Quality Industrial Corp 10-Q for FY2026 Q2
Quality Industrial Corp. (QIND)
About this 10-Q
Quality Industrial Corp filed this 10-Q on August 13, 2026, covering the quarter ended June 30, 2026 (FY2026 Q2).
Headline figures
Quarter ended June 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $3.53M
- down 11.9% from $4.01M a year earlier
- Net loss
- $32.3K
- compared with a net loss of $195.88K 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
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended:
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________ to ___________
Commission
File Number:
| (Exact name of registrant as specified in its charter) |
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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 is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No
As of August 13, 2026, there were a total of shares of the registrant’s common Stock, $ par value per share, outstanding.
TABLE OF CONTENTS
| PART I - FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements | 1 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 2 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 13 |
| Item 4. | Controls and Procedures | 13 |
| PART II - OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 14 |
| Item 1A. | Risk Factors | 15 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 15 |
| Item 3. | Defaults Upon Senior Securities | 16 |
| Item 4. | Mine Safety Disclosures | 16 |
| Item 5. | Other Information | 16 |
| Item 6. | Exhibits | 17 |
| SIGNATURES | 18 | |
| i |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Quality Industrial Corp.
Unaudited Consolidated Financial Statements
| 1 |
QUALITY INDUSTRIAL CORP.
CONSOLIDATED BALANCE SHEETS
| June 30, 2026 | December 31, 2025 | |||||||
| Unaudited | Audited | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Inventory | ||||||||
| Accounts receivable | ||||||||
| Related party receivables | ||||||||
| Deposits, prepayments & advances | ||||||||
| Other current assets | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| NON-CURRENT ASSETS | ||||||||
| Property, plant and equipment | ||||||||
| Right-of-use assets | ||||||||
| Advances for purchase of property, plant and equipment | ||||||||
| Goodwill | ||||||||
| TOTAL NON-CURRENT ASSETS | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND EQUITY (DEFICIT) | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Related party payables | ||||||||
| Lease liabilities – current portion | ||||||||
| Convertible notes, net of discount | ||||||||
| Other payables - current | ||||||||
| Other current liabilities | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| NON-CURRENT LIABILITIES | ||||||||
| Lease liabilities - non-current portion | ||||||||
| Other non-current liabilities | ||||||||
| TOTAL NON-CURRENT LIABILITIES | ||||||||
| TOTAL LIABILITIES | ||||||||
| EQUITY (DEFICIT) | ||||||||
| Preferred stock; $ par value; shares authorized; and Series B shares issued and outstanding as of June 30, 2026, and December 31, 2025, respectively | ||||||||
| Common stock; $ par value; shares authorized; and shares issued and outstanding as of June 30, 2026, and December 31, 2025, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income (loss) – foreign currency translation | ||||||||
| Noncontrolling interest | ||||||||
| TOTAL EQUITY (DEFICIT) | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND EQUITY (DEFICIT) | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-1 |
QUALITY INDUSTRIAL CORP.
CONSOLIDATED STATEMENT OF OPERATIONS
| 30-June-26 | 30-June-25 | 30-June-26 | 30-June-25 | |||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| 30-June-26 | 30-June-25 | 30-June-26 | 30-June-25 | |||||||||||||
| Unaudited | Unaudited | Unaudited | Unaudited | |||||||||||||
| REVENUE | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ||||||||||||||||
| GROSS PROFIT | ||||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Professional fees | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Depreciation and Amortization | ||||||||||||||||
TOTAL OPERATING EXPENSES | ||||||||||||||||
OPERATING INCOME (LOSS) | ( | ) | ||||||||||||||
OTHER (INCOME) EXPENSES | ||||||||||||||||
| Interest expenses | ||||||||||||||||
| Interest on convertible notes | ||||||||||||||||
| Conversion fees | ||||||||||||||||
| Discount on convertible notes | ||||||||||||||||
| Other non-operating expenses | ||||||||||||||||
| Other income-credit card fees | ( | ) | ( | ) | ||||||||||||
| Other non-operating income | ( | ) | ||||||||||||||
TOTAL OTHER (INCOME) EXPENSES, NET | ||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAX | ( | ) | ||||||||||||||
| Corporate income tax | ||||||||||||||||
NET INCOME (LOSS) | ( | ) | ||||||||||||||
| Less: net income attributable to noncontrolling interest | ||||||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO QIND STOCKHOLDERS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net income (loss) per common share: | ||||||||||||||||
| Basic | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Diluted | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted* | ||||||||||||||||
| * |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-2 |
QUALITY INDUSTRIAL CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the Six Months Ended June 30, 2026
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Amount | Amount | Amount | Amount | |||||||||||||||||||||||||||||||||||||
| Preferred Stock A | Preferred Stock B | Common Stock | Noncontrolling Interest | Additional Paid-in Capital | Accumulated other comprehensive income (loss) – foreign currency translation | Accumulated Deficit | Total Equity | |||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Amount | Amount | Amount | Amount | |||||||||||||||||||||||||||||||||||||
| Total Equity as of December 31, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Issued shares from conversion of convertible note | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Prefer B stock Converted to common Stock | - | ( | ) | ( | ) | - | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Income for the period | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income – foreign currency translation adjustment | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
| Net transactions with Non-controlling interest | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Total Equity (Deficit) as of March 31, 2026 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Income for the period | - | - | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income – foreign currency translation adjustment | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Net transactions with Non-controlling interest | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
| Total Equity (Deficit) as of June 30, 2026 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
For the Six Months Ended June 30, 2025
| Shares | Amount | Shares | Amount | Shares | Amount | Amount | Amount | Amount | ||||||||||||||||||||||||||||
| Preferred Stock B | Common Stock | Minority Interest | Additional Paid-in Capital | Retain Loss | Total Equity | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Amount | Amount | Amount | ||||||||||||||||||||||||||||
| Balance, December 31, 2024 | ( | ) | ||||||||||||||||||||||||||||||||||
| - | ||||||||||||||||||||||||||||||||||||
| Common stock issued for conversion of notes | - | - | ||||||||||||||||||||||||||||||||||
| Minority Interest | - | - | - | |||||||||||||||||||||||||||||||||
| Net Income | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Total Shareholders’ Equity as of March 31, 2025 | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance | ( | ) | ||||||||||||||||||||||||||||||||||
| Issuance of shares of common stock for services | - | - | - | |||||||||||||||||||||||||||||||||
| Common stock issued as staff compensation | - | - | - | |||||||||||||||||||||||||||||||||
| Issuance of shares as a commitment fee | - | - | - | |||||||||||||||||||||||||||||||||
| Issued shares from conversion of convertible note | - | - | ||||||||||||||||||||||||||||||||||
| Share buyback | - | - | - | |||||||||||||||||||||||||||||||||
| Minority Interest | - | - | - | |||||||||||||||||||||||||||||||||
| Income for the year | - | - | - | ( | ) | |||||||||||||||||||||||||||||||
| - | ||||||||||||||||||||||||||||||||||||
| Total Shareholders’ Equity as of June 30, 2025 | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance | ( | ) | ||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-3 |
QUALITY INDUSTRIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| June 30, 2026 | June 30, 2025 | |||||||
| For the Six Months Ended | ||||||||
| June 30, 2026 | June 30, 2025 | |||||||
| Cash flows from operating activities | ||||||||
| Income (Loss) for the period | ( | ) | ||||||
| Adjustment to reconcile net gain (loss) to net cash | ||||||||
| Finance cost | ||||||||
| Employee End of service benefits accrual | ||||||||
| Conversion fees | ||||||||
| Corporate income tax expense | ||||||||
| Depreciation and amortization | ||||||||
| Other non – operating income | ( | ) | ||||||
| Discount on convertible Notes | ||||||||
| Changes in assets and liabilities, net | ||||||||
| Inventory | ( | ) | ||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Deposits, prepayments & advances | ( | ) | ( | ) | ||||
| Related party receivables | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ( | ) | ||||
| Other Payables – current | ( | ) | ||||||
| Other current liabilities | ||||||||
| Lease liabilities | ( | ) | ( | ) | ||||
| Other Non Current Liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Advances for purchase of property, plant and equipment | ( | ) | ||||||
| Additions to property plant and equipment | ( | ) | ( | ) | ||||
| Payments to ASG shareholders | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Repayment of convertible note, net | ( | ) | ( | ) | ||||
| Finance cost | ( | ) | ||||||
| Fund support from holding company | ||||||||
| Repayment of bank borrowings - ASG | ( | ) | ( | ) | ||||
| Changes in noncontrolling interest | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | ||||||||
| Net (decrease)increase in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at the beginning of the period | ||||||||
| Cash and cash equivalents at end of the period | ||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-4 |
NOTE 1: OUR HISTORY
Quality Industrial Corp., a Nevada corporation (the “Company,” “QIND,” “we,” “us,” or “our”) was incorporated in the state of Nevada under the name Sensor Technologies, Inc. on May 4, 1998. In March 2006 the Company changed its name to Bixby Energy Systems Inc. In September 2006, the Company changed its name to Power Play Development Corporation. In April 2007, the Company changed its name to National League of Poker, Inc. In October 2007 the Company changed its name back to Power Play Development Corporation. In October 2011 the Company changed its name to Bluestar Technologies, Inc. In March 2018, the Company then changed its name to Wikisoft Corp.
In May 2016, the Company’s Board of Directors terminated the services of all prior officers and directors and the board appointed Robert Stevens as the Board Appointed Receiver for the Company. This was a private receivership where the receiver was appointed by the board to act on behalf of the Company and no court filings were ever made in connection with the receivership. On April 16, 2019, in connection with the Merger described below, Robert Stevens resigned from all of his positions with the Company and the board-appointed receivership was concluded. At that time Rasmus Refer was appointed as the Company’s CEO and Director, and he resigned from such positions in August and November 2020, respectively. On August 31, 2020, Carsten Kjems Falk was appointed as CEO, and Paul C Quintal was on December 1, 2021, appointed as the sole director of the Company.
On April 11, 2019, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with WikiSoft Acquisition Corp., a Delaware corporation which was then the Company’s wholly owned subsidiary (“Merger Sub”) and WikiSoft Corp., a privately held Delaware corporation (“WikiSoft DE”). In connection with the closing of this merger transaction, Merger Sub merged with and into WikiSoft DE (the “Merger”) on April 24, 2019. Pursuant to the Merger, the Company acquired WikiSoft DE which then became its wholly owned subsidiary.
On March 19, 2020, the Company entered into an Agreement and Plan of Merger (the “Short Form Merger Agreement”) with WikiSoft DE, pursuant to which it was agreed that the Company would merge with and into WikiSoft DE, with the Company surviving. Thereafter, on March 25, 2020, WikiSoft DE merged with and into the Company, with the Company (i.e., WikiSoft Corp. - the NV corporation) surviving pursuant to a Certificate of Ownership and Merger filed in with Delaware Secretary of State, whereby the then wholly owned subsidiary (WikiSoft DE) merged with and into the Company, with the Company surviving. On March 25, 2020, the Company filed Articles of Conversion in Nevada, whereby the then subsidiary (WikiSoft DE) merged with and into the Company, with the Company surviving. Prior to the Merger, the Company did not have any business operations, and at the closing of the Merger, the Company’s business was as described in detail below.
Wikisoft Corp. had a vision to become one of the largest portals of information for businesses and business professionals. Built on open-source software, the portal wikiprofile.com, was initially launched in January 2018, and the portal was relaunched in June 2021.
We
changed ownership on May 28, 2022, when Ilustrato Pictures International, Inc., a Nevada corporation (“Ilustrato”), at the
time, acquired
In line with the change in control and business direction, our Company changed its name to Quality Industrial Corp. with the ticker QIND, with a market effective date of August 4, 2022. As a result of these transactions, Quality Industrial Corp. became a public company focused on the industrial, oil & gas and utility sectors. The Company filed articles of merger with the Secretary of State of Nevada in order to effectuate a merger with our wholly owned subsidiary, Quality Industrial Corp. Shareholder approval was not required under Section 92A.180 of the Nevada Revised Statutes. As part of the merger, our Board of Directors authorized a change in our name to “Quality Industrial Corp.” and our Articles of Incorporation have been amended to reflect this name change. Our common stock trades under the symbol “QIND.”
| F-5 |
After
Ilustrato acquired control of QIND, on May 28, 2022, Ilustrato signed a binding letter of intent on June 28, 2022, to acquire
On March 9, 2023, we changed the SIC code of the Company to SIC 3590 - Misc. Industrial & Commercial Machinery and Equipment to reflect the new business direction.
On March 27, 2024, the Company signed a definitive Share Purchase Agreement with Al Shola Al Modea Gas LLC (“ASG” or “Al Shola Gas”). ASG is an Engineering and Distribution Company in the liquefied petroleum gas (“LPG”) Industry in the UAE and was established in 1980. The company are one of the leading suppliers & contractors of LPG centralized pipeline systems. ASG has been consolidated since its acquisition on March 27, 2024.
On April 8, 2025, the Company signed an Amendment to the Share Purchase Agreement, dated March 27, 2024, with the shareholders of ASG. The amended Share Purchase Agreement removed the termination clause 9.14 and amended other clauses of the Share Purchase Agreement, dated March 27, 2024.
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 the board of directors of the Company (the “Board of Directors” or the “Board”) approved the cancellation of the agreement with Quality International Co Ltd FZC signed on January 18, 2023, and amended on July 27, 2023. Quality International Co Ltd FZC is no longer consolidated with our financial statements.
On
November 18, 2024, the Company, Fusion Fuel Green PLC, an Irish public limited company (“Fusion Fuel Green PLC”, “Fusion
Fuel” or “HTOO”), Ilustrato, a stockholder of the Company, and certain other stockholders of the Company (together
with Ilustrato, the “QIND Sellers”), entered into a Stock Purchase Agreement, dated as of November 18, 2024 (the “Purchase
Agreement”). Under the Purchase Agreement, the QIND Sellers transferred an aggregate of shares of common stock and
shares of Series B Convertible Preferred Stock, par value $ per share (“Series B Preferred Stock”) of the Company, constituting
approximately
On August 28, 2025, the Board of Directors of the Company approved a strategic realignment of its executive leadership and board composition, effective immediately. As part of this planned transition, the Board approved several executive and director appointments. In connection with these appointments, certain officers and directors submitted their resignations, which became effective concurrently to facilitate the new leadership structure.
Appointment of Interim Chief Financial Officer and Director; Resignation of Chief Financial Officer
The Board appointed Mr. Carsten Kjems Falk as the Company’s Interim Chief Financial Officer and as a Director of the Company, effective August 28, 2025. Mr. Falk has served the Company in several senior executive roles since 2020 and brings extensive leadership experience across the SaaS, FMCG, and energy sectors.
In connection with Mr. Falk’s appointment, Mr. Krishnan Krishnamoorthy resigned from his position as Chief Financial Officer, effective immediately. The resignation was not the result of any disagreement with the Company, its management, operations, policies, or practices. Mr. Krishnamoorthy has confirmed that he has no outstanding claims or obligations with respect to the Company.
Appointment of Chief Operating Officer; Resignation of Chief Operating Officer
The Board appointed Mr. Sanjeeb Safir as the Company’s Chief Operating Officer (“COO”), effective August 28, 2025. Mr. Safir has served since 2008 as Managing Director of Al Shola Al Modea Gas and Distribution LLC and currently oversees the Company’s operations in the Middle East region. Mr. Safir’s existing employment agreement remains unchanged and has been filed as Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission (the “SEC”) on September 4, 2025.
| F-6 |
To
facilitate Mr. Safir’s appointment, Mrs. Louise Bennett resigned from her position as COO, effective immediately. The resignation
was not the result of any disagreement with the Company, its operations, or policies. Pursuant to a pre-agreed arrangement, the Company
has agreed to pay Mrs. Bennett approximately $
Appointment of Chairman and Director; Resignation of Chairman and Director
The Board appointed Mr. Frederico Figueira de Chaves as Chairman of the Board of Directors and as a Director of the Company, effective August 28, 2025. Mr. Chaves currently serves as Interim Chief Financial Officer and Director of Fusion Fuel. He has previously served in multiple senior leadership roles at Fusion Fuel, including Chief Executive Officer and Chief Financial Officer.
In
connection with Mr. Chaves’s appointment, Mr. Nicolas Link resigned as Chairman of the Board and Director of the Company, effective
immediately. The resignation was not the result of any disagreement with the Company, its management, operations, policies, or practices.
Pursuant to a pre-agreed arrangement, the Company has agreed to pay Mr. Link approximately $
Appointment of Director
The Board of Directors also appointed Mr. John-Paul Backwell as a Director of the Company, effective August 28, 2025. Mr. Backwell currently serves as the Company´s Chief Executive Officer and as Chief Executive Officer of Fusion Fuel Green PLC, the Company´s majority shareholder. He brings over 25 years of leadership experience in the manufacturing, technology, and energy industries.
Company’s Authorized Shares increase
On
January 20, 2026, the Board of Directors of Quality Industrial Corp. and Fusion Fuel Green PLC, the Company’s majority stockholder
holding approximately
On April 20, 2026, John-Paul Backwell resigned from his position as Chief Executive Officer of the Company, effective immediately. Mr. Backwell will continue to be a director of the Company. The resignation was not the result of any disagreement with the Company on any matter known to an executive officer of the Company relating to the operations, policies or practices of the Company.
Further on April 20, 2026, the Board of Directors of the Company appointed Carsten Kjems Falk as the Company’s Chief Executive Officer, effective immediately. Mr. Falk, 51, has served as the Interim Chief Financial Officer and a director of the Company since August 2025. Since June 2025, Mr. Falk has also served as Head of M&A of Fusion Fuel Green PLC, an Irish public limited company (Nasdaq: HTOO). From October 2022 to August 2025, Mr. Falk was the Chief Commercial Officer of the Company. From June 2022 to October 2024, Mr. Falk served as Chief Commercial Officer of Ilustrato Pictures International Inc., a Nevada corporation (OTC: ILUS). From September 2020 to October 2022, Mr. Falk was the Chief Executive Officer of the Company. From 2013 through 2019, Mr. Falk was Chief Executive Officer of Domino’s Pizza Denmark. Mr. Falk holds a Master of Arts in Educational Theory and Curriculum Studies: Mathematics from Aarhus University. The Board of Directors of the Company believes that Mr. Falk is qualified to serve on the Company’s Board of Directors due to his service to the Company in several senior executive roles since 2020 and extensive leadership experience across the SaaS, FMCG, and energy sectors.
| F-7 |
NOTE 2. SUMMARY OF SIGNIFICANT POLICIES
Basis of Presentation and Principles of consolidation
The accompanying consolidated financial statements represent the results of operations, financial position, and cash flows of QIND, and all of its majority-owned and controlled subsidiary are prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The accounts of ASG have been included since acquired on March 27, 2024. All significant inter-company accounts and transactions have been eliminated.
The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the SEC for interim financial information. It is management’s opinion that the unaudited condensed consolidated financial statements are prepared in accordance with instructions for Form 10-Q and include all adjustments (consisting only of normal recurring accruals) which are necessary for a fair presentation of the results for the periods presented. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the Annual Report on Form 10-K of Quality Industrial Corp. for the year ended December 31, 2025, filed with the SEC on March 31, 2026 (the “Annual Report”).
Use of estimates
A critical accounting estimate is an estimate that: (i) is made in accordance with generally accepted accounting principles, (ii) involves a significant level of estimation uncertainty and (iii) has had or is reasonably likely to have a material impact on the Company’s financial condition or results of operations.
The Company’s Consolidated Financial Statements have been prepared in accordance with U.S. GAAP. The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and judgments that affect reported amounts and related disclosures. On an ongoing basis, management evaluates and updates its estimates. Management employs judgment in making its estimates but they are based on historical experience and currently available information and various other assumptions that the Company believes to be reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily available from other sources. Actual results could differ from those estimates. Management believes that its judgment is applied consistently and produces financial information that fairly depicts the results of operations for all periods presented.
Significant estimates include estimates used to review the Company’s, impairments and estimations of long-lived assets, revenue recognition of Contract based revenue, allowances for uncollectible accounts, and the valuations of non-cash capital stock issuances. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Accounts receivable
Accounts receivables are recorded at the invoice amount less an allowance for credit losses. The allowance is an estimate based on historical collection experience, current and future economic and market conditions, and a review of the current status of each customer’s trade accounts receivable. Management evaluates the aging of the accounts receivable balances and the financial condition of its customers and all other forward-looking information that is reasonably available to estimate the amount of accounts receivable that may not be collected in the future and before recording the appropriate provision.
The duration of such receivables extends from 30 days to beyond 90 days. Payments are received only when a project is completed, and approvals are obtained. Provisions are created based on the estimated irrecoverable amounts determined by referring to past default experience and future economic and market conditions.
| F-8 |
Inventories
In accordance with ASC 330, the 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.
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. The estimated useful lives are as follows:
SCHEDULE OF ESTIMATED USEFUL LIVES
| Property, Plant and Equipment | Years | ||
| Machinery & Cylinders | |||
| Vehicles | |||
| Furniture, Fixtures & Office Equipment | |||
| LPG Cylinders |
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.
Deposits, Advances and Prepayments
Advances have been paid to the suppliers and subcontractors in the ordinary course of business for the procurement of specialized material and equipment required in the process of designing, engineering and installing Central Gas distribution and monitoring systems. The Company is engaged in the design, engineering, supply and monitoring of Central Gas systems supplying and installing equipment such as pressure regulators, pipelines, safety equipment, tapping points, metering units, valves and storage tanks. To undertake these projects, the Company is required to make upfront investments in materials and machinery. These projects involve many processes and take substantial time to complete. We estimate that the deposit will be utilized in the next 12 months, however, some will only be returned upon cancellation such as office lease deposit, internet and utilities.
SCHEDULE OF DEPOSITS, ADVANCES AND PREPAYMENTS
| Deposits & Advances Details | June 30, 2026 | December 31, 2025 | ||||||
| Project Job Refundable Security Deposit Against Project Performances | ||||||||
| DEWA Office | ||||||||
| Emarat General Petroleum Corporation LLC | ||||||||
| WASL Land | ||||||||
| Dubai Properties | ||||||||
| Dubai Real Estate Corporation | ||||||||
| DIRE Land | ||||||||
| Emirates Gas LLC | ||||||||
| Energy Tech | ||||||||
| Al Nabbah Real Estate | ||||||||
| Breeze Business Center LLC | ||||||||
| Fly Hawk Technical Services LLC | ||||||||
| Total Deposits and Advances | ||||||||
| F-9 |
| Prepaid Expenses | June 30, 2026 | December 31, 2025 | ||||||
| Hamsah Office Rent | ||||||||
| Store Rent | ||||||||
| Insurance | ||||||||
| Accommodation Rent | ||||||||
| DCD License | ||||||||
| Trade License | ||||||||
| Visa Cost | ||||||||
| On Account Fees, Costs and disbursements to Priestlys Attorneys at Law | ||||||||
| Retainer Fee to Leah Martin Law | ||||||||
| Total Prepaid Expenses | ||||||||
| Other Pre Payments | ||||||||
| Aiwa Energy | ||||||||
| Aiko Mall | ||||||||
| Aswaaq Shopping Mall | ||||||||
| Other Pre Payments | ||||||||
| Total Deposits, Prepayments &Advances | ||||||||
End-of-service benefits
Employee
end-of-service benefits in our subsidiary Al Shola Gas amounting to $
SCHEDULE OF OTHER LIABILITIES CURRENT
| Employee end of service benefits Al Shola Gas | June 30, 2026 | December 31, 2025 | ||||||
| Balance at Beginning of period | ||||||||
| Add: Charges for the year-to-date period | ||||||||
| Less: Benefits paid during the year-to-date period | ( | ) | ( | ) | ||||
| Foreign currency translation adjustment | ( | ) | ||||||
| Balance at the end of the period | ||||||||
Goodwill
Goodwill represents the cost of acquired companies in excess of the fair value of the net assets at the acquisition date and is subject to annual impairment. Goodwill is the excess of the purchase price paid for an acquired entity and the amount of the price not assigned to acquired assets and liabilities. It arises when an acquirer pays a high price to acquire a business. This asset only arises from an acquisition, and it cannot be generated internally. Goodwill is an intangible asset, and so is listed within the long-term assets section of the acquirers’ balance sheet.
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.
| F-10 |
Fair value of financial instruments
The carrying value of cash, accounts payable, warrants, accrued expenses, and debt, short term as well as long term, is recorded at fair value. Management believes the Company is not exposed to significant interest or credit risks arising from these financial instruments.
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company utilizes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable.
| Level 1. Quoted prices in active markets for identical assets or liabilities. These are typically obtained from real-time quotes for transactions in active exchange markets involving identical assets. | |
| Level 2. Quoted prices for similar assets and liabilities in active markets; quoted prices included for identical or similar assets and liabilities that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. These are typically obtained from readily available pricing sources for comparable instruments. | |
| Level 3. Unobservable inputs, where there is little or no market activity for the asset or liability. These inputs reflect the reporting entity’s own beliefs about the assumptions that market participants would use in pricing the asset or liability, based on the best information available in the circumstances. |
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606).
The principal activity of the Company is through our operating subsidiary, ASG, we provide comprehensive solutions for the LPG industry. Our services include consulting, designing, supplying, installing, and maintaining LPG systems, as well as the transportation and supply of LPG in both bulk and cylinder formats. We cater to a diverse range of clients, including commercial buildings, mixed-use apartment complexes, shopping centers, food courts, heavy industries, labor accommodations, catering units, commercial kitchens, and dining establishments. Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The company has applied the five-step approach below and has generally concluded that it is the principal in its revenue arrangements because it typically controls the goods or services before transferring them to the customer.
| 1. | Identify the contract with a customer. | |
| 2. | Identify the performance obligations in the contract. | |
| 3. | Determine the transaction price. | |
| 4. | Allocate the transaction price. | |
| 5. | Recognize revenue when the entity satisfies the performance obligation. |
The Company recognizes all stock-based compensation using the fair value provisions prescribed by ASC Topic 718, Compensation - Stock Compensation. Accordingly, compensation costs for awards of stock-based compensation settled in shares are determined based on the fair value of the share-based instrument at the time of grant and are recognized as expense over the vesting period of the share-based instrument, net of estimated forfeitures.
In accordance with ASC 718, the Company will generally apply the same guidance to both employee and non-employee share-based awards. However, the Company will also follow specific guidance for share-based awards to non-employees related to the attribution of compensation cost and the inputs to the option-pricing model for expected term. Non-employee 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-11 |
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.
Rounding
For purposes of clarity and ease of presentation, all dollar amounts in these financial statements have been rounded to the nearest whole number. However, the underlying data used in the calculations is not rounded, and the totals presented may differ by a small amount due to rounding. These differences are considered immaterial and do not affect the overall financial position or results of operations.
The Company reports earnings (loss) per share in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 260-10 “Earnings Per Share,” which provides for the calculation of “basic” and “diluted” earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common stockholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. The calculation of diluted net loss per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is anti-dilutive.
| Particulars | June 30, 2026 (Unaudited) | June 30, 2025 (Unaudited) | June 30, 2026 (Unaudited) | June 30, 2025 (Unaudited) | ||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| Particulars | June 30, 2026 (Unaudited) | June 30, 2025 (Unaudited) | June 30, 2026 (Unaudited) | June 30, 2025 (Unaudited) | ||||||||||||
| Earnings (loss) per share | ||||||||||||||||
| Numerator | ||||||||||||||||
| Net income (loss) | ( | ) | ||||||||||||||
| Net Income attributable to noncontrolling interest | ||||||||||||||||
| Net Income (loss) attributable to common stockholders | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Denominator | ||||||||||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
| Net income (loss) per share: | ||||||||||||||||
| Basic | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Diluted* | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| * |
| F-12 |
Income taxes
The Company accounts for income tax positions in accordance with Accounting Standards Codification Topic 740-10-50, “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 the majority of the company’s income belongs to the subsidiary, which is registered in an income tax-free jurisdiction since any losses incurred cannot be utilized in the future, rendering deferred tax assets irrelevant, The profits of a foreign subsidiary corporation are ordinarily not subject to tax in the United States as in accordance with the general Internal Revenue Service rule, foreign subsidiaries are not considered U.S. corporations even if they are wholly owned.
Corporate Tax Provision
On
January 1, 2024, the UAE introduced a Corporate Tax applicable to Companies on taxable income of above AED
Recently issued accounting pronouncements
The Company has evaluated all other recent accounting pronouncements and believes that none of them are expected to have a material effect on the Company’s financial position, results of operations, or cash flows.
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.
Lease liabilities
The Company accounts for leases under ASC Topic 842, Leases (Topic 842). Under Topic 842, at the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include, if any, the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating a lease, if the lease term reflects the Company exercising the option to terminate.
The variable lease payments that do not depend on an index or a rate are recognized as expenses in the period on which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments, or a change in the assessment to purchase the underlying asset.
| F-13 |
The
Company’s subsidiary, Al Shola Gas, has entered into commercial vehicles. These leases generally have a lease term of
The Company has a Lease arrangement for which the liability has been recorded separately. The Company determines whether an arrangement contains a lease at inception. A lease liability and corresponding right of use (ROU) asset are recognized for qualifying leased assets based on the present value of fixed and certain index-based lease payments at lease commencement.
The Company’s obligations under its leases are secured by the lessor’s title to the leased assets. There are no restrictions placed upon the Company by entering into these leases. The Company determines if an arrangement is or contains a lease at contract inception and recognizes an ROU asset and a lease liability based on the present value of fixed, and certain index-based lease payments at the lease commencement date. Variable payments are excluded from the present value of lease payments and are recognized in the period in which the payment is made.
The Company generally uses its incremental borrowing rate as the discount rate for measuring its lease liabilities, as the Company cannot determine the interest rate implicit in the lease because it does not have access to certain lessor-specific information. Lease expense is recognized on a straight-line basis over the lease term. The Company does not have significant finance leases. The Company has elected not to separate payments for lease components from payments for non-lease components for all classes of leases.
When accounting for finance leases in accordance with ASC 842, entity recognizes interest on the lease liability and amortization of the ROU asset in the income statement and classify payments of the principal portion of the lease liability as financing activities and payments of interest on the lease liability as operating activities.
Reclassification
Certain prior-period amounts have been reclassified in accordance with ASC 205 to conform to the current-period presentation, including the reclassification of retirement benefits from current liabilities to other payables – non-current, and the presentation of depreciation as a separate line item within operating expenses. These changes had no impact on previously reported net income, total assets, total liabilities, equity, or net cash flows.
During the year ended December 31, 2025, the Company reclassified Employee End of Service Benefits previously presented within Other current liabilities to other payables – non-current in the Consolidated Statements of Financial Position. Management determined this reclassification was appropriate to reflect the expected timing of settlement of the obligation, consistent with the classification guidance under ASC 210, Balance Sheet.
In addition, in accordance with ASC 230, Statement of Cash Flows, the Company reclassified interest paid from financing activities to operating activities in the Consolidated Statements of Cash Flows. This change was made to align the classification of cash payments for interest with U.S. GAAP presentation requirements.
Effective January 1, 2025, the Company revised the presentation of sales discounts to reflect their nature as variable consideration in accordance with ASC 606, Revenue from Contracts with Customers. Under the revised presentation, sales discounts are recorded as a reduction of revenue, resulting in revenue being reported on a net basis
The
Company implemented this presentation beginning in the fourth quarter of 2025 and recorded the full-year impact of sales discounts, totaling
USD
The impact of this reclassification was not material to any previously reported interim or annual period. Accordingly, prior period amounts have not been reclassified to conform to the current period presentation.
This change in presentation had no impact on net income, operating income, total assets, liabilities, or stockholders’ equity for any period presented.
NOTE 3. GOING CONCERN
The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP 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 continue to generate sufficient 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 required, will be available.
| F-14 |
NOTE 4. CURRENT ASSETS
Cash and Cash Equivalents
For
purposes of the statements of cash flows, in accordance with ASC 230-10-20, the Company considers all highly liquid investments and short-term
debt instruments with original maturities of three months or less to be cash equivalents. There were $
SCHEDULE OF CASH AND CASH EQUIVALENTS
June 30, 2026 | December 31, 2025 | |||||||
| Cash and Cash Equivalents | ||||||||
| Cash in hand | ||||||||
| Cash at bank | ||||||||
| Total | $ | $ | ||||||
Accounts Receivables
Accounts receivable arises from our subsidiary Al Shola Gas consolidated as of June 30, 2026. The duration of such receivables extends from 30 days to beyond 90 days. Payments are received only when a project milestone is completed, and approvals are obtained, or after the goods or services are transferred and according to the payment terms with the customer. Provisions are created based on the estimated irrecoverable amounts determined by referring to past default experience.
SCHEDULE OF ACCOUNTS RECEIVABLES
| Accounts Receivables Ageing Al Shola Gas | June 30, 2026 | December 31, 2025 | ||||||
| 1-30 days | ||||||||
| 31-60 days | ||||||||
| 61-90 days | ||||||||
| +90 days | ||||||||
| Total | ||||||||
| Accounts Receivables | ||||||||
Other Current Assets
As
of June 30, 2026, and December 31, 2025, the Company reported Other Current Assets of $
Related Party Receivable
The
Company’s majority-owned subsidiary, Al Shola Gas, has an affiliate, Al Shola Al Modea Safety and Security LLC (“Al Shola
Safety”), an established fire safety company registered in the United Arab Emirates. While both entities operate independently,
there is a limited overlap in their customer base. In certain instances, customers may remit payment for goods or services provided by
both companies to only one of the entities. These transactions are recorded as related party transactions on the transaction date and
are reconciled monthly between the respective related party accounts. As of June 30, 2026, the outstanding receivable from Al Shola Safety
was $
NOTE 5. NON-CURRENT ASSETS
Goodwill
The
Company acquired a
| F-15 |
The
Company acquired
NOTE 6. CURRENT LIABILITIES
Accounts Payable
Accounts
payable of $
SCHEDULE OF ACCOUNTS PAYABLE
| Accounts Payable Ageing Al Shola Gas | June 30, 2026 | December 31, 2025 | ||||||
| 1-30 days | ||||||||
| 31-60 days | ||||||||
| 61-90 days | ||||||||
| +90 days | ||||||||
| Total | ||||||||
| Accounts Payable | ||||||||
Operating Lease Liabilities - Current
As
of June 30, 2026, the Company had a current portion of lease liabilities of $
Convertible Notes
On
August 3, 2022, the Company issued a two-year convertible promissory note in the principal amount of $
On
March 17, 2023, the Company issued a two-year convertible promissory note in the principal amount of $
On
May 23, 2023, the Company issued to Jefferson Street Capital LLC a one-year convertible promissory note in the principal amount of $
On
July 31, 2023, the Company issued to 1800 Diagonal Lending Ltd. a promissory note in the principal amount of $
| F-16 |
On
August 15, 2023, the Company issued to 1800 Diagonal Lending Ltd. a promissory note in the principal amount of $
On
June 16, 2023, the Company issued to Sky Holdings Ltd. a six-month convertible promissory note in the principal amount of $
On
December 20, 2023, QIND issued a two-year convertible promissory note RB Capital Partners Inc. in the principal amount of $
On
December 20, 2023, the Company issued a one-year convertible promissory note in the principal amount of $
On
January 18, 2024, we issued a convertible promissory note 1800 Diagonal Lending LLC in the principal amount of $
On
February 6, 2024, we issued a six-month convertible promissory note to Exchange Listing LLC in the principal amount of $
On
March 12, 2024, we issued a convertible promissory note to 1800 Diagonal Lending LLC in the principal amount of $
On
May 21, 2024, we issued a one-year convertible promissory note Jefferson Street Capital LLC in the principal amount of $
| F-17 |
On
July 3, 2024, we issued a convertible promissory note 1800 Diagonal Lending LLC in the principal amount of $
On
September 25, 2024, we entered into a loan agreement with J.J. Astor & Co. The Note is the senior secured with a Principal Amount
of $
On
September 25, 2024, we issued a convertible promissory note 1800 Diagonal Lending LLC in the principal amount of $
Certain convertible notes include original issuance discounts or other issuance-type costs, resulting in debt discounts upon execution. These discounts are amortized into interest expense over the term of the convertible note. As of June 30, 2026, all related discounts have been fully amortized and no amortization expense was recognized during the period ended June 30, 2026.
| F-18 |
A summary of these outstanding convertible notes and accrued interest as of June 30, 2026, is summarized below:
SUMMARY OF OUTSTANDING CONVERTIBLE NOTES AND ACCRUED INTEREST
Debt & Interest Payable
| Cumulative Repayments | Cumulative Conversions | Total Balance Remaining | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lender | Date of Issue | Maturity Date | Initial Interest Rate (%) | Default Interest Rate (%) | Original Principal Amount | Total Default Interest/Fees Incurred Since Issuance (Before Repayments and Conversions) | Total Interest Accrued Since Issuance (Before Repayments and Conversions) | Principal Repayments | Default Interest Repayments | Accrued Interest Repayments | Total Repayments | Principal Converted | Default Interest and Fees converted | Accrued Interest Converted | Total Amount Converted | Conversion Price per share | Total Number of Common Shares Issued | Principal Outstanding | Default Interest (Default Principal) outstanding | Accrued Interest Outstanding | Total Balance Remaining | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RB Capital Partners Inc. | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RB Capital Partners Inc. | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jefferson Street Capital LLC | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sky Holdings Ltd | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lorlev 26 Irrevocable Trust | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exchange Listing LLC | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jefferson Street Capital LLC | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| J.J. Astor & Co | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| F-19 |
Options and Warrants
In accordance with ASC 470, warrants have been classified as a liability and recorded at their fair value.
On
April 19, 2023, the Company issued a common share purchase warrant to Exchange Listings LLC (the “Exchange Common Share Purchase
Warrant”). 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, of the Company’s common shares
(whereby such number may be adjusted from time to time pursuant to the terms and conditions of the Exchange Common Share Purchase Warrant)
at the exercise price of $
On
May 23, 2023, the Company issued a common share purchase warrant to Jefferson Street Capital LLC (the “Jefferson Common Share Purchase
Warrant”). 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, of the Company’s common shares
(whereby such number may be adjusted from time to time pursuant to the terms and conditions of the Jefferson Common Share Purchase Warrant)
at the exercise price of $
Other Payables Current
Other
payables - current amounted to $
The
balance primarily consists of (i) the current portion of bank borrowings of $
SCHEDULE OF OTHER PAYABLES CURRENT
| Other Payables Current | June 30, 2026 | December 31, 2025 | ||||||
| Payable Al Shola Gas | ||||||||
| Other Payables current | ||||||||
| Total Other Payables Current | $ | $ | ||||||
Other Current Liabilities –
Other
current liabilities amounted to $
SCHEDULE OF OTHER CURRENT LIABILITIES
| Other Current Liabilities | June 30, 2026 | December 31, 2025 | ||||||
| Value Added Tax (VAT) Payable | ||||||||
| Accrued Interest on Convertible note | ||||||||
| Payroll Liabilities | ||||||||
| Provision for Audit & Review fee | ||||||||
| Provision for Legal & Professional Charges | ||||||||
| Corporate Tax payable | ||||||||
| Total | ||||||||
Related Party Payable
On
November 18, 2024, QIND, Fusion, Ilustrato, and certain other stockholders of the Company, entered into the Purchase Agreement. Pursuant
to section 6.04 of the Purchase Agreement, Purchaser (as defined therein) shall use commercially reasonable efforts to raise at least
$
As
of June 30, 2026, and December 31, 2025, the Company had amounts owed to Fusion Fuel amounting to $
| F-20 |
NOTE 7. NON-CURRENT LIABILITIES
Lease Liabilities - Non-Current portion
Operating
lease liabilities are measured at the present value of the remaining lease payments, discounted using an estimated incremental borrowing
rate of
The following is a summary of future lease payments required under the lease agreements:
SCHEDULE OF FUTURE LEASE PAYMENTS
| Vehicle | DUSTER | X TRAIL | KICKS | URWAN | MICROBUS | SUNNY | KICKS NEW | RENAULT NEW | MERCEDES BENZ G580 | MAHINDRA SCORPIO S11 -41765EE | MAZDA CX5- 58416P | TOYOTA HIACE - 84402DD | ISUZU 4.2T SC TRUCK 72938P | MAZDA CX5- 94560Y | GEELY GX3 PRO | JAECOO J5 URBAN-94236H | JAECOO J5 URBAN-94143H | JAECOO J5 URBAN-94352H | Arrizo 5 2Nos_Batch1 | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year 2027 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year 2028 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year 2029 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year 2030 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SCHEDULE OF SUPPLEMENTAL INFORMATION
| Vehcile | DUSTER | X TRAIL | KICKS | URWAN | MICROBUS | SUNNY | KICKS NEW | RENAULT NEW | MERCEDES BENZ G580 | MAHINDRA SCORPIO S11 -41765EE | MAZDA CX5- 58416P | TOYOTA HIACE - 84402DD | ISUZU 4.2T SC TRUCK 72938P | MAZDA CX5- 94560Y | GEELY GX3 PRO | JAECOO J5 URBAN-94236H | JAECOO J5 URBAN-94143H | JAECOO J5 URBAN-94352H | Arrizo 5 2Nos_Batch1 | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RoU | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lease Liability | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non Current | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Weighted average remaining lease term (in years) | ||||
| Weighted average discount rate | % |
| F-21 |
Other Non-Current Liabilities
Other
non-current liabilities amounted to $
SCHEDULE OF OTHER NON-CURRENT LIABILITIES
| Other Non-Current Liabilities | June 30, 2026 | December 31, 2025 | ||||||
| Payable to Shareholders of Al Shola Gas | ||||||||
| Bank Borrowings Non-Current | ||||||||
| Employee End of Service Benefits | ||||||||
| Total | ||||||||
NOTE 8. STOCKHOLDERS’ EQUITY
The Company’s authorized capital stock consists of shares of common stock and shares of preferred stock, par value $ per share.
As of June 30, 2026, and December 31, 2025, there were and shares of common stock issued and outstanding, respectively.
As of June 30, 2026, and December 31, 2025, there were and shares of Series A stock of the Company issued and outstanding, respectively.
As of June 30, 2026, and December 31, 2025, there were and shares of Series B stock of the Company issued and outstanding, respectively.
On
January 20, 2026, the Board of Directors and Fusion Fuel Green PLC, the Company’s majority stockholder holding approximately
From January 1, 2025, to June 30, 2025, we made the following issuances:
On
January 10, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for the conversion of $
On
January 13, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for the conversion of $
On
January 17, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for the conversion of $
On
January 27, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for the conversion of $
On
January 29, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for the conversion of $
On
January 30, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for $
On
February 3, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for the conversion of $
On
March 27, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for the conversion of $
On
April 27, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for the conversion of $
On
April 30, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for the conversion of $
On
May 1, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for the conversion of $
On
May 6, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for the conversion of $
On
May 6, 2025, the Company issued shares of our common stock to Jefferson Street Capital LLC for the conversion of $
On
May 13, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for the conversion of $
On
June 5, 2025, the Company issued shares of our common stock to Jefferson Street Capital LLC for the conversion of $
From January 1, 2026, to June 30, 2026, we made the following issuances:
On
January 12, 2026, the Company issued
| F-22 |
On
February 23, 2026, Fusion Fuel Green PLC converted shares of Series B Preferred Stock, into
NOTE 9. OPERATING EXPENSES
Operating expenses consisted of the following for the periods presented:
SCHEDULE OF OPERATING EXPENSES
| 30-Jun-26 | 30-Jun-25 | 30-Jun-26 | 30-Jun-25 | |||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| 30-Jun-26 | 30-Jun-25 | 30-Jun-26 | 30-Jun-25 | |||||||||||||
| Operating expenses | ||||||||||||||||
| Professional fees | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Depreciation and Amortization | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
A breakdown of General and Administrative expenses for the three and six months ended June 30, 2026 and 2025 is presented below:
SCHEDULE OF GENERAL AND ADMINISTRATIVE EXPENSES
| General and Administrative Expenses | 30-June-26 | 30-June-25 | 30-June-26 | 30-June-25 | ||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| Salary & Compensation – QIND | ||||||||||||||||
| Salary | ||||||||||||||||
| Bonus | ||||||||||||||||
| Salary & Compensation – ASG | ||||||||||||||||
| Salary and other allowances | ||||||||||||||||
| Compensation and Benefits – Managing Directors | ||||||||||||||||
| Rent | ||||||||||||||||
| Office Expenses | ||||||||||||||||
| IT support | ||||||||||||||||
| Other expenses** | ||||||||||||||||
| Total | ||||||||||||||||
| * |
NOTE 10. NON-OPERATING INCOME
Non-operating
income consisted of Other Income – Credit Card Fees of $
SCHEDULE OF NON-OPERATING INCOME
| 30-Jun-26 | 30-Jun-25 | 30-Jun-26 | 30-Jun-25 | |||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| 30-Jun-26 | 30-Jun-25 | 30-Jun-26 | 30-Jun-25 | |||||||||||||
| Non-operating Income | ||||||||||||||||
| Other Income – Credit Card Fees | ( | ) | ( | ) | ||||||||||||
| Other Non - Operating Income | ( | ) | ||||||||||||||
| Total Non-operating Income | ( | ) | ( | ) | ||||||||||||
NOTE 11. BUSINESS COMBINATION DISCLOSURE
In Accordance with ASC 805-10-50, ASC 805-30-50, and ASC 805-10-25-6
On
March 27, 2024, QIND entered into a definitive Stock Purchase Agreement with the shareholders of AL SHOLA AL MODEA GAS DISTRIBUTION L.L.C.
to acquire
QIND
acquired majority ownership of Al Shola Gas, effective as of March 27, 2024, resulting in, Al Shola Gas becoming a subsidiary, in a transaction
accounted for as a business combination. The Company and its auditors considered all pertinent facts pursuant to ASC 805-10-25-6 that
the Share Purchase Agreement signing date is the acquisition date of the company, with the value of $
| F-23 |
The audited pro forma financial statements of Al Shola Gas for the periods ended December 31, 2023, has been filed through 8-K on June 7, 2024.
In accordance with ASC 805-30-50-1 (b) and ASC 805-20-50-1(c), the following table summarizes the consideration transferred to acquire Al Shola Gas and the amounts of identified assets acquired, and liabilities assumed at the acquisition date, as well as the fair value of the noncontrolling interest in Al Shola Gas at the acquisition date:
The Payment Schedule signed on March 27, 2024, outlines a series of payment requirements as follows:
Tranche
1: $
Tranche
2: Within 12 months of closing and at the soonest possible time, $
SCHEDULE OF CONSIDERATION PAID
| Consideration paid | June 30, 2026 | December 31, 2025 | ||||||
| Total | ||||||||
As
of June 30, 2026, $
Fair value of Consideration
SCHEDULE OF FAIR VALUE CONSIDERATION
| Cash or National Exchange listed stock | $ | |||
| Cash | $ | |||
| Total | $ |
Goodwill calculation of acquisition
SCHEDULE OF GOODWILL CALCULATION OF ACQUISITION
| Date of Acquisition | USD | |||
| Cash and cash equivalents | $ | |||
| Trade receivables & Other receivables | ||||
| Inventories | ||||
| Deposits, prepayments and advances | ||||
| Property, plant, and equipment | ||||
| Right of use assets | ||||
| Trade and other payables | ( | ) | ||
| Lease liabilities | ( | ) | ||
| Bank borrowings | ( | ) | ||
| Total identifiable net assets | $ | |||
| Non-Controlling Share (%) | ||||
| Parent Share ( | ||||
| Goodwill | $ | |||
| F-24 |
NOTE 12. SUBSEQUENT EVENTS
In accordance with ASC 855-10-50, the company lists events that are deemed to have a determinable significant effect on the balance sheet at the time of occurrence or on future operations, and without disclosure of it, the financial statements would be misleading.
Convertible Note Restructuring – RB Capital Partners, Inc.
As
of June 30, 2026, the Company had outstanding two convertible promissory notes payable to RB Capital Partners, Inc. (the “Holder”):
a Convertible Promissory Note dated August 3, 2022 in the original principal amount of $
On
July 10, 2026, subsequent to the balance sheet date, the Company entered into a Promissory Note & Loan Modification and Forbearance
Agreement (the “Forbearance Agreement”) with the Holder. Under the Forbearance Agreement, the Company is required to pay
the Holder an aggregate amount of $
The
Holder agreed to forbear from exercising its rights and remedies under the Notes through the earliest of March 1, 2028, an uncured default
under the Forbearance Agreement, or a written termination agreed by the parties, and the term of the Notes was extended to March 1, 2028.
The Forbearance Agreement provides for a 10 business day grace period following each installment date and an additional 10 calendar day
cure period following written notice of default before the Holder may exercise remedies. Upon an uncured default, the unpaid portion
of the Payment Amount becomes immediately due and payable and bears interest at
The Holder’s conversion right under the Notes was expressly reserved. The Holder may convert principal into shares of the Company’s common stock at $ per share at any time in accordance with the terms of the Notes, including the applicable beneficial ownership limitation, in which case the principal so converted will reduce the Payment Amount on a dollar-for-dollar basis and the remaining scheduled installments will be reduced in reverse chronological order. Any shares issued on conversion would be issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and Regulation D thereunder, and could be dilutive to existing stockholders.
The Company reported its entry into the Forbearance Agreement in a Current Report on Form 8-K filed with the Securities and Exchange Commission on July 14, 2026. The Forbearance Agreement constitutes a non-recognized subsequent event, and accordingly no adjustment has been made to the accompanying financial statements as of June 30, 2026. The Company is evaluating the accounting treatment of the modification under ASC 470-50 and, as applicable, ASC 470-60, which will be reflected in its financial statements for a subsequent period.
On
July 16, 2026, Al Shola Gas, a 51%-owned subsidiary of the Company, entered into a RAKfinance Loan Application and Agreement (Agreement
No. 20757553) with The National Bank of Ras Al Khaimah (P.S.C.) (“RAKBANK”) and received a loan in the principal amount of
AED
| F-25 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis provides information that our management believes is relevant to an assessment and understanding of the Company’s condensed consolidated results of operations and financial condition. The discussion should be read together with the unaudited condensed consolidated financial statements and the accompanying notes to those statements that are included elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”) and the audited financial statements and related notes for the year ended December 31, 2025, included in the Annual Report on Form 10-K of the Company for the year ended December 31, 2025, filed by the Company with the Securities and Exchange Commission (the “SEC”) on March 31, 2026 (the “Annual Report”). This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements”.
Use of Terms
Except as otherwise indicated by the context, references in this Quarterly Report to the “Company,” “we,” “us,” “our,” or “QIND” refer to Quality Industrial Corp., a Nevada corporation; and “common stock” refers to the Company’s common stock, par value $0.001 per share. References in this Quarterly Report to “Al Shola Gas” or “ASG” refer to Al Shola Al Modea Gas Distribution L.L.C., a United Arab Emirates (“UAE”) company, a 51.0%-owned subsidiary of the Company. References in this quarterly report to “Fusion Fuel” are to Fusion Fuel Green PLC, an Irish public limited company, the owner of approximately 51.8% of the common stock as of June 30, 2026. References in this Quarterly Report to “LPG” refer to liquified petroleum gas.
Note Regarding Trademarks, Trade Names and Service Marks
We use various trademarks, trade names and service marks in our business. For convenience, we may not include the ℠, ® or ™ symbols, but such omission is not meant to indicate that we would not protect our intellectual property rights to the fullest extent allowed by law. Any other trademarks, trade names or service marks referred to in this report are the property of their respective owners.
Special Note Regarding Forward-Looking Statements
This Quarterly Report contains forward-looking statements as defined in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are also made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In some cases, these forward-looking statements can be identified by words and phrases such as “may,” “will,” “could,” “would,” “should,” “believes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “seeks,” “future,” “continue,” “plan,” “target,” “predict,” “potential,” “outlook,” “guidance,” “forecast,” or the negative form of these words and phrases or other comparable expressions. All statements other than statements of historical facts are forward-looking statements, including, without limitation, statements regarding our financial position, business strategy, budgets, projected costs, plans and objectives of management for future operations, and the assumptions underlying or relating to any such statements. These forward-looking statements are based on management’s current expectations and assumptions regarding the Company’s business, the economy, and other future conditions, and involve significant risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statements.
The forward-looking statements included in this Quarterly Report relate to, among other things:
| ● | the expected delivery and operational deployment of new LPG Bobtail trucks and smaller-capacity Bobtail units to expand fleet capacity and distribution efficiency; | |
| ● | the anticipated increase in daily operational capacity from approximately 27 metric tons to approximately 35 metric tons following vehicle deployment; | |
| ● | anticipated increases in revenues during the second half of fiscal 2026, including following the resolution of certain project pricing inefficiencies; | |
| ● | anticipated increases in operating expenses in connection with the Company’s subsidiary expansion plan; | |
| ● | the Company’s plans for growth and expansion of Al Shola Gas’s operations, including resource allocation and planned investments in vehicles and infrastructure; | |
| ● | the availability and timing of additional financing from Fusion Fuel, the Company’s parent company, and the Company’s ability to continue as a going concern; | |
| ● | the expected impact of ongoing military conflict in the Middle East on the Company’s operations, supply chain, and financial condition; and | |
| ● | potential effects of supply chain disruptions on the procurement of critical materials and specialized equipment and the resulting impact on project installation timelines. |
Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, those described below and elsewhere in this Quarterly Report and in the sections entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 31, 2026 (the “Annual Report”), and “Risks Related to Our Gas Distribution Business” in Exhibit 99.2 to the Report on Form 6-K furnished by Fusion Fuel with the SEC on July 29, 2026.
| 2 |
Any forward-looking statement made by us in this Quarterly Report speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as may be required by applicable law, including the securities laws of the United States and the rules and regulations of the SEC.
| ● | the escalation of military conflict among Iran, the United States, Israel, and other belligerents, including the effective closure of the Strait of Hormuz to commercial shipping, attacks on UAE port infrastructure, the uncertain status of the ceasefire and memorandum of understanding between the United States and Iran, Iran’s stated intention to impose transit fees and assert sovereignty over the Strait, and the resulting disruption to Al Shola Gas’s LPG supply chains, procurement costs, and core operations in the UAE; | |
| ● | the Company’s ability to continue as a going concern and to generate sufficient revenues and raise capital within one year from the date of filing; | |
| ● | the Company’s dependence on financial support from Fusion Fuel, the Company’s parent company, including uncertainty as to the timing and amount of Fusion Fuel’s future capital raises and the continued availability of intercompany loans; | |
| ● | the possibility that previous loans from Fusion Fuel will be required to be repaid if the transactions contemplated by the Fusion Fuel Acquisition Agreement (as defined in “Liquidity and Capital Resources – Going Concern”) are unwound; | |
| ● | the Company’s outstanding defaults under multiple convertible promissory notes and the potential consequences thereof, including accelerated obligations, enforcement actions by noteholders, and dilution resulting from note conversions; | |
| ● | the Company may be in default under the Share Purchase Agreement, dated as of March 27, 2024, between the Company and Al Shola Gas, as amended by the Amendment Agreement in respect of the Share Purchase Agreement dated as of March 27, 2024, dated as of April 8, 2025, among QIND, Al Shola Gas, and Sanjeeb Safir, Safir Ahammed, and Mohamed Hilal Saeed Muroushad Almheiri (the “ASG Share Purchase Agreement”), as to total cash obligations of up to $11,175,000, which include (i) up to approximately $5,625,000 in quarterly stock or cash tranches; (ii) $1,000,000 in cash; $350,000 for vehicle facilitation; (iii) $2,000,000 from an equity or credit line; and (iv) $2,200,000 in debt financing, as to which $10,155,000 of such cash obligations remained unsatisfied as of June 30, 2026, and the adverse consequences that may result from such default under the ASG Share Purchase Agreement, including loss of ownership of Al Shola Gas, costly dispute resolution or litigation, enforcement proceedings, impairment charges reflected in the Company’s consolidated financial statements, and other adverse consequences under the ASG Share Purchase Agreement; | |
| ● | the Company’s indirect and minority economic interest in Al Shola Gas, held through a layered corporate structure, which limits the Company’s ability to control operations, extract cash, and direct strategic decisions at the operating level, and the risk that minority shareholder protections may restrict QIND’s ability to fully direct the operations and capital allocation of Al Shola Gas; | |
| ● | Al Shola Gas’s ability to secure and execute new liquefied petroleum gas engineering and distribution projects at anticipated volumes and pricing levels; | |
| ● | supply chain disruptions affecting the procurement of critical materials and specialized equipment, which may delay project installation timelines and extend estimated completion dates; | |
| ● | risks and potential liabilities inherent in the gas distribution industry, including equipment malfunctions, explosions, uncontrollable flows of gas, personal injury, property damage, environmental liability, and business interruption; | |
| ● | the ability of the parties to the Company’s service contracts to obtain all necessary regulatory and other consents and approvals and to deliver all required products and services in connection with contemplated projects; | |
| ● | the risks associated with long-term, fixed-price gas distribution project management contracts, including exposure to cost overruns, operating cost inflation, labor shortages, subcontractor performance, and potential claims for liquidated damages; | |
| ● | the Company’s ability to attract and retain qualified executive officers and key personnel, particularly following recent changes in executive leadership and board composition; | |
| ● | reductions in capital spending by the Company’s gas distribution customers, which may reduce demand for the Company’s services and products; | |
| ● | the dilutive effect of conversions under the Company’s outstanding convertible notes and any additional equity or debt financings the Company may pursue; | |
| ● | risks associated with operating internationally, including in the UAE, such as foreign currency exchange rate fluctuations, political instability, changes in local laws and regulations, unpredictable legal and regulatory environments, potential changes to the UAE’s visa legislation, the risk of unlawful or arbitrary governmental actions, and the potential imposition of international sanctions on the UAE or entities operating therein; | |
| ● | fluctuations in demand for LPG engineering, distribution, and supply services, including potential long-term declines resulting from governmental decarbonization policies and the transition to renewable energy alternatives; | |
| ● | volatility in energy markets and commodity prices, including LPG pricing, and the specific impact of Strait of Hormuz disruptions on LPG procurement costs, shipping insurance premiums, and supply availability; | |
| ● | the risk of goodwill impairment relating to the $8,411,100 of goodwill recorded in connection with the Company’s acquisition of Al Shola Gas; | |
| ● | regulatory approvals and compliance requirements affecting LPG distribution and engineering services in the UAE; | |
| ● | the Company’s ability to maintain effective internal controls over financial reporting and disclosure controls and procedures; | |
| ● | our future business development, financial condition, and results of operations; | |
| ● | fluctuations in general economic and business conditions in the markets in which we operate; and | |
| ● | those listed under Part I. Item 1A. “Risk Factors” of the Annual Report and “Risks Related to Our Gas Distribution Business” in Exhibit 99.2 to the Report on Form 6-K furnished by Fusion Fuel with the SEC on July 29, 2026. |
| 3 |
Overview
We are an industrial company specializing in the energy sector. Through our 51.0%-owned operating subsidiary, Al Shola Al Modea Gas Distribution L.L.C. (“ASG” or “Al Shola Gas”), we provide comprehensive solutions for the LPG” industry. Our services include consulting, designing, supplying, installing, and maintaining LPG systems, as well as the transportation and supply of LPG in both bulk and cylinder formats. We cater to a diverse range of clients, including commercial buildings, mixed-use apartment complexes, shopping centers, food courts, heavy industries, labor accommodations, catering units, commercial kitchens, and dining establishments. Our mission is to develop a next-generation industrial and energy corporation that meets the increasing global demand for high-quality, cost-effective, and sustainable energy solutions.
Factors Affecting Our Performance
The primary factors affecting our results of operations include, but are not limited to:
| ● | Revenue Concentration and Subsidiary Dependence. Substantially all of our revenue is generated through our single operating subsidiary, Al Shola Gas, located in the United Arab Emirates. For the six months ended June 30, 2026, revenue was $7,199,666, all of which was attributable to ASG’s operations. This concentration exposes the Company to geographic, regulatory, and sector-specific risks. Any adverse development affecting ASG’s operations, including loss of key contracts, changes in UAE regulations, or disruptions to the LPG market, could have a disproportionate impact on our consolidated results. In addition, the Company’s economic interest in Al Shola Gas is held indirectly through a layered corporate structure, and the Company’s ability to extract cash or direct strategic decisions at the operating level is limited by the 49% minority interest held by individual shareholders of Al Shola Gas, the claims of QIND’s creditors, and the terms of the ASG Share Purchase Agreement | |
| ● | Liquidity Constraints and Dependence on Parent Company Financing. Our ability to fund operations and pursue growth initiatives is substantially dependent on financial support from our parent company, Fusion Fuel. As of June 30, 2026, we had cash and cash equivalents of only $150,012 and had received $4,771,169 in loans from Fusion Fuel. These loans are not evidenced by separate loan agreements, do not bear contractual interest or specified maturity dates, and are subject to the terms of the Fusion Fuel Acquisition Agreement. Such loans will be forgiven upon the Preferred Stock Conversion (as defined in the Fusion Fuel Acquisition Agreement) or must be repaid if the transactions contemplated by the Fusion Fuel Acquisition Agreement are unwound. Based on our current projections, our existing cash resources will not be sufficient to meet our anticipated operating and other cash needs through June 30, 2027, unless additional financing is obtained. No assurance can be given that any such financing will be available or that previous loans from Fusion Fuel will not be required to be repaid. If we are unable to obtain sufficient funding, it could adversely affect our ability to execute our business plan and meet our obligations. | |
| ● | Convertible Note Defaults and Dilution. As of June 30, 2026, the Company was in default under multiple convertible promissory notes with an aggregate total balance remaining of approximately $2,493,483. Several of these notes carry default interest rates ranging from 15% to 20% and include dilutive conversion features that permit conversion at significant discounts to the market price of our common stock. Certain notes provide for the outstanding amount to become immediately due and payable at 150% to 200% of the then-outstanding principal and accrued interest, and one note includes a liquidated damages charge of 25% of the outstanding balance. As of June 30, 2026, an aggregate of 78,529,424 shares of common stock had been issued upon conversion of these notes. Continued defaults may result in additional enforcement actions, acceleration of obligations, or further dilutive conversions that could materially and adversely affect our financial condition, results of operations, and existing stockholders. If conversions of the convertible notes cause our parent company, Fusion Fuel, to cease to be the majority holder of QIND, then Fusion Fuel may not be able to consolidate QIND’s operations, which could result in delisting proceedings against Fusion Fuel, which, among other potential adverse consequences, may eliminate Fusion Fuel’s ability to continue to finance the Company. On July 10, 2026, the Company entered into a Forbearance Agreement (as defined in “Part II – Other Information – Item 1. Legal Proceedings – Forbearance Agreement”) with RB Capital Partners, Inc., which provided that, as of June 30, 2026, the aggregate amount outstanding under certain convertible promissory notes was $1,587,439.64. The Forbearance Agreement extended the term of the notes to March 1, 2028 and provides for 19 monthly installments totaling $1,675,000, which, if paid, would extinguish the remaining obligations under the notes; however, no assurance can be given that the Company will be able to satisfy any or all payment obligations under the Forbearance Agreement or resolve defaults under the remaining notes on acceptable terms. | |
| ● | Acquisition-Related Obligations. The Company has substantial outstanding obligations in connection with its acquisition of 51% of Al Shola Gas. Under the ASG Share Purchase Agreement, the Company’s total cash obligations are up to $11,175,000, which include (i) up to approximately $5,625,000 in quarterly stock or cash tranches; (ii) $1,000,000 in cash; $350,000 for vehicle facilitation; (iii) $2,000,000 from an equity or credit line; and (iv) $2,200,000 in debt financing, as to which $10,155,000 of such cash obligations remained unsatisfied as of June 30, 2026. There is a substantial basis for concluding that the Company’s acquisition by Fusion Fuel constituted a triggering event for QIND’s payment obligations under the ASG Share Purchase Agreement, and that QIND may be in default thereunder. QIND’s ability to cure any such default is uncertain given its recurring operating losses, net capital deficiency, going concern uncertainty, and existing defaults on its outstanding convertible promissory notes. Even if QIND is not required to return its 51% interest in Al Shola Gas, it could be required to pay substantial monetary damages, which it may lack the resources to satisfy. The Company’s ability to meet these obligations depends on, among other things, obtaining additional financing and generating sufficient cash flows from operations. Failure to satisfy these obligations could result in loss of ownership of Al Shola Gas, costly dispute resolution or litigation, enforcement proceedings, impairment charges reflected in the Company’s consolidated financial statements, and other adverse consequences under the ASG Share Purchase Agreement. |
| 4 |
| ● | Geopolitical Conditions. During the six months ended June 30, 2026, military conflict involving Iran, Israel, and the United States escalated sharply in the Middle East region, resulting in disruption to regional energy markets, critical infrastructure, and maritime supply chains upon which our LPG distribution operations depend. The conflict resulted in the effective closure of the Strait of Hormuz to most commercial shipping for a period of time, direct strikes on Dubai’s Jebel Ali port and Abu Dhabi port infrastructure, and threats to designate additional UAE energy facilities as military targets. On April 7–8, 2026, the United States and Iran agreed to a ceasefire, and on June 17, 2026, the parties signed a memorandum of understanding intended to bring the conflict to a formal end. However, as of the date of this filing, the ceasefire and memorandum of understanding appear to have materially deteriorated. As of June 30, 2026, management has not identified a material adverse impact on the Company’s reported financial results for the period. However, the situation remains highly uncertain, and future developments – including a resumption or escalation of hostilities, the imposition of transit fees on the Strait of Hormuz, further disruptions to shipping lanes and port infrastructure, increased LPG procurement and logistics costs, reduced demand for our services, or sanctions affecting trade in the region – could materially and adversely affect the Company’s operations, supply chain, costs, and financial results. There can be no assurance that the ceasefire will hold or that the Company will be able to pass increased procurement and logistics costs through to its customers. | |
| ● | Operational, Regulatory, and Market Risks of Gas Distribution. Our gas distribution business involves significant logistical challenges, including supply chain dependencies, fluctuating commodity prices, and transportation risks. Any disruptions in the supply of LPG due to geopolitical instability, supplier constraints, or global market fluctuations could result in increased costs or an inability to meet customer demand. In addition, the gas distribution industry is highly regulated, with stringent safety and environmental requirements governing the storage, handling, and transportation of flammable and hazardous materials. Compliance with evolving regulations may require costly upgrades to infrastructure, operational adjustments, or additional licensing. Non-compliance could result in fines, operational restrictions, or liability claims. As governments worldwide advocate for decarbonization and renewable energy alternatives, demand for LPG and other traditional gas products may decline over time, which could force the Company to adapt its business model or face revenue erosion. | |
| ● | Competitive Dynamics and Commodity Price Exposure. We operate in highly competitive markets, and our financial performance is sensitive to both competitive pricing pressures and fluctuations in gas commodity prices. When gas prices decline, customers may demand lower prices, which could reduce our gross profit and cash flow. Conversely, when gas prices increase, we may be unable to pass along cost increases to our customers due to the terms of existing contracts, competitive dynamics, or regulatory constraints, which could compress our margins. Revenue decreased year-over-year for both the three and six months ended June 30, 2026, and pricing and competitive conditions may continue to affect our results. | |
| ● | Supply Chain Dependence. Our operations require substantial amounts of raw materials, specialized equipment, and parts from suppliers. The availability and pricing of these materials are subject to disruption due to geopolitical instability, supplier constraints, labor disruptions, catastrophic weather events, and prevailing market conditions. During the six months ended June 30, 2026, operational challenges persisted regarding the procurement of critical materials and specialized equipment, and ongoing supply chain disruptions may delay project installation timelines, extending estimated completion and handover dates for active projects. Any sustained disruption in the supply of, or significant increases in the price of, raw materials or specialized equipment could have a material adverse effect on our results of operations and cash flows. |
In addition to the factors described above, our financial performance may be affected by the factors described under “Special Note Regarding Forward-Looking Statements” included elsewhere in this Quarterly Report and the risk factors described in Part I, Item 1A of the Annual Report and “Risks Related to Our Gas Distribution Business” in Exhibit 99.2 to the Report on Form 6-K furnished by Fusion Fuel with the SEC on July 29, 2026.
Recent and Planned Developments
Bank Loan
On July 16, 2026, ASG entered into a RAKfinance Loan Application and Agreement (Agreement No. 20757553) with The National Bank of Ras Al Khaimah (P.S.C.) (“RAKBANK”) and received a loan in the principal amount of AED 1,540,500 (approximately $419,469) for the purpose of business expansion. The loan has a tenor of 36 months and bears interest at RAKBANK’s SME Prime Rate plus 5.00% per annum (the “Loan Interest Rate”), calculated on a daily reducing balance basis. The SME Prime Rate is an interest rate determined by RAKBANK in its sole discretion from time to time and is not pegged to any external benchmark or central bank reference rate; RAKBANK may change the SME Prime Rate at any time by notice published in one or more newspapers in the UAE, on notice boards at RAKBANK branches, or on RAKBANK’s website. Accordingly, the Loan Interest Rate is a variable rate subject to change at RAKBANK’s discretion. The approved repayment schedule dated July 22, 2026 reflects an effective Loan Interest Rate of approximately 20.50% per annum. The loan agreement states a repayable balance of AED 2,083,428 (approximately $567,269), calculated as 36 equal monthly installments of AED 57,873 (approximately $15,758), with the first installment due on August 15, 2026. Under the approved repayment schedule, which reflects the daily reducing balance methodology, the aggregate of the 36 scheduled installments (including a reduced final installment) is AED 2,076,988.60 (approximately $565,513). The Loan Shield Insurance Policy (as defined below) premiums payable over the term of the loan are projected to total AED 5,139.26 (approximately $1,399). ASG paid processing fees of AED 42,525 (approximately $11,579) in connection with the loan.
Interest Rate. RAKBANK may change the Loan Interest Rate at any time by notice to ASG to the extent permitted by law. Any rate increase will be achieved by retaining the monthly installment amount and extending the tenor of the loan, rather than increasing the monthly payment, thereby increasing the total cost of borrowing.
Security. The loan is secured by (i) an undated security check of AED 2,083,428, and (ii) a security agreement over bank accounts. The loan agreement also requires ASG to obtain and maintain a credit life insurance policy (the “Loan Shield Insurance Policy”) in an amount equal to the loan amount, assigned in favor of RAKBANK as additional collateral security for all indebtedness under the loan. RAKBANK is authorized to debit premium payments for the Loan Shield Insurance Policy directly from ASG’s bank accounts.
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Guarantee. Safir Ahammed and Sanjeeb Safir, both minority shareholders of ASG, have provided joint and several personal guarantees of all obligations under the loan. Mr. Safir also serves as the Company’s Chief Operating Officer. Their liability extends to the full loan amount plus interest, penalty interest, additional charges, and any interest arising from instalment deferrals or rate increases. The guarantee constitutes a primary obligation that continues without limitation until the loan is fully repaid, survives the death or bankruptcy of the guarantor, and remains in place irrespective of whether the guarantor exits or sells his shares in ASG.
Late Payment. If any monthly installment is not received on the relevant due date, RAKBANK may charge late payment interest at 2% above the Loan Interest Rate, plus all costs, charges, and expenses incurred by the Bank in enforcing its rights, including legal expenses.
Restrictive Covenants. The loan agreement contains restrictive covenants, including requirements that ASG (i) route at least 25% of its monthly business, including POS transactions, through RAKBANK; (ii) deposit all checks and cash through its RAKBANK account; and (iii) not incur any additional bank borrowings for nine months following disbursement. In addition, without the prior written consent of RAKBANK, ASG may not undertake or permit any merger, reorganization, or change of ownership or management control, and no shareholder of ASG may transfer or sell shares without the Bank’s consent. In the event of a breach of any covenants or a failure to submit required documents to RAKBANK’s satisfaction, the loan interest rate is subject to increase by 2% per annum, and RAKBANK is authorized to recover additional amounts attributable to the increased rate.
Prepayment. ASG may prepay all or part of the outstanding amounts upon written notice, subject to an additional prepayment charge as detailed in RAKBANK’s Service and Price Guide.
Installment Deferral. Any installment deferral agreed to by RAKBANK in its sole discretion will result in additional interest and an extension of the final repayment date, increasing the total repayable balance.
Events of Default and Acceleration. The full indebtedness becomes immediately due and payable upon, among other things: (a) failure to make any payment when due; (b) breach of any undertaking or covenant; (c) any representation proving incorrect or misleading; (d) insolvency or bankruptcy proceedings against ASG or any guarantor; (e) dishonor of any check supplied to the Bank; (f) any material adverse change in the financial position or business of ASG or any guarantor; or (g) any merger, change of ownership or control, or share transfer without RAKBANK’s prior written consent. Upon acceleration, the Bank may charge additional late payment interest and recover all enforcement costs and legal expenses.
Indemnification. ASG must fully indemnify RAKBANK from any expense, loss, damage, or liability incurred under or in connection with the loan documents, including as a consequence of any event of default.
Set-Off. RAKBANK may, at any time and without notice, combine or consolidate amounts standing to the credit of any ASG accounts and set them off against sums due under the loan, whether such liabilities are actual or contingent, primary or collateral.
Expenses. ASG must reimburse RAKBANK on demand for all expenses incurred in the preparation, execution, enforcement, or preservation of any rights under the loan documents, including administrative costs and legal expenses on a full indemnity basis.
Transaction Costs. ASG is responsible for all transaction costs, registration fees, and similar taxes payable in connection with the loan documents, and must indemnify RAKBANK against any liabilities from delay or omission to pay such taxes.
Governing Law and Jurisdiction. The loan is governed by UAE law, with the exclusive jurisdiction of the Courts of Ras Al Khaimah, subject to RAKBANK’s right to initiate proceedings in any other court of competent jurisdiction.
Business Developments
Subsequent to June 30, 2026, ASG ordered a number of smaller-capacity Bobtail units to further optimize distribution efficiency within highly congested urban corridors, specifically the Deira and Bur Dubai market areas of Dubai, UAE.
During the third quarter of 2026, the Company expects to take delivery of a new LPG Bobtail truck with a capacity of 17,800 liters. The integration of this asset into the Company’s active fleet is projected to increase daily operational capacity from 27 metric tons (MT) to approximately 35 MT. Management anticipates that the addition of this vehicle will mitigate existing logistics bottlenecks, thereby driving incremental volume growth and positively impacting revenues in the periods following deployment.
Management anticipates an increase in revenues during the second half of fiscal 2026, following the resolution of certain project pricing inefficiencies. However, operational challenges persist regarding the procurement of critical materials and specialized equipment. Ongoing supply chain disruptions may delay project installation timelines, thereby extending estimated completion and handover dates for specific active projects.
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Results of Operations for the Three Months Ended June 30, 2026, and 2025
Revenue
Revenue decreased to $3,534,006 for the three months ended June 30, 2026, from $4,009,461 for the corresponding period in 2025. The decrease in revenue was primarily attributable to lower sales volumes compared with the corresponding period in the prior year.
Gross Profit
Gross profit decreased to $1,031,940 for the three months ended June 30, 2026, from $1,320,106 for the three months ended June 30, 2025. The decrease in gross profit was primarily attributable to lower revenue during the three months ended June 30, 2026.
Operating Expenses
Operating expenses were $899,810 for the three months ended June 30, 2026, compared to $879,647 for the three months ended June 30, 2025. The increase in operating expenses for the three-month period was primarily attributable to higher professional fees and increased depreciation and amortization expenses.
We anticipate that our operating expenses will increase as we undertake our subsidiary expansion plan. The increase is anticipated to be attributable to administrative and operating costs associated with our business activities and the professional fees associated with our reporting obligations.
Other Expenses
Total other expenses were $48,497 for the three months ended June 30, 2026, compared to $283,948 for the three months ended June 30, 2025. The decrease in other operating expenses was primarily due to reduced interest and discount-related expenses on convertible notes.
Other Income
Other income was $1,375 for the three months ended June 30, 2026, while there was no other income for the corresponding period ended June 30, 2025. The increase in other income was primarily due to credit card fee income recognized during the period.
Net Income (Loss)
Net income was $64,926 for the three months ended June 30, 2026, compared to net income of $99,191 for the three months ended June 30, 2025. The decrease in net income was primarily due to lower revenue.
Results of Operations for the Six Months Ended June 30, 2026, and 2025
Revenue
Revenue decreased to $7,199,666 for the six months ended June 30, 2026, from $7,630,934 for the corresponding period in 2025. The decrease in revenue was primarily attributable to lower sales volumes compared with the corresponding period in the prior year.
Gross Profit
Gross profit decreased to $2,032,540 for the six months ended June 30, 2026, from $2,275,492 for the six months ended June 30, 2025. The decrease in gross profit was primarily attributable to lower revenue during the six months ended June 30, 2026.
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Operating Expenses
Operating expenses were $1,724,590 for the six months ended June 30, 2026, compared to $2,782,155 for the six months ended June 30, 2025. The decrease in operating expenses was primarily attributable to lower administrative and operating costs resulting from the non-recurrence of discretionary bonus payments to management totaling $1,020,000 that were incurred during the corresponding period in 2025.
We anticipate that our operating expenses will increase as we undertake our subsidiary expansion plan. The increase is anticipated to be attributable to administrative and operating costs associated with our business activities and the professional fees associated with our reporting obligations.
Other Expenses
For the six months ended June 30, 2026, total other expenses were $32,311, compared to $569,366 for the same period in 2025. The decrease in other operating expenses was primarily due to reduced interest and discount-related expenses on convertible notes.
Other Income
Other income was $37,527 for the six months ended June 30, 2026, while there was no other income for the corresponding period ended June 30, 2025. The increase in other income was primarily due to the recognition of $35,000 of income arising from the waiver of outstanding consultancy fees by a third-party service provider, together with credit card fee income recognized during the period.
Net Income (Loss)
Net income was $198,150 for the six months ended June 30, 2026, compared to net loss of $(1,160,415) for the six months ended June 30, 2025. The improvement in results for the six-month period was primarily attributable to the non-recurrence of a one-time discretionary bonus payment of $1,020,000 to management, which was awarded during the first quarter of 2025 in connection with the Company’s acquisition by Fusion Fuel and the subsequent capital raising.
Liquidity and Capital Resources
As of June 30, 2026, we had cash and cash equivalents of $150,012, total current assets of $7,367,803, and total current liabilities of $18,127,438. Our primary sources of liquidity are financial support from our parent company, Fusion Fuel. We may also obtain additional liquidity through equity issuances and debt financings. Our primary liquidity requirements consist of funding working capital, operating expenses, strategic acquisitions, and the costs associated with being a public reporting company. Based on our current projections, we expect to require additional financing to support our operations, strategic acquisitions, and other growth initiatives beyond the near term.
Going Concern
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States 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 unaudited 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 continue to generate sufficient revenues and raise capital within one year from the date of filing.
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The Company will require additional financing to fund its operations beyond the near term. Based on our current projections, our existing cash resources will not be sufficient to meet our anticipated operating and other cash needs through June 30, 2027, and for at least 12 months beyond that period, unless additional financing is obtained, including the costs associated with being a public reporting company. Since our own financial resources may be insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities in public offerings, private placements or credit facilities. The sale of additional equity securities could result in dilution to our stockholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects.
As of June 30, 2026, the Company had received $4,771,169 in loans from its parent company, Fusion Fuel. The loans are not evidenced by separate loan agreements and do not bear contractual interest or specified maturity dates. The loans are subject to the terms of the Stock Purchase Agreement, dated November 18, 2024, among the Company, and certain other stockholders of the Company (the “Fusion Fuel Acquisition Agreement”). Under the Fusion Fuel Acquisition Agreement, Fusion Fuel will make loans of one-half of the net proceeds (or such lesser amount as agreed to by the parties) to QIND from certain capital raises by Fusion Fuel. Such loans will be (i) forgiven upon the Preferred Stock Conversion (as defined in the Fusion Fuel Acquisition Agreement), or (ii) repaid if the Transactions (as defined in the Fusion Fuel Acquisition Agreement) are unwound in accordance with the provisions of the Fusion Fuel Acquisition Agreement. For the 12 months ending June 30, 2027, the Company anticipates that Fusion Fuel, the Company’s parent company, will provide additional financing in connection with the operations of Al Shola Gas. In addition, the Company anticipates that Fusion Fuel will provide all compensation required by our executive officers, other than our Chief Operating Officer and Managing Director Middle East, Sanjeeb Safir. No assurance can be given that any such financing will be available, if and when required. No assurance can be given that previous loans from Fusion Fuel will not be required to be repaid. If we are unable to obtain sufficient funding, it could adversely affect our ability to execute our business plan and meet our obligations.
Summary of Cash Flow
The following table provides detailed information about our net cash flows for the six months ended June 30, 2026, and June 30, 2025:
| Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Net cash (used in) operating activities | $ | (341,094 | ) | $ | (514,600 | ) | ||
| Net cash (used in) investing activities | (179,578 | ) | (219,792 | ) | ||||
| Net cash provided by financing activities | 244,036 | 805,548 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 63 | - | ||||||
| Net change in cash and cash equivalents | (276,636 | ) | 71,156 | |||||
| Cash and cash equivalents – beginning of period | 426,585 | 225,582 | ||||||
| Cash and cash equivalents – end of period | $ | 150,012 | $ | 296,738 | ||||
Net cash used in operating activities was $(341,094) for the six months ended June 30, 2026, and was $(514,600) for the six months ended June 30, 2025. The decrease in net cash used in operating activities was primarily attributable to the improvement in operating results, as the Company reported net income of $198,150 for the six months ended June 30, 2026, compared to a net loss of $1,160,415 for the corresponding prior-year period, a reduced increase in accounts receivable from approximately $0.6 million to approximately $0.03 million, and a smaller decrease in accounts payable from approximately $0.7 million in the prior period to approximately $0.1 million in the current period, offset primarily by a reduced increase in other current liabilities from approximately $1.2 million to approximately $0.09 million, a decrease of approximately $0.4 million in finance cost, a change from an inventory drawdown of approximately $0.3 million to an inventory increase of approximately $0.06 million, an increase in related party receivables of approximately $0.2 million, and an approximately $0.1 million larger increase in deposits, prepayments and advances.
Net cash used in investing activities was $(179,578) for the six months ended June 30, 2026, and was $(219,792) for the six months ended June 30, 2025. The decrease in net cash used in investing activities was primarily due to reduced payments made toward the purchase consideration payable to ASG shareholders from $200,000 to $20,000, partially offset by additions to fixed assets.
Net cash provided by financing activities was $244,036 for the six months ended June 30, 2026, and was $805,548 for the six months ended June 30, 2025. The decrease in cash provided by financing activities was primarily due to lower financing from the Company’s parent company, which decreased from $1,060,684 during the corresponding prior-year period to $343,632 during the current period.
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Summary of Future Lease Obligations
QIND has a virtual office at 505 Montgomery Street, San Francisco, California. The cost per month is $73 and is renewed annually.
Set forth in the table below is information regarding Al Shola Gas’ leased facilities, including the lease term, and annual rent amounts.
| Location | Lease Term | Annual Rent | ||||
| Office at Hamsah Building, O/112, Zabeel Road, Dubai, UAE | May 10, 2026 to May 9, 2027 | $ | 38,931 | |||
| Office at Hamsah Building, O/307, Zabeel Road, Dubai, UAE | January 7, 2026 to January 6, 2027 | $ | 7,306 | |||
| Office at Al Yousef Building, Dubai, UAE | January 1, 2026 to December 31, 2026 | $ | 17,698 | |||
| Gas Warehouse Unit No. L723, Plot No. 0243-0154, Baghdad Street, Al Qusais Industrial Area 2, Al Qusais, Dubai, UAE | March 1, 2026 to February 28, 2027 | $ | 7,110 | |||
| Gas Store Unit No. L705, Plot No. 0243-0171, Baghdad Street, Al Qusais Industrial Area 2, Al Qusais, Dubai, UAE | March 1, 2026 to February 28, 2027 | $ | 7,110 | |||
| Warehouse Plot No: 987-1006, Al Layan 1, DIC, Dubai, UAE | March 26, 2025 to September 25, 2026 | $ | 2,927 | |||
| Employee Accommodation, 17 Units, Plot No: 483-0, Muhaisanah Second, Dubai, UAE | February 1, 2026 to January 31, 2027 | $ | 166,644 | |||
| Employee Accommodation, Fortuna Global Real Estate, Dubai, UAE | January 20, 2026 to January 31, 2027 | $ | 26,983 | |||
| Employee Accommodation, Al Nabbah Real Estate, Dubai, UAE | April 3, 2026 to March 2, 2027 | $ | 10,783 | |||
| Total | $ | 285,492 | ||||
Property rent expenses for the three and six months ended June 30, 2026, consisted of the following:
| Rent Expense | Amount ($) | |||||||
| Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 | |||||||
| Office Rent Expenses | $ | 15,561 | $ | 30,333 | ||||
| Warehouse/Store Rent Expenses | $ | 5,042 | $ | 9,281 | ||||
| Labor Accommodation Rent Expenses | 50,689 | 90,957 | ||||||
| Total | 71,292 | 130,571 | ||||||
In addition, the Company has payment obligations under certain vehicle leases.
The following table summarizes the Company’s future lease financial obligations by period in which payment is expected, as of June 30, 2026:
| Short-Term | Long-Term | Total | ||||||||||
| Property Leases* | $ | 155,794 | $ | 0 | $ | 155,794 | ||||||
| Vehicle Leases | $ | 169,898 | $ | 208,640 | $ | 378,538 | ||||||
| Total Lease Obligations | $ | 325,692 | $ | 208,640 | $ | 534,332 | ||||||
* Property leases are primarily one-year office, warehouse, store, and employee accommodation leases. Such leases have terms of 12 months or less and thus qualify for the short-term lease exemption under ASC 842 and are not recognized on the balance sheet as lease liability. Instead, unpaid lease-related amounts at period-end are included in accounts payable.
Convertible Notes
The Company’s outstanding debt obligations as of June 30, 2026, consisted primarily of convertible promissory notes, which are as follows:
| Cumulative Repayments | Cumulative Conversions | Total Balance Remaining | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lender | Date of Issue | Maturity Date | Initial Interest Rate (%) | Default Interest Rate (%) | Original Principal Amount | Total Default Interest/Fees Incurred Since Issuance (Before Repayments and Conversions) | Total Interest Accrued Since Issuance (Before Repayments and Conversions) | Principal Repayments | Default Interest and Fees Repayments | Accrued Interest Repayments | Total Repayments | Principal Converted | Default Interest and Fees Converted | Accrued Interest Converted | Total Amount Converted | Conversion Price per Share | Total Number of Common Shares Issued | Principal Outstanding | Default Interest and Fees Outstanding | Accrued Interest Outstanding | Total Balance Remaining | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RB Capital Partners Inc.(1) | August 3, 2022 | March 1, 2028(1) | 7 | % | - | 1,100,000 | - | 301,249 | - | - | - | - | - | - | - | - | - | (1) | - | 1,100,000 | - | 301,249 | 1,401,249 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RB Capital Partners Inc.(2) | March 17, 2023 | March 1, 2028(2) | 7 | % | - | 200,000 | - | 43,895 | 57,705 | - | - | 57,705 | - | - | - | - | - | (2) | - | 142,295 | - | 43,895 | 186,190 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jefferson Street Capital LLC | May 23, 2023 | February 23, 2024 | 6.5 | % | 15 | % | 220,000 | 138,963 | 34,416 | - | - | - | - | 220,000 | (3) | 36,509 | (3) | 16,486 | (3) | 272,995 | (3) | - | (3) | 13,524,647 | (3) | - | 102,454 | 17,930 | 120,384 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sky Holdings Ltd | June 16, 2023 | December 16, 2023 | 7 | % | - | 550,000 | - | 106,051 | - | - | - | - | 77,000 | (4) | - | 35,863 | (4) | 112,863 | (4) | 0.0375 | (4) | 3,009,680 | (4) | 473,000 | - | 70,188 | 543,188 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lorlev 26 Irrevocable Trust | December 20, 2023 | December 20, 2024 | - | (5) | - | 100,000 | - | 29,000 | 100,000 | 20,000 | 120,000 | (6) | - | - | - | - | (7) | - | - | - | - | 9,000 | 9,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exchange Listing LLC | February 6, 2024 | August 6, 2024 | 10 | % | 20 | % | 35,000 | - | 15,712 | - | - | - | - | - | - | - | - | (8) | - | - | 35,000 | - | 15,712 | 50,712 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jefferson Street Capital LLC(9) | May 21, 2024 | February 21, 2025 | 10 | % | 15 | % | 71,500 | 44,769 | 18,906 | - | - | - | - | 71,500 | 44,769 | 1,500 | 117,769 | (10) | - | 61,995,097 | - | - | 17,406 | 17,406 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| J.J. Astor & Co(11) | September 20, 2024 | June 30, 2025 | 0 | % | 16 | % | 405,000 | 37,462 | (12) | 84,317 | 323,963 | 37,462 | - | 361,425 | - | - | - | - | (13) | - | - | 81,037 | - | 84,317 | 165,354 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 2,681,500 | 221,195 | 633,546 | 481,668 | 37,462 | 20,000 | 539,130 | 368,500 | 81,278 | 53,849 | 503,627 | - | 78,529,424 | 1,831,332 | 102,454 | 559,697 | 2,493,483 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | As of June 30, 2026, the Company was in default under the Notes. Each of the Notes bears interest at 7% per annum, has an original term of 24 months, and permits voluntary conversion of principal into shares of the Company’s common stock at a conversion price of $1.00 per share, subject to beneficial ownership limitations and the other terms of the Notes (as defined in “Part II – Other Information – Item 1. Legal Proceedings – Forbearance Agreement”). As of June 30, 2026, the Notes had originally matured on August 3, 2024 and March 17, 2025, respectively. On July 10, 2026, the Company entered into the Forbearance Agreement (as defined in “Part II – Other Information – Item 1. Legal Proceedings – Forbearance Agreement”) with the Holder (as defined in “Part II – Other Information – Item 1. Legal Proceedings – Forbearance Agreement”), which provided that the aggregate amount outstanding under the Notes as of June 30, 2026 was $1,587,439.64. Pursuant to the Forbearance Agreement, the Company is required to pay an aggregate amount of $1,675,000 (the “Payment Amount”), inclusive of all accrued interest, in 19 monthly installments commencing July 30, 2026 and ending January 15, 2028. No additional interest accrues so long as no default has occurred and is continuing. If the Company timely pays each of the first 18 installments and no default is continuing, a $30,000 timely payment discount will reduce the final installment from $175,000 to $145,000. The Company may prepay at any time without premium or penalty. The Holder’s conversion right was expressly reserved; any principal converted at $1.00 per share reduces the Payment Amount dollar-for-dollar. The Holder agreed to forbear from exercising remedies during a period ending on the earliest of March 1, 2028, an uncured default, or a written termination agreement, and the term of the Notes was extended to March 1, 2028. The Forbearance Agreement provides for a 10-business-day grace period following each installment date and an additional 10-calendar-day cure period following written notice of default. Upon an uncured default, the unpaid Payment Amount becomes immediately due and payable, interest accrues at 5% per annum, and the Holder must irrevocably elect to pursue remedies under either the Forbearance Agreement or the Notes, but not both. The Forbearance Agreement contains mutual releases of claims relating to the Notes, and upon payment in full of the Payment Amount (less any applicable timely payment discount), all obligations under the Notes and the Forbearance Agreement will be deemed fully satisfied, discharged, and extinguished. The Forbearance Agreement does not constitute a novation or accord and satisfaction of the indebtedness under the Notes. See “Part II – Other Information – Item 1. Legal Proceedings – Forbearance Agreement”. |
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| (2) | See footnote (1). |
| (3) | The note may be converted by the holder at the initial conversion price of $0.35 per share, subject to adjustment. Upon an event of default, the holder may convert the note using the common stock’s lowest trading price during the period commencing on the date of default discounted by 35%. $1,500 will be added to principal for each conversion. As of June 30, 2026, the holder had converted an aggregate of $272,995, consisting of $220,000 of principal, $36,509 of default interest and fees, and $16,486 of accrued interest into 13,524,647 shares of common stock at a conversion price determined in accordance with the event of default conversion terms set forth in the Note, as the Note was in default at the time of conversion. | |
| (4) | The note was initially convertible by the holder at the initial conversion price of $0.35 per share. On May 16, 2024, the note was amended to have a conversion price equal to $0.0375 per share. As of March 31, 2026, the holder had converted $77,000 of principal and $35,863 of accrued interest into 3,009,680 shares of common stock at a conversion price of $0.0375 per share. | |
| (5) | 20% interest will be charged on the day the Company receives funding in connection with an initial public offering, and thereafter 15% per annum will be charged. | |
| (6) | On September 2, 2025, the lender and the Company entered into a settlement agreement to resolve amounts outstanding under this note. Pursuant to the settlement agreement, the parties agreed to settle the $100,000 principal amount, together with $29,000 of accrued interest as of June 30, 2025 (notwithstanding that $29,589 of interest had accrued under the note as of June 30, 2025), for an aggregate settlement amount of $129,000. The settlement amount is payable in installments consisting of an initial payment of $30,000 due by September 10, 2025, followed by monthly payments of $15,000 due on the 15th of each month thereafter until the settlement amount is paid in full. | |
| (7) | The note may be converted by the holder at an initial conversion price equal to a 50% discount of the Company’s listing price, subject to adjustment. | |
| (8) | The note may be converted by the holder at the initial conversion price equal to the price reflecting a discount of 35% to the volume weight average price of the Company’s common stock for the five days before any conversion, subject to adjustment. | |
| (9) | Ilustrato Pictures International Inc. is a guarantor under the note. | |
| (10) | The note may be converted by the holder at the initial conversion price of $0.03 per share, subject to adjustment. Upon an event of default, the holder may convert the note using the common stock’s lowest trading price during the period commencing on the date of default discounted by 20%. $1,500 will be added to principal for each conversion. As of June 30, 2026, the holder had converted an aggregate of $117,769, consisting of $71,500 principal, $44,769 of default interest and fees, and $1,500 of accrued interest into 61,995,097 shares of common stock at a conversion price determined in accordance with the event of default conversion terms set forth in the Note, as the Note was in default at the time of conversion. | |
| (11) | The note ranks senior to other debt and is secured by all assets of the Company. |
| (12) | Reflects a default fee equal to an increase of principal outstanding to 110% of the principal outstanding due to the occurrence of an event of default under the note. | |
| (13) | The note may be converted by the holder at the initial conversion price equal to 80% of the average of the four lowest volume weighted average closing prices of the Company’s common stock over the 20 trading days immediately prior to each permitted conversion of the note, subject to adjustment. The Company is required to file a resale registration statement with the SEC within 60 days of any default or event of default and register for resale all shares of common stock issued under the note within 90 days of any default or event of default. |
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Related-Party Debt
As of June 30, 2026, the Company had received $4,771,169 in loans from its parent company, Fusion Fuel. The loans are not evidenced by separate loan agreements and do not bear contractual interest or specified maturity dates. The loans are subject to the terms of the Stock Purchase Agreement, dated November 18, 2024, among the Company, and certain other stockholders of the Company (the “Fusion Fuel Acquisition Agreement”). Under the Fusion Fuel Acquisition Agreement, Fusion Fuel will make loans of one-half of the net proceeds (or such lesser amount as agreed to by the parties) to QIND from certain capital raises by Fusion Fuel. Such loans will be (i) forgiven upon the Preferred Stock Conversion (as defined in the Fusion Fuel Acquisition Agreement), or (ii) repaid if the Transactions (as defined in the Fusion Fuel Acquisition Agreement) are unwound in accordance with the provisions of the Fusion Fuel Acquisition Agreement.
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 consolidation of supplies and raw materials, optimized logistics and production processes, and other restructuring and improvement initiatives. The benefits of these integration efforts and upcoming planned acquisitions may not positively impact our financial results in the short term but have historically been the case in the medium to long term.
Critical Accounting Estimates
A critical accounting estimate is an estimate that: (i) is made in accordance with generally accepted accounting principles, (ii) involves a significant level of estimation uncertainty and (iii) has had or is reasonably likely to have a material impact on the Company’s financial condition or results of operations.
The “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section is based on the Company’s unaudited consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP). The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and judgments that affect reported amounts and related disclosures. On an ongoing basis, management evaluates and updates its estimates. Management employs judgment in making its estimates but they are based on historical experience and currently available information and various other assumptions that the Company believes to be reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily available from other sources. Actual results could differ from those estimates. Management believes that its judgment is applied consistently and produces financial information that fairly depicts the results of operations for all periods presented.
Significant estimates include estimates used to review the Company’s impairments and estimations of long-lived assets, revenue recognition of Contract-based revenue, allowances for uncollectible accounts, and the valuations of non-cash capital stock issuances. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Further, refer to the Company’s significant accounting policies as described in Note 2 of the unaudited consolidated financial statements.
We consider the following accounting estimate to be the most critical in understanding the judgments that are involved in preparing our unaudited consolidated financial statements:
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
The Company has evaluated all recently issued accounting pronouncements and has implemented all standards that are currently 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 recently issued accounting pronouncements will have a material impact on its financial position, results of operations, or cash flows.
ASU 2017-04, Simplifying the Test for Goodwill Impairment, has been effective for fiscal years beginning after December 15, 2019, and has been adopted by the Company. Under this standard, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total goodwill allocated to that reporting unit. The Company applies this simplified one-step impairment test in its annual goodwill assessment. As noted above, no impairment was identified as of June 30, 2026.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a “smaller reporting company,” we are not required to provide the information required by this Item.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Interim Chief Financial Officer, have evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) prior to the filing of this Quarterly Report. Based on that evaluation, our Chief Executive Officer and Interim Chief Financial Officer concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were, in design and operation, effective at a reasonable assurance level.
Changes in Internal Control Over Financial Reporting
During the period covered by this Quarterly Report, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are not currently aware of any such legal proceedings or claims that we believe may have a material adverse effect on our business, financial condition, or operating results, other than as disclosed below.
Forbearance Agreement
On July 10, 2026, the Company entered into a Promissory Note & Loan Modification and Forbearance Agreement, dated as of July 10, 2026 (the “Forbearance Agreement”), with RB Capital Partners, Inc., a California corporation (the “Holder”). The Forbearance Agreement relates to (i) a Convertible Promissory Note, dated August 3, 2022, issued by the Company to the Holder in the original principal amount of $1,100,000 (the “First Note”), and (ii) a Convertible Promissory Note dated March 17, 2023, issued by the Company to the Holder in the original principal amount of $200,000 (the “Second Note” and, together with the First Note, the “Notes”). Each of the Notes bears interest at a rate of 7% per annum, has an original term of 24 months, and permits voluntary conversion of principal into shares of the Company’s common stock at a conversion price of $1.00 per share, subject to the terms and limitations set forth in the Notes. Both Notes matured prior to the date of the Forbearance Agreement. The Forbearance Agreement provides that, as of June 30, 2026, the aggregate amount outstanding under the Notes was $1,587,439.64.
Pursuant to the Forbearance Agreement, the Company is required to pay the Holder an aggregate Payment Amount of $1,675,000. The Forbearance Agreement provides that the Payment Amount will be paid in 19 monthly installments commencing on July 30, 2026 and ending on January 15, 2028. Specifically, the Company is required to make the following monthly payments, in chronological order: four payments of $25,000; three payments of $50,000; three payments of $75,000; four payments of $100,000; three payments of $150,000; and two payments of $175,000. The Forbearance Agreement further provides that the Payment Amount includes all accrued interest on the outstanding obligations under the Notes through the end of the term of such installment schedule. No additional interest will accrue on the Payment Amount so long as no default has occurred and is continuing under the Forbearance Agreement. If the Company timely pays in full each of the first 18 installments and no default has occurred or is continuing, the Holder will apply a timely payment discount of $30,000 (“Timely Payment Discount”), reducing the final installment due on January 15, 2028, from $175,000 to $145,000. The Company may prepay all or any portion of the Payment Amount at any time, without premium or penalty. Any prepayment will be applied to the remaining scheduled installments in reverse chronological order unless the Company directs otherwise, and the Timely Payment Discount may apply to a full prepayment if the conditions set forth in the Forbearance Agreement are satisfied.
Pursuant to the Forbearance Agreement, the Holder is required to forbear from exercising its rights and remedies under the Notes during a forbearance period (“Forbearance Period”) ending on the earliest of (i) March 1, 2028, (ii) the occurrence of an uncured default under the Forbearance Agreement, or (iii) the effective date of a written agreement of the parties to terminate the forbearance period. Pursuant to the Forbearance Agreement, the term of the Notes was extended to March 1, 2028.
Subject to the expiration of applicable cure and grace periods, a default will occur under the Forbearance Agreement if, among other things, the Company fails to make any installment payment by the applicable payment date and the expiration of the applicable grace period; another default occurs under the Notes, other than any default existing as of the date of the Forbearance Agreement; the Company dissolves, divides, ceases to exist, revokes or purports to terminate its liability under any Note, challenges the validity or enforceability of any Note, or denies any further liability or obligations thereunder; the Company becomes subject to bankruptcy, insolvency, receivership, assignment for the benefit of creditors or similar proceedings; the Company ceases to conduct business in the ordinary course; a tax lien, warrant or levy is imposed on the Company; or any representation or warranty of the Company in the Forbearance Agreement is false, misleading or incorrect in any material respect when made.
The Forbearance Agreement provides for a grace period of ten business days following each date that an installment payment of the Payment Amount is due, and an additional 10-calendar-day cure period following written notice of default, before the Holder may exercise remedies. Upon a default under the Forbearance Agreement and the expiration of all applicable grace and cure periods, the following remedies under the Forbearance Agreement will become available to the Holder: (a) the Forbearance Period will immediately and automatically cease without notice to or action by any party and the full unpaid portion of the Payment Amount will immediately be due in full, (b) interest will accrue on the unpaid portion at a rate of 5% per annum, (c) subject to the election requirement described below, the Holder will be entitled to exercise any or all of its rights and remedies under the Notes, the Forbearance Agreement, and any other documents executed in connection with or related to the Forbearance Agreement or the Notes, or applicable law, and (d) any obligation of Holder to make advances or otherwise extend credit to the Company will immediately and automatically terminate, without notice to or action by any party. The Forbearance Agreement requires the Holder, following an uncured default, to elect remedies under either the Forbearance Agreement or the Notes, but not both simultaneously. If the Holder fails to provide timely notice of its election, it will be deemed to have elected remedies under the Forbearance Agreement. An election, once made or deemed made, will be irrevocable. The Forbearance Agreement provides that if the Holder elects remedies under the Notes, none of the remedies described above will be available (other than the Holder’s right to retain all payments previously received under the Forbearance Agreement), and prior payments under the Forbearance Agreement will be credited against amounts owed under the Notes. The Company will not be required to pay more in the aggregate under the Forbearance Agreement and the Notes than the total amount that would have been due under the Notes absent the Forbearance Agreement.
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The Forbearance Agreement contains mutual releases of claims relating to the Notes. The Company’s release is effective as of the date of the Forbearance Agreement, and the Holder’s release will become effective upon the Company’s payment of the Payment Amount in full. Upon payment in full of the Payment Amount (less any applicable Timely Payment Discount), all obligations of the Company under the Notes and the Forbearance Agreement will be deemed fully satisfied, discharged, and extinguished. In addition, the Forbearance Agreement contains covenants not to sue relating to released claims, with the Company’s covenant effective as of the date of the Forbearance Agreement and the Holder’s covenant effective upon payment in full of the Payment Amount, less any applicable Timely Payment Discount.
The Forbearance Agreement provides that except as expressly modified by the Forbearance Agreement, the Notes will remain in full force and effect, and the Forbearance Agreement does not constitute a novation or accord and satisfaction of the indebtedness outstanding under the Notes.
The Holder’s conversion right under the Notes was expressly reserved under the Forbearance Agreement. The Holder may exercise its right to convert principal into shares of the Company’s common stock at a conversion price of $1.00 per share at any time in accordance with the terms of the Notes, including certain beneficial ownership limitations and other provisions of the Notes, in which case the principal amount so converted will reduce the Payment Amount on a dollar-for-dollar basis and the remaining scheduled installments will be reduced in reverse chronological order.
The Forbearance Agreement is governed by the laws of the State of California.
Demand Letter
On July 13, 2026, counsel to Sapir LLC (“Sapir”) delivered a letter (the “Demand Letter”) to the Company, Fusion Fuel, Frederico Figueira de Chaves (Chairman of the Company and an executive officer and director of Fusion Fuel), and John-Paul Backwell (a director of the Company and of Fusion Fuel), relating to an alleged Consulting Agreement, dated September 25, 2024 (the “Consulting Agreement”), between Sapir and the Company. The Demand Letter asserted that Sapir was owed certain compensation for services under the Consulting Agreement. Specifically, the Demand Letter alleged (1) that Sapir assisted the Company in identifying Fusion Fuel as a Target (as defined in the Consulting Agreement), at which point Fusion Fuel acquired a controlling stake in the Company; and (2) therefore, the Company and Fusion Fuel owe Sapir $600,000, a $200,000 convertible promissory note agreement (including “an at Par conversion price and piggy-back registration rights in addition to other provisions,” under the Consulting Agreement), and 3% of the issued and outstanding shares of Fusion Fuel’s publicly listed stock on “a fully diluted post-merger basis with [the Company].” The Demand Letter demanded payment of such compensation, else Sapir would proceed with all of Sapir’s remedies permitted by the alleged Consulting Agreement, at law, and in equity. The Demand Letter also included an electronically stored information litigation hold and preservation demand.
On July 28, 2026, the Company and Fusion Fuel, through counsel, sent a letter responding to the Demand Letter (the “Response Letter”). The Response Letter stated that the Company and Fusion Fuel found the allegations and claim asserted in the Demand Letter to be without merit because, among other reasons, it was unclear that a binding contract had even been formed as the version of the Consulting Agreement that the Company’s former Chief Executive Officer recalls signing differs significantly from the version of the Consulting Agreement referenced in the Demand Letter and the condition for Sapir’s alleged entitlement to compensation under either version of the Consulting Agreement had not been satisfied. The Response Letter also posited that, even if the Consulting Agreement were a binding contract, Fusion Fuel was not liable to Sapir because Fusion Fuel was not a party to the alleged Consulting Agreement. The Response Letter invited Sapir’s counsel to contact counsel for the Company and Fusion Fuel if Sapir was interested in having a discussion to try to settle the matter. The Response Letter noted, however, that because the Company and Fusion Fuel believed that there was no merit to Sapir’s claim, any settlement they would be willing to offer or accept would be significantly less than the amount of Sapir’s demand.
As of the date of this Quarterly Report, neither the Company nor Fusion Fuel has received a response to the Response Letter.
Settlement and Release Agreement with Lucosky Brookman
In September 2025, the Company entered into a Settlement and Release Agreement (the “Lucosky Settlement Agreement”) with Lucosky Brookman LLP (“Lucosky Brookman”), the Company’s former legal counsel, to resolve an outstanding obligation of approximately $568,706. Under the terms of the Lucosky Settlement Agreement, the Company agreed to pay a total settlement amount of $250,000 in five equal monthly installments of $50,000, due monthly from September 2025 through January 2026. Upon receipt of the full settlement amount, the parties agreed to exchange mutual general releases of all claims. If the Company failed to pay the full settlement amount by January 31, 2026, Lucosky Brookman retains the right to seek collection of the full outstanding balance, less amounts previously paid. As of June 30, 2026, the Company had not paid the full settlement amount and owed $115,000 to Lucosky Brookman.
Item 1A. Risk Factors.
As a “smaller reporting company,” we are not required to provide the information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Other than as previously disclosed in current reports on Form 8-K, there were no unregistered sales of equity securities or repurchase of common stock during the period covered by this report.
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Item 3. Defaults Upon Senior Securities.
The following convertible promissory notes were in default as of June 30, 2026:
| (i) | As of June 30, 2026, the Company was in default under two convertible notes issued to RB Capital Partners Inc. in the original principal amounts of $1,100,000 and $200,000, which matured on August 3, 2024 and March 17, 2025, respectively. The Company defaulted on the Notes in the amount of $1,254,422 and $228,038, respectively. On July 10, 2026, the Company and RB Capital Partners Inc. entered into the Forbearance Agreement, pursuant to which the payment terms of both notes were modified. Under the Forbearance Agreement, the aggregate outstanding balance of the Notes as of June 30, 2026 was $1,587,439.64, and the Company agreed to repay an aggregate Payment Amount of $1,675,000 in accordance with the repayment schedule set forth therein. In addition, the term of the Notes was extended to March 1, 2028. As of August 13, 2026, the Company was not in default under the Forbearance Agreement, and the aggregate outstanding balance under the Notes, including accrued interest, was $1,600,835. See “Part II – Other Information – Item 1. Legal Proceedings – Forbearance Agreement”. | |
| (ii) | A convertible note in the original principal amount of $220,000 issued to Jefferson Street Capital LLC (“Jefferson Street Capital”), which matured on February 23, 2024, as to which the Company defaulted in the amount of $340,963, had a total amount in arrearage of $122,262 as of August 13, 2026. | |
| (iii) | A convertible note in the original principal amount of $550,000 issued to Sky Holdings Ltd, which matured on December 16, 2023, as to which the Company defaulted in the amount of $569,303, had a total amount in arrearage of $547,179 as of August 13, 2026. | |
| (iv) | A convertible note in the original principal amount of $100,000 issued to Lorlev 26 Irrevocable Trust, which matured on December 20, 2024, as to which the Company defaulted in the amount of $120,000, had a total amount in arrearage of $9,000 as of August 13, 2026. | |
(v) |
A convertible note in the original principal amount of $35,000 issued to Exchange Listing LLC, which matured on August 6, 2024, as to which the Company defaulted in the amount of $36,755, had a total amount in arrearage of $51,598 as of August 13, 2026. | |
| (vi) | A convertible note in the original principal amount of $71,500 issued to Jefferson Street Capital, which matured on February 21, 2025, as to which the Company defaulted in the amount of $117,818, had a total amount in arrearage of $17,704 as of August 13, 2026. | |
| (vii) | A convertible note in the original principal amount of $405,000 issued to J.J. Astor & Co., which matured on June 30, 2025, as to which the Company defaulted in the amount of $412,088, had a total amount in arrearage of $168,480 as of August 13, 2026. |
For a further description of terms and repayment status with respect to the above convertible notes, see Part 1. Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Convertible Notes”.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
We have no information to disclose that was required to be disclosed in a Current Report on Form 8-K during the three months ended June 30, 2026, but was not reported.
None
of our directors or “officers,” as defined in Rule 16a-1(f) under the Exchange Act,
| 16 |
Item 6. Exhibits.
| * | Filed herewith. |
| ** | Furnished herewith. |
| 17 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: August 13, 2026 | Quality Industrial Corp. | |
| /s/ Carsten Kjems Falk | ||
| Name: | Carsten Kjems Falk | |
| Title: | Chief Executive Officer and Interim Chief Financial Officer | |
| (Principal Executive Officer and Principal Financial Officer) | ||
| 18 |
Exhibit 3.1
Filed in the Office of
State Of Nevada |
Business Number C10156-1998 Filing Number 20265819047 Filed On 6/10/2026 9:23:00 AM Number of Pages 2 |
Secretary of State
 |
FRANCISCO V. AGUILAR Secretary of State 401 North Carson Street Carson City, Nevada 89701-4201 (775) 684-5708 Website: www.nvsos.gov |
Profit Corporation: Certificate of Amendment (PURSUANT TO NRS 78.380 & 78.385/78.390) Certificate to Accompany Restated Articles or Amended and Restated Articles (PURSUANT TO NRS 78.403) Officer’s Statement (PURSUANT TO NRS 80.030) |
TYPE OR PRINT - USE DARK INK ONLY - DO NOT HIGHLIGHT
| 1. Entity information: | Name of entity as on file with the Nevada Secretary of State: | |||
| QUALITY INDUSTRIAL CORP. | ||||
| Entity or Nevada Business Identification Number (NVID): | NV19981215811 | |||
2. Restated or Amended and Restated Articles: |
☐ Certificate to Accompany Restated Articles or Amended and Restated Articles | |||
(Select one) (If amending and restating only, complete section 1,2 3, 5 and 6) |
☐ |
Restated Articles - No amendments; articles are restated only and are signed by an officer of the corporation who has been authorized to execute the certificate by resolution of the board of directors adopted on:
The certificate correctly sets forth the text of the articles or certificate as amended to the date of the certificate. | ||
| ☐ | Amended and Restated Articles | |||
| * Restated or Amended and Restated Articles must be included with this filing type. | ||||
3. Type of Amendment Filing Being Completed: (Select only one box)
(If amending, complete section 1, 3, 5 and 6.) |
☐ | Certificate of Amendment to Articles of Incorporation (Pursuant to NRS 78.380 - Before Issuance of Stock) The undersigned declare that they constitute at least two-thirds of the following: (Check only one box) ☐ incorporators ☐ board of directors The undersigned affirmatively declare that to the date of this certificate, no stock of the corporation has been issued | |
| ☒ | Certificate of Amendment to Articles of Incorporation (Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock) The vote by which the stockholders holding shares in the corporation entitling them to exercise at least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may be required by the provisions of the articles of incorporation* have voted in favor of the amendment is: 53.5% Or ☐ No action by stockholders is required, name change only. | ||
| ☐
|
Officer’s Statement (foreign qualified entities only) - Name in home state, if using a modified name in Nevada:
|
| Jurisdiction of formation: | |||||
| Changes to takes the following effect: | |||||
☐ ☐ ☐ ☐ |
The entity name has been amended. The purpose of the entity has been amended. The authorized shares have been amended. Other: (specify changes) |
☐ ☐ ☐ |
Dissolution Merger Conversion |
|
|
| * Officer’s Statement must be submitted with either a certified copy of or a certificate evidencing the filing of any document, amendatory or otherwise, relating to the original articles in the place of the corporations creation. |
| This form must be accompanied by appropriate fees | Page 1 of 2 Revised: 9/1/2023 |
| |
FRANCISCO V. AGUILAR Secretary of State 401 North Carson Street Carson City, Nevada 89701-4201 (775) 684-5708 Website: www.nvsos.gov |
Profit Corporation: Certificate of Amendment (PURSUANT TO NRS 78.380 & 78.385/78.390) Certificate to Accompany Restated Articles or Amended and Restated Articles (PURSUANT TO NRS 78.403) Officer’s Statement (PURSUANT TO NRS 80.030) |
| 4. Effective Date and Time: (Optional) | Date: | Time: | ||||
| (must not be later than 90 days after the certificate is filed) | ||||||
| 5. Information Being Changed: (Domestic corporations only) | Changes to takes the following effect:
☐ The entity name has been amended. ☐ The registered agent has been changed. (attach Certificate of Acceptance from new registered agent) ☐ The purpose of the entity has been amended. ☑ The authorized shares have been amended. ☐ The directors, managers or general partners have been amended. ☐ IRS tax language has been added. ☐ Articles have been added. Articles have been deleted. ☐ Other. The articles have been amended as follows: (provide article numbers, if available)
See below.
(attach additional page(s) if necessary) | |||||
| 6. Signature: (Required) | ☒ |  |
Chief Executive Officer | |
| Signature of Officer or Authorized Signer | Title | |||
| ☒ | ||||
| Signature of Officer or Authorized Signer | Title | |||
*If any proposed amendment would alter or change any preference or any relative or other right given to any class or series of outstanding shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of the holders of shares representing a majority of the voting power of each class or series affected by the amendment regardless to limitations or restrictions on the voting power thereof. | ||||
|
Please include any required or optional information in space below: (attach additional page(s) if necessary) | ||||
| Article IV of the Amended and
Restated Articles of Incorporation is hereby amended so that, as amended, the first paragraph of said Article IV shall read as follows: “The Corporation is authorized to issue Four Hundred Fifty Million (450,000,000) shares of Common Stock, $0.001 par value per share, and One Million (1,000,000) shares of Preferred Stock, $0.001 par value per share.” |
| This form must be accompanied by appropriate fees | Page 2 of 2 Revised: 9/1/2023 |
Exhibit 31.1
CERTIFICATIONS
I, Carsten Kjems Falk, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Quality Industrial Corp.; |
| 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 control over financial reporting. |
| Dated: August 13, 2026 | ||
| By: | /s/ Carsten Kjems Falk | |
| Name: | Carsten Kjems Falk | |
| Title: | Chief
Executive Officer and Interim Chief Financial Officer (Principal Executive Officer and Principal 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
The undersigned Chief Executive Officer and Interim Chief Financial Officer of Quality Industrial Corp. (the “Company”), DOES HEREBY CERTIFY that to my knowledge:
1. The Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. Information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.
IN WITNESS WHEREOF, the undersigned has executed this statement on August 13, 2026.
/s/ Carsten Kjems Falk | |
| Chief
Executive Officer and Interim Chief Financial Officer (Principal Executive Officer and Principal Financial Officer) |
A signed original of this written statement required by Section 906 has been provided to Quality Industrial Corp. and will be retained by Quality Industrial Corp. and furnished to the Securities and Exchange Commission or its staff upon request.
The foregoing certification is being furnished to the Securities and Exchange Commission pursuant to § 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.