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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, 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.
Business Overview Change in Control
On May 28, 2022, Modern Art Foundation Inc. (“Modern Art”), Rene Lauritsen and
Fastbase Holding Inc. agreed to transfer 77,669,078 shares of their common stock
in our Company, Quality Industrial Corp., to Ilustrato Pictures International
Inc. (“ILUS”). Pursuant to a Stock Purchase Agreement, ILUS purchased the shares
for an aggregate amount of $500,000. Mr. Nicolas Link is CEO of ILUS which is
the beneficial owner.
As a result of this transaction, there has been a change in control of our
Company. The 77,669,078 shares transferred amounts to 77% of the outstanding
shares in our Company. Consequently, ILUS 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.
As a result of the change of control, Mr. Quintal resigned as Chairman of the
Board, and Mr. Link was appointed as the Company’s Chairman of the Board. There
was no known disagreement with Mr. Qunital on any matter relating to our
operations, policies or practices.
On May 25, 2022, we entered into a Debt Conversion Agreement (the “Agreement”)
with our prior officer and director, Rasmus Refer. Pursuant to the Agreement, we
transferred our 51% interest in Etheralabs LLC to Mr. Refer. In exchange, Mr.
Refer agreed to cancel $300,041 in loans including interest owed by our company
to Mr. Refer.
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 now a public
company focused on the Industrial, Oil & Gas and Utility Sectors and a
subsidiary to Ilustrato.
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Change in Business Direction
On June 30, 2022, ILUS signed a binding Letter of Intent for the Company to
acquire a 51% interest in an International process Engineering Company and
manufacturer of custom solutions for the Oil and Gas, Power/Energy, Water,
Desalination, Wastewater, Offshore and Public Safety. It has Oil and Gas
industry certifications in place and is on several global preferred vendor lists
including but not limited to BP, Shell, Total, Chevron, Sonatrach, Sasol &
Gasco.
In the agreed assumed equity valuation, subject to completion of financial due
diligence and business valuation ,will be holding 51% of the shareholding of the
International process engineering company. As payment, company will receive a
combination of cash investment over a period exceeding one year after closing,
with convertible preferred shares of QIND which will be tied to lock up and leak
out clauses. Quality Industrial Corp. has the right of first refusal to purchase
these shares back redeemable at $0.75 per share.
The Agreement is predicated upon the execution and delivery of a definitive
Stock Purchase Agreement for the transaction. The transaction is expected to
close within thirty (30) business days.
On August 3, 2022, we issue to an accredited investor a two year convertible
promissory note in the principal amount of $1,100,000 (the “Note”). The Note
bears interest at 7% per annum. We have 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 $1.00 per share.
The Company expects to continue to acquire and drive broad-based market
awareness among both sections of our company focusing on the end user of our
products. Our marketing channels continue to expand as our number of satisfied
customers increase, creating additional referrals to augment our traditional
print, online and social media efforts. We also rely heavily on our
relationships with trade partners in the construction industry for involvement
with their projects.
Our offices are located at 315 Montgomery Street, San Francisco, CA 94104, and
our telephone number is 800-706-0806. Our website address is
www.qualityindustrialcorp.com and our email address is info@
qualityindustrialcorp.com. Information contained on, or accessible through, the
foregoing website is not a part of, and is not incorporated by reference into,
this Quarterly Report on Form 10-Q.
Results of Operation for the Six Months Ended June 30, 2022 and 2021
Revenues
We earned no revenues for the six months ended June 30, 2022 or 2021. We
recently entered into a binding letter of intent to acquire an International
process Engineering Company and will generate revenues for the remainder of 2022
as a result of the consolidation into our financial results. The Company is
revenue generating company and manufactures custom solutions for the Oil and
Gas, Energy, Water Desalination, Waste-Water, Offshore and Public Safety
sectors.
Operating Expenses
Operating expenses decreased from $409,745 for the six months ended June 30,
2021 to $275,084 for the six months ended June 30, 2022. The main reason for the
decrease in operating expenses for the 2022 period was considerably less spent
on general and administrative expenses and professional fees over the same
period in 2021. We have not issued stock for services for the six month ended
June 30, 2022.
We anticipate our operating expenses will increase as we undertake our plan of
operations associated with the international process engineering company. The
increase will be attributable to administrative and operating costs associated
with our business activities and the professional fees associated with our
reporting obligations.
5 Table of Contents Other Income / Expense
We incurred other income of $350,537 for the six months ended June 30, 2022 as
compare with other expense of $2,212 for the same period ended 2021. Our other
income in 2022 was the result of a gain on settlement and forgiveness of debt,
offset mainly by a loss on a license agreement. Our other expense in 2021 was
mainly the result of interest expense.
Net Income/Net Loss
We incurred net income of $75,453 for the six months ended June 30, 2022,
compared to a net loss of $411,957 for the same period ended June 30, 2021.
Liquidity and Capital Resources
As of June 30, 2022, we had total current assets of $23,413 and total current
liabilities of $120,636. We had a working capital deficit of $97,223 as of June
30, 2022. This compares with a working capital deficit of $369,007 as of
December 31, 2021.
Net cash used in operating activities was $151,904 for the six months ended June
30, 2022, as compared with $234,848 in cash for the same period ended 2021.
Financing activities provided $150,691 in cash for the six months ended June 30,
2022, as compared with $249,999 in cash provided for the same period ended 2021.
Most cash provided in 2022 was from our S-1 equity line with White Lion Capital,
which was deregistered on June 22, 2022. The majority of cash provided in 2021
was proceeds from the Credit Agreement with Rasmus Refer, our former officer and
director.
Going Concern
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates continuity of
operations, realization of assets, liquidation of liabilities, the continued
ability to raise capital as and when required, in the normal course of business.
Future Financings.
Because of our limited operating history, it is difficult to predict our capital
needs on a monthly, quarterly or annual basis. We do not have financing in place
at this time other than capital from our parent company Ilustrato Pictures
International Inc.
Critical Accounting Policies.
In December 2001, the SEC requested that all registrants list their most
“critical accounting polices” in the Management Discussion and Analysis. The SEC
indicated that a “critical accounting policy” is one which 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 matters that are inherently
uncertain. Our critical accounting policies are disclosed Note 2 of our
unaudited financial statements included in this Quarterly Report on Form 10-Q.
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.
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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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