08/26/2024 | Press release | Distributed by Public on 08/26/2024 06:12
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2024
☐ Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from __________ to__________
Commission File Number: 000-56239
Ilustrato Pictures International, Inc.
(Exact name of registrant as specified in its charter)
Nevada | 27-2450645 | |
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
26 Broadway, Suite 934
New York, NY10004
(Address of principal executive offices)
917-522-3202
(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. ☒ Yes ☐ No
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). ☒ Yes ☐ No
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 | ☐ |
Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
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: 2,291,192,403 common shares as of August 26, 2024
EXPLANATORY NOTE
This Quarterly Report on Form 10-Q for the period ended June 30, 2024 (the "Report") including, but not limited to, the financial statements, related notes, and other information included herein has not been reviewed by the Company's independent public accounting firm prior to the filing of this Report. On August 19, 2024, the Company engaged a new independent registered public accounting firm. The new independent registered public accounting firm will review this Form 10-Q and upon the completion of its review, the Company will file the requisite amendment to this Report.
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 | 8 |
Item 4: | Controls and Procedures | 8 |
PART II - OTHER INFORMATION | ||
Item 1: | Legal Proceedings | 9 |
Item 1A: | Risk Factors | 9 |
Item 2: | Unregistered Sales of Equity Securities and Use of Proceeds | 9 |
Item 3: | Defaults Upon Senior Securities | 9 |
Item 4: | Mine Safety Disclosures | 9 |
Item 5: | Other Information | 9 |
Item 6: | Exhibits | 10 |
i
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Our financial statements included in this Form 10-Q are as follows:
F-1 | Consolidated Balance Sheets as of June 30, 2024 (Unaudited) and December 31, 2023; |
F-2 | Consolidated Statements of Operations for the three & six months ended June 30, 2024, and 2023 (Unaudited); |
F-3 | Consolidated Statement of Stockholders' Equity (Deficit) for the periods ended June 30, 2024, and 2023 (Unaudited); |
F-4 | Consolidated Statements of Cash Flows for the six months ended June 30, 2024, and 2023 (Unaudited); and |
F-5 | Notes to Consolidated Financial Statements (Unaudited). |
These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended June 30, 2024, are not necessarily indicative of the results that can be expected for the full year.
1
ILUSTRATO PICTURES INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED/NOT REVIEWED)
June 30, |
December 31, |
|||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and Cash Equivalents | $ | 302,254 | $ | 213,073 | ||||
Inventory | 2,025,381 | 1,612,800 | ||||||
Accounts Receivable | 7,531,969 | 22,825,113 | ||||||
Deposits, Prepayments, & Advances | 785,311 | 0 | ||||||
Other Current Assets | 10,116,487 | 5,451,159 | ||||||
Total Current Assets | 20,761,402 | 30,102,145 | ||||||
Non-Current Assets | ||||||||
Long Term Investments | 25,264,697 | 23,639,209 | ||||||
Property and Equipment | 186,207 | 139,523 | ||||||
Right-of-Use assets | 259,304 | 0 | ||||||
Capital work in progress | 654,666 | 0 | ||||||
Receivable Non-Current Portion | 7,157,417 | 0 | ||||||
Goodwill | 11,115,562 | 8,606,289 | ||||||
Total Non-current Assets | 44,637,853 | 32,385,021 | ||||||
Total Assets | $ | 65,399,255 | $ | 62,487,166 | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
Current Liabilities | ||||||||
Accounts Payable | $ | 4,136,227 | $ | 9,891,505 | ||||
Lease Operating Liabilities | 90,875 | 0 | ||||||
Related Party Payables | 406,235 | 0 | ||||||
Other Current Liabilities | 13,780,865 | 8,825,966 | ||||||
Total Current Liabilities | 18,414,202 | 18,717,471 | ||||||
Non-Current Liabilities | ||||||||
Lease Operating Non-Current Portion | 180,062 | 0 | ||||||
Notes payable - long-term | 14,355,776 | 11,740,619 | ||||||
Other Non-Current Liabilities | 1,844,602 | 2,121,455 | ||||||
Total Long-Term Liabilities | 16,380,440 | 13,862,074 | ||||||
Total Liabilities | 34,794,642 | 32,579,545 | ||||||
Stockholders' Equity | ||||||||
Class A - 10,000,000 authorized; 10,000,000 issued and outstanding as of June 30, 2024 and December 31, 2023, respectively | 10,000 | 10,000 | ||||||
Class B - 100,000,000 authorized; 3,560,000 and 4,064,000 issued and outstanding as of June 30, 2024 and December 31, 2023, respectively | 3,560 | 4,064 | ||||||
Class C - 10,000,000 authorized; 0 issued and outstanding as of June 30, 2024 and December 31, 2023 | 0 | 0 | ||||||
Class D - 60,741,000 authorized; 60,741,000 issued and outstanding as of December 31, 2023, and 2022, respectively | 60,741 | 60,741 | ||||||
Class E - 5,000,000 authorized; 3,172,175 issued and outstanding as of June 30, 2024 and December 31, 2023, respectively | 3,172 | 3,172 | ||||||
Class F - 50,000,000 authorized, 1,455,750 and 1,618,250 issued and outstanding as of June 30, 2024 and December 31, 2023, respectively | 1,456 | 1,618 | ||||||
Common stock; $0.001 par value; 200,000,000 shares authorized; 133,006,691and 127,129,694 shares issued and outstanding as of June 30, 2024, and December 31, 2023, respectively
|
2,107,853 | 1,720,183 | ||||||
Additional paid-in capital | 26,019,639 | 24,521,777 | ||||||
Retained Earnings/ accumulated Deficit | -5,754,719 | -100,292 | ||||||
Capital Reserve | 5,455,393 |
-
|
||||||
Noncontrolling interest | 2,697,518 | 3,686,358 | ||||||
Total stockholders' Equity | 30,604,613 | 29,907,621 | ||||||
Total liabilities and stockholders' Equity | $ | 65,399,255 | $ | 62,487,166 |
The accompanying notes are an integral part of these unaudited/not reviewed consolidated financial statements.
F-1
ILUSTRATO PICTURES INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED/NOT REVIEWED)
For the Three Months Ended | For the Six Months Ended | |||||||||||||||
30-Jun-24 Not Reviewed |
30-Jun-23 Not Reviewed |
30-Jun-24 Not Reviewed |
30-Jun-23 Not Reviewed |
|||||||||||||
Revenue | 4,245,791 | 1,943,690 | 5,345,259 | 3,595,851 | ||||||||||||
Cost of revenues | 2,688,540 | 1,375,004.00 | 3,467,733 | 2,553,284.00 | ||||||||||||
Gross profit | 1,557,251 | 568,686.00 | 1,877,526 | 1,042,567.00 | ||||||||||||
Operating expenses | ||||||||||||||||
Professional fees | 142,101 | 0 | 436,020 | 0 | ||||||||||||
General and administrative | 1,814,552 | 2,907,943 | 4,215,707 | 4,159,976 | ||||||||||||
Total operating expenses | 1,956,653 | 2,907,943 | 4,651,727 | 4,159,976 | ||||||||||||
Income (loss) from operations | (399,402 | ) | (2,339,257 | ) | (2,774,201 | ) | (3,117,409 | ) | ||||||||
Other (income) expenses | ||||||||||||||||
Interest expense | 255,669 | 1,116,537 | 438,694 | 1,542,509 | ||||||||||||
Other Income | (107,050 | ) | (1,164 | ) | (506,604 | ) | (4,703 | ) | ||||||||
Total other (income) expense, net | 148,619 | 1,115,373 | (67,910 | ) | 1,537,806 | |||||||||||
Net Income (Loss) | (548,021 | ) | (3,454,630 | ) | (2,706,291 | ) | (4,655,215 | ) | ||||||||
Less: net income attributable to noncontrolling interest | 152,547 |
-
|
19,111 |
-
|
||||||||||||
Net income (loss) attributable to ILUS stockholders | (700,568 | ) | (3,454,630 | ) | (2,725,402 | ) | (4,655,215 | ) | ||||||||
Weighted average common shares outstanding | 1,959,529,013 | 1,444,380,699 | 1,959,529,013 | 1,444,380,699 | ||||||||||||
Net income (loss) per common share - basic and diluted
|
(0.00 | ) | (0.00 | ) | (0.00 | ) | (0.00 | ) |
The accompanying notes are an integral part of these unaudited/not reviewed consolidated financial statements.
F-2
ILUSTRATO PICTURES INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED/NOT REVIEWED)
FOR THE PERIOD ENDED JUNE 30, 2024
Preferred Stock A | Preferred Stock B | Preferred Stock D | Preferred Stock E | Preferred Stock F | Common Stock |
Minority Interest |
Capital Reserve | Additional Paid-in Capital | Retain Loss | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Amount | Amount | Amount | Amount | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2023 | 10,000,000 | 10,000 | 4,064,000 | 4,064 | 60,741,000 | 60,741 | 3,172,175 | 3,172 | 1,618,250 | 1,618 | 1,720,182,651 | 1,720,183 | 3,686,358 | 0 | 24,521,777 | (100,292 | ) | 29,907,621 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Shared Issued | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible notes converted to common stock | 11,986,538 | 11,987 | 40,807 | 52,794 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued against Warrant | 26,566,901 | 26,567 | 70,933 | 97,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued for Cash | 22,349,206 | 22,349 | 97,651 | 120,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued as commitment shares | 4,750,000 | 4,750 | 50,200 | 54,950 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock as compensation to AJB Capital Investments LLC | 75,000,000 | 75,000 | 558,000 | 633,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
common stock as compensation to RB Capital Partners LLC | 50,000,000 | 50,000 | 150,000 | 200,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock class F issued | 162,500 | 163 | 199,838 | 200,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock converted into common stock | (50,000 | ) | (50 | ) | 5,000,000 | 5,000 | (4,950 | ) | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Minority Interest - Hyperion - Removed | (131,319 | ) | (131,319 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Minority Interest - QI - Removed | (1,922,351 | ) | (1,922,351 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Retained earnings | 4,195,517 | 4,195,517 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital Reserve | 5,520,734 | 5,520,734 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income | (206,332 | ) | (1,951,939 | ) | (2,158,270 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Minority Interest | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Shareholders' Equity as of March 31, 2024 | 10,000,000 | 10,000 | 4,064,000 | 4,064 | 60,741,000 | 60,741 | 3,172,175 | 3,172 | 1,730,750 | 1,731 | 1,915,835,296 | 1,915,836 | 1,426,357 | 5,520,734 | 25,684,256 | 2,143,286 | 36,770,175 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Shared Issued | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock Share through Convertible | 12,731,764 | 12,732 | 93,444 | 106,176 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Converted F Stock to Common | (275,000 | ) | (275 | ) | 27,500,000 | 27,500 | (27,225 | ) | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation Common Stock | 101,385,800 | 101,386 | 319,060 | 420,446 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Converted B Stock to Common | (504,000 | ) | (504 | ) | 50,400,000 | 50,400 | (49,896 | ) | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in Capital Reserve | (65,341 | ) | (65,341 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustment | (7,197,437 | ) | (7,197,437 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in shareholder's account | 1,118,615 | 1,118,615 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income | 152,547 | (700,568 | ) | (548,021 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Shareholders' Equity as of June 30, 2024 | 10,000,000 | 10,000 | 3,560,000 | 3,560 | 60,741,000 | 60,741 | 3,172,175 | 3,172 | 1,455,750 | 1,456 | 2,107,852,860 | 2,107,853 | 2,697,518 | 5,455,393 | 26,019,639 | (5,754,719 | ) | 30,604,613 |
FOR THE PERIOD ENDED JUNE 30, 2023
Preferred Stock A | Preferred Stock B | Preferred Stock D | Preferred Stock E | Preferred Stock F | Common Stock |
Minority Interest |
Capital Reserve | Additional Paid-in Capital | Retain Loss | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Amount | Amount | Amount | Amount | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance December 31,2022 | 10,000,000 | 10,000 | 3,400,000 | 3,400 | 60,741,000 | 60,741 | 3,172,175 | 3,172 | 1,633,250 | 1,634 | 1,355,230,699 | 1,355,230 | 24,386,712 | 20,631,261 | 9,664,983 | 56,117,132 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued | 63,850,000 | 63,850 | 484,650 | 548,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock cancelled | (40,000,000 | ) | (40,000 | ) | 40,000 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock issued | 35,000 | 35 | 2,205 | 2,240 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustment | 1,306,458 | 100 | 1,306,558 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Retained earnings | (1,640,192 | ) | (1,640,192 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current Quarter Income | 914,662 | 914,662 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Shareholders' Equity as of March 31, 2023 | 10,000,000 | 10,000 | 3,400,000 | 3,400 | 60,741,000 | 60,741 | 3,172,175 | 3,172 | 1,668,250 | 1,668 | 1,379,080,699 | 1,379,081 | 25,693,170 | 21,118,116 | 8,979,553 | 57,248,900 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued | 55,300,000 | 55,300 | 547,800.00 | 603,100 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred converted into Common stock | 10,000,000 | 10,000 | 10,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock converted | (100,000 | ) | (100 | ) | (100 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock issued | 100,000 | 100 | 100 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustment | (198 | ) | (198 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Retainer Earnings | (216,214 | ) | (216,214 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current Quarter Income | 980,224 | 980,224 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share of profit transferred to Non-Controlling Interest | 3,980,873 | (2,386,489 | ) | 1,594,384 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Shareholders' Equity as of June 30, 2023 | 10,000,000 | 10,000 | 3,400,000 | 3,400 | 60,741,000 | 60,741 | 3,172,175 | 3,172 | 1,668,250 | 1,668 | 1,444,380,699 | 1,444,381 | 29,674,043 | 0 | 21,665,916 | 7,356,876 | 60,220,196 |
The accompanying notes are an integral part of these unaudited/not reviewed consolidated financial statements.
F-3
ILUSTRATO PICTURES INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED/NOT REVIEWED)
June 30, 2024 |
June 30, 2023 |
|||||||
Cash flows from operating activities | ||||||||
Loss for the period | (2,706,291 | ) | (4,655,215 | ) | ||||
Adjustment to reconcile net gain (loss) to net cash | ||||||||
Finance cost | 438,694 | 0 | ||||||
Non-Cash Stock Compensation Expense | 679,113 | 0 | ||||||
Stock issued for Services | ||||||||
Amortization | 58,393 | |||||||
Commitment fees | 248,350 | 0 | ||||||
Depreciation - PPE | 38,680 | 31,868 | ||||||
Other income | (506,604 | ) | 0 | |||||
Discount on convertible Notes | 77,522 | 0 | ||||||
Changes in Assets and Liabilities, net | ||||||||
Current Assets | 9,429,924 | (1,937,566 | ) | |||||
Other Current Liabilities | (303,269 | ) | (68,940,644 | ) | ||||
Net cash (used In) provided by operating activities | 7,454,512 | (75,501,557 | ) | |||||
Cash flows from investing activities | ||||||||
Addition of Fixed Assets | (740,030 | ) | (948,437 | ) | ||||
Right of use Assets | (259,304 | ) | 0 | |||||
Changes in Non-current assets | (11,292,178 | ) | 43,170,769 | |||||
Changes in Non- Current Liabilities | 2,338,304 | 2,567,583 | ||||||
Net cash used in investing activities | (9,953,208 | ) | 44,789,915 | |||||
Cash flows from financing activities | ||||||||
Common Stock issued | 387,670 | 52,034,434 | ||||||
Lease Finance | 180,062 | 0 | ||||||
Preferred Stock Issued | (666 | ) | 5,455,341 | |||||
Finance cost | (438,694 | ) | 0 | |||||
Discount on convertible Notes | (77,522 | ) | 0 | |||||
Additional Paid-up Capital | 1,497,862 | 4,262,103 | ||||||
Changes in Retained Earnings & MI | 1,039,165 | (30,990,287 | ) | |||||
0 | ||||||||
Net cash generated from financing activities | 2,587,877 | 30,761,591 | ||||||
Net increase/(decrease) in cash and cash equivalents | 89,181 | 49,949 | ||||||
Cash and cash equivalents at the beginning of the year | 213,073 | 163,124 | ||||||
Cash and cash equivalents at end of the year | 302,254 | 213,073 |
The accompanying notes are an integral part of these unaudited/not reviewed consolidated financial statements.
F-4
ILUSTRATO PICTURES INTERNATIONAL INC.
NOTES TO AUDITED FINANCIAL STATEMENTS
NOTE 1: ORGANIZATION, HISTORY AND BUSINESS
(A) We were incorporated as a Superior Venture Corp. on April 27, 2010, in the State of Nevada to sell wine varietals. On November 9, 2012, we entered into an Exchange Agreement with Ilustrato Pictures Ltd., a British Columbia corporation (Ilustrato BC"), whereby we acquired all the issued and outstanding common stock of Ilustrato BC. On November 30, 2012, Ilustrato BC transferred all of its assets and liabilities to Ilustrato Pictures Limited, our wholly-owned subsidiary in Hong Kong ("Ilustrato HK"). On February 11, 2013, we changed the name to Ilustrato Pictures International, Inc.
(B) On April 1, 2016, Barton Hollow and the newly elected director of the issuer caused the Issuer to enter into a letter of Intent to merge with Cache Cabinetry, LLC, and Arizona limited liability company. Pursuant to the Letter of Intent, the parties thereto would endeavor to arrive at, and enter into, a definitive merger agreement providing for the Merger. As an inducement to the members of Cache Cabinetry, LLC to enter into the Letter of Intent and thereafter transact, the Issuer caused to be issued 360,000,000 shares of its common stock to the members.
(C) Subsequently, on April 6, 2016, the Issuer and Cache Cabinetry, LLC entered into a definitive agreement and Plan of Merger (the "Merger Agreement"). Concomitant therewith, the stockholders of the Issuer elected Derrick McWilliams, the President of Cache Cabinetry, LLC Chief Executive Officer of the Issuer, who along with Barton Hollow, ratified and approved the Merger Agreement and Merger.
(D) The Merger closed on June 3, 2016. The merger is designed as a reverse subsidiary merger pursuant to Section 368(a)(2)(E) of the Internal Revenue Code. That is, upon closing, Cache Cabinetry LLC will merge into a newly created subsidiary of the Issuer with the members of Cache Cabinetry, LLC receiving shares of the common stock of the Issuer as consideration therefor. Upon closing of the Merger, Cache Cabinetry, LLC will be the surviving corporation in its merger with the wholly-owned subsidiary of the Issuer and, therefore has become the wholly-owned operating subsidiary of the Issuer.
(E) On November 9th, 2018, the Company entered into a Term Sheet for a Plan of Merger and Control with Larson Elmore.
(F) As a part of the share purchase arrangement between Lee Larson Elmore and FB Technologies Global Inc., Nick Link, the owner of FB Technologies Global Inc. replaced Lee Larson Elmore as CEO of Ilustrato Pictures International Inc. on January 14, 2021, where we eventually got control over activities and books of accounts of Ilustrato Pictures International Inc. So, we are not aware about facts mentioned above vide note no. 1(A), 1(B), 1(C), 1(D), 1(E), 1(F) and 1(G) 'organization, history, and business' as they are related to prior to the date on which control over activities and books of accounts of Ilustrato Pictures International Inc. were handed over to us. Thus, those events have been reiterated as disclosed in previous fillings made by the preceding management of the company with the SEC.
F-5
(G) On May 18, 2020, the Company entered into a definitive agreement and Plan of Merger with FB Technologies Global, Inc, the shareholders of FB Technologies Global, Inc. were issued 3,172,175 shares of Series E Preferred Stock for their shares 360,000,000 common shares, 60,741,000 Preference D and 10,000,000 Preference A Shares. A final tranche of preference shares subject to performance to be issued in Quarter 1 of 2022. The merger was consummated on January 14, 2021.
(H) Firebug Mechanical Equipment LLC was incorporated on May 8, 2017. ILUS acquired 100% of this company on January 26, 2021, under a signed Share Purchase Agreement. This company is engaged in the research and development of firefighting technologies and the manufacturing of firefighting equipment and vehicles for its customers in the Middle East, Asia, and Africa.
(I) Georgia Fire & Rescue Supply LLC (Georgia Fire) was incorporated on January 21, 2003. ILUS acquired 100% of this company on March 31, 2022, under a signed Share Purchase Agreement. This company is engaged in the business of sales, distribution and servicing/maintenance of Firefighting, Rescue and Emergency Medical Services equipment. Purchase consideration includes an aggregate cash purchase price of $900,000 (Nine Hundred Thousand Dollars), wherein a fixed sum of $680,000 (Six Hundred Eighty Thousand) payable upon closing and the remaining $220,000 (Two Hundred Twenty Thousand Dollars) payable over a one-year period after closing to the extent the business operations of Georgia Fire & Rescue Supply, LLC meet mutually agreeable performance thresholds along with 1,500 (One Thousand Five Hundred) restricted Class F Preferred Shares in the public company llustrato Pictures International Inc. (Symbol: ILUS)
(J) Bright Concept Detection and Protection System LLC (BCD Fire) was incorporated on March 18, 2014. ILUS acquired 100% of this company on April 13, 2021, in connection with a signed Share Purchase Agreement. This company is engaged in the business of sales, distribution, installation and maintenance of Fire Protection and Security systems. Purchase consideration includes 250,000 AED (Two hundred and fifty thousand) payable on signing of the Sales Purchase agreement, 10,000 AED (Ten thousand) monthly for 24 months starting from May 2021 and 1,000,000 (1 million) restricted shares in the public company llustrato Pictures International Inc. (Symbol: ILUS)
(K) Bull Head Products Inc. was incorporated on June 8, 2007. ILUS acquired 100% of this company on January 1, 2022, under a signed Share Purchase Agreement. This company is engaged in manufacturing aluminum truck beds and brush truck skid units for firefighting purposes including wildland firefighting. Purchase consideration includes an aggregate cash purchase price of $500,000 (Five Hundred Thousand) wherein a fixed sum of $300,000 (Three Hundred Thousand) payable upon closing and remaining $200,000 (Two Hundred Thousand) payable over a one-year period after closing to the extent the business operations of Bull Head Products Inc. meet mutually agreeable performance thresholds referenced in Exhibit B in the SPA along with 6,750 (Six Thousand Seven Hundred and Fifty) restricted Class F Preferred Shares in the public company llustrato Pictures International Inc. (Symbol: ILUS)
(L) Emergency Response Technologies, Inc. This company was incorporated by ILUS on February 22, 2022, as the company's Emergency Response Subsidiary. This company is engaged in the business of public safety and emergency response-focused mergers and acquisitions.
(M) E-Raptor. This company was incorporated by ILUS as the company's Commercial Electric Utility Vehicle manufacturer on February 22, 2022. This company is engaged in the business of manufacturing electric utility vehicles for the emergency response, agricultural, industrial, hospitality and transport sectors.
(N) Replay Solutions was incorporated by ILUS on March 1, 2022. The company is engaged in the business of recovering precious metals from electronic waste, known as urban mining.
F-6
(O) Quality Industrial Corp. was originally incorporated on May 4, 1998. ILUS acquired 77% of this company on May 28, 2022, under a signed Share Purchase Agreement for an aggregate amount of $500,000. This company is engaged in the industrial, oil & gas, and manufacturing sectors. Quality Industrial Corp. is a public company that trades on the OTC Market under the ticker QIND and is designed as a Special Purpose Vehicle for our industrial and manufacturing division as well as for our operating company Quality International Co Ltd FCZ and other future acquisitions.
(P) AL Shola Al Modea Safety and Security LLC is a fire safety company registered in the United Arab Emirates. The company has signed a Share Purchase Agreement to acquire 51% control of AL Shola Al Modea Safety and Security LLC (ASSS) on December 13, 2022. The purchase consideration for 51% of the shares shall be up to $714,000 subject to certain agreed Targets and Key Performance indices being met as referenced in the SPA.
(Q) On January 3, 2024, Ilustrato Pictures International Inc. acquired a convertible note from YAII PN, LTD with outstanding principal and accrued interest of $600,685 in Samsara Luggage Inc. (SAML). On January 5, 2024, SAML reissued a convertible note to ILUS who on the same day converted the note into 150,753,425 shares of common stock in the Company pursuant to the terms of said exchange note. As a result of such conversion, Ilustrato acquired control of 91.5% of the outstanding shares in SAML as of January 5, 2024.
(R) On February 23, 2024, Ilustrato Pictures International, Inc., entered into a Stock Purchase Agreement with Samsara Luggage Inc., and sold all its equity interests in seven companies owned by the Company:
● | Firebug Mechanical Equipment LLC |
● | Georgia Fire & Rescue Supply LLC |
● | Bright Concept Detection and Protection System LLC |
● | Bull Head Products Inc |
● | E-Raptor |
● | The Vehicle Converters |
● | AL Shola Al Modea Safety and Security LLC, the only entity in which the Company does not own 100% but only 51% of the membership interests. |
The consideration for the sale of the equity interests in the foregoing companies was paid by SAML by the issuance of 350,000 restricted shares of Series B stock of SAML convertible into 350,000,000 common stock and further milestone payment/s should applicable performance targets be referenced.
(S) On March 27, 2024, our subsidiary QIND entered into a definitive Stock Purchase Agreement (the "Stock Purchase Agreement") with the shareholders of Al Shola Al Modea Gas Distribution LLC ("ASG" or "Al Shola Gas") to acquire a 51% interest in ASG. The Closing of the transaction took place when both parties signed the definitive Stock Purchase Agreement. Al Shola Gas is an Engineering and Distribution Company in the liquefied petroleum gas ("LPG") Industry in the United Arab Emirates and was established in 1980. The company is one of the region's leading suppliers and contractors of LPG centralized pipeline systems and is approved by The General Directorate of Civil Defense, Government of Dubai, as a Central Gas Contractor and LPG Supplier.
F-7
NOTE 2: SUMMARY OF ACCOUNTING POLICIES
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers.
Accordingly, revenue is recognized when control of the goods or services promised under a contract is transferred to the customer either at a point in time (e.g., upon delivery) or over time (e.g., as the Company performs under the contract) in an amount that reflects the consideration to which the Company expects to be entitled in exchange for the goods or services. The Company accounts for a contract when it has approval and commitment from both parties, the rights and payment terms of the parties are identified, the contract has commercial substance and collectability of consideration is probable. If collectability is not probable, the sale is deferred until collection becomes probable or payment is received.
Contract Assets and Contract Liabilities acquired under Business Combinations
The company follows new guidance under ASC 606 regarding the recognition and measurement of contract assets and contract liabilities acquired in a business combination. The company applies the definition of a performance obligation in ASC 606 when recognizing contract liabilities assumed in a business combination. The company eventually recognizes contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date. Earlier, contract assets and contract liabilities acquired in a business combination were recorded by the acquirer at fair value.
Work-in-progress
Work-in-progress is stated at cost plus attributable profit, less provision for any anticipated losses and progress billings. Cost comprises direct materials, labor, depreciation, and overheads. If any progress billings for any contract exceed the cost-plus attributable profit or less anticipated losses, the excess to be shown as excess progress billings. Claims are only recognized as income when the outcome and recoverability can be determined with reasonable certainty. Contract revenue and costs are recognized as revenue and expenses, respectively, in the statement of comprehensive income when the outcome of a construction contract can be estimated reliably.
In accordance with ASC-606 revenue recognition, amounts are billed in accordance with contractual terms or as work progresses. Unbilled amounts arise when the timing of billing differs from the timing of revenue recognized, such as when contract provisions require specific milestones to be met before a customer can be billed. Unbilled amounts primarily relate to performance obligations satisfied over time when the cost-to-cost method is utilized, and the revenue recognized exceeds the amount billed to the customer as there's not yet a right to invoice in accordance with contractual terms. Unbilled amounts are recorded as a contract asset when the revenue associated with the contract is recognized prior to billing and derecognized when billed in accordance with the terms of the contract.
Variations
Variations are recognized in contract revenue when the outcome can be determined with reasonable certainty and are capable of being reliably measured.
Variable consideration
If the consideration in a contract includes a variable amount, the Company estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved. The construction contracts provide customers with a right to claim damages for delay in delivery of goods. The rights to claim damages for delay in delivery of goods give rise to variable consideration.
F-8
Accounts Receivable
Accounts receivable are reported at the customers' outstanding balances, less any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable.
The duration of such receivables extends from 30 days to beyond 12 months. Full payment is received only when a job/project is completed, and approvals are obtained. Provisions are created based on estimated irrecoverable amounts determined by reference to past default experience.
Allowance for Doubtful Accounts
An allowance for doubtful accounts on accounts receivable is charged to operations in amounts sufficient to maintain the allowance for uncollectible accounts at a level management believes is adequate to cover any probable losses. Management determines the adequacy of the allowance based on historical write-off percentages and information collected from individual customers. Accounts receivables are charged off against the allowances when collectability is determined to be permanently impaired.
Inventories
In accordance with ASC 330, 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.
Tangible Assets/ Property Plant & Equipment
Property, plant, and equipment are recorded at cost, except when acquired in a business combination where property, plant and equipment are recorded at fair value. Depreciation of property, plant and equipment is recognized over the estimated useful lives of the respective assets using the straight-line method.
The estimated useful lives are as follows:
Buildings, related improvements & land improvements | 5-25 | |
Machinery & equipment | 3-15 | |
Computer hardware & software | 3-10 | |
Office, furniture & others | 3-15 |
Expenditures that extend the useful life of existing property, plant and equipment are capitalized and depreciated over the remaining useful life of the related asset. Expenditures for repairs and maintenance are expensed as incurred. When property, plant and equipment are retired or sold, the cost and related accumulated depreciation is removed from the Company's balance sheet, with any gain or loss reflected in operations.
Stock-Based Compensation
When applicable, the Company will account for stock-based payments to employees in accordance with ASC 718, "Stock Compensation" ("ASC 718"). Stock-based payments to employees include grants of stocks, grants of stock options and issuance of warrants that are recognized in the consolidated statement of operations based on their fair values at the date of grant.
In accordance with ASC 718, the company will generally apply the same guidance to both employee and nonemployee share-based awards. However, the company will also follow specific guidance for share-based awards to nonemployees related to the attribution of compensation cost and the inputs to the option-pricing model for the expected term. Nonemployee share-based payment equity awards are measured at the grant-date fair value of the equity instruments, similar to employee share-based payment equity awards.
F-9
The Company calculates the fair value of option grants and warrant issuances utilizing the Binomial pricing model. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. ASC 718 requires forfeitures to be estimated at the time stock options are granted and warrants are issued to employees and non-employees, and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term "forfeiture" is distinct from "cancellations" or "expirations" and represents only the unvested portion of the surrendered stock option or warrant. The Company estimates forfeiture rates for all unvested awards when calculating the expenses for the period. In estimating the forfeiture rate, the Company monitors both stock option and warrant exercises as well as employee termination patterns. The resulting stock-based compensation expense for both employee and non-employee awards is generally recognized on a straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period.
Earnings (Loss) per Share
The Company reports earnings (loss) per share in accordance with ASC Topic 260-10, "Earnings per Share." Basic earnings (loss) per share is computed by dividing income (loss) available to shareholders by the weighted average number of shares available. Diluted earnings (loss) per share available. Diluted earnings (loss) per share is computed similarly to basic earnings (loss) per share except the denominator is increased to include the number of additional shares that would have been outstanding if the potential shares had been issued and if the additional shares were dilutive.
Organization and Offering Cost
The Company has a policy to expense organization and offering cost as incurred.
Cash and Cash Equivalents
For the purpose of the statements of cash flows, the Company considers cash and cash equivalents to include all stable, highly liquid investments with maturities of three months or less.
Fair Value of Financial Instruments
The company's financial instruments consist of cash and cash equivalents, accounts receivable, and notes payable. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Business segment
ASC 280, "Segment Reporting" requires the use of the "management approach" model for segment reporting. The management approach model is based on the way a company's management organizes segments within the company for making operating decisions and assessing performance.
Below is the Statement of operations of reportable Segment:
F-10
Divisional Income Statement
The Company is organized into two divisions based on the similarity of products, customers served, common use of facilities, and economic characteristics. The Company's segments are as follows:
1. | Emergency Response |
2. | Industrial & Manufacturing |
All intersegment transactions have been eliminated in consolidation.
For the Six Months Ended | ||||||||
June 30, 2024 |
2023 (Restated) |
|||||||
Emergency & Response Division | ||||||||
Revenue | 2,028,053 | 3,595,851 | ||||||
Cost Of Goods Sold | 1,399,025 | 2,553,284 | ||||||
Gross Profit | 629,028 | 1,042,567 | ||||||
Total Operating Expenses | 1,886,734 | 3,259,649 | ||||||
Operating Loss | (1,257,706 | ) |
(2,217,08
|
) | ||||
Net Loss | (1,252,125 | ) | (2,988,458 | ) |
Our revenue decreased to $2,028,053 for the six months ended June 30, 2024, from $3,595,851 in 2023, a 44% decrease year to date. Gross profit percentage increased to 31% for the six months ended June 3, 2024, from 29% in 2023.
Operating expenses decreased to $1,886,734 for the six months ended June 30, 2024, compared with the same period of $ 3,259,649 in the year 2023.
For the coming period 2024, the Company will continue to allocate financial, technical and sales resources for recently acquired subsidiaries to positively impact their financial results through increased sales orders and efficiency. Allocated personnel will primarily focus on accelerating sales and marketing efforts, product development, international market expansion, optimizing supply chain and production processes, and overall increased profitability while continuing with the integration and optimization of currently operating companies. With the group expansion and growth, we also intend to hire executives and personnel with specific industry experience and fields of expertise to streamline financial reporting, compliance, and Investor Relations and to improve our corporate governance.
For the Six Months Ended | ||||||||
June 30, 2024 |
June 30, 2023 (Restated) |
|||||||
Industrial & Manufacturing Division (QIND) | ||||||||
Revenue | 3,317,206 | 0 | ||||||
Cost of revenues | 2,068,708 | 0 | ||||||
Gross profit | 1,248,498 | 0 | ||||||
Total Operating Expenses | 911,179 | 900,327 | ||||||
Profit/ loss from Operations | 337,319 | (900,327 | ) | |||||
Non-Operating expenses | 165,851 | 766,430 | ||||||
Non-Operating Income | 427,554 |
-
|
||||||
Net loss/ profit | 599,022 | (1,666,757 | ) |
F-11
For our Industrial and Manufacturing Division, the Operating Revenue increased to $3,317,206 for the quarter ended June 30, 2024, compared to $0 for the year ended June 30, 2023. The increase in revenue, was the result of the consolidation of Al Shola Gas For our Industrial and Manufacturing Division, the Operating expenses increased to $10,852 for the year ended June 30, 2024, compared to $65,013 for the year ended June 30, 2023. Our increase in operating expenses in 2024 was mainly the result of the consolidation of Al Shola Gas in our subsidiary QIND. Our Subsidiary QIND acquired a 51% interest in Al Shola Gas on March 23, 2024, and is consolidating the profitable operating company into its financials from Q2 2024.
We earned a profit of $599,022 for the six months ended June 30, 2024, compared to a net loss of $1,666,757 for the six months ended June 30, 2023. The change from loss to profit for the period ended June 30, 2024, is a result of Net Income from our acquisition of Al Shola Gas and the reversal of interest payments on the loan agreements with Mahavir and Artelliq.
Geographical presence
Presently our operations are spread across the United States, United Arab Emirates, United Kingdom, and the Republic of Serbia, however, we plan to further expand our regional presence and aim to expand our manufacturing operations in the United States during 2024. At present the revenue reported above is from the United States and United Arab Emirates. We've classified the revenue based on the entities registered in their respective locations. All the revenue generated as indicated has solely come from external customers, with no sales involving inter-company transactions.
Income Taxes
The Company accounts for income tax positions in accordance with Accounting Standards Codification Topic 740, "Income Taxes" ("ASC Topic 740"). This standard prescribes a recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There was no material impact on the Company's financial position or results of operations as a result of the application of this standard. Deferred tax assets have not been created for those subsidiaries which are in income tax-free jurisdiction, because the losses incurred cannot be utilized in the future, rendering deferred tax assets irrelevant.
Recent Accounting Pronouncements
In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. ASU 2017-04 also clarifies that an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The new standard is effective for fiscal years beginning after December 15, 2019, for both interim and annual reporting periods.
F-12
Rounding Off
Figures are rounded off to the nearest $, except the value of EPS and number of shares.
NOTE 3: CURRENT ASSETS
June 30, | December 31, | |||||||
Particulars | 2024 | 2023 | ||||||
Loans advanced | (2,327 | ) | 1,855,892 | |||||
Advance given to suppliers and sub-contractors | 0 | 65,089 | ||||||
Director's current accounts | 2,519,267 | 679,245 | ||||||
Statutory dues receivable | 0 | 50,404 | ||||||
Deposits | 0 | 46,918 | ||||||
Accrual of discount on notes | 85,354 | 217,440 | ||||||
Deferred expenses - consultancy | 1,785,938 | 0 | ||||||
Buy Back Commitment | 2,000,000 | 2,000,000 | ||||||
Toto Loan Current Portion | 3578709 | 0 | ||||||
Misc. current assets | 149,546 | 536,171 | ||||||
Total | 10,116,487 | 5,451,159 |
● | Advances to Subcontractors and Suppliers: Advances have been paid to the suppliers/ sub-contractors in the ordinary course of business for procurement of specialized material and equipment. |
● | Directors Current Account includes amount incurred for Company's Annual shareholders meeting, events for investor relationship, advances for our investment projects and other expenses incurred for future potential acquisitions. |
● | Loan advanced refers to the amount advanced by a company in the ordinary course of business and includes the amount paid for set up of new businesses. |
Accounts Receivable
Accounts receivables are reported at the customers' outstanding balances, less any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable.
The duration of such receivables extends from 30 days to beyond 12 months. Full payment is received only when a job/project is completed, and approvals are obtained. Provisions are created based on estimated irrecoverable amounts determined by reference to past default experience.
June 30, | ||||
2024 | ||||
Accounts Receivables Ageing | (unaudited) | |||
1-30 days | 329,345 | |||
31-60 days | 175,352 | |||
61-90 days | 146,028 | |||
+90 days | 6,881,243 | |||
Total | 7,531,969 |
F-13
NOTE 4: NON-CURRENT ASSETS
Goodwill
As a part of the share purchase arrangement between Lee Larson Elmore and FB Technologies Global Inc., Nick Link, the owner of FB Technologies Global Inc. replaced Lee Larson Elmore as CEO of Ilustrato Pictures International Inc. on January 14, 2021, and we eventually got control over activities and books of accounts of Ilustrato Pictures International Inc. from the date January 14, 2021.
As of June 30, 2024, the additional Goodwill has been generated through the acquisition by our subsidiary Quality Industrial Corp, through the operating business of Al Shola Gas as consolidated from April 1, 2024. Goodwill accounted for in the books is primarily a result of the acquisition, representing the excess of the purchase price over the fair value of the tangible net assets acquired.
The Company accounts for business combinations by estimating the fair value of the consideration paid for acquired businesses and assigning that amount to the fair values of assets acquired and liabilities assumed, with the remainder assigned to goodwill. If the fair value of assets acquired and liabilities assumed exceeds the fair value of consideration paid, a gain on bargain purchase is recognized. The estimates of fair values are determined utilizing customary valuation procedures and techniques, which require us, among other things, to estimate future cash flows and discount rates. Such analyses involve significant judgments and estimations.
The Company follows the guidance prescribed in Accounting Standards Codification ("ASC") 350, Goodwill and Other Intangible Assets, to test goodwill and intangible assets for impairment annually if an event occurs or circumstances change which indicates that its carrying amount may not exceed its fair value.
The annual impairment review is performed in the fourth quarter of each fiscal year based upon information and estimates available at that time. To perform the impairment testing, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair values of the Company's reporting units or indefinite-lived intangible assets are less than their carrying amounts as a basis for determining whether or not to perform the quantitative impairment test. Qualitative testing includes the evaluation of economic conditions, financial performance, and other factors such as key events when they occur. The Company then estimates the fair value of each reporting unit and each indefinite-lived intangible asset not meeting the qualitative criteria and compares their fair values to their carrying values.
The company will assess impairment from the 2024 year-end in accordance with the guidance prescribed in ASC 350. The Company would assess at year-end whether there has been an impairment in the value of goodwill and identifiable intangible assets.
If future operating performance at one or more of the Company's reporting units were to fall significantly below forecasted levels, the Company could be required to reflect, under current applicable accounting rules, a non-cash charge to operating income for an impairment. Any determination requiring the write-off of a significant portion of goodwill, or identifiable intangible assets would adversely impact the Company's results of operations and net worth.
On April 1, 2024, the Agreement with Quality International was canceled by the Board of Directors of Quality Industrial Corp. QIND restated its financial statements as of December 31, 2022, which were previously reported on the Original Filing and subsequent amendments. Quality International is no longer considered as Goodwill. The following items reflect the restatements:
As of June 30, 2024, Goodwill, and intangible assets amount to $11,115,562 as compared to total assets amounting to $8,606,289 as of December 31, 2023. Below is a table displaying the Goodwill arising from the Company's acquisitions:
Year |
June 30, 2024 |
December 31, 2023 |
||||||
QIND | 6,704,318 | 6,704,318 | ||||||
Firebug | 0 | (81,676 | ) | |||||
Bullhead | 0 | 597,226 | ||||||
Georgia Fire | 0 | 136,175 | ||||||
ILUS UK | 335,741 | 335,741 | ||||||
BCD | 0 | 306,597 | ||||||
ASSS | 0 | 607,908 | ||||||
SAML | 4,075,503 | 0 | ||||||
Goodwill Total | 11,115,562 | 8,606,289 |
F-14
Long term investments
Particulars |
June 30, 2024 |
December 31, 2023 |
||||||
Investment in BCD | 0 | 20,500 | ||||||
Investment in FB Fire Technologies Ltd | 2,036,767 | 3,172,175 | ||||||
Investment in Quality International | 0 | 6,500,000 | ||||||
Investment in Wikisoft | 6,555,755 | 0 | ||||||
Investment in Dear Cashmere Holding Co. | 12,000,000 | 12,000,000 | ||||||
Long term investment | 4,672,175 | 0 | ||||||
Loan to Fb Fire Technologies Ltd | 0 | 1,946,534 | ||||||
Total | 25,264,697 | 23,639,209 |
The company holds long-term investments of $6,500,000 and $0 as of December 31, 2023, and June 30, 2024, respectively. These investments were made for the acquisition of Quality International, a transaction that was terminated on April 1, 2024
Investment in Dear Cashmere Holding Co.: The company received 10,000,000 shares of Common stock in Dear Cashmere Holding Co on May 21, 2021, as compensation for services to provided DRCR such as but not limited to, free rent in Al Marsa Street 66, 11th Floor, Office 1105, Dubai, free use of inhouse accounting, IT, and legal team from 2021 until December 31, 2023. The shares were discretionary awarded and recorded at a fair market value of $1.20 with a grant date as of May 21, 2021, in accordance with ASC 718 and issued by, the Chairman, Nicolas Link and CEO, James Gibbons, of DRCR.
Investment in FB Fire Technologies:
Represents 3,172,175 number of Class E Preferred Stock issued, in advance, at $1 per share amounting $3,172,175 to the shareholders of FB Fire Technologies Ltd.
Tangible Assets
Particulars |
June 30, 2024 |
December 31, 2023 |
||||||
Tangible Assets | ||||||||
Land and Buildings | 0 | 0 | ||||||
Plant and Machineries | 34,401 | 38,582 | ||||||
Furniture, Fixtures and Fittings | 34,250 | 37,432 | ||||||
Vehicles | 69,397 | 14,645 | ||||||
Computer and Computer Equipment | 48,160 | 49,044 | ||||||
Total | 186,207 | 139,523 |
Depreciation on tangible assets in accordance with ASC 360.
Plant & Machinery |
Furniture, Fixtures & Office Equipment |
Vehicles | Computers | Total | ||||||||||||||||
Carrying value as of January 1, 2024 | 38,582 | 37,432.00 | 118,789 | 49,044 | 243,847 | |||||||||||||||
Addition during Q1 2024 | 3,116 | 9,801 |
-
|
-
|
12,917 | |||||||||||||||
Charged Depreciation Q1 2024 | 3,806 | 10,075 | 24,290 |
-
|
38,171 | |||||||||||||||
Carrying value March 31, 2024 | 37,892 | 37,158 | 94,499 | 49,044 | 218,592 | |||||||||||||||
Addition during Q2 2024 | 0 | 3,949 | 0 | 2,060 | 6,009 | |||||||||||||||
Charged Depreciation Q2 2024 | 3,491 | 6,857 | 25,102 | 2,944 | 38,394 | |||||||||||||||
Carrying value June 30, 2024 | 34,401 | 34,250 | 69,397 | 48,160 | 186,207 |
F-15
NOTE 5: CURRENT LIABILITIES
Other Current Liabilities
Particulars |
June 30, 2024 |
December 31, 2023 |
||||||
Accrued payables | 68,505 | 204,925 | ||||||
Credit cards | 10,494 | 8,221 | ||||||
other advances | 942,990 | 827,824 | ||||||
Loan Payable | 537,115 | 6,021,338 | ||||||
Misc. current liabilities | 432,607 | 165,344 | ||||||
Payroll Liabilities | 792,605 | 534,068 | ||||||
Payable to Government Authorities | 124,309 | 64,199 | ||||||
Provision for Audit Fees | 39,500 | 24,500 | ||||||
Payable to subsidiaries | 10,832,740 | 975,547 | ||||||
Total | 13,780,865 | 8,825,966 |
As per the applicable accounting standards, Borrowings from financial institutions have been bifurcated into current and non-current liabilities.
NOTE 6: NON-CURRENT LIABILITIES
Notes Payable
The following is the list of Notes payable as of June 30, 2024. Convertible Notes issued during the reported period are accounted in the books as a liability, accrued Interest and discount on notes is also accounted accordingly as per general accounting principles.
On February 04, 2022, the company entered into a convertible note with Discover Growth Fund LLC - John Burke for the amount of $2,000,000. The note is convertible at 35% below the lowest past 15-day share price and bears 12% interest per annum. The note matured on February 4, 2023. The Company signed a Forbearance Agreement with Discover Growth Fund on May 3, 2023. The Company shall make monthly minimum loan payments to Discover Growth Fund of $450,000.00 commencing on May 30, 2023, and on the 5th day of each month thereafter, until the Note is paid in full. Four payments of 450,000 have been made as of June 30, 2024.
On June 1, 2022, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $1,000,000. The note is convertible into common stock at the rate of $0.50 and bears 5% interest per annum. The note matures on May 31, 2024. This note has been partially converted.
On December 22, 2023, the company entered into a convertible note with AJB Capital Investment LLC for the amount of $1,680,000. The note is convertible into common stock upon an event of default at the rate equal to volume weighted average trading price of the specified period and bears 12% interest. The note matures on May 1, 2024.
On January 15, 2024, the company entered into a convertible note with Twn Brooks Inc., for the amount of $27,500. The note is convertible into common stock at the rate of 65% of the lowest trading price 10 days prior to conversion and bears a 9% interest per annum. The note matures on July 15, 2024.
On January 23, 2024, the company entered into a convertible note with Twn Brooks Inc., for the amount of $25,000. The note is convertible into common stock at the rate of 65% of the lowest trading price 10 days prior to conversion and bears a 9% interest per annum. The note matures on July 23, 2024.
On January 31, 2024, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $600,000. The note is convertible into common stock at the rate of $0.10 and bears 8% interest per annum. The note matures on January 31, 2026.
F-16
On April 1, 2024, ILUS entered into a consolidated note payable with a principal amount of $6,405,750 with RB Capital Inc. which amount represents the amount owed to Holder as of April 1, 2024. Repayable at any time and bears 7% interest rate per annum. The Company may repay the Holder in cash at any time in full including all interest and principal, without penalty. If the issuer pays the holder $650,000 in cash in a fiscal quarter the holder will not be permitted to carry out a conversion in that fiscal quarter, unless by mutual agreement. The note is convertible into common stock at a rate equal to the variable conversion price as of 70% of the lowest trading price during the previous ten trading days.
On April 15, 2024, the company entered into a convertible note with Twn Brooks Inc., for the amount of $55,000. The note is convertible into common stock at the rate of 65% of the lowest trading price 10 days prior to conversion and bears a 9% interest per annum. The note matures on October 15, 2024.
On May 6, 2024, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $100,000. The note is convertible into common stock at the rate of $0.10 and bears a 7% interest per annum. The note matures on May 6, 2026.
On May 16, 2024, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $150,000. The note is convertible into common stock at the rate of $0.10 and bears a 7% interest per annum. The note matures on May 16, 2026.
On May 20, 2024, the company entered into a convertible note with Twn Brooks Inc., for the amount of $27,500. The note is convertible into common stock at the rate of 35% below the average past 10-day share price prior to conversion and bears a 9% interest per annum. The note matures on November 20, 2024.
On June 12, 2024, ILUS entered into a note payable of $91,530 with 1800 Diagonal Lending LLC. convertible into common stock 65% multiplied by the lowest trading price for the Common Stock during the ten (10) Trading Days prior to the Conversion date and bears a 13% interest per annum. The note matures on March 15, 2025.
On June 20, 2024, ILUS entered into a note payable of $63,250 with 1800 Diagonal Lending LLC. convertible into common stock 65% multiplied by the lowest trading price for the Common Stock during the ten (10) Trading Days prior to the Conversion date and bears a 13% interest per annum. The note matures on March 30, 2025.
F-17
NOTE 7: OTHER NON CURRENT LIABILITIES
Particulars |
June 30, 2024 |
December 31, 2023 |
||||||
Retirement benefits to pay | 274,575 | 145,662 | ||||||
Bank Borrowings | 320,972 | 0 | ||||||
Provision for Convertible Notes | 1,249,055 | 1,155,338 | ||||||
Interest on Convertible Notes | 0 | 820,455 | ||||||
Total | 1,844,602 | 2,121,455 |
Options and Warrants
The Company chooses not to record warrants in its financial books if the exercise price is significantly higher than the current market price and classifies it as a contingent liability. For example, the common stock purchase warrant to Discover Growth Fund, LLC described below has an exercise price of $0.275. As of December 31, 2022, the market price was $0.07, and by March 15, 2023, it had further decreased to $0.04 when the Consolidated Financial Statements were being audited. The Company's management classifies these warrants as a contingent liability, given the decline in prices, making it unlikely that the warrants will be exercised in the future. The management reserves warrant shares with its transfer agent. If the warrants should be exercised in the future the warrants will be accounted for in accordance with ASC 480.
On February 4, 2022, a Common Share Purchase Warrant was issued to Discover Growth Fund, LLC, of the $2,000,000 convertible promissory note of even date herewith (the "Note"), , Holder is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date of issuance hereof, to purchase from the Company, 20,000,000 of the Company's common shares (the "Warrant Shares") (whereby such number may be adjusted from time to time pursuant to the terms and conditions of this Warrant) at the Exercise Price of $0.275, per share then in effect.
On December 2, 2022, we issued a common stock purchase warrant to AJB Capital Investment LLC for the $1,200,000 convertible promissory note. The holder is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date of issuance hereof, to purchase from the Company, 30,000,000 of the Company's common shares (the "Warrant Shares") (whereby such number may be adjusted from time to time pursuant to the terms and conditions of this Warrant) at the Exercise Price per share then in effect. The Warrant was later amended on March 8, 2023, and May 12, 2023.
On January 26, 2023, we issued a common stock purchase warrant to Jefferson Street Capital for the $100,000 convertible promissory note. The holder is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date of issuance hereof, to purchase from the Company, 650,000 of the Company's common shares (the "Warrant Shares") (whereby such number may be adjusted from time to time pursuant to the terms and conditions of this Warrant) at the Exercise Price per share then in effect.
On June 30, 2023, we issued a common stock purchase warrant to Exchange Listing. The holder is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date of issuance hereof, to purchase from the Company, 200,000 of the Company's common shares (the "Warrant Shares") (whereby such number may be adjusted from time to time pursuant to the terms and conditions of this Warrant) at the Exercise Price per share then in effect.
F-18
NOTE 8: STOCKHOLDER´S EQUITY
Common Stock And Preferred Stock
In August 2019 the Company Amended its Articles of Incorporation to authorize it to issue up to two billion (2,000,000,000) shares, of which all shares are common stock, with a par value of one-tenth of one cent ($0.001) per share.
The Company also created the following 30,000,000 preferred shares with a par value of $0.001 to be designated Class A, B and C.
Class A - 10,000,000 preferred shares that convert at 3 common shares for every 1 preferred class A share and voting rights of 500 common shares for every 1 preferred class A share. All 10,000,000 preferred class A shares have been issued to the Company's CEO.
Class B - 100,000,000 preferred with par value $0.001 that will be converted at 100 common shares for every 1 preferred Class B Share with voting rights of 100 common shares for every 1 preferred class B share. Dividends to be paid according to the company's dividend policy agreed by the board from time to time
Class C - 10,000,000 preferred shares that convert at 2 common shares for every 1 preferred class C common share with voting rights of 100 common shares for every 1 preferred class C share.
Class D- 60,741,000 preferred shares; par value $0.001 that convert at 500 common shares for every 1 preferred class D common share with voting rights of 500 common shares for every 1 preferred class D share.
Class E - 5,000,000 preferred shares; par value $0.001; non-cumulative. Dividends are 6% a year commencing a year after issuance. Dividends are to be paid annually. Redeemable at $1.00 per share, 2.25% must be redeemed per quarter, commencing one year after issuance, and shall be redeemed at a 130% premium to the redemption value. The shares do not have voting rights.
Class F - 50,000,000 preferred shares; par value $0.001 that convert at 100 common shares for every 1 preferred class F share with no voting rights and no dividends.
Stockholders' Equity
As of June 30, 2024,
1. | 3,500,000,000 shares of common stock are authorized, and 2,107,852,860 shares of the Company's common stock are issued and outstanding. |
2. | 235,741,000 shares of all classes of preferred stock are authorized and 78,928,925 shares of the Company's all classes of Preferred stock are issued and outstanding. |
On January 3, 2024, Ilustrato Pictures International Inc. acquired a convertible note from YAII PN, LTD with outstanding principal and accrued interest of $600,685 in Samsara Luggage Inc. (SAML). On January 5, 2024, SAML reissued a convertible note to ILUS who on the same day converted the note into 150,753,425 shares of common stock in the Company pursuant to the terms of said exchange note. As a result of such conversion, Ilustrato acquired control of 91.5% of the outstanding shares in SAML as of January 5, 2024.
F-19
On January 03, 2024, we issued 3,250,000 shares of common stock as commitment shares to Twn Brooks Inc. with a fair market value of $.0072 per share for an aggregate price of $23,400.
On January 18, 2024, we issued 6,349,206 shares of common stock to Kyle Comerford for a stock purchase agreement for an aggregate price of $20,000.
On January 22, 2024, James Gibbons converted 50,000 shares of Preference F stock into 5,000,000 shares of common stock.
On January 22, 2024, we issued 2,500,000 shares of common stock as commitment shares to Twn Brooks Inc. with a fair market value of $.0166 per share for an aggregate price of $41,500.
On January 25, 2024, we issued 75,000,000 shares of common stock as compensation to AJB Capital Investments LLC for partial conversion of a convertible note for an aggregate price of $633,000.
On February 1, 2024, we issued 50,000,000 shares of common stock as compensation to RB Capital Partners LLC for partial conversion of a convertible note for an aggregate price of $200,000.
On February 2, 2024, we issued 2,250,000 shares of common stock as commitment shares to Twn Brooks Inc. with a fair market value of $.0172 per share for an aggregate price of $38,700.
On February 8, 2024, the company entered into a share purchase agreement with William Black to sell 37,500 shares of Preferred F Stock for a purchase price of $30,000.
On February 19, 2024, we issued 125,000 shares of Preferred F stock to Safeguard Investments LLC for an aggregate price of $170,000 for consultancy services.
On February 23, 2024, Ilustrato Pictures International, Inc., entered into a Stock Purchase Agreement with Samsara Luggage Inc., and sold all its equity interests in seven companies owned by the Company:
● | Firebug Mechanical Equipment LLC |
● | Georgia Fire & Rescue Supply LLC |
● | Bright Concept Detection and Protection System LLC |
● | Bull Head Products Inc |
● | E-Raptor |
● | The Vehicle Converters |
● | AL Shola Al Modea Safety and Security LLC, the only entity in which the Company does not own 100% but only 51% of the membership interests. |
The consideration for the sale of the equity interests in the foregoing companies was paid by SAML by the issuance of 350,000 restricted shares of Series B stock of SAML convertible into 350,000,000 common stock and further milestone payment/s should applicable performance targets be referenced.
On March 19, 2024, we issued 26,566,901 shares of common stock to Jefferson Street for conversion of a warrant for an aggregate price of $97,500.
On March 26, 2024, the Company amended its Articles of Incorporation to authorize it to issue up to three and a half billion (3,500,000,000) common shares, with a par value of one-tenth of one cent ($0.001) per share.
F-20
On March 27, 2024, we issued 8,736,538 shares of common stock as commitment shares to Twn Brooks Inc. with a fair market value of $.0125 per share for an aggregate price of $109,207.
On March 27, 2024, our subsidiary QIND entered into a definitive Stock Purchase Agreement (the "Stock Purchase Agreement") with the shareholders of Al Shola Al Modea Gas Distribution LLC ("ASG" or "Al Shola Gas") to acquire a 51% interest in ASG. The Closing of the transaction took place when both parties signed the definitive Stock Purchase Agreement. Al Shola Gas is an Engineering and Distribution Company in the liquefied petroleum gas ("LPG") Industry in the United Arab Emirates and was established in 1980. The company is one of the region's leading suppliers and contractors of LPG centralized pipeline systems and is approved by The General Directorate of Civil Defense, Government of Dubai, as a Central Gas Contractor and LPG Supplier.
On April 01, 2024, we issued 3,365,882 shares of common stock to TwnBrooks Inc for conversion of a convertible note for an aggregate price of $22,888.
On April 02, 2024, we issued 3,365,882 shares of common stock to TwnBrooks Inc for conversion of a convertible note for an aggregate price of $22,888.
On April 03, 2024, we issued 16,000,000 shares of common stock to Kevin Van Hoesen for a stock purchase agreement for an aggregate price of $100,000.
On April 11, 2024, John-Paul Backwell converted 200,000 shares of Preference F Stock into 20,000,000 shares of common stock.
On April 11, 2024, Daniel Link converted 75,000 shares of Preference F stock into 7,500,000 shares of common stock.
On April 15, 2024, we issued 4,000,000 shares of common stock as commitment shares to Twn Brooks Inc. with a fair market value of $.0108 per share for an aggregate price of $43,200 pursuant to the issuance of a convertible promissory note dated April 15, 2024, amounting to $55,000.00
On May 6, 2024, we issued 18,000,000 shares of common stock as compensation to RB Capital Partners LLC for the final conversion of a convertible note for an aggregate price of $72,000
On May 8, 2024, Alexander Kolyakin converted 504,000 shares of Preference B stock into 50,400,000 shares of common stock.
On May 15, 2024, we issued 72,000,000 shares of common stock as compensation to RB Capital Partners LLC for the partial conversion of a convertible note for an aggregate price of $288,000
On May 21, 2024, we issued 2,000,000 shares of common stock as commitment shares to TwnBrooks Inc, with a fair market value of $.0086 per share for an aggregate price of $17,200.00 pursuant to the issuance of a convertible promissory note dated May 20, 2024, amounting to $27,500.00
On 14 June 2024, we issued 11,385,800 shares of common stock as compensation to 1800 Diagonal Lending LLC for the conversion of a convertible note for an aggregate price of $59,946.24
F-21
NOTE 9: NET LOSS PER SHARE
Particulars |
June 30, 2024 |
June 30, 2023 |
||||||
Basic EPS | ||||||||
Numerator | ||||||||
Net income / (loss) | (2,725,402 | ) | (4,655,215 | ) | ||||
Net Income attributable to common stockholders | $ | (2,725,402 | ) | $ | (4,655,215 | ) | ||
Denominator | ||||||||
Weighted average shares outstanding | 1,959,529,013 | 1,444,380,699 | ||||||
Number of shares used for basic EPS computation | 1,959,529,013 | 1,444,380,699 | ||||||
Basic EPS | $ | (0.00 | ) | $ | (0.00 | ) | ||
Diluted EPS | ||||||||
Numerator | ||||||||
Net income / (loss) | (2,725,402 | ) | (4,655,215 | ) | ||||
Net Income attributable to common stockholders | $ | (2,725,402 | ) | $ | (4,655,215 | ) | ||
Denominator | ||||||||
Number of shares used for basic EPS computation | 2,107,852,860 | 1,379,080,699 | ||||||
Conversion of Class A preferred stock to common stock | 30,000,000 | 30,000,000 | ||||||
Conversion of Class B preferred stock to common stock | 356,000,000 | 340,000,000 | ||||||
Conversion of Class C preferred stock to common stock | 0 | 0 | ||||||
Conversion of Class D preferred stock to common stock | 30,370,500,000 | 30,370,500,000 | ||||||
Conversion of Class E preferred stock to common stock | 3,172,175 | 3,172,175 | ||||||
Conversion of Class F preferred stock to common stock | 145,575,000 | 166,825,000 | ||||||
Number of shares used for diluted EPS computation | 33,013,100,035 | 32,289,577,874 | ||||||
Diluted EPS | $ | (0.00 | ) | $ | (0.00 | ) |
F-22
NOTE 10: RELATED PARTY TRANSACTIONS
The transactions described under the heading "Executive Compensation," there have not been, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a participant in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any director, executive officer, holder of 5% or more of any class of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest.
On April 1, 2024, the Agreement with Quality International was canceled by the Board of Directors of Quality Industrial Corp. QIND restated its financial statements as of December 31, 2022, which were previously reported on the Original Filing and subsequent amendments. Quality International is no longer considered a related party. The following items reflect the restatements:
As of June 30, 2024, and December 31, 2023, the Company had amounts due to Quality Industrial Corp. ("QIND"), a subsidiary of the Company, of $1,836,396 and $333,133, respectively. These figures are related to an intercompany loan agreement executed by and between the Company and QIND on June 15, 2022. The maximum principal amount to be borrowed by either party from each other under the agreement is $1,000,000. The purpose of the agreement is to provide for working capital to either the Company or ILUS through cash advances on an unsecured basis requested by either party at any time and from time to time in amounts of up to $100,000 and the agreement shall automatically be renewed for successive one-year terms thereafter unless terminated. The intercompany loan agreement has a term of one year from the date of execution and all cash advances mature and become payable on the termination date. Any unpaid principal accrues simple interest from the date of each cash advance until payment in full at a rate equal to 1% per annum.
On December 5, 2022, we issued 35,000 preferred Class F shares to Krishnan Krishnamoorthy as staff compensation for an aggregate price of $273,700.
On December 5, 2022, we issued 25,000 preferred Class F shares to Carsten Kjems Falk as staff compensation for an aggregate price of $195,500.
On December 5, 2022, we issued 75,000 preferred class F shares to Daniel Link as staff compensation for an aggregate price of $586,500. Daniel Link and Nicolas Link are siblings. Daniel Link was employed in Firebug UK from 2014 until February 28, 2022, thereafter he was employed in Replay Solutions which was incorporated by ILUS on March 1, 2022.
On December 5, 2022, we issued 250,000 shares of preferred class F to Nicolas Link as staff compensation for an aggregate price of $1,955,000.
On December 08, 2022, we canceled 10,000,000 shares of common stock held by Louise Bennett.
On December 08, 2022, we canceled 1,300,000 shares of preferred class F held by Louise Bennett.
On December 08, 2022, we canceled 800,000 shares of preferred class F held by John-Paul Backwell.
On April 12, 2023, 100,000 Preferred F shares were issued to John-Paul Backwell as staff compensation. with a fair market value of $429,000.
On May 4, 2023, QIND 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, QIND 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, QIND 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, QIND 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.
F-23
On May 4, 2023, QIND 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 September 15, 2023, QIND 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, QIND 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, QIND 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, QIND 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 April 3, 2024, we issued 30,000 shares of Series B stock in our subsidiary Samsara Luggage Inc. to John-Paul Backwell pursuant to his employment agreement dated January 5, 2023, with a fair market value of $900,000.
On April 3, 2024, we issued 10,000 shares of Series B stock to Daniel Link pursuant to a consultancy agreement dated January 5, 2023, with a fair market value of $300,000
On May 14, 2024, QIND issued to John-Paul Backwell 500,000 shares of our common stock, pursuant to his employee contract, with a grant-date and fair market value of $0.07 per share and $35,000 in total.
NOTE 11: CONSOLIDATION BASIS
Following companies are consolidating basis of Mergers & Acquisitions as of June 30, 2024:
1) | ILUS International US |
2) | ILUS International UK Ltd. |
4) | Firebug Mechanical Equipment LLC. |
5) | Bull Head Products Inc. |
6) | Georgia Fire & Rescue |
7) | Bright Concept and protection System LLC |
8) | Quality Industrial Corp. |
9) | Al Shola Al Modea Safety and Security LLC |
10) | Al Shola Al Modea Gas and Distribution LLC |
11) | Samsara Luggage Inc. |
F-24
NOTE 12: LEGAL PROCEEDINGS
From time to time, we may become party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. Aside from the below, we are not currently a party, as plaintiff or defendant, to any legal proceedings that we believe to be material or which, individually or in the aggregate, would be expected to have a material effect on our business, financial condition or results of operation if determined adversely to us.
We have been named as a defendant in an action commenced by our former CEO, Larson Elmore. A case has been filed in the Eight Judicial District Court of the State of Nevada (Case No. A-22-858343-C). The plaintiff alleges that we breached a stock purchase agreement dated May 10, 2020, and promissory notes and is therefore entitled to damages. On May 28, 2024, Lee Larson Elmore (Elmore), Ilustrato Pictures International, Inc. ("ILUS") Nicholas Link (Link), and FB Technologies Global Inc. (collectively the parties) have agreed to resolve all claims existing between themselves. In exchange for the satisfaction of the disputed promissory note (note) and release of all claims between these parties, ILUS shall:
1. | Convert the remainder of the note to 15 million shares of ILUS which will be issued to Elmore. These shares shall be subject to a 10% leak out based upon average daily volume; and | |
2. | Pay, or cause to be paid, to Elmore the total of $75,000 in 5 equal installments with the first installment on June 17, 2024, and the remaining payments being paid monthly on the following dates: July 17, 2024; August 17, 2024; September 17, 2024; and October 17, 2024. As security for these payments, ILUS will issue to Elmore 15 million restricted shares of ILUS to be released pro rata as payments are made. If there is a default in any portion of the payment of the $75,000 the portion of the restricted shares which have not been released pro rata may be piggy backed on any registration efforts made by ILUS. |
We have been named as a defendant in an action commenced by Steve Nicol, who claims that he loaned $12,000 on or about May 23, 2017, to Cache Cabinetry, LLC a subsidiary of ILUS under a promissory note, but that ILUS agreed to assume the note. He further claims that he elected to convert the note and that ILUS failed to convert the note into shares of ILUS common stock. He has alleged breach of contract, declaratory relief, and specific performance to require the company to issue 75,000,000 shares of common stock in ILUS. The company obtained a provisional settlement on September 6, 2023, and final details are in negotiation.
We have been named as a defendant in an action commenced by Black Ice Advisors LLC, regarding a historic note entered into by the previous CEO, Larson Elmore with a principal amount of $4,000. The company disputes the legitimacy of the note. On June 5, 2023, we received a service of process by the Superior Court of California, County of San Diego, with a hearing rescheduled for March 8, 2024. On August 22, 2023, the company received information that Black Ice Advisors withdrew their prior demand for shares with a new motion seeking a monetary judgment in Black Ice's for $3.772 million for the historic note with a principal amount of $4,000. At a hearing on November 3, 2023, the Court adopted its tentative ruling as the final ruling and denied the motion for summary judgment from Black Ice Advisors LLC. The company is currently trying to conclude a settlement agreement. A hearing date set for September 2024 if a settlement is unable to be negotiated.
We cannot predict whether the action against Steve Nicol and Black Ice Advisors is likely to result in any material recovery or expense to our company. Where it is reasonably possible to do so, the Company accrues estimates of the probable costs for the resolution of these matters. These estimates are based on an analysis of potential results and settlement strategies. It is possible, however, that future operating results for any particular quarter or annual period could be affected by changes in assumption.
F-25
NOTE 13: GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Currently, the Company has incurred operating losses, and as of December 31, 2023, the Company also had a working capital deficit and an accumulated deficit. These factors raise substantial doubt about the Company's ability to continue as a going concern.
Management also believes the Company needs to raise additional capital for working capital purposes. There is no assurance that such financing will be available in the future. The conditions described above raise substantial doubt about our ability to continue as a going concern. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going Ilustrato Pictures International Inc. recorded all revenue generated from selected customers on a credit basis. At the end of the year, accounts receivable for the previous year and the current year have not been collected. The management has represented that they will collect the cash for all outstanding account receivables due from the previous years and the current year.
NOTE 14: SUBSEQUENT EVENTS
On July 1, 2024, the company ILUS entered into a Convertible Note with a principal amount of $27,500 to Twn Brooks Inc. The note is convertible into common stock at the rate 35% below the average past 10-day share price. and bear 9% interest per annum. The note matures on January 1, 2025.
On July 1, 2024, the company ILUS entered into a Convertible Note with a principal amount of $27,500 to Twn Brooks Inc. The note is convertible into common stock at a rate 35% below the average past 10-day share price. and bear 9% interest per annum. The note matures on January 1, 2025.
On July 01, 2024, we issued 3,250,000 shares of common stock as commitment shares to Twn Brooks Inc. with a fair market value of $.0047 per share for an aggregate price of $15,275 pursuant to the issuance of a convertible promissory note dated April 15, 2024, amounting to $55,000.00.
On July 01, 2024, we issued 3,250,000 shares of common stock as commitment shares to Twn Brooks Inc. with a fair market value of $.0047 per share for an aggregate price of $15,275 pursuant to the issuance of a convertible promissory note dated April 15, 2024, amounting to $55,000.00.
On July 2, 2024, the company ILUS entered into a Convertible Note with a principal amount of $200,000 to RB Capital Partners Inc., which shall be convertible into shares of common stock of the Company at the rate of $0.10 per share. and bear 7% interest per annum. The note matures on July 2, 2026.
On July 8, 2024, we issued 15,000,000 shares of common stock to Larson Elmore pursuant to the Settlement Agreement.
On the 10th of July, we issued 200,000 Pref F shares as compensation to John-Paul Backwell.
On July 11, 2024, we issued 100,000,000 shares of common stock as compensation to RB Capital Partners LLC for the partial conversion of a convertible note for an aggregate price of $200,000
On August 13, 2024, the company ILUS entered into a Convertible Note with a principal amount of $65,000 to RB Capital Partners Inc., which shall be convertible into shares of common stock of the Company at the rate of $0.10 per share. and bear 7% interest per annum. The note matures on August 13, 2026.
On July 31, 2024, we issued 5,986,979 shares of common stock to Twn Brooks Inc for conversion of a convertible note for an aggregate price of $28,737.50
On August 05, 2024, we issued 5,852,564 shares of common stock to Twn Brooks Inc for conversion of a convertible note for an aggregate price of $28,531.25
F-26
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 that 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 Quarterly Report on Form 10-Q.
Overview
ILUS is a corporation based in Nevada with a primary focus on serving the public safety, industrial, and renewable energy sectors. The company consists of two subsidiaries: Emergency Response Technologies (ERT) and Quality Industrial Corp. (QIND). ERT's technology aims to protect communities, assets, and frontline personnel by acquiring the latest technology and solutions for the emergency response industry, which includes emergency medical services, fire and rescue services, law enforcement, and emergency management. QIND is an industrial company focused on the oil and gas as well as the utilities sector.
Factors Affecting Our Performance
The primary factors affecting our results of operations include:
General Macro Economic Conditions
Our business is impacted by the global economic environment, employment levels, consumer confidence, government, and municipal spending. Global instability in securities markets and the war in Ukraine are among other factors that can impact our financial performance. In particular, changes in the U.S. economic climate can impact the demand for our product range. In addition, the impact of taxes and fees can have a dramatic effect on the availability, lead times and costs associated with raw materials and parts for our product range.
2
Our purchases are discretionary by nature and therefore sensitive to the availability of financing, consumer confidence, and unemployment levels among other factors, and are affected by general U.S. and global economic conditions, which create risks that future economic downturns will further reduce consumer demand and negatively impact our sales.
While less economically sensitive than the Emergency Response sector, the Industrial and Manufacturing sectors are also impacted by the overall economic environment. Tenders can be withdrawn and lead times for the manufacturing can be affected which can result in cancellation of orders if not delivered on time.
Impact of Acquisitions
Historically, a significant component of our growth has been through the acquisition of businesses in our targeted sectors. We typically incur upfront costs as we incorporate and integrate acquired businesses into our operating philosophy and operational excellence. This includes the consolidation of supplies and raw materials, optimized logistics and production processes, and other restructuring and improvement initiatives. The benefits of these integration efforts may not positively impact our financial results in the short term but have historically positively impacted medium to long-term results.
We recognize acquired assets and liabilities at fair value. This includes the recognition of identified intangible assets and goodwill. In addition, assets acquired, and liabilities assumed generally include tangible assets, as well as contingent assets and liabilities.
Recent Developments
On March 27, 2024, the company's subsidiary QIND, entered into a definitive Stock Purchase Agreement with the shareholders of Al Shola Al Modea Gas Distribution LLC ("ASG" or "Al Shola Gas") to acquire a 51% interest in ASG. The Closing of the transaction took place when both parties signed the definitive Share Purchase Agreement. Al Shola Gas is an Engineering and Distribution Company in the LPG Industry in the United Arab Emirates and was established in 1980. The company is one of the region's leading suppliers and contractors of LPG centralized pipeline systems and is approved by The General Directorate of Civil Defense, Government of Dubai, as a Central Gas Contractor and LPG Supplier. Al Shola Gas has been consolidated into the financials for the quarter ended March 31, 2024.
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 and subsequently, the Board of Directors of QIND and ILUS 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 transaction, with management aiming to recover the investment or parts of it. However, if recovery proves unattainable, the investment may need to be written off in the future.
Planned Developments
ILUS continues to streamline its operations and align its core competencies with the evolving market demands. The Company is taking strategic steps to expand its portfolio of operating companies and therefore plans to acquire additional Emergency Response and Industrial companies. To support its expansion, the company plans to hire additional personnel in finance and legal. Our top priorities include supporting the expansion of our Emergency Response and Industrial subsidiaries. We intend to complete the Reverse Mergers of SAML and QIND (our two subsidiaries) with National Exchange-listed companies in the second half of 2024. Furthermore, we intend to issue an equity dividend in the form of SAML shares to ILUS shareholders following our sale of Emergency Response Technologies assets to SAML.
3
Results of Operation for the Three and Six Months Ended June 30, 2024, and 2023
Revenues
We earned $5,345,259 in revenue for the six months ended June 30, 2024, compared with a revenue of $3,595,851 in revenue for the six months ended June 30, 2023.
We earned $4,245,791 in revenue for the three months ended June 30, 2024, compared with a revenue of $1,943,690 in revenue for the three months ended June 30, 2023. Our increase in revenue were mainly as a result of acquiring Al Shola Gas in our industrial and manufacturing division.
Operating Expenses
Operating expenses increased from $4,159,976 for the six months ended June 30, 2023, to $4,651,727 for the six months ended June 30, 2024. For three months ended June 30, 2023, we had operating expenses of 2,907,943 and for the same period in 2024 were 1,956,653. Our increase in operating expenses for the six months ended June 30, 2024, were mainly as a result of acquiring Al Shola Gas, and administrative and operating costs associated with the business activities of our subsidiaries QIND and SAML.
We anticipate that our operating expenses will increase as QIND and SAML undertake their expansion plans associated with all operating businesses.
Non-Operating Expenses
We had other non-operating expenses of $438,694 for the six months ended June 30, 2024, as compared $1,542,509 in other expenses for the same period ended 2023. We had other non-operating expenses of $255,669 for the three months ended June 30, 2024, as compared with $1,116,537 in other expenses for the same period ended 2023. The decrease in non-operating expenses was mainly the result of an exchange note with RB Capital which decreased the Interest on Convertible notes.
Non-Operating Income
We had other non-operating income of $506,609 for the six months ended June 30, 2024, as compared $4,703 for the same period ended 2023. We had other non-operating income of $107,050 for the three months ended June 30, 2024, as compared $1,164 for the same period ended 2023, Our other income YTD 2024 was a result of the reversal of interest payments on the loan agreements with Mahavir and Artelliq which have been unwound with the cancellation of the agreement with Quality International.
Net Income/Net Loss
We incurred Net loss of $2,725,402 for the six months ended June 30, 2024, compared to a net loss of $4,655,215 for the six months ended June 30, 2023. We incurred a Net loss of $548,021 for the three months ended June 30, 2024, compared to a net loss of $3,454,630 for the three months ended June 30, 2023. The decrease in Net loss YTD ended June 30, 2024, is a result of Al Shola Gas' reported profit for the quarter and a reduction in operating expenses along with other income.
Divisional Income Statement
The Company is organized into two divisions based on the similarity of products, customers served, common use of facilities, and economic characteristics. The Company's segments are as follows:
1. | Emergency Response |
2. | Industrial & Manufacturing |
4
intersegment transactions have been eliminated in consolidation.
For the Six Months Ended June 30, |
||||||||
2024 | 2023 | |||||||
Emergency & Response Division | ||||||||
Revenue | $ | 2,028,053 | 1,099,000 | |||||
Cost Of Goods Sold | 1,399,025 | 779,000 | ||||||
Gross Profit | 629,028 | 320,000 | ||||||
Total Operating Expenses | 3,740,548 | 1,234,000 | ||||||
Operating Loss | (3,111,520 | ) | (914,000 | ) | ||||
Net Loss | $ | (3,305,313 | ) | $ | (993,000 | ) |
Our revenue increased to $2,028,053 for the six months ended June 30, 2024, from $1,099,000 in 2023, constituting an 85% increase YTD. Gross profit percentage increased to 31% for the six months ended June 30, 2024, from 28.6% in 2023. The focus for the quarter has been to drive higher margin orders and hereby increase our Gross Profit.
Operating expenses increased to $3,740,548 for the six months ended June 30, 2024, $1,234,000 in 2023, primarily due to optimizing product development, marketing, and employee-related costs.
For the coming period 2024, the Company will continue to allocate financial, technical and sales resources for recently acquired subsidiaries to positively impact their financial results through increased sales orders and efficiency. Allocated personnel will primarily focus on accelerating sales and marketing efforts, product development, international market expansion, optimizing of supply chain and production processes, overall increased profitability while continuing with the integration and optimization of current operating companies. With the group expansion and growth, we also intend to hire executives and personnel with specific industry experience and fields of expertise to streamline financial reporting, compliance, and Investor Relations and to improve our corporate governance.
For the Six Months Ended | ||||||||
June 30, 2024 |
June 30, 2023 |
|||||||
Industrial & Manufacturing Division | ||||||||
Revenue | 3,317,206 | - | ||||||
Cost of revenues | 2,068,708 | - | ||||||
Gross profit | 1,248,498 | - | ||||||
Total Operating Expenses | 911,179 | 900,065 | ||||||
Profit/ loss from Operations | 337,319 | (900,065 | ) | |||||
Non-Operating expenses | 165,851 | 766,430 | ||||||
Non-Operating Income | 427,554 | - | ||||||
Net loss/ profit | 599,022 | $ | (1,666,495 | ) |
5
For our Industrial and Manufacturing Division, the Operating Revenue increased to $3,317,206 for the period ended June 30, 2024, compared to $0 for the period ended June 30, 2023. The increase in revenue, was the result of the consolidation of Al Shola Gas For our Industrial and Manufacturing Division. The Operating expenses increased to $911,179 for the period ended June 30, 2024, compared to $900,065 for the period ended June 30, 2023. Our increase in operating expenses in 2024, was mainly the result of consolidation of Al Shola Gas in our subsidiary QIND. Our Subsidiary QIND acquired a 51% interest in Al Shola Gas on March 23, 2024, and will be consolidating the profitable operating company into the financials from Q2 2024 along reduction of some expenses.
We incurred Net Income of $599,022 for the six months ended June 30, 2024, compared to a net loss of $1,666,495 for the six months ended June 30, 2023. The increase in Net Profit for the quarter that ended June 30, 2024, is a result of Net Income from our acquisition of Al Shola Gas and the reversal of interest payments on the loan agreements with Mahavir and Artelliq.
Liquidity and Capital Resources
As of June 30, 2024, we had total current assets of $20,761,402 and total current liabilities of $18,414,202. We had a positive working capital of $2,347,200 as of June 30, 2024. This compares with a working capital of $11,384,674 as of December 31, 2023.
Operating activities generated $7,454,512 in cash for the six months ended June 30, 2024, as compared with $75,501,557 provided in cash for the six months ended June 30, 2023. Our positive operating cash flow YTD 2024 was mainly the result of six months of core business activities being higher and the merger of ASG operating expenses.
Investing activities used $9,953,208 in cash for the six months ended June 30, 2024, as compared with $44,789,915 provided in cash for the six months ended June 30, 2023.
Financing activities provided $2,587,877 in cash for the six months ended June 30, 2024, as compared with $30,761,591 for the same period ended 2023. Our financing cash flow YTD 2024 was mainly the result of Finance costs, proceeds from the issuance of convertible notes and changes in retained earnings.
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.
6
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 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.
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 June 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 March 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 any other new accounting pronouncements have been issued that might have a material impact on its financial position or results of operations.
7
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 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.
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.
8
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 other than those mentioned in Note 12. 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, 2023.
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
9
Item 6. Exhibits
* | Provided Previously |
** | Provided herewith |
10
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.
Ilustrato Pictures International Inc. | ||
Date: | August 26, 2024 | |
By: | /s/ Nicolas Link | |
Nicolas Link | ||
Title: |
Chief Executive Officer (principal executive) |
Ilustrato Pictures International Inc. | ||
Date: | August 26, 2024 | |
By: | /s/ Krishnan Krishnamoorthy | |
Krishnan Krishnamoorthy | ||
Title: |
Chief Financial Officer (principal accounting and financial officer) |
11