | Whether that series will have conversion privileges, and, if so, the terms and conditions of such conversion, including provision for adjustment of the conversion rate in such events as the Board of Directors determines; |
| (5) | Whether or not the shares of that series will be redeemable, and, if so, the terms and conditions of such redemption, including the date or date upon or after which they are redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; |
| (6) | Whether that series will have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of such sinking fund; |
| (7) | The rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the corporation, and the relative rights of priority, if any, of payment of shares of that series; and |
| (8) | Any other relative rights, preferences, and limitations of that series. |
In August 2019, the Company also created the following preferred shares with a par value of $0.001 to be designated Class A, B and C.
Class A – 10,000,000 preferred shares that convert at 3 common shares for every 1 preferred class A share and voting rights of 500 common shares for every 1 preferred class A share. All 10,000,000 preferred class A shares have been issued to the Company’s CEO.
Class B – 10,000,000 preferred shares that convert at 3 common shares for every 1 preferred class B common share with voting rights of 100 common shares for every 1 preferred class B share. On August 26, 2021, the company amended Class B Shares to 100,000,000 shares with par value $0.001 that convert at 100 common shares for every 1 preferred Class B Share with voting rights of 100 common shares for every 1 preferred class B share. Dividends to be paid according to the company’s dividend policy agreed by the board from time to time.
Class C – 10,000,000 preferred shares that convert at 2 common shares for every 1 preferred class C common share with voting rights of 100 common shares for every 1 preferred class C share.
Class D - 60,741,000 preferred shares designated on February 14, 2020, par value $0.001, that convert at 500 common shares for every 1 preferred class D common share with voting rights of 500 common shares for every 1 preferred class D share.
Class E – 5,000,000 preferred shares designated on May 28, 2020, par value $0.001, with non-cumulative right to dividends at 6% a year commencing a year after issuance. Dividends to be paid annually. The Class E shares are redeemable at $1.00 per share, 2.25% must be redeemed per quarter, commencing one year after issuance, and shall be redeemed at 130% premium to the redemption value. The shares do not have voting rights.
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Class F – 50,000,000 preferred shares designated on July 20, 2021, par value $0.001, that convert at 100 common shares for every 1 preferred class F share with no voting rights and no dividends.
Options and Warrants
On February 4, 2022, a Common Share Purchase Warrant was issued to Discover Growth Fund, LLC, of the $2,000,000.00 convertible promissory note of even date herewith (the “Note”), , Holder is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date of issuance hereof, to purchase from the Company, 20,000,000 of the Company’s common shares (the “Warrant Shares”) (whereby such number may be adjusted from time to time pursuant to the terms and conditions of this Warrant) at the Exercise Price of $0.275, per share then in effect.
On December 2, 2022, we issued a common stock purchase warrant to AJB Capital Investment LLC for the $1,200,000.00 convertible promissory note. The holder is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date of issuance hereof, to purchase from the Company, 30,000,000 of the Company’s common shares (the “Warrant Shares”) (whereby such number may be adjusted from time to time pursuant to the terms and conditions of this Warrant) at the Exercise Price per share then in effect.
On January 26, 2023, we issued a common stock purchase warrant to Jefferson Street Capital for the $100,000.00 convertible promissory note. The holder is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date of issuance hereof, to purchase from the Company, 650,000 of the Company’s common shares (the “Warrant Shares”) (whereby such number may be adjusted from time to time pursuant to the terms and conditions of this Warrant) at the Exercise Price per share then in effect.
On June 30, 2023, we issued a common stock purchase warrant to Exchange Listing. The holder is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date of issuance hereof, to purchase from the Company, 200,000 of the Company’s common shares (the “Warrant Shares”) (whereby such number may be adjusted from time to time pursuant to the terms and conditions of this Warrant) at the Exercise Price per share then in effect.
Debt Securities
On January 28, 2022, the company entered into a convertible note with RB Capital Partners Inc. – Brett Rosen for the amount of $500,000. The note is convertible at a fixed price $0.20 and bears 5% interest per annum. The note matures on January 27, 2024. This has now been fully converted.
On February 04, 2022, the company entered into a convertible note with Discover Growth Fund LLC – John Burke for the amount of $2,000,000. The note is convertible at a 35% below the lowest past 15-day share price and bears 12% interest per annum. The note matured on February 4, 2023. The Company signed a Forbearance Agreement with Discover Growth Fund on May 3, 2023, the agreement has been filed as an exhibit with this amended the registration statement. The Company shall make monthly minimum loan payments to Discover Growth Fund of $450,000.00 commencing on May 30, 2023, and on the 5th day of each month thereafter, until the Note is paid in full. Four payments of $450,000 have been made as of the date of this filing.
On April 26, 2022, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $500,000. The note is convertible into common stock at the rate of $0.20 and bears 5% interest per annum. The note matures on April 25, 2024. This has now been fully converted.
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On May 20, 2022, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $500,000. The note is convertible into common stock at the rate of $0.50 and bears 5% interest per annum. The note matures on May 19, 2024.
On May 27, 2022, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $500,000. The note is convertible into common stock at the rate of $0.50 and bears 5% interest per annum. The note matures on May 26, 2024. This note has been partially converted.
On June 1, 2022, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $1,000,000. The note is convertible into common stock at the rate of $0.50 and bears 5% interest per annum. The note matures on May 31, 2024.
On July 12, 2022, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $500,000. The note is convertible into common stock at the rate of $0.50 and bears 5% interest per annum. The note matures on July 11, 2024.
On August 10, 2022, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $500,000. The note is convertible into common stock at the rate of $0.50 and bears 5% interest per annum. The note matures on August 09, 2024.
On August 25, 2022, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $200,000. The note is convertible into common stock at the rate of $0.50 and bears 5% interest per annum. The note matures on August 24, 2024.
On September 21, 2022, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $650,000. The note is convertible into common stock at the rate of $0.50 and bears 5% interest per annum. The note matures on September 20, 2024.
On November 14, 2022, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $400,000. The note is convertible into common stock at the rate of $0.50 and bears 5% interest per annum. The note matures on November 13, 2024.
On December 2, 2022, the company entered into a convertible note with AJB Capital Investment LLC for the amount of $1,200,000. The note is convertible into common stock upon an event of default at the rate equal to volume weighted average trading price of the specified period and bears 12% interest. The note matures on June 01, 2023. The Company amended the AJB capital investments LLC note on October 18, 2023. The amended convertible note filed with this registration statement amounts to $1,450,000 and is maturing on May 1, 2024. This note is now fully settled.
On January 26, 2023, the company entered into a convertible note with Jefferson Street Capital for the amount of $100,000. The note is convertible into common stock upon an event of default at the rate equal to volume weighted average trading price of the specified period and bears 12% interest. The note matures on July 26, 2023. This is now fully converted.
On April 12, 2023, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $500,000. The note is convertible into common stock at the rate of $0.50 and bears a 5% interest per annum. The note matures on April 12, 2025.
On May 2, 2023, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $250,000. The note is convertible into common stock at the rate of $0.50 and bears a 5% interest per annum. The note matures on May 2, 2025.
On May 30, 2023, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $200,000. The note is convertible into common stock at the rate of $0.50 and bears a 5% interest per annum. The note matures on May 30, 2025.
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On May 30, 2023, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $450,000. The note is convertible into common stock at the rate of $0.50 and bears a 5% interest per annum. The note matures on May 30, 2025.
On June 21, 2023, the company entered into a note payable of $61,868 with 1800 Diagonal Lending LLC. Repayable in 9 monthly payments and shall bear 13% interest as one time charge on the issuance date. In case of event of default, note is convertible into common stock at 65% of lowest trading price during previous ten days. The note matures on March 30, 2024. This note is now fully settled.
On July 03, 2023, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $475,000. The note is convertible into common stock at the rate of $0.50 and bears a 5% interest per annum. The note matures on July 3, 2025
On July 26, 2023, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $550,000. The note is convertible into common stock at the rate of $0.50 and bears a 5% interest per annum. The note matures on July 26, 2025.
On August 29, 2023, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $100,000. The note is convertible into common stock at the rate of $0.50 and bears a 5% interest per annum. The note matures on August 29, 2025.
On September 5, 2023, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $450,000. The note is convertible into common stock at the rate of $0.50 and bears a 5% interest per annum. The note matures on September 5, 2025.
On September 7, 2023, the company entered into convertible Note with Richard Astrom, for the amount of $27,500. The note is convertible into common stock at variable conversion price and bears a 9% interest per annum. The note matures on March 6, 2024. The Note cannot be converted until 3 months from the date of issue of Note. This has now been fully converted.
On October 20, 2023, ILUS entered into a note payable of $89,250.00 with 1800 Diagonal Lending LLC. Repayable any time after 180 days following the date of note till maturity date and shall bears 9% interest rate per annum. The note is convertible into common stock at the rate equal to variable conversion price as defined, shall mean 65% of lowest trading price during previous ten days. The note matures on July 30, 2024. This is now fully paid off.
On November 7, 2023, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $200,000. The note is convertible into common stock at the rate of $0.50 and bears a 5% interest per annum. The note matures on November 7, 2025.
On November 21, 2023, the company entered into a convertible note with Twn Brooks Inc., for the amount of $22,222. The note is convertible into common stock at the rate of 65% of the lowest trading price 10 days prior to conversion and bears a 9% interest per annum. The note matures on May 21, 2024. This has now been fully converted.
On November 21, 2023, the company entered into a convertible note with Carizzo LLC, for the amount of $22,222. The note is convertible into common stock at the rate of 65% of the lowest trading price 10 days prior to conversion and bears a 9% interest per annum. The note matures on May 21, 2024. This has now been fully converted.
On November 29, 2023, the company entered into a convertible note with Twn Brooks Inc., for the amount of $27,500. The note is convertible into common stock at the rate of 65% of the lowest trading price 10 days prior to conversion and bears a 9% interest per annum. The note matures on May 29, 2024.
On December 1, 2023, ILUS entered into a note payable of $118,367 with 1800 Diagonal Lending LLC. Repayable any time after 180 days following the date of note till maturity date and shall bears 13% interest rate per annum. The note is convertible into common stock at the rate equal to variable conversion price as defined, shall mean 65% of lowest trading price during previous ten days. The note matures on August 30, 2024.
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On December 2, 2023, the company entered into a convertible note with AJB Capital Investment LLC for the amount of $1,680,000. The note is convertible into common stock upon an event of default at the rate equal to volume weighted average trading price of the specified period and bears 12% interest. The note matures on May 01, 2024.
On December 30, 2023, the company entered into a convertible note with Twn Brooks Inc., for the amount of $27,500. The note is convertible into common stock at the rate of 65% of the lowest trading price 10 days prior to conversion and bears a 9% interest per annum. The note matures on June 29, 2024.
On January 15, 2024, the company entered into a convertible note with Twn Brooks Inc., for the amount of $27,500. The note is convertible into common stock at the rate of 65% of the lowest trading price 10 days prior to conversion and bears a 9% interest per annum. The note matures on July 15, 2024.
On January 17, 2024, ILUS entered into a note payable with a principal amount of $61,868 with 1800 Diagonal Lending LLC. Repayable any time after 180 days following the date of note till maturity date and bears 13% interest rate per annum. The note is convertible into common stock at the rate equal to variable conversion price of 65% of lowest trading price during previous ten days. The note matures on October 30, 2024.
On January 23, 2024, ILUS entered into a note payable with a principal amount of $25,000 with Twn Brooks Inc. Repayable any time after 180 days following the date of note till maturity date and bears 9% interest rate per annum. The note is convertible into common stock at the rate equal to variable conversion price as of 65% of lowest trading price during previous ten days. The note matures on July 22, 2024.
On January 31, 2024, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $600,000. The note is convertible into common stock at the rate of $0.10 and bears a 5% interest per annum. The note matures on January 25, 2026.
On April 15, 2024, the company entered into a convertible note with Twn Brooks Inc., for the amount of $55,000. The note is convertible into common stock at the rate of 65% of the lowest trading price 10 days prior to conversion and bears a 9% interest per annum. The note matures on October 15, 2024.
Transfer Agent
The Company’s transfer agent is Pacific Stock Transfer, Inc. located at 6725 Via Austi Pkwy, Suite 300 Las Vegas, NV 89119 with a phone number at (800) 785-7782. Our previous transfer agent was Securities Transfer Corporation located at 2901 N. Dallas Parkway suite 280, Plano TX 75093 with a phone number at 469-633-0101 The change in transfer agent had an effective date of March 10, 2023.
Equity Compensation Plans
We have no equity compensation plans other than equity compensation described in the individual employee contracts.
Recent Sales of Unregistered Securities
The following information represents securities sold by the Company since the January 1, 2022, which were not registered under the Securities Act. Included are sales of reacquired securities, as well as new issues, securities issued in exchange for property, services, or other securities, and new securities resulting from the modification of outstanding securities.
On February 7, 2022, we issued 20,000,000 shares of Common stock as compensation to Discover Growth Fund, John Burke as commitment shares for an aggregate price of $4,000,000.00.
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On February 16, 2022, we issued 50,000,000 shares of Common stock as compensation to Luki Ventures Inc. Alex Blondel for acquiring a GPL note and converting to shares for an aggregate price of $7,000,000.00.
On April 13, 2022, we issued 6,500 shares of preferred class F stock as compensation to George Joe Chudina for the purchase of Bull Head Products Inc for an aggregate price of $85,150.00.
On April 13, 2022, we issued 250 shares of preferred class F stock as compensation to Sheila A. Hansen for services in the purchase of Bull Head Products Inc for an aggregate price of $3.275.
On April 28, 2022, we converted 250,000 Preferred Class F shares to 25,000,000 shares of common stock for Cicero Transact Group Inc.
On May 4, 2022, we issued 53,000,000 shares of common stock as compensation to RB Capital Partners Inc. for conversion of a convertible note which was issued on 6th April 2021, for an aggregate price of $530,000,00.
On May 17, 2022, we converted 120,000,000 of common stock to 1,200,000 shares of preferred class B stock for FB Technologies Global Inc.
On July 26, 2022, we issued 53,700,000 shares of common stock as compensation to RB Capital Partners Inc. for conversion of a convertible note which was issued on 28th April 2021, for an aggregate price of $537,000.00.
On September 28, 2022, we issued 1,500 shares of preferred class F stock as compensation to Barbara J Whidby for the purchase of Georgia Fire Rescue Supply LLC for an aggregate price of $13,800.00.
On November 8, 2022, we issued 10,000,000 shares of common stock as compensation to AES Capital Management LLC. for conversion of a convertible note for an aggregate price of $390,000.00.
On December 5, 2022, we issued 35,000 preferred Class F shares to Krishnan Krishnamoorthy as staff compensation for an aggregate price of $273,700.00.
On December 5, 2022, we issued 25,000 preferred Class F shares to Carsten Kjems Falk as staff compensation for an aggregate price of $195,500.00.
On December 5, 2022, we issued 10,000 shares of preferred class F to Annemarie Leo-Smith as staff compensation for an aggregate price of $78,200.00.
On December 5, 2022, we issued 75,000 shares of preferred class F to Daniel Link as staff compensation for an aggregate price of $586,500.00.
On December 5, 2022, we issued 15,000 shares of preferred class F to Irina Shatalova as staff compensation for an aggregate price of $117,300.00.
On December 5, 2022, we issued 250,000 shares of preferred class F to Nicolas Link as staff compensation for an aggregate price of $1,955,000.00.
On December 5, 2022, we issued 15,000 shares of preferred class F to Abel Tshingambo Kayomb as staff compensation for an offering price of $117,300.00.
On December 08, 2022, we cancelled 10,000,000 shares of common stock held by Louise Bennett.
On December 08, 2022, we cancelled 1,300,000 shares of preferred class F held by Louise Bennett.
On December 08, 2022, we cancelled 800,000 shares of preferred class F held by John-Paul Backwell.
On December 08, 2022, we cancelled 2,250,000 shares of preferred class F held by James Gibbons.
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On December 9, 2022, we issued 12,000,000 shares of common stock as commitment shares to AJB Capital Investment LLC for an aggregate price of $480,000.00, pursuant to issuance of convertible promissory note amounting to $ 1,200,000 issued on December 2, 2022, The shares issued are against commitment fees payable reflecting a price per Commitment Fee Share of $0.04.
On December 9, 2022, we issued 18,000,000 shares of common stock as commitment shares to AJB Capital Investment LLC for an aggregate price of $720,000.00 pursuant to issuance of convertible promissory note amounting to $ 1,200,000 issued on December 2, 2022, The shares issued are against commitment fees payable reflecting a price per Commitment Fee Share of $0.04.
On March 17, 2023, we issued 10,000,000 shares of common stock as commitment shares to AJB Capital Investment LLC for an aggregate price of $400,000.00 pursuant to issuance of convertible promissory note amounting to $ 1,200,000 issued on December 2, 2022. The shares issued are against commitment fees payable reflecting a price per Commitment Fee Share of $0.04.
On March 21, 2023, we issued 53,850,000 shares of common stock as compensation to RB Capital Partners Inc. for conversion of a convertible note, which was issued on 28th January 2022, for an aggregate price of $538,500.
On April 12, 2023, 100,000 Preferred F shares were issued to John-Paul Backwell as staff compensation.
On April 12, 2023, 100,000 Preferred F shares were converted into 10,000,000 common shares.
On May 12, 2023, we issued 2,000,000 shares of common stock as commitment shares to AJB Capital Investment LLC for an aggregate price of $80,000 pursuant to Securities Purchase Agreement, dated as of December 2, 2022.
On June 01, 2023, we issued 53,300,000 shares of common stock as compensation to RB Capital Parters Inc. for conversion of a convertible note for an aggregate price of $533,000.
On July 14, 2023, we issued 53,125,000 shares of common stock as compensation to RB Capital Partners Inc. For conversion of a convertible note for an aggregate price of $531,250.
On July 14, 2023, the Company issued to Exchange Listing LLC 21,665,710 shares of our common stock for $100 for consultancy services for the planned uplist to a National Exchange.
On September 6, 2023, the company entered into a share purchase agreement with Kyle Edward Comerford to sell 5,555,556 for a purchase price of $50,000.
On September 7, 2023, the company entered into a share purchase agreement with Cameron Canzellarini to sell 10,000,000 for a purchase price of $100,000.
On September 11, 2023, we issued 625,000 shares of common stock as commitment shares to Richard Astrom with a fair market value of $0.02 per shares for an aggregate price of $12,500.
On September 18, 2023, we issued 5,000,000 shares of common stock to Kirt Weidner for a stock purchase agreement for an aggregate price of $50,000.
On September 21, we issued 6,000,000 shares of common stock to Kaleb Ryan for a stock purchase agreement for the aggregate price of $60,000.
On September 28, we issued 10,526,316 shares of common stock to Kevin Van Hoesen for a stock purchase agreement for the aggregate price of $100,000.
On October 13, 2023, the company entered into a share purchase agreement with Lovejit Singh to sell 5,000,000 shares of common stock for a purchase price of $50,000.
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On October 19, 2023, we issued 2,118,644 shares of common stock as compensation to 1800 Diagonal Lending LLC. For partial conversion of a convertible note for an aggregate price of $25,000.
On October 20, 2023, we issued 4,555,555 shares of common stock as compensation to Jefferson Street Capital LLC. For partial conversion of a convertible note for an aggregate price of $40,000.
On October 23, 2023, we issued 3,092,784 shares of common stock as compensation to 1800 Diagonal Lending LLC. For partial conversion of a convertible note for an aggregate price of $30,000.
On October 25, 2023, we issued 9,538,461 shares of common stock as compensation to Jefferson Street Capital LLC. For partial conversion of a convertible note for an aggregate price of $30,000.
On November 6, 2023, the company entered into a share purchase agreement with Kevin Van Hoesen to sell 16,666,667 shares of common stock for a purchase price of $100,000.
On November 07, 2023, we issued 9,538,461 shares of common stock as compensation to Jefferson Street Capital LLC. For partial conversion of a convertible note for an aggregate price of $30,000.
On November 15, 2023, we issued 21,926,875 shares of common stock as compensation to RB Capital Partners LLC for partial conversion of a convertible note for an aggregate price of $86,069.
On November 27, 2023, we issued 45,000,000 shares of common stock as compensation to RB Capital Partners LLC for partial conversion of a convertible note for an aggregate price of $181,638.
On November 28, 2023, we issued 2,000,000 shares of common stock as commitment shares to Twn Brooks Inc. with a fair market value of $.0116 per shares for an aggregate price of $23,200.
On November 28, 2023, we issued 2,000,000 shares of common stock as commitment shares to Carizzo LLC with a fair market value of $.0116 per shares for an aggregate price of $23,200.
On November 30, 2023, we issued 25,000,000 shares of common stock as commitment shares to AJB Capital Investments LLC with a value of $0.02 per share for an aggregate price of $500,000.
On November 30, 2023, we issued 2,750,000 shares of common stock as commitment shares to Twn Brooks Inc. with a fair market value of $.0105 per shares for an aggregate price of $28,875.
On December 1, 2023, we issued 9,462,563 shares of common stock as compensation to Jefferson Street Capital LLC. for partial conversion of a convertible note for an aggregate price of $30,000
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On December 1, 2023, FB Technologies Global Inc. converted 16,000,000 shares of common stock into 160,000 Preference B Shares.
On December 04, 2023, we issued 504,000 shares of Preference B Stock to Alexander Kolyakin pursuant to a share purchase agreement signed on June 10, 2020,
On December 06, 2023, we cancelled 112,000 shares of Preference D Stock owned by FB Technologies Global Inc.
On December 06, we issued 112,000 shares of Preference D Stock to Alexander Kolyakin pursuant to a share purchase agreement signed on June 10, 2020,
On December 19, 2023, we issued 15,654,360 shares of common stock as compensation to Jefferson Street Capital LLC. for final conversion of a convertible note for an aggregate price of $49,876.67.
On December 19, 2023, John-Paul Backwell. converted 50,000 shares of Preference F stock into 5,000,000 shares of common stock.
On January 03, 2024, we issued 3,250,000 shares of common stock as commitment shares to Twn Brooks Inc. with a fair market value of $.0072 per shares for an aggregate price of $23,400.
On January 18, 2024, we issued 6,349,206 shares of common stock to Kyle Comerford for a stock purchase agreement for an aggregate price of $20,000.
On January 22, 2024, we issued 2,500,000 shares of common stock as commitment shares to Twn Brooks Inc. with a fair market value of $.0065 per shares for an aggregate price of $16,250.
On January 22, 2024, James Gibbons converted 50,000 shares of Preference F stock into 5,000,000 shares of common stock.
On January 25, 2024, we issued 75,000,000 shares of common stock as compensation to AJB Capital Investments LLC for partial conversion of a convertible note for an aggregate price of $633,000.
On February 1, 2024, we issued 50,000,000 shares of common stock as compensation to RB Capital Partners LLC for partial conversion of a convertible note for an aggregate price of $200,000.
On February 2, 2024, we issued 2,250,000 shares of common stock as commitment shares to Twn Brooks Inc. with a fair market value of $.0172 per shares for an aggregate price of $38,700.
The sales and issuances of the securities described below were made pursuant to the exemptions from registration contained in Section 4(a)(2) of the Securities Act and Regulation D under the Securities Act. Each purchaser represented that such purchaser’s intention to acquire the shares for investment only and not with a view toward distribution. We requested our stock transfer agent to affix appropriate legends to the stock certificate issued to each purchaser and the transfer agent affixed the appropriate legends. Each purchaser was given adequate access to sufficient information about us to make an informed investment decision.
ITEM 6. [RESERVED]
We are not required to provide the information required by this item because we are a smaller reporting company.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our results of operations and financial condition should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this Form 10-K. 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 of factors. See “Cautionary Note Regarding Forward-Looking Statements” at the beginning of this Form 10.
Overview
ILUS is a Nevada-based corporation that primarily focuses on serving the public safety, industrial, and renewable energy sectors. The company aims to provide advanced technology solutions through its wholly-owned subsidiary Emergency Response Technologies (ERT). ERT’s technology aims to protect communities, assets, and frontline personnel by acquiring the latest technology and solutions for the emergency response industry. This industry includes emergency medical services, fire and rescue services, law enforcement, and emergency management. The company also has a subsidiary named Quality Industrial Corp. which focuses on acquiring and growing process manufacturing and industrial companies.
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Factors Affecting Our Performance
The primary factors affecting our results of operations include:
General Macro Economic Conditions
Our business is impacted by the global economic environment, employment levels, consumer confidence, government, and municipal spending. Global instability in securities markets and the war in Ukraine are among other factors that can impact our financial performance. In particular, changes in the U.S. economic climate can impact the demand for our product range. In addition, the impact of taxes and fees can have a dramatic effect on the availability, lead-times and costs associated with raw materials and parts for our product range.
Our purchases are discretionary by nature and therefore sensitive to the availability of financing, consumer confidence, and unemployment levels among other factors and are affected by general U.S. and global economic conditions, which create risks that future economic downturns will further reduce consumer demand and negatively impact our sales.
While less economically sensitive than the Emergency Response sector, the Industrial and Manufacturing sectors are also impacted by the overall economic environment. Tenders can be withdrawn and lead times for the manufacturing can be affected which can result in cancellation of orders if not delivered on time.
Impact of Acquisitions
Historically, a significant component of our growth has been through the acquisition of businesses in our targeted sectors. We typically incur upfront costs as we incorporate and integrate acquired businesses into our operating philosophy and operational excellence. This includes the consolidation of supplies and raw materials, optimized logistics and production processes, and other restructuring and improvement initiatives. The benefits of these integration efforts may not positively impact our financial results in the short term but have historically positively impacted medium to long-term results.
We recognize acquired assets and liabilities at fair value. This includes the recognition of identified intangible assets and goodwill. In addition, assets acquired, and liabilities assumed generally include tangible assets, as well as contingent assets and liabilities.
On April 1, 2024, after several failed effort negotiations, with the purpose of restructuring the deal and obtaining information from the selling shareholders of Quality International, the Purchase Agreement with Quality International was terminated by Quality International and subsequently cancelled by the Board of Directors of Quality Industrial Corp. The Company is in the process of unwinding the transaction and this Form 10-K amends the Annual Report on Form 10-K of Ilustrato Pictures International Inc. for the fiscal year ended December 31, 2022, as filed with the Securities and Exchange Commission on April 10, 2023.
We are filing this Form 10-K to restate our financial statements as of December 31, 2022, that were previously reported on the Original Filing and subsequent amendments. The following items have been amended to reflect the restatements:
Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Part II, Item 8. Financial Statements and Supplementary Data
Part IV, Item 15. Financial Statement Schedules and Footnotes
In addition, the Company’s Auditor has provided a new Audit Report as of the date of this filing in connection with this Form 10-K.
ILUS has two existing distinct divisions which serve a diverse global customer base. An overview of the current divisions is found below.
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Recent Developments
On March 21, 2024, the Company signed Stock Purchase Agreements with Christopher Derbyshire and Tim Grey and sold the Company’s shares in Hyperion Defense Solutions Ltd. and terminated their employment agreements simultaneously. The Company sold the shares due to a strategic shift which enables increased focus on the intended uplisting of its two publicly listed subsidiaries to a National Exchange through a Reverse Merger (“RTO”). Therefore, the company transitioned from having four subsidiaries to two division and one subsidiary. The two divisions are publicly listed entities.
Emergency Response Division
Emergency Response Technologies is a subsidiary of ILUS. The subsidiary is publicly listed on the OTC Markets, currently under the name, Samsara Luggage Inc. and the trading symbol, SAML. The Nevada registered subsidiary has filed for its name and trading symbol change with the Financial Industry Regulatory Authority. Emergency Response Technologies’ operating companies specialize in designing, manufacturing, and distributing specialty equipment, vehicles, and related parts and services. They offer a wide range of firefighting equipment and vehicles, including firefighting vehicle superstructures as well as electric utility vehicles. Additionally, they distribute equipment for emergency services and provide fire protection equipment sales, installation, and maintenance services. They also specialize in servicing and maintaining firefighting, rescue, and emergency medical services equipment.
On January 3, 2024, Ilustrato Pictures International Inc. (“Ilustrato”). acquired a convertible note from YAII PN, LTD with outstanding principal and accrued interest of $600,684.93 in Samsara Luggage Inc. (SAML). On the January 5, 2024, SAML reissued a convertible note to Ilustrato who on the same day converted the note into 150,753,425 shares of common stock in the Company pursuant to the terms of said exchange note. As a result of such conversion, Ilustrato acquired control of 91.5% of the outstanding shares in SAML as of January 5, 2024. In connection with the acquisition of the note and subsequent conversion to shares of common stock, the officers and directors, Mrs. Atara Dzikowski and David Dahan resigned from all their positions with the Company. Mr. Nicolas Link was appointed as the Company’s Chairman of the Board and Mr. John-Paul Backwell was appointed as the Company’s Chief Executive Officer and Director.
On February 23, 2024, Ilustrato Pictures International, Inc., a Nevada corporation (the “Company”) entered into a Stock Purchase Agreement (the “SPA”) with Samsara Luggage Inc., a Nevada corporation which is owned 71.1% by the Company (“SAML”). Simultaneous with the execution and delivery of the SPA, the Company sold to SAML all its equity interests in seven companies owned by the Company:
| ● | Firebug Mechanical Equipment LLC |
| ● | Georgia Fire & Rescue Supply LLC |
| ● | Bright Concept Detection and Protection System LLC |
| ● | Bull Head Products Inc |
| ● | E-Raptor |
| ● | The Vehicle Converters |
| ● | AL Shola Al Modea Safety and Security LLC, the only entity in which the Company does not own 100% but only 51% of the membership interests. |
The disposition by the Company of the shares it held in these companies, referred to by the Company as the Emergency Response Technologies “ERT”.
The consideration for the sale of the equity interests in the foregoing companies was paid by SAML by the issuance of 350,000 restricted shares of Series B stock of SAML and further milestone payment/s should applicable performance targets referenced be achieved.
The funding obligations for acquisitions by Samsara Luggage Inc., (OTC: SAML), are funded by SAML itself as are the ongoing obligations for future acquisitions by the subsidiary. Our subsidiary SAML is currently in the process of uplisting to a National Exchange through a reverse triangular merger (“RTO”).
Industrial & Manufacturing Division:
Quality Industrial Corp. is the industrial and manufacturing subsidiary of ILUS. The subsidiary is publicly listed on the OTC Markets with the trading symbol, QIND. The subsidiary’s primary focus is on acquisitions in the industrial, oil & gas, and utility sectors. We are committed to pursuing and executing acquisitions that align with our growth strategy and drive long term value creation for our shareholders. We believe we have a clear acquisition strategy in place and are determined to achieve our goals.
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As of March 27, 2024, we entered into a definitive Stock Purchase Agreement with the shareholders of Al Shola Al Modea Gas Distribution LLC (“ASG” or “Al Shola Gas”) to acquire a 51% interest in ASG. The Closing of the transaction took place when both parties signed the definitive Share Purchase Agreement. Al Shola Gas is an Engineering and Distribution Company in the LPG Industry in the United Arab Emirates and was established in 1980. The company is one of the region’s leading suppliers and contractors of LPG centralized pipeline systems and is approved by The General Directorate of Civil Defense, Government of Dubai, as a Central Gas Contractor and LPG Supplier.
Al Shola Gas is ISO 9001 certified and offers a comprehensive range of services. These include consultation, design, supply, installation, maintenance, distribution, and commissioning of central gas systems. ASG provides customized solutions for all your LPG requirements.
The funding obligations for acquisitions such as Al Shola Gas, by our publicly listed industrial subsidiary, Quality Industrial Corp. (OTC: QIND), are funded by QIND itself as are the ongoing obligations for future acquisitions by the subsidiary. Our subsidiary QIND is currently in the process of uplisting to a National Exchange through a reverse triangular merger (“RTO”).
Mining & Renewable Energy subsidiary:
Our Mining & Renewable Energy subsidiary is currently focused on the recycling and recovery of precious metals from electronic waste. Replay Solutions, our operating subsidiary, is an urban mining company which incorporates a ‘Closed loop’ concept whereby its uses Electronic Waste (E-Waste) and data destruction as a resource not only to extract precious metals but to recycle and reuse materials found in E-Waste, such as plastics. Replay Solutions aims to extract precious metals from items such as, but not limited to, Print Circuit Boards (PCB) from computers and mobile phones, Cable wires and car radiators. The company uses specialist machinery to shred, crush, and grind the items to powder form and then uses airflow and an electrostatic separator to separate the materials accordingly. Precious metals obtained from this urban mining process are then sold as are the recycled materials.
Plan of Operations 2024
ILUS has recently re-evaluated its business strategy and decided to divest its Defense Division in order to expedite growth in its Emergency Response and Industrial & Manufacturing Divisions. This strategic move is aimed at optimizing the company’s resources and focusing its efforts towards areas that are expected to yield higher returns and have a more significant impact on its overall performance. By streamlining its operations and aligning its core competencies with the evolving market demands, ILUS aims to enhance its market position and deliver enhanced value to its stakeholders.
ILUS is taking strategic steps to expand its portfolio and manufacturing capabilities. By mid-2024, the company plans to acquire additional Emergency Response and Industrial companies. To support its expansion, the company plans to hire additional personnel in finance and legal as well as appoint strategic advisors with extensive experience in the Emergency Response, Industrial, and Manufacturing sectors.
Our top priorities include consolidating our recent acquisitions, increasing production of emergency response products in the US, and completing the Reverse Mergers of SAML and QIND with National Exchange listed companies in the first half of 2024. Furthermore, we intend to issue an equity dividend in the form of SAML shares to ILUS shareholders following our sale of Emergency Response Technologies assets to SAML.
Results of Operations for the Years Ended December 31, 2023, and 2022
Net Sales & Gross Profit
For the year 2021, ILUS acquired three companies, namely Firebug Mechanical Equipment LLC ( engaged in the business of manufacturing firefighting equipment and firefighting vehicles for global customers, and Bright Concept Detection and Protection System LLC (BCD Fire) a company engaged in the business of sales, distribution, installation and maintenance of Fire Protection and Security systems and lastly, The Vehicle Converters LLC, a company engaged in the conversion of specialized vehicles for specialist applications such as mobile clinics, ambulances, defense and oil field transportation. In the year 2022, ILUS acquired Georgia Fire and Rescue Supplies LLC as well as Bull Head Products. The revenue earned in the year 2022 corresponds to the above companies.
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Our 2023 revenue decreased to $6,586,037 from $12,740,458 in 2022. The decline in revenue was mainly due to orders in our Emergency Response division in the last part of 2023 being delayed into 2024 due to renegotiations to improve margins. As a consequence, the Gross profit decreased from 53% in 2022 to 33% in 2023. Further our Emergency & Response Technologies subsidiary, our challenge has been to elevate some operating companies up to the performance of our top-performing businesses. We will continue to focus on improving the performance of lagging businesses through actions which include but are not limited to; targeted and more robust sales and marketing efforts, appointment of new distributors and dealers where applicable, enhanced product development, active measures to ensure that payment terms are met by customers, and significant efforts to reduce indirect costs as well as general and administrative costs.
There is no operating company in the consolidated financials of our Industrial & Manufacturing division for the year 2022 and 2023 as a result of the cancellation of our agreement with Quality International on April 1, 2024.
Operating Expenses
Selling, general and administrative (“SG&A”) expenses decreased from $8,998,208 in 2022, to $7,942,003 in 2023. The Company managed reduce operating expenses in 2023 to offset the revenue decline for the year. The consolidation includes an increase in operating expenses for our subsidiary QIND in 2023, from $421,545 for the year ended December 31, 2022, to $2,704,320 for the year ended December 31, 2023. The increase in operating expenses for the year 2023 was mainly due to shares issued in QIND to our management in the amount of $2,233,000,
Non-Operating Income & Expense
We incurred Other Non-Operating Income for the group of $5,231 for the year ended December 31, 2023, compared to Other Non-Operating Income of $6,568,206 for the same period ended December 31, 2022, due to gain on purchase of 77,669,078 shares in WSFT now QIND on May 28, 2022, and gain on settlement & forgiveness of debt for $457,071.
The Other Non-Operating Income gain in both years has been recorded at fair market value at the grant date in accordance with ASC 718.
We incurred Non-Operating Expenses for the group of $4,793,155 for the year ended December 31, 2023, compared to Non-Operating expenses of $6,575,495 for the same period ended December 31, 2022. Such non-operating expenses comprise Finance Costs, loss on license agreements and commitment fees.
Net Income
We incurred net loss for the group of $2,316,756 for the year ended December 31, 2022, compared to a net loss of $10,503,508 for the same period ended December 31, 2023. There were no operations in our Industrial & Manufacturing division for the year 2022 and 2023 due to the cancellation of the agreement with Quality International on April 1, 2024. Our Subsidiary QIND acquired 51% interest in Al Shola Gas on March 23, 2024. Al Shola Gas had a positive Net Income for the year of 2023, of appx. of approximately $1,780,000 for the year 2023. The company and its subsidiary QIND will be consolidating Al Shola Gas into its financials from Q1 2024.
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Divisional Income Statement
The Company is organized into two division based on the similarity of products, customers served, common use of facilities, and economic characteristics. The Company’s segments are as follows:
| 1. | Emergency Response |
| 2. | Industrial & Manufacturing |
All intersegment transactions have been eliminated in consolidation.
| Emergency & Response Division | December 31, 2023 | December 31, 2022 | ||||||
| Revenue | 6,586,037 | 5.610,749 | ||||||
| Cost of Revenue | 4,439.162 | 4,153,849 | ||||||
| Gross Profit | 2,146,875 | 1,456,900 | ||||||
| Operating expenses | 2,176,025 | 1,372,111 | ||||||
| Profit from Operations | (29,150 | ) | 84,789 | |||||
| Non- Operating expenses | 798,771 | 59,441 | ||||||
| Non- Operating Income | 1,691 | 325 | ||||||
| Net Income Division | (826,231 | ) | 25,673 | |||||
Our revenue increased to $6,586,037 in 2023 from $5,610,749 in 2022, constituting a 17.4% increase YoY. Gross profit percentage increased to 32.6% in 2023 from 26.0% in 2022. The focus for the year has been to drive high-margin orders and therefore increase our Gross Profit.
Operating expenses increased to $2,176,025 in 2023 from $1,372,111in 2022, primarily due to resource investments, product development, marketing, and employee-related costs and expenditure towards the strengthening and growth of our operating companies in this segment to increase both revenue and profitability in 2024 as well as longer-term growth. Due to the investments in our operations, we incurred a loss in profits from operations of $29,150 and had a gain of $84,789 in 2022
We have impaired our intangible assets and incurred non-operating expenses of $798,771 in 2023 (described in financial footnote 14), in order not to carry it forward in our subsidiary “SAML” in 2024. SAML acquired the assets of the Emergency & Response Division on February 27, 2024, and now functions as a Special Purpose Vehicle with the intent of uplisting to a National Exchange during 2024. Due to the investments in our operations which impaired our intangible assets, we incurred a loss in net profit of $826,231 compared to a gain of $25,673 in 2022.
For the coming year 2024, the Company will continue to allocate financial, technical and sales resources for recently acquired subsidiaries to positively impact their financial results through increased sales orders and efficiency. Allocated personnel will primarily focus on accelerating sales and marketing efforts, product development, international market expansion, optimizing of supply chain and production processes, overall increased profitability while continuing with the integration and optimization of current operating companies. With the group expansion and growth, we also intend to hire executives and personnel with specific industry experience and fields of expertise to streamline financial reporting, compliance, and Investor Relations and to improve our corporate governance.
| Industrial & Manufacturing | December 31, 2023 | Restated December 31, | ||||||
| Revenue | 0 | 0 | ||||||
| Cost of Revenue | 0 | 0 | ||||||
| Gross Profit | 0 | 0 | ||||||
| Operating expenses | 2,704,320 | 421,546 | ||||||
| Profit from Operations | (2,704,320 | ) | (421,546 | ) | ||||
| Non- Operating expenses | 1,457,477 | 138,388 | ||||||
| Non- Operating Income | 0 | 457,071 | ||||||
| Net Income Division | (4,161,797 | ) | (102,863 | ) | ||||
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For our Industrial and Manufacturing Division, the Operating expenses increased to $2,704,320 for the year ended December 31, 2023, from $421,545 for the year ended December 31, 2022. Our operating expenses in 2023, were mainly the result of shares issued to our management and Chairman in QIND in the amount of $2,233,000, which resulted in the majority of our increased operating expenses. Our Subsidiary QIND acquired a 51% interest in Al Shola Gas on March 23, 2024, and will be consolidating the profitable operating company into the financials from Q1 2024. Al Shola Gas reported approximately $1.78M in Net Profit for the year 2023 with an increase of 62% from its 2022 Net profit. QIND is currently in the final stages of its discussions with a National Exchange listed company and as a result, the subsidiary intends to uplist to a National Exchange in the first half of 2024.
Liquidity and Capital Resources
Our primary requirements for liquidity and capital are working capital, expansion of existing manufacturing facilities, product development and certification, new acquisitions and existing acquisition tranche payments, debt service payments and general corporate operational needs. Historically, these cash requirements have been met through cash provided by financing activities. The Company plan to file an S-1 registration statement to provide funding and satisfy our historical debt obligations including the settlement convertible notes and provide liquidity to satisfy our cash requirements for the next 12 months.
The Company’s current Debt Obligations (convertible note) are mentioned as below. However, historical Debt Obligation include Note Issued on February 4, 2022, to Discover Growth Fund amounting to $2,000,000. The Company signed a Forbearance Agreement with Discover Growth Fund on May 3, 2023, the agreement has been filed as an exhibit with this Form 10-K.
On April 1, 2024, ILUS entered into a consolidated note payable with a principal amount of $6,050,000 with RB Capital Inc. which amount represents the amount owed to Holder as of April 1, 2024. Repayable at any time and bears 7% interest rate per annum. The Company may repay the Holder in cash at any time in full including all interest and principal, without penalty. If the issuer pays the holder $650,000 in cash in a fiscal quarter the holder will not be permitted to carry out a conversion in that fiscal quarter, unless by mutual agreement. The note is convertible into common stock at the rate equal to variable conversion price as of 70% of lowest trading price during previous ten trading days.
The Company’s Debt Obligations (convertible note) as of this filing is mentioned as below.
| Note owner | Date | Maturity Date | Amount $ | |||
| Discover Growth Fund LLC | 02/04/2022 | 11/01/2023 | 507,200 | |||
| RB Capital Partners Inc. | 05/27/2022 | 05/26/2024 | 70,620 | |||
| RB Capital Partners Inc. | 06/01/2022 | 05/31/2024 | 1,000,000 | |||
| Twn Brooks Inc. | 11/29/2023 | 05/29/2025 | 27,500 | |||
| 1800 Diagonal Lending LLC | 12/01/2023 | 08/30/2024 | 65,759 | |||
| AJB Capital Investment LLC | 12/02/2023 | 05/01/2024 | 1,680,000 | |||
| Twn Brooks Inc. | 12/30/2023 | 06/29/2024 | 27,500 | |||
| Twn Brooks Inc. | 01/15/2024 | 07/15/2024 | 27,500 | |||
| 1800 Diagonal Lending LLC | 01/17/2024 | 10/30/2024 | 48,120 | |||
| Twn Brooks Inc. | 01/23/2024 | 07/22/2024 | 25,000 | |||
| RB Capital Partners Inc. | 01/31/2024 | 01/25/2026 | 600,000 | |||
| RB Capital Partners Inc. | 04/01/2024 | 04/01/2026 | 6,450,750 | |||
| Twn Brooks Inc. | 04/15/2024 | 10/15/2024 | 55,000 | |||
| TOTAL | 10,584,949 |
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Based on management’s current expectations and available information, the Company believes its increase in operations and cash available from Financing activities will be sufficient to meet its operating cash requirements, planned capital expenditures, interest and principal payments on all borrowings, for the foreseeable future.
The Company continues to actively monitor its liquidity position and working capital needs and prioritizes capital expenditure related to capacity and strategic investments. The Company remains in a stable overall position regarding capital resources and liquidity, which the Company believes is adequate to meet its projected needs.
Additionally, if aligned businesses are available for acquisition upon acceptable terms, the Company may obtain all or a portion of the financing for these acquisitions through the incurrence of additional borrowings.
Cash Flow Summary
The following table shows summary cash flows for fiscal years 2023 and 2022:
| Figures in USD | Jan-Dec 2023 | Restated Jan-Dec 2022 | ||||||
| Net Cash (used in) provided by Operating Activities | 1,476,623 | (12,665,088 | ) | |||||
| Net Cash (used in) provided by Investing Activities | (5,787,434 | ) | 2,530,556 | |||||
| Net Cash (used in) provided by Financing Activities | 4,354,611 | 10,118,137 | ||||||
| Net Increase in Cash & Cash Equivalents | 43,800 | (7,395 | ) | |||||
| Net cash at the end of the year | 213,073 | 176,273 | ||||||
Operating Cash Flows
Net cash used in operating activities for the fiscal year 2022 was $12.7 million, compared to net cash provided for operating activities in the year 2023 which was $1.5 million. The positive cash generation from operating activities for the fiscal year 2023 is a result of increase in net income and improved net working capital efficiency. There has been an increase in receivables as a result of higher volume along with an increase in Inventories to support production amid supply chain challenges; and also Trade accounts payable have been increased due to higher inventory purchases but are still less than the accounts receivable.
Investing Cash Flows
Investing activities provided cash of $2.5 million for acquisitions and the acquisition of non-current assets for the operations of the business in the fiscal year 2022. Investing activities used cash of $5.8 million for acquisitions in 2023. The amount of $5.5M corresponds to tranche payments to Quality International. The Company is in the process of unwinding the transaction.
Financing Cash flows
Cash provided by Financing activities for the fiscal year 2022, was $10.1 million, compared to net cash provided by financing activities in the year 2023 of $4.4 million. This is a result of funds raised through convertible notes.
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Going Concern
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.
Management evaluated all relevant conditions and events that are reasonably known or reasonably knowable, in the aggregate, as of the date the consolidated financial statements are issued and determined. The Company’s ability to continue as a going concern is dependent on the Company’s ability to generate increased revenues and raise capital within one year from the date of filing.
Over the next twelve months management plans to use borrowings and security sales to mitigate the effects of cash flow deficits; however, no assurance can be given that debt or equity financing, if and when require, will be available.
Goodwill
The Company continues to review its goodwill for possible impairment or loss of value at least annually or more frequently upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount is greater than its fair value. On December 31, 2023, we performed a goodwill impairment evaluation. We performed a qualitative assessment of factors to determine whether it was necessary to perform the goodwill impairment test. Based on the results of the work performed, the Company has concluded that no impairment loss was warranted on December 31, 2023. Factors including non-renewal of a major contract or other substantial changes in business conditions could have a material adverse effect on the valuation of goodwill in future periods and the resulting charge could be material to future periods’ results of operations.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Recently Issued Accounting Pronouncements
In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. ASU 2017-04 also clarifies that an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The new standard is effective for fiscal years beginning after December 15, 2019, for both interim and annual reporting periods. The Company is currently assessing the potential impact of the adoption of ASU 2017-04 on its consolidated financial statements.
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that any other new accounting pronouncements have been issued that might have a material impact on its financial position or results of operations.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are not required to provide the information required by this Item because we are a smaller reporting company.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by this Item 8 are included in this Annual Report following Item 15 hereof. As a smaller reporting company, we are not required to provide supplementary financial information.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
In designing and evaluating our disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
As required by SEC Rule 15d-15, our management carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K.
Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of the end of the period covered by this report.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) of the Exchange Act that occurred during the year ended December 31, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.
The following information sets forth the names, ages and positions of our current directors and executive officers.
| Name | Current Age | Position | ||
| Nicolas Link | 43 | Executive Chairman of the Board | ||
| John-Paul Backwell | 43 | Managing Director | ||
| Krishnan Krishnamoorthy | 58 | Chief Financial Officer | ||
| Carsten Kjems Falk | 49 | Chief Commercial Officer | ||
| Louise Bennett | 53 | Chief Operational Officer |
Set forth below is a brief description of the background and business experience of each of our current executive officers and directors.
Nicolas Link (Chief Executive Officer, Chairman and Directors)
Mr. Link is a serial Entrepreneur. He has started, grown, and exited multiple companies in the UK, Dubai, China, Poland & South Africa.
Mr. Link joined the Company on January 14, 2021, as our CEO and Chairman of the Board of Directors. From May 28, 2022, Mr. Mr. Link holds the position as Chairman of the Board of Directors at Quality Industrial Corp. “QIND” a Subsidiary of the Company. From April 8, 2022, Mr. Link holds the position as Chairman of the Board of Directors at Dear Cashmere Holding Co. (Swifty Global) “DRCR”. From November 1, 2014, Mr. Link holds the position as CEO and Chairman of the Board of Directors at Firebug Mechanical Equipment, an operating company. On December 7, 2022, Mr. Link was appointed as CEO and Chairman of the Board of Directors for CGrowth Capital, Inc (CGRA). From January 5, 2024, Mr. Link holds the position as Chairman of the Board of Directors at Samsara Luggage Inc. “SAML”.
Aside from that provided above, Mr. Link does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to section 12 of the Exchange Act or subject to the requirements of section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940.
We believe that Mr. Link is qualified to serve on our Board of Directors because of, but not limited to, his experience in growing several companies in the public safety industry and his extensive network.
John-Paul Backwell (Managing Director)
Mr. Backwell joined the Company on July 1, 2021, as our Managing Director. From May 28, 2022, Mr. Backwell was appointed as Chief Commercial Officer at Quality Industrial Corp. “QIND”, a Subsidiary of the Company. On October 21, 2022, Mr. Backwell resigned as CCO of Quality Industrial Corp. and was appointed as Chief Executive Officer of Quality Industrial Corp. From February 1, 2022, Mr. Backwell also holds the position as Director at Emergency Response Technologies. a Subsidiary of the Company. From November 1, 2014, Mr. Backwell has held the position of Director at FB Fire Technologies, an operating Company. From January 5, 2024, Mr. Link holds the position as Director and CEO at Samsara Luggage Inc. “SAML”.
Mr. Backwell has 25 years’ experience in the development and leadership of Global Sales Teams predominantly in the fields of Public Safety and Security with a focus on disruptive technology.
Aside from that provided above, Mr. Backwell does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to section 12 of the Exchange Act or subject to the requirements of section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940.
We believe that Mr. Backwell is qualified to serve on our Board of Directors because of, but not limited to, his extensive experience in the public safety industry, his business management, and global sales experience.
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Louise Bennett (Chief Operations Officer)
Mrs. Bennett joined the Company on February 1, 2021, as our Chief Operations Officer. From May 28, 2022, Mrs. Bennett also holds the position of Chief Operations Officer at Quality Industrial Corp. “QIND” a Subsidiary of the Company. From March 1, 2014, Mrs. Bennett holds the position of General Manager at FB Fire Technologies, an operating company.
Mrs. Bennett possesses more than 25 years’ experience in senior operational management of global engineering, manufacturing, and distribution businesses.
Aside from that provided above, Mrs. Bennett does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to section 12 of the Exchange Act or subject to the requirements of section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940.
Krishna Krishnamoorthy (Chief Financial Officer)
Mr. Moorthy joined the Company on February 2, 2022, as our Chief Financial Officer. From May 28, 2022, Mr. Moorthy holds the position as Chief Financial Officer at Quality Industrial Corp. “QIND” a Subsidiary of the Company. From August 2020 Jan 2022. Mr. Moorthy worked as Group CFO with Bahrain Ship Repair Engineering Company. From December 2019 to August 2020 Mr. Moorthy worked as CFO for Firebug, an operating company. From 2018 to 2019 Mr. Moorthy worked as Group CFO at HO Holdings.
Mr. Moorthy possesses 35 years’ senior Financial Management experience of Public and Private companies in London, Dubai, Singapore & India. Mr. Moorthy holds a Ph. D LLB and MBA.
Aside from that provided above, Mr. Krishnamoorthy does not hold and has not held over the past five years other directorships in any company with a class of securities registered pursuant to section 12 of the Exchange Act or subject to the requirements of section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940.
Carsten Kjems Falk (Chief Commercial Officer)
Mr. Falk joined the Company on June 1, 2022, as our Chief Commercial Officer. From June 1st, 2020, Mr. Falk held the position as Wikisoft Corp.’s “WSFT” (now Quality Industrial Corp. “QIND”) a Subsidiary of the Company and signed a new contract as Chief Executive Officer on September 1, 2020. On October 21, 2022, Mr. Falk resigned as CEO of Quality Industrial Corp. and was appointed as Chief Commercial Officer of Quality Industrial Corp. From 2013 to 2019, Mr. Falk was Chief Executive Officer at Domino’s Pizza DK. Mr. Falk holds a master’s degree in mathematics.
Mr. Falk has a proven track record, including successfully winning two Gazelle Prizes in 2017 and 2018 respectively from the leading financial newspaper in Denmark, and has been awarded twice for best in global online sales by Domino’s International in 2016 and 2018 respectively. Mr. Falk’s resume also includes business acceleration and driving profitable growth for B2B and B2C Venture capital owned companies in Europe.
Aside from that provided above, Mr. Falk does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to section 12 of the Exchange Act or subject to the requirements of section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940.
Term of Office
Our directors are appointed to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board, subject to their respective employment agreements.
Family Relationships
There are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.
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Involvement in Certain Legal Proceedings
During the past 10 years, none of our current directors, nominees for directors or current executive officers has been involved in any legal proceeding identified in Item 401(f) of Regulation S-K.
Committees
We do not have a separately designated standing audit committee. The entire board of directors performs the functions of an audit committee, but no written charter governs the actions of the board of directors when performing the functions of that would generally be performed by an audit committee. The board of directors approves the selection of our independent accountants and meets and interacts with the independent accountants to discuss issues related to financial reporting. In addition, the board of directors reviews the scope and results of the audit with the independent accountants, reviews with management and the independent accountants our annual operating results, considers the adequacy of our internal accounting procedures and considers other auditing and accounting matters including fees to be paid to the independent auditor and the performance of the independent auditor.
For the fiscal year ending December 31, 2023, and 2022, the board of directors:
Reviewed and discussed the audited financial statements with management and reviewed and discussed the written disclosures and the letter from our independent auditors on the matters relating to the auditor’s independence.
Based upon the board of directors’ review and discussion of the matters above, the board of directors authorized inclusion of the audited financial statements for the year ended December 31, 2023, and 2022, to be included in this Registration Statement on Form 10-K filed with the Securities and Exchange Commission.
Code of Ethics & Insider Trading Policy
We have adopted a Code of Ethics and Insider Trading Policy which applies to our executive officers, directors and employees, a copy of our code of ethics is filed as Exhibit to this Form 10-K.
Director Independence
We use the definition of “independence” by the NYSE to make the following determination. In making the determination of whether a member of the board is independent, our board also considers, among other things, transactions and relationships between each director and his immediate family and the Company, including those reported under the caption “Certain Relationships and Related-Party Transactions”. The purpose of this review is to determine whether any such relationships or transactions are material and, therefore, inconsistent with a determination that the directors are independent. Under such definitions, we do not have any independent directors. We intend to appoint independent directors to serve on the above committees, with three of the independent directors serving as chair of the three respective committees (Audit, Compensation & Nominating Committee).
Conflicts of Interest
Our key management and board are also represented on the management and board of QIND, our subsidiary and our Chairman and CEO Nicolas Link is also the Chairman of the Board of Directors of Dear Cashmere Holding Co. and the Chairman of the Board of Directors of CGrowth Capital, Inc. and Chairman of the Board of Directors of Samsara Luggage (“SAML”) where he also holds the voting control. As a result, at certain points in time, these jointly represented companies may have members of key management and board concentrate their efforts on transactions that focus on one company over the other, which collectively would not amount to work for our company on a full-time basis. Dear Cashmere Holding Co. and CGrowth Capital, Inc. are however not affiliated with ILUS or any of its subsidiaries and each public company are independently responsible for its own funding. We estimate that our key management will spend an average of 20% of their time on the company’s Subsidiary QIND and 80% on the parent company ILUS and SAML. This and other conflicts of interest may arise between us and our officers and director in that they have other business interests currently, with respect to ILUS, and in the future to which they devote their attention, such as in the case of acquisitions, and they may be expected to continue to do so although management time must also be devoted to our business. These competing interests could disrupt focus of our key management and board. As a result, conflicts of interest may arise that can be resolved only through exercise of such judgment as is consistent with each officer or director’s understanding of his or her fiduciary duties to our company.
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Currently we have only four officers and one director. We will seek to add additional officers and/or directors with industry experience and when the proper personnel are located and terms of employment are mutually negotiated and agreed, and we have sufficient capital resources and cash flow to make such appointments.
In an effort to resolve such potential conflicts of interest as between ILUS, SAML and QIND, our officers and director have agreed that any opportunities that they are aware of independently or directly through their association with us would be presented by them solely to ILUS, before determining whether to include the opportunities in QIND or SAML.
In general, our officers and director are required to present business opportunities to ILUS, which may include QIND or SAML, if:
| ● | ILUS could financially undertake the opportunity through SAML or QIND; and |
| ● | the opportunity is aligned with the Industrial business of QIND. |
| ● | the opportunity is aligned with the Emergency Response business of SAML. |
Potential investors should also be aware of the following potential conflicts of interest:
None of our officers or directors is required to commit his or her full time to our company and, accordingly, may have conflicts of interest in allocating his or her time among various business activities.
In the course of their other business activities, our officers and our sole director may become aware of investment and business opportunities which may be appropriate for presentation to us as well as the other entities with which they are affiliated.
Our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to the combination.
Below is a table summarizing the entities to which our executive officers and director currently have fiduciary duties or contractual obligations:
| Individual (1) | Entity(2) | Affiliation | ||
| Nicolas Link |
ILUS QIND DRCR CGRA SAML |
Director & CEO Director Director Director Director | ||
| John-Paul Backwell |
ILUS QIND SAML |
Managing Director CEO Director & CEO | ||
| Louise Bennett |
ILUS QIND |
COO COO | ||
| Krishnan Krishnamoorthy |
ILUS QIND |
CFO CFO | ||
| Carsten Kjems Falk |
ILUS QIND |
CCO CCO |
| (1) | Each person has a fiduciary duty with respect to the listed entities next to their respective names. Each of our Officers only have employment in our Company and our Subsidiaries QIND and SAML. |
| (2) | Each of the entities listed by trading symbol in this table has priority and preference relative to our company with respect to the performance by each individual listed in this table of his obligations and the presentation by each such individual of business opportunities. |
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We cannot provide assurances that our efforts to eliminate the potential impact of conflicts of interest will be effective. We are at risk that our officers and directors will favor their other business interest over the needs of our company. These competing business interests could interfere with our ability to successfully implement our business plan.
ITEM 11. EXECUTIVE COMPENSATION
The following summary compensation table sets forth all compensation awarded to, earned by, or paid to our named executive officers paid by us during the years ended December 31, 2023, and 2022.
2023 & 2022 Summary Compensation Table
| Year | Salary $ | Bonus $ | Stock Awards $ | Option Awards $ | Non-Equity Incentive Plan Compensation $ | Non- Qualified Deferred Compensation Earnings $ | All Other Compensation $ | Totals $ | |||||||||||||||||||||||||||
| Nicolas Link | 2023 | 123,840 | — | — | — | — | — | — | 123,840 | ||||||||||||||||||||||||||
| 2022 | 123,840 | — | 1,955,000 | — | — | — | — | 2,078,840 | |||||||||||||||||||||||||||
| John-Paul Backwell** | 2023 | 133,875 | — | 429,000 | — | — | — | — | 562,875 | ||||||||||||||||||||||||||
| 2022 | 133,875 | — | — | — | — | — | — | 133,875 | |||||||||||||||||||||||||||
| Louise Bennett** | 2023 | 79,050 | — | — | — | — | — | 79,050 | |||||||||||||||||||||||||||
| 2022 | 79,050 | — | — | — | — | — | — | 79,050 | |||||||||||||||||||||||||||
| Krishna Krishnamoorthy* | 2023 | 130,000 | — | — | — | — | — | — | 130,000 | ||||||||||||||||||||||||||
| 2022 | 117,180 | — | 273,700 | — | — | — | — | 390,880 | |||||||||||||||||||||||||||
| Carsten Falk* | 2023 | 90,000 | — | — | — | — | — | — | 90,000 | ||||||||||||||||||||||||||
| 2022 | 52,500 | — | 195,500 | — | — | — | — | 248,000 | |||||||||||||||||||||||||||
| * | Salary paid to Mr. Moorthy and Mr. Falk has been considered from their date of employment with the company as CFO and CCO respectively. Mr. Falk’ salary is paid through ILUS’ Subsidiary QIND. |
| ** | Stock awards issued to John-Paul Backwell and Louise Bennett in the year 2021 were partially cancelled on December 5, 2022. Stock Awards in 2021, displays the shares held by each officer as of December 31, 2022. Excludes 10,000,000 common shares to our officers and director pursuant to their employee contracts with a grant-date and fair value of the award as of June 1, 2022, at $0.0721 issued on May 4, 2023, and 5,600,000 common shares to our officers and director pursuant to their employee contracts with a grant-date and fair value of the award as of September 15, 2023, of $0.27. See narrative disclosure for equity break-down. |
Stock-awards to executives are in compliance with ASC 718 and recognized in the consolidated statement of operations based on their fair values at the date of grant. Par value deemed as fair value for 2021 audited financials.
Narrative Disclosure to Summary Compensation Table
Employment Agreements
Officers and Directors of the Company have an employee agreement with the parent Company. The agreements also govern their employment in the majority owned subsidiary Quality Industrial Corp. All salaries are paid by ILUS, and stock-based compensation is as a combination from both companies. We estimate that our key management will spend an average of 80% of their time on the Company and 20% of the time on the subsidiary company QIND. The executive’s short term incentive program reflects this time allocation in the Company and its subsidiary.
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Nicolas Link (Chief Executive Officer & Chairman)
The company entered into an employment agreement with Mr. Link on January 14, 2021, in his capacity as Chief Executive Officer and Chairman. Pursuant to the agreement, the company agreed to pay Mr. Link a salary of $123,840 per annum. For entering the amended employment agreement on June 30, 2022, Mr. Link will be issued 2,750,000 QIND common shares in 2023 and was issued 250,000 shares of Class F Shares convertible into 25,000,000 common shares in Ilustrato Pictures International Inc. on December 5, 2022. Lock-up of the shares will be under rule 144. If Mr. Link should resign, he will be considered a corporate insider according to rule 144 for a full year and can during any given week not sell or transfer more than 2.5% of the average weekly trading volume over the previous 30 days average trading volume. During the following year, Mr. Link can sell 25% of any remain shares per quarter. The company has the right of first refusal to acquire the shares or match any written offer by a third party for the shares.
Mr. Link is eligible for the Company Officer’s Short Term Incentive Programme (STIP), a Performance Based Target opportunity. Mr. Links target opportunity equals 5,000,000 common shares in the company and 1,000,000 common shares in the subsidiary Quality Industrial Corp. intended to qualify as performance-based compensation under Internal Revenue Code section 162(m). The STIP can range from 0% to a maximum target based on performance against agreed plan. The Board of Directors reserves the right to amend the Bonus Structure based on market conditions and overall performance of the Company. The targets will be negotiated with the Board of Directors and compensation paid out once a year after the filing of the annual results effective from the month after the filing, for the first time with the 2022 annual results. The board of directors will after the annual result discretionarily decide if the STIP is stock-based equity, cash pay-out or a combination in the company or its subsidiaries. The targets for the Officer for each term are as per the Officer’s Key Performance Indices (KPI) Agreement.
If the company or any of its subsidiaries should up list to a National Exchange through an initial public offering (IPO) the Chief Executive Officer is entitled to an appropriate market based salary in accordance with the size and performance of the business, payable in 12 equal monthly payments, on the last day of every month, plus annual bonus in line with a revised appropriate Short Term Incentive Programme (STIP), shares in an up list or IPO of the company or its subsidiaries, all subject to approval by the Board of Directors.
The Chief Executive Officer is also eligible of up to 30 days per year excluding public holidays and may not carry over any unused vacation from prior years and is eligible to participate in all health and welfare benefits provided to other employees of the Company (other than any severance plans) or similar own insurance paid by the company.
The Chief Executive Officer is also eligible for vacation, paid sick days, mobile and internet and expenses incurred for travel, nights away from home, dining, entertainment etc.
If the Chief Executive Officer’s employment is terminated by the Company for Cause, or if his employment with the Company ends due to death, “permanent and total disability”, or due to a voluntary termination of employment by The Chief Executive Officer without Good Reason, then The Chief Executive Officer shall only be entitled to any earned but unpaid compensation as well as any other amounts or benefits owing to The Chief Executive Officer under the terms of any employee benefit plan of the Company.
If the Chief Executive Officer’s employment with the Company is terminated by the Company in connection with a non-renewal of the Agreement without Cause or for reasons other than Cause, death, “permanent and total disability” or is voluntarily terminated by The Officer for Good Reason, then The Officer shall be entitled to the Severance Benefits as well as his Accrued Benefits. In the event the Director becomes entitled to receive severance benefits the Company shall pay and provide for a period of 6 months after the Date of Termination, the Director’s then current base salary per month, a pro rata portion of any annual bonus that the Director would have been entitled to receive.
The foregoing description of the employment agreement does not purport to be complete and is qualified in its entirety by the full text of the employment contract in exhibit 10.1.
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John-Paul Backwell (Managing Director)
The company entered into an employment agreement with Mr. Backwell on July 1, 2021, in his capacity as Managing Director. Pursuant to the agreement, the company agreed to pay Mr. Backwell a salary of $133,875 per annum. Mr. Backwell was issued 1,050,000 Preferred F Shares in September 2021. In accordance with his amended employee agreement signed on June 30, 2022, Mr. Backwell had 800,000 preferred F Shares cancelled on December 8, 2022, and currently holds 250,000 shares of Class F Shares convertible into 25,000,000 common shares in Ilustrato Pictures International Inc. In accordance with his amended employee agreement, Mr. Backwell will be issued 2,250,000 QIND common shares in 2023. Lock-up of the shares will be under rule 144. If Mr. Backwell should resign, he will be considered a corporate insider according to rule 144 for a full year and can during any given week not sell or transfer more than 2.5% of the average weekly trading volume over the previous 30 days average trading volume. During the following year, Mr. Backwell can sell 25% of any remain shares per quarter. The company has the right of first refusal to acquire the shares or match any written offer by a third party for the shares.
Mr. Backwell is eligible for the Company Officer’s Short Term Incentive Programme (STIP), a Performance Based Target opportunity. Mr. Backwell’s target opportunity equals 5,000,000 common shares in the company and 1,000,000 common shares in the subsidiary Quality Industrial Corp. intended to qualify as performance-based compensation under Internal Revenue Code section 162(m). The STIP can range from 0% to a maximum target based on performance against agreed plan. The Board of Directors reserves the right to amend the Bonus Structure based on market conditions and overall performance of the Company. The targets will be negotiated with the Board of Directors and compensation paid out once a year after the filing of the annual results effective from the month after the filing, for the first time with the 2022 annual results. The board of directors will after the annual result discretionarily decide if the STIP is stock-based equity, cash pay-out or a combination in the company or its subsidiaries. The targets for the Officer for each term are as per the Officer’s Key Performance Indices (KPI) Agreement.
If the company or any of its subsidiaries should up list to a National Exchange through an initial public offering (IPO) the Managing Director is entitled to an appropriate market based salary in accordance with the size and performance of the business, payable in 12 equal monthly payments, on the last day of every month, plus annual bonus in line with a revised appropriate Short Term Incentive Programme (STIP), shares in an up list or IPO of the company or its subsidiaries, all subject to approval by the Board of Directors.
The Managing Director is also eligible of up to 30 days per year excluding public holidays and may not carry over any unused vacation from prior years and is eligible to participate in all health and welfare benefits provided to other employees of the Company (other than any severance plans) or similar own insurance paid by the company.
The Managing Director is also eligible for vacation, paid sick days, mobile and internet and expenses incurred for travel, nights away from home, dining, entertainment etc.
If the Managing Director’s employment is terminated by the Company for Cause, or if his employment with the Company ends due to death, “permanent and total disability”, or due to a voluntary termination of employment by The Managing Director without Good Reason, then The Managing Director shall only be entitled to any earned but unpaid compensation as well as any other amounts or benefits owing to The Managing Director under the terms of any employee benefit plan of the Company.
If the Managing Director’s employment with the Company is terminated by the Company in connection with a non-renewal of the Agreement without Cause or for reasons other than Cause, death, “permanent and total disability” or is voluntarily terminated by The Officer for Good Reason, then The Officer shall be entitled to the Severance Benefits as well as his Accrued Benefits. In the event the Director becomes entitled to receive severance benefits the Company shall pay and provide for a period of 3 months after the Date of Termination, the Director’s then current base salary per month, a pro rata portion of any annual bonus that the Director would have been entitled to receive.
The foregoing description of the employment agreement does not purport to be complete and is qualified in its entirety by the full text of the employment contract in exhibit 10.2.
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Louise Bennett (Chief Operations Officer)
The company entered into an employment agreement with Mrs. Bennett on February 1, 2021, in her capacity as Chief Operations Officer. Pursuant to the agreement, the company agreed to pay Mrs. Bennett a salary of $53,280 per annum. Mrs. Bennett was issued 1,500,000 Pref F Shares and 10,000,000 common shares of ILUS on September 14, 2021. On 30th June 2022 an amended contract was entered into with a salary of $81,000 per annum. In accordance with her amended employee agreement signed on June 30, 2022, Mrs. Bennett had 850,000 Preferred F Shares and 10,000,000 common shares cancelled on December 8, 2022, and currently hold 200,000 shares of Class F Shares convertible into 20,000,000 common shares in Ilustrato Pictures International Inc. In accordance with her amended employee agreement, Mrs. Bennett will also be issued 500,000 QIND common shares in 2023. Lock-up of the shares will be under rule 144. If Mrs. Bennett should resign, she will be considered a corporate insider according to rule 144 for a full year and can during any given week not sell or transfer more than 2.5% of the average weekly trading volume over the previous 30 days average trading volume. During the following year, Mrs. Bennett can sell 25% of any remain shares per quarter. The company has the right of first refusal to acquire the shares or match any written offer by a third party for the shares.
Mrs. Bennett is eligible for the Company Officer’s Short Term Incentive Programme (STIP), a Performance Based Target opportunity. Mrs. Bennett’s target opportunity equals 2,500,000 common shares in the company and 250,000 common shares in the subsidiary Quality Industrial Corp. intended to qualify as performance-based compensation under Internal Revenue Code section 162(m). The STIP can range from 0% to a maximum target based on performance against agreed plan. The Board of Directors reserves the right to amend the Bonus Structure based on market conditions and overall performance of the Company. The targets will be negotiated with the Board of Directors and compensation paid out once a year after the filing of the annual results effective from the month after the filing, for the first time with the 2022 annual results. The board of directors will after the annual result discretionarily decide if the STIP is stock-based equity, cash pay-out or a combination in the company or its subsidiaries. The targets for the Officer for each term are as per the Officer’s Key Performance Indices (KPI) Agreement.
If the company or any of its subsidiaries should up list to a National Exchange through an initial public offering (IPO) the Chief Operations Officer is entitled to an appropriate market based salary in accordance with the size and performance of the business, payable in 12 equal monthly payments, on the last day of every month, plus annual bonus in line with a revised appropriate Short Term Incentive Programme (STIP), shares in an up list or IPO of the company or its subsidiaries, all subject to approval by the Board of Directors.
The Chief Operations Officer is also eligible of up to 30 days per year excluding public holidays and may not carry over any unused vacation from prior years and is eligible to participate in all health and welfare benefits provided to other employees of the Company (other than any severance plans) or similar own insurance paid by the company.
The Chief Operations Officer is also eligible for vacation, paid sick days, mobile and internet and expenses incurred for travel, nights away from home, dining, entertainment etc.
If the Chief Operations Officer’s employment is terminated by the Company for Cause, or if her employment with the Company ends due to death, “permanent and total disability”, or due to a voluntary termination of employment by The Chief Operations Officer without Good Reason, then The Chief Operations Officer shall only be entitled to any earned but unpaid compensation as well as any other amounts or benefits owing to The Chief Operations Officer under the terms of any employee benefit plan of the Company.
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If the Chief Operations Officer’s employment with the Company is terminated by the Company in connection with a non-renewal of the Agreement without Cause or for reasons other than Cause, death, “permanent and total disability” or is voluntarily terminated by The Officer for Good Reason, then The Officer shall be entitled to the Severance Benefits as well as her Accrued Benefits. In the event the Officer becomes entitled to receive severance benefits the Company shall pay and provide for a period of 3 months after the Date of Termination, the Officer’s then current base salary per month, a pro rata portion of any annual bonus that the Officer would have been entitled to receive.
The foregoing description of the employment agreement does not purport to be complete and is qualified in its entirety by the full text of the employment contract in exhibit 10.3.
Krishnan Krishnamoorthy (Chief Financial Officer)
The company entered into an employment agreement with Mr. Krishnamoorthy on February 2, 2022, in his capacity as Chief Financial Officer. Pursuant to the agreement, the company agreed to pay Mr. Moorthy a salary of $130,000 per annum. In accordance with his amended employee agreement signed on June 30, 2022, Mr. Krishnamoorthy was issued 35,000 shares of Class F Shares in Ilustrato Pictures International Inc. on December 5, 2022, convertible into 3,500,000 common shares in Ilustrato Pictures International Inc. In accordance with his amended employee agreement, Mr. Krishnamoorthy will also be issued 2,250,000 QIND common shares in 2023. Lock-up of the shares will be under rule 144. If Mr. Krishnamoorthy should resign, he will be considered a corporate insider according to rule 144 for a full year and can during any given week not sell or transfer more than 2.5% of the average weekly trading volume over the previous 30 days average trading volume. During the following year, Mr. Krishnamoorthy can sell 25% of any remain shares per quarter. The company has the right of first refusal to acquire the shares or match any written offer by a third party for the shares.
Mr. Krishnamoorthy is eligible for the Company Officer’s Short Term Incentive Programme (STIP), a Performance Based Target opportunity. Mr. Krishnamoorthy ’s target opportunity equals 2,500,000 common shares in the company and 250,000 common shares in the subsidiary Quality Industrial Corp. intended to qualify as performance-based compensation under Internal Revenue Code section 162(m). The STIP can range from 0% to a maximum target based on performance against agreed plan. The Board of Directors reserves the right to amend the Bonus Structure based on market conditions and overall performance of the Company. The targets will be negotiated with the Board of Directors and compensation paid out once a year after the filing of the annual results effective from the month after the filing, for the first time with the 2022 annual results. The board of directors will after the annual result discretionarily decide if the STIP is stock-based equity, cash pay-out or a combination in the company or its subsidiaries. The targets for the Officer for each term are as per the Officer’s Key Performance Indices (KPI) Agreement.
If the company or any of its subsidiaries should up list to a National Exchange through an initial public offering (IPO), the Chief Financial Officer is entitled to an appropriate market-based salary in accordance with the size and performance of the business, payable in 12 equal monthly payments, on the last day of every month, plus annual bonus in line with a revised appropriate Short Term Incentive Programme (STIP), all subject to approval by the Board of Directors.
The Chief Financial Officer is also eligible of up to 30 days per year excluding public holidays and may not carry over any unused vacation from prior years and is eligible to participate in all health and welfare benefits provided to other employees of the Company (other than any severance plans) or similar own insurance paid by the company.
The Chief Financial Officer is also eligible for vacation, paid sick days, mobile and internet and expenses incurred for travel, nights away from home, dining, entertainment etc.
If the Chief Financial Officer’s employment is terminated by the Company for Cause, or if his employment with the Company ends due to death, “permanent and total disability”, or due to a voluntary termination of employment by The Chief Financial Officer without Good Reason, then The Chief Financial Officer shall only be entitled to any earned but unpaid compensation as well as any other amounts or benefits owing to The Chief Financial Officer under the terms of any employee benefit plan of the Company.
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If the Chief Financial Officer’s employment with the Company is terminated by the Company in connection with a non-renewal of the Agreement without Cause or for reasons other than Cause, death, “permanent and total disability” or is voluntarily terminated by The Officer for Good Reason, then The Officer shall be entitled to the Severance Benefits as well as his Accrued Benefits. In the event the Officer becomes entitled to receive severance benefits the Company shall pay and provide for a period of 3 months after the Date of Termination, the Officer’s then current base salary per month, a pro rata portion of any annual bonus that the Officer would have been entitled to receive.
The foregoing description of the employment agreement does not purport to be complete and is qualified in its entirety by the full text of the employment contract in exhibit 10.4.
Carsten Kjems Falk (Chief Commercial Officer)
The company entered into an employment agreement with Mr. Falk on June 1, 2022, in his capacity as Chief Commercial Officer. Pursuant to the agreement, the company agreed to pay Mr. Falk a salary of $90,000 per annum starting June 2022. Mr. Falk was issued 25,000 Pref F Shares in ILUS on December 5, 2022, convertible into 2,500,000 common shares in Ilustrato Pictures International Inc. Mr. Falk will also be issued 2,250,000 common shares in QIND in 2023, for entering the employment agreement on June 1, 2022, and waiving all liabilities as CEO in the subsidiary Quality Industrial Corp. Lock-up of the shares will be under rule 144. If Mr. Falk should resign, he will be considered a corporate insider according to rule 144 for a full year and can during any given week not sell or transfer more than 2.5% of the average weekly trading volume over the previous 30 days average trading volume. During the following year, Mr. Falk can sell 25% of any remain shares per quarter.
Mr. Falk is eligible for the Company Officer’s Short Term Incentive Programme (STIP), a Performance Based Target opportunity. Mr. Falk’s target opportunity equals 3,500,000 common shares in the company and 250,000 common shares in the subsidiary Quality Industrial Corp. intended to qualify as performance-based compensation under Internal Revenue Code section 162(m). Any bonus compensation will be pro-rated according to the start date of the Officer. The STIP can range from 0% to a maximum target based on performance against agreed plan. The Board of Directors reserves the right to amend the Bonus Structure based on market conditions and overall performance of the Company. The targets will be negotiated with the Chairman of the board and compensation paid out once a year after the filing of the annual results effective from the month after the filing, for the first time with the 2022 annual results. The board of directors will after the annual result discretionarily decide if the STIP is stock-based equity, cash pay-out or a combination in the company or its subsidiaries. The targets for the Officer for each term are as per the Officer’s Key Performance Indices (KPI) Agreement.
If the company or any of its subsidiaries should up list to a National Exchange through an initial public offering (IPO) the Chief Commercial Officer is entitled to an appropriate market-based salary in accordance with the size and performance of the business, payable in 12 equal monthly payments, on the last day of every month, plus annual bonus in line with a revised appropriate Short Term Incentive Programme (STIP), all subject to approval by the Board of Directors.
The Chief Commercial Officer is also eligible of up to 30 days per year excluding public holidays and may not carry over any unused vacation from prior years and is eligible to participate in all health and welfare benefits provided to other employees of the Company (other than any severance plans) or similar own insurance paid by the company.
The Chief Commercial Officer is also eligible for vacation, paid sick days, mobile and internet and expenses incurred for travel, nights away from home, dining, entertainment etc.
If the Chief Commercial Officer’s employment is terminated by the Company for Cause, or if his employment with the Company ends due to death, “permanent and total disability”, or due to a voluntary non-renewal of this Agreement by the Company or due to a voluntary termination of employment by The Chief Commercial Officer without Good Reason, then The Chief Commercial Officer shall only be entitled to any earned but unpaid compensation as well as any other amounts or benefits owing to The Chief Commercial Officer under the terms of any employee benefit plan of the Company.
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If the Chief Commercial Officer’s employment with the Company is terminated by the Company in connection with a non-renewal of the Agreement without Cause or for reasons other than Cause, death, “permanent and total disability” or is voluntarily terminated by The Officer for Good Reason, then The Officer shall be entitled to the Severance Benefits as well as his Accrued Benefits. In the event the Officer becomes entitled to receive severance benefits the Company shall pay and provide for a period of 3 months after the Date of Termination, the Officer’s then current base salary per month, a pro rata portion of any annual bonus that the Officer would have been entitled to receive.
The foregoing description of the employment agreement does not purport to be complete and is qualified in its entirety by the full text of the employment contract in exhibit 10.5.
Outstanding Equity Awards at Fiscal Year-End
Other than as discussed above, no executive officer received any equity awards, or holds exercisable or un-exercisable options, as of the years ended December 31, 2022, and 2021.
Long-Term Incentive Plans
There are no arrangements or plans in which the Company would provide pension, retirement or similar benefits for our Director or executive officers other than described in the individual contracts.
Compensation Committee
The Company currently does not have a compensation committee of the Board of Directors. The Board of Directors determines executive compensation.
Director Independence
The Board of Directors is currently composed of Two members, which are Nicolas Link and John-Paul Backwell. Aside from them, no director qualifies as independent in accordance with the published listing requirements of the NASDAQ Global Market. The NASDAQ independence definition includes a series of objective tests, such as that the Director is not, and has not been for at least three years, one of the Company’s employees and that neither the Director, nor any of his family members has engaged in various types of business dealings with us.
Director Compensation
The table below summarizes all compensation of our directors as of December 31, 2023.
DIRECTOR COMPENSATION
| Name | Fees | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Non-Qualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||
| Nicholas Link | 109,000 | - | - | - | - | - | 109,000 | |||||||||||||||||||||
Narrative Disclosure to the Director Compensation Table
Directors are permitted to receive fixed fees and other compensation for their services as Directors. The Board of Directors has the authority to fix the compensation of Directors. No amounts have been paid to, or accrued to, Directors in such capacity.
84
Security Holders Recommendations to Board of Directors
The Company welcomes comments and questions from the shareholders. However, while the Company appreciates all comments from shareholders, it may not be able to individually respond to all communications.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth certain information known to us regarding beneficial ownership of our capital stock as of March 31, 2023, for (i) all executive officers and directors as a group and (ii) each person, or group of affiliated persons, known by us to be the beneficial owner of more than five percent (5%) of our capital stock. All addresses are 26 Broadway, Suite 934, New York, NY 10004 unless otherwise indicated.
| Name & Address | Common Stock | Class A Preferred Stock |
Class B Preferred Stock |
Class D Preferred Stock |
Class E Preferred Stock |
Class F Preferred Stock |
||||||||||||||||||||||||||||||||||||||||||
| of Beneficial Owner | No. of shares Owned |
Percent of Class | No. of shares Owned | Percent of Class | No. of shares Owned | Percent of Class | No. of shares Owned | Percent of Class | No. of shares Owned | Percent of Class | No. of shares Owned | Percent of Class | ||||||||||||||||||||||||||||||||||||
| FB Technologies Global, Inc, - Nicolas Link, Dubai, U.A.E.2 | 10,000,000 | 3 | 0.5 | % | 10,000,000 | 100 | % | 3,560,000 | 88 | % | 60,741,000 | 100 | % | - | - | 250,000 | 14.2 | % | ||||||||||||||||||||||||||||||
| Krishnan Krishnamoorthy, Dubai, U.A.E. | - | - | - | - | - | - | - | - | - | - | 35,000 | 2.0 | % | |||||||||||||||||||||||||||||||||||
| Carsten Kjems Falk, Frederiksberg, Denmark | - | - | - | - | - | - | - | - | - | - | 25,000 | 1.4 | % | |||||||||||||||||||||||||||||||||||
| Louise Bennett, Doncaster, United Kingdom | - | - | - | - | - | - | - | - | - | - | 200,000 | 11.4 | % | |||||||||||||||||||||||||||||||||||
| John-Paul Backwell, Cheshire, United Kingdom | - | - | - | - | - | - | - | - | - | - | 200,000 | 11.4 | % | |||||||||||||||||||||||||||||||||||
| All Directors and Executive Officers as a Group (5 persons) and 5% Holders | 10,000,000 | 0.5 | % | 10,000,000 | 100 | % | 3,560,000 | 88 | % | 60,741,000 | 100 | % | - | - | 760,000 | 46.5 | % | |||||||||||||||||||||||||||||||
| (1) | Pursuant to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership includes any shares as to which a shareholder has sole or shared voting power or investment power, and any shares which the shareholder has the right to acquire within 60 days, including upon exercise of common shares purchase options or warrants. |
| (2) | The percentage is based on 1,864,531,857 shares of common stock outstanding, 10,000,000 shares of Class A Preferred Stock outstanding, 4,064,000 shares of Class B Preferred Stock outstanding, 60,741,000 shares of Class D Preferred Stock outstanding, 3,172,175 shares of Class E Preferred Stock outstanding, and 1,755,750 shares of Class F Preferred stock outstanding, as of March 31, 2024. |
| (3) |
Includes 10,000,000 common shares held by FB Technologies Global, Inc. in which Mr. Link has voting and dispositive control, 10,000,000 shares of Class A Preferred Stock held by FB Technologies Global, Inc. in which Mr. Link has voting and dispositive control that converts into 30,000,000 shares of common stock and 3,560,000 shares of Class B Preferred Stock held by FB Technologies Global, Inc. in which Mr. Link has voting and dispositive control that converts into 356,000,000 shares of common stock and 60,741,000 shares of Class D Preferred Stock held by FB Technologies Global, Inc. in which Mr. Link has voting and dispositive control that convert into 30,370,500,000 shares of common stock and 250,000 shares of Class F Preferred Stock in which Mr. Link has voting and dispositive control that converts into 25,000,000 shares of common stock. |
85
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Other than described below or the transactions described under the heading “Executive Compensation,” there have not been, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a participant in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any director, executive officer, holder of 5% or more of any class of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest.
The Company issued 75,000 preferred class F shares to Daniel Link as staff compensation for an aggregate price of $586,500 on December 5, 2022. Daniel Link and Nicolas Link are siblings. Daniel Link was employed in Firebug UK from 2014 until February 28, 2022, thereafter he was employed in Replay Solutions which was incorporated by ILUS on March 1, 2022.
FB Technologies Global, Inc. is wholly owned by Nicolas Link. FB Technologies Global, Inc. On May 10, 2020, FB Technologies Global, Inc., wholly owned by Nicolas Link, acquired shares of ILUS stock, consisting of 10,000,000 Pref A Shares, 60,741,000 Pref D shares and 360,000,000 common shares, from the prior CEO, Larson Elmore, for an aggregate purchase price of $140,000.
The company received 10,000,000 shares of Common stock in Dear Cashmere Holding Co on May 21, 2021, as compensation for services provided to DRCR such as but not limited to, free rent in offices at Al Marsa Street 66, 11th Floor, Office 1105, Dubai, free use of in-house accounting, IT, and legal teams from 2021 until December 31, 2023. The shares were discretionary awarded and recorded at fair market value of $1.20 with a grant date as of May 21, 2021, in accordance with ASC 718 and issued by, Chairman, Nicolas Link and CEO, James Gibbons, of DRCR.
Indemnification
Under our bylaws, every person who was or is a party to, or is threatened to be made a party to, or is involved in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, by reason of the fact that he is or was our director or officer, or is or was serving at our request as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust, or other enterprise, shall be indemnified and held harmless to the fullest extent legally permissible under the laws of the State of Nevada from time to time against all expenses, liability, and loss (including attorneys’ fees judgments, fines, and amounts paid or to be paid in settlement) reasonably incurred or suffered by him or her in connection therewith. Such right of indemnification shall be a contract right, which may be enforced in any manner desired by such person. The expenses of officers and directors incurred in defending a civil or criminal action, suit, or proceeding must be paid by us as they are incurred and in advance of the final disposition of the action, suit, or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by us. Such right of indemnification shall not be exclusive of any other right which such directors, officers, or representatives may have or hereafter acquire, and, without limiting the generality of such statement, they shall be entitled to their respective rights of indemnification under any bylaw, agreement, vote of shareholders, provision of law, or otherwise.
Without limiting the application of the foregoing, our board of directors may adopt bylaws from time to time with respect to indemnification, to provide at all times the fullest indemnification permitted by the laws of the State of Nevada, and may cause us to purchase and maintain insurance on behalf of any person who is or was our director or officer, or is or was serving at our request as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust, or other enterprise against any liability asserted against such person and incurred in any such capacity or arising out of such status, whether or not we would have the power to indemnify such person. The indemnification provided shall continue as to a person who has ceased to be a director, officer, employee, or agent, and shall inure to the benefit of the heirs, executors, and administrators of such person.
86
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
We have not entered into any agreements with our directors and executive officers that require us to indemnify these persons against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred (including expenses of a derivative action) in connection with any proceeding, whether actual or threatened, to which any such person may be made a party by reason of the fact that the person is or was our director or officer or any of our affiliated enterprises.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The following table sets forth the fees billed to our company for the years ended December 31, 2023, and 2022, for professional services rendered by our independent registered public accounting firm Pipara & Co LLP:
| Fees | 2023 | 2022 | ||||||
| Audit Fees | $ | 25,500 | $ | 19,500 | ||||
| Audit-Related Fees | ||||||||
| Tax Fees | ||||||||
| All Other Fees | ||||||||
| Total | $ | 25,500 | $ | 19,500 | ||||
Audit Fees
Audit fees were for professional services rendered for the audits of our annual financial statements and for review of our quarterly financial statements during the 2023 and 2022 fiscal years.
Audit-related Fees
This category consists of assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees”.
Tax Fees
As our independent registered public accountants did not provide any services to us for tax compliance, tax advice and tax planning during the fiscal years ended December 31, 2023, and 2022, no tax fees were billed or paid during those fiscal years.
All Other Fees
Our independent registered public accountants did not provide any products and services not disclosed in the table above during 2023, and 2022, fiscal years. As a result, there were no other fees billed or paid during those fiscal years.
Pre-Approval Policies and Procedures
Our board of directors, which acts as our audit committee, pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by our board of directors before the respective services were rendered.
Our board of directors has considered the nature and amount of fees billed by our independent registered public accounting firm and believe that the provision of services for activities unrelated to the audit is compatible with maintaining their respective independence.
87
PART IV
ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES.
We have filed the exhibits listed on the accompanying Exhibit Index of this Form 10-K and below in this Item 15:
| (a) | Financial Statements |
| (b) | Exhibits required by Item 601 of Regulation S-K. |
On April 1, 2024, after several failed effort negotiations, with the purpose of restructuring the deal and obtaining information from the selling shareholders of Quality International, the QI Purchase Agreement with Quality International was terminated by Quality International and subsequently cancelled by the Board of Directors of Quality Industrial Corp. The Company is in the process of unwinding the transaction and this Form 10-K amends the Annual Report on Form 10-K of Ilustrato Pictures International Inc. for the fiscal year ended December 31, 2022, as filed with the Securities and Exchange Commission on April 10, 2023.
We are filing this Form 10-K to restate our financial statements as of December 31, 2022, that were previously reported on the Original Filing and subsequent amendments. The following items have been amended to reflect the restatements:
Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Part II, Item 8. Financial Statements and Supplementary Data
Part IV, Item 15. Financial Statement Schedules and Footnotes
In addition, the Company’s Auditor has provided a new Audit Report as of the date of this filing in connection with this Form 10-K.
88
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
F-1
 |  |
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Ilustrato Pictures International, Inc.(ILUS)
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Ilustrato Pictures International, Inc. (the Company) (“Ilus”) as of December 31, 2023, and 2022, the related statements of income, changes in stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “Consolidated financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
We did not audit the financial statements of Al Shola Al Modea Safety & Security L.L.C, a majority- owned subsidiary, which statements reflect total assets and revenues constituting 0.78 percent and 30.28 percent, respectively, of the related consolidated totals. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Al Shola Al Modea Safety & Security L.L.C, is based solely on the report of the other auditors.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit and the report of the other auditors provide a reasonable basis for our opinion.
New York Office: 1270, Ave of Americas, Rockfeller Center, FL7, New York – 10020, USA | Corporate Office: “Pipara
Corporate House” | Mumbai Office: #3, 13th floor, Tradelink, ‘E’
Wing, A - Block, Kamala Mills, Senapati Bapat Marg, | Delhi Office: 1602,
Ambadeep Building, | Contact: T: +1 (646) 387 - 2034 F: 91 79 40 370376 E: usa@pipara.com naman@pipara.com
|
F-2
| |
Company’s Ability to Continue as a Going Concern
The Company suffered losses from operations in CY 2023, and CY 2022, and has a net capital deficiency in the period ended December 31, 2023, and 2022 that raises substantial doubt about its ability to continue as a going concern. As discussed in Note 18 to the financial statements, the accompanying financial statements have been prepared on a going-concern basis. Management’s plans in regard to these matters are also described in Note 18. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Critical Audit Matter
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Restatement of the Financial Statement of the Company
Description of the Matter
As discussed in Note 1 to the financial statements, On January 18, 2023, Quality Industrial Corp. (a majority-owned subsidiary of ILUS), entered into a definitive Stock Purchase Agreement (the “Purchase Agreement”) with the shareholders of Quality International Co. Ltd FZC (“Quality International”), a company headquartered in the United Arab Emirates. This binding agreement entailed acquisition of 52% stake in Quality International Co. Ltd FZC by the company viz Quality Industrial Corp. However, on April 01, 2024, the “Purchase Agreement” was cancelled by the Board of Directors of Quality Industrial Corp. and the shareholders of Quality International Co. Ltd FZC. Consequently, Quality Industrial Corp. was required to remove the portion of such step-down subsidiary from its financial statements to reflect the cancellation of the purchase agreement and the removal of Quality International’s financial figures.
How We Addressed the Matter in Our Audit
The primary procedures we performed to address this critical audit matter - we conducted a review of the cancellation of the Purchase Agreement. We examined the Form 8-K filing informing the cancellation and audited the removal of Quality International Co. Ltd FZC financial figures from Quality Industrial Corp.’s financial statements & an audit to determine if any liabilities arising from this transaction were appropriately recorded on the financial statements.
For,
We have served as the Company’s auditor since 2022
Place:
Date: May 01, 2024
New York Office: 1270, Ave of Americas, Rockfeller Center, FL7, New York – 10020, USA | Corporate Office: “Pipara
Corporate House” | Mumbai Office: #3, 13th floor, Tradelink, ‘E’
Wing, A - Block, Kamala Mills, Senapati Bapat Marg, | Delhi Office: 1602,
Ambadeep Building, | Contact: T: +1 (646) 387 - 2034 F: 91 79 40 370376 E: usa@pipara.com naman@pipara.com
|
F-3
ILUSTRATO PICTURES INTERNATIONAL INC.
RESTATED CONSOLIDATED BALANCE SHEETS
(AUDITED)
Dec 31, 2023 | Restated Dec 31, | Dec 31, 2022 | ||||||||||||||
| ASSETS | ||||||||||||||||
| Current Assets | ||||||||||||||||
| Cash and Cash Equivalents | 3 | |||||||||||||||
| Accounts Receivables | ||||||||||||||||
| Inventory | ||||||||||||||||
| Inventory (work-in-progress) | 2 | |||||||||||||||
| Other Current Assets | 4 | |||||||||||||||
| Total Current Assets | ||||||||||||||||
| Other Assets | 5 | |||||||||||||||
| Right of use of asset | ||||||||||||||||
| Goodwill | ||||||||||||||||
| Tangible Assets | 6 | |||||||||||||||
| Intangible Assets | 7 | |||||||||||||||
| Total Non-Current Assets | ||||||||||||||||
| Total Assets | ||||||||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
| Current Liabilities | ||||||||||||||||
| Account Payable | ||||||||||||||||
| Current lease liability | ||||||||||||||||
| Other Current liabilities | 8 | |||||||||||||||
| Total Current Liabilities | ||||||||||||||||
| Non-current liabilities | 9 | |||||||||||||||
| Notes Payable | ||||||||||||||||
| Non-current lease liability | ||||||||||||||||
| Other non- current liabilities | ||||||||||||||||
| Total Non-Current Liabilities | ||||||||||||||||
| Total Liabilities | ||||||||||||||||
| Stockholders’ Equity | ||||||||||||||||
| Common Stock: | 10 | |||||||||||||||
| Preferred Stock: | 10 | |||||||||||||||
| Class A - | ||||||||||||||||
| Class B - | ||||||||||||||||
| Class C - | ||||||||||||||||
| Class D - | ||||||||||||||||
| Class E - | ||||||||||||||||
| Class F - | ||||||||||||||||
| Additional Paid-in-capital | ||||||||||||||||
| Other Comprehensive Income | ( | ) | ( | ) | ||||||||||||
| Non-controlling Interest | ( | ) | ||||||||||||||
| Retained Earnings | ( | ) | ||||||||||||||
| Total Stockholders’ Equity | 11 | |||||||||||||||
| Total Liabilities and Stockholders’ Equity | ||||||||||||||||
The accompanying notes are an integral part of these audited consolidated financial statements.
F-4
ILUSTRATO PICTURES INTERNATIONAL INC.
RESTATED CONSOLIDATED STATEMENT OF OPERATIONS
(AUDITED)
| December 31, 2023 | Restated December 31, 2022 | December 31, | ||||||||||||||
| NET REVENUE | ||||||||||||||||
| COST OF REVENUE | ||||||||||||||||
| GROSS PROFIT | ||||||||||||||||
| Operating Expenses | ||||||||||||||||
| General, Selling & Administrative Expenses | 12 | |||||||||||||||
| Total Operating Expense | ||||||||||||||||
| PROFIT/ LOSS FROM OPERATIONS | ( | ) | ( | ) | ||||||||||||
| Non- Operating Expenses | 13 | |||||||||||||||
| Non-Operating Income | ||||||||||||||||
| NET PROFIT/ LOSS | 14 | ( | ) | ( | ) | |||||||||||
| Basic EPS | ( | ) | ( | ) | ||||||||||||
| Diluted EPS | ( | ) | ( | ) | ||||||||||||
| Weighted average shares outstanding | ||||||||||||||||
The accompanying notes are an integral part of these audited consolidated financial statements.
F-5
ILUSTRATO PICTURES INTERNATIONAL INC.
RESTATED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(AUDITED)
FOR THE YEAR ENDED DECEMBER 31, 2023
| Common Stock | Preferred Stock
- Class A | Preferred Stock
- Class B | Preferred Stock
- Class D | Preferred Stock
- Class E | Preferred Stock
- Class F | Minority | Additional Paid in | Accumulated | Total Stock Holders’ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Interest | Capital | Deficit | Equity | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance Dec 31, 2022 | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock converted into Preferred B | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock Converted to Common Stock | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible notes converted to common stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued against Services | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for Cash | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued as commitment shares | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Changes in Retained Earnings | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock class F issued | - | - | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock cancelled | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Comprehensive Income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Income | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Minority Interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance December 31, 2023 | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-6
FOR THE YEAR ENDED DECEMBER 31, 2022
| Common Stock | Preferred Stock
- Class A | Preferred Stock
- Class B | Preferred Stock
- Class D | Preferred Stock
- Class E | Preferred Stock
- Class F | Minority | Additional Paid in | Accumulated | Total Stock Holders’ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Interest | Capital | Deficit | Equity | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance Dec 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock converted into Preferred B | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock Converted to Common Stock | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible notes converted to common stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Changes in Add Capital | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Changes in Retained Earnings | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock issued | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock cancelled | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock cancelled | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Comprehensive Income | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Minority Interest | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Income | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance December 31, 2022 | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these audited consolidated financial statements.
F-7
ILUSTRATO PICTURES INTERNATIONAL INC.
RESTATED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AUDITED)
| Dec 31, 2023 | Restated Dec 31, 2022 | Dec 31, 2022 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
| Net Loss/ Profit | ( | ) | ( | ) | ||||||||
| Adjustment to reconcile net gain (loss) to net cash | ||||||||||||
| Non-Cash Stock Compensation Expense | ||||||||||||
| Premium on Investment | ( | ) | ( | ) | ||||||||
| Gain on settlement of Debt | ( | ) | ( | ) | ||||||||
| Loss on license agreement | ||||||||||||
| Depreciation Expense | ||||||||||||
| Stock issued for Services | ||||||||||||
| Impairment loss | ||||||||||||
| Commitment fees | ||||||||||||
| Finance cost | ||||||||||||
| Discount on Convertible Notes | ||||||||||||
| Interest on convertible notes | ||||||||||||
| Changes in Assets and Liabilities, net | ||||||||||||
| Other Current Assets | ( | ) | ( | ) | ( | ) | ||||||
| Other Current Liabilities | ||||||||||||
| Net cash (used in) provided by operating activities | ( | ) | ||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
| Addition of Fixed Assets | ( | ) | ( | ) | ( | ) | ||||||
| Investment in subsidiaries | ( | ) | ( | ) | ||||||||
| Changes in Non- Current Liabilities | ||||||||||||
| Investment in Dear Cashmere Holding Co. | ||||||||||||
| Net cash (used In) provided by investing activities | ( | ) | ( | ) | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
| Fund raised through notes | ||||||||||||
| Common Stock issued | ||||||||||||
| Preferred Stock Issued | ||||||||||||
| Transfer of Preferred Stock | ||||||||||||
| Finance cost | ( | ) | ( | ) | ||||||||
| Proceeds/repayment of bank Borrowings | ( | ) | ||||||||||
| Payment of lease liabilities | ( | ) | ||||||||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||||||
| Net change in cash, cash equivalents and restricted cash | ( | ) | ||||||||||
| Cash, cash equivalents and restricted cash, beginning of the year | ||||||||||||
| Cash, cash equivalents and restricted cash, end of the year | ||||||||||||
The accompanying notes are an integral part of these audited consolidated financial statements.
F-8
ILUSTRATO PICTURES INTERNATIONAL INC.
Notes to Financial Statements
Year Ended December 31, 2023
NOTE 1: RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS
On April 1, 2024, the Agreement with Quality International was cancelled by the Board of Directors of Quality Industrial Corp. The Company is currently unwinding the transaction and this Form 10-K amends the Annual Report on Form 10-K of Ilustrato Pictures International Inc. for the fiscal year ended December 31, 2022, as filed with the Securities and Exchange Commission on April 10, 2023.
We are filing this Form 10-K to restate our financial statements as of December 31, 2022, that were previously reported on the Original Filing and subsequent amendments. The following items have been amended to reflect the restatements:
Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Part II, Item 8. Financial Statements and Supplementary Data
Part IV, Item 15. Financial Statement Schedules and Footnotes
F-9
ILUSTRATO PICTURES INTERNATIONAL INC.
RESTATED CONSOLIDATED BALANCE SHEETS
(AUDITED)
| For the Year Ended December 31, 2022 | ||||||||||||
| As filed | Restated adjustment | As Restated | ||||||||||
| ASSETS | ||||||||||||
| Current Assets | ||||||||||||
| Cash and Cash Equivalents | ( | ) | ||||||||||
| Accounts Receivables | ( | ) | ||||||||||
| Inventory | ( | ) | ||||||||||
| Inventory (work-in-progress) | ( | ) | ||||||||||
| Other Current Assets | ( | ) | ||||||||||
| Total Current Assets | ( | ) | ||||||||||
| Other Assets | ||||||||||||
| Right of use of asset | ( | ) | ||||||||||
| Goodwill | ( | ) | ||||||||||
| Tangible Assets | ( | ) | ||||||||||
| Intangible Assets | ||||||||||||
| Total Non-Current Assets | ( | ) | ||||||||||
| Total Assets | ( | ) | ||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
| Current Liabilities | ||||||||||||
| Account Payable | ( | ) | ||||||||||
| Current lease liability | ( | ) | ||||||||||
| Other Current liabilities | ( | ) | ||||||||||
| Total Current Liabilities | ( | ) | ||||||||||
| Non-current liabilities | ||||||||||||
| Notes Payable | ||||||||||||
| Non-current lease liability | ( | ) | ||||||||||
| Other non- current liabilities | ( | ) | ||||||||||
| Total Non-Current Liabilities | ( | ) | ||||||||||
| Total Liabilities | ( | ) | ||||||||||
| Stockholders’ Equity | ||||||||||||
| Common Stock: | ||||||||||||
| Preferred Stock: | ||||||||||||
| Class A - | ||||||||||||
| Class B - | ||||||||||||
| Class C - | ||||||||||||
| Class D - | ||||||||||||
| Class E - | ||||||||||||
| Class F - | ||||||||||||
| Additional Paid-in-capital | ||||||||||||
| Other Comprehensive Income | ( | ) | ||||||||||
| Non-controlling Interest | ( | ) | ( | ) | ||||||||
| Retained Earnings | ||||||||||||
| Total Stockholders’ Equity | ( | ) | ||||||||||
| Total Liabilities and Stockholders’ Equity | ( | ) | ||||||||||
F-10
ILUSTRATO PICTURES INTERNATIONAL INC.
RESTATED CONSOLIDATED STATEMENT OF OPERATIONS
(AUDITED)
| For the Year Ended December 31, 2022 | ||||||||||||
| As filed | Restated adjustments | As Restated | ||||||||||
| NET REVENUE | ( | ) | ||||||||||
| COST OF REVENUE | ( | ) | ||||||||||
| GROSS PROFIT | ( | ) | ||||||||||
| Operating Expenses | ||||||||||||
| General, Selling & Administrative Expenses | ( | ) | ||||||||||
| Total Operating Expense | ( | ) | ||||||||||
| PROFIT/ LOSS FROM OPERATIONS | ( | ) | ( | ) | ||||||||
| Non- Operating Expenses | ( | ) | ||||||||||
| Non-Operating Income | ( | ) | ||||||||||
| NET PROFIT/ LOSS | ( | ) | ( | ) | ||||||||
| Basic EPS | ( | ) | ( | ) | ||||||||
| Diluted EPS | ( | ) | ( | ) | ||||||||
| Weighted average shares outstanding | ||||||||||||
NOTE 1A: ORGANIZATION, HISTORY AND BUSINESS
(A) We were incorporated as a Superior Venture Corp. on April 27, 2010, in the State of Nevada for the purpose of selling wine varietals. On November 9, 2012, we entered into an Exchange Agreement with the Ilustrato Pictures Ltd., a British Columbia corporation (Ilustrato BC”), whereby we acquired all the issued and outstanding common stock of Ilustrato BC. On November 30, 2012, Ilustrato BC transferred all of its assets and liabilities to Ilustrato Pictures Limited, our wholly owned subsidiary in Hong Kong (“Ilustrato HK”). On February 11, 2013, we changed the name to Ilustrato Pictures International, Inc.
(B) On April 1, 2016, Barton Hollow, together with the newly elected
director of the issuer, caused the Issuer to enter into a letter of Intent to merger with Cache Cabinetry, LLC, and Arizona limited liability
company. Pursuant to the Letter of Intent, the parties thereto would endeavor to arrive at, and enter into, a definitive merger agreement
providing for the Merger. As an inducement to the members of Cache Cabinetry, LLC to enter into the Letter of Intent and thereafter transact,
the Issuer caused to be issued to the members
(C) Subsequently, on April 6, 2016, the Issuer and Cache Cabinetry, LLC entered into a definitive agreement and Plan of Merger (the “Merger Agreement”). Concomitant therewith, the stockholders of the Issuer elected Derrick McWilliams, the President of Cache Cabinetry, LLC Chief Executive Officer of the Issuer, who along with Barton Hollow, ratified and approved the Merger Agreement and Merger.
(D) The Merger closed on June 3, 2016. The merger is designed as a reverse subsidiary merger pursuant to Section 368(a)(2)(E) of the Internal Revenue Code. That is, upon closing, Cache Cabinetry LLC will merger into a newly created subsidiary of the Issuer with the members of Cache Cabinetry, LLC receiving shares of the common stock of the Issuer as consideration therefor. Upon closing of the Merger, Cache Cabinetry, LLC will be the surviving corporation in its merger with the wholly owned subsidiary of the Issuer, therefore has become the wholly owned operating subsidiary of the Issuer.
F-11
(E) On November 9th, 2018, the Company entered into a Term Sheet for Plan of Merger and Control with Larson Elmore.
(F) As a part of share purchase arrangement between Lee Larson Elmore and FB Technologies Global Inc., Nick Link, the owner of FB Technologies Global Inc. replaced Lee Larson Elmore as CEO of Ilustrato Pictures International Inc. on January 14, 2021, where we eventually got control over activities and books of accounts of Ilustrato Pictures International Inc. So, we are not aware about facts mentioned above vide note no. 1(A), 1(B), 1(C), 1(D), 1(E), 1(F) and 1(G) ‘organization, history, and business’ as they are related to prior to the date on which control over activities and books of accounts of Ilustrato Pictures International Inc. were handed over to us. Thus, those events have been reiterated as disclosed in previous fillings made by the preceding management of the company with SEC.
(G) On May 18, 2020, the Company entered into a definitive agreement
and Plan of Merger with FB Technologies Global, Inc, the shareholders of FB Technologies Global, Inc. were issued
(H) Firebug Mechanical Equipment LLC was incorporated on May 8, 2017.
ILUS acquired
(I) Georgia Fire & Rescue Supply LLC (Georgia Fire) was incorporated
on the January 21, 2003. ILUS acquired
(J) Bright Concept Detection and Protection System LLC (BCD Fire) was
incorporated on March 18, 2014. ILUS acquired
(K) Bull Head Products Inc. was incorporated on June 8, 2007. ILUS
acquired
(L) Emergency Response Technologies, Inc. This company was incorporated by ILUS on February 22, 2022, as the company’s Emergency Response Subsidiary. This company is engaged in the business of public safety and emergency response focused mergers and acquisitions.
F-12
(M) E-Raptor. This company was incorporated by ILUS as the company’s Commercial Electric Utility Vehicle manufacturer on February 22, 2022. This company is engaged in the business of manufacturing electric utility vehicles for the emergency response, agricultural, industrial, hospitality and transport sectors.
(N) Replay Solutions was incorporated by ILUS on March 1, 2022. The company is engaged in the business of recovering precious metals from electronic waste, known as urban mining.
(O) Quality Industrial Corp. was originally incorporated on May 4,
1998. ILUS acquired
(P) AL Shola Al Modea Safety and Security LLC is a fire safety company
registered in the United Arab Emirates. The company has signed a Share Purchase Agreement to acquire
(Q) On January 3, 2024, Ilustrato Pictures International Inc. acquired
a convertible note from YAII PN, LTD with outstanding principal and accrued interest of $
(R) On February 23, 2024, Ilustrato Pictures International, Inc., entered into a Stock Purchase Agreement with Samsara Luggage Inc., and sold all its equity interests in seven companies owned by the Company:
| ● | Firebug Mechanical Equipment LLC |
| ● | Georgia Fire & Rescue Supply LLC |
| ● | Bright Concept Detection and Protection System LLC |
| ● | Bull Head Products Inc |
| ● | E-Raptor |
| ● | The Vehicle Converters |
| ● | AL Shola Al Modea Safety and Security LLC, the only entity in which the Company does not own |
The consideration for the sale of the equity interests
in the foregoing companies was paid by SAML by the issuance of
(S) On March 27, 2024, our subsidiary QIND entered into a definitive
Stock Purchase Agreement (the “Stock Purchase Agreement”) with the shareholders of Al Shola Al Modea Gas Distribution LLC
(“ASG” or “Al Shola Gas”) to acquire a
F-13
NOTE 2: SUMMARY OF ACCOUNTING POLICIES
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers.
Accordingly, revenue is recognized when control of the goods or services promised under a contract is transferred to the customer either at a point in time (e.g., upon delivery) or over time (e.g., as the Company performs under the contract) in an amount that reflects the consideration to which the Company expects to be entitled in exchange for the goods or services. The Company accounts for a contract when it has approval and commitment from both parties, the rights and payment terms of the parties are identified, the contract has commercial substance and collectability of consideration is probable. If collectability is not probable, the sale is deferred until collection becomes probable or payment is received.
Contract Assets and Contract Liabilities acquired under Business Combinations
Company follows new guidance under ASC 606 regarding recognition and measurement of contract assets and contract liabilities acquired in a business combination. The company applies the definition of a performance obligation in ASC 606 when recognizing contract liabilities assumed in a business combination. The company eventually recognize contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date. Earlier, contract assets and contract liabilities acquired in a business combination were recorded by the acquirer at fair value.
Work-in-progress
Work-in-progress is stated at cost plus attributable profit, less provision for any anticipated losses and progress billings. Cost comprises direct materials, labor, depreciation, and overheads. If any progress billings for any contract exceed the cost-plus attributable profit or less anticipated losses, the excess to be shown as excess progress billings. Claims are only recognized as income when the outcome and recoverability can be determined with reasonable certainty. Contract revenue and costs are recognized as revenue and expenses, respectively, in the statement of comprehensive income when the outcome of a construction contract can be estimated reliably.
In accordance with ASC-606 revenue recognition, amounts are billed in accordance with contractual terms or as work progresses. Unbilled amounts arise when the timing of billing differs from the timing of revenue recognized, such as when contract provisions require specific milestones to be met before a customer can be billed. Unbilled amounts primarily relate to performance obligations satisfied over time when the cost-to-cost method is utilized, and the revenue recognized exceeds the amount billed to the customer as there’s not yet a right to invoice in accordance with contractual terms. Unbilled amounts are recorded as a contract asset when the revenue associated with the contract is recognized prior to billing and derecognized when billed in accordance with the terms of the contract.
Variations
Variations are recognized in contract revenue when the outcome can be determined with reasonable certainty and are capable of being reliably measured.
Variable consideration
If the consideration in a contract includes a variable amount, the Company estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved. The construction contracts provide customers with a right to claim damages for delay in delivery of goods. The rights to claim damages for delay in delivery of goods give rise to variable consideration.
F-14
Accounts Receivable
Accounts receivable is reported at the customers’ outstanding balances, less any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable.
The duration of such receivables extends from 30 days to beyond 12 Months. Full payment is received only when a job/project is completed, and approvals are obtained. Provisions are created based on estimated irrecoverable amounts determined by reference to past default experience.
Allowance for Doubtful Accounts
An allowance for doubtful accounts on accounts receivable is charged to operations in amounts sufficient to maintain the allowance for uncollectible accounts at a level management believes is adequate to cover any probable losses. Management determines the adequacy of the allowance based on historical write off percentages and information collected from individual customers. Accounts receivables are charged off against the allowances when collectability is determined to be permanently impaired.
Inventories
In accordance with ASC 330, Company states inventories at the lower of cost or net realizable value. Cost, which includes material, labor and overhead, is determined on a first in, first out basis. The Company makes adjustments to reduce the cost of inventory to its net realizable value, if required, for estimated excess, obsolete, zero usage or impaired balances. Factors influencing these adjustments include changes in market demand, product life cycle and engineering changes.
Tangible Assets/ Property Plant & Equipment
Property, plant, and equipment are recorded at cost, except when acquired in a business combination where property, plant and equipment are recorded at fair value. Depreciation of property, plant and equipment is recognized over the estimated useful lives of the respective assets using the straight-line method.
| Buildings, related improvements & land improvements | ||
| Machinery & equipment | ||
| Computer hardware & software | ||
| Office, furniture & others |
Expenditures that extend the useful life of existing property, plant and equipment are capitalized and depreciated over the remaining useful life of the related asset. Expenditures for repairs and maintenance are expensed as incurred. When property, plant and equipment are retired or sold, the cost and related accumulated depreciation is removed from the Company’s balance sheet, with any gain or loss reflected in operations.
Stock Based Compensation
When applicable, the Company will account for stock-based payments to employees in accordance with ASC 718, “Stock Compensation” (“ASC 718”). Stock-based payments to employees include grants of stocks, grants of stock options and issuance of warrants that are recognized in the consolidated statement of operations based on their fair values at the date of grant.
In accordance with ASC 718, the company will generally apply the same guidance to both employee and nonemployee share-based awards. However, the company will also follow specific guidance for share-based awards to nonemployees related to the attribution of compensation cost and the inputs to the option-pricing model for expected term. Nonemployee share-based payment equity awards are measured at the grant-date fair value of the equity instruments, similar to employee share-based payment equity awards.
F-15
The Company calculates the fair value of option grants and warrant issuances utilizing the Binomial pricing model. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. ASC 718 requires forfeitures to be estimated at the time stock options are granted and warrants are issued to employees and non-employees, and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeiture” is distinct from “cancellations” or “expirations” and represents only the unvested portion of the surrendered stock option or warrant. The Company estimates forfeiture rates for all unvested awards when calculating the expenses for the period. In estimating the forfeiture rate, the Company monitors both stock option and warrant exercises as well as employee termination patterns. The resulting stock-based compensation expense for both employee and non-employee awards is generally recognized on a straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period.
Earnings (Loss) per Share
The Company reports earnings (loss) per share in accordance with ASC Topic 260-10, “Earnings per Share.” Basic earnings (loss) per share is computed by dividing income (loss) available to shareholders by the weighted average number of shares available. Diluted earnings (loss) per shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except the denominator is increased to include the number of additional shares that would have been outstanding if the potential shares had been issued and if the additional shares were dilutive.
Organization and Offering Cost
The Company has a policy to expense organization and offering cost as incurred.
Cash and Cash Equivalents
For purpose of the statements of cash flows, the Company considers cash and cash equivalents to include all stable, highly liquid investments with maturities of three months or less.
Fair Value of Financial Instruments
The company’s financial instruments consist of cash and cash equivalents, accounts receivable, and notes payable. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumption that affect the reported amount of assets and liabilities and disclosure of disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Business segment
ASC 280, “Segment Reporting” requires use of the “management approach” model for segments reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance.
F-16
Below is the Statement of operations of reportable Segment:
Divisional Income Statement
The Company is organized into two division based on the similarity of products, customers served, common use of facilities, and economic characteristics. The Company’s segments are as follows:
| 1. | Emergency Response |
| 2. | Industrial & Manufacturing |
All intersegment transactions have been eliminated in consolidation.
| Emergency & Response Division | December 31, 2023 | December 31, 2022 | ||||||
| Revenue | ||||||||
| Cost of Revenue | ||||||||
| Gross Profit | ||||||||
| Operating expenses | ||||||||
| Profit from Operations | ( | ) | ||||||
| Non- Operating expenses | ||||||||
| Non- Operating Income | ||||||||
| Net Income Division | ( | ) | ||||||
Our revenue increased to $
Operating expenses
increased to $
We have impaired our intangible assets and incurred non-operating expenses
of $
For the coming year 2024, the Company will continue to allocate financial, technical and sales resources for recently acquired subsidiaries to positively impact their financial results through increased sales orders and efficiency. Allocated personnel will primarily focus on accelerating sales and marketing efforts, product development, international market expansion, optimizing of supply chain and production processes, overall increased profitability while continuing with the integration and optimization of current operating companies. With the group expansion and growth, we also intend to hire executives and personnel with specific industry experience and fields of expertise to streamline financial reporting, compliance, and Investor Relations and to improve our corporate governance.
| Industrial & Manufacturing | December 31, 2023 | Restated | ||||||
| Revenue | ||||||||
| Cost of Revenue | ||||||||
| Gross Profit | ||||||||
| Operating expenses | ||||||||
| Profit from Operations | ( | ) | ( | ) | ||||
| Non- Operating expenses | ||||||||
| Non- Operating Income | ||||||||
| Net Income Division | ( | ) | ( | ) | ||||
F-17
For our Industrial and Manufacturing Division the Operating expenses
increased to $
Geographical presence
Presently our operations are spread across United States, United Arab Emirates, United Kingdom, and Republic of Serbia, however we plan to further expand our regional presence and aim to expand our manufacturing operations in the United States and to Spain during 2023. At present the revenue reported below is from United States and United Arab Emirates. We’ve classified the revenue based on the entities registered in their respective locations. All the revenue generated as indicated has solely come from external customers, with no sales involving inter-company transactions.
Income Taxes
The Company accounts for income tax positions in accordance with Accounting Standards Codification Topic 740, “Income Taxes” (“ASC Topic 740”). This standard prescribes a recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There was no material impact on the Company’s financial position or results of operations as a result of the application of this standard. Deferred tax assets have not been created for those subsidiaries which are in income tax-free jurisdiction, because the losses incurred cannot be utilized in the future, rendering deferred tax assets irrelevant. Company comprises of three profitable subsidiaries, out of which Quality International is located in the jurisdiction where corporate tax doesn’t apply. As for the other two profitable subsidiaries, one diligently file tax return, while the other does not meet the threshold criteria for tax return requirements.
Recent Accounting Pronouncements
In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. ASU 2017-04 also clarifies that an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The new standard is effective for fiscal years beginning after December 15, 2019, for both interim and annual reporting periods.
Rounding Off
Figures are rounded off to the nearest $, except value of EPS and number of shares.
NOTE 3: CASH AND CASH EQUIVALENTS
| Particulars | December 31, 2023 | Restated December 31, 2022 | ||||||
| Cash in Hand | ||||||||
| Balance with Banks | ||||||||
| Total | ||||||||
F-18
NOTE 4: OTHER CURRENT ASSETS
| Particulars | December 31, 2023 | Restated December 31, 2022 | ||||||
| Loans advanced | ||||||||
| Advance given to suppliers and sub-contractors | ||||||||
| Director’s current accounts | ||||||||
| Statutory dues receivable | ||||||||
| Deposits | ||||||||
| Accrual of discount on notes | ||||||||
| Buy Back Commitment | ||||||||
| Misc. current assets | ||||||||
| Total | $ | $ | ||||||
| ● | Advances to Subcontractors and Suppliers: Advances have been paid to the suppliers/ sub-contractors in the ordinary course of business for procurement of specialized material and equipment. |
| ● | Directors Current Account includes amount incurred for Company’s Annual shareholders meeting, events for investor relationship, advances for our investment projects and other expenses incurred for future potential acquisitions. |
| ● | Loan advanced refers to the amount advanced by a company in the ordinary course of business and includes amount paid for set up of new businesses. |
NOTE 5: GOODWILL
As a part of share purchase arrangement between Lee Larson Elmore and FB Technologies Global Inc., Nick Link, the owner of FB Technologies Global Inc. replaced Lee Larson Elmore as CEO of Ilustrato Pictures International Inc. on January 14, 2021, and we eventually got control over activities and books of accounts of Ilustrato Pictures International Inc. from the date January 14, 2021.
As of December 31, 2023, the Additional Goodwill has been generated through acquisition of our subsidiaries. Quality Industrial Corp. subsidiary Al Shola Gas will be consolidated from January 1, 2024. Goodwill accounted in the books is primarily a result of acquisitions, representing the excess of the purchase price over the fair value of the tangible net assets acquired.
The Company accounts for business combinations by estimating the fair value of consideration paid for acquired businesses and assigning that amount to the fair values of assets acquired and liabilities assumed, with the remainder assigned to goodwill. If the fair value of assets acquired and liabilities assumed exceeds the fair value of consideration paid, a gain on bargain purchase is recognized. The estimates of fair values are determined utilizing customary valuation procedures and techniques, which require us, among other things, to estimate future cash flows and discount rates. Such analyses involve significant judgments and estimations.
The Company follows the guidance prescribed in Accounting Standards Codification (“ASC”) 350, Goodwill and Other Intangible Assets, to test goodwill and intangible assets for impairment annually if an event occurs or circumstances change which indicates that its carrying amount may not exceed its fair value.
The annual impairment review is performed in the fourth quarter of each fiscal year based upon information and estimates available at that time. To perform the impairment testing, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair values of the Company’s reporting units or indefinite-lived intangible assets are less than their carrying amounts as a basis for determining whether or not to perform the quantitative impairment test. Qualitative testing includes the evaluation of economic conditions, financial performance, and other factors such as key events when they occur. The Company then estimates the fair value of each reporting unit and each indefinite-lived intangible asset not meeting the qualitative criteria and compares their fair values to their carrying values.
F-19
As all the subsidiaries were acquired in 2022, hence company would start impairment process from the next year 2023 in accordance with the guidance prescribed in ASC 350. The Company would assess at year-end whether there has been an impairment in the value of goodwill and identifiable intangible assets.
If future operating performance at one or more of the Company’s reporting units were to fall significantly below forecasted levels, the Company could be required to reflect, under current applicable accounting rules, a non-cash charge to operating income for an impairment. Any determination requiring the write-off of a significant portion of goodwill, or identifiable intangible assets would adversely impact the Company’s results of operations and net worth.
On April 1, 2024, the Agreement with Quality International was cancelled by the Board of Directors of Quality Industrial Corp. QIND restated its financial statements as of December 31, 2022, that were previously reported on the Original Filing and subsequent amendments. Quality International is no longer considered as Goodwill. The following items reflect the restatements:
| Year | 2023 | Restated 2022 | ||||||
| QIND | ||||||||
| Firebug | ( | ) | ( | ) | ||||
| Bullhead | ||||||||
| Georgia Fire | ||||||||
| ILUS UK | ||||||||
| BCD | ||||||||
| ASSS | ||||||||
| Goodwill Total | ||||||||
NOTE 6: OTHER ASSETS
| Particulars | December 31, 2023 |
Restated December 31, 2022 |
||||||
| Investments: | ||||||||
| Investment in TVC - Brand | ||||||||
| Investment in FB Fire Technologies Ltd | ||||||||
| Investment in Quality International | ||||||||
| Investment in Dear Cashmere Holding Co. | ||||||||
| Loan to Fb Fire Technologies Ltd | ||||||||
| Total | ||||||||
The company holds long-term investments of $
Investment in Dear cashmere Holding Co. The company received
F-20
Investment in FB Fire technologies
| 1. | Represents |
NOTE 7: TANGIBLE ASSETS
| Particulars | December 31, 2023 | Restated December 31, 2022 | ||||||
| Tangible Assets | ||||||||
| Land and Buildings | $ | $ | ||||||
| Plant and Machineries | ||||||||
| Furniture, Fixtures and Fittings | ||||||||
| Vehicles | ||||||||
| Computer and Computer Equipment | ||||||||
| Total | $ | $ | ||||||
| Plant & Machinery | Leasehold Improvements & Building | Furniture, Fixtures & Office Equipment | Vehicles | Computer and Computer Equipment | Total | |||||||||||||||||||
| As of December 31, 2021 | ||||||||||||||||||||||||
| Additions during the year | ( | ) | ||||||||||||||||||||||
| December 31, 2022 | ||||||||||||||||||||||||
| Additions during the year | ||||||||||||||||||||||||
| December 31, 2023 | ||||||||||||||||||||||||
| Accumulated depreciation and carrying value of the assets | ||||||||||||||||||||||||
| Plant & Machinery | Leasehold Improvements & Building | Furniture, Fixtures & Office Equipment | Vehicles | Computer and Computer Equipment | Total | |||||||||||||||||||
| Charge for the year 2022 | ||||||||||||||||||||||||
| Carrying value December 31, 2022 | ||||||||||||||||||||||||
| Plant & Machinery | Leasehold Improvements & Building | Furniture, Fixtures & Office Equipment | Vehicles | Computer and Computer Equipment | Total | |||||||||||||||||||
| Charge for the year 2023 | ||||||||||||||||||||||||
| Carrying value December 31, 2023 | ||||||||||||||||||||||||
F-21
NOTE 8: INTANGIBLE ASSETS
| Particulars | December 31, 2023 | Restated December 31, 202 | ||||||
| Intangible Assets | ||||||||
| Intellectual Property Rights | | |||||||
| Website | ||||||||
| Trademark | ||||||||
| Total | $ | $ | ||||||
NOTE 9: OTHER CURRENT LIABILITIES
| Particulars | December 31, 2023 | Restated December 31,2022 | ||||||
| Accrued payables | ||||||||
| Credit cards | ||||||||
| other advances | ||||||||
| Loan Payable | ||||||||
| Misc. current liabilities | ||||||||
| Payroll Liabilities | ||||||||
| Payable to Government Authorities | ||||||||
| Provision for Audit Fees | ||||||||
| Payable to subsidiaries | ||||||||
| Total | ||||||||
As of December 31, 2023
| 1. | Loan Payable amounting to $ |
As per the applicable accounting standards, Borrowings from financial institutions have been bifurcated into current and non-Current liabilities.
NOTE 10: NON-CURRENT LIABILITIES
| Particulars | December 31, 2023 | Restated December 31, 2022 | ||||||
| Provision for Convertible Notes | $ | $ | ||||||
| Interest on Convertible Notes | ||||||||
| Employee End of Service Benefits | ||||||||
| Total | $ | $ | ||||||
F-22
Notes Payable
The following is the list of Notes payable as of December 31, 2023. Convertible Notes issued during the reported period are accounted in the books as liability, accrued Interest and discount on notes is also accounted accordingly as per general accounting principles.
On January 28, 2022, the company entered into a
convertible note with RB Capital Partners Inc. – Brett Rosen for the amount of $
On February 04, 2022, the company entered into
a convertible note with Discover Growth Fund LLC – John Burke for the amount of $
On April 26, 2022, the company entered into a convertible
note with RB Capital Partners Inc., for the amount of $
On May 20, 2022, the company entered into a convertible
note with RB Capital Partners Inc., for the amount of $
On May 27, 2022, the company entered into a convertible
note with RB Capital Partners Inc., for the amount of $
On June 1, 2022, the company entered into a convertible
note with RB Capital Partners Inc., for the amount of $
On July 12, 2022, the company entered into a convertible
note with RB Capital Partners Inc., for the amount of $
On August 10, 2022, the company entered into a
convertible note with RB Capital Partners Inc., for the amount of $
On August 25, 2022, the company entered into a
convertible note with RB Capital Partners Inc., for the amount of $
On September 21, 2022, the company entered into
a convertible note with RB Capital Partners Inc., for the amount of $
On November 14, 2022, the company entered into
a convertible note with RB Capital Partners Inc., for the amount of $
F-23
On December 2, 2022, the company entered into
a convertible note with AJB Capital Investment LLC for the amount of $
On January 26, 2023, the company entered into a
convertible note with Jefferson Street Capital for the amount of $
On April 12, 2023, the company entered into a convertible
note with RB Capital Partners Inc., for the amount of $
On May 2, 2023, the company entered into a convertible
note with RB Capital Partners Inc., for the amount of $
On May 30, 2023, the company entered into a convertible
note with RB Capital Partners Inc., for the amount of $
On May 30, 2023, the company entered into a convertible
note with RB Capital Partners Inc., for the amount of $
On June 21, 2023, the company entered into a note
payable of $
On July 03, 2023, the company entered into a convertible
note with RB Capital Partners Inc., for the amount of $
On July 26, 2023, the company entered into a convertible
note with RB Capital Partners Inc., for the amount of $
On August 29, 2023, the company entered into a
convertible note with RB Capital Partners Inc., for the amount of $
On September 5, 2023, the company entered into
a convertible note with RB Capital Partners Inc., for the amount of $
On September 7, 2023, the company entered into
convertible Note with Richard Astrom, for the amount of $
F-24
On October 20, 2023, ILUS entered into a note
payable of $
On November 7, 2023, the company entered into a
convertible note with RB Capital Partners Inc., for the amount of $
On November 21, 2023, the company entered into
a convertible note with Twn Brooks Inc., for the amount of $
On November 21, 2023, the company entered into
a convertible note with Carizzo LLC, for the amount of $
On November 29, 2023, the company entered into
a convertible note with Twn Brooks Inc., for the amount of $
On December 1, 2023, ILUS entered into a note payable
of $
On December 2, 2023, the company entered into a
convertible note with AJB Capital Investment LLC for the amount of $
On December 30, 2023, the company entered into
a convertible note with Twn Brooks Inc., for the amount of $
On April 1, 2024, ILUS entered into a consolidated
note payable with a principal amount of $
| Note owner | Date | Maturity Date | Amount $ | |||||
| Discover Growth Fund LLC | ||||||||
| RB Capital Partners Inc. | ||||||||
| RB Capital Partners Inc. | ||||||||
| Twn Brooks Inc. | ||||||||
| 1800 Diagonal Lending LLC | ||||||||
| AJB Capital Investment LLC | ||||||||
| Twn Brooks Inc. | ||||||||
| Twn Brooks Inc. | ||||||||
| 1800 Diagonal Lending LLC | ||||||||
| Twn Brooks Inc. | ||||||||
| RB Capital Partners Inc. | ||||||||
| RB Capital Partners Inc. | ||||||||
| Twn Brooks Inc. | ||||||||
| TOTAL | ||||||||
| Year | Amount $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| TOTAL | ||||
F-25
Options and Warrants
The Company chose not to record warrants in its
financial books if the exercise price is significantly higher than the current market price and classifies it as a contingent liability. For
example, the common stock purchase warrant to Discover Growth Fund, LLC described below has an exercise price of $
On February 4, 2022, a Common Share Purchase Warrant
was issued to Discover Growth Fund, LLC, of the $
On December 2, 2022, we issued a common stock purchase
warrant to AJB Capital Investment LLC for the $
On January 26, 2023, we issued a common stock purchase
warrant to Jefferson Street Capital for the $
On June 30, 2023, we issued a common stock purchase
warrant to Exchange Listing. The holder is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter
set forth, at any time on or after the date of issuance hereof, to purchase from the Company,
NOTE 11: COMMON STOCK AND PREFERRED STOCK
In August 2019 the Company’s Amended
its Articles of Incorporation to authorize it to issue up to two billion (
F-26
The Company also created the following
Class A –
Class B –
Class C –
Class D–
Class E -
Class F –
NOTE 12. STOCKHOLDERS’ EQUITY
As of December 31, 2023,
| 1. |
| 2. |
On February 7, 2022, we issued
On February 16, 2022, we issued
On April 13, 2022, we issued
On April 13, 2022, we issued
On April 28, 2022, we converted
On May 4, 2022, we issued
On May 17, 2022, we converted
F-27
On July 26, 2022, we issued
On September 28, 2022, we issued
On November 8, 2022, we issued
On December 5, 2022, we issued
On December 5, 2022, we issued
On December 5, 2022, we issued
On December 5, 2022, we issued
On December 5, 2022, we issued
On December 5, 2022, we issued
On December 5, 2022, we issued
On December 08, 2022, we cancelled
On December 08, 2022, we cancelled
On December 08, 2022, we cancelled
On December 08, 2022, we cancelled
On December 9, 2022, we issued
On December 9, 2022, we issued
On March 17, 2023, we issued
On March 21, 2023, we issued
F-28
On April 12, 2023,
On April 12, 2023,
On May 12, 2023, we issued
On June 01, 2023, we issued
On July 14, 2023, we issued
On July 14, 2023, the Company issued to Exchange
Listing LLC
On September
6, 2023, the company entered into a share purchase agreement with Kyle Edward Comerford to sell
On September
7, 2023, the company entered into a share purchase agreement with Cameron Canzellarini to sell
On September 11, 2023, we issued
On September 18, 2023, we issued
On September 21, we issued
On September 28, we issued
On October 13, 2023, the company entered into a
share purchase agreement with Lovejit Singh to sell
On October 19, 2023, we issued
On October 20, 2023, we issued
On October 23, 2023, we issued
On October 25, 2023, we issued
On November 6, 2023, the company entered into a
share purchase agreement with Kevin Van Hoesen to sell
F-29
On November 07, 2023, we issued
On November 15, 2023, we issued
On November 27, 2023, we issued
On November 28, 2023, we issued
On November 28, 2023, we issued
On November 30, 2023, we issued
On November 30, 2023, we issued
On December 1, 2023, we issued
On December 1, 2023, FB Technologies Global Inc.
converted
On December 04, 2023, we issued
On December 06, 2023, we cancelled
On December 06, we issued
On December 19, 2023, we issued
On December 19, 2023, John-Paul Backwell converted
NOTE 13: EXPENSES
| GENERAL, SELLING AND ADMINISTRATION EXPENSES | December 31, 2023 | Restated December 31, 2022 | ||||||
| Administration and General Expense | ||||||||
| Selling and Distribution Expense | ||||||||
| Payroll Expense | ||||||||
| Stock Based Compensation | ||||||||
| Depreciation | ||||||||
| Total | $ | $ | ||||||
General and administrative expenses include, finance administration and human resources, facility costs (including rent), professional service fees, and other general overhead costs to support company’s operations.
F-30
NOTE 14: NON-OPERATIONAL EXPENSES
| NON-OPERATING EXPENSES | December 31, 2023 | Restated December 31, 2022 | ||||||
| Commitment Fees | ||||||||
| Interest On convertible notes | ||||||||
| Discount on Convertible Notes | ||||||||
| Misc. Non- Operating Expenses | ||||||||
| Stock issued for services | ||||||||
| Impairment of intangible assets | ||||||||
| Total | ||||||||
NOTE 15: NET LOSS PER SHARE
| Particulars | December 31, 2023 | Restated December 31, 2022 | ||||||
| Basic EPS | ||||||||
| Numerator | ||||||||
| Net income / (loss) | ( | ) | ( | ) | ||||
| Net Income attributable to common stockholders | $ | ( | ) | $ | ( | ) | ||
| Denominator | ||||||||
| Weighted average shares outstanding | ||||||||
| Number of shares used for basic EPS computation | ||||||||
| Basic EPS | $ | ( | ) | $ | ( | ) | ||
| Diluted EPS | ||||||||
| Numerator | ||||||||
| Net income / (loss) | ( | ) | ( | ) | ||||
| Net Income attributable to common stockholders | $ | ( | ) | $ | ( | ) | ||
| Denominator | ||||||||
| Number of shares used for basic EPS computation | ||||||||
| Conversion of Class A preferred stock to common stock | ||||||||
| Conversion of Class B preferred stock to common stock | ||||||||
| Conversion of Class D preferred stock to common stock | ||||||||
| Conversion of Class F preferred stock to common stock | ||||||||
| Number of shares used for diluted EPS computation | ||||||||
| Diluted EPS | $ | ( | ) | $ | ( | ) | ||
NOTE 16: RELATED PARTY TRANSACTIONS
The transactions described under the
heading “Executive Compensation,” there have not been, and there is not currently proposed, any transaction or series of similar
transactions to which we were or will be a participant in which the amount involved exceeded or will exceed the lesser of $
F-31
On April 1, 2024, the Agreement with Quality International was cancelled by the Board of Directors of Quality Industrial Corp. QIND restated its financial statements as of December 31, 2022, that were previously reported on the Original Filing and subsequent amendments. Quality International is no longer considered a related party. The following items reflect the restatements:
As of December 31, 2023, and
December 31, 2022, the Company had amounts due to Quality Industrial Corp. (“QIND”), a subsidiary of the Company,
of $(
On December 5, 2022, we issued
On December 5, 2022, we issued
On December
5, 2022, we issued
On December 5, 2022, we issued
On December 08, 2022, we cancelled
On December 08, 2022, we cancelled
On December 08, 2022, we cancelled
On April 12, 2023,
On May 4, 2023, QIND issued to Nicolas Link
On May 4, 2023, QIND issued to John-Paul Backwell
On May 4, 2023, QIND issued to Carsten Kjems
Falk
On May 4, 2023, QIND issued to Krishnan Krishnamoorthy
On May 4, 2023, QIND issued to Louise Bennett
On September 15, 2023, QIND issued to Nicolas
Link
On September 15, 2023, QIND issued to John-Paul
Backwell
On September 15, 2023, QIND issued to Carsten
Kjems Falk
On September 15, 2023, QIND issued to Louise
Bennett
F-32
NOTE 17: CONSOLIDATION BASIS
Following companies are consolidating basis of Mergers & Acquisitions as of December 31, 2023:
| 1) | ILUS International US |
| 2) | ILUS International UK Ltd. |
| 4) | Firebug Mechanical Equipment LLC. |
| 5) | Bull Head Products Inc. |
| 6) | Georgia Fire & Rescue |
| 7) | Bright Concept and protection System LLC |
| 8) | Quality Industrial Corp. |
| 9) | Al Shola Al Modea Safety and Security LLC |
NOTE 18: LEGAL PROCEEDINGS
From time to time, we may become party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. Aside from the below, we are not currently a party, as plaintiff or defendant, to any legal proceedings that we believe to be material or which, individually or in the aggregate, would be expected to have a material effect on our business, financial condition or results of operation if determined adversely to us.
We have been named as a defendant in an action commenced by our former CEO, Larson Elmore. A case has been filed in the Eight Judicial District Court of the State of Nevada (Case No. A-22-858343-C). Plaintiff alleges that we breached a stock purchase agreement dated May 10, 2020, and promissory notes and is therefore entitled to damages. We have potential counterclaims being prepared against the former CEO, arising due to improper action and lack of disclosures. The company has disputed the claim and argue that Larson Elmore has been misleading the company and its shareholders on various matters including but not limited to liabilities, company commitments and due diligence items presented by Larson Elmore during the takeover process. We have filed a motion to dismiss Larson Elmore’s complaint on the basis that it fails to state a claim and lacks jurisdiction in the Nevada courts. At the hearing on this motion, the court determined that discovery would be required before ruling for the company and denied the motion without prejudice. The company is evaluating a motion for reconsideration once the order has been entered. In the interim, the parties have discussed a tentative discovery schedule and the possibility of a mediation and settlement conference. Request for production of documents is due by April 19, 2024.
We have been named as a defendant in an action
commenced by Steve Nicol, who claims that he loaned $
We have been named as a defendant in an action
commenced by Black Ice Advisors LLC, regarding a historic note entered into by the previous CEO, Larson Elmore with a principal amount
of $
F-33
We cannot predict whether the action against involving our former CEO, Steve Nicol and Black Ice Advisors is likely to result in any material recovery or expense to our company. Where it is reasonably possible to do so, the Company accrues estimates of the probable costs for the resolution of these matters. These estimates are based on an analysis of potential results and settlement strategies. It is possible, however, that future operating results for any particular quarter or annual period could be affected by changes in assumption.
NOTE 19: GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Currently, the Company has incurred operating losses, and as of December 31, 2023, the Company also had a working capital deficit and an accumulated deficit. These factors raise substantially doubt about the Company’s ability to continue as a going concern.
Management also believes the Company needs to raise additional capital for working capital purpose. There is no assurance that such financing will be available in the future. The conditions described above raise substantial doubt about our ability to continue as a going concern. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going Ilustrato Pictures International Inc. recorded all revenue generated from selected customers on a credit basis. At the end of the year, accounts receivable for the previous year and the current year have not been collected. The management has represented that they will collect the cash for all outstanding account receivables due from the previous years and current year.
NOTE 20: SUBSEQUENT EVENTS
On January 3, 2024, Ilustrato Pictures International
Inc. acquired a convertible note from YAII PN, LTD with outstanding principal and accrued interest of $
On January 03, 2024, we issued
On January 15, 2024, the company entered into a
convertible note with Twn Brooks Inc., for the amount of $
On January 17, 2024, ILUS entered into a note
payable with a principal amount of $
On January 18, 2024, we issued
On January 22, 2024, James Gibbons converted
On January 22, 2024, ILUS entered into a note
payable with a principal amount of $
On January 22, 2024, we issued
F-34
On January 23, 2024, ILUS entered into a note
payable with a principal amount of $
On January 25, 2024, we issued
On January 31, 2024, the company entered into a
convertible note with RB Capital Partners Inc., for the amount of $
On February 1, 2024, we issued
On February 2, 2024, we issued
On February 8, 2024, the company entered into a
share purchase agreement with William Black to sell
On February 19, 2024, we issued
On February 23, 2024, Ilustrato Pictures International, Inc., entered into a Stock Purchase Agreement with Samsara Luggage Inc., and sold all its equity interests in seven companies owned by the Company:
| ● | Firebug Mechanical Equipment LLC |
| ● | Georgia Fire & Rescue Supply LLC |
| ● | Bright Concept Detection and Protection System LLC |
| ● | Bull Head Products Inc |
| ● | E-Raptor |
| ● | The Vehicle Converters |
| ● | AL Shola Al Modea Safety and Security LLC, the only entity in which the Company does not own |
The consideration for the sale of the equity interests
in the foregoing companies was paid by SAML by the issuance of
On
March 19, 2024, we issued
F-35
On March 21, 2024, the Company signed Stock Purchase Agreements with Christopher Derbyshire and Tim Grey and sold the Company’s shares in Hyperion Defense Solutions Ltd. and terminated their employment agreements simulations. The Company sold the shares due to a strategic shift by the company and to fully allow focus on uplisting its two public subsidiaries to a National Exchange through a Reverse Merger (“RTO”).
On
March 26, 2024, the Company amended its Articles of Incorporation to authorize it to issue up to three and a half billion (
On March 27, 2024, we issued
On March 27, 2024, our subsidiary QIND
entered into a definitive Stock Purchase Agreement (the “Stock Purchase Agreement”) with the shareholders of Al Shola Al Modea
Gas Distribution LLC (“ASG” or “Al Shola Gas”) to acquire a
On April 1, 2024, we issued
On April 1, 2024, we issued
On April 1, 2024, ILUS entered into a consolidated
note payable with a principal amount of $
On April 3, 2024, we issued
On April 11, 2024, John-Paul Backwell converted
On April 11, 2024, Dan Link converted
On April 15, 2024, ILUS entered into a note
payable with a principal amount of $
On April 15, 2024, we issued
F-36
(b) Exhibits.
89
90
| * | Filed Previously |
| ** | Filed Herewith |
91
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
Ilustrato Pictures International, Inc.
| By: | /s/ Nicolas Link | ||
| Name: | Nicolas Link | ||
| Title: | Chief Executive Officer | ||
| Date: | May 1, 2024 | ||
92
Exhibit 3.19
Exhibit 4.53
THIRD AMENDMENT TO
SECURITIES
PURCHASE AGREEMENT
This THIRD AMENDMENT TO THE SECURITIES PURCHASE AGREEMENT (this “Amendment”), dated as of December 22, 2023 (the “Effective Date”), by and between ILUSTRATO PICTURES INTERNATIONAL, INC., a Nevada corporation, with headquarters located at 26 Broadway, Suite 934, New York, New York 10004 (the “Company”), and AJB CAPITAL INVESTMENTS, LLC, a Delaware limited liability company, with its address at 4700 Sheridan Street, Suite J, Hollywood, FL 33021 (the “Buyer”).
WHEREAS:
| A. | The Company and the Buyer are parties to that certain Securities Purchase Agreement, dated as of December 2, 2022, as amended March 17, 2023 and May 12, 2023 (as amended, the “Agreement”); and Promissory Note of the Company issued in favor of the Buyer, dated December 2, 2022, as amended October 18, 2023, in the principal amount of US$1.450,000.00 (as amended, the “Note”). |
| B. | Section 10(e) of the Agreement provides that the provisions of the Agreement may be amended if such amendment is in writing and signed by the Buyer. |
| C. | The Company and the Buyer desire to amend the Agreement in accordance with the terms of this Amendment. |
NOW THEREFORE, in consideration of the foregoing recitals and the mutual covenants, representations, warranties, conditions, and agreements hereinafter expressed, the Company and the Buyer hereby agree as follows:
1. Defined Terms. All capitalized terms used in this Amendment and not otherwise defined shall have the meanings given to such terms in the Agreement or the Note, as applicable.
2. Amendment to Section 4(o). Sections 4(o)(i) and 4(o)(ii) of the Agreement are hereby deleted in their entirety.
3. Miscellaneous.
| a. | No Further Amendment. Except as expressly amended hereby, the Agreement is in all respects ratified and confirmed and all the terms, conditions, and provisions thereof shall remain in full force and effect. This Amendment is limited precisely as written and shall not be deemed to be an amendment to any other term or condition of the Agreement or any other document referred to therein. This Amendment shall be deemed to be in full force and effect from and after the execution of this Amendment by the Company and the Buyer, and the Company and the Buyer shall be bound hereby. |
| b. | Incorporation of Certain Provisions by Reference. The following provisions of the Agreement are hereby incorporated into this Amendment by reference mutatis mutandis: Section 10(a) (Governing Law); Section 10(b) (Counterparts; Signature by Facsimile); Section 10(c) (Construction; Headings); Section 10(d) (Severability); Section 10(e) (Entire Agreement; Amendments), Section 10(k) (No Strict Construction). |
[signature page follows]
IN WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Amendment to be duly executed as of the date first above written.
| ILUSTRATO PICTURES INTERNATIONAL, INC. | ||
| By: | /s/ Nicolas Link | |
| Name: | Nicolas Link | |
| Title: | Chief Executive Officer | |
| AJB CAPITAL INVESTMENTS, LLC | ||
| By: | /s/ Ari Blaine | |
| Name: | Ari Blaine | |
| Title: | Manager | |
Exhibit 4.54
Exhibit 4.57
ILUSTRATO PICTURES INTERNATIONAL INC.
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the “Agreement”) is made as of January 12, 2024, among Ilustrato Pictures International Inc., a Nevada corporation (the “Company”) and Kyle Edward Comerford, (the “Investor”).
The Investor understands that the Company proposes to offer and sell to the Investor 6,349,206 shares of its Common Stock for a purchase price of $20,000.00.
1. Purchase and Sale of Common Stock.
a. Common Stock Subject to the terms and conditions of this Agreement, the Investor agrees to purchase from the Company 6,349,206 shares of Company Common Stock for an aggregate purchase price of $20,000.00, payable by delivery to the Company of a check or wire in the amount of $20,000.00.
b. Initial Closing.
The purchase and sale of the Units shall take place at the offices of the Company at 26 Broadway, Suite 934, New York, NY 10004 (“Closing”). At the Closing, the Company shall deliver to the Investor the Common Stock, which such Investor is purchasing against delivery to the Company by such Investor of a check, wire transfer, or cancellation of indebtedness in the aggregate amount of the purchase price therefor payable to the Company’s order.
2. The Company’s Representations and Warranties. The Company represents and warrants to the Investor as follows:
a. Organization and Standing. The Company is a corporation duly organized and validly existing under the laws of the State of Nevada.
b. Authorization. The execution, delivery and performance of this Agreement by the Company has been duly authorized by all requisite corporate action, and this Agreement constitutes the legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject as to enforcement of remedies to applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors’ rights. The execution, delivery and performance of this Agreement and compliance with the provisions hereof by the Company does not conflict with, or result in a breach or violation of the terms, conditions or provisions of, or constitute a default (or an event with which the giving of notice or passage of time, or both could result in a default) under, or result in the creation or imposition of any lien pursuant to the terms of, the Articles of Incorporation or the Bylaws of the Company.
c. Securities. When issued pursuant to the terms of this Agreement, the Common Stock will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances caused or created by the Company; provided, however, that the Common Stock shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Agreement or otherwise required at the time a transfer is proposed.
3. Representations, Warranties of Investor and Restrictions on Transfer
a. Representations and Warranties of Investor. The Investor represents and warrants to the Company with respect to the purchase of Securities under this Agreement as follows:
i. This Agreement constitutes the Investor’s valid and legally binding obligation, enforceable in accordance with its terms.
ii. The Investor is acquiring the Common Stock for its own account for investment purposes only and not with a view to, or for the resale in connection with, any “distribution” thereof for purposes of the Securities Act of 1933, as amended (the “Act”). The Investor understands that the shares of Common Stock have not been registered under the Act or any applicable state securities laws by reason of a specific exemption therefrom that depends upon, among other things, the bona fide nature of the investment intent as expressed herein.
iii. The Investor has discussed the Company and its plans, operations and financial condition with its officers and has received all such information as the Investor deems necessary and appropriate to enable the Investor to evaluate the financial risk inherent in making an investment in the Common Stock. The Investor has received satisfactory and complete information concerning the business and financial condition of the Company in response to the Investor’s inquiries.
iv. The Investor realizes that the acquisition of the Common Stock will be a highly speculative investment. The Investor is able, without impairing the Investor’s financial condition, to hold the Common Stock for an indefinite period of time and to suffer a complete loss of the Investor’s investment. The Investor recognizes that the Company has only recently been organized and that it has a limited financial and operating history and the investment in the Company involves substantial risks. The Investor understands all of the risks related to the acquisition of the Common Stock. By virtue of the Investor’s experience in evaluating and investing in private placement transactions of securities in companies similar to the Company, the Investor is capable of evaluating the merits and risks of the Investor’s investment in the Company and has the capacity to protect the Investor’s own interests.
v. The Investor understands that the Common Stock must be held indefinitely unless subsequently registered under the Act or unless an exemption from registration is otherwise available. Moreover, the Investor understands that the Company is under no obligation to register the Common Stock. The Investor is aware of Rule 144 promulgated under the Act that permits limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions. The Investor understands that the Common Stock will be imprinted with a legend which prohibits the transfer of the Common Stock unless they are registered or such registration is not required in the opinion of counsel for the Company.
2
b. Legends. In addition to any legend imposed by state securities laws, each certificate representing the Common Stock shall be endorsed with the following legends:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
The Company need not register a transfer of Common Stock unless the conditions specified in the foregoing legends are satisfied. The Company may also instruct its transfer agent not to register the transfer of any of the Common Stock unless the conditions specified in the foregoing legends are satisfied.
c. Removal of Legends and Transfer Restrictions. The legend relating to the Act endorsed on a stock certificate pursuant to paragraph 4(b) of this Agreement and the stop transfer instructions with respect to such Common Stock shall be removed and the Company shall issue a stock certificate without such legend to the holder of such Common Stock if such Shares are registered under the Act and a prospectus meeting the requirements of Section 10 of the Act is available, or if such holder provides to the Company an opinion of counsel for such holder of the Shares or Note reasonably satisfactory to the Company or a no-action letter or interpretive opinion of the staff of the Commission to the effect that a public sale, transfer or assignment of such Shares or Note may be made without registration and without compliance with any restriction such as Rule 144. Any legend imposed by state securities laws will be removed if the state agency imposing such legend has consented to its removal.
4. Miscellaneous.
a. Governing Law. This Agreement shall be governed in all respects by the laws of the State of New York without regard to the conflict of law provisions thereof.
b. Survival. The representations and warranties contained herein shall survive the execution and delivery of this Agreement and the sale of the Common Stock.
c. Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
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d. Entire Agreement. This Agreement embodies the entire understanding and agreement between each Investor and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof.
e. Notices, etc. All notices and other communications required or permitted hereunder shall be effective upon receipt and shall be in writing and may be delivered in person, by telecopy, electronic mail, overnight delivery service or U.S. mail, addressed (a) if to an Investor, at his or her address set forth opposite such Investors name on the last page of this Agreement, or at such other address as such Investor shall have furnished the Company in writing, or (b) if to the Company, at the address of its principal office, or at such other address as the Company shall have furnished to the Investor in writing.
f. Titles and Subtitles. The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
g. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
h. Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of the Common Stock. Any amendment or waiver effected in accordance with this Section shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities are convertible), each future holder of all such securities, and the Company.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first written above.
| COMPANY: | ILUSTRATO PICTURES INTERNATIONAL INC. | ||
| a Nevada corporation | |||
| By: | /s/ Nicolas Link | ||
| Nicolas Link, CEO | |||
| INVESTOR: | |||
| $20,000 | |||
| Amount of Investment | |||
| Kyle Edward Comerford | |||
| By: | /s/ Kyle Edward Comerford | ||
| Title: | |||
[Signature page to Ilustrato Pictures International Inc. Common Stock]
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Exhibit 4.58
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
THE ISSUE PRICE OF THIS NOTE IS $61,868.00
THE ORIGINAL ISSUE DISCOUNT IS $7,118.00
| Principal Amount: $61,868.00 | Issue Date: January 17, 2024 |
| Purchase Price: $54,750.00 |
PROMISSORY NOTE
FOR VALUE RECEIVED, ILUSTRATO PICTURES INTERNATIONAL, INC., a Nevada corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of 1800 DIAGONAL LENDING LLC, a Virginia limited liability company, or registered assigns (the “Holder”) the sum of $61,868.00 together with any interest as set forth herein, on October 30, 2024 (the “Maturity Date”), and to pay interest on the unpaid principal balance hereof from the date hereof (the “Issue Date”) as set forth herein. This Note may not be prepaid in whole or in part except as otherwise explicitly set forth herein. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid (“Default Interest”). All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share (the “Common Stock”) in accordance with the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Each capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement dated the date hereof, pursuant to which this Note was originally issued (the “Purchase Agreement”).
This Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.
The following terms shall apply to this Note:
ARTICLE I. GENERAL TERMS
1.1 Interest. A one-time interest charge of thirteen percent (13%) (the “Interest Rate”) shall be applied on the Issuance Date to the Principal ($61,868.00 * thirteen percent (13%) = $8,042.00). Interest hereunder shall be paid as set forth herein to the Holder or its assignee in whose name this Note is registered on the records of the Company regarding registration and transfers of Notes in cash or, in the Event of Default, at the Option of the Holder, converted into share of Common Stock as set forth herein.
1.2 Mandatory Monthly Payments. Accrued, unpaid Interest and outstanding principal, subject to adjustment, shall be paid in nine (9) payments each in the amount of $7,767.78 (a total payback to the Holder of $69,910.00). The first payment shall be due February 29, 2024 with eight (8) subsequent payments on the 30th of each month thereafter. The Company shall have a five (5) day grace period with respect to each payment. The Company has right to accelerate payments or prepay in full at any time with no prepayment penalty. All payments shall be made by bank wire transfer to the Holder’s wire instructions, attached hereto as Exhibit A. For the avoidance of doubt, a missed payment shall be considered an Event of Default.
1.3 Security. This Note shall not be secured by any collateral or any assets pledged to the Holder
ARTICLE II. CERTAIN COVENANTS
2.1 Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business. Any consent to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition.
ARTICLE III. EVENTS OF DEFAULT
This Note shall be deemed in default upon the occurrence of one more of the events set forth in this Article III (each, an “Event of Default”). Upon the occurrence of an Event of Default, Holder, prior to exercising its rights hereunder, shall provide to Borrower written notification via both electronic mail (with confirmation of receipt) and another notification delivery method as set forth in Section 5.2 of this Note that an Event of Default has occurred. After receipt of such notice, Borrower shall have five (5) business days to cure such Default (or such other longer cure period as set forth in this Article III for a particular Event of Default) if such Event of Default is capable of being cured. In the event that an Event of Default is not completely cured during such time period, Holder may exercise his rights hereunder.
3.1 Failure to Pay Principal and Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity, upon acceleration or otherwise.
3.2 Breach of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this Note and any collateral documents including but not limited to the Purchase Agreement and such breach continues for a period of ten (10) days.
3.3 Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase Agreement), shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.
3.4 Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed.
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3.5 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower.
3.6 Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC (which specifically includes the quotation platforms maintained by the OTC Markets Group) or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the NYSE American Stock Exchange.
3.7 Failure to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange Act; and/or the Borrower shall cease to be subject to the reporting requirements of the Exchange Act.
3.8 Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
3.9 Cessation of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a “going concern” shall not be an admission that the Borrower cannot pay its debts as they become due.
3.10 Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC at any time after 180 days after the Issuance Date for any date or period until this Note is no longer outstanding, if the result of such restatement would, by comparison to the un-restated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.
3.11 Replacement of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.
3.12 Cross-Default. Notwithstanding anything to the contrary contained in this Note or the other related or companion documents, a breach or default by the Borrower of any covenant or other term or condition contained in any of the Other Agreements, after the passage of all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered a default under this Note and the Other Agreements, in which event the Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under the terms of this Note and the Other Agreements by reason of a default under said Other Agreement or hereunder. “Other Agreements” means, collectively, all agreements and instruments between, among or by: (1) the Borrower, and, or for the benefit of, and (2) the Holder and any affiliate of the Holder, including, without limitation, promissory notes evidencing obligations of the Borrower to the Holder; provided, however, the term “Other Agreements” shall not include the related or companion documents to this Note. Each of the loan transactions will be cross- defaulted with each other loan transaction and with all other existing and future debt of Borrower to the Holder.
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Upon the occurrence and during the continuation of any Event of Default, the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to 150% (“Default Percentage”) times the sum of (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the date of payment (the “Mandatory Prepayment Date”) plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed to the Holder pursuant to Article IV hereof (the then outstanding principal amount of this Note to the date of payment plus the amounts referred to in clauses (x), (y) and (z) shall collectively be known as the “Default Amount”) and all other amounts payable hereunder shall immediately become due and payable, all without demand, presentment or notice, all of which hereby are expressly waived, together with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and remedies available at law or in equity. Any failure to deliver shares in conversion following a default shall result in a unilateral increase of the Default Percentage to 200%.
If the Borrower fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable, then the Holder shall have the right at any time, to convert the balance owed pursuant to the note including the Default Amount into shares of common stock of the Company as set forth herein.
ARTICLE IV. CONVERSION RIGHTS
4.1 Conversion Right. At any time following an Event of Default, the Holder shall have the right, to convert all or any part of the outstanding and unpaid amount of this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified at the conversion price determined as provided herein (a “Conversion”); provided, however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso. The beneficial ownership limitations on conversion as set forth in the section may NOT be waived by the Holder. The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit B(the “Notice of Conversion”), delivered to the Borrower by the Holder in accordance with Section 4.4 below; provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the “Conversion Date”); however, if the Notice of Conversion is sent after 6:00 p.m., New York, New York time the Conversion Date shall be the next business day. The term “Conversion Amount” means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion plus (2) at the Holder’s option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided in this Note to the Conversion Date, plus (3) at the Holder’s option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4) at the Holder’s option, any amounts owed to the Holder pursuant to Sections 4.4 hereof.
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4.2 Conversion Price. The conversion price (the “Conversion Price”) shall mean 65% multiplied by the lowest Trading Price for the Common Stock during the ten (10) Trading Days prior to the Conversion Date (representing a discount rate of 35%) (subject to equitable adjustments by the Borrower relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). “Trading Price” means, for any security as of any date, the closing bid price on the OTCQB, OTCQX, Pink Sheets electronic quotation system or applicable trading market (the “OTC”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. Bloomberg) or, if the OTC is not the principal trading market for such security, the closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no closing bid price of such security is available in any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in the “pink sheets”. If the Trading Price cannot be calculated for such security on such date in the manner provided above, the Trading Price shall be the fair market value as mutually determined by the Borrower and the holders of a majority in interest of the Notes being converted for which the calculation of the Trading Price is required in order to determine the Conversion Price of such Notes. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTC, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.
4.3 Authorized Shares. The Borrower covenants that during the period that the Note is outstanding, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of this Note issued pursuant to the Purchase Agreement. The Borrower is required at all times to have authorized and reserved five times the number of shares that is actually issuable upon full conversion of the Note (based on the Conversion Price of the Note in effect from time to time initially 16,640,129 shares) (the “Reserved Amount”). The Reserved Amount shall be increased from time to time in accordance with the Borrower’s obligations hereunder. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. In addition, if the Borrower shall issue any securities or make any change to its capital structure which would change the number of shares of Common Stock into which the Notes shall be convertible at the then current Conversion Price, the Borrower shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Note. The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon conversion of this Note, and (ii) agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance with the terms and conditions of this Note.
If, at any time the Borrower does not maintain the Reserved Amount it will be considered an Event of Default under this Note.
4.4 Method of Conversion.
(a) Mechanics of Conversion. As set forth in Section 4.1 hereof, at any time following an Event of Default, the balance due pursuant to this Note may be converted by the Holder in whole or in part at any time from time to time after the Issue Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject to Section 4.4(b), surrendering this Note at the principal office of the Borrower (upon payment in full of any amounts owed hereunder). The Holder shall be entitled to deduct $500.00 from the conversion amount in each Notice of Conversion to cover Holder's deposit fees associated with each Notice of Conversion. Any additional expenses incurred by Holder with respect to the Borrower's transfer agent, for the issuance of the Common Stock into which this Note is convertible into, shall immediately and automatically be added to the balance of the Note at such time as the expenses are incurred by Holder.
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(b) Surrender of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless the entire unpaid principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as not to require physical surrender of this Note upon each such conversion.
(c) Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section 4.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Common Stock issuable upon such conversion within three (3) business days after such receipt (the “Deadline”) (and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with the terms hereof and the Purchase Agreement. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its obligations hereunder, all rights with respect to the portion of this Note being so converted shall forthwith terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection with such conversion.
(d) Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock issuable upon conversion, provided the Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon request of the Holder and its compliance with the provisions set forth herein, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit and Withdrawal at Custodian (“DWAC”) system.
(e) Failure to Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder’s right to pursue other remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion of this Note is not delivered by the Deadline solely due to action and/or inaction of the Borrower, the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock (the “Fail to Deliver Fee”); provided; however that the Fail to Deliver Fee shall not be due if the failure is a result of a third party (i.e., transfer agent; and not the result of any failure to pay such transfer agent) despite the best efforts of the Borrower to effect delivery of such Common Stock. Such cash amount shall be paid to Holder by the fifth day of the month following the month in which it has accrued or, at the option of the Holder (by written notice to the Borrower by the first day of the month following the month in which it has accrued), shall be added to the principal amount of this Note, in which event interest shall accrue thereon in accordance with the terms of this Note and such additional principal amount shall be convertible into Common Stock in accordance with the terms of this Note. The Borrower agrees that the right to convert is a valuable right to the Holder. The damages resulting from a failure, attempt to frustrate, interference with such conversion right are difficult if not impossible to qualify. Accordingly, the parties acknowledge that the liquidated damages provision contained in this Section 4.4(e) are justified.
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4.5 Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless: (i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration (such as Rule 144 or a successor rule) (“Rule 144”); or (iii) such shares are transferred to an “affiliate” (as defined in Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 4.5 and who is an Accredited Investor (as defined in the Purchase Agreement).
Any restrictive legend on certificates representing shares of Common Stock issuable upon conversion of this Note shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if the Borrower or its transfer agent shall have received an opinion of counsel from Holder’s counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that (i) a public sale or transfer of such Common Stock may be made without registration under the Act, which opinion shall be accepted by the Company so that the sale or transfer is effected; or (ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder under an effective registration statement filed under the Act; or otherwise may be sold pursuant to an exemption from registration. In the event that the Company does not reasonably accept the opinion of counsel provided by the Holder with respect to the transfer of Securities pursuant to an exemption from registration (such as Rule 144), it will be considered an Event of Default pursuant to this Note.
4.6 Effect of Certain Events.
(a) Adjustment Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion of all of the Note, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different number of shares of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance of all or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the Borrower, then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion, such stock, securities or assets which the Holder would have been entitled to receive in such transaction had this Note been converted in full immediately prior to such transaction (without regard to any limitations on conversion set forth herein), and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder of this Note to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction described in this Section 4.6(a) unless (a) it first gives, to the extent practicable, ten (10) days prior written notice (but in any event at least five (5) days prior written notice) of the record date of the special meeting of shareholders to approve, or if there is no such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Note. The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.
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(b) Adjustment Due to Distribution. If the Borrower shall declare or make any distribution of its assets (or rights to acquire its assets) to holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any dividend or distribution to the Borrower’s shareholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary (i.e., a spin-off)) (a “Distribution”), then the Holder of this Note shall be entitled, upon any conversion of this Note after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such assets which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had such Holder been the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to such Distribution.
ARTICLE V. MISCELLANEOUS
5.1 Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.
5.2 Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:
If to the Borrower, to:
ILUSTRATO PICTURES INTERNATIONAL, INC.
26 Broadway, Suite 934
New York, NY 10004
Attn: Nicolas Link, Chief Executive Officer
Email: nick.link@firebuggroup.com
If to the Holder:
1800 DIAGONAL LENDING LLC
1800 Diagonal Road, Suite 623
Alexandria VA 22314
Attn: Curt Kramer, President
Email: ckramer@sixthstreetlending.com
5.3 Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument (and the other Notes issued pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented, then as so amended or supplemented.
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5.4 Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a) of the Securities and Exchange Commission). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona fide margin account or other lending arrangement; and may be assigned by the Holder without the consent of the Borrower.
5.5 Cost of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys’ fees.
5.6 Governing Law. This Note shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Note shall be brought only in the Circuit Court of Fairfax County, Virginia or in the Alexandria Division of the United States District Court for the Eastern District of Virginia. The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Borrower and Holder waive trial by jury. The Holder shall be entitled to recover from the Borrower its reasonable attorney's fees and costs. In the event that any provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Note, any agreement or any other document delivered in connection with this Note by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.
5.7 Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.
5.8 Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing economic loss and without any bond or other security being required.
IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer this on January 17, 2024
ILUSTRATO PICTURES INTERNATIONAL, INC.
| By: | /s/ Nicolas Link | |
| Nicolas Link | ||
| Chief Executive Officer |
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EXHIBIT A – WIRE INSTRUCTIONS
[to be provided via email]
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EXHIBIT B -- NOTICE OF CONVERSION
The undersigned hereby elects to convert $ ________________ principal amount of the Note (defined below) into that number of shares of Common Stock to be issued pursuant to the conversion of the Note (“Common Stock”) as set forth below, of ILUSTRATO PICTURES INTERNATIONAL, INC., a Nevada corporation (the “Borrower”) according to the conditions of the convertible note of the Borrower dated as of January 17, 2024 (the “Note”), as of the date written below. No fee will be charged to the Holder for any conversion, except for transfer taxes, if any.
Box Checked as to applicable instructions:
| ☐ | The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”). |
Name of DTC Prime Broker:
Account Number:
| ☐ | The undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock set forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately below or, if additional space is necessary, on an attachment hereto: |
| Date of conversion: | |||
| Applicable Conversion Price: | $ | ||
| Number of shares of common stock to be issued | |||
| pursuant to conversion of the Notes: | |||
| Amount of Principal Balance due remaining | |||
| under the Note after this conversion: | |||
| 1800 DIAGONAL LENDING LLC |
| By: | ||||
| Name: | Curt Kramer | |||
| Title: | President | |||
| Date: | ||||
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Exhibit 4.59
Exhibit 4.60
Exhibit 4.61
Exhibit 4.62
Exhibit 4.63
Exhibit 4.64
ILUSTRATO PICTURES INTERNATIONAL INC.
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the “Agreement”) is made as of March 18, 2024, among Ilustrato Pictures International Inc., a Nevada corporation (the “Company”) and Kevin Van Hoesen (the “Investor”).
The Investor understands that the Company proposes to offer and sell to the Investor 16,000,000 shares of its Common Stock for a purchase price of $100,000.00.
1. Purchase and Sale of Common Stock.
a. Common Stock Subject to the terms and conditions of this Agreement, the Investor agrees to purchase from the Company 16,000,000 shares of Company Common Stock for an aggregate purchase price of $100,000.00, payable by delivery to the Company of a check or wire in the amount of $100,000.00.
b. Initial Closing.
The purchase and sale of the Units shall take place at the offices of the Company at 26 Broadway, Suite 934, New York, NY 10004 (“Closing”). At the Closing, the Company shall deliver to the Investor the Common Stock, which such Investor is purchasing against delivery to the Company by such Investor of a check, wire transfer, or cancellation of indebtedness in the aggregate amount of the purchase price therefor payable to the Company’s order.
2. The Company’s Representations and Warranties. The Company represents and warrants to the Investor as follows:
a. Organization and Standing. The Company is a corporation duly organized and validly existing under the laws of the State of Nevada.
b. Authorization. The execution, delivery and performance of this Agreement by the Company has been duly authorized by all requisite corporate action, and this Agreement constitutes the legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject as to enforcement of remedies to applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors’ rights. The execution, delivery and performance of this Agreement and compliance with the provisions hereof by the Company does not conflict with, or result in a breach or violation of the terms, conditions or provisions of, or constitute a default (or an event with which the giving of notice or passage of time, or both could result in a default) under, or result in the creation or imposition of any lien pursuant to the terms of, the Articles of Incorporation or the Bylaws of the Company.
c. Securities. When issued pursuant to the terms of this Agreement, the Common Stock will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances caused or created by the Company; provided, however, that the Common Stock shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Agreement or otherwise required at the time a transfer is proposed.
3. Representations, Warranties of Investor and Restrictions on Transfer
a. Representations and Warranties of Investor. The Investor represents and warrants to the Company with respect to the purchase of Securities under this Agreement as follows:
i. This Agreement constitutes the Investor’s valid and legally binding obligation, enforceable in accordance with its terms.
ii. The Investor is acquiring the Common Stock for its own account for investment purposes only and not with a view to, or for the resale in connection with, any “distribution” thereof for purposes of the Securities Act of 1933, as amended (the “Act”). The Investor understands that the shares of Common Stock have not been registered under the Act or any applicable state securities laws by reason of a specific exemption therefrom that depends upon, among other things, the bona fide nature of the investment intent as expressed herein.
iii. The Investor has discussed the Company and its plans, operations and financial condition with its officers and has received all such information as the Investor deems necessary and appropriate to enable the Investor to evaluate the financial risk inherent in making an investment in the Common Stock. The Investor has received satisfactory and complete information concerning the business and financial condition of the Company in response to the Investor’s inquiries.
iv. The Investor realizes that the acquisition of the Common Stock will be a highly speculative investment. The Investor is able, without impairing the Investor’s financial condition, to hold the Common Stock for an indefinite period of time and to suffer a complete loss of the Investor’s investment. The Investor recognizes that the Company has only recently been organized and that it has a limited financial and operating history and the investment in the Company involves substantial risks. The Investor understands all of the risks related to the acquisition of the Common Stock. By virtue of the Investor’s experience in evaluating and investing in private placement transactions of securities in companies similar to the Company, the Investor is capable of evaluating the merits and risks of the Investor’s investment in the Company and has the capacity to protect the Investor’s own interests.
v. The Investor understands that the Common Stock must be held indefinitely unless subsequently registered under the Act or unless an exemption from registration is otherwise available. Moreover, the Investor understands that the Company is under no obligation to register the Common Stock. The Investor is aware of Rule 144 promulgated under the Act that permits limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions. The Investor understands that the Common Stock will be imprinted with a legend which prohibits the transfer of the Common Stock unless they are registered or such registration is not required in the opinion of counsel for the Company.
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b. Legends. In addition to any legend imposed by state securities laws, each certificate representing the Common Stock shall be endorsed with the following legends:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
The Company need not register a transfer of Common Stock unless the conditions specified in the foregoing legends are satisfied. The Company may also instruct its transfer agent not to register the transfer of any of the Common Stock unless the conditions specified in the foregoing legends are satisfied.
c. Removal of Legends and Transfer Restrictions. The legend relating to the Act endorsed on a stock certificate pursuant to paragraph 4(b) of this Agreement and the stop transfer instructions with respect to such Common Stock shall be removed and the Company shall issue a stock certificate without such legend to the holder of such Common Stock if such Shares are registered under the Act and a prospectus meeting the requirements of Section 10 of the Act is available, or if such holder provides to the Company an opinion of counsel for such holder of the Shares or Note reasonably satisfactory to the Company or a no-action letter or interpretive opinion of the staff of the Commission to the effect that a public sale, transfer or assignment of such Shares or Note may be made without registration and without compliance with any restriction such as Rule 144. Any legend imposed by state securities laws will be removed if the state agency imposing such legend has consented to its removal.
4. Miscellaneous.
a. Governing Law. This Agreement shall be governed in all respects by the laws of the State of New York without regard to the conflict of law provisions thereof.
b. Survival. The representations and warranties contained herein shall survive the execution and delivery of this Agreement and the sale of the Common Stock.
c. Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
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d. Entire Agreement. This Agreement embodies the entire understanding and agreement between each Investor and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof.
e. Notices, etc. All notices and other communications required or permitted hereunder shall be effective upon receipt and shall be in writing and may be delivered in person, by telecopy, electronic mail, overnight delivery service or U.S. mail, addressed (a) if to an Investor, at his or her address set forth opposite such Investors name on the last page of this Agreement, or at such other address as such Investor shall have furnished the Company in writing, or (b) if to the Company, at the address of its principal office, or at such other address as the Company shall have furnished to the Investor in writing.
f. Titles and Subtitles. The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
g. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
h. Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of the Common Stock. Any amendment or waiver effected in accordance with this Section shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities are convertible), each future holder of all such securities, and the Company.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first written above.
| COMPANY: | ILUSTRATO PICTURES INTERNATIONAL INC. | ||
| a Nevada corporation | |||
| By: | /s/ Nicolas Link | ||
| Nicolas Link, CEO | |||
| INVESTOR: | |
| $100,000 | |
| Amount of Investment |
| Kevin Van Hoesen | ||
| By: | /s/ Kevin Van Hoesen | |
| Title: | Investor | |
[Signature page to Ilustrato Pictures International Inc. Common Stock]
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Exhibit 4.65
Exhibit 4.66
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
ILUSTRATO PICTURES INTERNATIONAL, INC.
CONVERTIBLE CONSOLIDATED PROMISSORY NOTE
| Principal Amount: $6,405,750.00 USD | Issue Date: April 1,2024 |
WHEREAS, as of April 1, 2024 (the “Issue Date”), RB Capital Partners, Inc., with its offices at 2856 Torrey Pines Road, La Jolla, California 92037 (the “Holder”), had loaned funds in the aggregate principal amount of $6,050,000.00 (the “Outstanding Principal”) to Ilustrato Pictures International, Inc., a Nevada corporation with its office at 26 Broadway, Suite 934, New York, NY 10004 (the “Company”; together with Holder, the “Parties” and each a “Party”), pursuant to, and subject to the terms of, the following sixteen (16) promissory notes issued by Company to Holder (the “Prior Notes”):
| DATE OF ISSUANCE | PRINCIPAL AMOUNT | INTEREST RATE | TOTAL
AMOUNT OWED (a/o April 1, 2024) | |||||||||
| 05/20/2022 | $ | 500,000 | 5 | % | $ | 546,560 | ||||||
| 07/12/2022 | $ | 500,000 | 5 | % | $ | 542,815 | ||||||
| 08/10/2022 | $ | 500,000 | 5 | % | $ | 540,940 | ||||||
| 08/25/2022 | $ | 200,000 | 5 | % | $ | 216,020 | ||||||
| 09/21/2022 | $ | 650,000 | 5 | % | $ | 699,565 | ||||||
| 11/14/2022 | $ | 400,000 | 5 | % | $ | 427,495 | ||||||
| 04/12/2023 | $ | 500,000 | 5 | % | $ | 524,270 | ||||||
| 05/02/2023 | $ | 250,000 | 5 | % | $ | 261,460 | ||||||
| 05/30/2023 | $ | 450,000 | 5 | % | $ | 468,750 | ||||||
| 05/30/2023 | $ | 200,000 | 5 | % | $ | 208,335 | ||||||
| 07/03/2023 | $ | 475,000 | 5 | % | $ | 493,075 | ||||||
| 07/26/2023 | $ | 550,000 | 5 | % | $ | 568,785 | ||||||
| 08/29/2023 | $ | 100,000 | 5 | % | $ | 102,955 | ||||||
| 09/05/2023 | $ | 450,000 | 5 | % | $ | 462,840 | ||||||
| 09/11/2023 | $ | 125,000 | 8 | % | $ | 137,915 | ||||||
| 11/07/2023 | $ | 200,000 | 5 | % | $ | 203,970 | ||||||
| $ | 6,050,000.00 | $ | 6,405,750.00 | |||||||||
WHEREAS, as of April 1, 2024, the total Outstanding Principal and accrued interest thereon owing by Company to Holder under the Prior Notes is $6,405,750.00 (the “Consolidated Principal Amount”);
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NOW, THEREFORE, THIS AGREEMENT WITNESSES that for and in consideration of the mutual premises and the mutual covenants and agreements contained herein, the Parties covenant and agree each with the other as follows:
1. Principal and Interest.
1.1 The Company, for value received, hereby promises to pay to the order of the Holder the sum of Six Million Four Hundred Five Thousand Seven Hundred Fifty Dollars ($6,405,750.00), which amount represents the amount owed to Holder as of April 1, 2024.
1.2 This Note shall bear interest at a rate of seven percent (7%) per annum, compounded annually. Following the occurrence of an Event of Default, the interest rate shall automatically be increased to the lesser of (i) twelve percent (12%) per annum and (ii) the maximum interest rate permitted by applicable law.
1.3 Upon payment in full of the principal, this Note shall be surrendered to the Company for cancellation.
1.4 The principal under this Note shall be payable at the principal office of the Company and shall be forwarded to the address of the Holder hereof as such Holder shall from time to time designate.
2. Attorney’s Fees. If the indebtedness represented by this Note or any part thereof is collected in bankruptcy, receivership or other judicial proceedings or if this Note is placed in the hands of attorneys for collection after default, the Company agrees to pay, in addition to the principal payable hereunder, reasonable attorneys’ fees and costs incurred by the Holder.
3. Conversion.
3.1 Voluntary Conversion. The Holder shall have the right, exercisable in whole or in part, to convert the outstanding principal into a number of fully paid and non-assessable whole shares of the Company’s $0.001 Par Value common stock (“Common Stock”) determined in accordance with Section 3.2 below.
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3.2 Shares Issuable. The number of whole shares of Common Stock into which this Note may be voluntarily converted (the “Conversion Shares”) shall be determined by dividing the aggregate principal amount borrowed hereunder by the Note Conversion Price (as defined below); provided, however, that, in no event, shall Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (i) the number of shares of Common Stock beneficially owned by Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of this Note or the unexercised or unconverted portion of any other security of Company subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (ii) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in the beneficial ownership by Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock of the Company. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934 and Regulation 13D-G thereunder, except as otherwise provided in clause (i) of such proviso. The “Note Conversion Price,” as of any date on which all or any portion of this Note is converted pursuant to Section 3.1 (each such date, a “Conversion Date”), shall be an amount equal to (x) the lowest trading price for the Common Stock during the ten (10) trading days immediately preceding the Conversion Date multiplied by (y) 0.70. The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the Note Conversion Price. The Term “Conversion Amount” means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted on the applicable Conversion Date plus, (2) at Company’s option, accrued and unpaid interest, if any, on such principal amount at the interest rate provided in this Note to the Conversion Date; provided, however, that Company shall have the right to pay any or all interest in cash. (ii) At least 50% of every conversion amount must be that of the principal outstanding, unless by mutual agreement (iii) The Holder agrees to convert a maximum of 4.99% of the total issued and outstanding every fiscal quarter. The 4.99% conversion will be based off the total issued and outstanding as January 1st of the calendar year in which the Notice of Conversion is submitted to the Company.
3.3 Conversion Procedures. If Holder elects to convert under this Note, Holder shall provide Company with a written notice of conversion setting forth the amount to be converted and the Conversion Date. The notice must be delivered to Company together with a copy of this Note. Within five (5) business days of receipt of such notice, Company shall deliver to Holder certificate(s) for the Common Stock issuable upon such conversion.
3.4 Other Conversion Provisions.
(a) Adjustment of Note Conversion Price. In the event the Company shall in any manner, subsequent to the issuance of this Note, approve a reclassification involving a reverse stock split and subdivision of the Company’s issued and outstanding shares of Common Stock, the Note Conversion Price shall forthwith be unaffected. In the event the Company shall in any manner, subsequent to the issuance of this Note, approve a reclassification involving a forward stock split and subdivision of the Company’s issued and outstanding shares of Common Stock, the Note Conversion Price shall forthwith be unaffected.
(b) Common Stock Defined. Whenever reference is made in this Note to the shares of Common Stock, the term “Common Stock” shall mean the Common Stock of the Company authorized as of the date hereof, and any other class of stock ranking on a parity with such Common Stock. Shares issuable upon conversion hereof shall include only shares of Common Stock of the Company.
3.5 No Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of this Note. In lieu of the Company issuing any fractional shares to the Holder upon the conversion of this Note, the Company shall pay to the Holder the amount of outstanding principal hereunder that is not so converted.
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4. Representations, Warranties and Covenants of the Company. The Company represents, warrants and covenants with the Holder as follows:
(a) Authorization; Enforceability. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Note and the performance of all obligations of the Company hereunder has been taken, and this Note constitutes a valid and legally binding obligation of the Company, enforceable in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.
(b) Governmental Consents. No consent, approval, qualification, order or authorization of, or filing with, any local, state or federal governmental authority is required on the part of the Company in connection with the Company’s valid execution, delivery or performance of this Note except any notices required to be filed with the Securities and Exchange Commission under Regulation D of the Securities Act of 1933, as amended (the “1933 Act”), or such filings as may be required under applicable state securities laws, which, if applicable, will be timely filed within the applicable periods therefor.
(c) No Violation. The execution, delivery and performance by the Company of this Note and the consummation of the transactions contemplated hereby will not result in a violation of its Certificate of Incorporation or Bylaws, in any material respect of any provision of any mortgage, agreement, instrument or contract to which it is a party or by which it is bound or, to the best of its knowledge, of any federal or state judgment, order, writ, decree, statute, rule or regulation applicable to the Company or be in material conflict with or constitute, with or without the passage of time or giving of notice, either a material default under any such provision or an event that results in the creation of any material lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business or operations, or any of its assets or properties.
(d) Reservation of Shares. The Company shall deliver within five days of execution of this Note, a fully-executed and complete irrevocable letter of instruction or similar instrument to the transfer agent of Company, in a form acceptable to Holder, with respect to the issuance of shares of Common Stock issuable pursuant to conversion of this Note (the “Letter of Instruction”). The shares of Common Stock issuable upon conversion of this Note shall not bear any restrictive legends. On and after the date of this Note, Company shall timely report all necessary public information required by Rule 144(c)(2) of the 1933 Act for Holder to resell the shares of Common Stock issued to Holder under this Note in reliance upon the public information requirements set forth in Rule 144(c)(2). In the Letter of Instruction, the Company shall instruct the transfer agent to place 525,000,000 shares of Common Stock on reserve for eventual conversion of this Note (the “Reserved Shares”). The Reserved Shares shall remain in the created reserve with the transfer agent until Holder and an authorized officer of Company provide joint written instructions to the transfer agent that the Reserved Shares, or any part of the Reserved Shares, shall be taken out of the reserve and shall no longer be subject to the terms of the Letter of Instruction.
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5. Representations and Covenants of the Holder. The Company has entered into this Note in reliance upon the following representations and covenants of the Holder:
(a) Investment Purpose. This Note and the Common Stock issuable upon conversion of the Note are acquired for investment and not with a view to the sale or distribution of any part thereof, and the Holder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption.
(b) Private Issue. The Holder understands (i) that this Note and the Common Stock issuable upon conversion of this Note are not registered under the 1933 Act or qualified under applicable state securities laws, and (ii) that the Company is relying on an exemption from registration predicated on the representations set forth in this Section 8.
(c) Financial Risk. The Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment, and has the ability to bear the economic risks of its investment.
(d) Risk of No Registration. The Holder understands that if the Company does not register with the Securities and Exchange Commission pursuant to Section 12 of the Securities Exchange Act of 1934 (the “1934 Act”), or file reports pursuant to Section 15(d) of the 1934 Act, or if a registration statement covering the securities under the 1933 Act is not in effect when it desires to sell the Common Stock issuable upon conversion of the Note, it may be required to hold such securities for an indefinite period. The Holder also understands that any sale of the Note or the Common Stock which might be made by it in reliance upon Rule 144 under the 1933 Act may be made only in accordance with the terms and conditions of that Rule.
6. Assignment. Subject to the restrictions on transfer described in Section 8 below, the rights and obligations of the Company and the Holder shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.
7. Repayment. The Company may repay the Holder in cash at any time in full including all interest and principal, without penalty. If the issuer pays the holder $650,000 (Six hundred fifty thousand Dollars) in cash in a fiscal quarter the holder will not be permitted to carry out a conversion in that fiscal quarter, unless by mutual agreement.
8. Waiver and Amendment. Any provision of this Note may be amended, waived or modified upon the written consent of the Company and the Holder.
9. Default. The only default provision is if the Company fails to repay the note in full within 2 years of the date of signing this note, the company will be in default.
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10. Transfer of This Note or Securities Issuable on Conversion Hereof. With respect to any offer, sale or other disposition of this Note or securities into which this Note may be converted, the Holder will give written notice to the Company prior thereto, describing briefly the manner thereof. Unless the Company reasonably determines that such transfer would violate applicable securities laws, or that such transfer would adversely affect the Company’s ability to account for future transactions to which it is a party as a pooling of interests, and notifies the Holder thereof within five (5) business days after receiving notice of the transfer, the Holder may effect such transfer. The Note thus transferred and each certificate representing the securities thus transferred shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance with the 1933 Act, unless in the opinion of counsel for the Company such legend is not required in order to ensure compliance with the 1933 Act. The Company may issue stop transfer instructions to its transfer agent in connection with such restrictions.
11. Notices. Any notice, other communication or payment required or permitted hereunder shall be in writing and shall be deemed to have been given upon delivery if personally delivered or three (3) business days after deposit if deposited in the United States mail for mailing by certified mail, postage prepaid. Each of the above addressees may change its address for purposes of this Section by giving to the other addressee notice of such new address in conformance with this Section.
12. Governing Law. This Note is being delivered in and shall be construed in accordance with the laws of the State of California, without regard to the conflicts of law provisions thereof. This Note and the other Loan Documents shall be interpreted without regard to any presumption or other rule requiring construction against the Party which drafted this and the other Loan Documents. Each Party hereto agrees that state and federal courts in the county of San Diego, California shall have exclusive jurisdiction over and be the exclusive venue for any disputes relating to or arising from this Note and the other Loan Documents or over any action to enforce any continuing obligations under this Note and the other Loan Documents.
13. Heading; References. All headings used herein are used for convenience only and shall not be used to construe or interpret this Note. Except as otherwise indicated, all references herein to Sections refer to Sections hereof.
14. Waiver by the Company. The Company hereby waives demand, notice, presentment, protest and notice of dishonor.
15. Delays. No delay by the Holder in exercising any power or right hereunder shall operate as a waiver of any power or right.
16. Severability. If one or more provisions of this Note are held to be unenforceable under applicable law, such provision shall be excluded from this Note and the balance of the Note shall be interpreted as if such provision was so excluded and shall be enforceable in accordance with its terms.
17. No Impairment. The Company will not, by any voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Note and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder of this Note against impairment.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, Ilustrato Pictures International, Inc. has caused this Note to be executed in its corporate name and this Note to be dated, issued and delivered, all on the date first above written.
| ILUSTRATO PICTURES | ||
| INTERNATIONAL, INC. | ||
| Date: April 1, 2024 | By | /s/ Nicolas Link |
| Nicolas Link | ||
| Its: | CEO & Director | |
| RB CAPITAL PARTNERS, INC. | ||
| Date: April 1, 2024 | By: | |
| Brett Rosen | ||
| Its: | Managing Member | |
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Exhibit 4.67
Description of Registrant’s Securities to be Registered
General
As of December 31, 2023,
| 1. | 2,000,000,000 shares of common stock are authorized, and 1,720,182,651 shares of the Company’s common stock are issued and outstanding. |
| 2. | 235,741,000 shares of all classes of preferred stock are authorized and 81,913,175 shares of the Company’s all classes of Preferred stock are issued and outstanding. |
COMMON STOCK AND PREFERRED STOCK
In August 2019 the Company’s Amended its Articles of Incorporation to authorize it to issue up to two billion (2,000,000,000) shares, of which all shares are common stock, with a par value of one-tenth of one cent ($0.001) per share.
As of December 31, 2023,
| 2,000,000,000 shares of common stock are authorized, and 1,720,182,651 shares of the Company’s common stock are issued and outstanding. |
Common Stock
Our common stock is entitled to one vote per share on all matters submitted to a vote of the stockholders, including the election of directors. Except as otherwise required by law or provided in any resolution adopted by our board of directors with respect to any series of preferred stock, the holders of our common stock will possess all voting power. Generally, all matters to be voted on by stockholders must be approved by a majority (or, in the case of election of directors, by a plurality) of the votes entitled to be cast by all shares of our common stock that are present in person or represented by proxy, subject to any voting rights granted to holders of any preferred stock. Holders of our common stock representing fifty percent (50%) of our capital stock issued, outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger, or an amendment to our Articles of Incorporation. Our Articles of Incorporation do not provide for cumulative voting in the election of directors.
Subject to any preferential rights of any outstanding series of preferred stock created by our board of directors from time to time, the holders of shares of our common stock will be entitled to such cash dividends as may be declared from time to time by our board of directors from funds available, therefore.
Subject to any preferential rights of any outstanding series of preferred stock created from time to time by our board of directors, upon liquidation, dissolution or winding up, the holders of shares of our common stock will be entitled to receive pro rata all assets available for distribution to such holders.
In the event of any merger or consolidation with or into another company in connection with which shares of our common stock are converted into or exchangeable for shares of stock, other securities, or property (including cash), all holders of our common stock will be entitled to receive the same kind and amount of shares of stock and other securities and property (including cash). Holders of our common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to our common stock.
Preferred Stock
Our board of directors may become authorized to authorize preferred shares of stock and to divide the authorized shares of our preferred stock into one or more series, each of which must be so designated as to distinguish the shares of each series of preferred stock from the shares of all other series and classes. Our board of directors is authorized, within any limitations prescribed by law and our articles of incorporation, to fix and determine the designations, rights, qualifications, preferences, limitations, and terms of the shares of any series of preferred stock including, but not limited to, the following:
| (1) | The number of shares constituting that series and the distinctive designation of that series, which may be by distinguishing number, letter, or title; |
| (2) | The dividend rate on the shares of that series, whether dividends will be cumulative, and if so, from which date(s), and the relative rights of priority, if any, of payment of dividends on shares of that series; |
| (3) | Whether that series will have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights; |
| (4) | Whether that series will have conversion privileges, and, if so, the terms and conditions of such conversion, including provision for adjustment of the conversion rate in such events as the Board of Directors determines; | |
| (5) | Whether or not the shares of that series will be redeemable, and, if so, the terms and conditions of such redemption, including the date or date upon or after which they are redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; |
| (6) | Whether that series will have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of such sinking fund; |
| (7) | The rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the corporation, and the relative rights of priority, if any, of payment of shares of that series; and |
| (8) | Any other relative rights, preferences, and limitations of that series. |
As of December 31, 2023,
| 235,741,000 shares of all classes of preferred stock are authorized and 81,913,175 shares of the Company’s all classes of Preferred stock are issued and outstanding. |
The Company also created the following 30,000,000 preferred shares with a par value of $0.001 to be designated Class A, B and C.
Class A – 10,000,000 preferred shares that convert at 3 common shares for every 1 preferred class A share and voting rights of 500 common shares for every 1 preferred class A share. All 10,000,000 preferred class A shares have been issued to the Company’s CEO.
Class B – 100,000,000 preferred with par value $0.001 that will be converted at 100 common shares for every 1 preferred Class B Share with voting rights of 100 common shares for every 1 preferred class B share. Dividends to be paid according to the company’s dividend policy agreed by the board from time to time
Class C – 10,000,000 preferred shares that convert at 2 common shares for every 1 preferred Class C common share with voting rights of 100 common shares for every 1 preferred class C share.
Class D– 60,741,000 preferred shares; par value $0.001 that convert at 500 common shares for every 1 preferred Class D common share with voting rights of 500 common shares for every 1 preferred class D share.
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Class E - 5,000,000 preferred shares; par value $0.001; non-cumulative. Dividends are 6% a year commencing a year after issuance. Dividends to be paid annually. Redeemable at $1.00 per share, 2.25% must be redeemed per quarter, commencing one year after issuance, and shall be redeemed at 130% premium to the redemption value. The shares do not have voting rights.
Class F – 50,000,000 preferred shares; par value $0.001 that convert at 100 common shares for every 1 preferred class F share with no voting rights and no dividends.
Provisions in Our Articles of Incorporation and By-Laws That Would Delay, Defer or Prevent a Change in Control
Our articles of incorporation authorize our board of directors to issue a class of preferred stock commonly known as a “blank check” preferred stock. Specifically, the preferred stock may be issued from time to time by the board of directors as shares of one (1) or more classes or series. Our board of directors, subject to the provisions of our Articles of Incorporation and limitations imposed by law, is authorized to adopt resolutions; to issue the shares; to fix the number of shares; to change the number of shares constituting any series; and to provide for or change the following: the voting powers; designations; preferences; and relative, participating, optional or other special rights, qualifications, limitations or restrictions, including the following: dividend rights, including whether dividends are cumulative; dividend rates; terms of redemption, including sinking fund provisions; redemption prices; conversion rights and liquidation preferences of the shares constituting any class or series of the preferred stock.
In each such case, we will not need any further action or vote by our shareholders. One of the effects of undesignated preferred stock may be to enable the board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a tender offer, proxy contest, merger or otherwise, and thereby to protect the continuity of our management. The issuance of shares of preferred stock pursuant to the board of director’s authority described above may adversely affect the rights of holders of common stock. For example, preferred stock issued by us may rank prior to the common stock as to dividend rights, liquidation preference or both, may have full or limited voting rights and may be convertible into shares of common stock. Accordingly, the issuance of shares of preferred stock may discourage bids for the common stock at a premium or may otherwise adversely affect the market price of the common stock.
Certain Anti-Takeover Provisions
Nevada Revised Statutes sections 78.378 to 78.379 provide state regulation over the acquisition of a controlling interest in certain Nevada corporations unless the articles of incorporation or bylaws of the corporation provide that the provisions of these sections do not apply. Our articles of incorporation and bylaws do not state that these provisions do not apply. The statute creates a number of restrictions on the ability of a person or entity to acquire control of a Nevada company by setting down certain rules of conduct and voting restrictions in any acquisition attempt, among other things. The statute is limited to corporations that are organized in the state of Nevada and that have 200 or more stockholders, at least 100 of whom are stockholders of record and residents of the State of Nevada; and does business in the State of Nevada directly or through an affiliated corporation. Because of these conditions, the statute currently does not apply to our company.
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Exhibit 21.1
List of Subsidiaries of ILUS
| Name of Subsidiary | Jurisdiction of Subsidiary | |
| Bull Head Products Inc. | Tennessee, USA | |
| Georgia Fire and Rescue Supply LLC | Georgia, USA | |
| Firebug Mechanical Equipment LLC | U.A.E. | |
| Bright Concept Detection and Protection System LLC | U.A.E. | |
| Emergency Response Technologies, Inc | Delaware, USA | |
| The Vehicle Converters LLC | U.A.E. | |
| E-Raptor Technologies Inc | Delaware, USA | |
| Replay Solutions | U.A.E. | |
| Quality Industrial Corp. | Nevada, USA | |
| Samsara Luggage Inc. | Nevada, USA | |
| Al Shola Al Modea Gas Distribution LLC | U.A.E. |
Exhibit 31.1
CERTIFICATIONS
I, Nicolas Link, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K for the fiscal year ended December 31, 2023, of Ilustrato Pictures International Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
| a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | evaluated the effectiveness of the registrant s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | disclosed in this report any change in the registrant s internal control over financial reporting that occurred during the registrant s most recent fiscal quarter (the registrant s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant s internal control over financial reporting; and; |
| 5. | The registrant s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant s auditors and the audit committee of the registrant s board of directors (or persons performing the equivalent functions); |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant s internal controls. |
| Dated: May 1, 2024 | /s/ Nicolas Link |
| Nicolas Link | |
| Chief Executive Officer | |
| (principal executive officer) |
Exhibit 31.2
CERTIFICATIONS
I, Krishnan Krishnamoorthy, certify that;
| 1. | I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2023, of Ilustrato Pictures International Inc. (the registrant); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant s internal control over financial reporting that occurred during the registrant s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant s internal control over financial reporting; and |
| 5. | The registrant s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant s auditors and the audit committee of the registrant s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant s internal control over financial reporting. |
| Date: May 1, 2024 | ||
| /s/ Krishnan Krishnamoorthy | ||
| By: | Krishnan Krishnamoorthy | |
| Title: | Chief Financial Officer | |
| (principal accounting, and financial officer) | ||
Exhibit 32.1
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION
1350 AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of Ilustrato Pictures International Inc. (the Company ) for the fiscal year ended December 31, 2023, as filed with the Securities and Exchange Commission (the Report ), I, Nicolas Link, Chief Executive Officer, and I, Krishnan Krishnamoorthy, Chief Financial Officer of the Company certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: May 1, 2024 | /s/ Nicolas Link |
| Nicolas Link | |
| Chief Executive Officer | |
| (Principal executive officer) | |
| Dated: May 1, 2024 | /s/ Krishnan Krishnamoorthy |
| Krishnan Krishnamoorthy Chief Financial Officer | |
| (Principal accounting and financial officer) |
This certification accompanies this Annual Report on Form 10-K pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.