QIND 10-K
Quality Industrial Corp. (QIND)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the fiscal year ended
OR
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) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange
Act:
Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically
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preceding 12 months (or for such shorter period that the registrant was required to submit such files).
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attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b)
of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company | |||
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act.
If securities are registered pursuant to Section 12(b) of the Act, indicate
by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously
issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes ☐ No
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price
of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter $
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: common shares and 20,000 Series B shares as of April 28, 2025.
TABLE OF CONTENTS
As used in this Annual Report on Form 10-K, unless the context otherwise requires, the terms the “Company,” “Registrant,” “we,” “us,” “our,” “Quality Industrial,” or “QIND” refer to Quality Industrial Corp., a Nevada corporation.
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FORWARD-LOOKING STATEMENTS
Except for statements of historical fact, some information in this document contains “forward-looking statements” that involve substantial risks and uncertainties. You can identify these forward-looking statements by words such as “may,” “will,” “should,” “anticipate,” “estimate,” “plans,” “potential,” “projects,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend” or the negative of these words or other variations on these words or comparable terminology. The statements that contain these or similar words should be read carefully because these statements discuss our future expectations, contain projections of our future results of operations or of our financial position, or state other forward-looking information. We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able accurately to predict or control. Further, we urge you to be cautious of the forward-looking statements which are contained in this registration statement because they involve risks, uncertainties and other factors affecting our operations, market growth, service, products and licenses. The factors listed in the sections captioned “Risk Factors” and “Description of Business,” as well as other cautionary language in this registration statement and events in the future may cause our actual results and achievements, whether expressed or implied, to differ materially from the expectations we describe in our forward-looking statements. We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all of those risks, nor can we assess the impact of all of those risks on our business or the extent to which any factor may cause actual results to differ materially from those contained in any forward-looking statement. The forward-looking statements in this registration statement are based on assumptions management believes are reasonable. However, due to the uncertainties associated with forward-looking statements, you should not place undue reliance on any forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and unless required by law, we expressly disclaim any obligation or undertaking to publicly update any of them in light of new information, future events, or otherwise. The occurrence of any of the events described as risk factors or other future events could have a material adverse effect on our business, results of operations and financial position.
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PART I
ITEM 1. BUSINESS
Business Overview
Quality Industrial Corp. (“QIND,” “the Company,” “we,” “us,” or “our”) is an industrial company specializing in the energy sector. Through our operating subsidiary, Al Shola Al Modea Gas Distribution LLC (“ASG” or “Al Shola Gas”), we provide comprehensive solutions for the liquefied petroleum gas (“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.
ASG is an ISO 9001-certified company based in Dubai, United Arab Emirates (“UAE”), offering a broad range of specialized services, including:
Central Gas Systems (LPG):
- Design, supply, construction, operation, and maintenance (certified by Dubai Civil Defense)
- Design consultancy and project management
- Repair and preventive maintenance
- Billing and monitoring systems
LPG Supply & Distribution:
- Supply of LPG in cylinders and bulk formats
LPG System Projects:
- Design, supply, and installation of aboveground and underground LPG tanks, including all pipeline and instrumentation components
- Installation and commissioning of LPG, propane, and synthetic natural gas (“SNG”) compatible systems
- Pressure-reducing and distribution stations
- Gas leak detection systems
- LPG metering stations
- Vaporizer systems
- Deluge and sprinkler systems, along with other gas safety systems
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ASG has established a reputation for designing and implementing extensive LPG pipeline networks across various commercial and industrial sectors. Safety remains a top priority in all our projects, and we strictly adhere to Dubai Civil Defense regulations and international safety standards. We provide warranty and safety certification as per applicable regulations.
LPG Distribution - Cylinders:
ASG operates one of the most extensive LPG distribution networks in Dubai, with a fleet of 56 delivery trucks. Our centralized call center, supported by a dedicated administrative team, enables us to distribute over 20,000 LPG cylinders monthly.
LPG Distribution – Bulk Gas:
ASG is an approved supplier of bulk LPG, sourcing from Emirates General Petroleum Corporation (“EMARAT”). Currently, we distribute over 500,000 liters of bulk LPG per month. Our fleet includes two 18,000-liter capacity trucks and one 25,000-liter capacity truck to support bulk LPG supply operations.
Intellectual Property
ASG does not own registered intellectual property rights. The Company’s intellectual property resides in its specific design and engineering processes, manpower, capability, compliance, and certifications that have made it a trusted service provider and supplier in its region.
ASG has the following certifications:
| ISO 9001 - Quality Management System |
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Competition
A list of some of ASG’s competitors is provided below:
Royal Development for Gas Works, established in 1994, is primarily engaged in the design, supply, and installation of central gas system works throughout the UAE. Their objective is to become the leading central gas system company in the Middle East. They execute projects in accordance with applicable international standards and codes of practice. Currently, they are executing projects in the UAE, Oman, Lebanon, and Africa with a workforce of over 450 employees, including professionally trained engineers and technicians who oversee ongoing projects. The company has completed and handed over more than 2,400 projects. Royal Gas services over 1,800 projects across the UAE, including operation and maintenance as well as LPG/Propane/Butane distribution and CNG/LNG.
Al Fanar Gas
Al Fanar Gas is an oil and gas company in the U.A.E., specializing in distribution systems for Liquefied Petroleum Gas (LPG), Synthetic Natural Gas (SNG), and Natural Gas (NG). It has been headquartered in Abu Dhabi since 1990. Al Fanar was the first company in the Emirate of Abu Dhabi to design, procure, and install a natural gas network in a residential development in the UAE.
Lahej & Sultan Gas Distribution
Since its establishment in 1981, Lahej & Sultan (L&S) has provided the following services: cleaning services, security services, gas distribution, gas pipeline connections, and pest control.
Al Shola Gas LLC’s advantages over competitors include but are not limited to:
| ● | Over 34 years of experience within the LPG industry and an extensive track record of delivery to Central Gas customers. | |
| ● | Affiliated and approved by the General Directorate of Civil Defence, Government of Dubai, UAE, as a ‘Central Gas Contractor’ and ‘LPG Supplier’. | |
| ● | ISO 9001-2015 certification reflects our dedication to quality management systems, ensuring that every aspect of our operations meets the most stringent industry standards |
Employees
We have approximately 120 employees in Al Shola Gas LLC. The employees are currently not represented by a labor union or collective bargaining agreement. We believe that our relationship with our employees is good.
Our Growth Strategies
We plan to pursue several strategies to grow our earnings, expand our market share and further diversify our revenue stream, including:
| ● | Increasing our margins through controllable operational initiatives: Our focus is on driving operational improvement across the business to increase our net income and drive our regional expansion. We aim to centralize certain decision-making procedures and increase adherence to lean manufacturing principles with the objective of reducing manufacturing costs while improving the value proposition for our customers. We aim to develop a companywide culture focused on continuous improvement through the implementation of measurable performance targets and the sharing of best practice. We strive to identify and implement ongoing procedures and initiatives across the business to increase profitability. | |
| ● | Continue to win new customers: We believe we have a significant opportunity to expand our customer base in the U.A.E. We plan to invest in our fleet of vehicles, sales and marketing organization to supply and promote our competitive products more effectively and accelerate customer acquisition. | |
| ● | Expand in our existing customers: Our customers demand high quality, reliable products delivered on-time and within budget. We are striving for continuous innovation and capability improvement in Consultation, Design, Supply, Installation, Maintenance, Distribution and Commissioning of Central Gas Systems. We are increasing the marketing of our continuously improving capability, state-of-the-art installations with a proven track record over three decades to our existing customers in order to capitalize on this growth opportunity. | |
| ● | Expansion into additional markets: Our immediate addressable markets are thew Central Gas System industries including Consultation, Design, Supply, Installation, Maintenance, Distribution and Commissioning of Central Gas Systems. Our goal is to increase the marketing of our design and engineering capability and distribution capacity in order to capitalize on the energy sector’s increasing demand for Central Gas systems in the UAE. Our long-term goal is to expand into the Middle East and Africa where the Central Gas System market is growing rapidly. | |
| ● | Pursue Strategic Acquisitions: We seek to pursue and execute acquisitions which accelerate our growth strategy. We believe that we have a clear acquisition strategy in place, targeting acquisitions with significant synergies to drive long-term value creation for shareholders. We will seek the acquisition of value enhancing companies which further diversify our manufacturing capability and geographic reach while simultaneously producing attractive financial returns. |
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Company Structure as of December 31, 2024
Quality Industrial Corp. (QIND) as of December 31, 2024 | ||||
| Fusion Fuel Green PLC | Management | Other shareholders | ||
| 67.04% ownership | 0% ownership | 32.96% ownership | ||
| 98,312,334 votes* | 0 votes | 48,330,356 votes |
*Including 20,000 Series B shares converting at 1:100
Corporate Office
Our offices are located at 505 Montgomery Street, San Francisco, CA 94104, and our telephone number is 800-706-0806. Our website addresses are www.qualityindustrialcorp.com, https://alsholagas.ae and our email address is [email protected]. Information contained on, or accessible through, the foregoing website is not a part of, and is not incorporated by reference into, this Form 10-K.
Employees
We have 6 employees in QIND and approximately 120 employees in our subsidiary Al Shola Gas. The employees are currently not represented by a labor union or collective bargaining agreement. We believe that our relationship with our employees is good.
Corporate History
The Company 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. (“ILUS”) acquired 77.4% of the outstanding shares in our Company. As a result, ILUS was able to unilaterally control the election of our board of directors, all matters requiring shareholder approval, and, ultimately, the direction of our company. Also, during the year, Mr. Nicolas Link, beneficial owner of ILUS, was appointed as our Executive Chairman of the Board, Mr. John-Paul Backwell was appointed as our Chief Executive Officer and Mr. Carsten Falk resigned as our Chief Executive Officer and was appointed as our Chief Commercial Officer.
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. is a public company focused on the industrial and energy sectors and was a subsidiary to ILUS. 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.”
After ILUS acquired control of QIND, on May 28, 2022, ILUS signed a binding letter of intent on June 28, 2022, for the Company to acquire 51% of Quality International Co. Ltd. FZC (“Quality International” or “QI”), an international process manufacturing company, manufacturing custom solutions for the oil & gas, petrochemical & refinery, chemical & fertilizer, power & desalination, water & wastewater, and offshore industries.
On March 9, 2023, we changed our SIC code of the Company to SIC 3590 — Misc. Industrial & Commercial Machinery and Equipment to reflect the new business direction.
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On June 22, 2023, the board of directors approved the granting of discretionary authority to the board of directors, at any time or times for a period of up to twelve months, to adopt an amendment (the “Amendment”) to the Company’s articles of incorporation, as amended (the “Articles of Incorporation”), to effect a reverse stock split (the “Reverse Stock Split”) with a ratio within the range of 1-for-2 to 1-for-20 (the “Reverse Stock Split Ratio”). On June 22, 2023, the Company received a written consent in lieu of a meeting by the holder of 77,669,078 shares of our common stock (the “Majority Stockholder”) authorizing the Reverse Stock Split and Reverse Stock Split Ratio for a period of up to twelve months conditional upon and concurrent with uplisting to a national stock exchange.
On March 27, 2024, we entered into a definitive Stock Purchase Agreement with the shareholders of Al Shola Al Modea Gas Distribution LLC (“ASG” or “Al Shola Gas”) to acquire a 51% stake in ASG. The closing of the transaction occurred with the execution of the definitive Stock Purchase Agreement. Al Shola Gas is an engineering and distribution company in the LPG industry based in the United Arab Emirates and was established in 1980. The company is one of the region’s leading suppliers of LPG gas and contractors for LPG Centralized Pipeline Systems, and it is approved by the General Directorate of Civil Defense, Government of Dubai, as a Central Gas Contractor and LPG Supplier.
Al Shola Gas is ISO 9001 certified and offers a wide range of services including Consultation, Design, Supply, Installation, Maintenance, Distribution and Commissioning of Central Gas Systems. ASG provides a wide range of bespoke solutions across all LPG related requirements.
The Parties agreed a “Purchase Price” of 51% shares for $10,000,000 (Ten Million USD), which is payable as follows:
| Tranche | Timeframe and Conditions | Amount | Paid By | Paid To | ||||||
| 1 | $9 million in National Exchange listed stock or cash to be paid to Seller. Payment in eight quarterly tranches over a period of 24 months, beginning from the first quarter following uplist to a National Exchange. Stock value to be protected by a make whole agreement/s and each tranche subject to a mutually agreed 12 months leak out agreement. | $ | 9,000,000 | QIND | ASG | |||||
| 2 | Within 12 months of closing and at the soonest possible time, $1 million cash payment to the Seller. | $ | 1,000,000 | QIND | ASG | |||||
Pursuant to the terms of the Stock Purchase Agreement, QIND occupies two non-paid board seats including Chairman of the Board of Al Shola Gas and one other non-paid board seat for existing Al Shola Gas shareholders. QIND obtained immediate control upon execution of the Agreement. Full operational control is retained by existing shareholders and management unless the new Board of Directors determines otherwise due to a breach of the Stock Purchase Agreement, ongoing poor performance, or if structural changes are recommended in line with the laws governed by the Stock Purchase Agreement which will be decided and approved by the new Board of Directors of the Company.
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 Quality International Purchase Agreement was terminated by Quality International and subsequently, the Board of Directors of the Company approved the cancellation of the agreement with Quality International that was signed on January 18, 2023, and amended on July 27, 2023.
On November 18, 2024, Quality Industrial Corp., a Nevada corporation, Fusion Fuel Green PLC, an Irish public limited company, Ilustrato Pictures International Inc., a Nevada corporation, a stockholder of the Company, and certain other stockholders of the Company together with the Company and Fusion Fuel, entered into a Stock Purchase Agreement, dated as of November 18, 2024. Under the Purchase Agreement, the Sellers transferred an aggregate of 78,312,334 shares of common stock and 20,000 shares of Series B Preferred Stock of the Company, constituting approximately 67.36% of the voting stock of at the time, to Fusion Fuel Green PLC. Fusion Fuel issued 3,818,969 Class A ordinary shares and 4,171,327 preferred shares to the Sellers. As a result of these transactions, Quality Industrial Corp. is a public company focused on the industrial, oil & gas and utility sectors and is a subsidiary to HTOO.
On April 8, 2025, the Company signed an Amendment to the Share Purchase Agreement, dated March 27, 2024, with the shareholders of Al Shola Al Modea Gas Distribution LLC. The amended Share Purchase Agreement removed the termination clause 9.14 and amended other clauses of the Share Purchase Agreement, dated March 27, 2024. The foregoing description of the Amended Share Purchase Agreement is not complete and is qualified in its entirety and filed as Exhibits 2.8 to this form 10-K.
Smaller Reporting Company
The Company is a “smaller reporting company” as defined in Rule 12b-2 under the Exchange Act. There are certain exemptions available to us as a smaller reporting company, including: (1) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes Oxley Act; (2) scaled executive compensation disclosures; and (3) the requirement to provide only two years of audited financial statements, instead of three years. As long as we maintain our status as a “smaller reporting company”, these exemptions will continue to be available to us.
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Emerging Growth Company
The Company qualifies as an “emerging growth company,” as defined in Section 2(a)(19) of the Securities Act, it may choose to follow disclosure requirements that are scaled for newly public companies. A company qualifies as an emerging growth company if it has total annual gross revenues of less than $1.07 billion during its most recently completed fiscal year and, as of December 8, 2011, had not sold common equity securities under a registration statement.
For so long as we remain an “emerging growth company” as defined in the Jumpstart our Business Startups Act of 2012, or the JOBS Act, we may take advantage of certain exemptions from various requirements that are applicable to public companies that are not “emerging growth companies.” In particular, as an emerging growth company we:
| ● | are not required to obtain an attestation and report from our auditors on our management’s assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002; | |
| ● | are not required to provide a detailed narrative disclosure discussing our compensation principles, objectives and elements and analyzing how those elements fit with our principles and objectives (commonly referred to as “compensation discussion and analysis”); | |
| ● | are not required to obtain a non-binding advisory vote from our stockholders on executive compensation or golden parachute arrangements (commonly referred to as the “say-on-pay,” “say-on-frequency” and “say-on-golden-parachute” votes); | |
| ● | are exempt from certain executive compensation disclosure provisions requiring a pay-for-performance graph and CEO pay ratio disclosure; | |
| ● | may present only two years of audited financial statements and only two years of related Management’s Discussion & Analysis of Financial Condition and Results of Operations (“MD&A”); and | |
| ● | are eligible to claim longer phase-in periods for the adoption of new or revised financial accounting standards under §107 of the JOBS Act |
Under the JOBS Act, we may take advantage of the above-described reduced reporting requirements and exemptions for up to five years after our initial sale of common equity pursuant to a registration statement declared effective under the Securities Act of 1933, as amended (the “Securities Act”), or such earlier time that we no longer meet the definition of an emerging growth company. In this regard, the JOBS Act provides that we would cease to be an “emerging growth company” if we have more than $1,070,000,000 in annual revenues, have more than $700 million in market value of our Common stock held by non-affiliates, or issue more than $1.0 billion in principal amount of non-convertible debt over a three-year period. We would cease to be an emerging growth company on the last day of the fiscal year following the date of the fifth anniversary of our first sale of common equity securities under an effective registration statement or a fiscal year in which we have $1 billion in gross revenues.
We intend to take advantage of all of these reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards under §107 of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. Therefore, our election to use the phase-in periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the phase-in periods under §107 of the JOBS Act.
Our independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of our internal control over financial reporting so long as we qualify as an “emerging growth company,” which may increase the risk that weaknesses or deficiencies in our internal control over financial reporting go undetected. Likewise, so long as we qualify as an “emerging growth company,” we may elect not to provide you with certain information, including certain financial information and certain information regarding compensation of our executive officers, that we would otherwise have been required to provide in filings we make with the SEC, which may make it more difficult for investors and securities analysts to evaluate our company. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.
Additional Information
The public may read and copy any materials the Company files with the SEC in the SEC’s Public Reference Section, Room 1580, 100 F Street N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Section by calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, which can be found at http://www.sec.gov.
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ITEM 1A. RISK FACTORS
An investment in our securities involves a high degree of risk. In addition to the other information contained in this prospectus, prospective investors should carefully consider the following risks before investing in our securities. If any of the following risks actually occur, as well as other risks not currently known to us or that we currently consider immaterial, our business, operating results and financial condition could be materially adversely affected. As a result, the trading price of our common stock could decline, and you may lose all or part of your investment in our common stock. The risks discussed below also include forward-looking statements, and our actual results may differ substantially from those discussed in these forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements” in this prospectus. In assessing the risks below, you should also refer to the other information contained in this prospectus, including the financial statements and the related notes, before deciding to purchase any of our securities.
Risks Relating to Macro Conditions and Our Financial Condition
We have a substantial amount of goodwill on our balance sheet. Future write-offs of goodwill may have the effect of decreasing our earnings or increasing our losses.
We have obtained growth through the acquisition of Al Shola Gas. Under existing accounting standards, we are required to periodically review goodwill assets for possible impairment. In the event that we are required to write down the value of any assets under these pronouncements, it may materially and adversely affect our operating results, financial condition, and the price of our common stock. See the more detailed discussion appearing as part of our Management’s Discussion and Analysis of Financial Condition and Results of Operations and in our financial footnotes. The percentage of our goodwill compared to our total assets as of December 31, 2024, was 46.4%.
Our ability to generate the significant amount of cash needed to service our debt obligations and our ability to refinance all or a portion of our indebtedness or obtain additional financing depends on many factors, many of which may be beyond our control.
Our ability to make scheduled payments on, or to refinance our obligations under, our debt, will depend on our financial and operating performance, which, in turn, will be subject to prevailing economic and competitive conditions and to the financial and business factors, many of which may be beyond our control. We cannot assure you that our business will generate sufficient cash flow from operations, that currently anticipated business opportunities will be realized on schedule or at all, or that future borrowings will be available to us in amounts sufficient to enable us to service our indebtedness and any amounts borrowed under future credit facilities, or to fund our other liquidity needs.
We will use cash to pay the principal and interest on our debt. These payments limit funds otherwise available for working capital, capital expenditures, acquisitions, collaborations, and other purposes. As a result of these obligations, our current liabilities may exceed our current assets. We may need to take on additional debt as we expand in our industry, which could increase our ratio of debt to equity. The need to service our debt may limit funds available for other purposes and our inability to service debt in the future could lead to acceleration of our debt and foreclosure on assets.
We cannot assure that we will be able to refinance any of our indebtedness or obtain additional financing as well as prevailing market conditions. As a result, we could face liquidity problems and might be required to dispose of material assets or operations to meet our indebtedness service and other obligations.
Our projections are subject to significant risks, assumptions, estimates and uncertainties, including assumptions regarding future legislation and changes in regulations of the jurisdictions in which we operate, or seek to operate, our business. As a result, our projected revenues, market share, expenses and profitability may differ materially from our expectations.
We operate in a rapidly evolving and highly competitive industry and our projections are subject to the risks and assumptions made by management with respect to this industry. Operating results are difficult to forecast because they generally depend on our assessment of factors that are inherently beyond our control and impossible to predict with certainty, such as the timing of the adoption of future legislation and regulations by different jurisdictions.
Furthermore, if we invest in the development of new products or distribution channels that do not achieve commercial success, whether because of competition or otherwise, we may not recover the often material “up front” costs of developing and marketing those products and distribution channels or recover the opportunity cost of diverting management and financial resources away from other products or distribution channels.
Additionally, our business may be affected by reductions in customer acquisition, customer persistency and customer spending as a result of numerous factors which may be difficult to predict. This may result in decreased revenue levels, and we may be unable to adopt timely measures to compensate for any unexpected shortfall in income. Our profitability projections make numerous assumptions about the expected future levels of various expense items. Historically, most of these expense items have been relatively stable or predictable either in absolute terms or in relation to revenue but there is no certainty that such stability or predictability will continue into the future. These inabilities could cause our operating results in a given period to be higher or lower than expected. If actual results differ from our estimates, analysts may react negatively, and our share price could be adversely impacted.
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If we are unable to successfully identify, complete and integrate acquisitions, our results of operations could be adversely affected.
Acquisitions have been and will continue to be a significant component of our growth strategy. We seek to identify and complete acquisitions and may continue to make strategic acquisitions. Our previous or future acquisitions may not be successful or may not generate the financial benefits that we expected to achieve at the time of acquisition. In addition, there can be no assurance that we will be able to locate suitable acquisition candidates in the future or acquire them on acceptable terms or, because of competition in the marketplace and limitations imposed by the agreements governing our indebtedness or the availability of capital, that we will be able to finance future acquisitions. We may be unable to identify, negotiate, and complete suitable acquisition opportunities on reasonable terms.
Acquisitions involve special risks, including, without limitation, the potential assumption of unanticipated liabilities and contingencies, difficulty in assimilating the operations and personnel of the acquired businesses, disruption of our existing business, dissipation of our limited management resources and impairment of relationships with employees and customers of the acquired business as a result of changes in ownership. For instance, the cancelled acquisition of Quality International on April 1, 2024. Such incidents can significantly affect our financial and operational outlook.
While we believe that strategic acquisitions can improve our competitiveness and profitability, these activities could have a material adverse effect on our business, financial condition, and operating results. We may incur significant costs such as transaction fees, professional service fees and other costs related to future acquisitions. We may also incur integration costs following the completion of any such acquisition as we integrate the acquired business with the rest of our Company. Although we expect that the realization of efficiencies related to the integration of any acquired businesses will offset the incremental transaction and acquisition-related costs over time, this net financial benefit may not be achieved in the near term or at all.
Risks associated with climate change and other environmental impacts, and increased focus and evolving views of our customers, shareholders, and other stakeholders on climate change issues, could negatively affect our business and operations.
The effects of climate change create short and long-term financial risks to our business, both in the UAE and globally. We have significant operations located in regions that have been, and may in the future be, exposed to significant weather events and other natural disasters. Climate related changes can increase variability in or otherwise impact natural disasters, including weather patterns, with the potential for increased frequency and severity of significant weather events (e.g., flooding, hurricanes, and tropical storms), natural hazards (e.g., increased flooding risk), rising mean temperature and sea levels, and long-term changes in precipitation patterns (e.g., drought, desertification, and/or poor water quality). We expect climate change could affect our facilities, operations, employees, and communities in the future, particularly at facilities in coastal areas and areas prone to extreme weather events and water scarcity. Our suppliers are also subject to natural disasters that could affect their ability to deliver or perform under our contracts, including as a result of disruptions to their workforce and critical infrastructure. Disruptions also impact the availability and cost of materials needed for manufacturing and could increase insurance and other operating costs.
Increased worldwide focus on climate change has led to legislative and regulatory efforts to combat both potential causes and adverse impacts of climate change, including regulation of greenhouse gas emissions. New or more stringent laws and regulations related to greenhouse gas emissions and other climate change related concerns may adversely affect us, our suppliers, and our customers. Some of our facilities are, for example, engaged in manufacturing processes that produce greenhouse gas emissions, including carbon dioxide, or rely on products from others that do so. We have worked for years to reduce our reliance on fossil-based energy sources, to decrease our greenhouse gas emissions, to reduce our consumption of water and production of waste, and to ensure our compliance with environmental regulations where we operate, enhancing our record of environmental sustainability. However, new, and evolving laws and regulations could mandate different or more restrictive standards, could require capital investments to transition to low carbon technologies, could adversely impact our ongoing operations, and could require changes on a more accelerated time frame. Our suppliers may face similar challenges and incur additional compliance costs that are passed on to us. These direct and indirect costs may adversely impact our results.
We may be adversely affected by the effects of inflation.
Inflation in wages, materials, parts, equipment, and other costs has the potential to adversely affect our results of operations, cash flows and financial position by increasing our overall cost structure, particularly if we are unable to achieve commensurate increases in the prices, we charge our customers for our products and services. In addition, the existence of inflation in the economy has the potential to result in higher interest rates, which could result in higher borrowing costs, supply shortages, increased costs of labor, weakening exchange rates and other similar effects. We have currently experienced inflationary pressures on its supply chain due to increased shipping costs, increased energy prices for manufacture of our commercial products as well as increased prices from suppliers of raw materials. We have so far been able to offset inflationary pressure to consumers, but it cannot be guaranteed that that our results of operations will not be adversely affected by inflation in the future and could reduce sales and/or operating margins, and overall financial performance.
We are dependent on the availability of raw materials, parts, and components used in our products.
While we manufacture certain parts and components used in our products, we also require substantial amounts of raw materials and purchases of certain parts and components from suppliers. The availability of and prices for raw materials, parts and components may be subject to curtailment or change due to, among other things, suppliers’ allocations to other purchasers, interruptions in production by suppliers, including due to geopolitical or civil unrest, unfavorable economic or industry conditions, labor disruptions, supply chain disruptions, catastrophic weather events, natural disasters, the occurrence of a contagious disease or illness, changes in exchange rates and prevailing price levels. Any change in the supply of, or price for, these raw materials or parts and components could materially affect us and our financial condition, results of operations and cash flow.
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Increases in the price of commodities could impact the cost or price of our products, which could impact our ability to sustain and grow earnings.
Our manufacturing processes consume significant amounts of raw materials, the costs of which are subject to worldwide supply and demand factors, as well as other factors beyond our control. Raw material price fluctuations may adversely affect our results. We purchase, directly and indirectly through component purchases, significant amounts of plastic, aluminium, steel, and other raw materials. In the past raw material prices have experienced volatility which has been unforeseen and unexpected. Commodity pricing has fluctuated over the past few years and may continue to do so in the future. Such fluctuations could have a material effect on our results of operations, balance sheets and cash flows and impact the comparability of our results between financial periods.
We may be subject to loss in market share and market acceptance as a result of performance failures, manufacturing errors, delays, or shortages.
There is a risk that, for unforeseen reasons, we may need to repair or replace products in use, or reimburse customers for products that fail to work or meet strict performance criteria. To date, we have encountered some product failures related to electronic and mechanical components in equipment and vehicles. These are either repaired under warranty, at a cost to the customer, or through a relevant maintenance agreement.
Other disruptions in the supply chain process or product sales and fulfilment systems for any reason, including equipment malfunction, failure to follow specific protocols and procedures, supplier facility shut-downs, defective raw materials, wars and conflict, natural disasters such as hurricanes, tornadoes or wildfires, property damage from riots, and other environmental factors and the impact of epidemics or pandemics, such as Covid-19, and actions by businesses, communities and governments in response, could lead to launch delays, product shortage, unanticipated costs, lost revenues and damage to our reputation.
We have taken steps to limit remedies for product failure to the repair or replacement of malfunctioning or non-compliant products or services and also attempt to exclude or minimize exposure to product and related liabilities by including in our standard agreements warranty disclaimers and disclaimers for consequential and related damages as well as limitations on our aggregate liability. From time to time, in certain sales transactions, we may negotiate liability provisions that vary from such standard forms. There is a risk that our contractual provisions may not adequately minimize our product and related liabilities or that such provisions may be unenforceable. We intend to carry product liability insurance, but the coverage we secure may not be adequate to cover potential claims. Moreover, to the extent we have to repair, reimburse, or expend funds to cover customer service issues, our results of operations will be negatively affected.
The markets in which we operate are highly competitive which could reduce sales and operating margins.
Most of our products are sold in competitive markets. Maintaining and improving a competitive position will require continued investment in manufacturing, engineering, quality standards, marketing, customer service and support and distribution networks. We may not be successful in maintaining our competitive position. Our competitors may develop products and methods that are more efficient or may adapt quicker to new technologies or evolving customer requirements. We may not be able to compete successfully with existing competitors or with new competitors. Pricing pressures may require us to adjust the prices of products to stay competitive. Failure to continue competing successfully could reduce sales, operating margins, and overall financial performance.
Our business operations may be adversely affected by information systems interruptions or cybersecurity intrusions.
We depend on various information technologies to administer, store, and support multiple business activities. If these systems are damaged, cease to function properly or are subject to cyber-security attacks, such as those involving unauthorized access, malicious software and/or other intrusions, we could experience production downtimes, operational delays, other detrimental impacts on operations or the ability to provide products and services to its customers, the compromising of confidential or otherwise protected information, destruction or corruption of data, security breaches, other manipulation or improper use of our systems or networks, financial losses from remedial actions, loss of business or potential liability, penalties, fines and/or damage to our reputation. We attempt to mitigate these risks by employing a number of measures, including the retained services of an IT Manager to assist QIND with cyber security expertise, and who reports directly to our management team overseeing the parent company and its subsidiaries regarding employee training, technical security controls and maintenance of backup and protective systems. Despite our efforts to mitigate these risks, our systems, networks, products, and services remain potentially vulnerable to known or unknown threats, any of which could have a material adverse effect on the Company and its financial condition or results of operations. Further, given the unpredictability, nature, and scope of cyber-security attacks, it is possible that potential vulnerabilities could go undetected for an extended period. We have currently not been subject to cybersecurity breaches in our supply chain, software, or services used in our products, services, or business. A severe future cybersecurity incident in our supply chain could however reduce sales, operating margins, and overall financial performance.
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Our long-term success depends, in part, on our ability to operate and expand internationally, and our business is susceptible to risks associated with international operations.
Currently, we only maintain operations in the United Arab Emirates, and plan to continue our efforts to expand globally, in jurisdictions where we do not currently operate. We expect international operations and export sales to continue to constitute the majority of our sales and assets in the foreseeable future. Managing a global organization is difficult, time consuming and expensive, and any international expansion efforts that we undertake may not be profitable in the near or long term. Although we have operating experience in many foreign jurisdictions, we must still continue to make significant investments to build our international operations. Our sales from international operations and sales from export are both subject in varying degrees to risks inherent in doing business outside the United States. These risks include the following:
| ● | Costs, risks, and uncertainties associated with tailoring our services in international jurisdictions as needed to better address both the needs of customers, and the threats of local competitors. | |
| ● | Risks of economic instability, including due to inflation. | |
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Uncertainties in forecasting revenues and expenses in markets where we have not previously operated. | |
| ● | Costs and risks associated with local and national laws and regulations governing the industries in which we operate, health and safety, climate change and sustainability, and labor and employment. | |
| ● | Operational and compliance challenges caused by distance, language, and cultural differences. | |
| ● | Costs and risks associated with compliance with international tax laws and regulations. | |
| ● | Costs and risks associated with compliance with the U.S. Foreign Corrupt Practices Act and other laws in the United States related to conducting business outside the United States, as well as the laws and regulations of non-U.S. jurisdictions governing bribery and other corrupt business activities. | |
| ● | Costs and risks associated with human trafficking, modern slavery and forced labor reporting, training and due diligence laws and regulations in various jurisdictions. | |
| ● | Being subject to other laws and regulations, including laws governing online advertising and other Internet activities, email and other messaging, collection and use of personal information, ownership of intellectual property, taxation, and other activities important to our online business practices. | |
| ● | Currency exchange rate fluctuations and restrictions on currency repatriation. | |
| ● | Competition with companies that understand the local market better than we do or that have preexisting relationships with regulators and customers in those markets. | |
| ● | Adverse effects resulting from the United Kingdom’s exit from the European Union (commonly known as “Brexit”) | |
| ● | Reduced or varied protection for intellectual property rights in some countries | |
| ● | Disruption of operations from labor and political disturbances. | |
| ● | Withdrawal from or renegotiation of international trade agreements and other restrictions on the trade between the United States and other countries | |
| ● | Changes in tariff and trade barriers; and | |
| ● | Geopolitical events, including natural disasters, climate change, public health issues, political instability (such as war between Ukraine and Russia), terrorism, insurrection, or war. |
Entry into certain transactions with foreign entities now or in the future may be subject to government regulations, including review related to foreign direct investment by U.S. or foreign government entities. If a transaction with a foreign entity is subject to regulatory review, such regulatory review might limit our ability to enter into the desired strategic alliance and thus our ability to carry out our long-term business strategy.
Operating in international markets also requires significant management attention and financial resources. The investment and additional resources required to establish operations and manage growth in other countries may not produce desired levels of revenue or profitability and could instead result in increased costs without a corresponding benefit. We cannot guarantee that our international operations or expansion efforts will be successful.
Any of these events as well as related events not aforementioned, could have a materially adverse impact on our Company and its operations.
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Uncertainty related to environmental regulation and industry standards, as well as physical risks of climate change, could impact our results of operations and financial position.
Increased public awareness and concern regarding environmental risks, including global climate change, may result in more international, regional and/or federal requirements or industry standards to reduce or mitigate global warming and other environmental risks. New climate change laws and regulations could require us to change our manufacturing processes or obtain substitute materials that may cost more or be less available for its manufacturing operations. Various jurisdictions in which we do business have implemented, or in the future could implement or amend, restrictions on emissions of carbon dioxide or other greenhouse gases, limitations or restrictions on water use, the production of single use plastics, regulations on energy management and waste management and other climate change-based rules and regulations, which may increase our expenses and adversely affect its operating results. In addition, the physical risks of climate change may impact the availability and cost of materials, sources and supply of energy, product demand and manufacturing and could increase insurance and other operating costs. The expected future increased worldwide regulatory activity relating to climate change could expand the nature, scope, and complexity of matters that we are required to control, assess, and report. If environmental laws or regulations or industry standards are either changed or adopted and impose significant operational restrictions and compliance requirements upon us, our suppliers, our customers, or our products, or our operations are disrupted due to physical impacts of climate change on us, our customers or our suppliers, our business, results of operations and financial condition could be adversely impacted.
Significant fluctuations in foreign currency exchange rates may harm our financial results.
We are exposed to fluctuations in foreign currency exchange rates, however not with respect to the UAE which is pegged to the U.S. dollar. Any significant change in the value of the currencies of the countries in which we might do business against not pegged to the U.S. dollar could affect our ability to sell products competitively and control its cost structure, which could have a material adverse effect on our results of operations.
A significant or sustained decline in commodity prices including gas could negatively impact the levels of expenditures by certain company customers.
Demand for our products depends, in part, on the level of new and planned expenditures by certain of our customers. The level of expenditures by our customers is dependent on, among other factors, general economic conditions, availability of credit, economic conditions within their respective industries and expectations of future market behavior. Our profitability may be adversely affected during any periods of unexpected or rapid increases in interest rates and volatility in commodity prices, including oil, can negatively affect the level of these activities and impact our subsidiary and can result in postponement of capital spending decisions or the delay or cancellation of existing orders. The ability of our customers to finance capital investment and maintenance may also be affected by the conditions in their industries. Reduced demand for our products could result in the delay or cancellation of existing orders or lead to excess manufacturing capacity, which unfavorably impacts the absorption of fixed manufacturing costs. This reduced demand could have a material adverse effect on our financial condition and results of operations.
We are dependent on financing for the continuation of our operations.
It can at times be difficult to predict our capital needs on a monthly, quarterly, or annual basis. Our future is dependent upon our ability to obtain profitable operations or financing. We reserve the right to seek additional funds through private placements of our common stock and/or through debt financing. We do not have financing in place at this time for all future planned acquisitions. We may not have access to financing or on terms that are acceptable to us. Any lack of funds from operations or fundraising for any shortage could be detrimental to our ability to continue operations and negatively impact us and our financial condition, results of operations and cash flow.
Risks Relating to Our Industry and Market
We occasionally provide integrated project management services in the form of long-term, fixed price contracts that may require us to assume additional risks associated with cost over-runs, operating cost inflation, labor availability and productivity, supplier and contractor pricing and performance, and potential claims for liquidated damages.
We occasionally provide integrated project management services outside our normal discrete business in the form of long-term, fixed price contracts. Some of these contracts are required by our customers, primarily international oil companies. These services include acting as project managers as well as service providers and may require us to assume additional risks associated with cost overruns. These customers may provide us with inaccurate information in relation to their reserves, which is a subjective process that involves location and volume estimation, that may result in cost overruns, delays, and project losses. In addition, our customers often operate in countries with unsettled political conditions, war, civil unrest, or other types of community issues. These issues may also result in cost over-runs, delays, and project losses.
Providing services on an integrated basis may also require us to assume additional risks associated with operating cost inflation, labor availability and productivity, supplier pricing and performance, and potential claims for liquidated damages. We rely on third-party subcontractors and equipment providers to assist us with the completion of these types of contracts. To the extent that we cannot engage subcontractors or acquire equipment or materials in a timely manner and on reasonable terms, our ability to complete a project in accordance with stated deadlines or at a profit may be impaired. If the amount we are required to pay for these goods and services exceeds the amount we have estimated in bidding for fixed-price work, we could experience losses in the performance of these contracts. These delays and additional costs may be substantial, and we may be required to compensate our customers for these delays. This may reduce the profit to be realized or result in a loss on a project.
The success of our business depends on our ability to maintain and enhance our reputation and brand.
We believe that our reputation in our industry is of significant importance to the success of our business. A well-recognized brand is critical to increasing our customer base and, in turn, increasing our revenue. Since the industry is highly competitive, our ability to remain competitive depends to a large extent on our ability to maintain and enhance our reputation and brand, which could be difficult and expensive. To maintain and enhance our reputation and brand, we need to successfully manage many aspects of our business, such as cost-effective marketing campaigns to increase brand recognition and awareness in a highly competitive market. We cannot assure you, however, that these activities will be successful and achieve the brand promotion goals we expect. If we fail to maintain and enhance our reputation and brand, or if we incur excessive expenses in our efforts to do so, our business, financial conditions and results of operations could be adversely affected.
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In the event that we are unable to successfully compete in our industry, we may see lower profit margins.
We face substantial competition in our industry. Due to our small size, it can be assumed that some of our competitors have greater financial, technical, and other competitive resources. Accordingly, these competitors may have already begun to establish superior technologies in our industry. We will attempt to compete against these competitors by developing technology that exceeds what is offered by our competitors. However, we cannot assure you that our technology will outperform competing technology, or that our competitors will not develop new products or services that exceed what we provide. In addition, we may face competition based on price. If our competitors lower the prices on their products, then it may not be possible for us to market our products at prices that are economically viable. Increased competition could result in lower than projected revenues, price reductions, and lower profit margins.
Any one of these results could adversely affect our business, financial condition, and results of operations.
In addition, our competitors may develop competing products that achieve greater market acceptance. It is also possible that new competitors may emerge and acquire significant market share. Our inability to achieve sales and revenue due to competition will have an adverse effect on our business, financial condition, and results of operations.
If we are unable to successfully manage growth, our operations could be adversely affected.
Our progress is expected to require the full utilization of our management, financial and other resources. Our ability to manage growth effectively will depend on our ability to improve and expand operations, including our financial and management information systems, and to recruit, train and manage personnel. There can be no absolute assurance that management will be able to manage growth effectively.
If we do not properly manage the growth of our business, we may experience significant strains on our management and operations and disruptions in our business. Various risks arise when companies and industries grow quickly. If our business or industry grows too quickly, our ability to meet customer demand in a timely and efficient manner could be challenged. We may also experience development delays as we seek to meet increased demand for our services and platform. Our failure to properly manage the growth that we or our industry might experience could negatively impact our ability to execute on our operating plan and, accordingly, could have an adverse impact on our business, our cash flow and results of operations, and our reputation with our current or potential customers.
If we are not able to design, develop and produce commercially competitive products and implement commercially competitive services in a timely manner in response to changes in the market, customer requirements, competitive pressures, developments associated with climate change concerns and energy mix transition, and technology trends, our business and consolidated results of operations could be materially and adversely affected, and the value of our intellectual property may be reduced.
The market for our services and products is characterized by continual technological developments to provide better and more reliable performance and services. If we are not able to design, develop, and produce commercially competitive products and to implement commercially competitive services in a timely manner in response to changes in the market, customer requirements, competitive pressures, developments associated with climate change concerns and energy mix transition, and technology trends, our business and consolidated results of operations could be materially and adversely affected, and the value of our intellectual property may be reduced. Likewise, if our proprietary technologies, equipment, facilities, or work processes become obsolete, we may no longer be competitive, and our business and consolidated results of operations could be materially and adversely affected.
Trends in oil and natural gas prices affect the level of exploration, development, and production activity of our customers and the demand for our services and products, which could have a material adverse effect on our business, consolidated results of operations, and consolidated financial condition.
Demand for our services and products is particularly sensitive to the level of exploration, development, and production activity of, and the corresponding capital spending by, oil and natural gas companies. The level of exploration, development, and production activity is directly affected by trends in oil and natural gas prices, which historically have been volatile especially after the Russian invasion of Ukraine and are likely to continue to be volatile. Prices for oil and natural gas are subject to large fluctuations in response to relatively minor changes in the supply of and demand for oil and natural gas, market uncertainty, and a variety of other economic factors that are beyond our control. Given the long-term nature of many large-scale development projects, even the perception of longer-term lower oil and natural gas prices by oil and natural gas companies can cause them to reduce or defer major expenditures. Any prolonged reductions of commodity prices or expectations of such reductions could have a material adverse effect on our business, consolidated results of operations, and consolidated financial condition.
Factors affecting the prices of oil and natural gas include:
| ● | the level of supply and demand for oil and natural gas; | |
| ● | the ability or willingness of the Organization of Petroleum Exporting Countries and the expanded alliance collectively known as OPEC+ to set and maintain oil production levels; | |
| ● | the level of oil production in the U.S. and by other non-OPEC+ countries; | |
| ● | oil refining capacity and shifts in end-customer preferences toward fuel efficiency and the use of natural gas; | |
| ● | the cost of, and constraints associated with, producing, and delivering oil and natural gas; | |
| ● | governmental regulations and other actions, including economic sanctions and policies of governments regarding the exploration for and production and development of their oil and natural gas reserves; | |
| ● | weather conditions, natural disasters, and health or similar issues, such as COVID-19 and other pandemics or epidemics; | |
| ● | worldwide political and military actions, and economic conditions, including potential recessions; and | |
| ● | increased demand for alternative energy and use of electric vehicles and increased emphasis on decarbonization, including government initiatives, such as the variety of tax credits contained in the U.S. Inflation Reduction Act of 2022, to promote the use of renewable energy sources and public sentiment around alternatives to oil and gas. |
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Our business is dependent on capital spending by our customers, and reductions in capital spending could have a material adverse effect on our business, consolidated results of operations, and consolidated financial condition.
Our business is directly affected by changes in capital expenditures by our customers, and reductions in their capital spending could reduce demand for our services and products and have a material adverse effect on our business, consolidated results of operations, and consolidated financial condition. Some of the items that may impact our customers capital spending include:
| ● | oil and natural gas prices, which are impacted by the factors described in the preceding risk factor; | |
| ● | the inability of our customers to access capital on economically advantageous terms, which may be impacted by, among other things, a decrease of investors’ interest in hydrocarbon producers because of environmental and sustainability initiatives; | |
| ● | changes in customers’ capital allocation, including an increased allocation to the production of renewable energy or other sustainability efforts, leading to less focus on oil and natural gas production growth; | |
| ● | restrictions on our customers’ ability to get their produced oil and natural gas to market due to infrastructure limitations; | |
| ● | consolidation of our customers; | |
| ● | customer personnel changes; and | |
| ● | adverse developments in the business or operations of our customers, including write-downs of oil and natural gas reserves and borrowing base reductions under customers’ credit facilities. |
Constraints in the supply of, prices for, and availability of transportation of raw materials can have a material adverse effect on our business and consolidated results of operations.
Raw materials essential to our operations and supply are normally readily available. Shortage of raw materials as a result of high levels of demand or loss of suppliers during market challenges can trigger constraints in the supply chain of those raw materials, particularly where we have a relationship with a single supplier for a particular resource. Many of the raw materials essential to our business require the use of rail, storage, and trucking services to transport the materials to our job sites. These services, particularly during times of high demand, may cause delays in the arrival of or otherwise constrain our supply of raw materials. These constraints could have a material adverse effect on our business and consolidated results of operations. In addition, price increases imposed by our vendors for raw materials and transportation providers used in our business, and the inability to pass these increases through to our customers, could have a material adverse effect on our business and consolidated results of operations.
Our ability to operate and our growth potential could be materially and adversely affected if we cannot attract, employ, and retain technical personnel at a competitive cost.
Many of the services that we provide and the products that we sell are complex and highly engineered and often must perform or be performed in harsh conditions. We believe that our success depends upon our ability to attract, employ, and retain technical personnel with the ability to design, utilize, and enhance these services and products. A significant increase in the wages paid by competing employers could result in a reduction of our skilled labor force, increases in the wage rates that we must pay, or both. If either of these events were to occur, our cost structure could increase, our margins could decrease, and any growth potential could be impaired.
Demand for the products we distribute could decrease if the manufacturers of those products were to sell a substantial amount of goods directly to end users in the markets we serve.
Our products are purchased through distributors and not directly from manufacturers. If those customers were to purchase the products that we sell directly from manufacturers, or if manufacturers sought to increase their efforts to sell directly to end users, our business, results of operations and financial condition could be materially and adversely affected. These or other developments that remove us from, or limit our role in, the distribution chain, may harm our competitive position in the marketplace and reduce our sales and earnings.
We may experience unexpected supply shortages.
We distribute products from a wide variety of manufacturers and suppliers. Nevertheless, in the future we may have difficulty obtaining the products we need from suppliers and manufacturers as a result of unexpected demand or production difficulties. Also, products may not be available to us in quantities sufficient to meet our customer demand. Our inability to obtain sufficient products from suppliers and manufacturers, in sufficient quantities, could have a material adverse effect on our business, results of operations and financial condition.
Price reductions by suppliers of products sold by us could cause the value of our inventory to decline. Also, such price reductions could cause our customers to demand lower sales prices for these products, possibly decreasing our margins and profitability on sales to the extent that our inventory of such products was purchased at the higher prices prior to supplier price reductions, and we are required to sell such products to our customers at the lower market prices.
The value of our inventory could decline as a result of price reductions by manufacturers of products sold by us. We have been selling the same types of products to our customers for many years (and therefore do not expect that our inventory will become obsolete). However, there is no assurance that a substantial decline in product prices would not result in a write-down of our inventory value. Such a write-down could have a material adverse effect on our financial condition. Also, decreases in the market prices of products sold by us could cause customers to demand lower sale prices from us. These price reductions could reduce our margins and profitability on sales with respect to such lower-priced products. Reductions in our margins and profitability on sales could have a material adverse effect on our business, results of operations, and financial condition.
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A substantial decrease in the price of gas could significantly lower our gross profit or cash flow.
We distribute gas and, as a result, our business may be significantly affected by the price and supply of gas. When gas prices are lower, the prices that we charge customers for products may decline, which affects our gross profit and cash flow. The gas industry as a whole is cyclical and at times pricing and availability of gas can be volatile due to numerous factors beyond our control, including general domestic and international economic conditions, labor costs, sales levels, competition, consolidation of steel producers, import duties and tariffs and currency exchange rates. When gas prices decline, customer demands for lower prices and our competitors’ responses to those demands could result in lower sale prices and, consequently, lower gross profit or cash flow.
If gas prices rise, we may be unable to pass along the cost increases to our customers.
We maintain inventories of gas to accommodate the lead time requirements of our customers. Accordingly, we purchase gas in an effort to maintain our inventory at levels that we believe to be appropriate to satisfy the anticipated needs of our customers based upon historic buying practices, contracts with customers and market conditions. Our commitments to purchase gas are generally at prevailing market prices in effect at the time we place our orders. If gas prices increase between the time, we order gas and the time of delivery of such products to us, our suppliers may impose surcharges that require us to pay for increases in gas prices during such period. Demand for the gas we distribute, the actions of our competitors, and other factors will influence whether we will be able to pass such gas cost increases and surcharges on to our customers, and we may be unsuccessful in doing so.
We may not have adequate insurance for potential liabilities, including liabilities arising from litigation.
In the ordinary course of business, we have and, in the future, may become the subject of various claims, lawsuits and administrative proceedings seeking damages or other remedies concerning our commercial operations, the products we distribute, employees and other matters, including potential claims by individuals alleging exposure to hazardous materials as a result of the products we distribute or our operations. Some of these claims may relate to the activities of businesses that we have acquired, even though these activities may have occurred prior to our acquisition of such businesses. The products we distribute are sold primarily for use in the energy industry, which is subject to inherent risks that could result in death, personal injury, property damage, pollution, or loss of production. In addition, defects in the products we distribute could result in death, personal injury, property damage, pollution or damage to equipment and facilities. Actual or claimed defects in the products we distribute may give rise to claims against us for losses and expose us to claims for damages.
We maintain insurance to cover certain of our potential losses, and we are subject to various self-retentions, deductibles, and caps under our insurance. It is possible, however, that judgments could be rendered against us in cases in which we would be uninsured and beyond the amounts that we currently have reserved or anticipate incurring for such matters. Even a partially uninsured claim, if successful and of significant size, could have a material adverse effect on our business, results of operations and financial condition. Furthermore, we may not be able to continue to obtain insurance on commercially reasonable terms in the future, and we may incur losses from interruption of our business that exceed our insurance coverage. Finally, even in cases where we maintain insurance coverage, our insurers may raise various objections and exceptions to coverage which could make uncertain the timing and amount of any possible insurance recovery uncertain.
Our operations are subject to hazards inherent in the oil and gas industry and, as a result, we are exposed to potential liabilities that may affect our financial condition and reputation.
Risks inherent to our industry, such as equipment malfunctions and failures, equipment misuse and defects, explosions and uncontrollable flows of oil, natural gas or well fluids and natural disasters, can cause personal injury, loss of life, suspension of operations, damage to formations, damage to facilities, business interruption and damage to or destruction of property, equipment, and the environment. These risks could expose us to substantial liability for personal injury, wrongful death, property damage, loss of oil and gas production, pollution, and other environmental damages. The frequency and severity of such incidents will affect operating costs, insurability and relationships with customers, employees, and regulators. In particular, our customers may elect not to purchase our services if they view our safety record as unacceptable, which could cause us to lose customers and substantial revenues. In addition, these risks may be greater for us because we may acquire companies that have not allocated significant resources and management focus to safety and have a poor safety record requiring rehabilitative efforts during the integration process.
Our customers could seek damages for losses associated with these errors, defects, or other performance problems. Our insurance policies may not be adequate to cover all liabilities. Further, insurance may not be generally available in the future or, if available, insurance premiums may make such insurance commercially unjustifiable. Moreover, even if we are successful in defending a claim, it could be time-consuming and costly to defend.
We are subject to increased risks associated with our investments in emerging markets, particularly in the Middle East region and specifically in the United Arab Emirates. These risks encompass significant political, social, and economic uncertainties in the region. Given the volatile nature of these markets, instabilities in these regions could significantly adversely affect the value of our investments.
Almost all of our operations are conducted, and almost of our assets are, as at the date of this document, located in the UAE, which is defined as an emerging market. While most of the countries in which we conduct our business have historically not been affected by political instability, there is no assurance that any political, social, economic or market conditions affecting such countries in the Middle East region generally (as well as outside the Middle East region because of interrelationships within the global financial markets) would not have a material adverse effect on our business, results of operations and financial condition.
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Specific risks in these countries and the Middle East region that may have a material impact on our business, results of operations and financial condition include:
| ● | ongoing macroeconomic uncertainty and disruption due to the COVID-19 pandemic; | |
| ● | an increase in inflation and the cost of living; | |
| ● | a devaluation in the currency of any country in which we have operations; | |
| ● | external acts of warfare and civil clashes or other hostilities involving nations in the region; | |
| ● | governmental actions or interventions, including tariffs, protectionism, and subsidies; | |
| ● | difficulties and delays in obtaining governmental or other approvals, new permits and consents for our operations or renewing existing ones; | |
| ● | potential lack of transparency or reliability in jurisdictions where we operate; | |
| ● | cancellation of contractual rights; | |
| ● | lack of infrastructure; | |
| ● | expropriation or nationalization of assets; | |
| ● | inability to repatriate profits and/or dividends; | |
| ● | continued regional political instability and unrest, including government or military regime change, riots or other forms of civil disturbance or violence, including through acts of terrorism; | |
| ● | military strikes or the outbreak of war or other hostilities involving nations in the region; | |
| ● | a material curtailment of the industrial and economic infrastructure development that is currently underway across the Middle East region; | |
| ● | increased government regulations, or adverse governmental activities, with respect to price, import and export controls, the environment, customs and immigration, capital transfers, foreign exchange and currency controls, labor policies, land and water use and foreign ownership; | |
| ● | changing tax regimes, including the imposition of taxes in currently tax favorable jurisdictions; | |
| ● | arbitrary, inconsistent, or unlawful government action, including capricious application of tax laws and selective tax audits; | |
| ● | limited availability of capital or debt financing; and | |
| ● | slowing regional and global economic environment. |
Any unexpected changes in the political, social, economic, or other conditions in which we operate, or neighboring countries may have a material adverse effect on our business, results of operations and financial condition.
It is not possible to predict the occurrence of events or circumstances such as or like those outlined above or the impact of such occurrences and no assurance can be given that we would be able to sustain its current profit levels if such events or circumstances were to occur.
Investors should also be aware that emerging markets are subject to greater risks than more developed markets, including in some cases significant legal, economic, and political risks. Accordingly, investors should exercise particular care in evaluating the risks involved and must decide for themselves whether, considering those risks, their investment is appropriate. Generally, investment in developing markets is only suitable for sophisticated investors who fully appreciate the significance of the risks involved.
To the extent that economic growth or performance in the countries in which we operate slows or begins to decline, or political conditions become sufficiently unstable to have a material adverse effect on our operations, our business, financial condition, and results of operations may be materially adversely affected.
We are exposed to risks from potentially unpredictable legal and regulatory environments in the UAE and Middle East region.
We currently operate in the UAE, an emerging market economy, which is in various stages of developing legal and regulatory systems that are not yet as fully matured and/or established as those of Western Europe and the United States. Some emerging market countries are also in the process of transitioning to a market economy and, as a result, are experiencing changes in their economies and their government policies (including, without limitation, policies relating to foreign ownership, repatriation of profits, property and contractual rights and planning and permit granting regimes) that may affect our business in those countries. Such countries are also characterized by less comprehensive legal and regulatory environments and systems. Existing laws and regulations may be applied inconsistently with anomalies in their interpretation or implementation. Such anomalies could affect our ability to enforce our rights under our contracts or to defend our business against claims by others.
There can be no assurance that if laws or regulations were imposed on the products and services offered by us it would not increase our costs, or adversely affect the way in which we conduct our business or otherwise have a material adverse effect on our results of operations and financial condition.
Any of the above factors, alone or in combination, may have a material adverse effect on our business, results of operations and financial condition.
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We are exposed to risks arising from potential changes in the UAE’s visa legislation, which could adversely impact our business operations.
A federal decision No. 281 of 2009 issued by the Minister of the Interior in May 2009 (the “Resolution”), which came into effect on 1 June 2009, standardized the terms of residency permits issued to expatriate residential property owners across the UAE. The decree allows expatriate property owners to apply for renewable multiple-entry visas with a validity of six months. The residency permit does not entitle the holder to work in the UAE and is in effect a long-term visit visa. In order to successfully apply for the new permit, expatriate property owners must satisfy certain criteria, including a minimum property valuation of at least AED 1 million, earning thresholds and the maintenance of appropriate insurance. While the Resolution was passed with the intention of standardizing the previous rules and stimulating the domestic market, it is not possible to assess whether the Resolution has had a positive or negative effect on levels of foreign investment in the UAE market. Separately, the Government, through the Dubai Land Department, has introduced a two-year residency visa for residential property owners in Dubai, and, while the criteria for obtaining this residency visa is similar to the residency permit, it provides the holder with UAE residency status, allowing the individual to obtain an Emirates ID card and a UAE driving license as well as to sponsor dependents (subject to meeting the relevant criteria for dependent sponsorship). The Government has introduced other new visa measures to make the UAE more appealing to investors, entrepreneurs, skilled personnel and outstanding students, including the 10-year “Golden” visa. As of the date of this document, we have not experienced difficulties in attracting skilled personnel, however, any restrictive changes to the UAE’s visa policies may discourage foreign nationals from choosing to live, work, and invest in the UAE, which would have an adverse effect on our ability to attract skilled personnel, our business, results of operations and financial condition.
We are subject to risks associated with potential unlawful or arbitrary governmental actions in the UAE, which could negatively impact our operations and financial performance.
Governmental authorities in the UAE in which we operate may have a high degree of discretion and, at times, act selectively or arbitrarily, without hearing or prior notice, and sometimes in a manner that is contrary to law or influenced by political or commercial considerations. The governing law covers all areas across Dubai, including special development zones and free zones and annuls clauses of the resolution issued on January 1, 1964, regulating the expropriation of private property for public use. Such governmental action could include, among other things, the withdrawal of building permits, the expropriation of property without adequate compensation or the forcing of business acquisitions, combinations, or sales. A new law, titled “Law No. (2) of 2022 Concerning Acquisition of Real Property for the Public Benefit in the Emirate of Dubai”, however, aims to ensure that the rights of owners of expropriated property are protected and that they are afforded full and fair compensation according to a clear set of rules outlined by the new law from 2022. However, any such action taken may have a material adverse effect on our business, results of operations and financial condition.
We are subject to the risk of international sanctions, which could significantly impact our business activities, results of operations and financial condition.
European, US and other international sanctions have in the past been imposed on companies engaging in certain types of transactions with specified countries or companies or individuals in those countries. Companies operating in certain countries in the Middle East region have been subject to such sanctions in the past. The UAE are not subject to such sanctions as at the date of this registration statement. The terms of legislation and other rules and regulations that establish sanctions regimes are often broad in scope and difficult to interpret.
If the UAE were in the future to violate European, US or international sanctions, penalties could include a prohibition or limitation on the UAE’s ability to conduct business in certain jurisdictions or to access the US or international capital markets. Any such sanction could have a material adverse effect on our business, results of operations and financial condition.
Risks Related to Legal, Accounting and Regulatory Matters
An unfavorable outcome of any pending contingencies or litigation could adversely affect us.
We are currently not involved in pending legal proceedings arising in the ordinary course of our business. Where it is reasonably possible to do so, we accrue estimates of the probable costs for the resolution of these matters. These estimates are based upon an analysis of potential results and settlement strategies. It is possible, however, that future operating results for any quarter or annual period could be affected by changes in assumptions. For additional details related to this risk, see “Legal Proceedings”.
The Sale of our Products involves Potential Product Liability and Related Risks that Could Expose us to Significant Insurance and Loss Expenses.
We face an inherent risk of exposure to product liability claims if the use of our products results in, or is believed to have resulted in, illness or injury. Any product liability claim may increase our costs and adversely affect our revenue and operating income. Moreover, liability claims arising from a serious adverse event may increase our costs through higher insurance premiums and deductibles for our insurances and may make it more difficult to secure adequate insurance coverage in the future. In addition, our product liability insurance may fail to cover future product liability claims, which, if adversely determined, could subject us to substantial monetary damages. Al Shola Gas has General Liability Coverage.
Compliance with Changing Regulation of Corporate Governance and Public Disclosure May Result in Additional Expenses.
Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and new SEC regulations, are creating uncertainty for companies such as ours. These new or changed laws, regulations and standards are subject to varying interpretations in many cases due to their lack of specificity, and as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We are committed to maintaining high standards of corporate governance and public disclosure. As a result, we intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new or changed laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, our reputation may be harmed.
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If we Fail to Comply with the Rules under the Sarbanes-Oxley Act Related to Accounting Controls and Procedures, or if Material Weaknesses or Other Deficiencies are Discovered in our Internal Accounting Procedures, our Stock Price Could Decline Significantly.
Section 404 of the Sarbanes-Oxley Act requires annual management assessments of the effectiveness of our internal controls over financial reporting. We are in the process of documenting and testing our internal control procedures, and we may identify material weaknesses in our internal control over financial reporting and other deficiencies. If material weaknesses and deficiencies are detected, it could cause investors to lose confidence in our Company and result in a decline in our stock price and consequently affect our financial condition. In addition, if we fail to achieve and maintain the adequacy of our internal controls, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our Common Stock could drop significantly. In addition, we cannot be certain that additional material weaknesses or significant deficiencies in our internal controls will not be discovered in the future.
Failure To Comply with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act or Other Applicable Anti-bribery Laws Could Have an Adverse Effect on us.
The U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business. Recent years have seen a substantial increase in anti-bribery law enforcement activity with more frequent and aggressive investigations and enforcement proceedings by both the Department of Justice and the SEC, increased enforcement activity by non-U.S. regulators and increases in criminal and civil proceedings brought against companies and individuals. Our policies mandate compliance with all anti-bribery laws. Our internal control policies and procedures may not always protect it from reckless or criminal acts committed by employees or third-party intermediaries. Violations of these anti-bribery laws may result in criminal or civil sanctions, which could have a material adverse effect on us as well as our financial condition and results of operations.
Changes in Tax laws or Exposure to Additional Income Tax Liabilities Could have a Material Impact on our Company, the Results of Operations, Financial Conditions and Cash Flows.
We are subject to income and non-income-based taxes in the jurisdictions in which we operate and intend to operate, as well as jurisdictions such as the United States. The tax laws in these jurisdictions could change on a prospective or retroactive basis, and any such changes could adversely affect us and our effective tax rate.
Taxation regulation in territories around the world can also change very quickly, which may mean that all the implications for businesses may not have been fully thought through by the regulating authorities before final guidelines and laws are issued. Furthermore, any changes made by tax authorities, together with other legislative changes, to the mandatory sharing of company information (financial and operational) with tax authorities on both a local and global basis, could lead to disagreements between jurisdictions with respect to the proper allocation of profits between such jurisdictions. We therefore continuously monitor changes to tax regulation and double tax treaties between the territories in which we operate. We also maintain a comprehensive transfer pricing policy to govern the flow of funds between various tax territories.
We are further subject to ongoing tax audits in the various jurisdictions in which we operate. We regularly assess the likely outcomes of these audits in order to determine the appropriateness of our tax provisions. However, there can be no assurance that we will accurately predict the outcomes of these audits, which could have a material impact on the business, financial condition, results of operations, and cash flows.
While we have recorded reserves for potential payments to various tax authorities related to uncertain tax positions, the calculation of such tax liabilities involves the application of complex tax regulations in many jurisdictions. Therefore, any dispute with a tax authority may result in payment that is significantly different from our estimates. If the payment proves to be less than the recorded reserves, the reversal of the liabilities would generally result in tax benefits being recognized in the period when we determine the liabilities to be no longer necessary. Conversely, if the payment proves to be more than the reserves, we could incur additional charges, and these could have a materially adverse effect on the business, financial condition, results of operations, and cash flows.
The US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), and the Bureau of Industry and Security at the US Department of Commerce (“BIS”) administer certain laws and regulations that restrict US persons and, in some instances, non-US persons, in conducting activities, transacting business with, or making investments in certain countries, governments, entities and individuals subject to US economic sanctions.
Our international operations subject us to these laws and regulations, which are complex and constantly changing. They restrict business dealings with certain countries, governments, entities, and individuals and may enact, amend, enforce, or interpret further restrictions in a manner that materially impacts our operations.
Our subsidiary sells and installs products, and may provide related services, to distributors or contractors and other purchasing bodies in such countries. These business dealings represent an insignificant amount of our consolidated revenues and income but expose us to a heightened risk of violating applicable sanctions regulations. Violations of these regulations are punishable by civil penalties, including fines, denial of export privileges, injunctions, asset seizures, debarment from government contracts and revocations or restrictions of licenses, as well as criminal fines and imprisonment.
We have established policies and procedures designed to assist with compliance with such laws and regulations. However, there can be no assurance that these will prevent us from violating these regulations in every transaction in which we may engage. As such a violation could adversely affect our reputation, business, financial condition, results of operations and cash flows.
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Risks Related to our Management and Control Persons
Our largest shareholder, Fusion Fuel Green, holds substantial control over the Company and is able to influence all corporate matters, which shareholders may consider to not always be in their best interests.
Fusion Fuel Green holds substantial control of our Company with over 50% of the outstanding shares of common stock. By virtue of the ownership of common stock, Fusion Fuel Green is able to exercise significant influence over all matters requiring approval by our stockholders, including the election of directors, the approval of significant corporate transactions, and any change of control of our Company.
We are dependent on the continued services of our director and executive chairman and officers and if we fail to keep them or fail to attract and retain qualified senior executives and key technical personnel, our business may not be able to expand.
We are dependent on the continued availability of Executive Chairman, Nicolas Link, CEO, John-Paul Backwell, and CCO, Carsten Kjems Falk, and the availability of new executives to implement our business plans. The market for skilled employees is highly competitive, especially for employees in our industry. Although we expect that our planned compensation programs will be intended to attract and retain the employees required for us to be successful, there can be no assurance that we will be able to retain all our key employees or a sufficient number to execute our plans, nor can there be any assurance we will be able to continue to attract new employees as required.
Our lack of adequate D&O insurance may also make it difficult for us to retain and attract talented and skilled directors and officers.
In the future we may be subject to litigation, including potential class action and stockholder derivative actions. Risks associated with legal liability are difficult to assess and quantify, and their existence and magnitude can remain unknown for significant periods of time. To date, we have not obtained directors and officers liability (“D&O”) insurance, but we plan to obtain it following an uplist to a National Exchange. Without adequate D&O insurance, the amounts we would pay to indemnify our officers and directors should they be subject to legal action based on their service to the Company could have a material adverse effect on our financial condition, results of operations and liquidity. Furthermore, our lack of adequate D&O insurance may make it difficult for us to retain and attract talented and skilled directors and officers, which could adversely affect our business.
The elimination of monetary liability against our directors, officers and employees under our Articles of Incorporation and the existence of indemnification rights to our directors, officers and employees may result in substantial expenditures by our Company and may discourage lawsuits against our directors, officers, and employees.
Our Articles of Incorporation contain provisions that eliminate the liability of our directors for monetary damages to our Company and shareholders. Our bylaws also require us to indemnify our officers and directors. We may also have contractual indemnification obligations under our agreements with our directors, officers, and employees. The foregoing indemnification obligations could result in our company incurring substantial expenditures to cover the cost of settlement or damage awards against directors, officers, and employees that we may be unable to recoup. These provisions and resulting costs may also discourage our company from bringing a lawsuit against directors, officers, and employees for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors, officers, and employees even though such actions, if successful, might otherwise benefit our Company and shareholders.
Our officers may voluntarily terminate their relationship with us at any time, and competition for qualified personnel is lengthy, costly, and disruptive.
If we lose the services of our officers and fail to replace them if they depart, we could experience a negative effect on our financial results and stock price. The loss and potential challenges in attracting, integrating, motivating, and retaining additional key employees could have a material adverse effect on our business, operating and financial results and stock price.
Certain officers and directors have other business activities which might cause them to allocate less time to work on our business.
Part of our management and board also serve on the management and board of ILUS. Our Executive Chairman, Nicolas Link is also the Chairman of the Board of Directors of Dear Cashmere Holding Co. (“DRCR”), the Chairman of the Board of Directors of CGrowth Capital, Inc. (“CGRA”), and the Chairman of the Board of Directors of Samsara Luggage Inc. (“SAML”). As a result, at certain points in time, these jointly represented companies may have members of management and board concentrate their efforts on transactions that focus on one company over the other, which collectively would not amount to work for our company on a full-time basis. This and other conflicts of interest may arise between us and part our officers and directors in that they have other business interests currently, with respect to QIND, and in the future to which they devote their attention, such as in the case of acquisitions, and they may be expected to continue to do so although management time must also be devoted to our business. Our officers and directors, while key in identifying and securing our funding sources, may face conflicts of interest due to their affiliations with other entities, impacting how funds are allocated between us and such affiliated entities. These competing interests could disrupt focus of our key management and board. As a result, conflicts of interest may arise that can be resolved only through exercise of such judgment as is consistent with each officer or director’s understanding of his or her fiduciary duties to our company.
In an effort to resolve potential conflicts of interest as between ILUS and QIND, our officers and director have agreed that any opportunities that they are aware of independently or directly through their association with us would be presented by them solely to QIND, before determining whether to include the opportunities in ILUS.
In general, our officers and director are required to present business opportunities to QIND and may present the opportunity to ILUS if the opportunity is aligned with the business of ILUS.
Potential investors should also be aware of the following potential conflicts of interest:
In the course of their other business activities, our officers and director may become aware of investment and business opportunities which may be appropriate for presentation to us as well as the other entities with which they are affiliated.
Our officers and director may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to the combination. Our employment contracts have been filed as exhibits to this form 10-K.
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The following table summarizes the entities to which our executive officers and director currently have fiduciary duties or contractual obligations:
| Individual(1) | Entity(2) | Affiliation | ||
| Nicolas Link | ILUS QIND DRCR CGRA SAML | Director & CEO Director Director Director Director | ||
| John-Paul Backwell | QIND HTOO | CEO CEO & Director | ||
| Louise Bennett | ILUS QIND | COO COO | ||
| Krishnan Krishnamoorthy | ILUS QIND | CFO CFO |
| (1) | Each person has a fiduciary duty with respect to the listed entities next to their respective names. |
| (2) | Each of the entities listed by trading symbol in this table has priority and preference relative to our company with respect to the performance by each individual listed in this table of his obligations and the presentation by each such individual of business opportunities. |
We cannot provide assurances that our efforts to eliminate the potential impact of conflicts of interest will be effective. We are at risk that our officers and director will favor their other business interests over the needs of our company. These competing business interests could interfere with our ability to implement our business plan successfully.
Our majority owner Fusion Fuel Green collectively owns a substantial amount of our voting stock.
Collectively, Fusion Fuel Green owns or exercises voting and investment control of over 50% of our outstanding common stock and voting power in our Company. As a result, unless required by a stock exchange rule, investors may be prevented from affecting matters involving our Company, including:
| ● | the composition of our Board and, through it, any determination with respect to our business direction and policies, including the appointment and removal of officers; | |
| ● | any determination with respect to mergers or other business combinations; | |
| ● | our acquisition or disposition of assets; and | |
| ● | our corporate financing activities. |
Furthermore, this concentration of voting power could have the effect of delaying, deterring, or preventing a change of control or other business combination that might otherwise be beneficial to our stockholders. This significant concentration of share ownership may also adversely affect the trading price of our common stock because investors may perceive disadvantages in owning stock in a Company that is controlled by a small number of stockholders.
Risks Relating to our Securities.
We may conduct offerings of our equity securities in the future, in which case your proportionate interest may become diluted.
We may be required to conduct equity offerings in the future to finance our current projects or to finance subsequent projects that we decide to undertake. If our common stock shares are issued in return for additional funds, the price per share could be lower than that paid by our current shareholders but with the aim to increase overall value for all shareholders. We anticipate continuing to rely on equity sales of our common stock shares in order to fund our business operations. If we issue additional common stock shares or securities convertible into shares of our common stock, your percentage interest in us could become diluted.
Our common stock price may be volatile and could fluctuate, which could result in substantial losses for investors.
Our common stock is quoted on the OTC Markets under the symbol, “QIND”. During the 30 trading days preceding December 31, 2024, the trading price of our shares in the OTC Market ranged from a minimum of $0.06 per share to a maximum of $0.075 per share. The market price of our common has been volatile and could continue to be volatile and fluctuate in price in response to various factors, many of which are beyond our control, including:
| ● | government regulation of our Company and operations. | |
| ● | the establishment of partnerships. | |
| ● | intellectual property disputes. | |
| ● | additions or departures of key personnel. | |
| ● | sales of our common stock. | |
| ● | our ability to integrate operations, technology, products, and services. | |
| ● | our ability to execute our business plan. | |
| ● | operating results below expectations. | |
| ● | loss of any strategic relationship. | |
| ● | industry developments. | |
| ● | economic and other external factors; and | |
| ● | period-to-period fluctuations in our financial results. |
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In addition, the securities markets have from time-to-time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.
Sales of a substantial number of shares of our common stock in the public market, or the perception that such sales could occur, could cause our stock price to fall.
The market price of our common stock could decline significantly as a result of sales of a large number of shares of our common stock. If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market after the contractual and securities law restrictions on resale of such common stock lapse, or after those shares become registered for resale pursuant to an effective registration statement, the trading price of our common stock could decline. As of December 31, 2024, a total of 126,642,689 shares of our common stock were outstanding. Of those shares, 48,330,356 were without restriction in the public market. Upon the effectiveness of any registration statement, we could elect to file with respect to any outstanding shares of common stock, any sales of those shares or any perception in the market that such sales may occur could cause the trading price of our common stock to decline.
The Issuance of shares of our common stock upon conversion or exercise of convertible notes, will dilute ownership to existing shareholders and may cause our stock price to fall.
Any issuance of additional common stock by us in the future as a result of the conversion or exercise of convertible notes or debt settlements would result in dilution to our existing shareholders. Such issuances could be made at a price that reflects a discount or a premium to the then-current trading price of our common stock. Moreover, the perception in the public market that shareholders might sell shares of our stock or that we could make a significant issuance of additional common stock in the future could depress the market for our shares. These sales, or the perception that these sales might occur, could depress the market price of our common stock, or make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.
We have issued shares of our common stock, as well as other securities such as convertible notes, which are convertible into shares of our common stock, in financing transactions that are deemed to be “restricted securities,” as that term is defined in Rule 144 promulgated under the Securities Act. From time to time, certain of our shareholders or derivative security holders may be eligible to sell all or some of their restricted shares of common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, subject to certain limitations. The resale pursuant to Rule 144 of shares acquired from us in private transactions could cause our stock price to decline significantly.
Future issuance of additional shares of common stock and/or preferred stock could dilute existing stockholders. We have and may issue preferred stock that could have rights that are preferential to the rights of common stock that could discourage potentially beneficially transactions to our common stockholders.
Pursuant to our Articles of Incorporation, we currently have authorized 200,000,000 shares of common stock and 1,000,000 shares of preferred stock. Our board of directors has the ability to issue additional shares of common stock in the future for such consideration as the board of directors may consider sufficient. The issuance of any additional securities could, among other things, result in dilution of the percentage ownership of our stockholders at the time of issuance, result in dilution of our earnings per share and adversely affect the prevailing market price for our common stock.
An issuance of shares of preferred stock could result in a class of outstanding securities that would have preferences with respect to voting rights and dividends and in liquidation over our common stock and could, upon conversion or otherwise, have all of the rights of our common stock. Our Board of Directors’ authority to issue preferred stock could discourage potential takeover attempts or could delay or prevent a change in control through merger, tender offer, proxy contest or otherwise by making these attempts more difficult or costly to achieve. The issuance of preferred stock could impair the voting, dividend, and liquidation rights of common stockholders without their approval.
We have never declared or paid any cash dividends or distributions on our capital stock.
We have never declared or paid any cash dividends or distributions on our capital stock. While we may not anticipate paying a dividend in the short-term and we currently intend to retain short-term earnings for growth, we may do so in the medium to long-term future.
The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend.
We may become involved in securities class action litigation that could divert management’s attention and harm our business.
The stock market in general has experienced extreme price and volume fluctuations. These fluctuations have often been unrelated or disproportionate to the operating performance of the companies involved. If these fluctuations occur in the future, the market price of our shares could fall regardless of our operating performance. In the past, following periods of volatility in the market price of a particular company’s securities, securities class action litigation has often been brought against that company. If the market price or volume of our shares suffers extreme fluctuations, then we may become involved in this type of litigation, which would be expensive and divert management’s attention and resources from managing our business.
As a public company, we may also from time to time make forward-looking statements about future operating results and provide some financial guidance to the public markets. Projections may not be timely made and set at expected performance levels and could affect the price of our shares.
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Risk Related to COVID-19
Our business and future operations may be adversely affected by epidemics and pandemics, such as the COVID-19 outbreak.
We may face risks related to health epidemics and pandemics or other outbreaks of communicable diseases, which could result in a widespread health crisis that could adversely affect general commercial activity and the economies and financial markets of the world. For example, the outbreak of COVID-19, which originated in China, was declared by the World Health Organization to be a “pandemic,” and spread across the globe. A health epidemic or pandemic or other outbreak of communicable diseases, such as the COVID-19 pandemic, poses the risk that we, or our current and potential business partners may be disrupted or prevented from conducting business activities for certain periods of time, the durations of which are uncertain, and may otherwise experience significant impairments of business activities, including due to operational shutdowns or suspensions that may be requested or mandated by national or local governmental authorities or self-imposed by us, our users or other business partners. While it is not possible at this time to estimate the full impact that COVID-19 could have on our business, potential users, or other potential business partners, the continued spread of COVID-19, the measures taken by the local and federal government, actions taken to protect employees, and the impact of the pandemic on various business activities could adversely affect our results of operations and financial condition. COVID-19 has not recently had any material impact on our operations, supply chain, liquidity, or capital resources. During the lockdowns we, however, saw significant shipping delays, consumer orders on hold due to budgetary restrictions as well as a slow-down in our planned acquisitions due to flight restrictions limiting on site due diligence. We have, as a mitigant to future COVID-19 outbreaks, increased our number of suppliers of raw materials to reduce the risk of production capabilities and order back-logs.
General Risk Factors
Our success depends on our executive management and other key personnel.
Our future success depends to a significant degree on the skills, experience and efforts of its executive management and other key personnel and their ability to provide us with uninterrupted leadership and direction. The loss of the services of any of the executive officers or a failure to provide adequate succession plans for key personnel could have an adverse impact on us. The availability of highly qualified talent is limited and the competition for talent is robust. However, we provide long-term equity awards and certain other benefits for our executive officers which provides incentives for them to make a commitment to us. Our future success will depend on our ability to have adequate succession plans in place and to attract, retain and develop qualified personnel. A failure to efficiently replace executive management members and other key personnel and to attract, retain and develop new qualified personnel could have an adverse effect on our operations and implementation of our strategic plan.
Challenges with respect to labor availability could negatively impact our ability to operate or grow the business.
Our success depends in part on the ability of its businesses to proactively attract, motivate, and retain a qualified and highly skilled workforce in an intensely competitive labor market. A failure to attract, motivate and retain highly skilled personnel could adversely affect our operating results or our ability to operate or grow the business. Additionally, any labor stoppages or labor disruptions, including due to geopolitical unrest, unfavorable economic or industry conditions, catastrophic weather events, natural disasters or the occurrence of a contagious disease or illness could adversely affect our operating results or its ability to operate or grow the business.
We are an “emerging growth company,” and we cannot be certain if the reduced reporting and disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including the auditor attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Pursuant to Section 107 of the JOBS Act, as an emerging growth company, we have elected to use the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to private companies. As a result, our financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies, which may make our common stock less attractive to investors. In addition, if we cease to be an emerging growth company, we will no longer be able to use the extended transition period for complying with new or revised accounting standards.
We will remain an emerging growth company until the earliest of: (1) the last day of the fiscal year following the fifth anniversary of our listing; (2) the last day of the first fiscal year in which our annual gross revenue is $1.235 billion or more; (3) the date on which we have, during the previous rolling three-year period, issued more than $1 billion in non-convertible debt securities; and (4) the date on which we are deemed to be a “large accelerated filer” under the rules of the SEC.
We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions. For example, if we do not adopt a new or revised accounting standard, our future results of operations may not be comparable to the results of operations of certain other companies in our industry that adopted such standards. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and our stock price may be more volatile.
ITEM 1B. UNRESOLVED STAFF COMMENTS
This information is not required for smaller reporting companies.
ITEM 1C. CYBERSECURITY RISK MANAGEMENT, STRATEGY, GOVERNANCE, AND INCIDENT DISCLOSURE
Risk Assessment and Identification
We conduct regular cybersecurity risk assessments to identify potential vulnerabilities across our information systems, manufacturing platforms, and third-party integrations. We prioritize risks based on their potential impact to our financial condition, operational continuity, and reputation.
Risk Management Processes
| ● | Preventive Controls: We deploy advanced firewalls, endpoint protection, and intrusion detection systems to secure our network infrastructure. Multi-factor authentication and encryption are enforced across critical systems and data repositories. | |
| ● | Monitoring and Detection: Continuous monitoring of our IT environment is facilitated through our IT manager. | |
| ● | Incident Response: We maintain an incident response plan that outlines procedures for containment, eradication, and recovery from cybersecurity incidents. | |
| ● | Employee Training: All employees receive mandatory cybersecurity awareness training at onboarding, covering phishing prevention, secure data handling, and reporting suspicious activities. |
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Third-Party Risk Management
Quality Industrial Corp relies on t
| ● | Due diligence reviews of vendors’ cybersecurity policies and practices prior to engagement. | |
| ● | Contractual requirements for vendors to maintain robust security controls and report incidents promptly. |
Material Impact of Cybersecurity Risks
Cybersecurity Governance
Board Oversight
Management’s Role
Management plays a critical role in assessing and managing material cybersecurity risks. Key responsibilities are assigned as follows:
| ● | Chief
Operations Officer (COO): | |
| ● | Incident
Responses: |
Incident Disclosure
ITEM 2. PROPERTIES
Quality Industrial Corp. has a virtual office at 505 Montgomery Street, 94104, San Francisco, CA, USA. The cost per month is $115 and is renewed annually.
Al Shola Gas LLC leases facilities for a term of up to 1 year at the addresses. Set in the table below with the square feet sizes and monthly leasing prices as indicated per facility. In total, ASG leases properties exceeding 17,000 square feet.
| Location | Lease Term | Area SqFt | Annual Rent in USD (3.67 AED) | |||||
| Office at Hamsah building, O/112, Zabeel road, Dubai, U.A.E. | 1 Year | 1,222 | $ | 25,723 | ||||
| Warehouse No. 19, Baghdad Street, Al Qusais Industrial Area 2, Al Qusais, Dubai, U.A.E. | 1 Year | 6,400 | $ | 7,115 | ||||
| Warehouse Plot No: 987-1006, Al Layan 1, DIC, Dubai, U.A.E. | 1 Year | 10,010 | $ | 30,518 | ||||
| Employee accommodation 17 units Plot No: 438-0, Muhaisanah second, DIC, Dubai, U.A.E. | 1 Year | 2,928 | 94,496 | |||||
| Total | 20,550 | $ | 157,852 | |||||
The lease for Al Shola Gas LLC is shared with the sister company AL Shola Al Modea Safety and Security LLC. The Rent expenses for the period ended December 31, 2024, amounted to:
| Expense | Amount in USD | |||
| Office Rent Expenses | 25,723 | |||
| Warehouse/Store Rent Expenses | 15,457 | |||
| Labor Accommodation Rent Expenses | 72,937 | |||
| Total | $ | 114,117 |
ITEM 3. LEGAL PROCEEDINGS
We may from time to time be involved in various claims and legal proceedings of a nature we believe are normal and incidental to our business. These matters may include product liability, intellectual property, employment, personal injury caused by our employees, and other general claims. Aside from the following, we are not presently a party to any legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. We currently have no legal proceedings ongoing or pending for the Company.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information.
Our common stock is quoted on the OTC Markets under the symbol “QIND” and has been quoted on the OTC since October 16, 2018. Previously, our common stock was quoted on the OTC Markets, under the symbol “WSFT.” There is currently limited liquid trading market for our common stock. There can be no assurance that a significant active trading market in our common stock will develop, or if such a market develops, that it will be sustained.
Holders
As of December 31, 2024, we had 290 shareholders of common stock per our transfer agent’s shareholder list, with others held in street name.
Dividends
The Company has not paid any cash dividends to date and does not anticipate or contemplate paying any dividends in the foreseeable future. It is the present intention of management to utilize all available funds for the growth of our business.
Equity Compensation Plan Information
We do not currently have an equity compensation plan in place.
Common and Preferred Stock
The Company’s authorized capital stock consists of 200,000,000 shares of common stock and 1,000,000 shares of preferred stock, par value $0.001 per share.
As of December 31, 2024, and December 31, 2023, there were 126,642,689 and 127,129,694 shares of common stock issued and outstanding, respectively.
As of December 31, 2024, and December 31, 2023, there were 0 and 0 shares of Series A stock of the Company issued and outstanding, respectively.
As of December 31, 2024, and December 31, 2023, there were 20,000 and 0 shares of Series B stock of the Company issued and outstanding, respectively.
Options and Warrants
In accordance with ASC 470, warrants have been classified as a liability and recorded at their fair market value.
On April 19, 2023, the Company issued a common share purchase warrant to Exchange Listing 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, 200,000 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 $0.58, per share then in effect.
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, 50,000 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 $3.50, per share then in effect.
Recent Sales of Unregistered Securities
From January 1, 2023, to December 31, 2023, we made the following issuances:
| ● | On March 17, 2023, the Company issued to RB Capital Partners Inc. a two-year convertible promissory note in the principal amount of $200,000 (the “March 2023 Note”). The March 2023 Note bears interest at 7% per annum. The Company has the right to prepay the March 2023 Note at any time. All principal on the March 2023 Note is convertible into shares of our common stock after six months from issuance at the election of the holder at a conversion price equal to $1.00 per share. | |
| ● | On May 4, 2023, the Company issued to Nicolas Link 2,750,000 shares of our common stock with a grant-date and fair market value of the award as of June 1, 2022, at $0.0721 pursuant to his employee contract. | |
| ● | On May 4, 2023, the Company issued to John-Paul Backwell 2,250,000 shares of our common stock with a grant-date and fair market value of the award as of June 1, 2022, at $0.0721 pursuant to his employee contract. | |
| ● | On May 4, 2023, the Company issued to Carsten Kjems Falk 2,250,000 shares of our common stock with a grant-date and fair market value of the award as of June 1, 2022, at $0.0721 pursuant to his employee contract. | |
| ● | On May 4, 2023, the Company issued to Krishnan Krishnamoorthy 2,250,000 shares of our common stock with a grant-date and fair market value of the award as of June 1, 2022, at $0.0721 pursuant to his employee contract. | |
| ● | On May 4, 2023, the Company issued to Louise Bennett 500,000 shares of our common stock with a grant-date and fair market value of the award as of June 1, 2022, at $0.0721 pursuant to her employee contract. | |
| ● | On May 8, 2023, the Company issued to Exchange Listing LLC 1,543,256 shares of our common stock for $1,543 for consultancy services for the planned uplist to NASDAQ with a grant-date and fair value of the award, at $0.41 pursuant to a share purchase agreement signed on April 19, 2023. | |
| ● | On June 1, 2023, the Company issued to Jefferson Street Capital LLC 150,000 shares of our common stock with a grant-date and fair value of the award as of May 23, 2023, at $0.60 pursuant to a share purchase agreement signed on May 23, 2023. |
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On June 16, 2023, the Company issued to Sky Holdings Ltd. A six-month convertible promissory note in the principal amount of $550,000. The Note bears interest at 7% per annum. The Company has the right to prepay the Note at any time. All principal on the Note is convertible into shares of our common stock after six months from issuance at the election of the holder at a conversion price equal to $0.35 per share. On May 16, 2024, the promissory note was amended to have a conversion price equal to $0.0375 per share
| ● | On July 26, 2023, 2023, the Company issued to Sky Holdings Ltd. 300,000 shares of our common stock with a grant-date and fair market value of the award as of June 16, 2023, at $0.42 pursuant to a share purchase agreement signed on June 16, 2023. | |
| ● | On July 27, 2023, our Company borrowed the principal amount of $3,000,000 from Mahavir Investments Limited (the “Mahavir Loan”). The Mahavir Loan bears interest at 20% per annum and is payable in nine tranches. We have the right to prepay the Mahavir Loan at any time. The loan matures on April 30, 2024. | |
| ● | On July 31, 2023, the Company issued to 1800 Diagonal Lending Ltd. A promissory note in the principal amount of $174,867 (the “Diagonal Lending Note”). The Diagonal Lending Note had a one-time interest amount of $22,732. The Company will prepay the Diagonal Lending Note in nine monthly payments each in the amount of $21,955.45. The promissory note matures on February 28, 2024, with a total payback to the Holder of $197,599. All principal on the Diagonal Lending Note is convertible into shares of our common stock in the event of default with a conversion price of 65% multiplied by the lowest Trading Price for the Common Stock during the ten (10) Trading Days prior to the Conversion Date. The note has been repaid In full. | |
| ● |
On August 15, 2023, the Company issued to 1800 Diagonal Lending Ltd. A promissory note in the principal amount of $118,367 (the “Diagonal Lending Note”). The Diagonal Lending Note had a one-time interest amount of $15,387.71. The Company will prepay the Diagonal Lending Note in nine monthly payments each in the amount of $14,861.64. The promissory note matures on May 30, 2024, with a total payback to the Holder of $133,754.71 All principal on the Diagonal Lending Note is convertible into shares of our common stock in the event of default with a conversion price of 65% multiplied by the lowest Trading Price for the Common Stock during the ten (10) Trading Days prior to the Conversion Date. | |
| ● | On August 25, 2023, the Company issued to Artelliq Software Trading 6,410,971 shares of our common stock for $2,000,000 pursuant to a share purchase and buy back agreement signed on August 21, 2023. | |
| ● | On September 15, 2023, the Company issued to Nicolas Link 2,000,000 shares of our common stock pursuant to his employee contract with a grant-date and fair market value of $0.27. | |
| ● | On September 15, 2023, the Company issued to John-Paul Backwell 2,000,000 shares of our common stock, pursuant to his employee contract, with a grant-date and fair market value of $0.27. | |
| ● | On September 15, 2023, the Company issued to Carsten Kjems Falk 1,250,000 shares of our common stock, pursuant to his employee contract, with a grant-date and fair market value of $0.27. | |
| ● | On September 15, 2023, the Company issued to Louise Bennett 350,000 shares of our common stock, pursuant to her employee contract, with a grant-date and fair market value of $0.27. | |
| ● | On December 20, 2023, the Company issued a two-year convertible promissory note in the principal amount of $100,000 to RB Capital Partners Inc. The Note bears interest at 10% per annum. The Company has the right to prepay the Note at any time. All principal on the Note is convertible into shares of our common stock after six months from issuance at the election of the holder at a conversion price equal to $1.00 per share. | |
| ● | On December 20, 2023, the Company issued a one-year convertible promissory note in the principal amount of $100,000 to Sean Levi. The Note bear a minimum of Twenty percent (20%) interest which will be charged on the day the company receives the IPO funding, and thereafter Fifteen percent (15%) per annum will be charged. The Note is for a period of 1 year and cannot be converted until six (6) months from the date first written above has passed. All principal on the Note is convertible into shares of our common stock after six months from issuance at the election of the holder at a conversion price equal to the price of 25% of the listing price, or if the company does not uplist, at a 50% discount of the market price. | |
| ● | On December 26, 2023, the Company issued to Jefferson Street Capital 241,758 shares of our common stock pursuant to a convertible note signed on May 23, 2023. |
From January 1, 2024, to December 31, 2024, we made the following issuances:
On January 11, 2024, the Company issued 281,426 shares of our common stock to Jefferson Street Capital LLC for the conversion of $15,000 of principal and $1,500 of conversion fees, pursuant to a convertible note signed on May 23, 2023.
On January 19, 2024, the Company issued 307,692 shares of our common stock to Jefferson Street Capital LLC for the conversion of $15,000 of principal and $1,500 of conversion fees, pursuant to a convertible note signed on May 23, 2023.
On February 15, 2024, the Company issued 307,692 shares of our common stock for the conversion of $15,000 of principal and $1,500 of conversion fees to Jefferson Street Capital LLC, pursuant to a convertible note signed on May 23, 2023.
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On April 26, 2024, we entered into an asset purchase agreement with Mr. Refer, the previous owner of the legacy business. Mr. Refer bought the intangible legacy assets of Wikisoft for a total consideration of 480,000 shares of common stocks to Quality Industrial Corp. (“QIND”) with a fair market value of $0.10 per common stock or $48,000. The shares were returned to the treasury. The legacy assets had no book value; therefore, we have recognized a gain of $48,000 related to this asset purchase.
On April 30, 2024, the Company issued 150,000 fully vested shares of our common stock to Paul Keely for services with a fair market value of $13,125 based on the market price of our stock on the date of grant
On May 7, 2024, the Company issued 416,141 shares of our common stock to Jefferson Street Capital LLC for the conversion of $15,000 of principal and $1,500 of conversion fees, pursuant to a convertible note signed on May 23, 2023.
On May 14, 2024, the Company issued 500,000 fully vested shares of our common stock to John-Paul Backwell, our CEO, pursuant to his employment contract with a fair market value of $36,500 based on the market price of our stock on the date of grant.
On June 3, 2024, the Company issued 500,000 commitment shares of our common stock to Jefferson Street Capital, pursuant to a convertible note signed on May 21, 2024, with a fair value of $24,179
On June 5, 2024, the Company issued 884,365 shares of our common stock to Jefferson Street Capital LLC for the conversion of $25,000 of principal and $1,500 of conversion fees, pursuant to a convertible note signed on May 20, 2024.
On June 13, 2024, the Company issued 3,009,680 shares of our common stock to Sky Holding Ltd. For the conversion of $77,000 of principal and $35,863 of accrued interest, pursuant to an amended convertible promissory note, signed on May 16, 2024.
On July 9, 2024, the Company issued 884,365 shares of our common stock to Jefferson Street Capital LLC for the conversion of $25,000 of principal and $1,500 of conversion fees, pursuant to a convertible note signed on May 20, 2024.
On August 9, 2024, the Company issued 884,365 shares of our common stock to Jefferson Street Capital LLC for the conversion of $25,000 of principal and $1,500 of conversion fees, pursuant to a convertible note signed on May 20, 2024.
On September 9, 2024, the Company issued 1,000,000 fully vested shares of our common stock to Sanjeeb Safir, pursuant to his employment contract signed on September 2, 2024, with a fair market value of $65,000 based on the market price of our stock on the date of grant.
On September 13, 2024, the Company issued 500,000 fully vested shares of our common stock to Safeguard Investments LLC, pursuant to a Consultancy contract signed on August 31, 2024, with a fair market value of $31,000 based on the market price of our stock on the date of grant.
On September 21, 2024, the Company cancelled 20,000,000 shares of common stock issued to Ilustrato Pictures International Inc. The shares were reissued to Ilustrato Pictures International Inc.as 20,000 series B preferred stock converting at 1:1000.
On September 20, 2024, the Company issued 2,500,000 shares of our common stock with a fair market value of $0.075 per share and a total value of $187,000 to JJ Astor Co., pursuant to a convertible note signed on September 21, 2024.
On September 24, 2024, the Company issued 884,365 shares of our common stock to Jefferson Street Capital LLC for the conversion of $25,000 of principal and $1,500 of conversion fees, pursuant to a convertible note signed on May 20, 2024.
On October 16, 2024, the Company entered into a Share Purchase Agreement with Safeguard Investments LLC, pursuant to which the Investor acquired 1,000,000 shares of the Company’s Common Stock for a purchase price of $30,000.
On October 22, 2024, the Company issued 1,092,118 shares of our common stock to Jefferson Street Capital LLC for the conversion of $10,000 of principal and $1,500 of conversion fees, pursuant to a convertible note signed on May 20, 2024.
On November 20, 2024, the Company issued 4,890,788 shares of our common stock to Jefferson Street Capital LLC for the conversion of $35,000 of principal together with $15,000.00 of accrued and unpaid interest thereto, $0.00 in default principal and $1,500.00 in fees, totaling $51,500., pursuant to a convertible note signed on May 20, 2024.
The sales and issuances of the securities described below were made pursuant to the exemptions from registration contained in Section 4(a)(2) of the Securities Act and Regulation D under the Securities Act. Each purchaser represented that such purchaser’s intention to acquire the shares for investment only and not with a view toward distribution. We requested our stock transfer agent to affix appropriate legends to the stock certificate issued to each purchaser and the transfer agent affixed the appropriate legends. Each purchaser was given adequate access to sufficient information about us to make an informed investment decision.
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ITEM 6. [Reserved]
We are not required to provide the information required by this item because we are a smaller reporting company.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The following is a discussion by management of its view of the Company’s business, financial condition, and corporate performance for the past year. The purpose of this information is to give management’s recap of the past year, and to give an understanding of management’s current outlook for the near future. This section is meant to be read in conjunction with the Financial Statements of this Annual Report on Form 10-K.
Overview
QIND is a Nevada Corporation that is majority-owned by Fusion Fuel Green PLC (“HTOO”). HTOO functions as QIND’s parent company, and as such it concentrates on providing strategic management oversight that includes financial, administration, marketing, and human resources support to QIND, which functions as HTOO’s Industrial subsidiary.
Factors Affecting Our Performance
The primary factors affecting our results of operations include but not limited to:
General Macro Economic Conditions
Our business is impacted by the global economic environment, employment levels, consumer confidence, government, and municipal spending. Global instability in securities markets and the Russian invasion of Ukraine are among other factors that can impact our financial performance. In particular, changes in the U.S. economic climate, can impact the demand of our products range. The Industrial and Manufacturing sectors are impacted by the overall economic environment as addressed in the risk factors. Tenders can be withdrawn and lead times for the manufacturing can be affected which can result in cancellation of orders if not delivered on time.
Impact of Acquisitions
A significant component of our growth is through the acquisition and consolidation of our operating companies 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 sales synergies within the operating businesses with the aim to expand globally. The benefits of these integration efforts may not positively impact our financial results instantly but is expected to do so in the medium to long-term future.
Recent Developments
On March 27, 2024, we entered into a definitive Stock Purchase Agreement with the shareholders of Al Shola Al Modea Gas Distribution LLC (“ASG” or “Al Shola Gas”) to acquire a 51% interest in ASG. The Closing of the transaction took place when both parties signed the definitive Share Purchase Agreement. Al Shola Gas is an engineering and distribution company in the LPG industry in the United Arab Emirates. It was established in 1980. The company is one of the region’s leading suppliers and contractors of LPG centralized pipeline systems and is approved by the General Directorate of Civil Defense, Government of Dubai, as a Central Gas Contractor and LPG Supplier.
On April 1, 2024, after several failed effort negotiations to restructure the deal and obtain information from the selling shareholders of Quality International, the Purchase Agreement with Quality International was terminated by Quality International. Subsequently, the Board of Directors of the Company approved the cancellation of the agreement with Quality International Co Ltd FZC that was signed on January 18, 2023, and amended on July 27, 2023. The company is in the process of unwinding the remaining part of the transaction consisting of the $2M buy-back commitment, with management aiming to recover the investment or parts of it. However, the investment may need to be written off if recovery proves unattainable.
On May 23, 2024, Quality Industrial Corp. entered into a binding term sheet with Actelis Networks, Inc., a Delaware corporation traded on the NASDAQ under the symbol ASNS, pursuant to which Actelis would acquire between 61% to 75% of the issued and outstanding shares of the Company’s share capital. We originally intended to close the transaction, pending regulatory requirements and due diligence, within 60 days. On August 30, 2024, we agreed to further extend the non-solicitation and no-shop periods provided in the Term Sheet until October 1, 2024, unless mutually terminated earlier by the parties. On October 10, 2024, ASNS provided the Company with written notice of ASNS’ intent to terminate the Term Sheet in accordance with the termination provisions thereof, which required 30-day written notice of termination. Such 30-day period ended, and the Term Sheet was definitively canceled on November 11, 2024.
On November 14, 2024, Ilustrato Pictures International Inc. (“Ilustrato”) and eight additional sellers agreed to transfer 78,312,334 shares of common stock and 20,000 series B stock in the Company to Fusion Fuel Green PLC an Irish corporation traded on the NASDAQ under the symbol “HTOO”. Pursuant to a Share Purchase Agreement, the consideration for the Purchased Shares will be payable in shares of common stock and preferred stock of HTOO. As a result of this transaction, there was a change in control of the Company when the transaction closed on November 26, 2024. The shares transferred amount to 69.23% voting rights of the outstanding shares in our Company on a fully diluted and as-converted basis. Consequently, HTOO is now able to unilaterally control the election of our board of directors, all matters upon which shareholder approval is required and, ultimately, the direction of our Company.
On April 8, 2025, the Company signed an Amendment to the Share Purchase Agreement, dated March 27, 2024, with the shareholders of Al Shola Al Modea Gas Distribution LLC. The amended Share Purchase Agreement removed the termination clause 9.14 and amended other clauses of the Share Purchase Agreement, dated March 27, 2024. The foregoing description of the Amended Share Purchase Agreement is not complete and is qualified in its entirety and filed as Exhibits 2.8 to this form 10-K.
Planned Developments
In 2025, the Company will allocate resources to our subsidiary Al Shola Gas to enhance efficiency, boost sales, and positively influence their financial performance with investment from our parent company, Fusion Fuel Green PLC. We also plan to invest in new vehicles for our subsidiary to improve their bulk LPG supply capabilities and increase our revenue. We expect that our revenue and operating expenses will rise as we implement the expansion plan related to our subsidiary. This increase will be due to administrative and operating costs linked to our business activities.
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Results of Operation for the Year Ended December 31, 2024, and 2023
Revenues
We earned $11,177,567 in revenue for the year ended December 31, 2024, as compared with revenue of $0 for the year ended December 31, 2023. The addition of revenue is a result of the ASG acquisition on March 27, 2024. The revenue from Al Shola Gas has been consolidated from April 1, 2024, to December 31, 2024. Al Shola Gas had revenue for the 12 months ended December 31, 2024, of $14,268,840 compared to $10,839,209 for the 12 months ended December 31, 2023, an increase of 31.1%.
Operating Expenses
Operating expenses increased to $3,280,008 for the year ended December 31, 2024, from $2,766,256 for the year ended December 31, 2023. Our General and Administrative expenses are approximately the same for 2024 and 2023. The expenses in 2024 are however mainly due to General and Administrative expenses in our subsidiary Al Shola Gas, as opposed to 2023, where General and Administrative expenses were mainly due to shares issued to our management and Chairman in the amount of $2,233,000. We had an increase in professional fees from $315,011 in 2023, to $849,925 in 2024. The increase was related to one-off costs for a reaudit of our financials with our new auditor Bush and Associates CPA amounting to $95,000. Further we had legal one off-costs with our legal counsel, Lucosky Brookman LLP, for legal work carried out in connection with the merger with our new parent company Fusion Fuel Green PLC amounting to a total of $525,994.
We anticipate that our operating expenses will increase as we undertake our subsidiary expansion plan. The increase will be attributable to administrative and operating costs associated with our business activities and the professional fees associated with our reporting obligations.
Non-Operating Expenses
We had other non-operating expenses of $687,755 for the year ended December 31, 2024, compared to $1,466,476 for the year ended December 31, 2024.
Our non-operating expenses for the year ended December 31, 2024, compared to the same periods in 2023, were primarily lower due to Commitment and Conversion Fees for stock.
Non-Operating Income
We had other non-operating income of $427,554 for the year ended December 31, 2024, compared to $0 for the same period in 2023. Our other income for the year ended December 31, 2024, resulted from the reversal of interest payments on the loan agreements with Mahavir and Artelliq in the first quarter, which was unwound with the cancellation of the agreement with Quality International and the sale of intangible assets from the legacy business, Wikisoft Corp.
Net Income/Net Loss
We incurred Net income of $266,780 for the year ended December 31, 2024, compared to a net loss of $4,232,732 for the same period ended December 31, 2023. The growth in Net income is a result of the ASG acquisition on March 27, 2024. The Net Income from Al Shola Gas has been consolidated from April 1, 2024, to December 31, 2024. Al Shola Gas had Net Income for the 12 months ended December 31, 2024, of $2,051,645 compared to $1,743,974 for the 12 months ended December 31, 2023, an increase of 17.6%, which includes a 9% corporate tax provision imposed in the UAE for the FY 2024 as compared with 0% in 2023.
Liquidity and Capital Resources
As of December 31, 2024, and 2023, we had total current assets of $7,466,617 and $2,002,492, respectively, and total current liabilities of $11,363,612 and $5,782,017. The notes to the consolidated financial statements provide a breakdown for the periods ended December 31, 2024, and 2023, respectively.
As of December 31, 2024, our working capital deficit was $3,896,995, compared to $3,779,525 as of December 31, 2023.
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Net cash provided by operating activities was $1,154,846 for the fiscal year ended December 31, 2024, as compared with $2,358,808 provided for the fiscal year ended December 31, 2023.
Net cash used in investing activities was $(5,636) for the fiscal year ended December 31, 2024, as compared with $(5,500,000) provided for the fiscal year ended December 31, 2023.
Net cash (used in) provided by Financing activities was $(926,120) for the fiscal year ended December 31, 2024, as compared with $3,140,548 provided for the same period ended 2023.
Our primary liquidity and capital requirements include working capital for our subsidiary, Al Shola Gas, and general corporate operational needs. Historically, we have met these cash requirements through cash generated by financing activities.
The Company’s ability to continue as a going concern depends on its ability to continue to generate sufficient revenues and raise capital within one year from the date of this filing. 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.
The Company’s Debt Obligations as of December 31, 2024 (including convertible and promissory notes):
| Lender | Date of Issue | Maturity Date | Principal Amount | Outstanding | ||||||
| RB Capital Partners Inc. | 3 Aug 2022 | 3 Aug 2024 |
1,100,000 |
1,100,000 |
||||||
| RB Capital Partners Inc. | 17 Mar 2023 | 16 Mar 2025 | 200,000 | 200,000 | ||||||
| Sky Holdings | 16 Jun 2023 | 31 Dec 2024 | 550,000 | 473.000 | ||||||
| RB Capital Partners Inc. | 21 Dec 2023 | 20 Dec 2024 | 100,000 | 100,000 | ||||||
| Sean Levi | 20 Dec 2023 | 20 Dec 2024 | 100,000 | 100.000 | ||||||
| Exchange Listing LLC | 6 Feb 2024 | 6 Aug 2024 | 35,000 | 35,000 | ||||||
| Jefferson | 21 May 2024 | 21 Feb 2025 | 71,500 | 71.500 | ||||||
| 1800 Diagonal Lending | 3 Jul 2024 | 25 Apr 2025 | 179,400 | 120,011 | ||||||
| 1800 Diagonal Lending | 25 Sep 2024 | 30 Jun 2025 | 115,000 | 102,222 | ||||||
| J.J. Astor & Co | 20 Sep 2024 | 30 Jun 2025 | 405,000 | 374,625 | ||||||
| Total | 2,855,900 | 2,676,358 |
| * | The convertible and promissory notes are described in financial footnotes and included in the exhibits. Amounts are principal amounts and exclude interest. |
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Going Concern
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.
Management evaluated all relevant conditions and events that are reasonably known or reasonably knowable, in the aggregate, as of the date the consolidated financial statements are issued and determined. The Company’s ability to continue as a going concern is dependent on the Company’s ability to continue to generate sufficient revenues and raise capital within one year from the date of filing.
QIND intends to complete future acquisitions, and we intend to disclose these acquisitions, as they happen, in our ongoing reports with the Securities and Exchange Commission. 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.
Impact of Acquisitions
Historically, 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 instantly, but this has historically been the case in future periods.
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” is based on the Company’s 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 Notes to Consolidated Financial Statements.
We consider the following accounting estimate to be the most critical in understanding the judgments that are involved in preparing our 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 implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are not required to provide the information required by this Item because we are a smaller reporting company.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by Item 8 are included in this Annual Report following Item 15 hereof. As a smaller reporting company, we are not required to provide supplementary financial information.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
In designing and evaluating our disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
As required by SEC Rule 15d-15, our management carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K.
Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of the end of the period covered by this report.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) of the Exchange Act that occurred during the year ended December 31, 2023, that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The following information sets forth the names, ages and positions of our current directors and executive officers.
| Name | Current Age | Position | ||
| Nicolas Link | 44 | Executive Chairman of the Board | ||
| John-Paul Backwell | 44 | Chief Executive Officer | ||
| Krishnan Krishnamoorthy | 59 | Chief Financial Officer | ||
| Carsten Kjems Falk | 50 | Chief Commercial Officer | ||
| Louise Bennett | 54 | Chief Operational Officer | ||
| Sanjeeb Safir | 51 | Managing Director Middle East |
Below is a brief description of the background and business experience of each of our current executive officers and directors.
Nicolas Link
Mr. Nicolas Link, Executive Chairman, 44, combines over 20 years of experience in the manufacturing and technology industries holding several senior management positions, including Founder, CEO, Strategic Advisor and Chairman positions. From 2003 until 2011, Mr. Link was Founder and CEO of Jewel Saffire Products Ltd, a company developing and integrating water mist technologies into firefighting solution. Since 2014, Mr. Link has served as the CEO of Firebug Group, a company focused on developing, manufacturing, and distributing firefighting products across the globe. Since 2014, he has also served as CEO of FB Fire Technologies Ltd (Firebug), an acquisition company. In 2020, Mr. Link became a Strategic Advisor for Ilustrato Pictures International Inc, “ILUS” and since 2021, Mr. Link has been Chief Executive Officer, and Chairman, leading the company’s strategic and synergetic mergers and acquisitions initiatives. on May 28, 2022, ILUS acquired the majority of the Company and Mr. Link, became the Chairman of the board of directors. On December 7, 2022, Mr. Link was appointed as CEO and Chairman of the Board of Directors for CGrowth Capital Inc., “CGRA,” an innovation and growth-orientated company focused on the acquisition and consolidation of disruptive technology and product businesses in the sports industry. He resigned as CEO on May 15, 2023. On January 8, 2024, Mr. Link was appointed as Chairman of the Board of Directors for Samsara Luggage Inc, “SAML”. Mr. Link also currently holds the position as Chairman of the Board of Directors at Dear Cashmere Holding Co “DRCR”., a company in the gambling and betting sector. Mr. Link holds a Marketing Diploma from Damelin College, South Africa.
Aside from that provided above, Mr. Link does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.
Mr. Link is widely regarded as a serial entrepreneur who has successfully started, grown, and exited several companies in the UK, UAE, China, Poland & South Africa. We believe that Mr. Link is qualified to serve on our board of directors because of his experience in leadership and management roles in the field of manufacturing and technology, as well as his experience taking companies public in the USA.
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John-Paul Backwell
Mr. John-Paul Backwell, 44, is the Chief Executive Officer. He has more than 23 years of experience developing and leading global teams, predominantly in the fields of Manufacturing and Technology. He has a Bachelor of Arts degree in English Language and Literature/Letters from Stellenbosch University.
From 2000 to 2014, Mr. Backwell held various roles, including Sales Manager and Regional Sales Director, before becoming the Global Sales Director for FireBug Group, a company dedicated to developing, manufacturing, and distributing firefighting products worldwide, from 2014 to 2019. From 2019 until mid-2021, he was a Non-Executive Director at ConnectNow, a Software-as-a-Service technology firm, and Managing Director of Detego Global, a British company specializing in digital forensics. Mr. Backwell also previously served as the Managing Director of Ilustrato Pictures International, Inc., and as director and CEO on the Board of Directors for Samsara Luggage Inc. Currently, Mr. Backwell is currently a Director and Chief Executive Officer of Fusion Fuel Green PLC, our parent company.
Aside from that provided above, Mr. Backwell does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.
Louise Bennett
Ms. Louise Bennett, Chief Operational Officer, 54, has gained over 25 years of experience in the senior management of global engineering, manufacturing, and distribution businesses. Since March 2014, she has served as the General Manager of FB Fire Technologies Ltd (FireBug), a company focused on developing, manufacturing and distributing firefighting products across the globe. From 2021 to the present, Ms. Bennett serves as the Chief Operations Officer of Ilustrato Pictures International, Inc. She has a High School O-level degree from Kirk Hallam Comprehensive School in the UK.
Aside from that provided above, Ms. Bennett does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.
Krishnan Krishnamoorthy
Mr. Krishnan Krishnamoorthy, Chief Financial Officer, 59, has amassed more than 39 years of experience in the financial management of public and private companies in London, UAE, Bahrain, Dubai, Singapore, and India.
From 2018 through 2020, he was the Group CFO of HO Holding Group, a retail company out of Dubai. From 2020 through 2022, he was the Chief Financial Officer of The Bahrain Ship Repairing and Engineering Company B.S.C. From 2022 to the present, he has served as the Chief Financial Officer of Ilustrato Pictures International, Inc. In August 2018, Mr. Krishnamoorthy received the 2018 Global CFO Award from Acquisition International, a business magazine in the U.K. He holds an MBA in Finance from TIU, USA, and a Ph.D. in Finance from Trinity College.
Aside from that provided above, Mr. Krishnamoorthy does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.
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Carsten Kjems Falk
Mr. Carsten Kjems Falk, Chief Commercial Officer, has gained more than 15 years of experience as an executive in multiple industries accelerating growth for both private venture capital and publicly listed companies. He holds a Master of Arts in Educational Theory and Curriculum Studies: Mathematics from Aarhus University.
From 2013 through 2019, Mr. Falk was Chief Executive Officer of Domino’s Pizza Denmark. During that period, he was three times awarded global winner of “best digital” by Domino’s International for driving online sales from 30% to 90% of total sales. Since 2019, he has been self-employed as a Management Consultant for industrial investors and corporate clients seeking expert advice on SaaS and FMCG industries, including digital transformation, business development, strategy, sales marketing, and operational excellence. Mr. Falk joined QIND (previously WSFT) on June 1, 2020, as Deputy Chief Executive Officer and signed a new contract as Chief Executive Officer on September 1, 2020. On October 21, 2022, Mr. Falk resigned as our Chief Executive Officer and was subsequently appointed by our board of directors as our Chief Commercial Officer. Since June 2022, Mr. Falk has also served as Chief Commercial Officer of Ilustrato Pictures International, Inc. from June 2022 until October 2024.
Aside from that provided above, Mr. Falk does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.
Sanjeeb Safir
On September 2, 2024, the Board appointed Sanjeeb Safir as our newly appointed Managing Director for the Middle East Region. From 2008 until present, Mr. Safir has been the Managing Director of Al Shola Al Modea Gas and Distribution LLC.
Aside from that provided above, Mr. Safir does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.
Family Relationships
There are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.
Involvement in Certain Legal Proceedings
During the past 10 years, none of our current directors, nominees for directors, or current executive officers has been involved in any legal proceeding identified in Item 401(f) of Regulation S-K.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires the Company’s directors and officers, and persons who beneficially own more than 10% of a registered class of the Company’s equity securities, to file reports of beneficial ownership and changes in beneficial ownership of the Company’s securities with the SEC on Forms 3, 4 and 5. Officers, directors and greater than 10% stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. All filings were timely.
Committees
We currently do not have a separately designated standing audit committee or any other committees. The entire board of directors performs the functions of an audit committee. On October 30, 2023, the Board adopted written charters which govern the actions of the board of directors when performing the functions of that would generally be performed by an audit committee. The board of directors approves the selection of our independent accountants and meets and interacts with the independent accountants to discuss issues related to financial reporting. In addition, the board of directors reviews the scope and results of the audit with the independent accountants, reviews with management and the independent accountants our annual operating results, considers the adequacy of our internal accounting procedures and considers other auditing and accounting matters including fees to be paid to the independent auditor and the performance of the independent auditor.
For the fiscal year ending December 31, 2024, and 2023, the board of directors:
Reviewed and discussed the audited financial statements with management and reviewed and discussed the written disclosures and the letter from our independent auditors on the matters relating to the auditor’s independence.
Based upon the board of directors’ review and discussion of the matters above, the board of directors authorized inclusion of the audited financial statements for the year ended December 31, 2024, and 2023, to be included in this Form 10-K.
On October 30, 2023, the Board adopted a written charter setting forth the authority and responsibilities of the Compensation, Audit, Nominating and Corporate Governance Committee.
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Compensation Committee Interlocks and Insider Participation
None of the Company’s executive officers serves, or in the past has served, as a member of the Board or the Compensation Committee, or other committee serving an equivalent function of any entity that has one or more executive officers who serve as members of the Board or its Compensation Committee. None of the members of the Compensation Committee is, or has ever been, an officer or employee of the Company.
Code of Ethics & Insider Trading Policy
We have
Director Independence
We use the definition of “independence” as stipulated by NASDAQ to make the following determination regarding Director Independence. In making the determination of whether a member of the board is independent, our board also considers, among other things, transactions and relationships between each director and his immediate family and the Company, including those reported under the caption “Certain Relationships and Related-Party Transactions”. The purpose of this review is to determine whether any such relationships or transactions are material and, therefore, inconsistent with a determination that the directors are independent.
Under such definitions, we do not have any independent directors. We intend to appoint independent directors to serve on the above committees, with three of the independent directors serving as chair of the three respective committees (Audit, Compensation & Nominating Committee).
Conflicts of Interest
Some members of our management and board also serve on the management and board of ILUS. Our Executive Chairman, Nicolas Link is also the Chairman of the Board of Directors of Dear Cashmere Holding Co. (“DRCR”), the Chairman of the Board of Directors of CGrowth Capital, Inc. (“CGRA”), and the Chairman of the Board of Directors of Samsara Luggage Inc. (“SAML”). As a result, at certain points in time, these jointly represented companies may have members of management and board concentrate their efforts on transactions that focus on one company over the other, which collectively would not amount to work for our company on a full-time basis. This and other conflicts of interest may arise between us and part our officers and directors in that they have other business interests currently, with respect to QIND, and in the future to which they devote their attention, such as in the case of acquisitions, and they may be expected to continue to do so although management time must also be devoted to our business. Our officers and directors, while key in identifying and securing our funding sources, may face conflicts of interest due to their affiliations with other entities, impacting how funds are allocated between us and such affiliated entities. These competing interests could disrupt focus of our key management and board. As a result, conflicts of interest may arise that can be resolved only through exercise of such judgment as is consistent with each officer or director’s understanding of his or her fiduciary duties to our company.
In an effort to resolve potential conflicts of interest as between ILUS and QIND, our officers and director have agreed that any opportunities that they are aware of independently or directly through their association with us would be presented by them solely to QIND, before determining whether to include the opportunities in ILUS.
In general, our officers and director are required to present business opportunities to QIND, and may present the opportunity to ILUS if the opportunity is aligned with the business of ILUS.
Potential investors should also be aware of the following potential conflicts of interest:
In the course of their other business activities, our officers and director may become aware of investment and business opportunities which may be appropriate for presentation to us as well as the other entities with which they are affiliated.
Our officers and director may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to the combination. Our employment contracts have been filed as exhibits to this form 10-K.
The following table summarizes the entities to which our executive officers and director currently have fiduciary duties or contractual obligations:
| Individual(1) | Entity(2) | Affiliation | ||
| Nicolas Link | ILUS QIND DRCR CGRA SAML | Director & CEO Director Director Director & CEO Director | ||
| John-Paul Backwell | QIND HTOO | CEO Director & CEO | ||
| Louise Bennett | ILUS QIND | COO COO | ||
| Krishnan Krishnamoorthy | ILUS QIND | CFO CFO |
| (1) | Each person has a fiduciary duty with respect to the listed entities next to their respective names. Each of our officers only have employment contracts in QIND and our parent company ILUS. |
| (2) | Each of the entities listed by trading symbol in this table has priority and preference relative to our company with respect to the performance by each individual listed in this table of his obligations and the presentation by each such individual of business opportunities. |
We cannot provide assurances that our efforts to eliminate the potential impact of conflicts of interest will be effective. We are at risk that our officers and directors will favor their other business interest over the needs of our company. These competing business interests could interfere with our ability to successfully implement our business plan.
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ITEM 11. EXECUTIVE COMPENSATION.
| Summary Compensation Table as of December 31, 2024 | ||||||||||||||||||||||||||||||
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards* ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Non-Qualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||
| Nicolas Link | 2024 | 0 | ||||||||||||||||||||||||||||
| Executive Chairman | 2023 | *738,275 | $ | 738,275 | ||||||||||||||||||||||||||
| John-Paul Backwell | 2024 | 35,000 | 36,500 | $ | 71,500 | |||||||||||||||||||||||||
| CEO | 2023 | *702,500 | $ | 702,500 | ||||||||||||||||||||||||||
| Krishnan Krishnamoorthy | 2024 | 0 | ||||||||||||||||||||||||||||
| CFO | 2023 | *162,500 | $ | 162,500 | ||||||||||||||||||||||||||
| Louise Bennett | 2024 | 0 | ||||||||||||||||||||||||||||
| COO | 2023 | *130,550 | $ | 130,550 | ||||||||||||||||||||||||||
| Carsten Falk | 2024 | $ | 107,500 | 27,500 | $ | 135,000 | ||||||||||||||||||||||||
| CCO | 2023 | $ | 52,500 | *499,725 | 17,500 | $ | 569,725 | |||||||||||||||||||||||
| Sanjeeb Safir | 2024 | $ | 40,000 | 65,000 | $ | 105,000 | ||||||||||||||||||||||||
| MD Middle East | 2023 | 0 | ||||||||||||||||||||||||||||
| * | Includes 10,000,000 common shares to our officers and director pursuant to their employee contracts with a grant-date and fair value of the award as of June 1, 2022, at $0.0721 issued on May 4, 2023, and 5,600,000 common shares to our officers and director pursuant to their employee contracts with a grant-date and fair value of the award as of September 15, 2023, of $0.27. |
Narrative Disclosure to Summary Compensation Table
Employment Agreements
Our Director and Officers executed employment agreements with an effective date of July 1, 2023 and have been filed as exhibits to this Form 10-K. Under the executive employment agreements, each executive is entitled to receive a cash bonus at the time of the Company’s uplisting to a National Stock Exchange, which shall be equivalent to any accrued base salary from the effective date of July 1, 2023, through the uplisting date.
Nicolas Link
On November 14, 2023, the Company entered into an employment agreement with Mr. Link to serve as Executive Chairman effective upon the Company’s uplist to a National Exchange, through June 30, 2024, (the “Link Agreement”). Pursuant to the Link Agreement, Mr. Link receives an annual base salary of $420,000 in periodic instalments in accordance with the Company’s customary payroll practices and applicable wage payment laws, but no less frequently than monthly. Mr. Link’s salary will be subject to adjustment pursuant to the Company’s employee compensation policies in effect from time to time and he will also be eligible to receive certain employee benefits. Additionally, Mr. Link may receive an annual bonus of up to 100% of his annual base salary as well as equity awards, determined by an agreed to set of corporate goals and objectives. The Executive is entitled to receive an uplist bonus in cash, once the Company uplists to a National Exchange. The bonus will be equivalent to the accrued base salary from July 1, 2023, until the effective date.
John-Paul Backwell (Chief Executive Officer)
On November 14, 2023, the Company entered into an employment agreement with Mr. Backwell to serve as Chief Executive Officer effective as of July 1, 2023, through June 30, 2024, (the “Backwell Agreement”). Pursuant to the Backwell Agreement, Mr. Backwell receives an annual base salary of $420,000 in periodic instalments in accordance with the Company’s customary payroll practices and applicable wage payment laws, but no less frequently than monthly. Mr. Backwell’s salary will be subject to adjustment pursuant to the Company’s employee compensation policies in effect from time to time and he will also be eligible to receive certain employee benefits. Additionally, Mr. Backwell may receive an annual bonus of up to 100% of his annual base salary as well as equity awards, determined by an agreed to set of corporate goals and objectives. The Executive is entitled to receive an uplist bonus in cash, once the Company uplists to a National Exchange. The bonus will be equivalent to the accrued base salary from July 1, 2023, until the effective date.
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Louise Bennett (Chief Operations Officer)
On November 14, 2023, the Company entered into an employment agreement with Mrs. Bennett to serve Chief Operations Officer effective upon the Company’s uplist to a national exchange, through June 30, 2024, (the “Bennett Agreement”). Pursuant to the Bennett Agreement, Mrs. Bennett receives an annual base salary of $220,000 in periodic instalments in accordance with the Company’s customary payroll practices and applicable wage payment laws, but no less frequently than monthly. Mrs. Bennett’s salary will be subject to adjustment pursuant to the Company’s employee compensation policies in effect from time to time and he will also be eligible to receive certain employee benefits. Additionally, Mrs. Bennett may receive an annual bonus of up to 100% of her annual base salary as well as equity awards, determined by an agreed to set of corporate goals and objectives. The Executive is entitled to receive an uplist bonus in cash, once the Company uplists to a National Exchange. The bonus will be equivalent to the accrued base salary from July 1, 2023, until the effective date.
Carsten Kjems Falk (Chief Commercial Officer)
On November 14, 2023, the Company entered into an employment agreement with Mr. Falk to serve Chief Commercial Officer effective upon the Company’s uplist to a national exchange, through June 30, 2024, (the “Falk Agreement”). Pursuant to the Falk Agreement, Mr. Falk receives an annual base salary of $300,000 in periodic instalments in accordance with the Company’s customary payroll practices and applicable wage payment laws, but no less frequently than monthly. Mr. Falk’s salary will be subject to adjustment pursuant to the Company’s employee compensation policies in effect from time to time and he will also be eligible to receive certain employee benefits. Additionally, Mr. Falk may receive an annual bonus of up to 100% of his annual base salary as well as equity awards, determined by an agreed set of corporate goals and objectives. The Executive is entitled to receive an uplist bonus in cash, once the Company uplists to a National Exchange. The bonus will be equivalent to the accrued base salary from July 1, 2023, until the effective date.
Sanjeeb Safir - Managing Director for the Middle East Region
On September 2, 2024, the Board appointed Sanjeeb Safir as our newly appointed Managing Director for the Middle East Region. Pursuant to the Employment Agreement, Mr. Safir receives an annual base salary of $120,000 in periodic installments, in accordance with the Company’s customary payroll practices and applicable wage payment laws, but no less frequently than monthly. Mr. Safir’s salary will be subject to adjustment pursuant to the Company’s employee compensation policies in effect from time to time. He will also be eligible to receive certain employee benefits. Additionally, Mr. Safir may receive an annual bonus of up to 25% of his annual base salary as well as equity awards, determined by an agreed set of corporate goals and objectives. The Executive has received a sign-on bonus consisting of 1,000,000 shares in the company upon entering the contract.
Krishnan Krishnamoorthy (Chief Financial Officer)
The Company entered into an amended employee agreement signed on June 30, 2022. In accordance with his amended employee agreement, Mr. Krishnamoorthy was issued 2,250,000 QIND common shares on May 4, 2023, pursuant to his employment agreement. Lock-up of the shares will be under rule 144. If Mr. Krishnamoorthy should resign, he will be considered a corporate insider according to rule 144 for a full year and can during any given week not sell or transfer more than 2.5% of the average weekly trading volume over the previous 30 days average trading volume. During the following year, Mr. Krishnamoorthy can sell 25% of any remaining shares per quarter. The Company has the right of first refusal to acquire the shares or match any written offer by a third party for the shares.
Upon the Company’s uplist to a National Exchange through an initial public offering (IPO), the Chief Financial Officer is entitled to an appropriate market-based salary in accordance with the size and performance of the business, payable in 12 equal monthly payments, on the last day of every month, plus annual bonus in line with any incentive program that the Company may have in place at the time, all subject to approval by the Board of Directors.
The Chief Financial Officer is also eligible of up to 30 days per year excluding public holidays and may not carry over any unused vacation from prior years and is eligible to participate in all health and welfare benefits provided to other employees of the Company (other than any severance plans) or similar own insurance paid by the Company.
The Chief Financial Officer is also eligible for vacation, paid sick days, mobile and internet and expenses incurred for travel, nights away from home, dining, entertainment etc.
If the Chief Financial Officer’s employment is terminated by the Company for Cause, or if his employment with the Company ends due to death, “permanent and total disability”, or due to a voluntary termination of employment by The Chief Financial Officer without Good Reason, then The Chief Financial Officer shall only be entitled to any earned but unpaid compensation as well as any other amounts or benefits owing to The Chief Financial Officer under the terms of any employee benefit plan of the Company.
If the Chief Financial Officer’s employment with the Company is terminated by the Company in connection with a non-renewal of the Agreement without Cause or for reasons other than Cause, death, “permanent and total disability” or is voluntarily terminated by The Officer for Good Reason, then The Officer shall be entitled to the Severance Benefits as well as his Accrued Benefits. In the event the Officer becomes entitled to receive severance benefits the Company shall pay and provide for a period of 3 months after the Date of Termination, the Officer’s then current base salary per month, a pro rata portion of any annual bonus that the Officer would have been entitled to receive.
Outstanding Equity Awards at Fiscal Year-End
Other than as discussed above, no executive officer received any equity awards, or holds exercisable or un-exercisable options, as of the years ended December 31, 2024, and 2023.
Long-Term Incentive Plans
There are no arrangements or plans under which the Company would provide pension, retirement or similar benefits for our Director or Executive Officers.
Compensation of Directors
Directors are permitted to receive fixed fees and other compensation for their services as Directors. The Board of Directors has the authority to fix the compensation of Directors.
| 36 |
Director Independence
We use the definition of “independence” by the NASDAQ to make the following determination. In making the determination of whether a member of the board is independent, our board also considers, among other things, transactions and relationships between each director and his immediate family and the Company, including those reported under the caption “Certain Relationships and Related-Party Transactions”. The purpose of this review is to determine whether any such relationships or transactions are material and, therefore, inconsistent with a determination that the directors are independent.
Under such definitions, we do not have any independent directors. We intend to appoint independent directors to serve on the above committees, with three of the independent directors serving as chair of the three respective committees (Audit, Compensation & Nominating Committee).
Security Holders Recommendations to Board of Directors
The Company welcomes comments and questions from the shareholders. However, while the Company appreciates all comments from shareholders, it may not be able to individually respond to all communications.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth certain information known to us regarding beneficial ownership of our capital stock for (i) all executive officers and directors as a group and (ii) each person, or group of affiliated persons, known by us to be the beneficial owner of more than five percent (5%) of our capital stock. The percentage of beneficial ownership in the table below is based on 126,642,689 shares of common stock deemed to be outstanding as of December 31, 2024. Unless otherwise indicated, the address of each beneficial owner listed in the table below is 505 Montgomery Street, San Francisco, CA 94104.
| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) | Percentage of Beneficial Ownership(2) | ||||||
| Directors and Officers: | ||||||||
| Nicolas Link | 0 | 0 | % | |||||
| John-Paul Backwell | 0 | 0 | % | |||||
| Krishnan Krishnamoorthy | 0 | 0 | % | |||||
| Louise Bennett | 0 | 0 | % | |||||
| Carsten Falk | 0 | 0 | % | |||||
| Sanjeeb Safir | 0 | 0 | % | |||||
| All executive officers and directors as a group (6 persons) | 0 | 0 | % | |||||
| 5% Holders | 98,312,334 | 67 | % | |||||
| Fusion Fuel Green PLC3 | ||||||||
| (1) | Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the number of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding. |
| (2) | Based upon 126,642,689 common shares issued and outstanding as per December 31, 2024, and 20,000 Series B stock issued and outstanding as per December 31, 2024. |
| (3) |
On November 18, 2024, Quality Industrial Corp., a Nevada corporation, Fusion Fuel Green PLC, an Irish public limited company, Ilustrato Pictures International Inc., a Nevada corporation , a stockholder of the Company, and certain other stockholders of the Company together with the Company and Fusion Fuel, entered into a Stock Purchase Agreement, dated as of November 18, 2024. Under the Purchase Agreement, the Sellers transferred an aggregate of 78,312,334 shares of common stock and 20,000 shares of Series B Preferred Stock of the Company, constituting approximately 67.36% of the voting stock of at the time to Fusion Fuel Green PLC. Fusion Fuel issued 3,818,969 Class A ordinary shares and 4,171,327 preferred shares to the Sellers. As a result of these transactions, Quality Industrial Corp. is a public company focused on the industrial, oil & gas and utility sectors and is a subsidiary to HTOO. |
| 37 |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Other than as disclosed below, or included in the section titled Executive Compensation, there have been no transactions involving the Company since the beginning of the last fiscal year, or any currently proposed transactions, in which the Company was or is to be a participant and the amount involved exceeds $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years, and in which any related person had or will have a direct or indirect material interest.
Indemnification
Under our bylaws, every person who was or is a party to, or is threatened to be made a party to, or is involved in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, by reason of the fact that he is or was our director or officer, or is or was serving at our request as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust, or other enterprise, shall be indemnified and held harmless to the fullest extent legally permissible under the laws of the State of Nevada from time to time against all expenses, liability, and loss (including attorneys’ fees judgments, fines, and amounts paid or to be paid in settlement) reasonably incurred or suffered by him or her in connection therewith. Such right of indemnification shall be a contract right, which may be enforced in any manner desired by such person. The expenses of officers and directors incurred in defending a civil or criminal action, suit, or proceeding must be paid by us as they are incurred and in advance of the final disposition of the action, suit, or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by us. Such right of indemnification shall not be exclusive of any other right which such directors, officers, or representatives may have or hereafter acquire, and, without limiting the generality of such statement, they shall be entitled to their respective rights of indemnification under any bylaw, agreement, vote of shareholders, provision of law, or otherwise.
Without limiting the application of the foregoing, our board of directors may adopt bylaws from time to time with respect to indemnification, to provide at all times the fullest indemnification permitted by the laws of the State of Nevada, and may cause us to purchase and maintain insurance on behalf of any person who is or was our director or officer, or is or was serving at our request as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust, or other enterprise against any liability asserted against such person and incurred in any such capacity or arising out of such status, whether or not we would have the power to indemnify such person. The indemnification provided shall continue as to a person who has ceased to be a director, officer, employee, or agent, and shall inure to the benefit of the heirs, executors and administrators of such person.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The following table sets forth the fees billed to our company for the years ended December 31, 2024, and 2023, for professional services rendered by our independent registered public accounting firm Bush and Co LLP:
| Fees | 2024 | 2023 | ||||||
| Audit Fees | $ | 48,000 | $ | 25,500 | ||||
| Audit-Related Fees | 0 | 0 | ||||||
| Tax Fees | 0 | 0 | ||||||
| All Other Fees | 0 | 0 | ||||||
| Total | $ | 48,000 | $ | 25,500 |
Audit Fees
Audit fees were for professional services rendered for the audits of our annual financial statements and for review of our quarterly financial statements during the 2024 and 2023 fiscal years. 2023 audit fee excludes a reaudit of 2022 and 2023 totaling $95,000.
Audit-related Fees
This category consists of assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees”.
Tax Fees
As our independent registered public accountants did not provide any services to us for tax compliance, tax advice and tax planning during the fiscal years ended December 31, 2024, and 2023, no tax fees were billed or paid during those fiscal years.
All Other Fees
Our independent registered public accountants did not provide any products and services not disclosed in the table above during the 2024 and 2023 fiscal years. As a result, there were no other fees billed or paid during those fiscal years.
Pre-Approval Policies and Procedures
Our board of directors, which acts as our audit committee, pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by our board of directors before the respective services were rendered.
Our board of directors has considered the nature and amount of fees billed by our independent registered public accounting firm and believe that the provision of services for activities unrelated to the audit is compatible with maintaining their respective independence.
| 38 |
PART IV
ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES.
We have filed the exhibits listed on the accompanying Exhibit Index of this Form 10-K and below in this Item 15:
| (a) | Financial Statements |
| (b) |
Exhibits required by Item 601 of Regulation S-K. |
Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Part II, Item 8. Financial Statements and Supplementary Data
Part IV, Item 15. Financial Statement Schedules and Footnotes
In addition, the Company’s Auditor has provided a new Audit Report as of the date of this filing in connection with this Form 10-K.
| 39 |
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Quality Industrial Corp.
Opinion on the Consolidated Financial Statements
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses from operations and has a net capital deficiency for the period ended December 31, 2024 that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that the following is a critical audit matter.
Acquisition of 51% Stake in Al Shola Al Modea Gas Distribution LLC
As described in Note 11 to the consolidated financial statements, on March 27, 2024, the Company entered into a definitive Stock Purchase Agreement to acquire a 51% stake in Al Shola Al Modea Gas Distribution LLC (“ASG”) for $10,000,000. The transaction includes a complex payment structure with $9,000,000 to be paid in eight quarterly tranches over 24 months and the remaining $1,000,000 to be paid within 12 months of closing. The acquisition provided the Company with two non-paid board seats, including the Chairman position. Additionally, the Company disclosed that after failed negotiations to restructure a separate deal, it terminated a Purchase Agreement with Quality International that was originally signed on January 18, 2023, and amended on July 27, 2023.
We identified the accounting for this acquisition as a critical audit matter because of the significant judgment required by management in determining: (1) whether the Company obtained control of ASG, (2) the appropriate acquisition date, (3) the fair value of consideration transferred, (4) the identification and valuation of assets acquired and liabilities assumed, and (5) the determination of non-controlling interest. The transaction’s structure with multiple payment tranches, board representation arrangements, and the terminated agreement with Quality International increased the complexity of the audit procedures required to evaluate the accounting treatment. Auditing these elements involved especially challenging, subjective, and complex auditor judgment due to the nature and significance of the transaction and the extent of audit effort required, including the involvement of valuation professionals.
Our audit procedures related to the Company’s accounting for the acquisition included the following, among others:
| ● | Obtaining and reviewing the Stock Purchase Agreement and related documents to understand the terms and conditions of the transaction | |
| ● | Evaluating management’s determination of the acquisition date and whether control was obtained | |
| ● | Testing management’s valuation of the consideration transferred, including the assessment of deferred payments | |
| ● | Assessing the completeness and valuation of identified assets acquired and liabilities assumed | |
| ● | Evaluating the methodology and significant assumptions used by management and their valuation specialists to determine fair values | |
| ● | Evaluating the Company’s accounting for the non-controlling interest | |
| ● | Testing the mathematical accuracy of management’s calculations | |
| ● | Evaluating the adequacy of the Company’s disclosures related to the acquisition |
| /s/ |
We have served as the Company’s auditor since 2024.
April 28, 2025
PCAOB
ID Number
| F-2 |
QUALITY INDUSTRIAL CORP.
CONSOLIDATED BALANCE SHEETS
(AUDITED)
December 31, 2024 Audited | December 31, 2023 Audited | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and Cash Equivalents | $ | $ | ||||||
| Inventory | ||||||||
| Accounts Receivable | ||||||||
| Deposits | ||||||||
| Other Current Assets | ||||||||
| Total Current Assets | ||||||||
| Non-Current Assets | ||||||||
| Long Term Investments | ||||||||
| Property, Plant and Equipment | ||||||||
| Right-of-Use assets | ||||||||
| Related Party Receivables | ||||||||
| Goodwill | ||||||||
| Total Non-current Assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accounts Payable | $ | $ | ||||||
| Related Party Payables | ||||||||
| Lease Operating Liabilities | ||||||||
| Convertible Notes, net of discount | ||||||||
| Other payables - current | ||||||||
| Other Current Liabilities | ||||||||
| Total Current Liabilities | ||||||||
| Non-Current Liabilities | ||||||||
| Lease Operating Non-Current Portion | ||||||||
| Convertible Notes, net of discount | ||||||||
| Other payables – long-term | ||||||||
| Total Long-Term Liabilities | ||||||||
| Total Liabilities | ||||||||
| Stockholders’ Equity | ||||||||
| Preferred stock; $par value; shares authorized; and Series B shares issued and outstanding as of as of Dec 31, 2024, and December 31, 2023, respectively | ||||||||
| Common stock; $ par value; shares authorized; and shares issued and outstanding as of Dec 31, 2024, and December 31, 2023, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Retained Earnings/ accumulated Deficit | ( | ) | ( | ) | ||||
| Noncontrolling interest | ||||||||
| Total stockholders’ Equity | ||||||||
| Total liabilities and stockholders’ Equity | $ | $ |
The accompanying notes are an integral part of these audited consolidated financial statements.
| F-3 |
QUALITY INDUSTRIAL CORP.
CONSOLIDATED STATEMENT OF OPERATIONS
(AUDITED)
December 31, 2024 Audited | December 31, 2023 Audited | |||||||
| Revenue | $ | $ | ||||||
| Cost of revenues | ||||||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| Professional fees | ||||||||
| General and administrative | ||||||||
| Total operating expenses | ||||||||
| Income (loss) from operations | ( | ) | ||||||
| Other (income) expenses | ||||||||
| Interest expense | ||||||||
| Interest on Convertible Notes | ||||||||
| Commitment and Conversion Fees | ||||||||
| Discount on Convertible Notes | ||||||||
| Other Income | ( | ) | ||||||
| Total other (income) expense, net | ||||||||
| Net Income (Loss) Before Provision for Income Taxes | ( | ) | ||||||
| Corporate Income Tax | ||||||||
| Net Income (Loss) | ( | ) | ||||||
| Less: net income attributable to noncontrolling interest | ||||||||
| Net income (loss) attributable to QIND stockholders | $ | ( | ) | $ | ( | ) | ||
| Weighted average common shares outstanding | ||||||||
| Net income (loss) per common share - basic and diluted | ) | ) |
The accompanying notes are an integral part of these audited consolidated financial statements.
| F-4 |
QUALITY INDUSTRIAL CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the year Ended December 31, 2024
| Preferred Stock A | Preferred Stock B | Common Stock | Minority Interest | Additional Paid-in Capital | Retain Loss | Total Equity | ||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Amount | Amount | Amount | ||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares of common stock for Cash | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares of common stock for services | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Issuance of shares as a commitment fee | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Issued shares from conversion of convertible note | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Share buyback | - | - | ( | ) | ( | ) | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Common Stock Converted to Prefer B stock | - | ( | ) | ( | ) | - | ||||||||||||||||||||||||||||||||||||||
| Common stock issued as staff compensation | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Minority Interest | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Income for the year | - | - | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Total Shareholders’ Equity as of December 31, 2024 | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| For the year Ended December 31, 2023 | ||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional Paid-in | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
| Common stock issued for cash | ||||||||||||||||||||||||||||
| Common stock issued to Management | - | |||||||||||||||||||||||||||
| Common stock issued for services | - | |||||||||||||||||||||||||||
| Common stock issued as commitment shares | - | |||||||||||||||||||||||||||
| Common stock issued against Note conversion | - | |||||||||||||||||||||||||||
| Adjustment for Warrants | - | - | ||||||||||||||||||||||||||
| Net Income | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | ( | ) | $ | |||||||||||||||||||||||
The accompanying notes are an integral part of these audited consolidated financial statements.
| F-5 |
QUALITY INDUSTRIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AUDITED)
December 31, 2024 | December 31, 2023 | |||||||
| Cash flows from operating activities | ||||||||
| Income (Loss) for the period | ( | ) | ||||||
| Adjustment to reconcile net gain (loss) to net cash | ||||||||
| Finance cost | ||||||||
| Non-Cash Stock Compensation Expense | ||||||||
| Stock issued for Services | ||||||||
| Non-cash expenses | ||||||||
| Commitment fees | ||||||||
| Corporate Income Tax Expense | ||||||||
| Depreciation and Amortization | ||||||||
| Other income | ( | ) | ||||||
| Discount on convertible Notes | ||||||||
| Changes in Assets and Liabilities, net | ||||||||
| Inventory | ||||||||
| Accounts Receivable | ( | ) | ||||||
| Deposits | ( | ) | ||||||
Related Party Receivables | ( | ) | ||||||
| Other current assets | ( | ) | ||||||
| Accounts Payable | ||||||||
| Lease Operating Liabilities | ( | ) | ||||||
| Other payables - current | ( | ) | ||||||
Other payables - non current | ( | ) | ||||||
| Other Current Liabilities | ||||||||
| Net cash provided by operating activities | ||||||||
| Cash flows from investing activities | ||||||||
| Addition of Fixed Assets | ( | ) | ||||||
| Changes in Non-current assets | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of common stock | ||||||||
| Proceeds from Convertible Note, net | ||||||||
| Finance cost | ( | ) | ( | ) | ||||
| Changes in Noncontrolling Interest | ( | ) | ||||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Net increase/(decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at the beginning of the year | ||||||||
| Cash and cash equivalents at end of the year | ||||||||
The accompanying notes are an integral part of these audited consolidated financial statements.
| F-6 |
NOTE 1: OUR HISTORY
The Company 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 ILUS 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-7 |
After ILUS acquired control of
QIND, on May 28, 2022, ILUS 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”). ASG is an Engineering and Distribution Company in the LPG Industry in the U.A.E. and was established in 1980. The company are one of the leading suppliers & contractors of LPG centralized pipeline systems. ASG has been consolidated since acquired on 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 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 May 23, 2024, Quality Industrial Corp. entered into a binding term sheet with Actelis Networks, Inc, a Delaware corporation traded on the NASDAQ under the symbol ASNS, pursuant to which Actelis would acquire between to of the issued and outstanding shares of the Company’s share capital. We originally intended to close the transaction, pending regulatory requirements and due diligence, within 60 days. On August 30, 2024, we agreed to further extend the non-solicitation and no-shop periods provided in the Term Sheet until October 1, 2024, unless mutually terminated earlier by the parties. On October 10, 2024, ASNS provided the Company with written notice of ASNS’ intent to terminate the Term Sheet in accordance with the termination provisions thereof, which require a 30-day written notice of termination. The 30-day period ended, and the Term Sheet was definitively canceled on November 11, 2024.
On November 18, 2024, Quality Industrial Corp., a Nevada
corporation, Fusion Fuel Green PLC, an Irish public limited company, Ilustrato Pictures International Inc., a Nevada corporation, a stockholder
of the Company, and certain other stockholders of the Company, entered into a Stock Purchase Agreement, dated as of November 18, 2024.
Under the Purchase Agreement, the Sellers transferred an aggregate of shares of common stock and shares of Series B
Preferred Stock of the Company, constituting approximately
| F-8 |
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 accompanying audited 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 United States Securities and Exchange Commission (the “SEC”) for interim financial information. It is management’s opinion that the accompanying audited condensed consolidated financial statements are prepared in accordance with instructions for Form 10-K 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 accounting principles generally accepted in the United States of America (“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. as of and for the year ended December 31, 2023, filed with the SEC on April 8, 2024.
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 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.
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.
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:
| Property, Plant and Equipment | Years | ||
| Machinery | |||
| Vehicles | |||
| Furniture, Fixtures & Office Equipment |
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.
Depreciation expense for the twelve
months ended December 31, 2024, and 2023 was $
| F-9 |
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.
| Deposits & Advances Details | USD | |||
| 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 | ||||
| Total | $ |
| PREPAID EXPENSES | December 31, 2024 | |||
| Prepaid Expenses | USD | |||
| Hamsah Office Rent | ||||
| Store Rent | ||||
| Godown Rent Al Qusais | ||||
| Godown Rent Al Lewan | ||||
| Group Life Insurance | ||||
| Third Party Liability | ||||
| Group Medical Insurance | ||||
| a. Management | ||||
| b. Cat A | ||||
| c. Cat B | ||||
| Employers Liability | ||||
| Accommodation Rent | ||||
| DCD License | ||||
| Trade License | ||||
| Visa Cost | ||||
| Other Pre Payments | ||||
| Aiwa Energy | ||||
| Aiko Mall | ||||
| Aswaaq Shopping Mall | ||||
| Total | $ | |||
End-of-service benefits
Employee
end-of-service benefits in our subsidiary Al Shola Gas amounting to $
| Employee end of service benefits Al Shola Gas | December 31, 2024 | |||
| Balance at Beginning | ||||
| Add: charge for the period | ||||
| Less: Settlement for the period | ( | ) | ||
| Balance at the end of the period | ||||
| F-10 |
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.
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, Al Shola Al Modea Gas Distribution LLC (“ASG” or “Al Shola Gas”), we provide comprehensive solutions for the liquefied petroleum gas (“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 | Year Ended December 31, 2024 (audited) | Year Ended December 31, 2023 (audited) | ||||||
| Basic and diluted EPS* | ||||||||
| Numerator | ||||||||
| Net income/(loss) | ( | ) | ||||||
| Net Income attributable to common stockholders | ( | ) | ( | ) | ||||
| Denominator | ||||||||
| Weighted average common shares outstanding | ||||||||
| Number of shares used for basic EPS computation | ||||||||
| Basic EPS | ( | ) | ( | ) | ||||
| Number of shares used for diluted EPS computation* | ||||||||
| Diluted EPS | ( | ) | ( | ) | ||||
| * |
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-12 |
The Company’s subsidiary, Al Shola Gas, has entered into commercial vehicles. These leases generally have a lease term of 4 years. 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 also has leases with terms of 12 months or less which the Company has elected to not apply Topic 842 to short-term leases.
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.
Reclassifications
Certain reclassifications have been made to the December 31, 2023, balance sheet to conform to the December 31, 2024, presentation. These reclassifications had no impact on the net loss or loss per share as previously reported.
NOTE 3. GOING CONCERN
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.
Management evaluated all relevant conditions and events that are reasonably known or reasonably knowable, in the aggregate, as of the date the consolidated financial statements are issued and determined. The Company’s ability to continue as a going concern is dependent on the Company’s ability to continue to generate sufficient revenues and raise capital within one year from the date of filing.
QIND has planned future acquisitions, and we intend to disclose these acquisitions, as they happen, in our ongoing reports with the Securities and Exchange Commission. 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.
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. The Company held no cash equivalents as of December 31, 2024, and
December 31, 2023. There were $
December 31, 2024 | December 31, 2023 | |||||||
| Cash and Cash Equivalents | ||||||||
| Cash in hand | ||||||||
| Cash at bank | ||||||||
| Total | $ | $ | ||||||
Accounts Receivables
Accounts receivable arise from our subsidiary Al Shola Gas consolidated as of December 31, 2024. 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.
| Accounts Receivables Ageing Al Shola Gas | December 31, 2024 | December 31, 2023 | ||||||
| 1-30 days | ||||||||
| 31-60 days | ||||||||
| 61-90 days | ||||||||
| +90 days | ||||||||
| Total | ||||||||
| F-13 |
Other Current Assets
On August 25, 2023, the Company
issued to Artelliq Software Trading shares of our common stock for $
NOTE 5. NON-CURRENT ASSETS
Related Party Receivables
As of December 31, 2024, and December
31, 2023, the Company had amounts due from Ilustrato Pictures International, Inc. (“ILUS”), a former majority shareholder
of the Company, of $
The Company’s majority-owned subsidiary, Al Shola Al Modea Gas LLC has a sister company, Al Shola Al Modea Safety and Security LLC, 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 December 31, 2024, there were no outstanding balances between Al Shola Gas and Al Shola Al Modea Safety and Security.
Long Term Investments
As of December 31, 2024, and December
31, 2023, Long Term investments were $
On July 27, 2023, our Company
borrowed from Mahavir Investments Limited, the principal amount of $
On August 25, 2023, the Company
issued to Artelliq Software Trading shares of our common stock for $
The loan agreements with Mahavir and Artelliq were unwound with the cancellation of the agreement with Quality International and were not an obligation of the Company as of March 31, 2024, including accrued interest. The liability balances were charged against the investment as part of the cancellation with Quality International on April 1, 2024.
Goodwill
The Company acquired a
The Company acquired
NOTE 6. CURRENT LIABILITIES
Accounts Payable
Accounts payable of $
| Accounts Payable Ageing Al Shola Gas | December 31, 2024 | December 31, 2023 | ||||||
| 1-30 days | ||||||||
| 31-60 days | ||||||||
| 61-90 days | ||||||||
| +90 days | ||||||||
| Total | ||||||||
| F-14 |
Operating Lease Liabilities - Current
As disclosed, we acquired %
of the outstanding shares of ASG on March 27, 2024. In connection with this acquisition, we acquired right-of-use assets 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 $
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, the Company
issued a two-year convertible promissory note in the principal amount of $
| F-15 |
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 $
On July 3, 2024, we issued a convertible
promissory note 1800 Diagonal Lending LLC in the principal amount of $
| F-16 |
On September 20, 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. During the twelve months ended December 31, 2024, amortization related to these
discounts totaled $
A summary of these outstanding convertible notes and accrued interest as of December 31, 2024, is summarized below:
Debt & Interest Payable
| Lender | Date of Issue | Maturity Date | Principal Amount | Paid | Converted | Outstanding | Interest | |||||||||||||||||
| RB Capital Partners Inc. | ||||||||||||||||||||||||
| RB Capital Partners Inc. | ||||||||||||||||||||||||
| Jefferson | ||||||||||||||||||||||||
| Sky Holdings | ||||||||||||||||||||||||
| 1800 Diagonal Lending | ||||||||||||||||||||||||
| 1800 Diagonal Lending | ||||||||||||||||||||||||
| RB Capital Partners Inc. | ||||||||||||||||||||||||
| Sean Levi | ||||||||||||||||||||||||
| Exchange Listing LLC | ||||||||||||||||||||||||
| Jefferson | ||||||||||||||||||||||||
| 1800 Diagonal Lending | ||||||||||||||||||||||||
| 1800 Diagonal Lending | ||||||||||||||||||||||||
| J.J. Astor & Co | ||||||||||||||||||||||||
| 1800 Diagonal Lending | ||||||||||||||||||||||||
| 1800 Diagonal Lending | ||||||||||||||||||||||||
| Less: Interest Paid | ( | ) | ||||||||||||||||||||||
| Total | ||||||||||||||||||||||||
Discount on Convertible Notes
| Lender | Date of Issue | Maturity Date | Discount | |||||||
| 1800 Diagonal Lending | ||||||||||
| 1800 Diagonal Lending | ||||||||||
| Jefferson | ||||||||||
| J.J. Astor & Co | ||||||||||
| 1800 Diagonal Lending | ||||||||||
| 1800 Diagonal Lending | ||||||||||
| Jefferson Capital (JC) | ||||||||||
| Less: Amortized | ( | ) | ||||||||
| Balance as of December 31, 2024 | ||||||||||
| F-17 |
Options and Warrants
In accordance with ASC 470, warrants have been classified as a liability and recorded at their fair market 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 $
While preparing our financial statements for the year ended December 31, 2024, we identified an error in the previously issued Form 10-K for the prior period, filed on April 10, 2024. Specifically, we inaccurately did not account for the impact of the aforementioned warrants on our financial statements, which have now been restated for the period ended December 31, 2023, as follows:
Consolidated Balance Sheet
| Line Item | As Previously Reported | Adjustment | As Restated | |||||||||
Stockholders’ Equity Additional Paid-in Capital | $ | $ | $ | |||||||||
| Retained Earnings | $ | ( | ) | $ | $ | ( | ) | |||||
Consolidated Statement of Operations
| Line Item | As Previously Reported | Adjustment | As Restated | |||||||||
General and Administrative Expenses Stock based compensation | $ | $ | $ | |||||||||
| Net Income | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Consolidated Statement of Cash Flows
| Line Item | As Previously Reported | Adjustment | As Restated | |||||||||
| Net Income | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Non-Cash Stock based Compensation Expenses | $ | $ | $ | |||||||||
Other Payables Current
In
connection with the ASG Acquisition, we acquired short term bank debt totaling $
The Company acquired a % interest
in Al Shola Gas on March 27, 2024, with the issuance of $
| Other Payables Current | December 31, 2024 (audited) | December 31, 2023 | ||||||
| Mahavir Loan | ||||||||
| Artelliq loan | ||||||||
| Payable Al Shola Gas | ||||||||
| Other Payables current | ||||||||
| Total Other Payables Current | $ | $ | ||||||
Other Liabilities - Current
| Other Current Liabilities | December 31, 2024 | December 31, 2023 | ||||||
| Accrued Interest on Convertible note | ||||||||
| Payroll Liabilities* | ||||||||
| Audit fee provision | ||||||||
| Retirement benefits | ||||||||
| Corporate Tax payable | ||||||||
| Total | ||||||||
| * |
| F-18 |
NOTE 7. NON-CURRENT LIABILITIES
Operating Lease Liabilities - Non-Current portion
As disclosed, we acquired %
of the outstanding shares of ASG on March 27, 2024. In connection with this acquisition, we acquired right-of-use assets of $
The following is a summary of future lease payments required under the lease agreements:
| DUSTER | X- TRAIL | KICKS | URWAN | MICROBUS | SUNNY | ASX | YARIS | KICKS NEW | RENAULT NEW | Total | |||||||||||||||||||||||||||||||||||
| Year 2025 | |||||||||||||||||||||||||||||||||||||||||||||
| Year 2026 | |||||||||||||||||||||||||||||||||||||||||||||
| Year 2027 | |||||||||||||||||||||||||||||||||||||||||||||
| Year 2028 | |||||||||||||||||||||||||||||||||||||||||||||
Supplemental Information:
| DUSTER | X- TRAIL | KICKS | URWAN | MICROBUS | SUNNY | ASX | YARIS | KICKS NEW | RENAULT NEW | Total | ||||||||||||||||||||||||||||||||||
| RoU | ||||||||||||||||||||||||||||||||||||||||||||
| Lease Liability | ||||||||||||||||||||||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||||||||||||||||||||
| Non Current | ||||||||||||||||||||||||||||||||||||||||||||
| Weighted average remaining lease term (in years) | |||
| Weighted average discount rate | % |
Other Payables - Long term
In
connection with the ASG Acquisition, we acquired long term bank debt totaling $
The Company acquired a
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 December 31, 2024, and December 31, 2023, there were and shares of common stock issued and outstanding, respectively.
As of December 31, 2024, and December 31, 2023, there were and shares of Series A stock of the Company issued and outstanding, respectively.
As of December 31, 2024, and December 31, 2023, there were and shares of Series B stock of the Company issued and outstanding, respectively.
For the year ended December 31, 2023
On May 4, 2023, the Company issued to Nicolas Link shares of our common stock with a grant date and fair market value of the award as of June 1, 2022, at $ pursuant to his employee contract.
On May 4, 2023, the Company issued to John-Paul Backwell shares of our common stock with a grant date and fair market value of the award as of June 1, 2022, at $ pursuant to his employee contract.
On May 4, 2023, the Company issued to Carsten Kjems Falk shares of our common stock with a grant date and fair market value of the award as of June 1, 2022, at $ pursuant to his employee contract.
On May 4, 2023, the Company issued to Krishnan Krishnamoorthy shares of our common stock with a grant date and fair market value of the award as of June 1, 2022, at $ pursuant to his employee contract.
| F-19 |
On May 4, 2023, the Company issued to Louise Bennett shares of our common stock with a grant date and fair market value of the award as of June 1, 2022, at $ pursuant to her employee contract.
On May 8, 2023, the Company issued
to Exchange Listing LLC shares of our common stock for $
On June 1, 2023, the Company issued to Jefferson Street Capital LLC shares of our common stock with a grant date and fair value of the award as of May 23, 2023, at $ pursuant to a share purchase agreement signed on May 23, 2023.
On July 17, 2023, the Company issued to Sky Holdings Ltd. shares of our common stock with a grant-date and fair value of the award as of June 16, 2023, at $ pursuant to a share purchase agreement signed on June 16, 2023.
On August 25, 2023, the Company
issued to Artelliq Software Trading shares of our common stock for $
On September 15, 2023, the Company issued to Nicolas Link shares of our common stock pursuant to his employee contract with a grant-date and fair market value of $.
On September 15, 2023, the Company issued to John-Paul Backwell shares of our common stock, pursuant to his employee contract, with a grant-date and fair market value of $.
On September 15, 2023, the Company issued to Carsten Kjems Falk shares of our common stock, pursuant to his employee contract, with a grant-date and fair market value of $.
On September 15, 2023, the Company issued to Louise Bennett shares of our common stock, pursuant to her employee contract, with a grant-date and fair market value of $.
For the Year ended December 31, 2024:
On January 11, 2024, the Company
issued shares of our common stock to Jefferson Street Capital LLC for the conversion of $
On January 19, 2024, the Company
issued shares of our common stock to Jefferson Street Capital LLC for the conversion of $
| F-20 |
On February 15, 2024, the Company
issued shares of our common stock for the conversion of $
On April 26, 2024, we entered
into an asset purchase agreement with Mr. Refer, the previous owner of the legacy business. Mr. Refer bought the intangible legacy assets
of Wikisoft for a total consideration of
On May 7, 2024, the Company issued
shares of our common stock to Jefferson Street Capital LLC for the conversion of $
On April 30, 2024, the Company issued fully vested shares of our common stock to Paul Keely for services with a fair market value of $ based on the market price of our stock on the date of grant.
On May 14, 2024, the Company issued fully vested shares of our common stock to John-Paul Backwell, our CEO, pursuant to his employment contract with a fair market value of $ based on the market price of our stock on the date of grant.
On June 3, 2024, the Company issued
commitment shares of our common stock to Jefferson Street Capital, pursuant to a convertible note signed on May 21, 2024, with
a fair value of $
On June 5, 2024, the Company issued
shares of our common stock to Jefferson Street Capital LLC for the conversion of $
On June 13, 2024, the Company issued shares of our
common stock to Sky Holding Ltd. For the conversion of $
On July 9, 2024, the Company issued
shares of our common stock to Jefferson Street Capital LLC for the conversion of $
On August 9, 2024, the Company
issued shares of our common stock to Jefferson Street Capital LLC for the conversion of $
On September 9, 2024, the Company issued fully vested shares of our common stock to Sanjeeb Safir, pursuant to his employment contract signed on September 2, 2024, with a fair market value of $ based on the market price of our stock on the date of grant.
| F-21 |
On September 13, 2024, the Company
issued fully vested shares of our common stock to Safeguard Investments LLC, pursuant to a Consultancy contract signed on August
31, 2024, with a fair market value of $
On September 21, 2024, the Company cancelled shares of common stock issued to Ilustrato Pictures International Inc. The shares were reissued to Ilustrato Pictures International Inc.as series B preferred stock converting at 1:1000.
On September 20, 2024, the Company issued shares of our common stock with a fair market value of $ per share and a total value of $ to JJ Astor Co., pursuant to a convertible note signed on September 21, 2024.
On September 24, 2024, the Company
issued shares of our common stock to Jefferson Street Capital LLC for the conversion of $
On October 16, 2024, the Company entered into a Share Purchase Agreement with Safeguard Investments LLC, pursuant to which the Investor acquired shares of the Company’s Common Stock for a purchase price of $.
On October 22, 2024, the Company
issued shares of our common stock to Jefferson Street Capital LLC for the conversion of $
On November 18, 2024, Quality
Industrial Corp., a Nevada corporation, Fusion Fuel Green PLC, an Irish public limited company, Ilustrato Pictures International Inc.,
a Nevada corporation, a stockholder of the Company, and certain other stockholders of the Company together with the Company and Fusion
Fuel, entered into a Stock Purchase Agreement, dated as of November 18, 2024. Under the Purchase Agreement, the Sellers transferred an
aggregate of shares of common stock and shares of Series B Preferred Stock of the Company, constituting approximately
election of our board of directors, all matters upon which shareholder approval is required and, ultimately, the direction of our Company.
On November 20, 2024, the Company issued of
our common stock to Jefferson Street Capital LLC for the conversion of $
NOTE 9. OPERATING EXPENSES
| General and Administrative Expenses | December 31, 2024 | December 31, 2023 | ||||||
| Salaries and compensation to employees* | ||||||||
| Rent | ||||||||
| Office Expenses | ||||||||
| IT support | ||||||||
| Other expenses** | ||||||||
| Total | $ | $ | ||||||
| * | |
| ** |
NOTE 10. NON-OPERATING INCOME
The Company Earned other income in 2024 as a result of sale of intangible legacy assets and reversal of interest payments on the loan agreements with Mahavir and Artelliq which was unwound with cancellation of the agreement with Quality International.
The table below presents the breakdown of non-Operating income:
| Non-Operating income | December 31, 2024 | December 31, 2023 | ||||||
| Reversal of interest payment | ||||||||
| Sale of Wikisoft assets | ||||||||
| Total | $ | $ | ||||||
| F-22 |
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 $
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. The acquired business
contributed revenues of $
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, $ |
| Consideration paid | December 31, 2024 | March 31, 2024 | ||||||
| Total | ||||||||
As of December 31, 2024, $
Fair value of Consideration
| Cash or National Exchange listed stock | $ | ||
| Cash | $ | ||
| Total | $ |
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 | $ | |||
During the quarter ended March
31, 2024, we consolidated this acquired business since January 1, 2024, rather than since the acquisition date of March 27, 2024. The
impact on our March 31, 2024, results would have resulted in revenue of $
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.
On January 10, 2025, the Company
issued shares of our common stock to 1800 DIAGONAL LENDING LLC for the conversion of $
| F-23 |
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 8, 2025, the Company signed an Amendment to the Share Purchase Agreement, dated March 27, 2024, with the shareholders of Al Shola Al Modea Gas Distribution LLC. The amended Share Purchase Agreement removed the termination clause 9.14 and amended other clauses of the Share Purchase Agreement, dated March 27, 2024. The foregoing description of the Amended Share Purchase Agreement is not complete and is qualified in its entirety and filed as Exhibits 2.8 to this form 10-K.
| F-24 |
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements
Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include but are not limited to changes in economic conditions, incorporating acquisitions, changes in the supply chain for raw materials, effects of Covid and wars, including the Ukraine war, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.
General
The following is a discussion by management of its view of the Company’s business, financial condition, and corporate performance for the past year. The purpose of this information is to give management’s recap of the past year, and to give an understanding of management’s current outlook for the near future. This section is meant to be read in conjunction with the Financial Statements of this Year Report on Form 10-K.
Overview
QIND is a Nevada Corporation that is majority-owned by ILUS. HTOO functions as QIND’s parent company, and as such it concentrates on providing strategic management oversight that includes financial, administration, marketing, and human resources support to its operating companies. QIND functions as the Industrial & Manufacturing subsidiary of HTOO.
Factors Affecting Our Performance
The primary factors affecting our results of operations include but are not limited to:
General Macro Economic Conditions
Our business is impacted by the global economic environment, employment levels, consumer confidence, government, and municipal spending. Global instability in securities markets and the Russian invasion of Ukraine are among other factors that can impact our financial performance. In particular, changes in the U.S. economic climate can impact the demand of our product range. The Industrial and Manufacturing sectors are impacted by the overall economic environment as addressed in the risk factors. Tenders can be withdrawn and lead times for the manufacturing can be affected which can result in cancellation of orders if not delivered on time.
Impact of Acquisitions
A significant component of our growth is through the acquisition and consolidation of our operating companies 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 sales synergies within the operating businesses with the aim to expand globally. The benefits of these integration efforts may not positively impact our financial results instantly but is expected to do so in the medium to long-term future.
| 40 |
Recent Developments
On March 27, 2024, we entered into a definitive Stock Purchase Agreement with the shareholders of Al Shola Al Modea Gas Distribution LLC (“ASG” or “Al Shola Gas”) to acquire a 51% interest in ASG. The Closing of the transaction took place when both parties signed the definitive Share Purchase Agreement. Al Shola Gas is an engineering and distribution company in the LPG industry in the United Arab Emirates. It was established in 1980. The company is one of the region’s leading suppliers and contractors of LPG centralized pipeline systems and is approved by the General Directorate of Civil Defense, Government of Dubai, as a Central Gas Contractor and LPG Supplier.
On April 1, 2024, after several failed effort negotiations to restructure the deal and obtain information from the selling shareholders of Quality International, the Purchase Agreement with Quality International was terminated by Quality International. Subsequently, the Board of Directors of the Company approved the cancellation of the agreement with Quality International Co Ltd FZC that was signed on January 18, 2023, and amended on July 27, 2023. The company is in the process of unwinding the remaining part of the transaction consisting of the $2M buy-back commitment, with management aiming to recover the investment or parts of it. However, the investment may need to be written off if recovery proves unattainable.
On May 23, 2024, Quality Industrial Corp. entered into a binding term sheet with Actelis Networks, Inc., a Delaware corporation traded on the NASDAQ under the symbol ASNS, pursuant to which Actelis would acquire between 61% to 75% of the issued and outstanding shares of the Company’s share capital. We originally intended to close the transaction, pending regulatory requirements and due diligence, within 60 days. On August 30, 2024, we agreed to further extend the non-solicitation and no-shop periods provided in the Term Sheet until October 1, 2024, unless mutually terminated earlier by the parties. On October 10, 2024, ASNS provided the Company with written notice of ASNS’ intent to terminate the Term Sheet in accordance with the termination provisions thereof, which required 30-day written notice of termination. Such 30-day period ended, and the Term Sheet was definitively canceled on November 11, 2024.
On November 14, 2024, Ilustrato Pictures International Inc. (“Ilustrato”) and eight additional sellers agreed to transfer 78,312,334 shares of common stock and 20,000 series B stock in the Company to Fusion Fuel Green PLC an Irish corporation traded on the NASDAQ under the symbol “HTOO”. Pursuant to a Share Purchase Agreement, the consideration for the Purchased Shares will be payable in shares of common stock and preferred stock of HTOO. As a result of this transaction, there was a change in control of the Company when the transaction closed on November 26, 2024. The shares transferred amount to 69.23% voting rights of the outstanding shares in our Company on a fully diluted and as-converted basis. Consequently, HTOO is now able to unilaterally control the election of our board of directors, all matters upon which shareholder approval is required and, ultimately, the direction of our Company.
On April 8, 2025, the Company signed an Amendment to the Share Purchase Agreement, dated March 27, 2024, with the shareholders of Al Shola Al Modea Gas Distribution LLC. The amended Share Purchase Agreement removed the termination clause 9.14 and amended other clauses of the Share Purchase Agreement, dated March 27, 2024. The foregoing description of the Amended Share Purchase Agreement is not complete and is qualified in its entirety and filed as Exhibits 2.8 to this form 10-K.
Planned Developments
In 2025, the Company will allocate resources to our subsidiary Al Shola Gas to enhance efficiency, boost sales, and positively influence their financial performance with investment from our parent company, Fusion Fuel Green PLC. We also plan to invest in new vehicles for our subsidiary to improve their bulk LPG supply capabilities and increase our revenue. We expect that our revenue and operating expenses will rise as we implement the expansion plan related to our subsidiary. This increase will be due to administrative and operating costs linked to our business activities.
Results of Operation for the Year Ended December 31, 2024, and 2023
Revenues
We earned $11,177,567 in revenue for the year ended December 31, 2024, as compared with revenue of $0 for the year ended December 31, 2023. The addition of revenue is a result of the ASG acquisition on March 27, 2024. The revenue from Al Shola Gas has been consolidated from April 1, 2024, to December 31, 2024. Al Shola Gas had revenue for the 12 months ended December 31, 2024, of $14,268,840 compared to $10,839,209 for the 12 months ended December 31, 2023, an increase of 31.1%.
Operating Expenses
Operating expenses increased to $3,280,008 for the year ended December 31, 2024, from $2,766,256 for the year ended December 31, 2023. Our General and Administrative expenses are approximately the same for 2024 and 2023. The expenses in 2024 are however mainly due to General and Administrative expenses in our subsidiary Al Shola Gas, as opposed to 2023, where General and Administrative expenses were mainly due to shares issued to our management and Chairman in the amount of $2,233,000. We had an increase in professional fees from $315,011 in 2023, to $849,925 in 2024. The increase was related to one-off costs for a reaudit of our financials with our new auditor Bush and Associates CPA amounting to $95,000. Further we had legal one off-costs with our legal counsel, Lucosky Brookman LLP, for legal work carried out in connection with the merger with our new parent company Fusion Fuel Green PLC amounting to a total of $525,994.
We anticipate that our operating expenses will increase as we undertake our subsidiary expansion plan. The increase will be attributable to administrative and operating costs associated with our business activities and the professional fees associated with our reporting obligations.
Non-Operating Expenses
We had other non-operating expenses of $687,755 for the year ended December 31, 2024, compared to $1,466,476 for the year ended December 31, 2023.
| 41 |
Our non-operating expenses for the year ended December 31, 2024, compared to the same periods in 2023, were primarily lower due to Commitment and Conversion Fees for stock.
Non-Operating Income
We had other non-operating income of $427,554 for the year ended December 31, 2024, compared to $0 for the same period in 2023. Our other income for the year ended December 31, 2024, resulted from the reversal of interest payments on the loan agreements with Mahavir and Artelliq in the first quarter, which was unwound with the cancellation of the agreement with Quality International and the sale of intangible assets from the legacy business, Wikisoft Corp.
Net Income/Net Loss
We incurred Net income of $423,054 for the year ended December 31, 2024, compared to a net loss of $4,232,732 for the same period ended December 31, 2023. The growth in Net income is a result of the ASG acquisition on March 27, 2024. The Net Income from Al Shola Gas has been consolidated from April 1, 2024, to December 31, 2024. Al Shola Gas had Net Income for the 12 months ended December 31, 2024, of $2,051,645 compared to $1,743,974 for the 12 months ended December 31, 2023, an increase of 17.6%, which includes a 9% corporate tax provision imposed in the UAE for the FY 2024 as compared with 0% in 2023.
Liquidity and Capital Resources
As of December 31, 2024, and 2023, we had total current assets of $7,466,617 and $2,002,492, respectively, and total current liabilities of $11,363,612 and $5,782,017. The notes to the consolidated financial statements provide a breakdown for the periods ended December 31, 2024, and 2023, respectively.
As of December 31, 2024, our working capital deficit was $3,896,995, compared to $3,779,525 as of December 31, 2023.
Net cash provided by operating activities was $1,154,846 for the fiscal year ended December 31, 2024, as compared with $2,358,808 provided for the fiscal year ended December 31, 2023.
Net cash used in investing activities was $(5,636) for the fiscal year ended December 31, 2024, as compared with $(5,500,000) provided for the fiscal year ended December 31, 2023.
Financing activities (used in) provided $(926,120) in cash for the fiscal year ended December 31, 2024, as compared with $3,140,548 in cash provided for the same period ended 2023.
Our primary liquidity and capital requirements include working capital for our subsidiary, Al Shola Gas, and general corporate operational needs. Historically, we have met these cash requirements through cash generated by financing activities.
Going Concern
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.
Management evaluated all relevant conditions and events that are reasonably known or reasonably knowable, in the aggregate, as of the date the consolidated financial statements are issued and determined. The Company’s ability to continue as a going concern is dependent on the Company’s ability to 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.
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 improvements initiatives. The benefits of these integration efforts and upcoming planned acquisitions may not positively impact our financial results in the short term but has historically been the case in the medium to long term.
Critical Accounting Policies
In December 2001, the SEC requested that all registrants list their most “critical accounting policies” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of inherently uncertain matters. Our critical accounting policies are disclosed in the Notes of our unaudited financial statements included in this Annual Report on Form 10-K.
Goodwill
The Company continues to review its goodwill for possible impairment or loss of value at least annually or more frequently upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount is greater than its fair value. On December 31, 2024, we performed a goodwill impairment evaluation. We performed a qualitative assessment of factors to determine whether it was necessary to perform the goodwill impairment test. Based on the results of the work performed, the Company has concluded that no impairment loss was warranted on December 31, 2024. Factors including non-renewal of a major contract or other substantial changes in business conditions could have a material adverse effect on the valuation of goodwill in future periods and the resulting charge could be material to the future periods’ results of operations.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Recently Issued Accounting Pronouncements
In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. ASU 2017-04 also clarifies that an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The new standard is effective for fiscal years beginning after December 15, 2019, for both interim and annual reporting periods. The Company is currently assessing the potential impact of the adoption of ASU 2017-04 on its consolidated financial statements.
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
| 42 |
Item 3. Quantitative and Qualitative Disclosures About Market Risk
A smaller reporting company is not required to provide the information required by this Item.
Item 4. Controls and Procedures
We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
In designing and evaluating our disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
As required by SEC Rule 15d-15, our management carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K.
Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of the end of the period covered by this report.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) of the Exchange Act that occurred during the quarter ended September 30, 2024, that has materially affected or is reasonably likely to materially affect, our internal control over financial reporting.
Part II: Other Information
Item 1 - Legal Proceedings
We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers, or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interests.
Item 1A. Risk Factors
There have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults upon Senior Securities
None
Item 4. Mine Safety Disclosures
None
Item 5. Other Information
None
| 2. | Financial Statement Schedules |
All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission (the “Commission”) are either not required under the related instructions, are not applicable (and therefore have been omitted), or the required disclosures are contained in the financial statements included herein.
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| 3. | Exhibits (including those incorporated by reference). |
(b) The following exhibits are filed as a part of this Annual Report on Form 10-K:
| 44 |
| * | Previously filed |
| ** | Filed herewith |
ITEM 16. 10-K SUMMARY
None
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SIGNATURES
Quality Industrial Corp.
| By: | /s/ John-Paul Backwell | |
| Name: | John-Paul Backwell | |
| Title: | Chief Executive Officer (principal executive officer) | |
| Date: | April 28, 2025 |
| By: | /s/ Krishnan Krishnamoorthy | |
| Name: | Krishnan Krishnamoorthy | |
| Title: | Chief Financial Officer (principal financial officer and principal accounting officer) | |
| Date: | April 28, 2025 |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By: | /s/ John-Paul Backwell | |
| Name: | John-Paul Backwell | |
| Title: | Chief Executive Officer (principal executive officer) | |
| Date: | April 28, 2025 |
| By: | /s/ Krishnan Krishnamoorthy | |
| Name: | Krishnan Krishnamoorthy | |
| Title: | Chief Financial Officer (principal financial officer and principal accounting officer) | |
| Date: | April 28, 2025 |
| By: | /s/ Nicholas Link | |
| Name: | Nicholas Link | |
| Title: | Chairperson and Director | |
| Date: | April 28, 2025 |
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