UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For
the quarterly period ended
For the transition period from __________ to__________
Commission
File Number:
(Exact name of registrant as specified in its charter)
| (State
or other jurisdiction of incorporation or organization) |
(IRS
Employer Identification No.) |
(Address of principal executive offices)
(Registrant’s telephone number)
(Former name, former address, and former fiscal year, if changed since last report)
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. ☒
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). ☒
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.
| ☐ Large accelerated filer | ☐ Accelerated filer | |
| ☒
|
||
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes
Securities registered pursuant to Section 12(b) of the Act: None
State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: common shares as of June 4, 2025.
TABLE OF CONTENTS
| Page | ||
| PART I – FINANCIAL INFORMATION | ||
| Item 1: | Financial Statements | 1 |
| Item 2: | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 2 |
| Item 3: | Quantitative and Qualitative Disclosures About Market Risk | 6 |
| Item 4: | Controls and Procedures | 6 |
| PART II – OTHER INFORMATION | ||
| Item 1: | Legal Proceedings | 7 |
| Item 1A: | Risk Factors | 7 |
| Item 2: | Unregistered Sales of Equity Securities and Use of Proceeds | 7 |
| Item 3: | Defaults Upon Senior Securities | 7 |
| Item 4: | Mine Safety Disclosures | 7 |
| Item 5: | Other Information | 7 |
| Item 6: | Exhibits | 7 |
| i |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Our financial statements included in this Form 10-Q are as follows:
| 1 |
QUALITY INDUSTRIAL CORP.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31, 2025 | December 31, 2024 | |||||||
| Unaudited | Audited | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and Cash Equivalents | $ | $ | ||||||
| Inventory | ||||||||
| Accounts Receivable | ||||||||
| Deposits, Prepayments & Advances | ||||||||
| Other Current Assets | ||||||||
| Total Current Assets | ||||||||
| Non-Current Assets | ||||||||
| 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 | ||||||||
| 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 March 31, 2025, and December 31, 2024, respectively | ||||||||
| Common stock; $ par value; shares authorized; and shares issued and outstanding as of March 31, 2025, and December 31, 2024, 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 unaudited consolidated financial statements.
| F-1 |
QUALITY INDUSTRIAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| For the Three Months Ended | ||||||||
| 31-March-25 Unaudited | 31-March-24 Unaudited | |||||||
| Revenue | $ | |||||||
| Cost of revenues | ||||||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| Professional fees | ||||||||
| General and administrative | ||||||||
| Total operating expenses | ||||||||
| Income (loss) from operations | ( | ) | ( | ) | ||||
| Other (income) expenses | ||||||||
| Interest Expenses | ||||||||
| Interest on Convertible Notes | ||||||||
| Commitment and Conversion Fees | ||||||||
| Discount on Convertible notes | ||||||||
| Other Income | ( | ) | ||||||
| Total other (income) expense, net | ( | ) | ||||||
| Net Income (Loss) before Provision of Income Tax | ( | ) | ||||||
| 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 unaudited consolidated financial statements.
| F-2 |
QUALITY INDUSTRIAL CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(UNAUDITED)
For the Three Months Ended March 31, 2025
| 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, 2024 | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Issued shares from conversion of convertible note | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||
| Minority Interest | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| Income for the period | - | - | - | - | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance March 31, 2025 | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Three Months Ended March 31, 2024
| Preferred Stock | Common Stock | Additional Paid-in | Minority | Accumulated | Total Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Interest | Deficit | Equity | |||||||||||||||||||||||||
| Balance, December 31, 2023 | ( | ) | ||||||||||||||||||||||||||||||
| Common stock issued for conversion of notes | - | |||||||||||||||||||||||||||||||
| Minority Interest | ||||||||||||||||||||||||||||||||
| Income for the period | - | - | ||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | ( | ) | ||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-3 |
QUALITY INDUSTRIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| March 31, 2025 | March 31, 2024 | |||||||
| 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 | ||||||||
| Conversion fees | ||||||||
| Corporate Income Tax Expense | ||||||||
| Depreciation and Amortization | ||||||||
| Other income | ( | ) | ||||||
| Discount on convertible Notes | ||||||||
| Changes in Assets and Liabilities, net | ||||||||
| Inventory | ||||||||
| Accounts receivable | ||||||||
| Deposits, Prepayments & Advances | ( | ) | ||||||
| Related Party Receivables | ( | ) | ( | ) | ||||
| Other Current Assets | ( | ) | ||||||
| Accounts Payable | ( | ) | ||||||
| Other Current Liabilities | ||||||||
| Lease Liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Addition of Fixed Assets | ||||||||
| Right of Use Assets | ||||||||
| Changes in Non-current assets | ||||||||
| Payments to ASG Shareholders | ( | ) | ||||||
| Cash acquired in business acquisition | ||||||||
| Net cash (used in)/provided by investing activities | ( | ) | ||||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of common stock | ||||||||
| Repayment/Conversion of Convertible Notes | ( | ) | ||||||
| Payment of Interest | ( | ) | ( | ) | ||||
| Related Party Loan | ||||||||
| Payment for ASG Debt | ( | ) | ||||||
| Net Cash provided by Financing Activities | ||||||||
| Net increase 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 unaudited consolidated financial statements.
| F-4 |
QUALITY INDUSTRIAL CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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.
| F-5 |
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.”
After ILUS acquired control of QIND on May 28, 2022, ILUS signed a binding letter of intent on June 28, 2022, to acquire 51% of Quality International, an international process manufacturing company that manufactures custom solutions for the oil and gas, petrochemical and refinery, chemical and fertilizer, power and desalination, water and wastewater, and offshore industries.
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”). Established in 1980, ASG is an Engineering and Distribution Company in the U.A.E. LPG industry. It is one of the leading suppliers and contractors of LPG centralized pipeline systems. ASG has been consolidated since being 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.
| F-6 |
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
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 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 its acquisition 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-Q and include all adjustments (consisting only of normal recurring accruals) which are necessary for a fair presentation of the results for the periods presented. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with 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, 2024, filed with the SEC on April 28, 2025.
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.
| F-7 |
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, currently available information, and various other assumptions that the Company believes 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 receivable 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 overheads, 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
& Amortization expenses, including depreciation on Right of Use Assets for the three months ended March 31, 2025, and 2024, was $
| F-8 |
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, Prepayments &Advances | March 31, 2025 | December 31, 2024 | ||||||
| QIND - Advances | ||||||||
| Advance for Purchases of Truck | ||||||||
| Prepaid Bonus - Nicolas Link | ||||||||
| Prepaid Bonus – Louise Bennett | ||||||||
| Total - QIND | ||||||||
| Al Shola Gas - Advances | ||||||||
| Deposits & Advances | ||||||||
| 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 | March 31, 2025 | March 31, 2024 | ||||||
| Hamsah Office Rent | ||||||||
| Store Rent | ||||||||
| Insurance | ||||||||
| Accommodation Rent | ||||||||
| DCD License | ||||||||
| Trade License | ||||||||
| Visa Cost | ||||||||
| Total | ||||||||
| Other Pre-Payments | ||||||||
| Aiwa Energy | ||||||||
| Aiko Mall | ||||||||
| Aswaaq Shopping Mall | ||||||||
| Total | ||||||||
| Total Deposits, Prepayments &Advances | ||||||||
| F-9 |
End-of-service benefits
Employee
end-of-service benefits in our subsidiary Al Shola Gas, amounting to $
March 31, 2025 | December 31, 2024 | |||||||
| Employee end of service benefits Al Shola Gas | ||||||||
| Balance from previous period | ||||||||
| Add: Charge for the period | ||||||||
| Less: Settle for the period | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
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 cannot be generated internally. Goodwill is an intangible asset, and so it is listed within the long-term assets section of the acquirer’s 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.
| F-10 |
| ● | 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”), where 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 is 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.
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.
| F-11 |
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 include no dilution and are 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 | March 31, 2025 (Unaudited) | March 31, 2024 (Unaudited) | ||||||
| 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 the 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
| F-12 |
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.
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, for which the Company has elected not to apply Topic 842.
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.
| F-13 |
When accounting for finance leases in accordance with ASC 842, an entity recognizes interest on the lease liability and amortization of the ROU asset in the income statement and classifies payments of the principal portion of the lease liability as financing activities and payments of interest on the lease liability as operating activities.
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
March 31, 2025, and December 31, 2024. There were $
| March 31, 2025 | December 31, 2024 | |||||||
| Cash and Cash Equivalents | ||||||||
| Cash in hand | ||||||||
| Cash at bank | ||||||||
| Total | $ | $ | ||||||
Accounts Receivables
Accounts receivable arise from our subsidiary, Al Shola Gas. 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 | March 31, 2025 |
December 31, | ||||||
| 1-30 days | ||||||||
| 31-60 days | ||||||||
| 61-90 days | ||||||||
| +90 days | ||||||||
| Total | ||||||||
| F-14 |
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 March 31, 2025, and December 31, 2024, 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 March 31, 2025, there were $
As
of March 31, 2025, and December 31, 2024, the Company had amounts due from Nicolas Link due to prepayment of bonus amounting to $
As
of March 31, 2025, and December 31, 2024, the Company had amounts due from Louise Bennett due to prepayment of bonus amount to $
Goodwill
The
Company acquired a
The
Company acquired
| F-15 |
NOTE 6. CURRENT LIABILITIES
Accounts Payable
Accounts
payable totaled $
| Accounts Payable Ageing | March 31, 2025 |
December 31, | ||||||
| 1-30 days | ||||||||
| 31-60 days | ||||||||
| 61-90 days | ||||||||
| +90 days | ||||||||
| Total | ||||||||
Related Party Payable
On
November 18, 2024, Quality Industrial Corp., Fusion Fuel Green PLC, an Irish public limited company, Ilustrato Pictures International
Inc., a Nevada corporation, and certain other stockholders of the Company, entered into a Stock Purchase Agreement. Pursuant to section
6.04 of the agreement, Purchaser shall use commercially reasonable efforts to raise at least $
As
of March 31, 2025, and December 31, 2024, the Company had amounts owed to Fusion Fuel Green PLC amounting to $
Operating Lease Liabilities - Current
As
disclosed, we acquired % of the outstanding shares of ASG on March 27, 2024. These acquired operating leases were valued on the date
of acquisition using the present value of the lease payments remaining from the date acquired and an estimated incremental borrowing
rate 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 $
| F-16 |
On
June 16, 2023, the Company issued to Sky Holdings Ltd. a six-month convertible promissory note in the principal amount of $
On
December 20, 2023, QIND issued a two-year convertible promissory note RB Capital Partners Inc. in the principal amount of $
On
December 20, 2023, the Company issued a one-year convertible promissory note in the principal amount of $
On
February 6, 2024, we issued a six-month convertible promissory note to Exchange Listing 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
September 25, 2024, we entered into a loan agreement with J.J. Astor & Co. The Note is the senior secured with a Principal Amount
of $
On
September 25, 2024, we issued a convertible promissory note to 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 Three months ended March 31, 2025, amortization
related to these discounts totaled $
| F-17 |
A summary of these outstanding convertible notes and accrued interest as of March 31, 2025, is summarized below:
Debt & Interest Payable
| Lender | Date of Issue | Maturity Date | Principal Amount | Default Interest Fees | Paid | Converted | Outstanding | Interest | ||||||||||||||||||||
| RB Capital Partners Inc. | ||||||||||||||||||||||||||||
| RB Capital Partners Inc. | ||||||||||||||||||||||||||||
| Sky Holdings | ||||||||||||||||||||||||||||
| RB Capital Partners Inc. | ||||||||||||||||||||||||||||
| Sean Levi | ||||||||||||||||||||||||||||
| Exchange Listing LLC | ||||||||||||||||||||||||||||
| Jefferson | ||||||||||||||||||||||||||||
| 1800 Diagonal Lending | ||||||||||||||||||||||||||||
| 1800 Diagonal Lending | ||||||||||||||||||||||||||||
| J.J. Astor & Co | ||||||||||||||||||||||||||||
| 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 March 31, 2025 | ||||||||
| F-18 |
Options and Warrants
In accordance with ASC 470, warrants have been classified as a liability and recorded at their fair value.
On
April 19, 2023, the Company issued a common share purchase warrant to Exchange Listings LLC (the “Exchange Common Share Purchase
Warrant”). The holder is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set
forth, at any time on or after the date of issuance hereof, to purchase from the Company, of the Company’s common shares
(whereby such number may be adjusted from time to time pursuant to the terms and conditions of the Exchange Common Share Purchase Warrant)
at the exercise price of $
On
May 23, 2023, the Company issued a common share purchase warrant to Jefferson Street Capital LLC (the “Jefferson Common Share Purchase
Warrant”). The holder is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set
forth, at any time on or after the date of issuance hereof, to purchase from the Company, of the Company’s common shares
(whereby such number may be adjusted from time to time pursuant to the terms and conditions of the Jefferson Common Share Purchase Warrant)
at the exercise price of $
Other Payables Current
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 a $
| Other Payables - Current | March 31, 2025 | December 31, 2024 | ||||||
| Payable to Shareholders of Al Shola Gas | ||||||||
| CCO expenses payable | ||||||||
| Bank Borrowings - Current | ||||||||
| Total | ||||||||
| Other Liabilities - Current | March 31, 2025 | December 31, 2024 | ||||||
| Accrued Interest on Convertible note | ||||||||
| Payroll Liabilities (Group) | ||||||||
| Audit fee provision | ||||||||
| Retirement benefits | ||||||||
| Corporate Tax payable | ||||||||
| Total | ||||||||
| F-19 |
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. These acquired operating leases were valued on the date
of acquisition using the present value of the lease payments remaining from the date acquired and an estimated incremental borrowing
rate of
The following is a summary of future lease payments required under the lease agreements:
| Vehicle | DUSTER | X TRAIL | KICKS | URWAN | MICROBUS | SUNNY | ASX | YARIS | KICKS | RENAULT | Total | |||||||||||||||||||||||||||||||||
| Year 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Year 2026 | ||||||||||||||||||||||||||||||||||||||||||||
| Year 2027 | ||||||||||||||||||||||||||||||||||||||||||||
| Year 2028 | ||||||||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||||||||
Supplemental Information as of March 31, 2025:
| Vehicle | DUSTER | X TRAIL | KICKS | URWAN | MICROBUS | SUNNY | ASX | YARIS | KICKS | RENAULT | 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
| Other Payables Non-current | March 31, 2025 | December 31, 2024 | ||||||
| Payable to Shareholders of Al Shola Gas | ||||||||
| Bank Borrowings - Non - Current | ||||||||
| Total | ||||||||
| F-20 |
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 March 31, 2025, and March 31, 2024, there were and shares of common stock issued and outstanding, respectively.
As of March 31, 2025, and March 31, 2024, there were and shares of Series A stock of the Company issued and outstanding, respectively.
As of March 31, 2025, and March 31, 2024, there were and shares of Series B stock of the Company issued and outstanding, respectively.
For the Three Months ended March 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 $
On
February 15, 2024, the Company issued shares of our common stock for the conversion of $
For the Three Months ended March 31, 2025
On
January 10, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for the conversion of $
On
January 13, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for the conversion of $
On
January 17, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for the conversion of $
On
January 27, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for the conversion of $
On
January 29, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for the conversion of $
On
January 30, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for $
On
February 3, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for the conversion of $
On
March 27, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for the conversion of $
| F-21 |
NOTE 9. General and Administrative Expenses
| General and Administrative Expenses | March 31, 2025 | March 31, 2024 | ||||||
| Salaries and compensation to employees | ||||||||
| Salary and compensation - QIND | ||||||||
| Salary and compensation - ASG | ||||||||
| Management Expenses – ASG | ||||||||
| 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 | March 31, 2025 | March 31, 2024 | ||||||
| Reversal of interest payment | ||||||||
| Total | $ | $ | ||||||
NOTE 11. BUSINESS COMBINATION DISCLOSURE
In Accordance with ASC 805-10-50, ASC 805-30-50, and ASC 805-10-25-6
On
March 27, 2024, QIND entered into a definitive Stock Purchase Agreement with the shareholders of AL SHOLA AL MODEA GAS DISTRIBUTION L.L.C.
to acquire
QIND
acquired majority ownership of AL SHOLA GAS, effective as of March 27, 2024, resulting in AL SHOLA GAS becoming a subsidiary, in a
transaction accounted for as a business combination. The Company and its auditors considered all pertinent facts pursuant to ASC
805-10-25-6 that the Share Purchase Agreement signing date is the acquisition date of the Company, with the value of $
| F-22 |
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 | March 31, 2025 | March 31, 2024 | ||||||
| Total | ||||||||
As
of March 31, 2025, out of the total payable amount of $
Fair value of Consideration
| Cash or National Exchange listed stock | $ | |||
| Cash | $ | |||
| Total | $ |
Goodwill calculation of the 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 $
| F-23 |
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 April 8, 2025, Quality Industrial Corp. 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, such as the payment schedule. The foregoing description of the Amended Share Purchase Agreement is not complete and is qualified in its entirety and filed as Exhibits to this Form 10-Q
On
April 27, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for the conversion of $
On
April 30, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for the conversion of $
On
May 1, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for the conversion of $
On
May 6, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING LLC for the conversion of $
On
May 6, 2025, the Company issued shares of our common stock to Jefferson Street Capital LLC for the conversion of $
On
May 13, 2025, the Company issued shares of our common stock to 1800 DIAGONAL LENDING
LLC for the conversion of $
| 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 provide 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 Quarterly Report on Form 10-Q.
Overview
QIND is a Nevada Corporation majority-owned by Fusion Fuel Green PLC (“Fusion Fuel” or “HTOO”), an Irish company listed on the Nasdaq with the ticker HTOO. HTOO functions as QIND’s parent company, and as such, it concentrates on providing strategic management oversight that includes financial, administrative, marketing, and human resources support to its operating companies. QIND functions as the Industrial Energy 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 for 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.
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 Industrial and Utilities company in the Liquefied Petroleum Gas (LPG) Industry in the United Arab Emirates and was established in 1980. The company is one of the region’s leading LPG suppliers and contractors of LPG centralized pipeline systems. It is approved by the General Directorate of Civil Defense, Government of Dubai, as a Central Gas Contractor and LPG Supplier. Al Shola Gas has been consolidated into the financials from the quarter ended June 30, 2024.
| 2 |
On April 1, 2024, after several failed effort negotiations with the purpose of restructuring the deal and obtaining information from the selling shareholders of Quality International, the Purchase Agreement with Quality International was terminated by Quality International and subsequently, 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. The company is in the process of unwinding the remaining part of the transaction, consisting of a $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 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 (the “Company”), Fusion Fuel Green PLC, an Irish public limited company (the “Fusion Fuel”), Ilustrato Pictures International Inc., a Nevada corporation, a stockholder of the Company (“Ilustrato”), and certain other stockholders of the Company (together with Ilustrato, the “Sellers” and the Sellers together with the Company and Fusion Fuel, the “Parties”), entered into a Stock Purchase Agreement, dated as of November 18, 2024 (the “Purchase Agreement”). Under the Purchase Agreement, the Sellers will transfer an aggregate of 78,312,334 shares of common stock and 20,000 shares of Series B Preferred Stock of the Company, constituting approximately 69.36% of the capital stock of the Company, to Fusion Fuel (the “Transferred Shares”). Fusion Fuel will issue 3,818,969 Class A ordinary shares and 4,171,327 preferred shares to the Sellers, subject to adjustment, with provisions for the preferred shares to convert into 41,713,270 ordinary shares, subject to shareholder approval and Nasdaq listing clearance. The Purchase Agreement also provides for a post-closing merger of the Company into a newly formed subsidiary of Fusion Fuel, resulting in the Company becoming a wholly-owned subsidiary of Fusion Fuel. The transaction is subject to customary closing conditions, including regulatory approvals. The Parties have also agreed to several post-closing covenants, including actions related to shareholder meetings and financing arrangements. The agreement contains customary representations, warranties, and indemnification provisions, and certain unwinding and termination rights.
On April 8, 2025, Quality Industrial Corp. 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, such as the payment schedule. The foregoing description of the Amended Share Purchase Agreement is not complete and is qualified in its entirety and filed as Exhibits to this Form 10-Q.
On May 21, 2025, it was announced that the Company’s operating subsidiary, Al Shola Al Modea Gas Distribution LLC, has secured over $2.7 million in new project awards since the beginning of March 2025 and has added more than 1,800 apartments to its utility portfolio since the beginning of January 2025. The new contracts encompass engineering, installation, and long-term operations of liquefied petroleum gas (LPG) utilities. Concerning the liquefied petroleum gas (“LPG”) utilities, newly awarded contracts for the bulk supply of LPG are projected to yield an estimated annual recurring utility revenue of $905,000.
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Planned Developments
In 2025, the Company will allocate resources to our subsidiary, Al Shola Gas, to enhance efficiency, boost sales, and positively impact their financial performance with investment from our parent company, Fusion Fuel Green PLC. We have invested in new vehicles for our subsidiary to improve their bulk LPG supply capabilities and increase our revenue. The trucks are expected to be delivered in the third quarter of 2025. We anticipate that our revenue and operating expenses will rise as we implement the expansion plan related to our subsidiary. This increase will arise from administrative and operating costs linked to our business activities.
Results of Operation for the Three Months Ended March 31, 2025, and 2024
Revenues
We had $3,621,473 and $0 in revenue for the Three months ended March 31, 2025, compared with $0 in revenue for the Three months ended March 31, 2024. The increase in revenue is a result of revenue from our acquisition of Al Shola Gas consolidated from the second quarter of 2024. In the first quarter of 2025, Al Shola Gas, grew its revenue with 17.3% compared with the same quarter last year.
Gross Profit
We had $955,386 and $0 in Gross Profit for the three months ended March 31, 2025, compared with $0 in Gross Profit for the Three ended March 31, 2024. Gross profit increased for the three months ended March 31, 2025, compared with Gross Profit for the three months ended March 31, 2024, in our operating business, Al Shola Gas.
Operating Expenses
Operating expenses increased to $1,902,508 for the three months ended March 31, 2025, compared to $81,249 for the three months ended March 31, 2024.
Our operating expenses for the Three months ended March 31, 2025, were mainly as a result of administrative and operating costs associated with the business activities of our subsidiary Al Shola Gas, and a one-off bonus payout to management of $1,020,000 associated with the merger with NASDAQ:HTOO.
We anticipate that our operating expenses will increase as we undertake our control plan associated with our operating business, Al Shola Gas. 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 $285,418 for the three months ended March 31, 2025, as compared $91,615 in other expenses for the same period ended 2024. The increase in other operating expenses in Q1 2025, were mainly the result of Depreciation on Fixed assets and Discount and Interest on Convertible notes.
Non-Operating Income
We had other non-operating income of $0 for the three months ended March 31, 2025, as compared to $379,554 for the same period ended 2024. Our other income in Q1 2024 resulted from the reversal of interest payments on the loan agreements with Mahavir and Artelliq, which was unwound with the cancellation of the agreement with Quality International.
Net Income/Net Loss
We incurred a Net Loss of $1,259,606 for the three months ended March 31, 2025, compared to a net profit of $206,690 for the three months ended March 31, 2024. The Net Loss is primarily due to a one-off bonus payout to management of $1,020,000 associated with the merger with HTOO.
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Liquidity and Capital Resources
As of March 31, 2025, we had total current assets of $7,594,665 and total current liabilities of $12,623,726. These liabilities include the payable amount of $5,300,000 as part of the purchase consideration for the acquisition of our operating company, Al Shola Gas, which will be paid over the next 12 months. We had negative working capital of $5,029,061 as of March 31, 2025. This compares with a working capital deficit of $3,896,995 as of December 31, 2024.
Operating activities used $334,816 in cash for the three months ended March 31, 2025, as compared with $170,860 used in cash for the three months ended March 31, 2024. Our negative operating cash flow for Q1 2025 was mainly due to a one-off bonus payout to management of $1,020,000 associated with the merger of HTOO.
Investing activities used $200,000 in cash for the three months ended March 31, 2025, as compared with $111,766 provided in cash for the three months ended March 31, 2024. We expect our investing cash flow to grow as a result of investing in long-term assets for the company’s growth.
Financing activities provided $669,647 in cash for the three months ended March 31, 2025, as compared with $171,074 in cash provided for the same period ended 2024. Our financing cash flow for Q1 2025 was mainly the result of proceeds from our parent company, Fusion Fuel.
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 improvement initiatives. The benefits of these integration efforts and upcoming planned acquisitions may not positively impact our financial results in the short term, but have historically been the case in the medium to long term.
Critical Accounting 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 Quarterly Report on Form 10-Q.
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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 September 30, 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 September 30, 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.
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 Quarterly Report on Form 10-Q.
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.
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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 March 31, 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
Item 6. Exhibits
| * | Filed previously |
| ** | Provided herewith |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Quality Industrial Corp. | ||
| Date: | June 4, 2025 | |
| By: | /s/ John-Paul Backwell | |
| John-Paul Backwell | ||
| Title: | Chief Executive Officer (Principal executive) |
| By: | s/ Krishnan Krishnamoorthy | |
| Krishnan Krishnamoorthy | ||
| Title |
Chief Financial Officer (principal accounting, and financial officer) |
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