UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10
Amendment No.
5
GENERAL FORM FOR REGISTRATION OF SECURITIES
Under Section 12(b) or (g) of the Securities Exchange
Act of 1934
| Ilustrato Pictures International, Inc. |
| (Exact name of registrant as specified in its charter) |
| NEVADA |
|
|
27-2450645 |
| (State or other jurisdiction of incorporation) |
|
|
(I.R.S. Employer Identification No.) |
|
26 Broadway, Suite 934
New York, NY 10004 |
| (Address of principal executive offices and Zip Code) |
| 917-522-3202 |
| (Registrant’s telephone number, including area code) |
Copies
of all correspondence to:
Scott
Doney, Esq.
The
Doney Law Firm
4955
S. Durango Dr. Ste. 165
Las
Vegas, NV 89113
Phone:
(702) 982-5686
| Securities registered pursuant to Section 12(b) of the Act: None |
Securities to be registered pursuant to Section 12(g) of the Act:
Common stock, $0.001 par value
(Title of class)
Indicate by check mark whether the registrant is a large, accelerated
filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of
“large, accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging
growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer |
[ ] |
Accelerated filer |
[ ] |
| |
|
|
|
| Non-accelerated filer |
[X] |
Smaller reporting company |
[X] |
| |
|
|
|
| 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. [ ]
TABLE OF CONTENTS
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
Some of the statements contained in this registration
statement on Form 10 of Ilustrato Pictures International, Inc. (hereinafter the “Company,” “Ilustrato Pictures,”
“ILUS,” “we,” “us” or “our”) discuss future expectations, contain projections of our plan
of operation or financial condition or state other forward-looking information. In this registration statement, forward-looking statements
are generally identified by the words such as “anticipate,” “plan,” “believe,” “expect,”
“estimate” and the like. Forward-looking statements involve future risks and uncertainties, there are factors that could cause
actual results or plans to differ materially from those expressed or implied. These statements are subject to known and unknown risks,
uncertainties, and other factors that could cause the actual results to differ materially from those contemplated by the statements. The
forward-looking information is based on various factors and is derived using numerous assumptions. A reader should not place undue reliance
on these forward-looking statements, which apply only as of the date of this registration statement. Important factors that may cause
actual results to differ from projections include, for example:
| |
• |
the success or failure of management’s efforts to implement the Company’s business plan; |
| |
|
|
| |
• |
the ability of the Company to fund its operating expenses; |
| |
|
|
| |
• |
the ability of the Company to compete with other companies that have a similar business plan; |
| |
|
|
| |
• |
the effect of changing economic conditions impacting our plan of operation; |
| |
|
|
| |
• |
the ability of the Company to meet the other risks as may be described in future filings with the SEC. |
Readers are cautioned not to place undue reliance
on the forward-looking statements contained herein, which speak only as of the date hereof. We believe the information contained in this
Form 10 to be accurate as of the date hereof. Changes may occur after that date. We will not update that information except as required
by law in the normal course of our public disclosure practices.
Additionally, the following discussion regarding our
financial condition and results of operations should be read in conjunction with the financial statements and related notes included in
this Form 10.
Item 1. Business
Business Overview
ILUS is a Nevada corporation operating out of New
York, London, and Dubai, focused on adding shareholder value through innovation and growth. The company has acquired and incorporated
businesses in the global public safety and technology, engineering, and manufacturing industries. Historically, the company has evolved
out of the public safety sector mainly through the development and manufacture of Emergency Services products, including Emergency Response
vehicles, Special Vehicle conversions, Commercial EVs, and IoT Technology. ILUS also intends to acquire complimentary companies, which
have disruptive technology and strong management and potential for rapid growth that may benefit from cross pollination of territories,
products, and skills offered by our other group companies.
ILUS functions as a holding company, which operates
through its subsidiaries within the public safety, technology, engineering, and manufacturing sectors. Our principal operating subsidiaries
and their respective businesses are discussed in detail below. ILUS wholly owns or has a controlling stake in each of its subsidiaries
which conduct their business operations with relative autonomy and are evaluated on their individual performance based upon the type of
products and services they offer. Our strategy is to acquire manufacturing capability, routes to market and technology advancements in
well-defined geographic, demographic and/or product niches within the business sectors that ILUS is focused on.
Organizational Structure
The below graphic shows our organizational structure,
with ILUS as the “Parent” company and operations primarily carried out through the operating subsidiaries. The subsidiaries
are identified in the figure below and are placed in four distinct divisions within their own existing or planned public companies, designed
as Special Purpose Vehicles (SPV’s) formed to fulfil each division’s specific business
purpose and activity. A fourth defense division has been incorporated in line with potential future acquisitions that are contemplated
for in this division, as well as acquisitions contemplated for other divisions. We intend to disclose these acquisitions, as they happen,
in our ongoing reports with the Securities and Exchange Commission. The divisions are listed below followed by the graphic:
| 2. | Industrial & Manufacturing |
| 3. | Mining & Renewable Energy |
| • | ILUS was incorporated in Nevada on April 27, 2010. ILUS functions as a Mergers and Acquisitions
company, which concentrates on providing strategic management oversight that includes financial, administration, marketing, and human
resources support to its operating companies. Therefore, in terms of revenue generation, ILUS itself relies on fees, dividends, and other
distributions from its acquired operating companies as the principal source of cash flow to meet its obligations. Additional information
regarding the cash flow and liquidity needs of the Parent can be found in the Liquidity and Capital Resources section of Management’s
Discussion and Analysis of Financial Condition and Results of Operations. |
| • | FB
Fire Technologies Ltd. (Firebug Group – UK) was incorporated on December 8, 2014.
ILUS acquired 100% of this company on June 10, 2020, under a signed Share Purchase Agreement.
This company is engaged in the business of manufacturing firefighting equipment and firefighting
vehicles for global customers. Due to the ongoing uncertainty regarding the outcome of a
litigation regarding ownership ILUS has not consolidated the subsidiary with its own. |
| • | Firebug Mechanical Equipment LLC (Firebug Group – U.A.E.) 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 business
of research and development of firefighting technologies as well as the manufacturing firefighting equipment and firefighting vehicles
for its customers in the Middle East, Asia, and Africa. |
| • | Georgia Fire & Rescue Supply LLC (Georgia Fire) was incorporated on the 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. |
| • | 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 a signed Share Purchase Agreement. This company is engaged in the
business of sales, distribution, installation and maintenance of Fire Protection and Security systems. |
| • | 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 the business of manufacturing of aluminum truck
beds and brush truck skid units for firefighting purposes including wildland firefighting. |
| |
• | The
Vehicle Converters (TVC) was incorporated in 2006. ILUS owns 100% of the company. Ownership
was transferred to ILUS after ILUS acquired the brand name, intellectual property, and employees
of the company on March 25, 2022. Following ongoing due diligence which determined that the
company was in a difficult financial position due to the Covid-19 pandemic, ILUS agreed to
take ownership of the company from previous management in order to restructure and rebuild
it so that it would cooperate with Firebug Mechanical Equipment LLC out of Dubai, United
Arab Emirates. This company is engaged in the business of specialist vehicle conversions
and as planned, collaborates closely with Firebug Mechanical Equipment LLC to deliver converted
vehicles to their customers. This transaction is classified as an acquisition of an assembled
workforce rather than a business acquisition |
| • | 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. |
| • | 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. |
| • | 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. |
| • | Quality
Industrial Corp. was originally incorporated on May 4, 1998. Quality industrial is
quoted on the OTC Pink Markets under the symbol “QIND.” ILUS acquired 77% of
this company on May 28, 2022, under a signed Share Purchase Agreement. This company is engaged
in the industrial, oil & gas, and manufacturing sectors. Quality Industrial Corp. is
a public company which 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. |
| | • | 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. |
| | • | Quality
International Co Ltd FCZ is a United Arab Emirates registered
process manufacturing and engineering company. It manufactures custom solutions for
the oil and gas, power/energy, water, desalination, wastewater, offshore and public safety
industries. Quality Industrial Corp. signed the definitive Share Purchase Agreement on January
18, 2023, to acquire 52% of the shares in Quality International Co Ltd FCZ. |
| | | |
Our Offices
Our offices are located at the following locations:
| 1. | 26 Broadway, Suite 934, New York, NY 10004 |
| 2. | Al Marsa Street 66, 11th Floor, Office 1105, Dubai Marina P.O. Box 32923, Dubai |
| 3. | Matrix@Dinnington. Nobel Way, Sheffield S25 3QB, United Kingdom |
Our primary office telephone number is +1 917-522-3202.
Our website address is https://ilus-group.com and our email address is ir@ilus-group.com. Information contained on, or accessible through,
our website is not a part of, and is not incorporated by reference into this Form 10 Registration Statement.
Intellectual Property
The following overview concerns the intellectual property
matters of our company and its subsidiaries. Specific detail as to each subsidiary, if applicable, is contained in the section titled
“Our Operating Subsidiaries” below.
Patents and other proprietary rights are important
to our business and can provide us with a competitive advantage. We also rely on trade secrets, design and manufacturing know-how, continuing
technological innovations, and licensing opportunities to maintain and improve our competitive position. While the Company uses reasonable
efforts to protect its trade and business secrets, the Company cannot assure that its employees, consultants, contractors, or advisors
will not, unintentionally, or willfully, disclose the Company's trade secrets to competitors or other third parties. In addition, courts
outside the United States are sometimes less willing to protect trade secrets. Moreover, the Company's competitors may independently develop
equivalent knowledge, methods, and know-how. We periodically review third-party proprietary rights, including patents and patent applications,
in an effort to avoid infringement on third-party proprietary rights and protect our own, identify licensing or partnership opportunities
and monitor the intellectual property claims of others. Any infringement of the Company's proprietary rights could result in significant
litigation costs, and any failure to adequately protect could result in the Company's competitors offering similar products, potentially
resulting in loss of a competitive advantage and decreased revenue.
Existing patent, copyright, trademark, and trade secret
laws afford only limited protection. In addition, the laws of some foreign countries do not protect the Company's proprietary rights to
the same extent as do the laws of the United States. Therefore, the Company may not be able to protect the Company's proprietary rights
against unauthorized third-party use. Enforcing a claim that a third party illegally obtained and is using the Company's trade secrets
could be expensive and time consuming, and the outcome of such a claim is unpredictable. Litigation may be necessary in the future to
protect the Company's trade secrets or to determine the validity and scope of the proprietary rights of others. This litigation could
result in substantial costs and diversion of resources and could materially adversely affect the Company's future operating results.
We own a portfolio of intellectual property in our group,
including 3 patents in the operating company, FB Fire Technologies Ltd. (FireBug Group), as well as confidential technical information
and technological expertise in the manufacturing of firefighting technology. We got control over FB Fire technologies Ltd on January 14,
2021, but later in 2022 we lost effective control due to ongoing uncertainty regarding the outcome of the litigation on lien-marked shares,
hence we decided not to consolidate FB Fire's financial statements. The 3 patents are still with the registered Inventor of the patented
products, Nicolas Link, who is also the beneficial owner of ILUS. We are currently the process of extending the life of the patents and
transferring them to Firebug Mechanical Equipment LLC.
While we consider
our patents to be valued assets, we do not believe that our competitive position is dependent primarily on our patents or that our operations
are dependent upon any single patent to manufacture our products. We nevertheless face intellectual property-related risks. For
more information on these risks, see “Item 1A. Risk Factors.”
The Company owns the trademark ILUS.
Competition
The following overview covers the competition we encounter
within markets we operate in and those we intend to expand into. Specific detail as to each subsidiary, if applicable, is contained in
the section titled “Our Operating Subsidiaries” below.
The Public Safety Technology, Engineering, Industrial,
Manufacturing, Mining and Renewable Energy sectors are highly competitive and continually evolving as participants strive to distinguish
themselves within their markets and compete within their respective industry. While we do face intense competition in some divisions of
our business from companies that have been established long before ours and have a strong global reach, we have also developed our own
disruptive technology for which there is no known direct competition within that particular sector. We strive to advance our Technology,
Engineering & Manufacturing capabilities in each sector ahead of our competitors to gain market share. Our ability to continue to
compete effectively also depends upon our ability to attract the required skills, as well as to retain and motivate our existing employees
and to compensate employees competitively. We believe that we have competitive strengths that position us favorably in our lines of business.
However, our industry is dominated by long-standing companies, and we are continuously strategizing to increase our market share. These
long-standing companies are often larger and have more resources to their disposable to retain market share. We believe that, in many
of the sectors where we operate, the technology offered by our competitors is outdated and we have a competitive advantage through the
innovative technology we offer.
A list of competitors for
our operating companies can be found in the table below:
| Type |
Competitor
Name |
HQ
Location |
Date
Founded |
Website |
Public/Private |
| Manufacturer |
Oshkosh
Corp - Pierce Manufacturing |
WI,
USA |
1917 |
https://www.oshkoshcorp.com/ |
Public |
| Manufacturer |
REV
Fire Group - Ferrara, KME, Spartan, E-ONE, Smeal |
WI,
USA |
2010 |
https://revgroup.com/ |
Public |
| Manufacturer |
IDEX
Corporation |
IL,
USA |
1988 |
https://www.idexcorp.com/ |
Public |
| Manufacturer |
Rosenbauer |
Leonding,
Austria |
1866 |
https://www.rosenbauer.com/en/uae/rosenbauer-world |
Public |
| Manufacturer |
Task
Force Tips |
IN,
USA |
1971 |
Task Force Tips - Task
Force Tips Home Page (tft.com) |
Private |
| Manufacturer |
Akron
Brass |
OH,
USA |
1918 |
https://www.akronbrass.com/ |
Public |
| Manufacturer |
Elkhart
Brass |
IN,
USA |
1902 |
https://www.elkhartbrass.com/ |
Private |
| Manufacturer |
Delta
Fire |
Norwich,
USA |
1980 |
https://www.deltafire.co.uk/ |
Private |
| Manufacturer |
Ziegler |
Brussels,
Belgium |
1908 |
https://www.zieglergroup.com/ |
Private |
| Manufacturer |
Iveco
Magirus |
Baden-Württemberg
Germany |
1864 |
https://www.iveco.com/corporate-en/company/pages/magirus.aspx |
Private |
| Supplier/Distributor |
WS
Darley |
IL,
USA |
1908 |
https://www.darley.com/ |
Private |
| Supplier/Distributor |
United
Fire |
AZ,
USA |
1968 |
https://www.unitedfire.net/ |
Private |
| Supplier/Distributor |
Safe
Fleet |
MO,
USA |
2013 |
https://www.safefleet.net/ |
Private |
| Manufacturer |
United
Safety & Survivability Corp |
PA,
USA |
1984 |
https://unitedsafetycorporation.com/ |
Private |
| Supplier/Distributor |
MES
Fire |
TX,
USA |
2001 |
https://www.mesfire.com |
Private |
| Manufacturer |
Marioff |
Vantaa,
Finland |
1991 |
http://www.marioff.com/en/ |
Private |
| Manufacturer |
Ansul |
WI,
USA |
1915 |
www.ansul.com |
Private |
| Manufacturer
& Supplier |
Waterous |
MN, USA |
1844 |
https://www.waterousco.com/ |
Private |
| Manufacturer |
Flaim |
Melbourne,
Australia |
2017 |
https://flaimsystems.com/ |
Private |
| Supplier/Distributor |
Western
States Fire Protection |
CO,
USA |
1985 |
https://www.wsfp.com/ |
Private |
| Manufacturer |
Kidde
Fire Systems |
MA, USA |
1917 |
https://www.kidde-fenwal.com/ |
Private |
| Manufacturer |
Cascade
Fire Equipment |
OR,
USA |
1985 |
https://cascadefire.com/ |
Private |
| Manufacturer |
Draeger |
Lubeck,
Germany |
1889 |
https://www.draeger.com |
Private |
| Manufacturer |
IFS
Solutions |
TX,
USA |
1979 |
https://ifsolutions.com |
Private |
| Manufacturer |
Harris
Pye |
Glamorgan,
UK |
1978 |
https://www.harrispye.com |
Private |
| Manufacturer |
Aarya
Engineering |
Sharjah,
UAE |
2005 |
http://www.aaryaengg.com |
Private |
Below is a list of competitors
and ILUS competitive advantages:
| Category |
Competitor
Name |
Competitor
of |
ERT
Advantages |
| Firefighting
Vehicles |
Oshkosh
Corp - Pierce Manufacturing |
FireBug |
patented
water mist technology & lightweight polypropylene rapid response vehicle technology |
| Firefighting
Vehicles |
REV
Fire Group - Ferrara, KME, Spartan, E-ONE, Smeal |
FireBug |
patented
water mist technology & lightweight polypropylene rapid response vehicle technology |
| Firefighting
Equipment |
IDEX
Corporation |
FireBug |
patented
water mist technology & lightweight polypropylene rapid response vehicle technology |
| Firefighting
Vehicles |
Rosenbauer |
FireBug |
patented
water mist technology & lightweight polypropylene rapid response vehicle technology |
| Firefighting
Equipment |
Task
Force Tips |
FireBug |
patented
water mist technology in firefighting equipment |
| Firefighting
Equipment |
Akron
Brass |
FireBug |
patented
water mist technology in firefighting equipment |
| Firefighting
Equipment |
Elkhart
Brass |
FireBug |
patented
water mist technology in firefighting equipment |
| Firefighting
Equipment |
Delta
Fire |
FireBug |
patented
water mist technology in firefighting equipment |
| Firefighting
Vehicles |
Ziegler |
FireBug |
patented
water mist technology & lightweight polypropylene rapid response vehicle technology |
| Firefighting
Vehicles |
Iveco
Magirus |
FireBug |
patented
water mist technology & lightweight polypropylene rapid response vehicle technology |
| Firefighting
Equipment |
WS
Darley |
FireBug |
patented
water mist technology & lightweight polypropylene rapid response vehicle technology |
| Fire
Safety |
United
Fire |
FireBug |
patented
water mist nozzle technology for more effective and efficient firefighting equipment & fixed fire suppression systems |
| Fire
Safety |
Safe
Fleet |
FireBug |
patented
water mist nozzle technology for more effective and efficient firefighting equipment & fixed fire suppression systems |
| Fire
Safety |
United
Safety & Survivability Corp |
FireBug |
patented
water mist nozzle technology for more effective and efficient firefighting equipment & fixed fire suppression systems |
| Fire
Safety |
MES
Fire |
Georgia
Fire & Rescue Supply |
exclusive
distributors of world's largest brands and patented technology supported by an experienced team of firefighters, renowned service
and reputation |
| Fire
Protection |
Marioff |
FireBug |
patented
water mist nozzle technology for more effective and effective fixed fire suppression systems |
| Fire
Protection |
Ansul |
FireBug |
patented
water mist nozzle technology for more effective and efficient firefighting equipment & fixed fire suppression systems |
| Fire
Protection |
Western
States Fire Protection |
FireBug |
patented
water mist nozzle technology for more effective and efficient firefighting equipment & fixed fire suppression systems |
| Fire
Protection |
Kidde
Fire Systems |
FireBug |
patented
water mist nozzle technology for more effective and efficient firefighting equipment & fixed fire suppression systems |
| Process
Equipment |
IFS
Solutions |
Quality
International |
extensive
list of global multinationals as references and 1750 employees operating from over 10m square feet of manufacturing facilities &
two port facilities - no outsourcing needed therefore competitive for complete turnkey projects |
| Process
Equipment |
Harris
Pye |
Quality
International |
extensive
list of global multinationals as references and 1750 employees operating from over 10m square feet of manufacturing facilities &
two port facilities - no outsourcing needed therefore competitive for complete turnkey projects |
| Process
Equipment |
Aarya
Engineering |
Quality
International |
extensive
list of global multinationals as references and 1750 employees operating from over 10m square feet of manufacturing facilities &
two port facilities - no outsourcing needed therefore competitive for complete turnkey projects |
Government Regulations
The following overview concerns government regulations
that affect our company and its subsidiaries. Specific detail as to each subsidiary, if applicable, is contained in the section titled
“Our Operating Subsidiaries” below.
In certain markets,
some of our products require government approvals and some of our companies require specific operating licenses. Our operating companies
remain compliant with the required licenses and approvals in order to operate within their respective markets and/or geographic territories.
Approvals may also be required for the award of government contracts, and these are provided accordingly as required.
Environmental, Health and Safety
Laws and Regulations
Our ongoing global
operations are subject to a wide range of federal, state, local and foreign environmental, health and safety laws and regulations. These
laws and regulations relate to the generation, storage, handling, use, release, disposal and transportation of hazardous materials and
wastes, environmental cleanup, the health and safety of our employees and the fuel economy and emissions of the vehicles we manufacture.
Compliance with these laws, regulations, permits, and approvals is a significant factor in our business. Certain of our operations require
permits or other approvals from governmental authorities, and certain of these permits and approvals are subject to expiration, denial,
revocation, or modification under various circumstances. We have expended resources, both financial and managerial, to comply with required
regulations and we maintain procedures designed to foster and ensure compliance. We are committed to protecting our employees and the
environment against any manufacturing related risks. In addition, we may be responsible under environmental laws and regulations for the
investigation, remediation, and monitoring, as well as associated costs, expenses and third-party damages, including tort liability and
natural resource damages, relating to past or present releases of hazardous substances on or from our properties or the properties of
our predecessor companies, or third-party sites to which we or our predecessor companies have sent hazardous waste for disposal or treatment.
Liability under these laws may be imposed without regard to fault and may be joint and several.
However,
our failure to comply with applicable environmental, health and safety laws and regulations or permit or approval requirements could result
in substantial liabilities or civil or criminal fines or penalties or enforcement actions, including regulatory or judicial orders enjoining
or curtailing operations or requiring remedial or corrective measures, installation of pollution control equipment or other actions, as
well as business disruptions, which could have a material adverse effect on our business, financial condition and operating results.
Employees
As of September 30, 2022, Ilustrato Pictures
International Inc. had approximately 5 employees in the Parent company and there were approximately 1800 that are employees of the subsidiaries.
The Parent employees and those employed by their respective subsidiary, are not currently represented by a labor union or collective bargaining agreement.
We believe that our relationship with our employees is good.
Our Operating Subsidiaries
ILUS provides strategic management oversight
as well as financial, administration, marketing, and human resources support to the operating companies within its subsidiaries. Therefore,
in terms of revenue generation ILUS itself relies on fees, dividends, and other distributions from its acquired operating companies as
the principal source of cash flow to meet its obligations. Additional information regarding the cash flow and liquidity needs of the Parent
can be found in the Liquidity and Capital Resources section of Management’s Discussion and Analysis of Financial Condition and Results
of Operations.
ILUS currently has four distinct Divisions. The
respective operating companies within each division are listed below:
| 1. | Emergency & Response subsidiary (under ERT): |
| b. | The Vehicle Converters LLC |
| c. | Bright Concept and protection System LLC |
| d. | Bull Head Products Inc. |
| e. | Georgia Fire & Rescue Supply LLC. |
| | f. | AL
Shola Al Modea Safety and Security LLC. |
| | | |
| 2. | Process & Manufacturing subsidiary (under ERT) - (Special Purpose Vehicle - QIND): |
| a. | Quality International Co Ltd FCZ |
| | | |
| 3. | Mining
& Renewable Energy subsidiary: |
| |
a. |
Hyperion
Defence Solutions |
Emergency Response Technologies Inc.
ILUS is primarily focused on the emergency response
sector through its wholly owned subsidiary, Emergency Response Technologies Inc. (“ERT”). Under this subsidiary, ILUS aims
to provide technology that protects communities, front line personnel and assets by acquiring technology and solutions for the emergency
response sector. This sector includes Fire and Rescue Services, Law Enforcement, Emergency Medical Services and Emergency Management.
Firebug Group
FireBug is a firefighting equipment and
vehicle manufacturer which specializes in disruptive water mist technology and rapid response vehicles. FireBug’s equipment is designed
to offer increased fire fighter safety with reduced water consumption. This technology enables smaller, more cost-effective vehicles for
rapid fire and emergency response. The company was formed in the UK and currently operates from the following two locations:
| · | Matrix@Dinnington Business Centre, Nobel Way Dinnington, Sheffield S25 3QB, United Kingdom |
| | | |
| · | Warehouse G04, 79th Street, DIRC Warehouse Complex, DIP 2, Dubai, United Arab Emirates |
On May 10, 2020, FB Technologies Global, Inc., wholly
owned by Nicolas Link, acquired shares of ILUS stock, consisting of 10,000,000 Pref A Shares, 60,741,000 Pref D shares and 360,000,000
common shares, from the prior CEO, Larson Elmore, for an aggregate purchase price of $140,000.
On June 10, 2020, the Company entered into a definitive
agreement with FB Fire Technologies Ltd. for the conversion of debt. The shareholders were issued 3,172,175 shares of Class E Preferred
Stock. BrohF Holdings Ltd. was issued 672,175 shares and Artem Belov was issued 2,500,000 shares of Preferred Class E stock. A final
tranche of shares for debt conversion will be issued conditional upon the audited financials for 2022.
On 26 January 2021,
ILUS (The “Buyer”) acquired 100% of the shares in Firebug Mechanical Equipment L.L.C. and 100% of the shares in FB Fire Technologies
Ltd. Both companies were contributed to ILUS without consideration.
The FireBug range of products consists
of the following:
| 1. | MistNozzle handheld firefighting nozzles |
The MistNozzle handheld firefighting nozzles is a
specialist firefighting nozzle/branch, which produces a fine water mist enabling it to extinguish multiple classes of fires without the
use of chemical agents. The product is designed to increase efficiency, utilize less water, and increase fire fighter safety. The MistNozzle
range is designed, developed and manufactured in the UK. It uses proven micron technology from the fire fixed suppression system industry.
The MistNozzle uses science in order to provide superior fire cooling and extinguishing. Its low-pressure water mist technology makes
it more efficient than comparative firefighting nozzles. The MistNozzle has one-click switch-function technology, allowing the user to
easily transition between Jet Mode and Water Mist Mode, minimizing room for error and ensuring safe mode selection. The plug-and-play
functionality of the MistNozzle works with most existing hose types on most existing fire trucks. The nozzle has been specifically designed
for ease of use with minimal training required for safe and effective use. With water being a valuable resource the world over, the MistNozzle
deliberately uses less water during operation. The water mist produced by the MistNozzle absorbs 2257kj of energy per liter verses conventional
technology which absorbs 335kj per liter. The MistNozzle also combats the effects of smoke within the fire environment, providing effective
and in some cases, lifesaving smoke scrubbing capability.
| 2. | Mongoose external firefighting lance |
FireBug’s Mongoose is a handheld firefighting
nozzle with an extension lance that allows it to be inserted from the exterior of a structure into an area such as a room (compartment)
in order to cool the area and suppress the fire. The Mongoose system is comprised of the water mist attack nozzle and a battery-operated
hole cutting drill. Either the drill or the firefighters compartment entry tools are used to breach the structure and create the necessary
hole through which the Mongoose is inserted. This method provides safer access to the compartment. The Mongoose has been designed to
ensure the correct kinetic energy will overcome the pressures created by the fire. Water mist droplets are transformed into steam by
the heat which consumes energy, removes oxygen, and consequently cools the gases and inhibits re-ignition. The Mongoose can deliver 40–50-micron
water mist droplets covering a large surface area into a compartment which rapidly cools the area, scrubs the smoke, and suppresses the
fire. The Mongoose is completely unique in that it can operate on an existing fire truck on existing hose lines, without requiring a
separate pump and hose reel.
| 3. | MistMax and Maverick firefighting pumps |
FireBug’s MistMax is a portable low-pressure
water mistfire suppression skid. The self-contained skid unit is designed to fit in a standard pick-up truck or on a UTV such
as the E-Raptor electric UTV. The MistMax is an easy-to-use, lightweight, and reliable solution which can be used by both non-technical
operators and experienced firefighters. The MistMax uses Firebug’s proprietary technology including customized eductor
mixer, a specialized pulsating diaphragm pump, front winding geared hose reel, easy to use control panel, custom engineered baffled water
tank and the Mini MistNozzle which features Firebug’s water stream colliding and atomizing technology.
FireBug’s Maverick is a self-priming,
high-water volume, light portable pump which is designed as multi-purpose firefighting skid unit that can be portable or permanently fixed
in a firefighting vehicle. It has the capability to operate a hose reel or lay flat hose connected to a water supply tank or it can lift
water from an open water source or obtain it from a pressure fed supply such as a floating pump.
Firebug offers a range of floating
pumps which are designed for pumping water from streams, lakes, hard-to-reach sources of water, or flooded areas. The range of floating
pumps offer practical features and easy-to-use operation. Features include high impact resistance, compact size and light weight, powerful
Honda or Briggs & Stratton engines, bronze impellers for marine use where required, specialized strainers and optional external fuel
tanks.
Firebug’s BacPac has been designed to
provide rapid response firefighting capabilities using either water, foam or additive. The BacPac system contains a sophisticated internal
mechanical rotor, which is used in the generation of WaterMist or foam (RAFS foam). The spindle and impellor rotate at high speeds mixing
the foam that allows optimum extinguishing. The device increases the range of the discharge by at least 200% and is 6 times more efficient
than any other known foam system, including CAFS.
| 6. | E-Raptor Commercial Electric Utility Vehicle |
Manufactured by FireBug, the E-Raptor range
consists of commercial electric utility vehicles for several rugged applications. The E-Raptor 6x6 is the world’s only 6-wheel electric
utility vehicle. With 80km range on a single charge, the E-Raptor is fit for most industrial, agricultural, and rapid emergency response
applications. The E-Raptor can carry a maximum load weight of 3500 Lbs. The E-Raptor range is manufactured by FireBug as it complements
its rapid response firefighting vehicle solutions for confined and congested spaces.
| 7. | Rapid Intervention Vehicles |
FireBug’s rapid intervention vehicle
solutions range from small electric utility vehicles with bespoke firefighting systems to pick-up trucks with firefighting and rescue
systems, right up to customized firefighting appliances. FireBug specializes in providing bespoke vehicle solutions for rapid emergency
response in congested areas, industrial facilities, shopping malls, marinas, airports, resorts, and communities which require their own
firefighting or rescue vehicle capability.
| 8. | Lightweight Co-Polymer Vehicle Bodies and Water Tanks |
FireBug manufactures high quality,
lightweight co-polymer vehicle bodies and tanks primarily for the emergency response sector. Depending on customer requirements, FireBug
provides only the tank or vehicle superstructure or the fully equipped complete vehicle. Utilizing the latest in plastic cutting and welding
technology, FireBug produces its plastic vehicle bodies and tanks from a highly durable and recyclable plastic material which has a 25-year
guarantee.
Intellectual Property
FireBug’s patents are
listed below:
| Category |
Short title |
Long Title |
Reference |
| Patent |
BacPac |
Apparatus and method for fighting fires |
GB2520561 |
| Patent |
Spinning Regulating Unit |
Fluid mixer device and method |
GB2548074 |
| Patent |
Mongoose |
Fire-fighting apparatus and method of firefighting |
GB2568684 |
No patents have been licensed from third parties.
Competition
Below is some of FireBug’s
competitors and competitive advantages:
| Competitor
Name |
Competitor
of |
FireBug
Advantages |
| Oshkosh
Corp - Pierce Manufacturing |
FireBug |
patented
water mist technology & lightweight polypropylene rapid response vehicle technology |
| REV
Fire Group - Ferrara, KME, Spartan, E-ONE, Smeal |
FireBug |
patented
water mist technology & lightweight polypropylene rapid response vehicle technology |
| IDEX
Corporation |
FireBug |
patented
water mist technology & lightweight polypropylene rapid response vehicle technology |
| Rosenbauer |
FireBug |
patented
water mist technology & lightweight polypropylene rapid response vehicle technology |
| Task
Force Tips |
FireBug |
patented
water mist technology in firefighting equipment |
| Akron
Brass |
FireBug |
patented
water mist technology in firefighting equipment |
| Elkhart
Brass |
FireBug |
patented
water mist technology in firefighting equipment |
| Delta
Fire |
FireBug |
patented
water mist technology in firefighting equipment |
| Ziegler |
FireBug |
patented
water mist technology & lightweight polypropylene rapid response vehicle technology |
| Iveco
Magirus |
FireBug |
patented
water mist technology & lightweight polypropylene rapid response vehicle technology |
| WS
Darley |
FireBug |
patented
water mist technology & lightweight polypropylene rapid response vehicle technology |
| United
Fire |
FireBug |
patented
water mist nozzle technology for more effective and efficient firefighting equipment & fixed fire suppression systems |
| Safe
Fleet |
FireBug |
patented
water mist nozzle technology for more effective and efficient firefighting equipment & fixed fire suppression systems |
| United
Safety & Survivability Corp |
FireBug |
patented
water mist nozzle technology for more effective and efficient firefighting equipment & fixed fire suppression systems |
| Marioff |
FireBug |
patented
water mist nozzle technology for more effective and effective fixed fire suppression systems |
| Ansul |
FireBug |
patented
water mist nozzle technology for more effective and efficient firefighting equipment & fixed fire suppression systems |
| Western
States Fire Protection |
FireBug |
patented
water mist nozzle technology for more effective and efficient firefighting equipment & fixed fire suppression systems |
| Kidde
Fire Systems |
FireBug |
patented
water mist nozzle technology for more effective and efficient firefighting equipment & fixed fire suppression systems |
Employees
As of September 30, 2022, we had approximately
21 employees in Firebug Group. The employees are not currently represented by a labor union or collective bargaining agreement.
We believe that our relationship with our employees is good.
The Vehicle Converters LLC
The Vehicle Converters (TVC) is a specialist
vehicle converter which is operates from Warehouse G04, 79th Street, DIRC Warehouse Complex, DIP 2, Dubai, United Arab Emirates.
On 25 March 2021 ILUS (The “Buyer”) acquired 100% of the
brand name and all other rights, title, and interest in The Vehicle Converters a company beneficially owned by Danny Kourosh (The “Seller”)
for the sum of $20,500 (Twenty Thousand Five Hundred) in consideration.
The Vehicle Converters have operated for
more than 15 years fabricating and converting specialized vehicles for specialist applications such as mobile clinics, ambulances, military
transportation, oil, and gas, camping vehicles and mobile food trucks. The company focuses on sales in the Middle East and North African
markets.
The Vehicle Converters completes various
types of vehicle conversions as per customer requirements. Some examples can be found below:
Competition
A list of TVC’s competitors
is provided below:
| · | BOTT Vehicle Conversions |
| · | DAW Automobile Assembly FZCO |
Employees
As of September 30, 2022, we have 1 employee
in Vehicle Converters. The employee is currently not represented by a labor union or collective bargaining agreement. We believe
that our relationship with our employee is good. Employees from Firebug Mechanical Equipment L.L.C., which operates from the same manufacturing
facility in Dubai, United Arab Emirates, are used for vehicle conversions by The Vehicle Converters.
Bright Concept Detection and Protection System LLC
Bright Concept Detection and Protection System LLC
(BCD Fire) designs, installs, commissions, maintains and distributes fire protection, fire detection, evacuation, access control and security
systems across the Middle East region. The company is located at Warehouse G04, 79th Street, DIRC Warehouse Complex, DIP 2, Dubai, United
Arab Emirates.
On 13 April 2021, ILUS (The “Buyer”) acquired
100% of the assets, liabilities and shares of Bright Concepts Detection & Protection Systems LLC, a company beneficially owned by
Narinder Chadha & Partners (The “Seller”). As consideration, the buyer paid the seller 250,000 AED (Two hundred and fifty
thousand) immediately on signing of the Sales Purchase agreement and agreed to pay the seller 10,000 AED (Ten thousand) monthly for 24
months starting from May 2021. The Buyer also issued the seller 1,000,000 (1 million) restricted shares in
the public company llustrato Pictures International Inc. (Symbol: ILUS).
BCD Fire delivers turnkey projects which incorporate
specification, design, installation, support, and maintenance at sites such as hotels, shopping malls, residential and commercial buildings
as well as industrial facilities.
Competition
A list of BCD Fire’s competitors is provided
below:
| · | MAF Fire Safety & Security LLC |
| · | Blue Flame Fire Fighting LLC |
Employees
As of September 30, 2022, BCD Fire had approximately
24 employees. The employees are currently not represented by a labor union or collective bargaining agreement. We believe that
our relationship with our employees is good.
Bull Head Products Inc.
Bull Head Products Inc. is a specialist aluminum truck
bed manufacturer and vehicle converter located at 387 Thorngrove Pike, Kodak Tennessee, 37764, USA.
On January 1, 2022, ILUS (The “Buyer”)
acquired 100% of the 1000 (one thousand) shares of Bull Head Products Inc.,
a company beneficially owned by George Joe Chudina and Dorothy Lee Chudina (The “Sellers”).
As consideration, the Buyer agreed to pay the Sellers an aggregate cash purchase price of $500,000 (Five
Hundred Thousand) on the condition that certain agreed Targets and Key Performance indices are met.
The Buyer paid a fixed sum of $300,000 (Three Hundred Thousand) upon closing and the remaining $200,000
(Two Hundred Thousand) will be paid by the Buyer 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 filed with this Form 10 and in the schedule
below. The Buyer also issued the Sellers 6,750 (Six Thousand Seven Hundred and Fifty) restricted
Class F Preferred Shares in Buyer.
To Qualify for the 2nd Payment of $ 100,000, minimum turnover of $320,000
(Excluding all taxes) must be achieved for the period from January 1, 2022, to June 30, 2022, or as per the following table. To Qualify
for the 3rd Payment of $ 100,000, minimum turnover of $320,000 (Excluding all taxes) must be achieved for the period from 1
July, 2022, to December 31, 2022, or as per the following table:
| Turnover
Target |
Percentage
of Target |
Aggregate
Payment |
| $320,000 |
Greater
than 100% |
$100,000 |
| $320,000 |
90-99 |
$90,000 |
| $320,000 |
80-89 |
$80,000 |
| $320,000 |
70-79 |
$70,000 |
| $320,000 |
60-69 |
$60,000 |
| $320,000 |
50-59 |
$50,000 |
| $320,000 |
less
than 50% |
$0 |
Bull Head Products designs, manufactures and installs
its aluminum truck beds and vehicle conversions for customers across the United States. Its customers come from several sectors, including
wildland fire fighting. The company's products are built with 100% aluminum for optimal performance and reliability.
Bull Head Products operates from its
Kodak, Tennessee facility, with many truck beds and conversions being completed and installed in the facility and many being shipped to
dealers and distributors for installation.
During the past 18 months, Bull Head
Products faced some supply chain issues as a direct result of the disruption in supply chains across the world due to the Covid-19 pandemic.
Whilst every effort is made to source materials from additional suppliers, this can sometimes lead to an increase in price. The company
has therefore increased its principal suppliers of raw materials to the following suppliers:
| · | Tennessee Valley Fasteners |
Bull Head Products manufactures and
installs its products for both private individuals and businesses who require a specific type of aluminum flatbed for their truck or fleet
of trucks. The company services a wide range of new and repeat customers and there is no dependency on any one single customer.
Intellectual Property
Bull Head Products Inc has a Registered
Trademark for the company logo. Originally it was registered under the name of George Chudina, and then changed to Bull Head Products
Inc. and has subsequently been renewed.
| Category |
Title |
Reference |
| Trademark |
Bull Head Products Mark |
3397385 |
The above trademark certificate is provided in the
Exhibits.
Competition
As Bull Head Products manufactures all of its truck
beds from 100% aluminum, it does not currently have direct competitors to the company’s knowledge. Companies which offer comparable
products use a combination of aluminum sheeting and steel frames which are prone to rust and decay. However, a list of some these competitive
companies is listed below:
Employees
As of September 30, 2022, we had approximately 9 employees
in Bull Head Products. The employees are currently not represented by a labor union or collective bargaining agreement. We believe
that our relationship with our employees is good.
Georgia Fire & Rescue Supply LLC
Georgia Fire & Rescue Supply LLC (Georgia Fire)
is a distributor of equipment to the firefighting, law enforcement and Emergency Medical Services industries. The company is located at
107 P Rickman Industrial Drive, Canton, Georgia, 30115, USA
On February 22, 2022, ILUS (The “Buyer”)
acquired 100% of the shares of Georgia Fire & Rescue Supply LLC, a company beneficially owned by Barbara Jean Whidby (The “Seller”).
As consideration, the buyer agreed to pay the seller an aggregate cash purchase price of $900,000 (Nine Hundred
Thousand Dollars) on the condition that certain agreed Targets and Key Performance indices are met referenced in Exhibit B in the SPA
filed with this Form 10. The Buyer paid a fixed sum of $680,000 (Six Hundred Eighty Thousand) upon
closing and the remaining $220,000 (Two Hundred Twenty Thousand Dollars) will be paid by the Buyer over a one-year period after closing
to the extent the business operations of Georgia Fire & Rescue Supply, LLC meet mutually agreeable performance thresholds displayed
in table below. The Buyer also issued the seller 1,500 (One Thousand Five Hundred) restricted
Class F Preferred Shares in Buyer.
Minimum Turnover (gross revenue) for 2022 and Quarter
1 (Excluding all taxes)- must be achieved for the period from January 1, 2022, to December 31, 2022, or as per the following table:
| 2022
Turnover Target |
Q1
Turnover Target |
Percentage
of Target |
Aggregate
Payment |
| $3,200,000 |
$800,000 |
Greater
than 100% |
$170,000 |
| $3,200,000 |
$800,000 |
90-99 |
$153,000 |
| $3,200,000 |
$800,000 |
80-89 |
$136,000 |
| $3,200,000 |
$800,000 |
70-79 |
$119,000 |
| $3,200,000 |
$800,000 |
60-69 |
$102,000 |
| $3,200,000 |
$800,000 |
50-59 |
$85,000 |
| $3,200,000 |
$800,000 |
less
than 50% |
$0 |
The company receives enquiries and orders through
the following means:
| · | e-commerce website - https://www.georgiafirerescue.com |
| · | retail location in Canton, Georgia |
| · | field sales representatives who call on and demonstrate products to potential customers |
| · | participation in industry trade shows and events. |
The company's products are delivered to the customer
from its distribution warehouse in Canton, Georgia or shipped directly from the manufacturer to the end customer.
Georgia Fire has a customer base of over 1,800 customers
and currently distributes over 95 brands as follows:
| AED Superstore |
Flamefighter Corp |
Pollard Water |
| Agility Tech Corp |
Fox Fury |
Poly Tech |
| Airstar Space Lighting |
FoxFire |
Professional Life Support |
| Ajax Rescue Tools |
Froggy’s Fog |
R & B Fabrications |
| Ansell |
Full Source |
Ram Air Gear Dryer |
| Black Diamond |
Gemtor |
Rescue Technology |
| Bluewater |
Groves-Ready Rack |
Rhyno - We Cut the Glass |
| Boston Leather |
Helly Hansen |
Ringers Gloves |
| Boswell Oil |
Hi-Lift |
RIT Safety Solutions |
| Brightstar |
Highwater Hose Inc |
Rocky Boots |
| Brooks Equipment |
Holmatro |
RollNRack |
| Bullard |
Husky Portable |
S&H Fire Products |
| BullDog Hose |
Innotex |
Sam Carbis Solutions Group |
| C & S Supply |
Kroll |
SCI Structural Composites |
| CET Fire Pumps Mfg. |
Lakeland Fire |
Smoke Trainer |
| CMC Rescue |
Lakeland Industries Inc |
Starrett |
| Con-Space |
Leader-Tempest |
STC Footwear |
| Council Tool |
Lifeliners |
Streamlight |
| Cox Reels |
Lion Boots by Thorogood |
Super Vac |
| Denko Foam |
Logistics |
Task Force Tips |
| Desert Diamond Industries |
Mercedes Textiles Limited |
Team Equipment Inc |
| Dewalt |
National Foam |
Tele-Lite |
| Diablo |
Nightstick |
Thorogood Boots |
| Dräger |
Nupla |
Trellchem |
| Dragon Fire Gloves |
ORS |
True North Gear |
| Duo Safety Ladders |
Paratech |
Turtle Plastics |
| ESS Eye Safety Systems |
Pelican |
Unifire |
| EVAC Systems |
Performance Adv. Co. |
Vanguard Safety Wear |
| Fire Hooks Unlimited |
Phillips |
Warthog |
| Firefly Signs |
Plastix Plus |
Wehr Engineering |
| FireQuip |
PMI |
Zephyr Tools |
| FireBug |
|
Ziamatic Corporation |
Georgia Fire is an official Dealer
of Holmatro Products and partakes in the Holmatro Coop Marketing Program. Through this program, Georgia Fire & Rescue Supply has access
to logo’s, product images and information, and a dealer reward scheme. All promotions of the Holmatro range of products by Georgia
Fire & Rescue Supply has to be reviewed and approved by Holmatro.
Competition
A list of Georgia Fire’s
competitors is provided below:
| · | US Fire & Safety Equipment Co |
Employees
As of September 30, 2022, we
had approximately 13 employees in Georgia Fire. The employees are currently not represented by a labor union or collective bargaining agreement.
We believe that our relationship with our employees is good.
Quality Industrial Corp.
On May 28, 2022, Modern Art Foundation Inc. (“Modern
Art”) Rene Lauritsen and Fastbase Holding Inc. agreed to transfer 77,669,078 shares of common stock in Wikisoft Corp. to Ilustrato
Pictures International Inc. (“Ilustrato”). Pursuant
to a Stock Transfer Agreement, the company purchased the shares for an aggregate amount of $500,000. Wikisoft Corp. has since changed
its name to Quality Industrial Corp. and its OTC Ticker was changed from WSFT to QIND.
As a result of the above transaction, there was a
change in control of the Company. The 77,669,078 shares transferred amounts to approximately 77% of the outstanding shares in Quality
Industrial Corp. Consequently, ILUS now unilaterally controls the election
of our board of directors and the direction of QIND. As a result of the Change of Control, Mr. Quintal resigned as Chairman of the Board,
and Mr. Link was appointed as the Chairman of the Board.
Quality International Co Ltd FCZ
After ILUS acquired control of QIND, on May 28,
2022, the company signed a binding letter of intent on June 28, 2022, to acquire control of Quality International, an international process
manufacturing company, manufacturing custom solutions for the Oil & Gas, Petrochemical & Refinery, Chemical & Fertilizer,
Power & Desalination, Water & Wastewater and Offshore industries. Quality International has several required industry certifications
in place and is on several global preferred vendor lists, with customers including but not limited to BP, Shell, Total, Chevron, Sonatrach,
Sasol and Gasco.
To fund the first tranche of the purchase price
for the interest in Quality International, on August 3, 2022, we issued to an accredited investor a two-year convertible promissory note
in the principal amount of $1,100,000 the “August 2022 Note”). The August 2022 Note bears interest at 7% per annum. We have
the right to prepay the August 2022 Note at any time. All principal on the August 2022 Note is convertible into shares of our common
stock after six months from issuance at the election of the holder at a conversion price equal to $1.00 per share.
The Binding Letter of Intent with Quality International
contemplated a period of due diligence followed by entry into a share purchase agreement. On January 18, 2023, we entered into a share
purchase agreement with the shareholders of Quality International (the “QI Share Purchase Agreement”), which agreement provided
for our purchase of 78 of the 150 (52%) outstanding shares of Quality International (the “QI Shares”), a freezone company
under the regulations of Abu Dhabi General Markets and laws of United Arab Emirates. This entity is our majority owned subsidiary. All
closing documents were executed for the transaction on March 6, 2023.
The
purchase price for the acquisition shall be up to $137,000,000 in cash, paid in tranches,
subject to achievement of financial milestones presented in a schedule of payments set forth
in the QI Share Purchase Agreement which was filed with our
Form 8-K dated January 18, 2023. Later on, July 31, 2023, the parties to the Purchase
Agreement entered into an amendment to the Purchase Agreement to revise the payment schedule
for the acquisition. The Purchase Price shall remain at up to $137,000,000 in cash, but the
schedule was amended, effective as of March 31, 2023.
On July 31, 2023, the
parties to the QI Purchase Agreement entered into an amendment to the QI Purchase Agreement (the “Amended QI Purchase Agreement”)
to revise the payment schedule for the acquisition to extend the payment timeline with smaller amounts due at each date. Moreover, break
fees were introduced if the payments are not received by their respective due dates. In the event that the Company fails to meet any
of the revised payment dates and/or the revised payment amounts, pursuant to the Amended Payment Schedule, the parties acknowledge and
agree that the QI Shareholders shall have the right, but not the obligation, to, in their sole discretion, terminate the Amended QI Purchase
Agreement and all associated agreements with us. Consequently, if terminated, the Company would be liable for the applicable break fee
pursuant to the table in the Amended Payment Schedule, and the parties agreed to release each other from the performance of any obligations
under the Amended QI Purchase Agreement, together with all related transaction documents, and the parties shall have no accrued rights
under the same save as those which are intended to survive after such termination.
In the event that we
fail to meet any of the Revised Payment Dates and/or the Revised Payment Amounts pursuant to Tranches 2.1, 2.2, 2.3 and Tranche 3.1 and
paid tranche 2.1 and 2.2 as the date of this amended registration statement. The parties acknowledge and agree that the Shareholders
shall have the right, but not the obligation, to, in their sole discretion, terminate the Purchase Agreement and all associated agreements
with us. Consequently, we would be liable for the applicable break fee pursuant to the table above, and the parties agreed to release
each other from the performance of any obligations under the Purchase Agreement, together with all related transaction documents, and
the parties shall have no accrued rights under the same save as those which are intended to survive after such termination.
Furthermore, payments
for Tranches 4, 5 and 6 are linked and paid in proportion to the percentage of EBITDA target achieved against forecasted EBITDA targets
and capped at 100% of EBITDA target. Any shortfall or surplus (as the case may be) on the EBITDA target of a particular Tranche shall
be carried over to the subsequent Tranche and to be added to or deducted from (as the case may be) the subsequent EBITDA target. Any
shortfall EBITDA existing after the expiration of time allotted for Tranche 6, shall be allowed to be delivered within an extended 6-month
period until June 30, 2025, and be paid in proportion to the EBITDA target achieved and capped at 100% of EBITDA target. Any remaining
shortfall existing after the expiration of time allotted for Tranche 6, shall be forfeit, resulting in a reduction to the Purchase Price.
We will take two non-paid board seats of Quality International
and there shall be two other non-paid board seats for existing Company shareholders. A final board seat will be independent and chosen
by us and the Company’s shareholders.
The
Purchase Agreement also contains certain restrictive covenants whereby the shareholders selling the Shares are prohibited from (a) competing
with the business of the Quality Industrial, (b) soliciting employees of the Company and (c) intentionally interfering with the Company’s
business relationships, in each case during the two-year period immediately following the Closing on March 6, 2023.
Quality
International specializes in the following industries and field of activities, as described below and illustrated in the graphics:
| |
• |
Refineries & Petrochemicals Industry |
| |
• |
Chemical, Fertilizer, Metals & Mineral Processing Industry |
| |
• |
Water & Wastewater Treatment Plant Industry |
| |
• |
Power & Desalination Industry |
Quality
International’s operations include the complimentary business of manufacturing process equipment, process skids & modular assemblies,
pipe spools & piping system installations, heavy structures (jakets, flare trestles), tank farms and turnkey projects. The company’s
services include design, detail engineering, procurement, fabrication, testing, and site installation & commercial assistance. The
graphic below further visualizes this.
Quality
International manufactures the following types of products:
| |
1. |
Pressure Vessels, Reactors & Columns. All metallurgies with shell
thickness up to 135 mm: |
| |
• |
Clad Steels (SS, Inconel, Incoloy, Ti) |
| |
• |
CS Rubber Lined |
| |
 |
2.
Shell & Tube Heat Exchangers, Evaporators/Condensers & Re-boilers/Waste Heat Boilers:
Materials of Construction:
•
Carbon Steel / LTCS
•
Stainless Steel
•
Duplex & Super Duplex SS
•
Titanium
•
Non-ferrous Alloys
•
Clad Steels (SS, Inconel, Incoloy, Ti)
3.
Pipe Spools Fabrication and Piping Systems:
Materials
of Construction:
- Carbon Steel /
LTCS
- Stainless Steel
- Duplex & Super
Duplex SS
- Non-Ferrous Alloys
- Clad Steel
- CS Rubber Lined
- Fiber Reinforced
Plastic
4.
Process Skids & Modular Assemblies:
•
Test Separators
•
Gas Refrigeration Modules
•
Fuel Gas Conditioning Skids
•
Gas Dehydration Modules
•
Filtration Skids
•
Desalination Plant Modules
•
Skidded Equipment
•
Process Modules
•
Pipe Rack Modules
5.
Process & Storage Tanks.
• Warehouse
Fabricated & Field Erected Metallic Tanks
•
With Fixed Cone Roof / Al Dome
•
With External Floating Roof
•
With internal Floating Deck & Al Dome
6.
Heavy structures (On-shore & Off-Shore)
•
Piles
•
Jackets
•
Decks
•
Bridges & Flare Trestles
•
Top Sides
•
Offshore Process Platform
•
Auxiliary Structures
7. Turnkey
Projects & EPC Contracts. Full scope of work including Civil, Mechanical, Electrical and Instrumentation for:
•
Tank Farms
•
Lubricant Blending Plants
•
Process Plants
•
Pipeline and BOP Packages
Intellectual Property
Quality
International Co Ltd FCZ does not own registered Intellectual Property rights. The company’s Intellectual Property resides
in its specific manufacturing processes, capability, compliance and certifications which have made it a trusted manufacturer for many
large global multinationals including but not limited to BP, Shell, Total, Chevron, Sonatrach,
Sasol, Gasco, Doosan and Technip Energies.
Certifications
Quality
International Co Ltd FCZ has the following certifications:
| Category |
Type |
Reference |
| Certification |
ISO 9001: 2015 |
Hamriyah Facility |
| Certification |
ISO 14001:2015 |
Hamriyah Facility |
| Certification |
ISO 45001:2018 |
Hamriyah Facility |
| Certification |
Manufacturer and Welding Shop acc. To AD 2000-Code / DIN EN ISO 3834 |
Hamriyah Facility |
| Certification |
ASME U Certificate of Authorization for Pressure vessels |
Hamriyah Facility |
| Certification |
ASME U2 Authorization to Manufacture Class 1 and Class 2 pressure vessels |
Hamriyah Facility |
| Certification |
ASME S Authorization to manufacture and assembly of power boilers |
Hamriyah Facility |
| Certification |
National Board of Boiler & Pressure Vessel Inspectors – Accreditation of “R” Repair Organizations |
Hamriyah Facility |
| Certification |
National Board of Boiler & Pressure Vessel Inspectors – Authorised to apply “NB” mark and register pressure vessels. |
Hamriyah Facility |
Competition
A
list of some of Quality International’s competitors is provided below:
| |
• |
Charles
Thompson Ltd (CTL), operates out of the United Kingdom and is an established process plant equipment engineering company, specializing
in the mechanical design and manufacture of bespoke equipment for the hydrocarbon and process industries; namely: pressure vessels,
shell and tube heat exchangers, filtration and drying equipment, pipework systems, columns, reactors and complete pre-packaged process
systems for on and offshore applications. |
| |
• |
ATB
Group is an Italian manufacturer of process equipment for the Petrochemical industry, ammonia and urea production sector as well
as for gas treatment plants. |
| |
• |
Integrated
Flow Solutions operates out of the United States and specializes in the design and manufacture of modular engineered-to-order (“ETO”)
and configure-to-order (“CTO”) liquid and gas process systems. |
| |
• |
HSM
Offshore Energy is a large Dutch construction yard which manufactures platforms, modules and equipment for the Oil and Gas and Energy
sectors. |
| |
• |
Harris
Pye is a global company headquartered in the United Kingdom. The company specializes in the repair, maintenance, upgrade and installation
services for boilers, heat transfer and associated equipment within the marine, offshore, energy from waste, and associated onshore
industrial sectors. |
| |
• |
Aarya
Engineering is a United Arab Emirates based steel fabrication and mechanical contracting company. The company manufactures Tanks
and Pressure Vessels, Piping Systems, Furnace Packages, Turnkey Mechanical Solutions and Process Skids for the Oil and Gas, Water
Treatment and Powerplant Industries. |
Quality
International’s advantages over competitors include but are not limited to:
| |
• |
Over
20 years of manufacturing experience with an extensive track record of delivery to global multinational customers. |
| |
• |
A
total manufacturing area of over 900,000 square meters with approximately 220,000 square meters of that in a waterfront facility,
enabling direct shipping to customers globally. |
| |
• |
All
required ISO, ASME and National Certifications are in place and equipment is manufactured as per the ASME, PD 5500, TEMA, API 650,
620 and other international standards |
| |
• |
Ability
to design and manufacturer bespoke customer specific requirements in in Stainless Steel, Duplex,
Super Duplex, Carbon Steel, Alloy Steel and Clad construction |
| |
• |
Flexibility
to offer end-to-end manufacturing capability and shipment as completed units or delivery of modules to customers with assembly on-site.
|
| |
• |
The
company is prequalified with the Abu Dhabi National Oil Company (ADNOC), Takreer Oil Refinining Company, GASCO, Borouge, Zakum Development
Company, Fertil Ruwais, SABIC, Ma’aden, Kuwait National Petroleum Company and the Kuwait Oil Company. |
| |
• |
An
extensive list of past and present customers including but not limited to Total, Shell, BP, Chevron, Sasol McDermott, Technip Energies,
Sonatrach, Worley, Doosan, Tecnimont, UTICO and Air Products. |
Employees
As
of December 30, 2022, we had approximately 1750 employees in Quality International Co Ltd FCZ. The employees are currently not represented
by a labor union or collective bargaining agreement. We believe that our relationship with our employees is good.
Replay Solutions
Replay
Solutions was incorporated by ILUS on the 1st of March 2022. The
company recycles and recovers precious metals from electronic and other forms of waste through the use of mechanical and chemical treatments.
The company’s “closed loop” concept utilizes electronic waste (E-Waste) and several other types of waste as resources
not only to extract precious metals but to re-use all materials such as the plastics which are obtained. The company recycles cleanly,
safely, and sustainably from items such as, but not limited to Print Circuit Boards (PCB), Cable wire and car radiators. The waste is
shredded, crushed, and ground into powder form before an airflow and an electrostatic separator is used to separate the materials into
metal and fibers. From and further refining processes, the various precious metals are obtained.
Competition
A list of Replay Solution's
competitors is provided below:
| · | Muller Guttenbrunn Group |
Employees
As of September 30, 2022, we had approximately 3 employees in Replay
Solutions. The employees are currently not represented by a labor union or collective bargaining agreement. We believe that
our relationship with our employees is good.
AL Shola
Al Modea Safety and Security LLC
On
December 13, 2022, the company has signed a Share Purchase Agreement to acquire 51% control of AL Shola Al Modea Safety and Security
LLC (ASSS), an established fire safety company registered in the United Arab Emirates. The total purchase price is up to $714,000.
The first tranche of $100,000 has been paid and the remaining three tranches with a total of $610,00
are conditional upon certain agreed Targets and Key Performance indices are met referenced in clause 1.02 in the SPA filed with this
Form 10 and scheduled below.
| Tranche | |
Timeframe and Conditions | |
Amount | |
Paid By | |
Paid To |
| 1 | | |
Payment within 7 days of closing proposed
transaction – Time of signing SPA. | |
$ | 100,000 | | |
ILUS | |
ASSS |
| 2 | | |
To be Paid as a Loan to the Seller within 45 days
after signing the SPA and Loan Agreement (Exhibit 3). The loan would be converted into Equity if the Company meets the agreed
Revenue Forecast (Exhibit 2) and achieves a valuation of $2,000,000 (Two Million USD), until then it would be considered a loan.
Repayment of the Loan shall be made as per the Loan Agreement (Exhibit 3) before disbursement of dividends. | |
$ | 306,000 | | |
ILUS | |
ASSS |
| 3 | | |
Paid after end of H1 2023, provided forecasted revenue
and EBITDA forecasts are met for the first 6 months of 2023. (Exhibit 2) | |
$ | 200,000 | | |
ILUS | |
ASSS |
| 4 | | |
Paid after end of 2023, provided forecasted revenue
and EBITDA forecasts are met for 2023. (Exhibit 2) | |
$ | 200,000 | | |
ILUS | |
ASSS |
| 5 | | |
Paid after end of H1 2024, provided forecasted revenue
and EBITDA forecasts are met for the first 6 months of 2023. (Exhibit 2) | |
$ | 214,000 | | |
ILUS | |
ASSS |
Exhibit 2 -
Target Financials as per ASSS / Agreed Revenue Forecast to be achieved
| USD |
2023 |
2024 |
2025 |
2026 |
2027 |
| Revenues |
1.987.747
|
2.450.647
|
2.804.629
|
2.940.776
|
3.076.923
|
| EBITDA |
238.530
|
367.597
|
420.694
|
470.524
|
523.077
|
Competition
A list of ASSS’s competitors is provided
below:
| |
· |
MAF
Fire Safety & Security LLC |
| |
· |
Blue
Flame Fire Fighting LLC |
Employees
As of December 31, 2022, we had approximately 32
employees in AL Shola Al Modea Safety and Security LLC. The employees are
currently not represented by a labor union or collective bargaining agreement. We believe that our relationship with our employees
is good.
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). Plaintiff alleges that we breached a stock purchase agreement dated May 10, 2020, and promissory notes and
is therefore entitled to damages. We have potential counterclaims being prepared against the former CEO, arising due to improper action
and lack of disclosures. The company has disputed the claim and argue that Larson Elmore has been
misleading the company and its shareholders on various matters including but not limited to liabilities, company commitments and due
diligence items presented by Larson Elmore during the takeover process. We have filed a motion to dismiss Larson Elmore’s
complaint on the basis that it fails to state a claim and lacks jurisdiction in the Nevada courts. At the hearing on this motion,
the court determined that discovery would be required before ruling for the company and denied the motion without prejudice. The
company is evaluating a motion for reconsideration once the order has been entered. In the interim, the parties have discussed a
tentative discovery schedule and the possibility of a mediation and settlement conference.
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 settlement
on September 6, 2023, and awaits the final court order.
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 in the amount of $3.772 million for the historic note with a principal amount of $4,000.
ILUS’ last day to file an opposition is October 20, 2023.
We cannot predict whether this action involving
our former CEO, or Black Ice Advisors LLC is likely to result in any material recovery by 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 based upon
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.
Smaller Reporting Company
The Company is a “smaller reporting company”
as defined in Rule 12b-2 under the Exchange Act. There are certain exemptions available to us as a smaller reporting company, including:
(1) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes Oxley Act; (2) scaled executive
compensation disclosures; and (3) the requirement to provide only two years of audited financial statements, instead of three years. As
long as we maintain our status as a “smaller reporting company”, these exemptions will continue to be available to us.
Corporate History
We were incorporated as Superior Venture Corp. on
April 27, 2010, in the State of Nevada for the purpose of selling 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 of the issued and outstanding
common stock of Ilustrato BC and the shareholders of Ilustrato BC received 1,200,000 shares of our common stock, which represented approximately
15% of our outstanding common stock following the acquisition. 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”).
Ilustrato BC was in the business of developing, for
international release, feature theatrical films to be financed and distributed domestically by Chinese production companies.
On February 11, 2016, Barton Hollow, LLC, a Nevada
limited liability company, and stockholder of the Company, filed an Application for Appointment of Custodian pursuant to Section 78.347
of the Nevada Revised Statutes in the District Court for Clark County, Nevada. Barton Hollow was subsequently appointed custodian of the
Company by Order of the Court on Apri1 5, 2016. In accordance with the provisions of the Order, Barton Hollow thereafter moved to reinstate
the Company with the State of Nevada, provide for the election of interim officers and directors, and call and hold a stockholder meeting.
On April 1, 2016, Barton Hollow, together with the
newly elected director of the Company, caused the Company to enter into a Letter of Intent to merge with Cache Cabinetry, LLC, an Arizona
limited liability company. Cache Cabinetry was a cabinet and design company headquartered in Scottsdale, Arizona that focused on the design
and supply of kitchen furnishings to residential clients. Pursuant to the Letter of intent, the parties thereto would endeavor to arrive
at, and enter 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 Company caused 360,000,000 shares of its common stock to be issued to the members.
Subsequently, on Apri1 6, 2016, the Company and Cache
Cabinetry, LLC entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”). As a result, the stockholders
of the Company elected Derrick McWilliams the President and Chief Executive Officer of Cache Cabinetry, LLC, who, along with Barton Hollow,
ratified and approved the Merger Agreement and Merger
The Merger closed on June 3, 2016. Upon closing, Cache
Cabinetry, LLC. merged into a newly created subsidiary of the Company with the members of Cache Cabinetry, LLC receiving shares of common
stock of the Company as consideration therefore. Upon closing of the Merger, Cache Cabinetry, LLC. was the surviving corporation in the
merger and wholly owned subsidiary of the Company.
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 – 10,000,000 preferred shares that convert
at 3 common shares for every 1 preferred class B common share.
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.
On February 14, 2020, the Company designated preferred
Class D shares – 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.
On May 28, 2020, the Company designated preferred
Class E shares - 5,000,000 preferred shares; par value $0.001; non-cumulative. Dividends are 6% a year commencing a year after issuance.
2.25% must be redeemed per quarter, commencing one year after issuance, and shall be redeemed at 130% premium to the redemption value.
These shares do not have voting rights.
On June 10, 2020, the Company entered into a definitive
agreement with FB Fire Technologies Ltd. for the conversion of debt. The shareholders were issued 2,500,000 shares of Class E Preferred
Stock and BrohF Holdings Ltd., a creditor of the company was issued 672,175 shares.
On May 29, 2020, the 10,000,000 preferred A and preferred
60,741,000 D shares were transferred to FB Technologies Global, Inc.
On August 26, 2021, the company
amended Class B Shares to 100,000,000 shares with par value $0.001 that convert 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.
On July 20, 2021, the Company
designed preferred Class F shares – 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.
The company’s subsidiaries
were acquired on the following dates:
January 26, 2021, acquired Firebug Group
March 25, 2021, acquired The Vehicle Converters LLC
April 13, 2021, acquired Bright Concept Detection
and Protection System LLC
February 11, 2022, acquired Bull Head Products Inc.
March 31, 2022, acquired Georgia Fire & Rescue
Supply LLC
May 28, 2022, acquired Wikisoft
Corporation (now Quality Industrial Corp.)
December
13, 2022, acquired Al Shola Al Modea Safety and Security LLC
January 18, 2023, acquired Quality
International Co Ltd FCZ (binding LOI signed on June 28, 2022)
February 13, 2023, incorporation
of Hyperion Defence Solutions
Item 1A. Risk Factors
An investment in our securities involves a high degree
of risk. In addition to the other information contained in this Registration Statement on Form 10, prospective investors should carefully
consider the following risks before investing in our securities. If any of the following risks actually occur, as well as other risks
not currently known to us or that we currently consider immaterial, our business, operating results and financial condition could be materially
adversely affected. As a result, the trading price of our common stock could decline, and investors may lose all or part of their investment
in our common stock. The risks discussed below also include forward-looking statements, and our actual results may differ substantially
from those discussed in these forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements” in this
Form 10. In assessing the risks below, you should also refer to the other information contained in this Form 10, including the financial
statements and the related notes, before deciding to purchase any of our securities.
Risk Related to Covid 19
Our business and future operations may be adversely
affected by epidemics and pandemics, such as the COVID-19 outbreak.
We may face risks related to health epidemics
and pandemics or other outbreaks of communicable diseases, which could result in a widespread health crisis that could adversely affect
general commercial activity and the economies and financial markets of the world as a whole. For example, the outbreak of COVID-19, which
originated in China, was declared by the World Health Organization to be a “pandemic,” and spread across the globe. A health
epidemic or pandemic or other outbreak of communicable diseases, such as the COVID-19 pandemic, poses the risk that we, or
our current and potential business partners may be disrupted or prevented from conducting business activities for certain periods of
time, the durations of which are uncertain, and may otherwise experience significant impairments of business activities, including due
to operational shutdowns or suspensions that may be requested or mandated by national or local governmental authorities or self-imposed
by us, our users or other business partners. While it is not possible at this time to estimate the full impact that COVID-19 could have
on our business, potential users, or other potential business partners, the continued spread of COVID-19, the measures taken by the local
and federal government, actions taken to protect employees, and the impact of the pandemic on various business activities could adversely
affect our results of operations and financial condition. COVID-19 has not recently had any material impact on our operations, supply
chain, liquidity or capital resources. During the lockdowns we however saw significant shipping delays, consumer orders on hold due to
budgetary restrictions as well as a slow-down in our planned acquisitions due to flight restrictions limiting on site due diligence.
The company has as a mitigant to future COVID-19 outbreaks increased its number of suppliers of raw materials
to reduce the risk of production capabilities and order back-logs.
Risks Relating to Macro Conditions and
Our Financial Condition
We have a substantial amount
of goodwill on our balance sheet. Future write-offs of goodwill may have the effect of decreasing our earnings or increasing our losses.
We have obtained growth through the acquisition
of Quality International. Under existing accounting standards, we are required to periodically review goodwill assets for possible impairment.
In the event that we are required to write down the value of any assets under these pronouncements, it may materially and adversely affect
our earnings. See the more detailed discussion appearing as part of our Management’s Discussion and Analysis of Financial Condition
and Results of Operations and in our financial footnotes. The percentage of our goodwill and intangible assets compared to our total
assets as of December 31, 2022, were 24.0% and 44.6% respectively.
Our ability to generate the significant
amount of cash needed to service our debt obligations and our ability to refinance all or a portion of our indebtedness or obtain additional
financing depends on many factors, many of which may be beyond our control.
As of December 31, 2022, we had $1,478,702 in
cash and cash equivalents as compared to $176,668 as of December 31, 2021. We also had $60,690,812 in accounts receivable as of December
31, 2022. Of those 33,175,606 related to Quality International a subsidiary of QIND and in total we had receivables that are more than
90 days past due as of December 31, 2022, of $30,192,822 in total of which $30,095,285 was in QIND. Our accounts receivable primarily
includes balance due from customers of Quality International Co Ltd FCZ, as well as products sold and delivered to additional customers.
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.
The majority of Quality International Co Ltd FCZ accounts receivable extend beyond 12 months and are guaranteed by a shareholder of Quality
International Co Ltd FCZ, Gerab National Enterprises LLC. Collected accounts receivable are used as working capital in our operations,
where necessary.
We normally grant our customers 30–90-day
payment terms after credit sales, depending on their trading history and specific tender requirements (if applicable). However, in the
fiscal year 2021, some of our distributors were affected by the COVID-19 outbreak which caused delays in their payment. In addition,
some of our customers tend to require longer payment terms due to their longer payment processing procedures. Even though we believe
that they are unlikely to default because of our long-term business relationships with them and our belief that the collectability risk
is low based on our historical experience and collection history with them, there can be no assurances that these receivables will be
collected.
Our ability to make scheduled payments on, or
to refinance our obligations under, our debt, will depend on our financial and operating performance, which, in turn, will be subject
to prevailing economic and competitive conditions and to the financial and business factors, many of which may be beyond our control.
We cannot assure you that our business will generate sufficient cash flow from operations, that currently anticipated business opportunities
will be realized on schedule or at all, or that future borrowings will be available to us in amounts sufficient to enable us to service
our indebtedness and any amounts borrowed under future credit facilities, or to fund our other liquidity needs.
We will use cash to pay the principal and interest
on our debt. These payments limit funds otherwise available for working capital, capital expenditures, acquisitions, collaborations,
and other purposes. As a result of these obligations, our current liabilities may exceed our current assets. We may need to take on additional
debt as we expand in our industry, which could increase our ratio of debt to equity. The need to service our debt may limit funds available
for other purposes and our inability to service debt in the future could lead to acceleration of our debt and foreclosure on assets.
We cannot assure that we will be able to refinance
any of our indebtedness or obtain additional financing as well as prevailing market conditions. As a result, we could face liquidity
problems and might be required to dispose of material assets or operations to meet our indebtedness service and other obligations.
Our projections are subject
to significant risks, assumptions, estimates and uncertainties, including assumptions regarding future legislation and changes in regulations
of the jurisdictions in which we operate, or seek to operate, our business. As a result, our projected revenues, market share, expenses
and profitability may differ materially from our expectations.
We operate in
a rapidly evolving and highly competitive industry and our projections are subject to the risks and assumptions made by management with
respect to the respective industry. Operating results are difficult to forecast because they generally depend on our assessment of factors
that are inherently beyond our control and impossible to predict with certainty, such as the timing of adoption of future legislation
and regulations by different jurisdictions. Furthermore, if we invest in the development of new products or distribution channels that
do not achieve commercial success, whether because of competition or otherwise, we may not recover the often material “up front”
costs of developing and marketing those products and distribution channels or recover the opportunity cost of diverting management and
financial resources away from other products or distribution channels.
Additionally,
our business may be affected by reductions in customer acquisition, customer persistency and customer spending as a result of numerous
factors which may be difficult to predict. This may result in decreased revenue levels, and we may be unable to adopt timely measures
to compensate for any unexpected shortfall in income. Our profitability projections make numerous assumptions about the expected future
levels of various expense items. Historically most of these expense items have been relatively stable or predictable either in absolute
terms or in relation to revenue but there is no certainty that such stability or predictability will continue into the future. These
inabilities could cause our operating results in a given period to be higher or lower than expected. If actual results differ from our
estimates, analysts may negatively react and our share price could be adversely impacted.
If we are unable to successfully identify, complete and integrate
acquisitions, our results of operations could be adversely affected.
Acquisitions have been and will continue to be a significant component
of our growth strategy, including the recent acquisition of Quality International. We seek to identify and complete acquisitions and
may continue to make strategic acquisitions. Our previous or future acquisitions may not be successful or may not generate the financial
benefits that we expected to achieve at the time of acquisition. In addition, there can be no assurance that we will be able to locate
suitable acquisition candidates in the future or acquire them on acceptable terms or, because of competition in the marketplace and limitations
imposed by the agreements governing our indebtedness or the availability of capital, that we will be able to finance future acquisitions.
We may be unable to identify, negotiate, and complete suitable acquisition opportunities on reasonable terms.
Acquisitions involve special risks, including,
without limitation, the potential assumption of unanticipated liabilities and contingencies, difficulty in assimilating the operations
and personnel of the acquired businesses, disruption of our existing business, dissipation of our limited management resources and impairment
of relationships with employees and customers of the acquired business as a result of changes in ownership. For instance, our subsidiary
QIND considered acquiring a 51% interest in Petro Line FZ-LLC (“Petro Line”), entering into a share purchase agreement on
January 27, 2023, (the “Petro Line Share Purchase Agreement”). However, the acquisition never materialized after a fire at
a Petro Line factory. An investigation into the fire’s impact led us to subsequently terminate the Petro Line Share Purchase Agreement
on July 31, 2023, and no payments to Petro Line were made. Such incidents can significantly affect our financial and operational outlook.
While we believe that strategic acquisitions can
improve our competitiveness and profitability, these activities could have a material adverse effect on our business, financial condition,
and operating results. We may incur significant costs such as transaction fees, professional service fees and other costs related to
future acquisitions. We may also incur integration costs following the completion of any such acquisitions as we integrate the acquired
business with the rest of our Company. Although we expect that the realization of efficiencies related to the integration of any acquired
businesses will offset the incremental transaction and acquisition-related costs over time, this net financial benefit may not be achieved
in the near term, or at all.
Our ability to generate the significant amount of cash needed to
service our debt obligations and our ability to refinance all or a portion of our indebtedness or obtain additional financing depends
on many factors, many of which may be beyond our control.
Our ability to make scheduled payments on, or to refinance
our obligations under, our debt, will depend on our financial and operating performance, which, in turn, will be subject to prevailing
economic and competitive conditions and to the financial and business factors, many of which may be beyond our control. We cannot assure
you that our business will generate sufficient cash flow from operations, that currently anticipated business opportunities will be realized
on schedule or at all, or that future borrowings will be available to us in amounts sufficient to enable us to service our indebtedness
and any amounts borrowed under future credit facilities, or to fund our other liquidity needs.
We will use cash to pay the principal and interest
on our debt. These payments limit funds otherwise available for working capital, capital expenditures, acquisitions, collaborations and
other purposes. As a result of these obligations, our current liabilities may exceed our current assets. We may need to take on additional
debt as we expand in our industry, which could increase our ratio of debt to equity. The need to service our debt may limit funds available
for other purposes and our inability to service debt in the future could lead to acceleration of our debt and foreclosure on assets.
Although this is
presently not the case, nor do we currently foresee it, we cannot assure that we will be able to refinance any of our indebtedness or
obtain additional financing as well as prevailing market conditions. As a result, we could face liquidity problems and might be required
to dispose of material assets or operations to meet our indebtedness service and other obligations.
The Company’s current Debt Obligations are mentioned elsewhere in this registration statement.
However, a historical debt obligation includes a Note Issued on February 4, 2022, to Discover Growth Fund amounting to $2,000,000 which
we were not able to service before maturity. 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 as of this Form 10.
The lending documents restrict, and any agreements
governing future indebtedness may restrict, our ability to dispose of assets and use the proceeds from any such dispositions. We cannot
assure we will be able to consummate any asset sales, or if we do, what the timing of the sales will be or whether the proceeds that we
realize will be adequate to meet indebtedness service obligations when due.
Our ability to generate the significant amount of cash needed
to fund acquisition obligations is dependent mainly on the ability of our subsidiary, QIND, to attract quality investors on an exchange.
Aside from serving debt, the Company also has
outstanding obligations for payments under acquisitions. The Company plans to fund the current and ongoing obligations for acquisitions
such as Quality International Co Ltd FCZ, through its publicly listed Industrial & Manufacturing subsidiary, Quality Industrial Corp.
(OTC: QIND). QIND filed a preliminary information statement on Schedule 14C on June 23, 2023, for a potential reverse split to meet the
share price requirements to uplist on NYSE American. Following the uplist, QIND intends to raise capital by private or public means to
fund the cash obligations for its acquisitions.
We believe that an uplist of QIND to a national
exchange will enhance the ability to attract more suitable investors. There can be no assurances, however, that QIND will be eligible
to uplist to the NYSE American, or that it will be able to raise the capital needed to fund these outstanding obligations. If we are
unable to fund acquisition obligations, we may lose valuable assets and the subsidiaries that we are attempting to acquire, which could
cause us to go out of business.
If we are unable to successfully identify, complete and
integrate acquisitions, our results of operations could be adversely affected.
Acquisitions have been and will continue to be a
significant component of our growth strategy. We seek to identify and complete acquisitions and may continue to make strategic acquisitions.
Our previous or future acquisitions may not be successful or may not generate the financial benefits that we expected to achieve at the
time of acquisition. In addition, there can be no assurance that we will be able to locate suitable acquisition candidates in the future
or acquire them on acceptable terms or, because of competition in the marketplace and limitations imposed by the agreements governing
our indebtedness or the availability of capital, that we will be able to finance future acquisitions. Acquisitions involve special risks,
including, without limitation, the potential assumption of unanticipated liabilities and contingencies, difficulty in assimilating the
operations and personnel of the acquired businesses, disruption of our existing business, dissipation of our limited management resources
and impairment of relationships with employees and customers of the acquired business as a result of changes in ownership. While we believe
that strategic acquisitions can improve our competitiveness and profitability, these activities could have a material adverse effect on
our business, financial condition, and operating results. We may incur significant costs such as transaction fees, professional service
fees and other costs related to future acquisitions. We may also incur integration costs following the completion of any such acquisitions
as we integrate the acquired business with the rest of our Company. Although we expect that the realization of efficiencies related to
the integration of any acquired businesses will offset the incremental transaction and acquisition-related costs over time, this net financial
benefit may not be achieved in the near term, or at all.
Inability to Continue Developing New Products.
Our ability to continue to grow organically
is tied in large part to our ability to continue to develop new products. A failure to continue to develop and deliver new, innovative,
and competitive products to the market could limit sales growth and negatively impact our Company and our financial condition, results
of operations and cash flow.
Risks associated with climate change and other environmental impacts,
and increased focus and evolving views of our customers, shareholders, and other stakeholders on climate change issues, could negatively
affect our business and operations.
The effects of climate change create short and long-term
financial risks to our business, both in the U.S. and globally. We have significant operations located in regions that have been, and
may in the future be, exposed to significant weather events and other natural disasters. Climate related changes can increase variability
in or otherwise impact natural disasters, including weather patterns, with the potential for increased frequency and severity of significant
weather events (e.g., flooding, hurricanes, and tropical storms), natural hazards (e.g., increased wildfire risk), rising mean temperature
and sea levels, and long-term changes in precipitation patterns (e.g., drought, desertification, and/or poor water quality). We expect
climate change could affect our facilities, operations, employees, and communities in the future, particularly at facilities in coastal
areas and areas prone to extreme weather events and water scarcity. Our suppliers are also subject to natural disasters that could affect
their ability to deliver or perform under our contracts, including as a result of disruptions to their workforce and critical infrastructure.
Disruptions also impact the availability and cost of materials needed for manufacturing and could increase insurance and other operating
costs.
Increased worldwide focus on climate change has led
to legislative and regulatory efforts to combat both potential causes and adverse impacts of climate change, including regulation of greenhouse
gas emissions. New or more stringent laws and regulations related to greenhouse gas emissions and other climate change related concerns
may adversely affect us, our suppliers, and our customers. Some of our facilities are, for example, engaged in manufacturing processes
that produce greenhouse gas emissions, including carbon dioxide, or rely on products from others that do so. We have worked for years
to reduce our reliance on fossil-based energy sources, to decrease our greenhouse gas emissions, to reduce our consumption of water and
production of waste, and to ensure our compliance with environmental regulations where we operate, enhancing our record of environmental
sustainability. However, new, and evolving laws and regulations could mandate different or more restrictive standards, could require capital
investments to transition to low carbon technologies, could adversely impact our ongoing operations, and could require changes on a more
accelerated time frame. Our suppliers may face similar challenges and incur additional compliance costs that are passed on to us. These
direct and indirect costs may adversely impact our results
We may be adversely affected by the effects
of inflation.
Inflation in wages, materials, parts, equipment, and
other costs has the potential to adversely affect our results of operations, cash flows and financial position by increasing our overall
cost structure, particularly if we are unable to achieve commensurate increases in the prices, we charge our customers for our products
and services. In addition, the existence of inflation in the economy has the potential to result in higher interest rates, which could
result in higher borrowing costs, supply shortages, increased costs of labor, weakening exchange rates and other similar effects. The
Company has currently experienced inflationary pressures on its supply chain due to increased shipping
costs, increased energy prices for manufacture of our commercial products as well as increased prices from suppliers
of raw materials. We have so far been able to offset inflationary pressure to consumers but it cannot be guaranteed that that our
results of operations will not be adversely affected by inflation in the future and could reduce sales and/or operating margins, and overall
financial performance.
We are Dependent on the Availability of Raw Materials, Parts and
Components Used in our Products.
While the Company manufactures certain parts and components
used in its products, the Company also requires substantial amounts of raw materials and purchases certain parts and components from suppliers.
The availability of and prices for raw materials, parts and components may be subject to curtailment or change due to, among other things,
suppliers’ allocations to other purchasers, interruptions in production by suppliers, including due to geopolitical or civil unrest,
unfavorable economic or industry conditions, labor disruptions, supply chain disruptions, catastrophic weather events, natural disasters,
the occurrence of a contagious disease or illness, changes in exchange rates and prevailing price levels. Any change in the supply of,
or price for, these raw materials or parts and components could materially affect the Company and its financial condition, results of
operations and cash flow.
Using the recent example of our acquisition, Bull
Head Products Inc., the demand for new trucks has not declined during Covid-19, but instead there was a delay in the delivery of new Pickup
trucks due to a shortage of electronic chips. Historically, 68% of the truck beds built by Bull Head Products are for installation of
a truck bed on a new pickup truck. There has not been a significant shift to installation on older trucks, but instead, the customers
wait for confirmation of the delivery of new trucks before ordering a new truck bed. Bull Head Products Inc. also has order backlogs of
over 9 months due to customers waiting for their new trucks to be delivered. One-third of our current enquiries are impacted by a delay
in delivery of new pick-up trucks, which presents a risk to Bull Head Products Inc.
Increases in the price of commodities could impact the
cost or price of our products, which could impact our ability to sustain and grow earnings.
Our manufacturing processes consume significant
amounts of raw materials, the costs of which are subject to worldwide supply and demand factors, as well as other factors beyond our control.
Raw material price fluctuations may adversely affect our results. We purchase, directly and indirectly through component purchases, significant
amounts of plastic, aluminum, steel, and other raw materials. In the past raw material prices have experienced volatility which has been
unforeseen and unexpected. Commodity pricing has fluctuated over the past few years and may continue to do so in the future. Such fluctuations
could have a material effect on our results of operations, balance sheets and cash flows and impact the comparability of our results between
financial periods.
We May be Subject to Loss in Market Share and Market Acceptance
as a Result of Performance Failures, Manufacturing Errors, Delays or Shortages.
There is a risk that for unforeseen reasons we may
be required to repair or replace products in use or to reimburse customers for products that fail to work or meet strict performance criteria.
To date, we have experienced some product failures related to electronic and mechanical components within equipment and vehicles. These
are either repaired under warranty or at cost to the customer or under a maintenance agreement.
Other disruptions in the supply
chain process or product sales and fulfilment systems for any reason, including equipment malfunction, failure to follow specific protocols
and procedures, supplier facility shut-downs, defective raw materials, wars and conflict, natural disasters such as hurricanes, tornadoes
or wildfires, property damage from riots, and other environmental factors and the impact of epidemics or pandemics, such as Covid-19,
and actions by businesses, communities and governments in response, could lead to launch delays, product shortage, unanticipated costs,
lost revenues and damage to our reputation.
We have taken steps to limit remedies for product
failure to the repair or replacement of malfunctioning or non-compliant products or services, and also attempt to exclude or minimize
exposure to product and related liabilities by including in our standard agreements warranty disclaimers and disclaimers for consequential
and related damages as well as limitations on our aggregate liability. From time to time, in certain sales transactions, we may negotiate
liability provisions that vary from such standard forms. There is a risk that our contractual provisions may not adequately minimize our
product and related liabilities or that such provisions may be unenforceable. We intend to carry product liability insurance, but coverage
we secure may not be adequate to cover potential claims. Moreover, to the extent we have to repair, reimburse, or expend funds to cover
customer service issues, our results of operations will be negatively affected.
We Will Rely in Part Upon Sales Reps, Retailers and Distribution
Partners to Distribute our Products, and We May Be Adversely Affected if Those Parties do not Actively Promote our Products or Pursue
Customers Who Would Have a Potential Demand for our Products.
We estimate that a significant portion of our revenue
will come from sales to partners through sales reps, retailers, distributors, and resellers. Some of these relationships have not been
formalized in detailed contracts and may be subject to termination at any time. Even where these relationships are formalized in a detailed
contract, the agreements are often terminable with little or no notice and subject to periodic amendment. We cannot control the amount
and timing of resources that our partners devote to activities on our behalf.
We intend to continue to seek strategic relationships
to distribute, license and sell certain of our products. We, however, may not be able to negotiate acceptable relationships in the future
and cannot predict whether current or future relationships will be successful.
The Markets the Company operates in are Highly Competitive which
Could Reduce Sales and Operating Margins.
Most of the Company’s products are sold in competitive
markets. Maintaining and improving a competitive position will require continued investment in manufacturing, engineering, quality standards,
marketing, customer service and support and distribution networks. The Company may not be successful in maintaining its competitive position.
The Company’s competitors may develop products and methods that are more efficient or may adapt quicker to new technologies or evolving
customer requirements. The Company may not be able to compete successfully with existing competitors or with new competitors. Pricing
pressures may require the Company to adjust the prices of products to stay competitive. Failure to continue competing successfully could
reduce sales, operating margins, and overall financial performance.
The Company’s Business Operations May Be Adversely Affected
by Information Systems Interruptions or Cybersecurity Intrusions.
The Company depends on various information technologies
to administer, store, and support multiple business activities. If these systems are damaged, cease to function properly or are subject
to cyber-security attacks, such as those involving unauthorized access, malicious software and/or other intrusions, the Company could
experience production downtimes, operational delays, other detrimental impacts on operations or the ability to provide products and services
to its customers, the compromising of confidential or otherwise protected information, destruction or corruption of data, security breaches,
other manipulation or improper use of the Company’s systems or networks, financial losses from remedial actions, loss of business
or potential liability, penalties, fines and/or damage to the Company’s reputation. While the Company attempts to mitigate these
risks by employing a number of measures, including having hired an IT manager with cyber security expertise, who reports directly to our
management team, employee training, technical security controls and maintenance of backup and protective systems, the Company’s
systems, networks, products, and services remain potentially vulnerable to known or unknown threats, any of which could have a material
adverse effect on the Company and its financial condition or results of operations. Further, given the unpredictability, nature, and scope
of cyber-security attacks, it is possible that potential vulnerabilities could go undetected for an extended period. We have currently
not been subject to material cybersecurity breaches in our supply chain, software, or services used in our products, services, or business.
A severe future cybersecurity incident in our supply chain could however reduce sales, operating margins, and overall financial performance.
With the strategy establishing and expanding our
defense subsidiary, which may become involved in defense contracting, we may face increased cyber and security threats that can range
from attacks common to most industries, but could have even greater financial or reputational impact, to advanced persistent threats
on our defense programs, which could involve information that is considered a matter of national security.
We are dependent on the availability of raw materials, parts,
and components used in our products.
While the Company manufactures certain parts and
components used in its products, the Company also requires substantial amounts of raw materials and purchases certain parts and components
from suppliers. The availability of and prices for raw materials, parts and components may be subject to curtailment or change due to,
among other things, suppliers’ allocations to other purchasers, interruptions in production by suppliers, including due to geopolitical
or civil unrest, unfavorable economic or industry conditions, labor disruptions, supply chain disruptions, catastrophic weather events,
natural disasters, the occurrence of a contagious disease or illness, changes in exchange rates and prevailing price levels. Any change
in the supply of, or price for, these raw materials or parts and components could materially affect the Company and its financial condition,
results of operations and cash flow. For instance, the war in Ukraine affected the geopolitical stability in Serbia. Consequently, the
company postponed the production of electric vehicles in Serbia temporarily until after the Serbian election and kept our manufacturing
of E-Raptor range of commercial electric Utility Vehicles in the UAE to mitigate the risk for operational and supply chain disruptions.
We cannot assure in the future that such incidents can significantly affect our supply chain and impact our financial and operational
outlook.
Our long-term success depends, in part, on our ability to operate
and expand internationally, and our business is susceptible to risks associated with international operations.
Currently, we maintain operations in the United
States, the United Kingdom, the Republic of Serbia and the United Arab Emirates, and plan to continue our efforts to expand globally,
in jurisdictions where we do not currently operate including, but not limited to, Spain, Uruguay and South Africa. The Company expects
international operations and export sales to continue to constitute the majority of our sales and assets in the foreseeable future. For
the year ended December 31, 2022, the international operations constituted approximately 84% of our total sales of which part of the
international operation include international sales to US costumers. For the year ended December 31, 2022, the international operations
constituted approximately 99% of our total assets.
Managing a global organization is difficult, time consuming and expensive, and
any international expansion efforts that we undertake may not be profitable in the near or long term. Although we have operating experience
in many foreign jurisdictions, we must still continue to make significant investments to build our international operations. The Company’s
sales from international operations and sales from export are both subject in varying degrees to risks inherent in doing business outside
the U.S. These risks include the following:
| § | Costs,
risks and uncertainties associated with tailoring our services in international jurisdictions
as needed to better address both the needs of customers, and the threats of local competitors; |
| § | Risks
of economic instability, including due to inflation; |
| § | Uncertainties
in forecasting revenues and expenses in markets where we have not previously operated; |
| § | Costs
and risks associated with local and national laws and regulations governing the industries
in which we operate, health and safety, climate change and sustainability, and labor and
employment; |
| § | Operational
and compliance challenges caused by distance, language, and cultural differences; |
| § | Costs
and risks associated with compliance with international tax laws and regulations; |
| § | Costs
and risks associated with compliance with the U.S. Foreign Corrupt Practices Act and other
laws in the United States related to conducting business outside the United States, as well
as the laws and regulations of non-U.S. jurisdictions governing bribery and other corrupt
business activities; |
| § | Costs
and risks associated with human trafficking, modern slavery and forced labor reporting, training
and due diligence laws and regulations in various jurisdictions; |
| § | Being
subject to other laws and regulations, including laws governing online advertising and other
Internet activities, email and other messaging, collection and use of personal information,
ownership of intellectual property, taxation and other activities important to our online
business practices; |
| § | Currency
exchange rate fluctuations and restrictions on currency repatriation; |
| § | Competition
with companies that understand the local market better than we do or that have preexisting
relationships with regulators and customers in those markets; |
| § | Adverse
effects resulting from the U.K.’s exit from the European Union (commonly known as “Brexit”) |
| § | Reduced
or varied protection for intellectual property rights in some countries; |
| § | Disruption
of operations from labor and political disturbances; |
| § | Withdrawal
from or renegotiation of international trade agreements and other restrictions on the trade
between the United States and other countries; |
| § | Changes
in tariff and trade barriers; and |
| § | geopolitical
events, including natural disasters, climate change, public health issues, political instability
(such as war between Ukraine and Russia), terrorism, insurrection, or war. |
Entry into certain transactions with foreign entities
now or in the future may be subject to government regulations, including review related to foreign direct investment by U.S. or foreign
government entities. If a transaction with a foreign entity is subject to regulatory review, such regulatory review might limit our ability
to enter into the desired strategic alliance and thus our ability to carry out our long-term business strategy.
Operating in international markets also requires significant
management attention and financial resources. The investment and additional resources required to establish operations and manage growth
in other countries may not produce desired levels of revenue or profitability and could instead result in increased costs without a corresponding
benefit. We cannot guarantee that our international operations or expansion efforts will be successful.
Any of these events
as well as related events not aforementioned, could have a materially adverse impact on the Company and its operations.
Uncertainty Related to Environmental Regulation and Industry Standards,
as well as Physical Risks of Climate Change, Could Impact the Company’s Results of Operations and Financial Position.
Increased public awareness and concern regarding environmental
risks, including global climate change, may result in more international, regional and/or federal requirements or industry standards to
reduce or mitigate global warming and other environmental risks. New climate change laws and regulations could require the Company to
change its manufacturing processes or obtain substitute materials that may cost more or be less available for its manufacturing operations.
Various jurisdictions in which the Company does business have implemented, or in the future could implement or amend, restrictions on
emissions of carbon dioxide or other greenhouse gases, limitations or restrictions on water use, the production of single use plastics,
regulations on energy management and waste management and other climate change-based rules and regulations, which may increase the Company’s
expenses and adversely affect its operating results. In addition, the physical risks of climate change may impact the availability and
cost of materials, sources and supply of energy, product demand and manufacturing and could increase insurance and other operating costs.
The expected future increased worldwide regulatory activity relating to climate change could expand the nature, scope, and complexity
of matters that the Company is required to control, assess, and report. If environmental laws or regulations or industry standards are
either changed or adopted and impose significant operational restrictions and compliance requirements upon the Company, its suppliers,
its customers or its products, or the Company's operations are disrupted due to physical impacts of climate change on the Company, its
customers or its suppliers, the Company's business, results of operations and financial condition could be adversely impacted.
Significant Movements in Foreign Currency Exchange Rates May Harm
the Company’s Financial Results.
The Company is exposed to fluctuations in foreign
currency exchange rates, particularly with respect to the Euro, British Pound, Indian Rupee, UAE Dirham and Serbian Dinar. Any significant
change in the value of the currencies of the countries in which the Company does business against the U.S. Dollar could affect the
Company’s ability to sell products competitively and control its cost structure, which could have a material adverse effect on results
of operations.
A Significant or Sustained Decline in Commodity Prices Including
Oil Could Negatively Impact the Levels of Expenditures by Certain of the Company’s Customers.
Demand for the Company’s products depends,
in part, on the level of new and planned expenditures by certain of its customers. The level of expenditures by the Company’s customers
is dependent on, among other factors, general economic conditions, availability of credit, economic conditions within their respective
industries and expectations of future market behavior. The Company’s profitability may be adversely affected during any periods
of unexpected or rapid increases in interest rates and volatility in commodity prices, including
oil, can negatively affect the level of these activities and especially impact our Industrial
& Manufacturing division and can result in postponement of capital spending decisions or the delay or cancellation of existing
orders. The ability of the Company’s customers to finance capital investment and maintenance may also be affected by the conditions
in their industries. Reduced demand for the Company’s products could result in the delay or cancellation of existing orders or
lead to excess manufacturing capacity, which unfavorably impacts the absorption of fixed manufacturing costs. This reduced demand could
have a material adverse effect on the Company and its financial condition and results of operations.
We are dependent on financing for the continuation
of our operations.
It can at times be difficult to predict our capital
needs on a monthly, quarterly, or annual basis. Our future is dependent upon our ability to obtain profitable operations or financing.
We reserve the right to seek additional funds through private placements of our common stock and/or through debt financing. We do not
have financing in place at this time for all future planned acquisitions. We may not have access to financing or on terms that are acceptable
to us. Any lack of funds from operations or fundraisings for any shortage could be detrimental to our ability to continue operations and
negatively impact us and our financial condition, results of operations and cash flow.
Risks Related to Legal, Accounting and Regulatory
Matters
An Unfavorable Outcome of Any Pending Contingencies or Litigation
Could Adversely Affect the Company.
We have been named as a defendant in a lawsuit,
and we may be named in additional litigation, all of which will require significant management time and attention and result in significant
legal expenses and may result in an unfavorable outcome, which could have a material adverse effect on our business, financial condition,
results of operations and cash flows.
We have been named as a defendant in an action
commenced by our former CEO, Larson Elmore. A case also has been filed in the Eight Judicial District Court of the State of Nevada (Case
No. A-22-858343-C). Plaintiff alleges that we breached a stock purchase agreement dated May 10, 2020, and promissory notes and is therefore
entitled to damages. We have potential counterclaims against the former CEO which are being prepared due to improper action and lack
of disclosures. The company has disputed the claim and argue that Larson Elmore has been misleading
the company and its shareholders on various matters including but not limited to liabilities, company commitments and due diligence items
presented by Larson Elmore during the takeover process. We are in the process of a settlement discussion and have obtained an
extension of time to respond while this process occurs.
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 settlement
on September 6, 2023, and awaits the final court order.
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 dispute the legitimacy of the note. On June 5, 2023, we got a service of process by Superior Court of California,
County of San Diego, with a reschedule hearing on March 3, 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
in the amount of $3.772 million for the historic note with a principal amount of $4,000. ILUS’
last day to file an opposition is October 20, 2023.
We cannot predict whether the action against involving
our former CEO, Black Ice Advisors or Mr. Nicol is likely to result in any material recovery by or expense to our company. In general,
we lack much information and evidence to support the assertions of financial statements prior to the current management taking over and
there are chances that preceding management of the company might have missed compliances for which we are not aware. Thus, the company
may have to bear consequences for that from authorities. We cannot reasonably ascertain an amount for those contingencies.
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 upon 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.
We may continue to incur legal fees in responding
to these and other lawsuits. The expense of defending such litigation may be significant and any sizeable verdict may adversely affect
the company. The amount of time to resolve this and any additional lawsuits is unpredictable, and these actions may divert management’s
attention from the day-to-day operations of our business, all of which could adversely affect our business, results of operations and
cash flows. For additional detail related to this risk, see Item 8, “Legal Proceedings”.
The Sale of our Products Involves Potential Product Liability and Related Risks that Could Expose us to Significant Insurance and Loss
Expenses.
We face an inherent risk of exposure to product liability
claims if the use of our products results in, or is believed to have resulted in, illness or injury. Any product liability claim may increase
our costs and adversely affect our revenue and operating income. Moreover, liability claims arising from a serious adverse event may increase
our costs through higher insurance premiums and deductibles for our insurances we have with Firebug Group, Georgia Fire and Bull Head
Products and may make it more difficult to secure adequate insurance coverage in the future. In addition, our product liability insurance
may fail to cover future product liability claims, which, if adversely determined, could subject us to substantial monetary damages. Georgia
Fire, Bull Head Products and Firebug all have General Liability Cover.
Failure by us to Maintain the Proprietary Nature of our Technology,
Intellectual Property and Manufacturing Processes Could Have a Material Adverse Effect on our Business, Operating Results, Financial Condition,
Stock Price, and on our Ability to Compete Effectively.
We principally rely upon patent, trademark, copyright,
trade secret and contract law to establish and protect our proprietary rights. There is a risk that claims allowed on any patent licenses
or trademarks we hold may not be broad enough to protect our technology. In addition, our patent licenses or trademarks may be challenged,
invalidated or circumvented and we cannot be certain that the rights granted thereunder will provide competitive advantages to us. Moreover,
any current or future issued or licensed patents, or trademarks, or currently existing or future developed trade secrets or know-how may
not afford sufficient protection against competitors with similar technologies or processes, and the possibility exists that certain of
our already issued patents or trademarks may infringe upon third party patents or trademarks or be designed around by others. In addition,
there is a risk that others may independently develop proprietary technologies and processes, which are the same as, substantially equivalent,
or superior to ours, or become available in the market at a lower price.
In addition, foreign laws treat the protection of
proprietary rights differently from laws in the United States and may not protect our proprietary rights to the same extent as U.S. laws.
The failure of foreign laws or judicial systems to adequately protect our proprietary rights or intellectual property, including intellectual
property developed on our behalf by foreign contractors or subcontractors may have a material adverse effect on our business, operations,
financial results, and stock price.
There is a risk that we have infringed or in the future
will infringe patents or trademarks owned by others, that we will need to acquire licenses under patents or trademarks belonging to others
for technology potentially useful or necessary to us, and that licenses will not be available to us on acceptable terms, if at all.
We may have to litigate to enforce our patents or
trademarks or to determine the scope and validity of other parties’ proprietary rights. Litigation could be very costly and divert
management’s attention. An adverse outcome in any litigation may have a severe negative effect on our financial results and stock
price. To determine the priority of inventions, we may have to participate in interference proceedings declared by the United States Patent
and Trademark Office or oppositions in foreign patent and trademark offices, which could result in substantial cost and limitations on
the scope or validity of our patents or trademarks.
We also rely on trade secrets and proprietary know-how,
which we seek to protect by confidentiality agreements with our employees, consultants, service providers and third parties. There is
a risk that these agreements may be breached, and that the remedies available to us may not be adequate. In addition, our trade secrets
and proprietary know-how may otherwise become known to or be independently discovered by others.
Compliance with Changing Regulation of Corporate Governance and
Public Disclosure May Result in Additional Expenses.
Changing laws, regulations and standards relating
to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and new SEC regulations, are creating uncertainty
for companies such as ours. These new or changed laws, regulations and standards are subject to varying interpretations in many cases
due to their lack of specificity, and as a result, their application in practice may evolve over time as new guidance is provided by regulatory
and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing
revisions to disclosure and governance practices. We are committed to maintaining high standards of corporate governance and public disclosure.
As a result, we intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in
increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance
activities. If our efforts to comply with new or changed laws, regulations and standards differ from the activities intended by regulatory
or governing bodies due to ambiguities related to practice, our reputation may be harmed.
If we Fail to Comply with the Rules under the
Sarbanes-Oxley Act Related to Accounting Controls and Procedures, or if Material Weaknesses or Other Deficiencies are Discovered in our
Internal Accounting Procedures, our Stock Price Could Decline Significantly.
Section 404 of the Sarbanes-Oxley Act requires
annual management assessments of the effectiveness of our internal controls over financial reporting. We are in the process of documenting
and testing our internal control procedures, and we may identify material weaknesses in our internal control over financial reporting
and other deficiencies. If material weaknesses and deficiencies are detected, it could cause investors to lose confidence in our Company
and result in a decline in our stock price and consequently affect our financial condition. In addition, if we fail to achieve and maintain
the adequacy of our internal controls, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal
controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls, particularly
those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to helping prevent
financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed,
investors could lose confidence in our reported financial information, and the trading price of our Common Stock could drop significantly.
In addition, we cannot be certain that additional material weaknesses or significant deficiencies in our internal controls will not be
discovered in the future.
Failure To Comply with the U.S. Foreign Corrupt Practices Act,
the U.K. Bribery Act or Other Applicable Anti-bribery Laws Could Have an Adverse Effect on the Company.
The U.S. Foreign Corrupt Practices Act, the U.K. Bribery
Act and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments
for the purpose of obtaining or retaining business. Recent years have seen a substantial increase in anti-bribery law enforcement activity
with more frequent and aggressive investigations and enforcement proceedings by both the Department of Justice and the SEC, increased
enforcement activity by non-U.S. regulators and increases in criminal and civil proceedings brought against companies and individuals.
The Company’s policies mandate compliance with all anti-bribery laws. However, the Company operates in certain countries that are
recognized as having governmental and commercial corruption. The Company’s internal control policies and procedures may not always
protect it from reckless or criminal acts committed by employees or third-party intermediaries. Violations of these anti-bribery laws
may result in criminal or civil sanctions, which could have a material adverse effect on the Company and its financial condition and results
of operations.
Changes in Tax laws or Exposure to Additional Income Tax Liabilities
Could have a Material Impact on our Company, the Results of Operations, Financial Conditions and Cash Flows.
We are subject to income taxes, as well as non-income-based
taxes in the jurisdictions in which we operate, as well as jurisdictions such as the United States, in which we intend to have operations.
The tax laws in these could change on a prospective or retroactive basis, and any such changes could adversely affect us and our effective
tax rate.
Taxation regulation in territories around the world can also change
very quickly, which may mean that all the implications for businesses may not have been fully thought through by the regulating authorities
before final guidelines and laws are issued. Furthermore, any changes made by tax authorities, together with other legislative changes,
to the mandatory sharing of company information (financial and operational) with tax authorities on both a local and global basis, could
lead to disagreements between jurisdictions with respect to the proper allocation of profits between such jurisdictions. We therefore
continuously monitor changes to tax regulation and double tax treaties between the territories in which we operate. We also maintain a
comprehensive transfer pricing policy to govern the flow of funds between various tax territories.
We are further subject to ongoing tax audits in the
various jurisdictions in which we operate. We regularly assess the likely outcomes of these audits in order to determine the appropriateness
of our tax provisions. However, there can be no assurance that we will accurately predict the outcomes of these audits, which could have
a material impact on the business, financial condition, results of operations, and cash flows.
While we have recorded reserves for potential payments
to various tax authorities related to uncertain tax positions, the calculation of such tax liabilities involves the application of complex
tax regulations in many jurisdictions. Therefore, any dispute with a tax authority may result in payment that is significantly different
from our estimates. If the payment proves to be less than the recorded reserves, the reversal of the liabilities would generally result
in tax benefits being recognized in the period when we determine the liabilities to be no longer necessary. Conversely, if the payment
proves to be more than the reserves, we could incur additional charges, and these could have a materially adverse effect on the business,
financial condition, results of operations, and cash flows.
Laws and Regulations Governing International Business Operations
Could Adversely Impact Our Company.
The US Department of the Treasury’s Office of
Foreign Assets Control (“OFAC”), and the Bureau of Industry and Security at the US Department of Commerce (“BIS”)
administer certain laws and regulations that restrict US persons and, in some instances, non-US persons, in conducting activities, transacting
business with, or making investments in certain countries, governments, entities and individuals subject to US economic sanctions.
Our international operations subject us to these laws
and regulations, which are complex, restrict business dealings with certain countries, governments, entities, and individuals, and are
constantly changing. Further restrictions may be enacted, amended, enforced, or interpreted in a manner that materially impacts our operations.
From time to time, certain subsidiaries have limited business dealings in countries subject to comprehensive sanctions.
Certain of our subsidiaries sell products, and may
provide related services, to distributors and other purchasing bodies in such countries. These business dealings represent an insignificant
amount of our consolidated revenues and income but expose us to a heightened risk of violating applicable sanctions regulations. Violations
of these regulations are punishable by civil penalties, including fines, denial of export privileges, injunctions, asset seizures, debarment
from government contracts and revocations or restrictions of licenses, as well as criminal fines and imprisonment.
We have established
policies and procedures designed to assist with compliance with such laws and regulations. However, there can be no assurance that these
will prevent us from violating these regulations in every transaction in which we may engage. As such a violation could adversely affect
our reputation, business, financial condition, results of operations and cash flows.
We are subject to changes in contract
estimates in our Defense and Industrial & Manufacturing Divisions
We account for substantially
all long-term contracts in the Defense and Industrial & Manufacturing Divisions utilizing the cost-to-cost method of percentage-of-completion
accounting. This accounting requires judgment relative to assessing risks, estimating revenues and costs, and making assumptions regarding
the timing of receipt of delivery orders from our customer and technical issues. Due to the size and nature of these contracts, the estimation
of total revenues and costs is complicated and subject to many variables. We must make assumptions regarding for example expected increases
in material costs, wages and employee benefits, engineering hours, productivity and availability of labor and allocated fixed costs.
Changes to production costs, overhead rates, learning curves and/or supplier performance can also impact these estimates. Furthermore,
under the revenue recognition accounting rules, we can only include units in our estimates of overall contract profitability after we
have received a firm delivery order for those units. Because new orders have the potential to significantly change the overall profitability
of cumulative orders received to date, particularly early in the contract when fewer overall units are on order, the period in which
we receive those orders will impact the estimated life-to-date contract profitability. Changes in underlying assumptions, circumstances
or estimates could have a material adverse effect on our net sales, financial condition and/or profitability.
General Risk Factors
The Company’s Success Depends on Its Executive Management and Other Key Personnel.
The Company’s future success depends to a significant
degree on the skills, experience and efforts of its executive management and other key personnel and their ability to provide the Company
with uninterrupted leadership and direction. The loss of the services of any of the executive officers or a failure to provide adequate
succession plans for key personnel could have an adverse impact on the Company. The availability of highly qualified talent is limited
and the competition for talent is robust. However, the Company provides long-term equity awards and certain other benefits for its executive
officers which provides incentives for them to make a commitment to the Company. The Company’s future success will depend on its
ability to have adequate succession plans in place and to attract, retain and develop qualified personnel. A failure to efficiently replace
executive management members and other key personnel and to attract, retain and develop new qualified personnel could have an adverse
effect on the Company’s operations and implementation of its strategic plan.
Challenges with Respect to Labor Availability Could Negatively
Impact the Company’s Ability to Operate or Grow the Business.
The Company’s success depends in part on the
ability of its businesses to proactively attract, motivate, and retain a qualified and highly skilled workforce in an intensely competitive
labor market. A failure to attract, motivate and retain highly skilled personnel could adversely affect the Company’s operating
results or its ability to operate or grow the business. Additionally, any labor stoppages or labor disruptions, including due to geopolitical
unrest, unfavorable economic or industry conditions, catastrophic weather events, natural disasters or the occurrence of a contagious
disease or illness could adversely affect the Company’s operating results or its ability to operate or grow the business.
Risks Related to our Management and Control
Persons
Our largest shareholder, officer, director,
Nicolas Link holds substantial control over the company and is able to influence all corporate matters, which could be deemed by shareholders
as not always being in their best interests.
Nicolas Link, our Chief Executive
Officer (Principal Executive Officer & Chairman of the Board of Directors) with his company, FB Technologies Global, Inc. Dubai,
U.A.E , owns approximately 2% of the outstanding shares of common stock, owns all of the outstanding shares of Class A Preferred Stock,
Class B Preferred Stock and Class D Preferred Stock and owns 15% of the outstanding shares of Class F Preferred Stock.
Our common stock is entitled
to one vote per share on all matters submitted to a vote of the stockholders, including the election of directors. Each share of Class
A Preferred Stock is entitled to vote together with the holders of our common stock on all matters submitted to shareholders at a rate
of 500 votes, including the election of directors. Each share of Class D Preferred Stock is entitled to vote together with the holders
of our common stock on all matters submitted to shareholders at a rate of 500 votes, including the election of directors.
There are 1,379,080,699 shares
of common stock outstanding, which amounts to 1,379,080,699 votes on matters requiring a shareholder vote. While Mr. Link owns only 2%
of the outstanding common shares, with the Series A Preferred Stock that Mr. Link owns, he has the power over 5,000,000,000 votes and
with the Series D Preferred Stock, he has the power to over 30,370,500,000 additional votes on matters requiring a shareholder vote,
including the election of directors. He will have voting power over every aspect of our business.
By virtue of his ownership of
common stock and preferred stock, Mr. Link is able to exercise significant influence over all matters requiring approval by our stockholders,
including the election of directors, the approval of significant corporate transactions, and any change of control of our company.
Our officers and directors are located
outside of the U.S., so it will be difficult to effect service of process and enforcement of legal judgments upon our officers and directors.
Our officers and directors
are located outside of the United States and reside in the U.A.E, U.K. and Denmark. As a result, it may be difficult to effect service
of process within the United States and enforce judgments of the US courts obtained against our executive officers and directors. Particularly,
our shareholders may not be able to:
| | • | |
Effect service of process in the U.S. on any of our officers and directors; |
| | • | |
Enforce judgments obtained in U.S. courts against our officers and directors based upon the civil liability provisions of the U.S. federal securities laws; |
| | • | |
Enforce, in a court outside of the U.S., judgments of U.S. courts based on the civil liability provisions
of the U.S. federal securities laws; and |
| | • | |
Bring an original action in a court in the U.A.E, U.K. or Denmark to enforce liabilities against any of our officers and directors based upon the U.S. federal securities laws. |
We are dependent on the continued services
of our Director and Chairman and if we fail to keep them or fail to attract and retain qualified senior executives and key technical personnel,
our business may not be able to expand.
We are dependent on the continued
availability of Chairman, Nicolas Link and Director, John-Paul Backwell, and the availability of new executives to implement our business
plans. The market for skilled employees is highly competitive, especially for employees in our industry. Although we expect that our planned
compensation programs will be intended to attract and retain the employees required for us to be successful, there can be no assurance
that we will be able to retain all our key employees or a sufficient number to execute our plans, nor can there be any assurance we will
be able to continue to attract new employees as required.
Our lack of adequate D&O insurance may
also make it difficult for us to retain and attract talented and skilled directors and officers.
In the future we may be subject to litigation, including
potential class action and stockholder derivative actions. Risks associated with legal liability are difficult to assess and quantify,
and their existence and magnitude can remain unknown for significant periods of time. To date, we have not obtained directors and officers
liability (“D&O”) insurance, but the company is currently investigating and plans to obtain one. Without adequate D&O
insurance, the amounts we would pay to indemnify our officers and directors should they be subject to legal action based on their service
to the Company could have a material adverse effect on our financial condition, results of operations and liquidity. Furthermore, our
lack of adequate D&O insurance may make it difficult for us to retain and attract talented and skilled directors and officers, which
could adversely affect our business.
Our Officers and Key Personnel may voluntarily
terminate their relationship with us at any time, and competition for qualified personnel is lengthy, costly, and disruptive.
If we lose the services of our
officers and key personnel and fail to replace them if they depart, we could experience a negative effect on our financial results and
stock price. The loss and our failure to attract, integrate, motivate, and retain additional key employees could have a material adverse
effect on our business, operating and financial results and stock price.
Certain of our officers and directors have other business pursuits
that might interfere with their work on our business.
Our key management and board are also represented
on the management and board of QIND, our subsidiary and our Chairman and CEO Nicolas Link is also the Chairman of the Board of Directors
of Dear Cashmere Holding Co. and the Chairman of the Board of Directors of CGrowth Capital, Inc. As a result, at certain points in time,
these jointly represented companies may have members of key management and board concentrate their efforts on transactions that focus
on one company over the other, which collectively would not amount to work for our company on a full-time basis. Dear Cashmere Holding
Co. and CGrowth Capital, Inc. are however not affiliated with ILUS or any of its subsidiaries and each public company are independently
responsible for its own funding. We estimate that our key management will spend an average of 20% of their time on the company’s
Subsidiary QIND and 80% on the parent company ILUS. This and other conflicts of interest may arise between us and our officers and director
in that they have other business interests currently, with respect to ILUS, and in the future to which they devote their attention, such
as in the case of acquisitions, and they may be expected to continue to do so although management time must also be devoted to our business.
These competing interests could disrupt focus of our key management and board. As a result, conflicts of interest may arise that can
be resolved only through exercise of such judgment as is consistent with each officer or director’s understanding of his or her
fiduciary duties to our company.
Currently we have only four officers and one director.
We will seek to add additional officers and/or directors with industry experience and when the proper personnel are located and terms
of employment are mutually negotiated and agreed, and we have sufficient capital resources and cash flow to make such appointments.
In an effort to resolve such potential conflicts
of interest as between ILUS and QIND, our officers and director have agreed that any opportunities that they are aware of independently
or directly through their association with us would be presented by them solely to ILUS, before determining whether to include the opportunities
in QIND or another subsidiary.
In general, our officers and director are required
to present business opportunities to ILUS, which may include QIND, if:
| |
• |
ILUS could financially undertake the opportunity
through QIND; and |
| |
• |
the opportunity is aligned with the Industrial
business of QIND. |
Potential
investors should also be aware of the following potential conflicts of interest:
None of
our officers or director is required to commit his or her full time to our company and, accordingly, may have conflicts of interest in
allocating his or her time among various business activities.
In the course
of their other business activities, our officers and directors may become aware of investment and business opportunities which may be
appropriate for presentation to us as well as the other entities with which they are affiliated.
Our officers
and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation
of any such officers and directors was included by a target business as a condition to any agreement with respect to the combination.
Below is
a table summarizing the entities to which our executive officers and director currently have fiduciary duties or contractual obligations:
| Individual
(1) |
Entity(2) |
Affiliation |
| Nicolas
Link |
ILUS
QIND
DRCR
CGRA |
Director & CEO
Director
Director
Director |
| John-Paul
Backwell |
ILUS
QIND |
Managing Director
CEO |
| Louise
Bennett |
ILUS
QIND |
COO
COO |
| Krishnan
Krishnamoorthy |
ILUS
QIND |
CFO
CFO |
| Carsten
Kjems Falk |
ILUS
QIND |
CCO
CCO |
| (1) |
Each
person has a fiduciary duty with respect to the listed entities next to their respective names. Each of our Officers only have
employment in our Company and our Subsidiary QIND. |
| (2) |
Each
of the entities listed by trading symbol in this table has priority
and preference relative to our company with respect to the performance by each individual listed in this table of his obligations and
the presentation by each such individual of business opportunities. |
We cannot provide assurances that our efforts
to eliminate the potential impact of conflicts of interest will be effective. We are at risk that our officers and directors will favor
their other business interest over the needs of our company. These competing business interests could interfere with our ability to successfully
implement our business plan.
Risks Relating to our
Common Stock
We may conduct offerings of our equity securities
in the future, in which case your proportionate interest may become diluted.
We may be required to conduct
equity offerings in the future to finance our current projects or to finance subsequent projects that we decide to undertake. If our common
stock shares are issued in return for additional funds, the price per share could be lower than that paid by our current shareholders
but with the aim to increase overall value for all shareholders. We anticipate continuing to rely on equity sales of our common stock
shares in order to fund our business operations. If we issue additional common stock shares or securities convertible into shares of our
common stock, your percentage interest in us could become diluted.
Our common stock price may be volatile and
could fluctuate, which could result in substantial losses for investors.
Our common stock is quoted on
the OTC Pink Market under the symbol, “ILUS.” The market price of our common stock is likely to be volatile and could fluctuate
in price in response to various factors, many of which are beyond our control, including:
| § | government regulation of our Company and operations. |
| § | the establishment of partnerships. |
| § | intellectual property disputes. |
| § | additions or departures of key personnel. |
| § | sales of our common stock. |
| § | our ability to integrate operations, technology, products and services. |
| § | our ability to execute our business plan. |
| § | operating results below expectations. |
| § | loss of any strategic relationship. |
| § | economic and other external factors; and |
| § | period-to-period fluctuations in our financial results. |
In addition, the securities markets
have from time-to-time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular
companies. These market fluctuations may also materially and adversely affect the market price of our common stock.
Sales of a substantial number of shares of
our common stock in the public market, or the perception that such sales could occur, could cause our stock price to fall.
The market price of our common stock could decline
significantly as a result of sales of a large number of shares of our common stock. If our existing stockholders sell, or indicate an
intention to sell, substantial amounts of our common stock in the public market after the contractual and securities law restrictions
on resale of such common stock lapse, or after those shares become registered for resale pursuant to an effective registration statement,
the trading price of our common stock could decline. As of March 31, 2023, a total of 1,379,080,699 shares of our common stock were outstanding.
Of those shares, 1,190,797,366 are currently without restriction, in the public market.
Upon the effectiveness of any registration statement, we could elect to file with respect to any outstanding shares of common stock,
any sales of those shares or any perception in the market that such sales may occur could cause the trading price of our common stock
to decline.
The issuance of shares of our common stock upon conversion or exercise
of preferred stock, warrants and convertible notes, will dilute ownership to existing shareholders and may cause our stock price to fall.
Any issuance of additional common stock by us in the
future as a result of the conversion or exercise of warrants, convertible notes, preferred stock or debt settlements would result in dilution
to our existing shareholders. Such issuances could be made at a price that reflects a discount or a premium to the then-current trading
price of our common stock. Moreover, the perception in the public market that shareholders might sell shares of our stock or that we could
make a significant issuance of additional common stock in the future could depress the market for our shares. These sales, or the perception
that these sales might occur, could depress the market price of our common stock or make it more difficult for us to sell equity securities
in the future at a time and at a price that we deem appropriate.
We have issued shares of our common stock, as well
as other securities such as warrants, convertible notes, preferred stock or debt settlements, which are convertible into shares of our
common stock, in financing transactions that are deemed to be “restricted securities,” as that term is defined in Rule 144
promulgated under the Securities Act. From time to time, certain of our shareholders or derivative security holders may be eligible to
sell all or some of their restricted shares of common stock by means of ordinary brokerage transactions in the open market pursuant to
Rule 144, subject to certain limitations. The resale pursuant to Rule 144 of shares acquired from us in private transactions could cause
our stock price to decline significantly.
We have never declared or paid any cash dividends
or distributions on our capital stock.
We have never declared or paid
any cash dividends or distributions on our capital stock. While we may not anticipate paying a dividend in the short-term and we currently
intend to retain short-term earnings for growth, we may do so in the medium to long-term future.
The declaration, payment and
amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, the
results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors
considers relevant. There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance with respect
to the amount of any such dividend.
We may become involved in securities class
action litigation that could divert management’s attention and harm our business.
The stock market in general, have experienced extreme
price and volume fluctuations. These fluctuations have often been unrelated or disproportionate to the operating performance of the companies
involved. If these fluctuations occur in the future, the market price of our shares could fall regardless of our operating performance.
In the past, following periods of volatility in the market price of a particular company’s securities, securities class action litigation
has often been brought against that company. If the market price or volume of our shares suffers extreme fluctuations, then we may become
involved in this type of litigation, which would be expensive and divert management’s attention and resources from managing our
business.
As a public company, we may also from time to time
make forward-looking statements about future operating results and provide some financial guidance to the public markets. Projections
may not be timely made and set at expected performance levels and could affect the price of our shares.
Our common stock is currently deemed a “penny stock,”
which makes it more difficult for our investors to sell their shares.
Our common stock is currently deemed a “penny
stock,” which makes it more difficult for our investors to sell their shares. The SEC has adopted rule 3a51-1 which establishes
the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less
than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving
a penny stock, unless exempt, Rule 15g-9 requires:
| |
• |
that a broker or dealer approve a person’s account for transactions in penny stocks, and |
| |
• |
the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. |
In order to approve a person’s account for transactions
in penny stocks, the broker or dealer must:
| |
• |
obtain financial information and investment experience objectives of the person, and |
| |
• |
make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. |
The broker or dealer must also deliver, prior to any
transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form:
| |
• |
sets forth the basis on which the broker or dealer made the suitability determination and |
| |
• |
that the broker or dealer received a signed, written agreement from the investor prior to the transaction. |
Generally, brokers may be less willing to execute
transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of
our common stock and cause a decline in the market value of our stock.
If we do not have sufficient authorized common stock for potential
conversion of our outstanding Series B and Series D Preferred Stock, we could be at risk of breaching a forbearance agreement with the
shareholder, Nicolas Link.
The company is in
the process of entering into a forbearance agreement with Nicolas Link, the affiliate holder of
our Series B and Series D Preferred Stock, to restrict him from converting his preferred stock into common stock until the earlier of
one year from listing with a national exchange or two years from the date of the agreement. The number of shares of common stock issuable
upon conversion or exercise of outstanding preferred stock, warrants and convertible notes upon entering the Forbearance agreement are
appx 1.8bn shares and below the 2bn authorized number of shares. After the forbearance period ends, we may be required to have sufficient
shares of common stock available to accommodate future conversions of the preferred stock.
If
we breach our obligations under the forbearance agreement with the holder of our Series B Preferred Stock and our Series D Preferred
Stock, including our failure to convert the preferred stock into shares of common stock as a result of an insufficient number of shares
of authorized common stock available for issuance, we would be in default of the agreement if Nicolas Link chooses to convert the applicable
preferred stock into shares of common stock.
Risks Relating to Our Company and Industry
The success of our business depends on our ability to maintain and
enhance our reputation and brand.
We believe that our reputation in our industry is
of significant importance to the success of our business. A well-recognized brand is critical to increasing our customer base and, in
turn, increasing our revenue. Since the industry is highly competitive, our ability to remain competitive depends to a large extent on
our ability to maintain and enhance our reputation and brand, which could be difficult and expensive. To maintain and enhance our reputation
and brand, we need to successfully manage many aspects of our business, such as cost-effective marketing campaigns to increase brand recognition
and awareness in a highly competitive market. We cannot assure you, however, that these activities will be successful and achieve the
brand promotion goals we expect. If we fail to maintain and enhance our reputation and brand, or if we incur excessive expenses in our
efforts to do so, our business, financial conditions and results of operations could be adversely affected.
In the event that we are unable to successfully compete in our industry,
we may not see lower profit margins
We face substantial competition in our industry. Due
to our smaller size, it can be assumed that some of our competitors have greater financial, technical, and other competitive resources.
Accordingly, these competitors may have already begun to establish superior technologies in our industry. We will attempt to compete against
these competitors by developing technology that exceed what is offered by our competitors. However, we cannot assure you that our technology
will outperform competing technology, or that our competitors will not develop new products or services that exceed what we provide. In
addition, we may face competition based on price. If our competitors lower the prices on their products, then it may not be possible for
us to market our products at prices that are economically viable. Increased competition could result in:
| |
• |
Lower than projected revenues; |
| |
• |
Price reductions and lower profit margins.
|
| |
|
|
Any one of these results could adversely affect our business,
financial condition, and results of operations.
In addition, our competitors may develop competing products that
achieve greater market acceptance. It is also possible that new competitors may emerge and acquire significant market share. Our inability
to achieve sales and revenue due to competition will have an adverse effect on our business, financial condition, and results of operations.
If we are unable to successfully manage growth, our operations could
be adversely affected.
Our progress is expected to require the full utilization
of our management, financial and other resources. Our ability to manage growth effectively will depend on our ability to improve and expand
operations, including our financial and management information systems, and to recruit, train and manage personnel. There can be no absolute
assurance that management will be able to manage growth effectively.
If we do not properly manage the growth of our business,
we may experience significant strains on our management and operations and disruptions in our business. Various risks arise when companies
and industries grow quickly. If our business or industry grows too quickly, our ability to meet customer demand in a timely and efficient
manner could be challenged. We may also experience development delays as we seek to meet increased demand for our services and platform.
Our failure to properly manage the growth that we or our industry might experience could negatively impact our ability to execute on our
operating plan and, accordingly, could have an adverse impact on our business, our cash flow and results of operations, and our reputation
with our current or potential customers.
We may fail to successfully integrate acquisitions or otherwise
be unable to benefit from pursuing acquisitions.
We believe there are meaningful opportunities to grow
through acquisitions and joint ventures across all service categories and we expect to continue a strategy of selectively identifying
and acquiring businesses with complementary services. We may be unable to identify, negotiate, and complete suitable acquisition opportunities
on reasonable terms. There can be no assurance that any business acquired by us will be successfully integrated with our operations or
prove to be profitable to us. We may incur future liabilities related to acquisitions. Should any of the following problems, or others,
occur as a result of our acquisition strategy, the impact could be material:
| |
• |
difficulties integrating personnel from acquired entities and other corporate cultures into our business; difficulties integrating information systems; |
| |
• |
the potential loss of key employees of acquired companies; |
| |
• |
the assumption of liabilities and exposure to undisclosed or unknown liabilities of acquired companies; or the diversion of management attention from existing operations. |
The elimination of monetary liability against our directors, officers
and employees under our Articles of Incorporation and the existence of indemnification rights to our directors, officers and employees
may result in substantial expenditures by our Company and may discourage lawsuits against our directors, officers, and employees.
Our Articles of Incorporation contain provisions that
eliminate the liability of our directors for monetary damages to our Company and shareholders. Our bylaws also require us to indemnify
our officers and directors. We may also have contractual indemnification obligations under our agreements with our directors, officers,
and employees. The foregoing indemnification obligations could result in our company incurring substantial expenditures to cover the cost
of settlement or damage awards against directors, officers, and employees that we may be unable to recoup. These provisions and resulting
costs may also discourage our company from bringing a lawsuit against directors, officers, and employees for breaches of their fiduciary
duties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors, officers, and employees
even though such actions, if successful, might otherwise benefit our Company and shareholders.
We provide integrated project management services in the form
of long-term, fixed price contracts that may require us to assume additional risks associated with cost over-runs, operating cost inflation,
labor availability and productivity, supplier and contractor pricing and performance, and potential claims for liquidated damages.
We provide integrated project management services
outside our normal discrete business in the form of long-term, fixed price contracts. Some of these contracts are required by our customers,
primarily international oil companies and defense companies. These services include acting as project managers as well as service providers
and may require us to assume additional risks associated with cost over-runs. These customers may provide us with inaccurate information
in relation to their reserves, which is a subjective process that involves location and volume estimation, that may result in cost over-runs,
delays, and project losses. In addition, our customers often operate in countries with unsettled political conditions, war, civil unrest,
or other types of community issues. These issues may also result in cost over-runs, delays, and project losses.
Providing services on an integrated basis may
also require us to assume additional risks associated with operating cost inflation, labor availability and productivity, supplier pricing
and performance, and potential claims for liquidated damages. We rely on third-party subcontractors and equipment providers to assist
us with the completion of these types of contracts. To the extent that we cannot engage subcontractors or acquire equipment or materials
in a timely manner and on reasonable terms, our ability to complete a project in accordance with stated deadlines or at a profit may
be impaired. If the amount we are required to pay for these goods and services exceeds the amount we have estimated in bidding for fixed-price
work, we could experience losses in the performance of these contracts. These delays and additional costs may be substantial, and we
may be required to compensate our customers for these delays. This may reduce the profit to be realized or result in a loss on a project.
We
may experience unexpected supply shortages.
We distribute products from a wide variety of
manufacturers and suppliers. Nevertheless, in the future we may have difficulty obtaining the products we need from suppliers and manufacturers
as a result of unexpected demand or production difficulties. Also, products may not be available to us in quantities sufficient to meet
our customer demand. Our inability to obtain sufficient products from suppliers and manufacturers, in sufficient quantities, could have
a material adverse effect on our business, results of operations and financial condition. For instance, the war in Ukraine affected the
geopolitical stability in Serbia. Consequently, the company postponed the production of electric vehicles in Serbia temporarily until
after the Serbian election and kept our manufacturing of E-Raptor range of commercial electric Utility Vehicles in the UAE to mitigate
the risk for operational and supply chain disruptions. We cannot assure in the future that such incidents can significantly affect our
supply chain and impact our financial and operational outlook.
A
substantial decrease in the price of steel could significantly lower our gross profit or cash flow.
We distribute
many products manufactured, some of which may contain steel and, as a result, our business may be significantly affected by the price
and supply of steel. When steel prices are lower, the prices that we charge customers for products may decline, which affects our gross
profit and cash flow. The steel industry as a whole is cyclical and at times pricing and availability of steel can be volatile due to
numerous factors beyond our control, including general domestic and international economic conditions, labor costs, sales levels, competition,
consolidation of steel producers, fluctuations in the costs of raw materials necessary to produce steel, import duties and tariffs and
currency exchange rates. When steel prices decline, customer demands for lower prices and our competitors’ responses to those demands
could result in lower sale prices and, consequently, lower gross profit or cash flow.
If
steel prices rise, we may be unable to pass along the cost increases to our customers.
We
maintain inventories of steel products to accommodate the lead time requirements of our customers. Accordingly, we purchase steel products
in an effort to maintain our inventory at levels that we believe to be appropriate to satisfy the anticipated needs of our customers
based upon historic buying practices, contracts with customers and market conditions. Our commitments to purchase steel products are
generally at prevailing market prices in effect at the time we place our orders. If steel prices increase between the time, we order
steel products and the time of delivery of such products to us, our suppliers may impose surcharges that require us to pay for increases
in steel prices during such period. Demand for the products we distribute, the actions of our competitors, and other factors will influence
whether we will be able to pass such steel cost increases and surcharges on to our customers, and we may be unsuccessful in doing so.
We are subject to increased risks associated
with our investments in emerging markets, particularly in the Middle East region and specifically in the United Arab Emirates. These
risks encompass significant political, social, and economic uncertainties in the region. Given the volatile nature of these markets,
instabilities in these regions could significantly adversely affect the value of our investments.
Almost all of ILUS’s operations are conducted,
and almost of its assets are, as at the date of this document, located in the UAE, which is defined as an emerging market. While most
of the countries in which ILUS conducts business have historically not been affected by political instability, there is no assurance
that any political, social, economic or market conditions affecting such countries in the Middle East region generally (as well as outside
the Middle East region because of interrelationships within the global financial markets) would not have a material adverse effect on
our business, results of operations and financial condition.
Specific risks in these countries and the Middle
East region that may have a material impact on our business, results of operations and financial condition include:
| |
· |
ongoing macroeconomic
uncertainty and disruption due to the COVID-19 pandemic; |
| |
· |
an increase in inflation and the cost of living; |
| |
· |
a devaluation in the currency of any country in which ILUS has operations; |
| |
· |
external acts of warfare and civil clashes or other hostilities
involving nations in the region; |
| |
· |
governmental actions or interventions, including tariffs, protectionism
and subsidies; |
| |
· |
difficulties and delays in obtaining governmental or other approvals,
new permits and consents for our operations or renewing existing ones; |
| |
· |
potential lack of transparency or reliability in jurisdictions where
ILUS operates; |
| |
· |
cancellation of contractual rights; |
| |
· |
lack of infrastructure; |
| |
· |
expropriation or nationalization of assets; |
| |
· |
inability to repatriate profits and/or dividends; |
| |
· |
continued regional political instability and unrest, including government
or military regime change, riots or other forms of civil disturbance or violence, including through acts of terrorism; |
| |
· |
military strikes or the outbreak of war or other hostilities involving
nations in the region; |
| |
· |
a material curtailment of the industrial and economic infrastructure
development that is currently underway across the Middle East region; |
| |
· |
increased government regulations, or adverse governmental activities,
with respect to price, import and export controls, the environment, customs and immigration, capital transfers, foreign exchange
and currency controls, labor policies, land and water use and foreign ownership; |
| |
· |
changing tax regimes, including the imposition of taxes in currently
tax favorable jurisdictions; |
| |
· |
arbitrary, inconsistent or unlawful government action, including
capricious application of tax laws and selective tax audits; |
| |
· |
limited availability of capital or debt financing; and |
| |
· |
slowing regional and global economic environment. |
Any unexpected changes
in the political, social, economic or other conditions in which ILUS operates or neighboring countries may have a material adverse effect
on our business, results of operations and financial condition.
It is not possible
to predict the occurrence of events or circumstances such as or similar to those outlined above or the impact of such occurrences and
no assurance can be given that ILUS would be able to sustain its current profit levels if such events or circumstances were to occur.
Investors should also
be aware that emerging markets are subject to greater risks than more developed markets, including in some cases significant legal, economic
and political risks. Accordingly, investors should exercise particular care in evaluating the risks involved and must decide for themselves
whether, in light of those risks, their investment is appropriate. Generally, investment in developing markets is only suitable for sophisticated
investors who fully appreciate the significance of the risks involved.
To the extent that
economic growth or performance in the countries in which QIND operates slows or begins to decline, or political conditions become sufficiently
unstable to have a material adverse effect on QIND's operations, QIND's business, financial condition and results of operations may be
materially adversely affected.
We are exposed to risks from potentially
unpredictable legal and regulatory environments in the UAE and Middle East region.
ILUS currently operates
in an emerging market economy in the UAE, which are in various stages of developing institutions and legal and regulatory systems that
are not yet as fully matured and as established as those of Western Europe and the United States. Some of these countries are also in
the process of transitioning to a market economy and, as a result, are experiencing changes in their economies and their government policies
(including, without limitation, policies relating to foreign ownership, repatriation of profits, property and contractual rights and
planning and permit granting regimes) that may affect our business in those countries. Such countries are also characterized by less
comprehensive legal and regulatory environments and systems. Existing laws and regulations may be applied inconsistently with anomalies
in their interpretation or implementation. Such anomalies could affect our ability to enforce its rights under its contracts or to defend
its business against claims by others.
There can be no assurance
that if laws or regulations were imposed on the products and services offered by QIND it would not increase its costs, impact the costs
that are associated with buying properties in Dubai and internationally, adversely affect the way in which QIND conducts its business
or otherwise have a material adverse effect on its results of operations and financial condition.
Any of the above factors,
alone or in combination, may have a material adverse effect on our business, results of operations and financial condition.
We are exposed to risks arising from
potential changes in the UAE's visa legislation, which could adversely impact the business operations.
A federal decision
No. 281 of 2009 issued by the Minister of the Interior in May 2009 (the "Resolution"), which came into effect on 1 June
2009, standardized the terms of residency permits issued to expatriate residential property owners across the UAE. The decree allows
expatriate property owners to apply for renewable multiple-entry visas with a validity of six months. The residency permit does not entitle
the holder to work in the UAE and is in effect a long-term visit visa. In order to successfully apply for the new permit, expatriate
property owners must satisfy certain criteria, including a minimum property valuation of at least AED 1 million, earning thresholds and
the maintenance of appropriate insurance. While the Resolution was passed with the intention of standardizing the previous rules and
stimulating the domestic market, it is not possible to assess whether the Resolution has had a positive or negative effect on levels
of foreign investment in the UAE market. Separately, the Government, through the Dubai Land Department, has introduced a two-year residency
visa for residential property owners in Dubai, and, while the criteria for obtaining this residency visa is similar to the residency
permit, it provides the holder with UAE residency status, allowing the individual to obtain an Emirates ID card and a UAE driving license
as well as to sponsor dependents (subject to meeting the relevant criteria for dependent sponsorship). The Government has introduced
other new visa measures to make the UAE more appealing to investors, entrepreneurs, skilled personnel and outstanding students, including
the 10-year “Golden” visa. However, any restrictive changes to the UAE's visa policies may discourage foreign nationals from
investing in the UAE, which would have an adverse effect on our business, results of operations and financial condition.
We are subject to risks associated
with potential unlawful or arbitrary governmental actions in the UAE, which could negatively impact our operations and financial performance.
Governmental authorities
in the UAE in which some of ILUS’s subsidiaries operates may have a high degree of discretion and, at times, act selectively or
arbitrarily, without hearing or prior notice, and sometimes in a manner that is contrary to law or influenced by political or commercial
considerations. Such governmental action could include, among other things, the withdrawal of building permits, the expropriation of
property without adequate compensation or the forcing of business acquisitions, combinations or sales. Any such action taken may have
a material adverse effect on our business, results of operations and financial condition.
We are subject to the risk of international
sanctions, which could significantly impact our business activities, results of operations and financial condition.
European, US and other
international sanctions have in the past been imposed on companies engaging in certain types of transactions with specified countries
or companies or individuals in those countries. Companies operating in certain countries in the Middle East region have been subject
to such sanctions in the past. The UAE are not subject to such sanctions as at the date of this transition report. The terms of legislation
and other rules and regulations which establish sanctions regimes are often broad in scope and difficult to interpret.
If the UAE were in
the future to violate European, US or international sanctions, penalties could include a prohibition or limitation on the UAE’s
ability to conduct business in certain jurisdictions or to access the US or international capital markets. Any such sanction could have
a material adverse effect on our business, results of operations and financial condition.
Item 2. Financial Information
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following
discussion and analysis of our results of operations and financial condition should be read in conjunction with our financial statements
and the notes to those financial statements that are included elsewhere in this Form 10. Our discussion includes forward-looking statements
based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations, and intentions. Actual
results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number
of factors. See “Cautionary Note Regarding Forward-Looking Statements” at the beginning of this Form 10.
Overview
ILUS is a Nevada Corporation primarily focused on
the public safety, industrial and renewable energy sectors. Through its wholly owned subsidiary, Emergency Response Technologies Inc.
(“ERT”), ILUS aims to provide technology that protects communities, front line personnel and assets by acquiring technology
and solutions for the emergency response sector. This sector includes Fire and Rescue Services, Law Enforcement, Emergency Medical Services
and Emergency Management. The company also has an Industrial and Manufacturing subsidiary, Quality Industrial Corp., which is focused
on the acquisition and growth of process manufacturing and industrial companies. Furthermore, the company has a Mining and Renewable Energy
subsidiary which is focused on the incorporation, acquisition and growth of companies in the sustainable mining and renewable energy sectors.
ILUS has four existing distinct divisions which serve a diverse global
customer base. An overview of the current divisions is found below:
Emergency & Response division:
Emergency Response Technologies is a subsidiary of
ILUS, whose operating companies design, manufacture and distribute specialty equipment, vehicles and related parts and services. We provide
firefighting equipment, firefighting vehicles, firefighting vehicle superstructures, distribution of equipment for emergency services,
fire protection equipment sales, installation, and maintenance as well as servicing/maintenance of Firefighting, Rescue and Emergency
Medical Services equipment.
Industrial & Manufacturing division:
This
division is specialized in the manufacturing and assembling of process equipment, piping, and modules for the oil, gas, and energy sectors
with over two decades of experience and key end-users in the Oil & Gas, Off-shore, Refineries & Petrochemical, Waste-water treatment
plants and Chemical, Fertilizer, Metals & Mineral Processing industries. The international end-users include such as, but not limited
to Chevron, BP, Shell, Total, Sasol, Gasco. The sub-division has capabilities of undertaking design, detailed engineering, procurement,
fabrication, site erection, commissioning, testing & handing over of process equipment. The funding obligations for acquisitions
such as Quality International Co Ltd FCZ and Petro Line FZ LLC, by our publicly listed industrial subsidiary, Quality Industrial Corp.
(OTC: QIND), are currently funded by QIND itself as
are the ongoing obligations for future acquisitions by the subsidiary. Our subsidiary QIND is currently in the process of uplisting to
NYSE American. Following the uplist, an S-1 Registration Statement will be filed by QIND to fund its debt obligations.
Mining & Renewable Energy division:
This division is engaged in the Mining & Renewable
Energy industry currently through its subsidiary Replay Solutions with recycling and recovery of precious metals from electronic waste.
We incorporate a ‘Closed loop’ concept where we use E – Waste and data destruction as a resource not only to extract
precious metals but to reuse all materials found in E-Waste such as plastics. We recycle cleanly, safely, and sustainably on items such
as, but not limited to Print Circuit Boards (PCB) and precious metals, Cable wire, car radiator shredding and separation. We shred, crush,
and grind the board to powder form and then use an airflow and an electrostatic separator to separate the materials into metal and fibers.
Defense Division:
This division is engaged in the Defense industry
currently through its subsidiary Hyperion Defence Solutions where it aims to provide
customers with the technological capability, solutions and services that will protect their warfighters and provide them with a technological
advantage in the following key areas: Joint Close Air Support (JCAS), Counter.
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 of our products 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.
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 improvements initiatives. The benefits of these
integration efforts may not positively impact our financial results in the short-term but has 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 and Plan of Operations
First Half of 2022
In the first half of 2022, ILUS planned to acquire
specific manufacturing and distribution capability in the United States as well as additional technological and strategic advancement.
ILUS therefore acquired Bull-Head Products, a Tennessee based manufacturer specialist vehicle truck beds and vehicle conversions, Georgia
Fire & Rescue, Georgian based distributor of firefighting equipment, and Quality Industrial Corp. a Special Purpose Vehicle listed
on the OTCQB intended for the acquisition Quality International Co Ltd FCZ which the company signed
a binding letter of intent to acquire on June 28, 2022, and for further strategically aligned acquisitions. In February 2022, ILUS hired
a Chief Financial Officer (CFO) for the Company and in June 2022 ILUS hired a Chief Commercial Officer.
Second Half of 2022
In the second half of 2022, ILUS completed its
audit process for 2020 and 2021 therefore it filed this Form 10-12G Registration Statement with the U.S. Securities and Exchange Commission
(the "SEC") to become a fully reporting company. In the second half of 2022, the company expected to acquire other companies
in the Emergency Response technology and manufacturing sectors. The Company completed seven acquisitions in 2021 and 2022. The Company
completed three acquisitions in 2021 and four acquisitions in 2022.
| Year 2021 |
Year 2022 |
| FB Fire Technologies Ltd. |
Bull Head Products Inc. |
| Bright Concept Detection and Protection System LLLC |
Georgia Fire & Rescue Supply LLC |
| The Vehicle Converters LLC |
Wikisoft Corporation (now Quality Industrial Corp.) |
| |
Al Shola Al Modea Safety and Security LLC |
| |
Bright Concept Detection and Protection System LLC
|
There is also an agreement with AL Shola Al Modea
Safety and Security LLC (ASSS) signed on December 13, 2022.
ILUS is in the process of launching an approved investment
project in Serbia, whereby it has been approved to obtain subsidies from the Serbian government for the employment of Serbian nationals,
for the property and for the required machinery and equipment to manufacture commercial Electric Utility Vehicles currently used for
emergency response purposes as sold by our Emergency Response division, as well as for industrial, hospitality and agricultural purposes.
The project has been approved by the Republic of Serbia and ILUS will with the investment receive incentive funds from the Republic of
Serbia equivalent to 35% of the gross salaries of all hires and 25% of all capital expenditure (CAPEX). The total amount of government
subsidies for ILUS EV Technologies is expected to be upwards of $8 million for its first investment project in Serbia and Serbia is planned
to be ILUS’ main production hub for vehicles and equipment outside of the United States. ILUS has secured a large site on the outskirts
of Cacak and also has the option to secure manufacturing facilities in Rekovac, Kragujevac and Jagodina. The company is engaged with
an Investment Bank to complete a planned subsidiary IPO. ILUS plans to appoint Strategic Advisors to strengthen the organization and
its corporate governance for its first planned subsidiary up list to a major stock exchange. In our July 13, 2022, press release, we
updated our revenue forecast to a run rate revenue of $140 million for 2022 due to current progress and the agreed acquisitions at the
time expected to close in the 3rd quarter. The company had run rate revenue of $140.94 million if annualizing the audited revenue for
the three months ended December 31, 2022.
First Half of 2023
ILUS entered into an agreement to acquire 52%
of Quality International Co Ltd FCZ on January 18, 2023, and 51% of Petro Line FZ LLC on January 27, 2023. Quality International Co Ltd
FCZ currently has signed purchase orders of $150M in various stages of the manufacturing process and an additional $220M in expected
orders. QIND will, following the acquisitions, disclose any known trends or uncertainties that have had or that the company reasonably
expects will have a material impact on net sales or revenues or income from continuing operations. In the first half of 2023, ILUS plans
to complete additional Emergency Response Technologies acquisitions, as well as integrate newer acquisitions into the group. We are presently
manufacturing in the United States, United Arab Emirates, United Kingdom and Republic of Serbia. The site in Kragujevac, Serbia has existing
automotive engineers to be onboarded by ILUS EV Technologies as well as existing machinery for production of the company’s E-Raptor
range of commercial electric Utility Vehicles. ILUS expects the first E-Raptor 6x6 models to roll off the Kragujevac production line
in late Q3 2023. The company plans to further expand its manufacturing in the United States and to Spain during the first half of 2023.
The company also plans to further expand operations through its newly formed Defense subsidiary. The focus will be on the international
expansion of its subsidiaries through strategically aligned acquisitions and the growth of the operating companies. ILUS anticipates
hiring additional finance, legal and acquisition personnel to facilitate and manage the growth as well as additional Strategic Advisors,
consisting of experienced individuals from the Emergency Response, Industrial, Manufacturing, Mining, and Renewable Energy sectors.
Second Half of 2023
In the second half of 2023, ILUS plans to continue
the international expansion of its subsidiaries by increasing sales and operational efficiencies as well as the completion of additional
strategically aligned acquisitions. The company plans to focus on the completion of additional Quality Industrial Corp., Replay Solutions
and Defense acquisitions during this period. Additional focus will go towards the ongoing consolidation and integration of acquisitions
as well as increased manufacturing of the company’s emergency response products in the United States. Our subsidiary QIND is currently
in the process of uplisting to NYSE American expected in Q3.
Financial Forecasts
Our management have
made projections in a best effort assessment of the Company’s future performance. The projections are based upon history of operations,
current orders in production, assessment of high probability forecasted sales, expected acquisitions in 2023, and other factors which
altogether provide the basis for management's assessment. Our projections are subject to significant risks and uncertainties. As a result,
our projected revenues, market share, expenses and profitability may differ materially from our forecasts as per the risks addressed
in our Risk Section.
| Divisions |
Revenue |
Net
Income |
EPS |
| Industrial
& Manufacturing |
$150M |
$17M |
N/A |
| Emergency
& Response |
$30M |
$2.5M |
N/A |
| Mining
& Renewable Energy |
$10M |
$650K |
N/A |
| Defense |
$10M |
$800K |
N/A |
| Total |
$200M |
$21M |
0.01* |
* Based upon 1,524,726,965 as per September 11,
2023
Assumptions:
Industrial
& Manufacturing Division:
Revenue for 2023 has been
forecasted on the basis of historical performance combined with actual orders in production that are expected to be invoiced within 2023
as well as current purchase orders in hand which are expected to be invoiced in 2023. Current orders in production exceed $100m which
will be finalized and invoiced this year and total purchase orders in hand exceed $180m of which some will be invoiced in 2023 and the
remainder in 2024. We have also assessed sales forecasts and included sales orders with a high probability of closing and invoicing within
the period. High probability sales orders are classified as those where confirmation of award has been received and we are awaiting the
purchase order from the client. All expenses have been forecasted taking into account historical performance and our forecasted profit
and loss statement includes the costs of manufacturing the current purchase orders in production, purchase orders obtained and forecasted
purchase orders which are scheduled for delivery in 2023.
Emergency & Response Division:
Revenue forecasts for
this division have been made by analyzing the historical performance of each operating company and determining the average annual growth
rate for each company before applying the relevant growth percentage to determine each company’s individual forecast. The same
historical performance data has been utilized to generate annual profit and loss forecast for each operating company. We have included
forecasted revenue for Q4 in 2023 from an acquisition that we expect to close late in the third quarter. As a mergers and acquisitions
company engaged primarily in the business of acquiring and growing aligned companies, we will continue to acquire the majority stake
in companies during 2023 and consolidate their financials accordingly, thus the inclusion of the relevant financial forecasts of an acquisition
which we expect to complete during this period. Our expenses within this division are derived from the annual profit and loss forecasts
for each operating company which in turn has taken into account the historical performance data and factors such as cost of input, economies
of scale and learning curve.
Mining & Renewable Energy Division:
Replay Solutions calculates its projected
revenue from conservative forecasts for the amount of minerals obtained per tonne of raw materials processed in the urban mining plant
before applying the respective mineral spot prices to the sale of the minerals obtained. Minerals obtained from the mining of electronic
waste include gold, silver, platinum, palladium, copper, tin, aluminum and resin. Historical data provides the background for determining
the quantity of minerals that is obtained using the specific refining machinery used by Replay Solutions. Actual cost of supply and operating
expenses has been used to determine the expenses for the division.
Defense Division:
Hyperion Defense Solutions’ projected revenue
for 2023 accounts for only high probability sales of the companies SB10 Improvised Explosive Device Detectors. The operating company
has quoted on several large projects in the Middle East and Europe and has a sales pipeline which exceeds $55m, from which it conservatively
expects to invoice at least $10m worth of sales in 2023. The conservative estimate relates to delayed roll out of our business plan,
production capabilities and long-term contracts estimates in our Defense Division. Operating expenses including but not limited to extensive
sales and marketing efforts and expected cost of sales have included to determine the resultant forecasted net income for the division.
The company will, disclose
any known trends or uncertainties that have had or that the company reasonably expects will have a material impact on net sales or revenues
or income from continuing operations in its ongoing filing obligations. The above forecast is based upon historic performance and known
purchase orders at the time of filing. If any of the risks referenced in Item 1A should occur, as well as other risks not currently known
to the company or that we currently consider immaterial, our business, operating results and financial condition could be materially
adversely affected.
Results
of Operations for the Years Ended December 31, 2022, and 2021
Performance
in 2022 Compared with 2021
| |
|
Currency: US Dollars |
| |
|
Jan - Dec 2022 |
|
Jan - Dec 2021 |
|
Change $ |
| Net Sales |
|
|
78,344,131 |
|
|
|
11,263,875 |
|
|
|
67,080,256 |
| Cost of Sales |
|
|
49,983,258 |
|
|
|
7,489,784 |
|
|
|
42,493,474 |
| Gross Profit |
|
|
28,360,873 |
|
|
|
3,774,091 |
|
|
|
24,586,782 |
| Gross Margin |
|
|
3% |
|
|
|
34% |
|
|
|
|
| General, Selling & Administration Expenses/ operating Expenses |
|
|
20,047,791 |
|
|
|
1,165,229 |
|
|
|
18,882,562 |
| Operating Income/(Loss) |
|
|
7,8,313,082 |
|
|
|
2,608,862 |
|
|
|
5,704,220 |
Net
Sales
For the year 2021, ILUS
acquired three companies, namely Firebug Group ( engaged in the business of manufacturing firefighting equipment and firefighting vehicles
for global customers, and Bright Concept Detection and Protection System LLC (BCD Fire) a company engaged in the business of sales, distribution,
installation and maintenance of Fire Protection and Security systems and lastly, The Vehicle Converters LLC, a company engaged in the
conversion of specialized vehicles for specialist applications such as mobile clinics, ambulances, defense and oil field transportation.
The
revenue earned in the year 2021 corresponds to the above three subsidiaries, in-house operations and the manufacturing of Firefighting
Equipment.
Our
2022 revenue increased to $78,344,131 from $11,263,875 in 2021. The increase in revenue is primarily a result of the acquisition of Quality
International by our Industrial & Manufacturing subsidiary and the newly acquired companies in our Emergency Response subsidiary.
There were no operations in our Industrial & Manufacturing division for the year 2021. Further, 2022 financial results of Emergency
& Response Segment are comprised of six subsidiaries versus three subsidiaries in the year 2021.
Divisional Revenue
Figures In USD
| Division |
Year
2022 |
Year
2021 |
| Emergency
& Response |
12,740,458 |
11,263,875 |
| Industrial
& Manufacturing |
65,603,673 |
0 |
| Total
Revenue |
78,344,131 |
11,263,875 |
We
believe we have made substantial progress in our Industrial & Manufacturing division (QIND) in this fiscal year 2022. For the coming
year 2023, the Company will allocate financial, technical and sales resources for recently acquired subsidiaries with the aim 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 anticipate hiring executives and personnel with specific industry experience and fields of expertise to
streamline financial reporting, compliance, Investor Relations and to improve our corporate governance in line with an anticipated uplist
to a national exchange.
In our
Emergency & Response Technologies subsidiary, our challenge is to bring some operating companies up to the high level of performance
of our top performing businesses. We will continue to focus on improving the performance of lagging businesses through actions which include
but are not limited to; targeted and more robust sales and marketing efforts, appointment of new distributors and dealers where applicable,
enhanced product development, active measures to ensure that payment terms are met by customers, and significant efforts to reduce indirect
costs as well as general and administrative costs.
Geographical
presence
Presently our operations
are spread across United States, United Arab Emirates, United Kingdom, and Republic of Serbia, however we plan to further expand our
regional presence and aim to expand our manufacturing operations in the United States and to Spain during 2023. At present the revenue
reported below is from 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.
Regional
Revenue Figures in USD
| Particulars |
2022 |
2021 |
| United
States |
12,242,551 |
10,930,000 |
International
Operations (United Arab Emirates) |
66,101,580 |
333,875 |
Regional Tangible Assets Figures in
USD
| Particulars |
2022 |
2021 |
| United
States |
116,432 |
84,606 |
| International
Operations (United Arab Emirates) |
20,900,983 |
119,705 |
Gross Profit
| Figures in USD |
Jan -Dec 2022 |
Jan- Dec 2021 |
Change $ |
| Emergency
Response Division |
7,606,138 |
3,774,091 |
3,832,047 |
| Industrial
& Manufacturing Division |
20,754,735 |
0 |
20,754,735 |
| Gross
Profit |
28,360,873 |
3,774,091 |
24,586,782 |
Consolidated
gross profit increased to $28.3 million in the fiscal year 2022 primarily due to higher gross profit in the Industrial & Manufacturing
division along with increase in gross profit in the Emergency response segment.
The
increase in gross profit in the Emergency Response Division is primarily the result of increased efficiencies resulting from operational
improvement initiatives and higher volume leverage, favorable price/cost and productivity.
Business Segment Information
The Company is organized into four segments based based on the similarity
of products, customers served, common use of facilities, and economic characteristics. The Company’s segments are as follows:
| |
2. |
Industrial
& Manufacturing |
| |
3. |
Mining
& Renewable Energy |
In 2022, among the four mentioned segments, only two were active
and operational. All intersegment transactions have been eliminated in consolidation.
Divisional
Income Statement
In
the year 2021, only one Subsidiary, Emergency & Response Technologies was operational, and it was comprised of 3 operating companies.
| |
| |
| Year
2021 |
Emergency
& Response Division |
Industrial
& Manufacturing Division |
| Revenue |
11,263,875
|
0 |
| Cost
of Revenue |
7,489,784
|
0 |
| Operating
expenses |
|
|
| Selling,
General & Admin Expenses |
1,165,229
|
0 |
| Profit
from Operations |
2,608,862
|
0 |
| Non-
Operating expenses |
463,886 |
|
| Finance
Cost |
—
|
0 |
| Other
Non- operating Expenses |
—
|
0 |
| Non-
Operating Income |
|
|
| Premium
on Investment |
11,835,500
|
0 |
| Net
Income |
13,980,477
|
0 |
In the year 2022,
both Emergency & Response Technologies and our Industrial & Manufacturing Subsidiaries were revenue generating. Emergency Response
Technologies comprised 6 Subsidiaries whereas the Industrial & Manufacturing Division comprised only one subsidiary in the year 2022.
| Year
2022 |
Emergency
& Response Division |
Industrial
& Manufacturing Division |
| Revenue |
12,740,458
|
65,603,673 |
| Cost
of Revenue |
5,134,320
|
44,848,938 |
| Operating
expenses |
|
|
| Selling,
General & Admin Expenses |
9,323,046
|
10,724,745 |
| Profit
from Operations |
(1,716,908) |
10,029,990 |
| Non-
Operating expenses |
|
|
| Finance
Cost |
— |
— |
| Other
Non- operating Expenses |
6,608,119 |
3,976,725 |
| Non-
Operating Income |
|
|
| Premium
on Investment |
6,111,135
|
|
| Other
Non- operating Income |
|
720,003 |
| Net
Income |
(2,213,893)
|
6,773,268 |
| Net
Income of the Group |
|
4,559,375 |
Operating expenses
| Figures
in USD |
Jan
-Dec 2022 |
Jan-
Dec 2021 |
Emergency Response Division
Industrial & Manufacturing
Operating Expenses |
9,323,046
10,724,745
20,047,791 |
1,165,229
0
1,165,229 |
Selling,
general and administrative (“SG&A”) expenses corresponding to the Emergency Response Technologies subsidiary have increased
primarily due to the impact from acquisitions, resource investments, product development, marketing, and employee-related costs. Such
expenses were higher in 2022, as more companies were acquired under this segment and a larger amount was spent towards the strengthening
and growth of our companies in this segment to increase both revenue and profitability in 2023 and 2024 as well as longer term growth.
Non-Operating
Income & Expense
We incurred Other Non-Operating
Income for the group of $11,835,000 for the year ended December 31, 2021, due to gain on 10M shares in DRCR acquired on May
21, 2021, compared to Other Non-Operating Income of $6,831,138 for the same period ended December 31, 2022, due to gain on
purchase of 77,669,078 shares in WSFT now QIND on May 28, 2022, and gain on settlement & forgiveness of debt for $457,071.
The Other Non-Operating Income gain in both years
have been recorded at fair market value at the grant date in accordance with ASC 718.
We incurred Non-Operating
Expenses for the group of $463,886 for the year ended December 31, 2021compared to Non-Operating expenses of $10,584,844 for the
same period ended December 31, 2022. Such non- operating expenses comprises of Finance Cost, loss on license agreement and commitment
fees. Company incurred commitment fees amounting to $5,200,000 pursuant to convertible notes issued to AJB Capital Investment and Discover
Growth Fund.
Net Income
We incurred net income for the group of $4,559,375 for
the year ended December 31, 2022, compared to a net income of $13,980,477 for the same period ended December 31, 2021. For
Both the periods', non-operating income is included while calculating Net income.
Liquidity
and Capital Resources
Our
primary requirements for liquidity and capital are working capital, expansion of existing manufacturing facilities, product development
and certification, new acquisitions and existing acquisition tranche payments, debt service payments and general corporate operational
needs. Historically, these cash requirements have been met through cash provided by financing activities. The Company plan to file an
S-1 registration statement to provide funding and satisfy our historical debt obligations including the settlement convertible notes
and provide liquidity to satisfy our cash requirements for the next 12 months.
The Company’s current Debt Obligations (convertible
note) are mentioned as below. However, historical Debt Obligation include Note Issued on 4th February 2022 to Discover Growth
Fund amounting to $2,000,000. The Company signed a Forbearance Agreement with Discover Growth Fund on May 3, 2023, the agreement has
been filed as an exhibit with this amended the registration statement. 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. The
first four payments of $450,000 have been made as of the date of this filing.
| Note
owner |
Issue
date |
Maturity
Date |
Amount
$ |
| RB
Capital Partners Inc. |
20/05/2022 |
25.04.2024 |
500,000
|
| RB
Capital Partners Inc. |
27/05/2022 |
19.05.2024 |
500,000
|
| RB
Capital Partners Inc. |
01/06/2022 |
26.05.2024 |
1,000,000
|
| RB
Capital Partners Inc. |
12/07/2022 |
31.05.2024 |
500,000
|
| RB
Capital Partners Inc. |
10/08/2022 |
11.07.2024 |
500,000
|
| RB
Capital Partners Inc. |
25/08/2022 |
09.08.2024 |
200,000
|
| RB
Capital Partners Inc. |
21/09/2022 |
25.08.2024 |
650,000
|
| RB
Capital Partners Inc |
14/11/2022 |
21.09.2024 |
400,000
|
| AJB
Capital Investments LLC |
02/12/2022 |
14.11.2024 |
1,200,000
|
| Jefferson
Street Capital |
26/01/2023 |
01.06.2023 |
110,000
|
| RB
Capital Partners Inc |
04.12.2023 |
04.12.2023 |
500,000
|
| 1800
Diagonal |
04/11/2023 |
04.11.2024 |
136,500
|
| 1800
Diagonal |
04/11/2023 |
11.03.2024 |
144,200
|
| RB
Capital Partners Inc. |
05/02/2023 |
05.02.2025 |
250,000
|
| RB
Capital Partners Inc. |
05/30/2023 |
05.30.2025 |
200,000
|
| RB
Capital Partners Inc. |
05/30/2023 |
05.30.2025 |
450,000
|
| 1800
Diagonal |
06/21/2023 |
03.30.2024 |
61,868 |
| RB
Capital Partners Inc. |
07/03/2023 |
07.03.2025 |
475,000 |
| RB
Capital Partners Inc. |
07/26/2023 |
07.26.2025 |
550,000 |
| RB
Capital Partners Inc. |
08/29/2023 |
08.29.2025 |
100,000 |
| Discovery
Growth fund LLC |
04/02/2022 |
27.01.2024 |
200,000
|
| RB
Capital Partners Inc. |
09/07/2023 |
09/07/2025 |
450,000 |
| Richard
Astrom |
09/07/2023 |
03/06/2024 |
27,500 |
| TOTAL |
9,105,068 |
Based
on management’s current expectations and available information, the Company believes its increase in operations and cash available
from Financing activities will be sufficient to meet its operating cash requirements, planned capital expenditures, interest and
principal payments on all borrowings, for the foreseeable future.
The
Company continues to actively monitor its liquidity position and working capital needs and prioritizes capital expenditure related to
capacity and strategic investments. The Company remains in a stable overall position regarding capital resources and liquidity, which
the Company believes is adequate to meet its projected needs.
Additionally,
if aligned businesses are available for acquisition upon acceptable terms, the Company may obtain all or a portion of the financing for
these acquisitions through the incurrence of additional borrowings.
Net cash provided by operating activities for
the fiscal year 2022 was $29 million, compared to net cash provided by operating activities in the year 2021 which was $1.5 million.
The positive cash generation from operating activities for the fiscal year 2022 is a result of increase in net income and improved net
working capital efficiency. There has been an increase in receivables as a result of higher volume along with an increase in Inventories
to support production amid supply chain challenges; and also Trade accounts payable have been increased due to higher inventory purchases,
but are still less than the accounts receivable.
Cash
Flow Summary
The
following table shows summary cash flows for fiscal years 2022 and 2021:
| Figures
in USD |
Jan-Dec
2022 |
Jan-Dec
2021 |
Net Cash (used in) provided by Operating Activities
Net Cash (used in) provided by Investing Activities
Net Cash (used in) provided by Financing Activities
Net Increase in Cash & Cash Equivalents
Net cash at the end of the year |
5,891,619
(3,239,478)
(1,350,107)
1,302,034
1,478,702 |
(1,780,778)
(1,629,716)
3,585,830
175,336
176,668 |
Operating
Cash Flows
Net cash provided by operating activities for
the fiscal year 2022 was $5.8 million, compared to net cash provided by operating activities in the year 2021 which was $1.7 million.
The positive cash generation from operating activities for the fiscal year 2022 is a result of increase in net income and improved net
working capital efficiency. There has been an increase in receivables as a result of higher volume along with an increase in Inventories
to support production amid supply chain challenges; and also Trade accounts payable have been increased due to higher inventory purchases but are still less than the accounts receivable.
Investing
Cash Flows
Investing activities used cash of $3.2 million
for acquisitions and for acquisition of non- current assets for the operations of the business in the fiscal year 2022. The increase
in net cash used for investing activities was primarily due to increased investment in acquisitions.
During the year 2022, a major portion of Goodwill
was generated from the acquisition of QIND’s subsidiary, Quality International. Along with Goodwill, the corresponding Liability
is also recorded.
Financing Cash flows
Cash provided by Financing activities for the
fiscal year 2022 was $1.3 million, compared to net cash provided by financing activities in the year 2021 which was $3 million. This
is a result of funds raised through convertible notes.
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 generate increased 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 require, will be available.
Goodwill
The
Company continues to review its goodwill for possible impairment or loss of value at least annually or more frequently upon the occurrence
of an event or when circumstances indicate that a reporting unit’s carrying amount is greater than its fair value. On December
31, 2022, we performed a goodwill impairment evaluation. We performed a qualitative assessment of factors to determine whether it was
necessary to perform the goodwill impairment test. Based on the results of the work performed, the Company has concluded that no impairment
loss was warranted on December 31, 2022. 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 future
periods’ results of operations.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues
or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Recently Issued Accounting Pronouncements
In January
2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairments
by eliminating step two from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value,
an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting
unit. ASU 2017-04 also clarifies that an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount
of the reporting unit when measuring the goodwill impairment loss, if applicable. The new standard is effective for fiscal years beginning
after December 15, 2019, for both interim and annual reporting periods. The Company is currently assessing the potential impact of the
adoption of ASU 2017-04 on its consolidated financial statements.
The Company has implemented all new accounting pronouncements
that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and
the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact
on its financial position or results of operations.
Item 3. Properties
We lease factories and offices in the US, Dubai, and
the UK. The lease agreements are filed as exhibits with this Form 10.
Bull Head Products Inc. has a lease at $3000/month, on a month-to-month
basis. The property located at 87 Thorngrove Pike, Kodak Tennessee, 37764, USA. has an 8k sq. ft. building used for the manufacture
of aluminum truck beds. Bull Head Products Inc. plans to move to a bigger premises to facilitate growth, but there is currently a shortage
of industrial buildings for lease with our required minimum of 15k sq. ft. at a reasonable price per square foot (current average rate
$17.50/sq. ft.).
Firebug Group has a factory with 14k sq. ft located
at Warehouse G04, 79th Street, DIRC Warehouse Complex, DIP 2, Dubai, United Arab Emirates with lease payments of $ 3630/month
with the right but not the obligation to renew annually on March 28 of each year and has an office located at Matrix@Dinnington Business
Centre, Nobel Way Dinnington, Sheffield S25 3QB, United Kingdom.
Ilustrato Pictures International Inc. has offices
located at Al Marsa Street 66, 11th Floor, Office 1105, Dubai Marina P.O. Box 32923, Dubai, UAE, 4k sq. ft., with lease payments
of $9870/month renewable annually on February 24 of each year and a virtual office at 26 Broadway, Suite 934, New York NY10004, USA.
The cost per month is $99.00 and is renewed every 3 months.
Georgia Fire & Rescue Supply has a lease of $6,375
per month renewable on April 10, 2024. The property is 9,250 sq. ft., and used as a warehouse, offices and a section to service and repair
tools used in the fire and rescue range of products. The property is located at 107 P Rickman Industrial Drive, Canton, Georgia, 30115,
USA.
Quality industrial Corp. has a virtual office at 315 Montgomery
Street, 94104 San Francisco, CA, USA. The cost per month is $109 and is renewed annually.
Quality International Co Ltd FCZ lease facilities
on the addresses Hamriyah Free Zone), PO Box: 50622, Sharjah-UAE. set in table below
with the square meter sizes and monthly leasing prices as indicated per facility. In total Quality International Co Ltd FCZ lease
property exceeding 220,000 square meters.
| Plot No | |
Area
SqM | |
Annual Rent in USD (3,67 AED) |
| | 22C/1 | | |
| 10.090 | | |
$ | 285.204 | |
| | 22C/2 | | |
| 10.844 | | |
| | |
| | 6C-01B | | |
| 6.989 | | |
$ | 47.609 | |
| | 6C-02 | | |
| 81.791 | | |
$ | 557.159 | |
| | 6C-03 | | |
| 46.179 | | |
$ | 314.571 | |
| | 6C-04 | | |
| 16.000 | | |
$ | 108.992 | |
| | HD-22D | | |
| 30.843 | | |
$ | 588.286 | |
| | HD-22E | | |
| 15.000 | | |
$ | 286.104 | |
| | HD-22F | | |
| 4.114 | | |
$ | 78.469 | |
| | Total | | |
| 221.850 | | |
$ | 2.266.393 | |
AL
Shola Al Modea Safety and Security LLC
The
company currently leases and operates facilities from the following two locations:
| • | Head
Office, Hamsah Bld - A 112 Zaa'beel St - Al Karama, Dubai,
United Arab Commercial space of 594 sqm, Price AED 26,112.00, renewed annually on March 1 |
| • | 112
Zabeel Road, 1st Floor, Hamsah Building Block A, Dubai, United Arab Office space of
113 sqm, Price AED 89,700.00, renewed annually on May 10. |
Item 4. Security Ownership of Certain Beneficial Owners and Management
The following table
sets forth certain information known to us regarding beneficial ownership of our capital stock as of March 31, 2023, for
(i) all executive officers and directors as a group and (ii) each person, or group of affiliated persons, known by us to be the beneficial
owner of more than five percent (5%) of our capital stock. All addresses are 26 Broadway, Suite 934, New York, NY 10004 unless otherwise
indicated.
| Name & Address of Beneficial Owner |
Common
Stock |
Class
A Preferred Stock |
Class
B Preferred Stock |
Class
D Preferred Stock |
Class
E Preferred
Stock |
Class
F Preferred
Stock |
| |
No.
of shares Owned |
Percent
of Class |
No.
of shares Owned |
Percent
of Class |
No.
of shares Owned |
Percent
of Class |
No.
of shares Owned |
Percent
of Class |
No.
of shares Owned |
Percent
of Class |
No.
of shares Owned |
Percent
of Class |
| FB
Technologies Global, Inc, - Nicolas Link, Dubai, U.A.E. (2) |
20,000,000(3) |
2% |
10,000,000 |
100% |
3,400,000
|
100% |
60,741,000
|
100% |
- |
- |
250,000 |
15.3% |
| Krishnan
Krishnamoorthy, Dubai, U.A.E. |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
35,000 |
2.1% |
| Carstem
Kjems Falk, Frederiksberg, Denmark |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
25,000 |
1.5% |
| Louise
Bennett, Doncaster,United Kingdom |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
200,000 |
12.2% |
| John-Paul
Backwell, Cheshire,United Kingdom |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
250,000 |
15.3% |
| All
Directors and Executive Officers as a Group (5 persons) and 5% Holders |
20,000,000 |
3% |
10,000,000
|
100% |
3,400,000
|
100% |
60,741,000
|
100% |
- |
- |
760,000 |
46.5% |
| |
(1) |
Pursuant to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership
includes any shares as to which a shareholder has sole or shared voting power or investment power, and any shares which the shareholder
has the right to acquire within 60 days, including upon exercise of common shares purchase options or warrants. |
| |
(2) |
The percentage is based on 1,379,080,699 shares of common stock outstanding,
10,000,000 shares of Class A Preferred Stock outstanding, 3,400,000 shares of Class B Preferred Stock outstanding, 60,741,000 shares
of Class D Preferred Stock outstanding, 3,172,175 shares of Class E Preferred Stock outstanding, and 1,633,250 shares of Class F
Preferred stock outstanding, as of March 31, 2023. |
| |
(3) |
Includes 20,000,000 shares held by FB Technologies Global, Inc. in which
Mr. Link has voting and dispositive control, 10,000,000 shares of Class A Preferred Stock held by FB Technologies Global, Inc. in
which Mr. Link has voting and dispositive control that converts into 30,000,000 shares of common stock and 60,741,000 shares of Class
D Preferred Stock held by FB Technologies Global, Inc. in which Mr. Link has voting and dispositive control that convert into 30,370,500,000
shares of common stock. |
| |
(4) |
Excludes 10,000,000 common shares issued on May
4, 2023, with a stock price of $0.50, in our subsidiary QIND, to our officers and director pursuant to their employee contracts with
a grant-date and fair value of the award as of June 1, 2022, at $0.0721 in accordance with
ASC 718. See narrative disclosure for equity break-down. |
Item 5. Directors and Executive Officers.
The following information sets forth the names, ages,
and positions of our current directors and executive officers.
| Name |
Age |
Date Appointed and Offices Held |
| Nicolas Link |
42 |
Appointed on January 14, 2021
Chief Executive Officer (Principal Executive Officer & Chairman of
the Board of Directors) and member of the Board of Directors |
| |
|
|
| John-Paul Backwell |
42 |
Appointed on July 1, 2021
Managing Director |
| |
|
|
| Louise Bennett |
53 |
Appointed on February 1, 2021
Chief Operational Officer |
| |
|
|
| Krishnan Krishnamoorthy |
56 |
Appointed on February 2, 2022
Chief Financial Officer (principal financial/accounting officer) |
| |
|
|
|
Carsten Kjems Falk |
49 |
Appointed on June 1, 2022
Chief Commercial Officer |
Set forth below is a brief description of the background
and business experience of each of our current executive officers and directors.
Nicolas Link (Chief Executive Officer, Chairman and Directors)
Mr. Link is a serial Entrepreneur. He has started,
grown, and exited multiple companies in the UK, Dubai, China, Poland & South Africa.
Mr. Link joined the Company on January 14, 2021,
as our CEO and Chairman of the Board of Directors. From May 28, 2022, Mr. Mr. Link holds the position as Chairman of the Board of Directors
at Quality Industrial Corp. “QIND” a Subsidiary of the Company. From April 8, 2022, Mr. Link holds the position as Chairman
of the Board of Directors at Dear Cashmere Holding Co. (Swifty Global) “DRCR”. From November 1, 2014, Mr. Link holds the
position as CEO and Chairman of the Board of Directors at Firebug Group, an operating company. On December 7, 2022, Mr. Link was appointed
as CEO and Chairman of the Board of Directors for CGrowth Capital, Inc (CGRA).
On May 15, 2023, Mitchell Smith was appointed as CEO and Nicolas Link resigned as interim CEO for CGRA.
Aside from that provided above, Mr. Link does not
hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant
to section 12 of the Exchange Act or subject to the requirements of section 15(d) of such Act or any company registered as an investment
company under the Investment Company Act of 1940.
We believe that Mr. Link is qualified to serve on
our Board of Directors because of, but not limited to, his experience in growing several companies in the public safety industry and his
extensive network.
John-Paul Backwell (Managing Director)
Mr. Backwell joined
the Company on July 1, 2021, as our Managing Director. From May 28, 2022, Mr. Backwell was appointed as Chief Commercial Officer at Quality
Industrial Corp. “QIND”, a Subsidiary of the Company. On October 21, 2022, Mr. Backwell
resigned as CCO of Quality Industrial Corp. and was appointed as Chief Executive Officer of Quality Industrial Corp. From February 1,
2022, Mr. Backwell also holds the position as Director at Emergency Response Technologies. a Subsidiary of the Company. From November
1, 2014, Mr. Backwell has held the position of Director at FB Fire Technologies, an operating Company.
Mr. Backwell has 25 years’ experience in the
development and leadership of Global Sales Teams predominantly in the fields of Public Safety and Security with a focus on disruptive
technology.
Aside from that provided
above, Mr. Backwell does not hold and has not held over the past five years any other directorships in any company with a class of securities
registered pursuant to section 12 of the Exchange Act or subject to the requirements of section 15(d) of such Act or any company registered
as an investment company under the Investment Company Act of 1940.
We believe that Mr. Backwell is qualified to serve
on our Board of Directors because of, but not limited to, his extensive experience in the public safety industry, his business management,
and global sales experience.
Louise Bennett (Chief Operations Officer)
Mrs. Bennett joined the Company on February 1, 2021,
as our Chief Operations Officer. From May 28, 2022, Mrs. Bennett also holds the position of Chief Operations Officer at Quality Industrial
Corp. “QIND” a Subsidiary of the Company. From March 1, 2014, Mrs. Bennett holds the position of General Manager at FB Fire
Technologies, an operating company.
Mrs. Bennett possesses more than 25 years' experience
in senior operational management of global engineering, manufacturing, and distribution businesses.
Aside from that provided above, Mrs. Bennett does
not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant
to section 12 of the Exchange Act or subject to the requirements of section 15(d) of such Act or any company registered as an investment
company under the Investment Company Act of 1940.
Krishna Krishnamoorthy (Chief Financial Officer)
Mr. Moorthy joined the Company on February 2, 2022,
as our Chief Financial Officer. From May 28, 2022, Mr. Moorthy holds the position as Chief Financial Officer at Quality Industrial Corp.
“QIND” a Subsidiary of the Company. From August 2020 Jan 2022. Mr. Moorthy worked as Group CFO with Bahrain Ship Repair Engineering
Company. From December 2019 to August 2020 Mr. Moorthy worked as CFO for Firebug, an operating company. From 2018 to 2019 Mr. Moorthy
worked as Group CFO at HO Holdings.
Mr. Moorthy possesses 35 years’ senior Financial
Management experience of Public and Private companies in London, Dubai, Singapore & India. Mr. Moorthy holds a Ph. D LLB and MBA.
Aside from that provided above, Mr. Krishnamoorthy
does not hold and has not held over the past five years other directorships in any company with a class of securities registered pursuant
to section 12 of the Exchange Act or subject to the requirements of section 15(d) of such Act or any company registered as an investment
company under the Investment Company Act of 1940.
Carsten Kjems Falk (Chief Commercial Officer)
Mr. Falk joined the
Company on June 1, 2022, as our Chief Commercial Officer. From June 1st, 2020, Mr. Falk held the position as Wikisoft Corp.’s “WSFT”
(now Quality Industrial Corp. “QIND”) a Subsidiary of the Company and signed a new contract as Chief Executive Officer on
September 1, 2020. On October 21, 2022, Mr. Falk resigned as CEO of Quality Industrial Corp. and
was appointed as Chief Commercial Officer of Quality Industrial Corp. From 2013 to 2019, Mr. Falk
was Chief Executive Officer at Domino’s Pizza DK. Mr. Falk holds a master’s degree in Mathematics.
Mr. Falk has a proven track record, including successfully
winning two Gazelle Prizes in 2017 and 2018 respectively from the leading financial newspaper in Denmark, and has been awarded twice
for best in global online sales by Domino’s International in 2016 and 2018 respectively. Mr. Falk’s resume also includes
business acceleration and driving profitable growth for B2B and B2C Venture capital owned companies in Europe.
Aside from that provided above, Mr. Falk does not
hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to
section 12 of the Exchange Act or subject to the requirements of section 15(d) of such Act or any company registered as an investment
company under the Investment Company Act of 1940.
Term of Office
Our directors are appointed to hold office until the
next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed
by our board of directors and hold office until removed by the board, subject to their respective employment agreements.
Family Relationships
There are no family relationships between or among
the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.
Involvement in Certain Legal Proceedings
During the past 10 years, none of our current directors,
nominees for directors or current executive officers has been involved in any legal proceeding identified in Item 401(f) of Regulation
S-K.
Committees
We do not have a separately designated standing audit
committee. The entire board of directors performs the functions of an audit committee, but no written charter governs the actions of the
board of directors when performing the functions of that would generally be performed by an audit committee. The board of directors approves
the selection of our independent accountants and meets and interacts with the independent accountants to discuss issues related to financial
reporting. In addition, the board of directors reviews the scope and results of the audit with the independent accountants, reviews with
management and the independent accountants our annual operating results, considers the adequacy of our internal accounting procedures
and considers other auditing and accounting matters including fees to be paid to the independent auditor and the performance of the independent
auditor.
For the fiscal year ending December 31, 2022, and 2021, the board
of directors:
Reviewed and discussed the audited financial statements
with management and reviewed and discussed the written disclosures and the letter from our independent auditors on the matters relating
to the auditor's independence.
Based upon the board of directors’ review
and discussion of the matters above, the board of directors authorized inclusion of the audited financial statements for the year ended
December 31, 2022, and 2021, to be included in this Registration Statement on Form 10 filed with the Securities and Exchange Commission.
Code of Ethics &
Insider Trading Policy
We have adopted a Code of Ethics and Insider Trading Policy which
applies to our executive officers, directors and employees, a copy of our code of ethics is filed as Exhibit 14.1 and 14.2 to this Form
10.
Item 6. Executive Compensation
The following summary compensation table sets
forth all compensation awarded to, earned by, or paid to our named executive officers paid by us during the years ended December 31,
2022, and 2021.
2021 & 2022
Summary Compensation Table
| |
Year |
|
Salary
$ |
|
Bonus $ |
Stock Awards
$ |
Option Awards $ |
Non Equity Incentive Plan Compensation $ |
Non-Qualified
Deferred Compensation Earnings
$ |
All Other Compensation $ |
Totals
$ |
| Nicolas Link |
2021 |
109,000.00 |
— |
— |
— |
— |
— |
— |
109,000.00 |
| |
2022 |
123,840.00 |
— |
1,955,000.00 |
— |
— |
— |
— |
2,078,840,00 |
| John-Paul Backwell** |
2021 |
54,518.39 |
— |
25,000.00 |
— |
— |
— |
— |
79,518.39 |
| |
2022 |
133,875.00 |
— |
— |
— |
— |
— |
— |
133,875.00 |
| Louise Bennett** |
2021 |
48,840.00 |
— |
20,000.00 |
— |
— |
— |
— |
68,840.00 |
| |
2022 |
79,050.00 |
— |
— |
— |
— |
— |
— |
79,050.00 |
| Krishna Krishnamoorthy* |
2021 |
— |
— |
— |
— |
— |
— |
— |
— |
| |
2022 |
117,180.00 |
— |
273,700.00 |
— |
— |
— |
— |
390,880.00 |
| Carsten Falk* |
2021 |
— |
— |
— |
— |
— |
— |
— |
— |
| |
2022 |
52,500.00 |
— |
195,500.00 |
— |
— |
— |
— |
248,000.00 |
| *Salary
paid to Mr. Moorthy and Mr. Falk has been considered from their date of employment with the
company as CFO and CCO respectively. |
| ** Stock awards issued to John-Paul Backwell and Louise Bennett in the year 2021 were partially
cancelled on December 5, 2022. Stock Awards in 2021, displays the shares held by each officer as of December 31, 2022. Excludes
10,000,000 common shares issued on May 4, 2023, with a stock price
of $0.50, in our subsidiary QIND,
to our officers and director pursuant to their employee contracts with a grant-date and fair value of the award as of June 1, 2022, at
$0.0721 in accordance with ASC-718. See narrative disclosure for equity break-down. |
Stock-awards to executives are in compliance
with ASC 718 and recognized in the consolidated statement of operations based on their fair values at the date of grant. Par value deemed
as fair value for 2021 audited financials.
Narrative Disclosure to Summary Compensation Table
Employment Agreements
Officers and Directors of the Company have an
employee agreement with the parent Company. The agreements also govern their employment in the majority owned subsidiary Quality Industrial
Corp. All salaries are paid by ILUS and stock-based compensation is as a combination from both companies. We estimate that our key management
will spend an average of 80% of their time on the Company and 20% of the time on the subsidiary company QIND. The executive’s short
term incentive program reflects this time allocation in the Company and its subsidiary.
Nicolas Link (Chief Executive Officer & Chairman)
The company entered into an employment agreement
with Mr. Link on January 14, 2021, in his capacity as Chief Executive Officer and Chairman. Pursuant to the agreement, the company agreed
to pay Mr. Link a salary of $123,840 per annum. For entering the amended employment agreement on June 30, 2022, Mr. Link will be issued
2,750,000 QIND common shares in 2023 and was issued 250,000 shares of Class F Shares convertible into 25,000,000 common shares in Ilustrato
Pictures International Inc. on December 5, 2022. Lock-up of the shares will be under rule 144. If Mr. Link should resign, he will be
considered a corporate insider according to rule 144 for a full year and can during any given week not sell or transfer more than
2.5% of the average weekly trading volume over the previous 30 days average trading volume. During the following year, Mr. Link can sell
25% of any remain shares per quarter. The company has the right of first refusal to acquire the shares or match any written offer by
a third party for the shares.
Mr. Link is eligible for the Company Officer’s
Short Term Incentive Programme (STIP), a Performance Based Target opportunity. Mr. Links target opportunity equals 5,000,000 common shares
in the company and 1,000,000 common shares in the subsidiary Quality Industrial Corp. intended to qualify as performance-based compensation
under Internal Revenue Code section 162(m). The STIP can range from 0% to a maximum target based on performance against agreed plan. The
Board of Directors reserves the right to amend the Bonus Structure based on market conditions and overall performance of the Company.
The targets will be negotiated with the Board of Directors and compensation paid out once a year after the filing of the annual results
effective from the month after the filing, for the first time with the 2022 annual results. The board of directors will after the annual
result discretionarily decide if the STIP is stock-based equity, cash pay-out or a combination in the company or its subsidiaries. The
targets for the Officer for each term are as per the Officer’s Key Performance Indices (KPI) Agreement.
If the company or any of its subsidiaries should up
list to a National Exchange through an initial public offering (IPO) the Chief Executive Officer is entitled to an appropriate market
based salary in accordance with the size and performance of the business, payable in 12 equal monthly payments, on the last day of every
month, plus annual bonus in line with a revised appropriate Short Term Incentive Programme (STIP), shares in an up list or IPO of the
company or its subsidiaries, all subject to approval by the Board of Directors.
The Chief Executive Officer is also eligible of up
to 30 days per year excluding public holidays and may not carry over any unused vacation from prior years and is eligible to participate
in all health and welfare benefits provided to other employees of the Company (other than any severance plans) or similar own insurance
paid by the company.
The Chief Executive Officer is also eligible for vacation,
paid sick days, mobile and internet and expenses incurred for travel, nights away from home, dining, entertainment etc.
If the Chief Executive Officer’s
employment is terminated by the Company for Cause, or if his employment with the Company ends due to death, "permanent and total
disability", or due to a voluntary termination of employment by The Chief Executive Officer without Good Reason, then The Chief Executive
Officer shall only be entitled to any earned but unpaid compensation as well as any other amounts or benefits owing to The Chief Executive
Officer under the terms of any employee benefit plan of the Company.
If the Chief Executive Officer’s employment
with the Company is terminated by the Company in connection with a non-renewal of the Agreement without Cause or for reasons other than
Cause, death, "permanent and total disability” or is voluntarily terminated by The Officer for Good Reason, then The Officer
shall be entitled to the Severance Benefits as well as his Accrued Benefits. In the event the Director becomes entitled to receive severance
benefits the Company shall pay and provide for a period of 6 months after the Date of Termination, the Director’s then current base
salary per month, a pro rata portion of any annual bonus that the Director would have been entitled to receive.
The foregoing description
of the employment agreement does not purport to be complete and is qualified in its entirety by the full text of the employment contract
in exhibit 10.1.
John-Paul Backwell (Managing Director)
The company entered into an employment agreement
with Mr. Backwell on July 1, 2021, in his capacity as Managing Director. Pursuant to the agreement, the company agreed to pay Mr. Backwell
a salary of $133,875 per annum. Mr. Backwell was issued 1,050,000 Preferred F Shares on September, 2021. In accordance with his amended
employee agreement signed on June 30, 2022, Mr. Backwell had 800,000 preferred F Shares cancelled on December 8, 2022, and currently
holds 250,000 shares of Class F Shares convertible into 25,000,000 common shares in Ilustrato Pictures International Inc. In accordance
with his amended employee agreement, Mr. Backwell will be issued 2,250,000 QIND common shares in 2023. Lock-up of the shares will be
under rule 144. If Mr. Backwell should resign, he will be considered a corporate insider according to rule 144 for a full year and can
during any given week not sell or transfer more than 2.5% of the average weekly trading volume over the previous 30 days average
trading volume. During the following year, Mr Backwell can sell 25% of any remain shares per quarter. The company has the right of first
refusal to acquire the shares or match any written offer by a third party for the shares.
Mr. Backwell is eligible for the Company Officer’s
Short Term Incentive Programme (STIP), a Performance Based Target opportunity. Mr. Backwell’s target opportunity equals 5,000,000
common shares in the company and 1,000,000 common shares in the subsidiary Quality Industrial Corp. intended to qualify as performance-based
compensation under Internal Revenue Code section 162(m). The STIP can range from 0% to a maximum target based on performance against agreed
plan. The Board of Directors reserves the right to amend the Bonus Structure based on market conditions and overall performance of the
Company. The targets will be negotiated with the Board of Directors and compensation paid out once a year after the filing of the annual
results effective from the month after the filing, for the first time with the 2022 annual results. The board of directors will after
the annual result discretionarily decide if the STIP is stock-based equity, cash pay-out or a combination in the company or its subsidiaries.
The targets for the Officer for each term are as per the Officer’s Key Performance Indices (KPI) Agreement.
If the company or any of its subsidiaries should up
list to a National Exchange through an initial public offering (IPO) the Managing Director is entitled to an appropriate market based
salary in accordance with the size and performance of the business, payable in 12 equal monthly payments, on the last day of every month,
plus annual bonus in line with a revised appropriate Short Term Incentive Programme (STIP), shares in an up list or IPO of the company
or its subsidiaries, all subject to approval by the Board of Directors.
The Managing Director is also eligible of up to 30
days per year excluding public holidays and may not carry over any unused vacation from prior years and is eligible to participate in
all health and welfare benefits provided to other employees of the Company (other than any severance plans) or similar own insurance paid
by the company.
The Managing Director is also eligible for vacation,
paid sick days, mobile and internet and expenses incurred for travel, nights away from home, dining, entertainment etc.
If the Managing Director’s
employment is terminated by the Company for Cause, or if his employment with the Company ends due to death, “permanent and total
disability”, or due to a voluntary termination of employment by The Managing Director without Good Reason, then The Managing Director
shall only be entitled to any earned but unpaid compensation as well as any other amounts or benefits owing to The Managing Director under
the terms of any employee benefit plan of the Company.
If the Managing Director’s employment with
the Company is terminated by the Company in connection with a non-renewal of the Agreement without Cause or for reasons other than Cause,
death, “permanent and total disability” or is voluntarily terminated by The Officer for Good Reason, then The Officer shall
be entitled to the Severance Benefits as well as his Accrued Benefits. In the event the Director becomes entitled to receive severance
benefits the Company shall pay and provide for a period of 3 months after the Date of Termination, the Director’s then current base
salary per month, a pro rata portion of any annual bonus that the Director would have been entitled to receive.
The foregoing description of the employment agreement
does not purport to be complete and is qualified in its entirety by the full text of the employment contract in exhibit 10.2.
Louise Bennett (Chief Operations Officer)
The company entered into an employment agreement
with Mrs. Bennett on February 1, 2021, in her capacity as Chief Operations Officer. Pursuant to the agreement, the company agreed to pay
Mrs. Bennett a salary of $53,280 per annum. Mrs. Bennett was issued 1,500,000 Pref F Shares and 10,000,000 common shares of ILUS on September
14, 2021. On 30th June 2022 an amended contract was entered into with a salary of $81,000 per annum. In accordance with her
amended employee agreement signed on June 30, 2022, Mrs. Bennett had 850,000 Preferred F Shares and 10,000,000 common shares cancelled
on December 8, 2022, and currently hold 200,000 shares of Class F Shares convertible into 20,000,000 common shares in Ilustrato Pictures
International Inc. In accordance with her amended employee agreement, Mrs. Bennett will also be issued 500,000 QIND common shares in
2023. Lock-up of the shares will be under rule 144. If Mrs. Bennett should resign, she will be considered a corporate insider according
to rule 144 for a full year and can during any given week not sell or transfer more than 2.5% of the average weekly trading volume
over the previous 30 days average trading volume. During the following year, Mrs. Bennett can sell 25% of any remain shares per quarter.
The company has the right of first refusal to acquire the shares or match any written offer by a third party for the shares.
Mrs. Bennett is eligible for the Company
Officer’s Short Term Incentive Programme (STIP), a Performance Based Target opportunity. Mrs. Bennett’s target opportunity
equals 2,500,000 common shares in the company and 250,000 common shares in the subsidiary Quality Industrial Corp. intended to qualify
as performance-based compensation under Internal Revenue Code section 162(m). The STIP can range from 0% to a maximum target based on
performance against agreed plan. The Board of Directors reserves the right to amend the Bonus Structure based on market conditions and
overall performance of the Company. The targets will be negotiated with the Board of Directors and compensation paid out once a year after
the filing of the annual results effective from the month after the filing, for the first time with the 2022 annual results. The board
of directors will after the annual result discretionarily decide if the STIP is stock-based equity, cash pay-out or a combination in the
company or its subsidiaries. The targets for the Officer for each term are as per the Officer’s Key Performance Indices (KPI) Agreement.
If the company or any of its subsidiaries should up
list to a National Exchange through an initial public offering (IPO) the Chief Operations Officer is entitled to an appropriate market
based salary in accordance with the size and performance of the business, payable in 12 equal monthly payments, on the last day of every
month, plus annual bonus in line with a revised appropriate Short Term Incentive Programme (STIP), shares in an up list or IPO of the
company or its subsidiaries, all subject to approval by the Board of Directors.
The Chief Operations Officer is also eligible of up
to 30 days per year excluding public holidays and may not carry over any unused vacation from prior years and is eligible to participate
in all health and welfare benefits provided to other employees of the Company (other than any severance plans) or similar own insurance
paid by the company.
The Chief Operations Officer is also eligible for
vacation, paid sick days, mobile and internet and expenses incurred for travel, nights away from home, dining, entertainment etc.
If the Chief Operations Officer’s employment
is terminated by the Company for Cause, or if her employment with the Company ends due to death, “permanent and total disability”,
or due to a voluntary termination of employment by The Chief Operations Officer without Good Reason, then The Chief Operations Officer
shall only be entitled to any earned but unpaid compensation as well as any other amounts or benefits owing to The Chief Operations Officer
under the terms of any employee benefit plan of the Company.
If the Chief Operations Officer’s employment
with the Company is terminated by the Company in connection with a non-renewal of the Agreement without Cause or for reasons other than
Cause, death, “permanent and total disability” or is voluntarily terminated by The Officer for Good Reason, then The Officer
shall be entitled to the Severance Benefits as well as her Accrued Benefits. In the event the Officer becomes entitled to receive severance
benefits the Company shall pay and provide for a period of 3 months after the Date of Termination, the Officer’s then current base
salary per month, a pro rata portion of any annual bonus that the Officer would have been entitled to receive.
The foregoing description of the employment agreement
does not purport to be complete and is qualified in its entirety by the full text of the employment contract in exhibit 10.3.
Krishnan Krishnamoorthy (Chief Financial Officer)
The company entered into an employment agreement
with Mr. Krishnamoorthy on February 2, 2022, in his capacity as Chief Financial Officer. Pursuant to the agreement, the company agreed
to pay Mr. Moorthy a salary of $130,000 per annum. In accordance with his amended employee agreement signed on June 30, 2022, Mr. Krishnamoorthy
was issued 35,000 shares of Class F Shares in Ilustrato Pictures International Inc. on December 5, 2022, convertible into 3,500,000 common
shares in Ilustrato Pictures International Inc. In accordance with his amended employee agreement, Mr. Krishnamoorthy will also be issued
2,250,000 QIND common shares in 2023. Lock-up of the shares will be under rule 144. If Mr. Krishnamoorthy should resign, he will be considered
a corporate insider according to rule 144 for a full year and can during any given week not sell or transfer more than 2.5% of the
average weekly trading volume over the previous 30 days average trading volume. During the following year, Mr. Krishnamoorthy can sell
25% of any remain shares per quarter. The company has the right of first refusal to acquire the shares or match any written offer by
a third party for the shares.
Mr. Krishnamoorthy is eligible for the Company Officer’s
Short Term Incentive Programme (STIP), a Performance Based Target opportunity. Mr. Krishnamoorthy ’s target opportunity equals 2,500,000
common shares in the company and 250,000 common shares in the subsidiary Quality Industrial Corp. intended to qualify as performance-based
compensation under Internal Revenue Code section 162(m). The STIP can range from 0% to a maximum target based on performance against agreed
plan. The Board of Directors reserves the right to amend the Bonus Structure based on market conditions and overall performance of the
Company. The targets will be negotiated with the Board of Directors and compensation paid out once a year after the filing of the annual
results effective from the month after the filing, for the first time with the 2022 annual results. The board of directors will after
the annual result discretionarily decide if the STIP is stock-based equity, cash pay-out or a combination in the company or its subsidiaries.
The targets for the Officer for each term are as per the Officer’s Key Performance Indices (KPI) Agreement.
If the company or any of its subsidiaries should
up list to a National Exchange through an initial public offering (IPO), the Chief Financial Officer is entitled to an appropriate market-based
salary in accordance with the size and performance of the business, payable in 12 equal monthly payments, on the last day of every month,
plus annual bonus in line with a revised appropriate Short Term Incentive Programme (STIP), all subject to approval by the Board of Directors.
The Chief Financial Officer is also eligible of up
to 30 days per year excluding public holidays and may not carry over any unused vacation from prior years and is eligible to participate
in all health and welfare benefits provided to other employees of the Company (other than any severance plans) or similar own insurance
paid by the company.
The Chief Financial Officer is also eligible for vacation,
paid sick days, mobile and internet and expenses incurred for travel, nights away from home, dining, entertainment etc.
If the Chief Financial Officer’s employment
is terminated by the Company for Cause, or if his employment with the Company ends due to death, “permanent and total disability”,
or due to a voluntary termination of employment by The Chief Financial Officer without Good Reason, then The Chief Financial Officer shall
only be entitled to any earned but unpaid compensation as well as any other amounts or benefits owing to The Chief Financial Officer under
the terms of any employee benefit plan of the Company.
If the Chief Financial Officer’s employment
with the Company is terminated by the Company in connection with a non-renewal of the Agreement without Cause or for reasons other than
Cause, death, “permanent and total disability” or is voluntarily terminated by The Officer for Good Reason, then The Officer
shall be entitled to the Severance Benefits as well as his Accrued Benefits. In the event the Officer becomes entitled to receive severance
benefits the Company shall pay and provide for a period of 3 months after the Date of Termination, the Officer’s then current base
salary per month, a pro rata portion of any annual bonus that the Officer would have been entitled to receive.
The foregoing description of the employment agreement
does not purport to be complete and is qualified in its entirety by the full text of the employment contract in exhibit 10.4.
Carsten Kjems Falk (Chief Commercial Officer)
The company entered into an employment agreement
with Mr. Falk on June 1, 2022, in his capacity as Chief Commercial Officer. Pursuant to the agreement, the company agreed to pay Mr. Falk
a salary of $90,000 per annum starting June 2022. Mr. Falk was issued 25,000 Pref F Shares in ILUS on December 5, 2022, convertible into
2,500,000 common shares in Ilustrato Pictures International Inc. Mr. Falk will also be issued 2,250,000 common shares in QIND in 2023,
for entering the employement agreement on June 1, 2022, and waiving all liabilities as CEO in the subsidiary Quality Industrial Corp.
Lock-up of the shares will be under rule 144. If Mr. Falk should resign, he will be considered a corporate insider according to rule
144 for a full year and can during any given week not sell or transfer more than 2.5% of the average weekly trading volume over
the previous 30 days average trading volume. During the following year, Mr. Falk can sell 25% of any remain shares per quarter.
Mr. Falk is eligible for the Company Officer’s
Short Term Incentive Programme (STIP), a Performance Based Target opportunity. Mr. Falk’s target opportunity equals 3,500,000 common
shares in the company and 250,000 common shares in the subsidiary Quality Industrial Corp. intended to qualify as performance-based compensation
under Internal Revenue Code section 162(m). Any bonus compensation will be pro-rated according to the start date of the Officer. The STIP
can range from 0% to a maximum target based on performance against agreed plan. The Board of Directors reserves the right to amend the
Bonus Structure based on market conditions and overall performance of the Company. The targets will be negotiated with the Chairman of
the board and compensation paid out once a year after the filing of the annual results effective from the month after the filing, for
the first time with the 2022 annual results. The board of directors will after the annual result discretionarily decide if the STIP is
stock-based equity, cash pay-out or a combination in the company or its subsidiaries. The targets for the Officer for each term are as
per the Officer’s Key Performance Indices (KPI) Agreement.
If the company or any of its subsidiaries should
up list to a National Exchange through an initial public offering (IPO) the Chief Commercial Officer is entitled to an appropriate market-based
salary in accordance with the size and performance of the business, payable in 12 equal monthly payments, on the last day of every month,
plus annual bonus in line with a revised appropriate Short Term Incentive Programme (STIP), all subject to approval by the Board of Directors.
The Chief Commercial Officer is also eligible of up
to 30 days per year excluding public holidays and may not carry over any unused vacation from prior years and is eligible to participate
in all health and welfare benefits provided to other employees of the Company (other than any severance plans) or similar own insurance
paid by the company.
The Chief Commercial Officer is also eligible for
vacation, paid sick days, mobile and internet and expenses incurred for travel, nights away from home, dining, entertainment etc.
If the Chief Commercial
Officer’s employment is terminated by the Company for Cause, or if his employment with the Company ends due to death, "permanent
and total disability", or due to a voluntary non-renewal of this Agreement by the Company or due to a voluntary termination of employment
by The Chief Commercial Officer without Good Reason, then The Chief Commercial Officer shall only be entitled to any earned but unpaid
compensation as well as any other amounts or benefits owing to The Chief Commercial Officer under the terms of any employee benefit plan
of the Company.
If the Chief Commercial Officer’s employment
with the Company is terminated by the Company in connection with a non-renewal of the Agreement without Cause or for reasons other than
Cause, death, "permanent and total disability” or is voluntarily terminated by The Officer for Good Reason, then The Officer
shall be entitled to the Severance Benefits as well as his Accrued Benefits. In the event the Officer becomes entitled to receive severance
benefits the Company shall pay and provide for a period of 3 months after the Date of Termination, the Officer’s then current base
salary per month, a pro rata portion of any annual bonus that the Officer would have been entitled to receive.
The foregoing description of the employment agreement
does not purport to be complete and is qualified in its entirety by the full text of the employment contract in exhibit 10.5.
Outstanding Equity Awards at Fiscal Year-End
Other than as discussed above, no executive officer
received any equity awards, or holds exercisable or un-exercisable options, as of the years ended December 31, 2022, and 2021.
Long-Term Incentive Plans
There are no arrangements or plans in which the Company
would provide pension, retirement or similar benefits for our Director or executive officers other than described in the individual contracts.
Compensation Committee
The Company currently does not have a compensation
committee of the Board of Directors. The Board of Directors determines executive compensation.
Director Independence
The Board of Directors is currently composed of Two
members, which are Nicolas Link and John-Paul Backwell. Aside from them, no director qualifies as independent in accordance with the published
listing requirements of the NASDAQ Global Market. The NASDAQ independence definition includes a series of objective tests, such as that
the Director is not, and has not been for at least three years, one of the Company’s employees and that neither the Director, nor
any of his family members has engaged in various types of business dealings with us.
Director Compensation
The
table below summarizes all compensation of our directors as of December 31, 2022.
| DIRECTOR COMPENSATION |
| Name |
Fees Earned or Paid in Cash
($) |
Stock Awards ($) |
Option Awards
($) |
Non-Equity Incentive
Plan Compensation ($) |
Non-Qualified Deferred Compensation Earnings
($) |
All Other Compensation
($) |
Total
($) |
| Nicholas Link |
- |
- |
- |
- |
- |
-- |
- |
| John-Paul Backwell |
- |
- |
- |
- |
- |
- |
- |
Narrative Disclosure to the
Director Compensation Table
Directors
are permitted to receive fixed fees and other compensation for their services as Directors. The Board of Directors has the authority
to fix the compensation of Directors. No amounts have been paid to, or accrued to, Directors in such capacity.
Security Holders Recommendations to Board of Directors
The Company welcomes comments and questions from the
shareholders. However, while the Company appreciates all comments from shareholders, it may not be able to individually respond to all
communications.
Item 7. Certain Relationships and Related Transactions, and Director
Independence
Other than described below or 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.
The Company issued 75,000 preferred class F shares
to Daniel Link as staff compensation for an aggregate price of $586,500 on December 5, 2022. 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.
FB Technologies Global, Inc. is wholly owned by
Nicolas Link. FB Technologies Global, Inc. was not acquired. On May 10, 2020, FB Technologies Global, Inc., wholly owned by Nicolas Link,
acquired shares of ILUS stock, consisting of 10,000,000 Pref A Shares, 60,741,000 Pref D shares and 360,000,000 common shares, from
the prior CEO, Larson Elmore, for an aggregate purchase price of $140,000.
The company received 10,000,000 shares of Common
stock in Dear Cashmere Holding Co on May 21, 2021, as compensation for services provided to DRCR such as but not limited to, free rent
in offices at Al Marsa Street 66, 11th Floor, Office 1105, Dubai, free use of in-house accounting, IT and legal teams from 2021 until
December 31, 2023. The shares were discretionary awarded and recorded at fair market value of $1.20 with a grant date as of May 21, 2021,
in accordance with ASC 718 and issued by, Chairman, Nicolas Link and CEO, James Gibbons,
of DRCR.
Conflicts of Interest
Our key management
and board are also represented on the management and board of QIND, our subsidiary and our Chairman and CEO Nicolas Link is also the
Chairman of the Board of Directors of Dear Cashmere Holding Co. and the Chairman of the Board of Directors of CGrowth Capital, Inc. As
a result, at certain points in time, these jointly represented companies may have members of key management and board concentrate their
efforts on transactions that focus on one company over the other, which collectively would not amount to work for our company on a full-time
basis. Dear Cashmere Holding Co. and CGrowth Capital, Inc. are however not affiliated with ILUS or any of its subsidiaries and each public
company are independently responsible for its own funding. We estimate that our key management will spend an average of 20% of their
time on the company’s Subsidiary QIND and 80% on the parent company ILUS. This and other conflicts of interest may arise between
us and our officers and director in that they have other business interests currently, with respect to ILUS, and in the future to which
they devote their attention, such as in the case of acquisitions, and they may be expected to continue to do so although management time
must also be devoted to our business. These competing interests could disrupt focus of our key management and board. As a result, conflicts
of interest may arise that can be resolved only through exercise of such judgment as is consistent with each officer or director’s
understanding of his or her fiduciary duties to our company.
Currently we have only four officers and one director.
We will seek to add additional officers and/or directors with industry experience and when the proper personnel are located and terms
of employment are mutually negotiated and agreed, and we have sufficient capital resources and cash flow to make such appointments.
In an effort to resolve such potential conflicts
of interest as between ILUS and QIND, our officers and director have agreed that any opportunities that they are aware of independently
or directly through their association with us would be presented by them solely to ILUS, before determining whether to include the opportunities
in QIND or another subsidiary.
In general, our officers and director are required
to present business opportunities to ILUS, which may include QIND, if:
| |
• |
ILUS could financially undertake the opportunity
through QIND; and |
| |
• |
the opportunity is aligned with the Industrial business of QIND. |
Potential
investors should also be aware of the following potential conflicts of interest:
None of
our officers or directors is required to commit his or her full time to our company and, accordingly, may have conflicts of interest
in allocating his or her time among various business activities.
In the course
of their other business activities, our officers and our sole director may become aware of investment and business opportunities which
may be appropriate for presentation to us as well as the other entities with which they are affiliated.
Our officers
and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation
of any such officers and directors was included by a target business as a condition to any agreement with respect to the combination.
Below is
a table summarizing the entities to which our executive officers and director currently have fiduciary duties or contractual obligations:
| Individual
(1) |
Entity(2) |
Affiliation |
| Nicolas
Link |
ILUS
QIND
DRCR
CGRA |
Director & CEO
Director
Director
Director |
| John-Paul
Backwell |
ILUS
QIND |
Managing Director
CEO |
| Louise
Bennett |
ILUS
QIND |
COO
COO |
| Krishnan
Krishnamoorthy |
ILUS
QIND |
CFO
CFO |
| Carsten
Kjems Falk |
ILUS
QIND |
CCO
CCO |
| (1) |
Each
person has a fiduciary duty with respect to the listed entities next to their respective names. Each of our Officers only have
employment in our Company and our Subsidiary QIND. |
| (2) |
Each
of the entities listed by trading symbol in this table has priority and preference relative to our company with respect to the performance
by each individual listed in this table of his obligations and the presentation by each such individual of business opportunities. |
We cannot provide assurances that our efforts
to eliminate the potential impact of conflicts of interest will be effective. We are at risk that our officers and directors will favor
their other business interest over the needs of our company. These competing business interests could interfere with our ability to successfully
implement our business plan.
Item 8. Legal Proceedings
We may from time to time be involved in various claims
and legal proceedings of a nature we believe are normal and incidental to our business. These matters may include product liability, intellectual
property, employment, personal injury cause by our employees, and other general claims. Aside from the following, we are not presently
a party to any legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business.
Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources
and other factors.
Ilustrato Pictures International Inc. had applied
to the District Court, Clark County, Nevada to have 40,000,000 shares with Ambrose & Keith cancelled as they were issued in error
in 2018 as the deal never completed. The case was won on September 15, 2022, in favor of the company and the court order was received
on January 23, 2023. The transfer agent cancelledthe 40,000,000 shares on February 17, 2023.
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. We have potential counterclaims against the former CEO which are being prepared, arising out of
improper action and lack of disclosures. The company has disputed the claim and argue that Larson Elmore has mislead the company and
its shareholders on various matters including but not limited to liabilities, company commitments and due diligence items presented by
Larson Elmore during the takeover process. We filed a motion to dismiss Larson Elmore’s
complaint on the basis that it fails to state a claim and lacks jurisdiction in the Nevada courts. At the hearing on this motion,
the court determined that discovery would be required before ruling for the company and denied the motion without prejudice. The
company is evaluating a motion for reconsideration once the order has been entered. In the interim, the parties have discussed a
tentative discovery schedule and the possibility of a mediation and settlement conference.
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 settlement
on September 6, 2023, and awaits the final court order.
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 dispute the legitimacy of the note. On June 5, 2023, we got a service of process by Superior Court of California,
County of San Diego, with a reschedule hearing on March 3, 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
in the amount of $3.772 million for the historic note with a principal amount of $4,000. ILUS’
last day to file an opposition is October 20, 2023.
We cannot predict whether the action against involving
our former CEO or Black Ice Advisors LLC is likely to result in any material recovery by 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 based upon
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.
We may continue to incur legal fees in responding
to this and other lawsuits. The expense of defending such litigation may be significant and any sizeable verdict may adversely affect
the company. The amount of time to resolve this and any additional lawsuits is unpredictable, and these actions may divert management’s
attention from the day-to-day operations of our business, all of which could adversely affect our business, results of operations and
cash flows.
Item 9. Market Price of and Dividends on the Registrant’s Common
Equity and Related Shareholder Matters
Market Information.
Our common stock is qualified for quotation on the OTC Markets- OTC Pink
under the symbol “ILUS” and has been quoted on the OTC Pink since 2013.
Holders
As of December 31, 2022, we had 33 shareholders
of record of common stock per transfer agent’s shareholder list with others in street name.
Dividends
The Company has not paid any cash dividends to date
and does not anticipate or contemplate paying any dividends in the foreseeable future. It is the present intention of management to utilize
all available funds for the growth of the Registrant’s business.
The Company has not declared any cash dividends since
inception and does not anticipate paying any cash dividends in the foreseeable future. The payment of cash dividends is within the discretion
of the Board of Directors and will depend on the Company’s earnings, capital requirements, financial condition, and other relevant
factors. There are no restrictions that currently limit the Company’s ability to pay cash, or other, dividends on its Common Stock
other than those generally imposed by applicable state law.
Equity Compensation Plan Information
The Company does not currently have an equity compensation
plan in place other than equity compensation described in the individual employee contracts.
Common and Preferred Stock
Our authorized capital stock consists of 2,000,000,000
shares of common stock and 235,741,000 shares of preferred stock, par value $0.001 per share. As of June 30, 2023, there were 1,444,380,699
shares of our common stock issued and outstanding and 78,981,425 shares of our preferred stock issued and outstanding.
Options and Warrants
On February 4, 2022, a
Common Share Purchase Warrant was issued to Discover Growth Fund, LLC, of the $2,000,000.00 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 $1,200,000.00 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.
On January 26, 2023, we issued a common stock
purchase warrant to Jefferson Street Capital for the $100,000.00 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.
Debt Securities
On January 28, 2022, the company entered into a convertible
note with RB Capital Partners Inc. – Brett Rosen for the amount of $500,000. The note is convertible at a fixed price $0.20 and
bears 5% interest per annum. The note matures on January 27, 2024.
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 a 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 agreement has been filed as an exhibit with this amended the registration statement.
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. The first four payments of $450,000 have been made as of the date of this
filing.
On April 26, 2022, the company entered into a convertible
note with RB Capital Partners Inc., for the amount of $500,000. The note is convertible into common stock at the rate of $0.20 and bears
5% interest per annum. The note matures on April 25, 2024.
On May 20, 2022, the company entered into a convertible
note with RB Capital Partners Inc., for the amount of $500,000. The note is convertible into common stock at the rate of $0.50 and bears
5% interest per annum. The note matures on May 19, 2024.
On May 27, 2022, the company entered into a convertible
note with RB Capital Partners Inc., for the amount of $500,000. The note is convertible into common stock at the rate of $0.50 and bears
5% interest per annum. The note matures on May 26, 2024.
On June 01, 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.
On July 12, 2022, the company entered into a convertible
note with RB Capital Partners Inc., for the amount of $500,000. The note is convertible into common stock at the rate of $0.50 and bears
5% interest per annum. The note matures on July 11, 2024.
On August 10, 2022, the company entered into a convertible
note with RB Capital Partners Inc., for the amount of $500,000. The note is convertible into common stock at the rate of $0.50 and bears
5% interest per annum. The note matures on August 09, 2024.
On August 25, 2022, the company entered into a convertible
note with RB Capital Partners Inc., for the amount of $200,000. The note is convertible into common stock at the rate of $0.50 and bears
5% interest per annum. The note matures on August 24, 2024.
On
September 22, 2022, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $650,000. The note is
convertible into common stock at the rate of $0.50 and bears 5% interest per annum. The note matures on September 20, 2024.
On November 14, 2022, the company
entered into a convertible note with RB Capital Partners Inc., for the amount of $400,000. The note is convertible into common stock
at the rate of $0.50 and bears 5% interest per annum. The note matures on November 13, 2024.
On December 2, 2022, the company entered into a convertible
note with AJB Capital Investment LLC for the amount of $1,200,000. 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 June 01,
2023.
On January 26, 2023, the company entered into
a convertible note with Jefferson Street Capital for the amount of $100,000. 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 July 26, 2023.
On April 11, 2023, ILUS entered into a note payable
of $144,200 with 1800 Diagonal Lending LLC. Repayable in 9 monthly payments and bears 13% interest as one time charge on the issuance
date. In case of event of default, note is convertible into common stock at 65% of lowest trading price during previous ten days. The
note matures on March 11, 2024.
On April 11, 2023, ILUS entered into a note payable
of $136,500 with 1800 Diagonal Lending LLC. Repayable any time after 180 days following the date of note till maturity date and bears
9% interest rate per annum. The note is convertible into common stock at the rate equal to variable conversion price as defined, shall
mean 65% of lowest trading price during previous ten days. The note matures on April 11, 2024.
On
April 12, 2023, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $500,000. The note is convertible
into common stock at the rate of $0.50 and bears a 5% interest per annum. The note matures on April 12, 2025.
On
May 2, 2023, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $250,000. The note is convertible
into common stock at the rate of $0.50 and bears a 5% interest per annum. The note matures on May 2, 2025.
On
May 30, 2023, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $200,000. The note is convertible
into common stock at the rate of $0.50 and bears a 5% interest per annum. The note matures on May 30, 2025.
On
May 30, 2023, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $450,000. The note is convertible
into common stock at the rate of $0.50 and bears a 5% interest per annum. The note matures on May 30, 2025.
On June 21, 2023, the company
entered into a note payable of $61,868 with 1800 Diagonal Lending LLC. Repayable in 9 monthly payments and shall bear 13% interest as
one time charge on the issuance date. In case of event of default, note is convertible into common stock at 65% of lowest trading price
during previous ten days. The note matures on March 30, 2024.
On July 03, 2023, the company
entered into a convertible note with RB Capital Partners Inc., for the amount of $475,000. The note is convertible into common stock at
the rate of $0.50 and bears a 5% interest per annum. The note matures on July 3, 2025
On July 26, 2023, the company
entered into a convertible note with RB Capital Partners Inc., for the amount of $550,000. The note is convertible into common stock at
the rate of $0.50 and bears a 5% interest per annum. The note matures on July 26, 2025.
On August 29, 2023, 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 $0.50 and bears a 5% interest per annum. The note matures on August 29, 2025.
On September 5, 2023, the company
entered into a convertible note with RB Capital Partners Inc., for the amount of $450,000. The note is convertible into common stock at
the rate of $0.50 and bears a 5% interest per annum. The note matures on September 5, 2025.
On September 7, 2023, the company entered
into convertible Note with Richard Astrom, for the amount of $27,500. The note is convertible into common stock at variable conversion
price and bears a 9% interest per annum. The note matures on March 6, 2024. The Note cannot be converted until 3 months from the date
of issue of Note.
Transfer Agent
The Company’s transfer agent is Pacific
Stock Transfer, Inc. located at 6725 Via Austi Pkwy, Suite 300 Las Vegas, NV 89119 with a phone number at (800) 785-7782. Our previous
transfer agent was Securities Transfer Corporation located at 2901 N. Dallas Parkway suite 280, Plano TX 75093 with a phone number
at 469-633-0101. The change in transfer agent had an effective date of March 10, 2023.
Equity Compensation Plans
We have no equity compensation plans other than equity
compensation described in the individual employee contracts.
Item 10. Recent Sales of Unregistered Securities
The following information
represents securities sold by the Company since the December 31, 2019, which were not registered under the Securities Act. Included are
sales of reacquired securities, as well as new issues, securities issued in exchange for property, services, or other securities, and
new securities resulting from the modification of outstanding securities.
On
March 19, 2020, we issued 60,741,000 shares of Preferred Class D stock as compensation to Larson Elmore for the acquisition of Ilustrato
Pictures International Inc. pursuant to Agreement with Larson Elmore for an aggregate price of $60,741.00.
On June 4, 2020, we issued 672,175 shares of Preferred
Class E stock as compensation to BrohF Holdings Ltd, Hamza Nasko for conversion of debt into preferred shares for an aggregate price of
$672.175.
On June 4, 2020, we issued 2,500,000 shares of Preferred
Class E stock as compensation to Artem Belov for conversion of debt with FB Fire Technologies Ltd for an aggregate price of $2,500.00.
On January 27, 2021, we issued 76,000,000 shares of
Common stock to GPL Ventures LLC for settlement of a convertible note for an aggregate price of $76,000.00.
On February 3, 2021, we issued 84,000,000 shares of
Common stock to GPL Ventures LLC for settlement of a convertible note for an aggregate price of $84,000.00.
On February 11, 2021, we issued 84,000,000 shares
of Common stock to GPL Ventures LLC for settlement of a convertible note for an aggregate price of $84,000.00.
On February 19, 2021, we issued 20,000,000 shares
of Common stock to GPL Ventures LLC for settlement of a convertible note for an aggregate offering price of $20,000.00.
On March 17, 2021, we issued 20,000,000 shares of
Common stock to GPL Ventures LLC for settlement of a convertible note for an aggregate offering price of $20,000.00.
On March 26, 2021, we issued 50,000,000 shares of
Common stock to GPL Ventures LLC for settlement of a convertible note for an aggregate price of $50,000.00.
On March 29, 2021, we issued 20,000,000 shares of Common stock to
GPL Ventures LLC for settlement of a convertible note for an aggregate price of $20,000.00.
On April 20, 2021, we issued 10,000,000 shares
of Common stock to GPL Ventures LLC for settlement of a convertible note for an aggregate price of $10,000.00.
On April 28, 2021, we issued 10,000,000 shares of
Common stock to GPL Ventures LLC for settlement of a convertible note for an aggregate price of $10,000.00.
On May 14, 2021, we issued 46,000,000 shares of Common
stock to GPL Ventures LLC for settlement of a convertible note for an aggregate price of $46,000.00.
On May 14, 2021, we issued 34,000,000 shares of Common
stock to GPL Ventures LLC for settlement of a convertible note for an aggregate price of $34,000.00.
On July 9, 2021, we issued 80,000,000 shares of Common
stock to GPL Ventures LLC for settlement of a convertible note for an aggregate price of $80,000.00.
On September 10, 2021, we converted 185,000,000 of
common stock held by FB Technologies Global Inc into 1,850,000 Preferred Class B Shares in agreement with FB Technologies Global Inc.
On September 14, 2021, we issued 5,000,000 shares
of Common stock to Mohamed Suhail Abdool Hamid for an agreement to purchase shares for an aggregate price of $5,000.00.
On September 14, 2021, we issued 6,000,000 shares
of Common stock to Riefqah Abrahams for an agreement to purchase shares for an aggregate price of $6,000.00.
On September 14, 2021, we issued 5,000,000 shares
of Common stock to Zander Boshoff for an agreement to purchase shares for an aggregate price of $5,000.00.
On September 14, 2021, we issued 6,000,000 shares
of Common stock to Albertus Willem Burger for an agreement to purchase shares for an aggregate price of $6,000.00.
On September 14, 2021, we issued 2,500,000 shares
of Common stock to Nicolas Bernd Jonischkeit for an agreement to purchase shares for an aggregate price of $2,500.00.
On September 14, 2021, we issued 5,000,000 Shares
of Common stock to Kyle Kotz for an agreement to purchase shares for an aggregate price of $5,000.00.
On September 14, 2021, we issued 5,000,000 shares
of Common stock to Chantelle l’Anson-Sparks for an agreement to purchase shares for an aggregate offering price of $5,000.00.
On September 14, 2021, we issued 2,500,000 shares
of Common stock as compensation to Jason Brown for services supplied to the company for an aggregate price of $2,500.00.
On September 14, 2021, we issued 10,000,000 shares
of Common stock to Louise Bennett for staff compensation for an aggregate price of $10,000.00.
On September 14, 2021, we issued 5,000,000 shares of Common stock
to Trygve Slette for an agreement to purchase shares for an aggregate price of $5,000.00.
On September 14, 2021, we issued 500,000 shares of
Common stock as compensation to Cameron Cox for services supplied to the company for an aggregate price of $500.00.
On September 14, 2021, we issued 1,500,000 shares
of preferred class F to Louise Bennett as staff compensation for an aggregate price of $150,000.00.
On September 14, 2021, we issued 2,500,000 shares
of preferred class F as compensation to James Gibbons for an agreement to purchase shares for an aggregate price of $250,000.00.
On September 14, 2021, we issued 1,050,000 shares
of preferred class F to John-Paul Backwell as staff compensation for an aggregate price of $105,000.00.
On September 20, 2021, we issued 1,000,000 shares
of preferred class F as compensation to Cicero Transact Group Inc Michael Woloshin pursuant to a pre-existing warrant with the company
which was proven to be valid and hereby honored for an aggregate price of $100,000.00.
On September 20, 2021, we issued 3,333,333 shares
of Common stock to Lawrence Gillet for an agreement to purchase shares for an aggregate price of $3,333.33.
On September 21, 2021, we issued 700,000 shares of
Common stock to Eli Safdieh, AES Capital Management LLC for an agreement to purchase shares for an aggregate price of $700.00.
On September 21, 2021, we issued 700,000 shares of
Common stock to Arin LLC Adam Ringer for an agreement to purchase shares for an aggregate price of $700.00.
On September 23, 2021, we issued 2,500,000 shares
of Common stock to Benjamin Scott Richards for an agreement to purchase share for an aggregate price of $2,500.00.
On September 23, 2021, we issued 2,500,000 shares
of Common stock to Fernando Parker for an agreement to purchase shares for an aggregate price of $2,500.00.
On September 30, 2021, we converted 35,000,000 of
common stock to 350,000 Preferred Class B Shares for FB Technologies Global Inc.
On October 4, 2021, we converted 250,000 Preferred
Class F shares to 25,000,000 shares of Common stock for Cicero Transact Group Inc.
On December 16, 2021, we issued 75,000,000 shares
of Common stock as compensation to GPL Ventures LLC for settlement of a convertible note for an aggregate price of $75,000.00.
On February 7, 2022, we issued 20,000,000 shares of
Common stock as compensation to Discover Growth Fund, John Burke as commitment shares for an aggregate price of $4,000,000.00.
On February 16, 2022, we issued 50,000,000 shares
of Common stock as compensation to Luki Ventures Inc. Alex Blondel for acquiring a GPL note and converting to shares for an aggregate
price of $7,000,000.00.
On April 13, 2022, we issued 6,500 shares of preferred
class F stock as compensation to George Joe Chudina for the purchase of Bull Head Products Inc for an aggregate price of $85,150.00.
On April 13, 2022, we issued 250 shares of preferred
class F stock as compensation to Sheila A. Hansen for services in the purchase of Bull Head Products Inc for an aggregate price of $3.275.
On April 28, 2022, we converted 250,000 Preferred
Class F shares to 25,000,000 shares of common stock for Cicero Transact Group Inc.
On May 4, 2022, we issued 53,000,000 shares of
common stock as compensation to RB Capital Partners Inc. for conversion of a convertible note which was issued on 6th April
2021, for an aggregate price of $530,000,00.
On May 17, 2022, we converted 120,000,000 of common
stock to 1,200,000 shares of preferred class B stock for FB Technologies Global Inc.
On July 26, 2022, we issued 53,700,000 shares
of common stock as compensation to RB Capital Partners Inc. for conversion of a convertible note which was issued on 28th
April 2021, for an aggregate price of $537,000.00.
On September 28, 2022, we issued 1,500 shares of preferred
class F stock as compensation to Barbara J Whidby for the purchase of Georgia Fire Rescue Supply LLC for an aggregate price of $13,800.00.
On November 8, 2022, we issued 10,000,000 shares of
common stock as compensation to AES Capital Management LLC. for conversion of a convertible note for an aggregate price of $390,000.00.
On December 5, 2022, we issued 35,000 preferred Class
F shares to Krishnan Krishnamoorthy as staff compensation for an aggregate price of $273,700.00.
On December 5, 2022, we issued 25,000 preferred Class
F shares to Carsten Kjems Falk as staff compensation for an aggregate price of $195,500.00.
On December 5, 2022, we issued 10,000 shares of preferred
class F to Annemarie Leo-Smith as staff compensation for an aggregate price of $78,200.00.
On December 5, 2022, we issued 75,000 shares of preferred
class F to Daniel Link as staff compensation for an aggregate price of $586,500.00.
On December 5, 2022, we issued 15,000 shares of preferred
class F to Irina Shatalova as staff compensation for an aggregate price of $117,300.00.
On December 5, 2022, we issued 250,000 shares of preferred
class F to Nicolas Link as staff compensation for an aggregate price of $1,955,000.00.
On December 5, 2022, we issued 15,000 shares of preferred class F
to Abel Tshingambo Kayomb as staff compensation for an offering price of $117,300.00.
On December 08, 2022, we cancelled 10,000,000 shares
of common stock held by Louise Bennett.
On December 08, 2022, we cancelled 1,300,000 shares
of preferred class F held by Louise Bennett.
On December 08, 2022, we cancelled 800,000 shares
of preferred class F held by John-Paul Backwell.
On December 08, 2022, we cancelled 2,250,000 shares
of preferred class F held by James Gibbons.
On December 9, 2022, we issued 12,000,000 shares
of common stock as commitment shares to AJB Capital Investment LLC for an aggregate price of $480,000.00, pursuant to issuance of convertible
promissory note amounting to $ 1,200,000 issued on December 2, 2022 The shares issued are against commitment fees payable reflecting
a price per Commitment Fee Share of $0.04.
On December 9, 2022, we issued 18,000,000 shares
of common stock as commitment shares to AJB Capital Investment LLC for an aggregate price of $720,000.00 pursuant to issuance of convertible
promissory note amounting to $ 1,200,000 issued on December 2, 2022 The shares issued are against commitment fees payable reflecting
a price per Commitment Fee Share of $0.04.
On March 17, 2023, we issued 10,000,000 shares
of common stock as commitment shares to AJB Capital Investment LLC for an aggregate price of $400,000.00 pursuant to issuance of convertible
promissory note amounting to $ 1,200,000 issued on December 2, 2022. The shares issued are against commitment fees payable reflecting
a price per Commitment Fee Share of $0.04.
On March 21, 2023, we issued 53,850,000 shares
of common stock as compensation to RB Capital Partners Inc. for conversion of a convertible note, which was issued on 28th
January 2022, for an aggregate price of $538,500.
On April 12, 2023, 100,000 Preferred
F shares were issued to John-Paul Backwell as staff compensation.
On April 12, 2023, 100,000
Preferred F shares were converted into 10,000,000 common shares.
On May 12, 2023, we issued
2,000,000 shares of common stock as commitment shares to AJB Capital Investment LLC for an aggregate price of $80,000 pursuant to Securities
Purchase Agreement, dated as of December 2, 2022.
On June 01, 2023 we issued
53,300,000 shares of common stock as compensation to RB Capital Parters Inc. for conversion of a convertible note for an aggregate price
of $533,000.
On July 14, 2023, we issued
53,125,000 shares of common stock as compensation to RB Capital Partners Inc. For conversion of a convertible note for an aggregate price
of $531,250.
On July 14, 2023, the Company
issued to Exchange Listing LLC 21,665,710 shares of our common stock for $100 for consultancy services
for the planned uplist to a National Exchange.
On
September 6, 2023, the company entered into a share purchase agreement with Kyle Edward Comerford to sell 5,555,556 for a purchase price
of $50,000.
On
September 7, 2023, the company entered into a share purchase agreement with Cameron Canzellarini to sell 10,000,000 for a purchase price
of $100,000.
The sales and issuances
of the securities described below were made pursuant to the exemptions from registration contained in Section 4(a)(2) of the Securities
Act and Regulation D under the Securities Act. Each purchaser represented that such purchaser’s intention to acquire the shares
for investment only and not with a view toward distribution. We requested our stock transfer agent to affix appropriate legends to the
stock certificate issued to each purchaser and the transfer agent affixed the appropriate legends. Each purchaser was given adequate
access to sufficient information about us to make an informed investment decision.
Item 11. Description of Registrant’s
Securities to be Registered
General
Our authorized capital stock consists of 2,000,000,000
shares of common stock and 235,741,000 shares of preferred stock, par value $0.001 per share. As of December 31, 2022, there were 1,355,230,699
shares of our common stock issued and outstanding and 78,946,425 shares of our preferred stock issued and outstanding.
Common Stock
Our common stock is entitled
to one vote per share on all matters submitted to a vote of the stockholders, including the election of directors. Except as otherwise
required by law or provided in any resolution adopted by our board of directors with respect to any series of preferred stock, the holders
of our common stock will possess all voting power. Generally, all matters to be voted on by stockholders must be approved by a majority
(or, in the case of election of directors, by a plurality) of the votes entitled to be cast by all shares of our common stock that are
present in person or represented by proxy, subject to any voting rights granted to holders of any preferred stock. Holders of our common
stock representing fifty percent (50%) of our capital stock issued, outstanding and entitled to vote, represented in person or by proxy,
are necessary to constitute a quorum at any meeting of our stockholders. A vote by the holders of a majority of our outstanding shares
is required to effectuate certain fundamental corporate changes such as liquidation, merger, or an amendment to our Articles of Incorporation.
Our Articles of Incorporation do not provide for cumulative voting in the election of directors.
Subject to any preferential
rights of any outstanding series of preferred stock created by our board of directors from time to time, the holders of shares of our
common stock will be entitled to such cash dividends as may be declared from time to time by our board of directors from funds available,
therefore.
Subject to any preferential
rights of any outstanding series of preferred stock created from time to time by our board of directors, upon liquidation, dissolution
or winding up, the holders of shares of our common stock will be entitled to receive pro rata all assets available for distribution to
such holders.
In the event of any merger
or consolidation with or into another company in connection with which shares of our common stock are converted into or exchangeable
for shares of stock, other securities, or property (including cash), all holders of our common stock will be entitled to receive the
same kind and amount of shares of stock and other securities and property (including cash). Holders of our common stock have no pre-emptive
rights, no conversion rights and there are no redemption provisions applicable to our common stock.
Preferred Stock
Our board of directors
may become authorized to authorize preferred shares of stock and to divide the authorized shares of our preferred stock into one or more
series, each of which must be so designated as to distinguish the shares of each series of preferred stock from the shares of all other
series and classes. Our board of directors is authorized, within any limitations prescribed by law and our articles of incorporation,
to fix and determine the designations, rights, qualifications, preferences, limitations, and terms of the shares of any series of preferred
stock including, but not limited to, the following:
| |
(1) |
The number of shares
constituting that series and the distinctive designation of that series, which may be by distinguishing number, letter, or title; |
| |
(2) |
The dividend rate
on the shares of that series, whether dividends will be cumulative, and if so, from which date(s), and the relative rights of priority,
if any, of payment of dividends on shares of that series; |
| |
(3) |
Whether that series
will have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights; |
| |
(4) |
Whether that series
will have conversion privileges, and, if so, the terms and conditions of such conversion, including provision for adjustment of the
conversion rate in such events as the Board of Directors determines; |
| |
(5) |
Whether or not the
shares of that series will be redeemable, and, if so, the terms and conditions of such redemption, including the date or date upon
or after which they are redeemable, and the amount per share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates; |
| |
(6) |
Whether that series
will have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of such sinking
fund; |
| |
(7) |
The rights of the
shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the corporation, and the
relative rights of priority, if any, of payment of shares of that series; and |
| |
(8) |
Any other relative
rights, preferences, and limitations of that series. |
In August 2019, the Company’s
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 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 – 10,000,000 preferred shares that
convert at 3 common shares for every 1 preferred class B common share with voting rights of 100 common shares for every 1 preferred class
B share.
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.
On February 14, 2020,
the Company designated 60,741,000 Class D 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.
On May 28, 2020, the Company
designated 5,000,000 Class E preferred shares, par value $0.001, with non-cumulative right to dividends at 6% a year commencing a year
after issuance. Dividends to be paid annually. The Class E shares are redeemable at $1.00 per share, 2.25% must be redeemed per quarter,
commencing one year after issuance, and shall be redeemed at 130% premium to the redemption value. The shares do not have voting rights.
On August 26, 2021, the
company amended Class B Shares to 100,000,000 shares with par value $0.001 that convert 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.
On July 20, 2021, the
Company designed 50,000,000 Class F preferred shares 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.
Provisions in Our Articles of Incorporation
and By-Laws That Would Delay, Defer or Prevent a Change in Control
Our articles of incorporation
authorize our board of directors to issue a class of preferred stock commonly known as a “blank check” preferred stock. Specifically,
the preferred stock may be issued from time to time by the board of directors as shares of one (1) or more classes or series. Our board
of directors, subject to the provisions of our Articles of Incorporation and limitations imposed by law, is authorized to adopt resolutions;
to issue the shares; to fix the number of shares; to change the number of shares constituting any series; and to provide for or change
the following: the voting powers; designations; preferences; and relative, participating, optional or other special rights, qualifications,
limitations or restrictions, including the following: dividend rights, including whether dividends are cumulative; dividend rates; terms
of redemption, including sinking fund provisions; redemption prices; conversion rights and liquidation preferences of the shares constituting
any class or series of the preferred stock.
In each such case, we
will not need any further action or vote by our shareholders. One of the effects of undesignated preferred stock may be to enable the
board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a tender offer, proxy contest,
merger or otherwise, and thereby to protect the continuity of our management. The issuance of shares of preferred stock pursuant to the
board of director’s authority described above may adversely affect the rights of holders of common stock. For example, preferred
stock issued by us may rank prior to the common stock as to dividend rights, liquidation preference or both, may have full or limited
voting rights and may be convertible into shares of common stock. Accordingly, the issuance of shares of preferred stock may discourage
bids for the common stock at a premium or may otherwise adversely affect the market price of the common stock.
Certain Anti-Takeover Provisions
Nevada Revised Statutes
sections 78.378 to 78.379 provide state regulation over the acquisition of a controlling interest in certain Nevada corporations unless
the articles of incorporation or bylaws of the corporation provide that the provisions of these sections do not apply. Our articles of
incorporation and bylaws do not state that these provisions do not apply. The statute creates a number of restrictions on the ability
of a person or entity to acquire control of a Nevada company by setting down certain rules of conduct and voting restrictions in any
acquisition attempt, among other things. The statute is limited to corporations that are organized in the state of Nevada and that have
200 or more stockholders, at least 100 of whom are stockholders of record and residents of the State of Nevada; and does business in
the State of Nevada directly or through an affiliated corporation. Because of these conditions, the statute currently does not apply
to our company.
Item 12. Indemnification of Directors and
Officers
Under our bylaws, every
person who was or is a party to, or is threatened to be made a party to, or is involved in any action, suit, or proceeding, whether civil,
criminal, administrative, or investigative, by reason of the fact that he is or was our director or officer, or is or was serving at
our request as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust, or other
enterprise, shall be indemnified and held harmless to the fullest extent legally permissible under the laws of the State of Nevada from
time to time against all expenses, liability, and loss (including attorneys’ fees judgments, fines, and amounts paid or to be paid
in settlement) reasonably incurred or suffered by him or her in connection therewith. Such right of indemnification shall be a contract
right, which may be enforced in any manner desired by such person. The expenses of officers and directors incurred in defending a civil
or criminal action, suit, or proceeding must be paid by us as they are incurred and in advance of the final disposition of the action,
suit, or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately
determined by a court of competent jurisdiction that he is not entitled to be indemnified by us. Such right of indemnification shall
not be exclusive of any other right which such directors, officers, or representatives may have or hereafter acquire, and, without limiting
the generality of such statement, they shall be entitled to their respective rights of indemnification under any bylaw, agreement, vote
of shareholders, provision of law, or otherwise.
Without limiting the application
of the foregoing, our board of directors may adopt bylaws from time to time with respect to indemnification, to provide at all times
the fullest indemnification permitted by the laws of the State of Nevada, and may cause us to purchase and maintain insurance on behalf
of any person who is or was our director or officer, or is or was serving at our request as a director or officer of another corporation,
or as its representative in a partnership, joint venture, trust, or other enterprise against any liability asserted against such person
and incurred in any such capacity or arising out of such status, whether or not we would have the power to indemnify such person. The
indemnification provided shall continue as to a person who has ceased to be a director, officer, employee, or agent, and shall inure
to the benefit of the heirs, executors, and administrators of such person.
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing
provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities
Act and is therefore unenforceable.
We have not entered into
any agreements with our directors and executive officers that require us to indemnify these persons against expenses, judgments, fines,
settlements and other amounts actually and reasonably incurred (including expenses of a derivative action) in connection with any proceeding,
whether actual or threatened, to which any such person may be made a party by reason of the fact that the person is or was our director
or officer or any of our affiliated enterprises.
Item 13. Financial Statements and Supplementary
Data
The Company’s audited financial statements
for the fiscal years ended December 31, 2022, and December 31, 2021, are included here on pages F-1 through F6 and were audited by Pipara
& Co LLP.
Item 14. Changes in
and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 15. Exhibit
and Financial Statement Schedules
We have filed the exhibits listed
on the accompanying Exhibit Index of this Annual Report and below in this Item 15:
(a) Financial Statements.
INDEX TO CONSOLIDATED
FINANCIAL STATEMENTS
| Report of Independent Registered Public Accounting Firm; |
F-1 |
| Consolidated Balance Sheets as of December 31, 2022, and 2021; |
F-2 |
| Consolidated Statements of Operations for the years ended December 31, 2022, and 2021; |
F-3 |
| Consolidated Statements of Stockholders’ Equity as of December 31, 2022, and 2021; |
F-4 |
| Consolidated Statements of Cash Flows for the years ended December 31, 2022, and 2021; and |
F-5 |
| Notes to Consolidated Financial Statements. |
F-6 |
Report of Independent Registered Public Accounting
Firm
To the Shareholders and the Board of Directors of Ilustrato Pictures International,
Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Ilustrato Pictures International, Inc. (the Company) (“Ilus”) as of
December 31, 2022, and 2021, the related statements of income, changes in stockholders’ equity, and cash flows for each of the two
years in the period ended December 31, 2022, and the related notes (collectively referred to as the “Consolidated financial statements”).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December
31, 2022, and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022,
in conformity with accounting principles generally accepted in the United States of America.
We did not audit the financial statements
of Bull Head Products Inc. (“Bull Head”) and Georgia Fire & Rescue Supply LLC (“Georgia”), a majority-owned
subsidiary, where Georgia and Bullhead have total assets amounting to USD 1,814,638 and USD 754,095 respectively. These figures represent
0.73% and 0.30% of ILUS's total assets. Furthermore, Georgia and Bullhead generated revenues of USD 4,271,535 and USD 818,992, respectively,
accounting for 5.45% and 1.04% of ILUS's total revenue. Lastly, the net profits from Georgia and Bullhead were USD 292,004 and USD 47,335,
respectively, constituting 6.40% and 1.03% of ILUS's net profit for FY 2022, respectively, of the related consolidated totals. Those statements
were reviewed by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included
for Ilustrato Pictures International, Inc. (ILUS), is based solely on the report of the other auditors.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of
the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation
of the financial statements. We believe that our audit and the report of the other auditors provide a reasonable basis for our opinion.
Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared by
the management on the assumption that the Company will continue as a going concern. As discussed in Note No. 21 to the financial statements,
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.
There is substantial doubt about the company's ability to continue
as a going concern which is further discussed in Note No. 21 and as per management, they have 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, collect due 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.
Ilus 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. Refer No. 21 for accounts receivable in detail.
Critical Audit Matter
The critical audit matters
communicated below are matters arising from the current period audit of the financial statements that were communicated or required to
be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and
(2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below,
providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Ilustrato Pictures International,
Inc. is currently involved in legal matters regarding its ownership of FB Fire Technologies Ltd. (“FB Fire”). In its previously
filed Form 10 with the SEC, ILUS listed FB Fire as a subsidiary. However, due to the ongoing uncertainty regarding the outcome of the
litigation on lien-marked shares, ILUS has decided not to consolidate FB Fire's financial statements with its own. Management has informed
us that the lawyers representing ILUS in the case are unable to predict the outcome with certainty. Refer to Note No. 19 for details captured
by ILUS for this litigation.
For, Pipara & Co LLP (6841)
/s/ Pipara & Co LLP
We have served as the Company’s auditor since 2021 Place: Ahmedabad,
India
Date: April 06, 2023
| |
New York Office:
1270, Ave of Americas,
Rockfeller Center, FL7,
New York – 10020, USA
|
|
Corporate Office:
“Pipara
Corporate House”
Near
Bandhan Bank Ltd.,
Netaji
Marg, Law Garden,
Ahmedabad
- 380006, INDIA
|
|
Mumbai Office:
#3, 13th floor,
Tradelink,
‘E’ Wing, A - Block,
Kamala
Mills, Senapati Bapat Marg,
Lower Parej, Mumbai - 400013
|
|
Delhi
Office:
1602,
Ambadeep Building,
KG
Marg, Connaught Place
New
Delhi- 110001
|
|
Contact:
T: +1 (646)
387 - 2034
F: 91 79 40 370376
E:usa@pipara.com
naman@piara.com
|
ILUSTRATO
PICTURES INTERNATIONAL INC.
CONSOLIDATED
BALANCE SHEETS
(AUDITED)
| |
| |
Dec
31, 2022 | |
Dec
31, 2021 |
| ASSETS |
| |
| |
|
| Current Assets |
| |
| |
|
| Cash
and Cash Equivalents |
3 | |
$ | 1,478,702 | | |
$ | 176,668 | |
| Accounts
Receivables |
| |
| 60,690,812 | | |
| 10,077,350 | |
| Inventory |
| |
| 1,877,905 | | |
| 1,046,960 | |
| Inventory
(work-in-progress) |
| |
| 58,081,202 | | |
| 62,297 | |
| Other
Current Assets |
4 | |
| 17,062,388 | | |
| 2,583,014 | |
| Total
Current Assets |
| |
| 139,191,009 | | |
| 13,946,289 | |
| Other
Assets |
7 | |
| 18,368,326 | | |
| 15,315,560 | |
| Right of
use of asset |
| |
| 11,906,654 | | |
| — | |
| Goodwill |
| |
| 60,310,468 | | |
| 871,970 | |
| Tangible
Assets |
8 | |
| 21,017,415 | | |
| 204,311 | |
| Intangible
Assets |
9 | |
| 623,592 | | |
| 1,256,329 | |
| Total
Non Current Assets |
| |
| 112,226,455 | | |
| 17,648,169 | |
| Total
Assets |
| |
| 251,417,463 | | |
| 31,594,459 | |
| LIABILITIES
AND STOCKHOLDERS' EQUITY |
| |
| | | |
| | |
| Current
Liabilities |
| |
| | | |
| | |
| Account
Payable |
| |
| 52,141,842 | | |
$ | 6,394,428 | |
| Current
lease liability |
| |
| 836,382 | | |
| — | |
| Other
Current liabilities |
10 | |
| 102,059,820 | | |
| 3,730,264 | |
| Total
Current Liabilities |
| |
| 155,038,044 | | |
| 10,124,692 | |
| Non-current
liabilities |
| |
| | | |
| | |
| Notes
Payable |
| |
| 10,550,000 | | |
| 848,838 | |
| Non
current lease liability |
| |
| 13,696,729 | | |
| — | |
| Other
non- current liabilities |
11 | |
| 16,015,558 | | |
| 2,550,000 | |
| Total
Non-Current Liabilities |
| |
| 40,262,287 | | |
| 3,398,838 | |
| Total
Liabilities |
| |
| 195,300,330 | | |
| 13,523,530 | |
| Stockholders'
Equity |
| |
| | | |
| | |
| Common
Stock: 2,000,000,000 shares authorized, $0.001 par value, 1,355,230,699 and 1,243,530,699 issued and outstanding as of December 31,
2022, and 2021, respectively |
12 | |
| 1,355,231 | | |
| 1,243,531 | |
| Preferred
Stock: 235,741,000 authorized, $0.001 par value, |
12 | |
| | | |
| | |
| Class
A - 10,000,000 authorized; 10,000,000 issued and outstanding |
| |
| 10,000 | | |
| 10,000 | |
| Class
B - 100,000,000 authorized ; 3,400,000 and 2,200,000 issued and outstanding as of December 31, 2022 and 2021, respectively |
| |
| 3,400 | | |
| 2,200 | |
| Class
C - 10,000,000 authorized; 0 issued and outstanding |
| |
| — | | |
| — | |
| Class
D -60,741,000 authorized; 60,741,000 issued and outstanding |
| |
| 60,741 | | |
| 60,741 | |
| Class
E - 5,000,000 authorized; 3,172,175 issued and outstanding |
| |
| 3,172 | | |
| 3,172 | |
| Class
F - 50,000,000 authorized, 1,633,250 and 5,800,000 issued and outstanding as of December 31, 2022 and 2021, respectively |
| |
| 1,633 | | |
| 5,800 | |
| Additional
Paid-in-capital |
| |
| 21,474,067 | | |
| 3,664,118 | |
| Other
Comprehensive Income |
| |
| (20,666 | ) | |
| — | |
| Non
controlling Interest |
| |
| 24,386,712 | | |
| — | |
| Retained
Earnings |
| |
| 8,842,843 | | |
| 13,081,367 | |
| Total
Stockholders' Equity |
| |
| 56,117,133 | | |
| 18,070,929 | |
| |
| |
| | | |
| | |
| Total
Liabilities and Stockholders' Equity |
| |
| 251,417,463 | | |
| 31,594,459 | |
The
accompanying notes are an integral part of these audited consolidated financial statements.
ILUSTRATO
PICTURES INTERNATIONAL INC.
CONSOLIDATED
STATEMENT OF OPERATIONS
(AUDITED)
| |
|
|
|
|
|
|
|
| |
|
|
For
the year ended |
| |
|
|
December
31,2022 |
|
December
31,2021 |
| NET REVENUE |
|
|
78,344,131 |
|
|
|
11,263,875 |
| Total Net Revenue |
|
|
78,344,131 |
|
|
|
11,263,875 |
| |
|
|
|
|
|
|
|
| COST OF REVENUE |
|
|
49,983,258 |
|
|
|
7,489,784 |
| |
|
|
|
|
|
|
|
| GROSS PROFIT |
|
|
28,360,873 |
|
|
|
3,774,091 |
| Operating Expenses |
|
|
|
|
|
|
|
| General, Selling & Administrative Expenses |
|
|
20,047,791 |
|
|
|
1,165,229 |
| Total Operating Expense |
|
|
20,047,791 |
|
|
|
1,165,229 |
| PROFIT/ LOSS FROM OPERATIONS |
|
|
8,313,082 |
|
|
|
2,608,862 |
| Non- Operating Expenses |
|
|
10,584,844 |
|
|
|
463,886 |
| Non-Operating Income |
|
|
6,831,138 |
|
|
|
11,835,500 |
| NET PROFIT/ LOSS |
|
|
4,559,375 |
|
|
|
13,980,477 |
| |
|
|
|
|
|
|
|
| Basic EPS |
|
|
0.00 |
|
|
|
0.01 |
| Diluted EPS |
|
|
0.00 |
|
|
|
0.00 |
| Weighted average shares outstanding |
|
|
1,355,230,699 |
|
|
|
1,050,462,845 |
The
accompanying notes are an integral part of these audited consolidated financial statements.
ILUSTRATO
PICTURES INTERNATIONAL INC.
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
(AUDITED)
| STATEMENT OF STOCKHOLDERS' EQUITY |
| | |
Common Stock | |
Preferred Stock - Class A | |
Preferred Stock - Class B | |
Preferred Stock - Class D | |
Preferred Stock - Class E | |
Preferred Stock - Class F | |
| |
| |
|
| | |
| Shares
| | |
| Amount
| | |
| Shares
| | |
| Amount
| | |
| Shares
| | |
| Amount
| | |
| Shares
| | |
| Amount
| | |
| Shares
| | |
| Amount
| | |
| Shares
| | |
| Amount
| | |
| Additional
Paid in Capital | | |
| Accumulated
Deficit | | |
| Total
Stock Holders' Equity | |
Balance December 31, 2020
| |
| 767,297,366 | | |
$ | 1,183,282 | | |
| 10,000,000 | | |
$ | 10,000 | | |
| — | | |
| — | | |
| 60,741,000 | | |
$ | 60,741 | | |
| 3,175,172 | | |
$ | 3,172 | | |
| — | | |
| — | | |
$ | 2,846,812 | | |
$ | (899,110 | ) | |
$ | 3,204,897 | |
| Balance June 30, 2021 | |
| 1,221,297,366 | | |
$ | 1,221,297 | | |
| 10,000,000 | | |
$ | 10,000 | | |
| — | | |
| — | | |
| 60,741,000 | | |
$ | 60,741 | | |
| 3,172,175 | | |
$ | 3,172 | | |
| — | | |
| — | | |
$ | 2,846,812 | | |
$ | 11,936,144 | | |
$ | 16,078,166 | |
| Shares issued | |
| (77,766,667 | ) | |
| (77,766 | ) | |
| — | | |
| — | | |
| 2,200,000 | | |
$ | 2,200 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 6,050,000 | | |
$ | 6,050 | | |
$ | — | | |
$ | 801,076 | | |
$ | 731,560 | |
| Balance Sept 30,2021 | |
| 1,143,530,699 | | |
$ | 1,143,531 | | |
| 10,000,000 | | |
$ | 10,000 | | |
| 2,200,000 | | |
$ | 2,200 | | |
| 60,741,000 | | |
$ | 60,741 | | |
| 3,172,175 | | |
$ | 3,172 | | |
| 6,050,000 | | |
$ | 6,050 | | |
$ | 2,846,812 | | |
$ | 12,737,220 | | |
$ | 16,809,726 | |
| Shares issued | |
| 100,000,000 | | |
$ | 100,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (250,000 | ) | |
$ | (250 | ) | |
$ | (25,500 | ) | |
$ | 1,186,953 | | |
$ | 1,261,203 | |
| Audit Adjustment | |
| — | | |
$ | — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | — | | |
$ | 842,806 | | |
$ | (842,806 | ) | |
$ | — | |
Balance Dec 31, 2021
| |
| 1,243,530,699 | | |
$ | 1,243,531 | | |
| 10,000,000 | | |
$ | 10,000 | | |
| 2,200,000 | | |
$ | 2,200 | | |
| 60,741,000 | | |
$ | 60,741 | | |
| 3,172,175 | | |
$ | 3,172 | | |
| 5,800,000 | | |
$ | 5,800 | | |
$ | 3,664,118 | | |
$ | 13,081,367 | | |
$ | 18,070,929 | |
| Shares issued | |
| 70,000,000 | | |
$ | 70,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | 124,746 | | |
$ | 636,636 | | |
$ | 831,382 | |
| Balance Mar 31, 2022 | |
| 1,313,530,699 | | |
$ | 1,313,531 | | |
$ | 10,000,000 | | |
$ | 10,000 | | |
$ | 2,200,000 | | |
$ | 2,200 | | |
| 60,741,000 | | |
$ | 60,741 | | |
| 3,172,175 | | |
$ | 3,172 | | |
| 5,800,000 | | |
$ | 5,800 | | |
| 3,788,864 | | |
$ | 13,718,003 | | |
$ | 18,902,311 | |
| Share Capital of Subsidiary | |
| — | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Common stock converted into Preferred B | |
| (120,000,000 | ) | |
$ | (120,000 | ) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | (120,000 | ) |
| Preferred Stock Converted to Common Stock | |
| 25,000,000 | | |
$ | 25,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | 25,000 | |
| Convertible notes converted to common stock | |
| 53,000,000 | | |
$ | 53,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | 53,000 | |
| Common stock converted into Preferred | |
| — | | |
| — | | |
| — | | |
| — | | |
| 1,200,000 | | |
$ | 1,200 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | 1,200 | |
| Preferred Stock Converted to Common Stock | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (243,250 | ) | |
$ | (243 | ) | |
| — | | |
| — | | |
$ | (243 | ) |
| Changes in Add Capital | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | 12,633,277 | | |
| — | | |
$ | 12,633,277 | |
| Current quarter income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | 1,132,322 | | |
$ | 1,132,322 | |
| Changes in Retained Earnings | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | (11,589,135 | ) | |
$ | (11,589,135 | ) |
| Balance June 30, 2022 | |
| 1,271,530,699 | | |
$ | 1,271,531 | | |
$ | 10,000,000 | | |
$ | 10,000 | | |
| 3,400,000 | | |
$ | 3,400 | | |
| 60,741,000 | | |
$ | 60,741 | | |
| 3,172,175 | | |
$ | 3,172 | | |
| 5,556,750 | | |
$ | 5,557 | | |
$ | 16,422,141 | | |
$ | 3,261,190 | | |
$ | 21,037,732 | |
| Common Stock issued | |
| 53,700,000 | | |
$ | 53,700 | | |
| — | | |
$ | — | | |
| — | | |
| — | | |
| — | | |
$ | — | | |
| — | | |
$ | — | | |
| 0 | | |
| 0 | | |
$ | — | | |
$ | — | | |
$ | 53,700 | |
| Preferred Stock issued | |
| — | | |
$ | — | | |
| — | | |
$ | — | | |
| — | | |
| — | | |
| — | | |
$ | — | | |
| — | | |
$ | — | | |
| 1500 | | |
$ | 1.5 | | |
$ | — | | |
$ | — | | |
$ | 2 | |
| Current Quarter Income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | 1,187,494 | | |
$ | 1,187,494 | |
| Changes in Additional Capital | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | 563,900 | | |
| — | | |
$ | 563,900 | |
| Foreign exchange adjustment | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | 17,158 | | |
$ | 17,158 | |
| Balance September 30,2022 | |
| 1,325,230,699 | | |
$ | 1,325,231 | | |
| 10,000,000 | | |
$ | 10,000 | | |
| 3,400,000 | | |
$ | 3,400 | | |
| 60,741,000 | | |
$ | 60,741 | | |
| 3,172,175 | | |
$ | 3,172 | | |
| 5,558,250 | | |
$ | 5,559 | | |
$ | 16,986,041 | | |
$ | 4,465,842 | | |
$ | 22,859,985 | |
| Share Capital of subsidiaries | |
$ | 563,393 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total Shareholders Equity as of 30.09.2022 | |
| 23,423,379 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Common stock issued | |
| 40,000,000 | | |
$ | 40,000 | | |
| — | | |
$ | — | | |
| — | | |
| — | | |
| — | | |
$ | — | | |
| — | | |
$ | — | | |
| 0 | | |
$ | — | | |
$ | 12,487,500 | | |
$ | — | | |
$ | 12,527,500 | |
| Common stock cancelled | |
| (10,000,000 | ) | |
$ | (10,000 | ) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | — | | |
$ | (10,000 | ) |
| Prefered stock issued | |
| — | | |
$ | — | | |
| — | | |
$ | — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 425,000 | | |
| 424 | | |
$ | 3,425,292 | | |
$ | — | | |
$ | 3,425,716 | |
| Prefered stock cancelled | |
| — | | |
$ | — | | |
| — | | |
$ | — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (4,350,000 | ) | |
| (4,350 | ) | |
$ | (11,424,766 | ) | |
| — | | |
$ | (11,429,116 | ) |
| changes in Retained earnings | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | 2,753,412 | | |
$ | 2,753,412 | |
| Current Quarter Income | |
| — | | |
$ | — | | |
| — | | |
$ | — | | |
| — | | |
| — | | |
| — | | |
$ | — | | |
| — | | |
$ | — | | |
| — | | |
| — | | |
$ | — | | |
$ | 1,602,923 | | |
$ | 1,602,923 | |
| Balance December 31,2022 | |
| 1,355,230,699 | | |
| 1,355,231 | | |
| 10,000,000 | | |
| 10,000 | | |
| 3,400,000 | | |
| 3,400 | | |
| 60,741,000 | | |
| 60,741 | | |
| 3,172,175 | | |
| 3,172 | | |
| 1,633,250 | | |
| 1,633 | | |
| 21,474,067 | | |
| 8,822,177 | | |
| 31,730,420 | |
| Share
capital of Subsidiaries | |
| 24,386,712 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total
Shareholders Equity as of 31.12.2022 | |
| 56,117,132 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
The
accompanying notes are an integral part of these audited consolidated financial statements.
ILUSTRATO
PICTURES INTERNATIONAL INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(AUDITED)
| |
|
|
|
|
|
|
|
|
| |
|
For the 12 months
ended |
|
For the 12 months
ended |
| |
|
Dec
31,2022 |
|
Dec
31,2021 |
| CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
| Net Loss/ Profit |
|
|
4,559,375 |
|
|
|
13,980,477 |
|
| Adjustment to reconcile net gain (loss) to
net cash |
|
|
|
|
|
|
|
|
| Non Cash Stock Compensation Expense |
|
|
3,319,150 |
|
|
|
— |
|
| Premium on Investment |
|
|
(6,111,135 |
) |
|
|
(11,835,500 |
) |
| Gain on settlement of
Debt |
|
|
(457,071) |
|
|
|
|
|
| Loss on license agreement |
|
|
104,550 |
|
|
|
|
|
| Depreciation Expense |
|
|
2,356,255 |
|
|
|
4,577 |
|
| Commitment fees |
|
|
5,200,000 |
|
|
|
31,042 |
|
| Finance cost |
|
|
3,838,336 |
|
|
|
149,724 |
|
| Discount on Convertible Notes |
|
|
324,166 |
|
|
|
276,018 |
|
| Interest on convertible notes |
|
|
516,200 |
|
|
|
— |
|
| Changes in Assets and Liabilities, net |
|
|
|
|
|
|
|
|
| Other Current Assets |
|
|
(24,384,071 |
) |
|
|
(14,045,639 |
) |
| Goodwill |
|
|
— |
|
|
|
(399,319 |
) |
| Other Current Liabilities |
|
|
16,625,864 |
|
|
|
10,093,649 |
|
| Decrease in Accrued Liabilities |
|
|
— |
|
|
|
(6,304 |
) |
| Decrease in Deferred Liabilities |
|
|
— |
|
|
|
(26,003 |
) |
| Decrease in Real estate earnest funds |
|
|
— |
|
|
|
(3,500 |
) |
| Net cash (used in) provided by operating activities |
|
|
5,891,619
|
|
|
|
(1,780,778 |
) |
| |
|
|
|
|
|
|
|
|
| CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
| Addition of Fixed Assets |
|
|
(758,478 |
) |
|
|
(1,465,216 |
) |
| Investment in subsidiaries |
|
|
(2,481,000 |
) |
|
|
— |
|
| Changes in Non- Current Liabilities |
|
|
— |
|
|
|
— |
|
| Investment in Dear Cashmere Holding Co. |
|
|
— |
|
|
|
(164,500 |
) |
| Net cash (used In) provided by investing activities |
|
|
(3,239,478
|
) |
|
|
(1,629,716 |
) |
| |
|
|
|
|
|
|
|
|
| CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
| Fund raised through notes |
|
|
9,550,000 |
|
|
|
2,850,000 |
|
| Common Stock issued |
|
|
— |
|
|
|
877,554 |
|
| Preferred Stock Issued |
|
|
— |
|
|
|
8,250 |
|
| Transfer of Preferred Stock |
|
|
— |
|
|
|
(250 |
) |
| Finance cost |
|
|
(3,838,336 |
) |
|
|
(149,724 |
) |
| |
|
|
|
|
|
|
|
|
| Proceeds/repayment of bank Borrowings |
|
|
(5,154,933) |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Payment of lease liabilities |
|
|
(1,906,838) |
|
|
|
|
|
| Net cash (used in) provided by financing activities |
|
|
(1,350,107)
|
|
|
|
3,585,830
|
|
| |
|
|
|
|
|
|
|
|
| Net change in cash, cash equivalents and restricted cash |
|
|
1,302,034 |
|
|
|
175,336 |
|
| Cash, cash equivalents and restricted cash, beginning of the year |
|
|
176,668 |
|
|
|
1,332 |
|
| Cash, cash equivalents and restricted cash, end of the year |
|
|
1,478,702 |
|
|
|
176,668 |
|
The
accompanying notes are an integral part of these audited consolidated financial statements.
ILUSTRATO
PICTURES INTERNATIONAL INC.
Notes
to Financial Statements
Year Ended
December 31, 2022
Note
1 : Organization, History
and Business
(A) We were
incorporated as a Superior Venture Corp. on April 27, 2010 in the State of Nevada for the purpose of selling wine varietals. On November
9, 2012, we entered into an Exchange Agreement with the 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, together with the newly elected director of the issuer, caused the Issuer to enter into a letter of Intent to
merger 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 to the members 360,000,000
shares of its common stock.
(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 merger 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,
therefore has become the wholly owned operating subsidiary of
the Issuer.
(E) On November
9th, 2018, the Company entered into a Term Sheet
for Plan of Merger and Control with Larson Elmore.
(F) As
a part of 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 Internatinal 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. 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 Internatinal 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 SEC.
(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 consummated
during the 1st quarter of 2021. We have got
effective control over FB Fire Technologies Ltd. on
January 14, 2021.
(H) Firebug
Mechanical Equipment LLC (Firebug Group –
U.A.E.) 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
business of research and development of firefighting technologies as well as the manufacturing
firefighting equipment and firefighting vehicles for its customers in the Middle East,
Asia, and Africa.
(I)
Georgia Fire & Rescue Supply LLC (Georgia
Fire) was incorporated on the 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 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 the business of manufacturing
of 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.
(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 which 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.Puchase consideration for 51% of the shares shall be up to $714,000 subject to certain
agreed Targets and Key Performance indices are met referenced in SPA.
(Q)
Quality International Co Ltd FCZ is a United
Arab Emirates registered process manufacturing and engineering company. It manufactures
custom solutions for the oil and gas, power/energy, water, desalination, wastewater, offshore
and public safety industries. Quality Industrial Corp. signed the definitive Share
Purchase Agreement on January 18, 2023, to acquire 52% of the shares in Quality International Co
Ltd FCZ. The purchase consideration for the 52% of the Shares shall be up to $137,000,000
in cash, to be paid in tranches, out of which $82 million considered as fixed payment and the remaining 55 million subject to achievement
of financial milestones presented in a schedule of payments set forth in the Purchase Agreement. The tranches will be payable over a
period of 2 years until the audited financials for the year ended December 31, 2024.
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
Company follows new guidance
under ASC 606 regarding 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 recognize 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.
Industrial & Manufacturing
segment revenue
Majority of the revenue
is generated from our reportable segment – Industrial & Manufacturing, below is accounting policy followed by such segment:
The principal activity of this
segment is to engage in general trading, manufacturing and fabrication or steel and steel products and mainly manufacturing of pressure
vessels, tanks, heat exchangers and construction of storage tanks and piping. Revenue from contracts with customers is recognized when
control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects
to be entitled in exchange for those goods or services. The Company has generally concluded that it is the principal in its revenue arrangements
because it typically controls the goods or services before transferring them to the customer.
Construction contracts
Construction contract revenue
and contract costs are recognized as revenue and expenses respectively by reference to the stage of completion of the contract activity
at the end of the reporting period, when the outcome of a construction contract can be estimated reliably. The percentage of completion
method of accounting requires the reporting of revenues and expenses on a yearly basis, as determined by the percentage of the contract
that has been fulfilled. The stage of completion is measured by reference to the proportion of the costs incurred to date.
When the outcome of a construction
contract cannot be estimated reliably, contract revenue is recognized to the extent of contract costs incurred that are likely to be
recoverable and contracts costs are recognized as expense in the period in which they are incurred. An expected loss on the construction
contract is recognized as an expense immediately when it is probable that total contract costs will exceed total contract revenue.
The Company principally operates
fixed price contracts. If the outcome of such a contract can be reliably measured, revenue associated with the construction contract
is recognized by reference to the stage of completion of the contract activity at year end (the percentage of completion method).
In applying the percentage
of completion method, revenue recognized corresponds to the total contract revenue (as defined below) multiplied by the actual completion
rate based on the proportion of total contract costs (as defined below) incurred to date over the total estimated contract costs.
Contract revenue corresponds
to the initial amount of revenue agreed in the contract and any variations in contract work, claims and incentive payments to the extent
that it is probable that they will result in revenue, and they are capable of being reliably measured.
Contract costs include costs
that relate directly to the specific contract and costs that are attributable to contract activity in general and can be allocated to
the contract.
The Company’s contracts are
typically negotiated for the construction of a single asset or a group of assets which are closely interrelated or interdependent in
terms of their design, technology and function. In certain circumstances, the percentage of completion method is applied to the separately
identifiable components of a single contract or to a group of contracts together in order to reflect the substance of a contract or a
group of contracts.
Variations
Variations are recognized in contract revenue when the outcome can be determined with reasonable certainty and are capable of being reliably
measured.
Claims
Claims are recognized in contract revenue when:
| · | Negotiations
have reached an advanced stage such that it is probable that the customer will accept the
claim; and |
| · | The
amount that is probable will be accepted by the customer and can be measured reliably. |
Revenue
from construction contracts is recognized over a period of time by reference to the stage of completion of the contract activities at
the end of the reporting period.
The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of
the transaction price needs to be allocated. In determining the transaction price for the construction contract, the Company considers
the effects of variable consideration, the existence of significant financing components, non-cash consideration, and consideration payable
to the customer (if any).
Revenue from the construction contract is measured at the fair value of the consideration received or receivable, net of returns and
allowances, trade discounts and volume rebates.
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.
Rights to claim damages for delay in delivery of goods
Construction contracts provide a customer with a right to claim damages for delay in
delivery of goods within a specified period. The Company uses a pre-agreed percentage method to estimate the amount of penalty that will
be paid to the customer because this method best predicts the amount of variable consideration to which the Company will be entitled.
Accounts
Receivable
Accounts receivable
is reported at the customers’
outstanding balances, less any allowance for doubtful accounts. Interest is not
accrued on overdue accounts receivable.
Our accounts receivable primarily includes balance due
from customers of Quality International Co Ltd FCZ, as well as products sold and delivered to additional customers. 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. The majority
of Quality International Co Ltd FCZ accounts receivable extend beyond 12 months and are guaranteed by one of the shareholder of Quality
International Co Ltd FCZ. Out of total accounts receivable of the company, $33,175,606 represents balances due from customers of Quality
International Co Ltd FCZ.
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 receivable are charged off against the allowances when collectability is
determined to be permanently impaired.
Inventories
In accordance with ASC 330, 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 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.
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 earning (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 shares available. Diluted earnings (loss) per share
is computed similar 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 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.
Concentration
of Credit Risk
The Company
primarily transacts its business with one financial institution. The amount on deposit
in that one institution may from time to time exceed the federally- insured limit.
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 assumption that affect the reported amount of assets and liabilities and disclosure of 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 use of the “management
approach” model for segments 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.
Out of four segments discussed
in the business overview section in Form 10, only two segments fulfill the criteria of Operating segments and out of 2 operating segments,
only 1 segment meets the Quantitative threshold thus forming as a Reportable Segment. The reporting segment known as Industrial
& Manufacturing is
a result of acquisition of our subsidiary Quality International.
Below is the Statement of operations of reportable Segment-
Industrial and manufacturing Division
| Year
2022 |
Industrial
& Manufacturing Division |
| Revenue |
65,603,673 |
| Cost
of Revenue |
44,848,938 |
| Operating
expenses |
|
| Selling,
General & Admin Expenses |
10,724,745 |
| Profit
from Operations |
10,029,990 |
| Non-
Operating expenses |
|
| Finance
Cost |
(3,872,175) |
| Other
Non- operating Expenses |
104,550 |
| Non-
Operating Income |
|
| Non-
operating Income |
720,003 |
| Net
Income |
6,773,268 |
Below is the list of assets belonging to Industrial and Manufacturing
Division:
| Tangible
Assets |
December
31,2022 |
| Leasehold
improvements & building |
17,390,322 |
| Plant
and Machinery |
1,365,585 |
| Furniture,
fixtures & office equipment |
156,370 |
| Capital
work in progress |
1,884,569 |
| Total |
20,796,591 |
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. Company comprises of three profitable subsidiaries, out of which Quality International is located in the jurisdiction
where corporate tax doesn't apply. As for the other two profitable subsidiaries, one diligently files tax return, while the other does
not meet the threshold criteria for tax return requirements.
Leases
The Company
accounts for leases with escalation clauses a in accordance with Accounting Standards Codification (ASC) 842, “Lease”.
In accordance with the principles of ASC 842,
company recognizes both the assets and the liabilities arising from their leases. The lease liability is measured as the present value
of lease payments while the lease assets is equal to the lease liability adjusted for certain items like prepaid rent ad lease incentives.
The Company applies a single recognition and measurement
approach for all leases, except for short-term leases and leases of low-value assets. The Company recognizes lease liabilities to make
lease payments and right-of-use assets representing the right to use the underlying assets.
The Company recognizes right-of-use assets at the
commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost,
less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement
date less any lease incentives received and estimate of costs to be incurred by the lessee in dismantling and removing the underlying
asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions
of the lease, unless those costs are incurred to produce inventories. Unless the Company is reasonably certain to obtain ownership of
the leased asset at the end of the lease term, the recognized right-of-use assets are depreciated on a straight-line basis over the shorter
of its estimated useful life and the lease term as follows:
Land:
25 years
Right-of-use
assets are subject to impairment review.
At the commencement
date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease
term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable
lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments
also include, if any, the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties
for terminating a lease, if the lease term reflects the Company exercising the option to terminate.
The variable
lease payments that do not depend on an index or a rate are recognized as expense in the period on which the event or condition that
triggers the payment occurs.
In calculating
the present value of lease payments, the Company uses the incremental borrowing rate at the lease commencement date if the interest rate
implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect
the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured
if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment
to purchase the underlying asset.
The Company’s subsidiary Quality International
has entered into commercial leases of land for office, manufacturing yards and storage facilities. These leases generally have lease
term of 25 years. The Company’s obligations under its leases are secured by the lessor’s title to the leased assets. There
are no restrictions placed upon the Company by entering into these leases. The Company also has certain leases with lease terms of 12
months or less and leases with low value.
The Company has Lease arrangement for which the liability
has been recorded separately. The Company determines whether an arrangement contains a lease at inception. A lease liability and corresponding
right of use (ROU) asset are recognized for qualifying leased assets based on the present value of fixed and certain index-based lease
payments at lease commencement.
When accounting for finance leases in accordance with
ASC 842, entity recognizes interest on the lease liability and amortization of the ROU asset in the income statement and classify payments
of the principal portion of the lease liability as financing activities and payments of interest on the lease liability as operating
activities.
During fiscal year 2022, the Company recognized interest
on lease liabilities amounting to $667,614 and paid $1,906,838 as lease payments. As of December 31, 2022, Lease liabilities are presented
in the statement of financial position as:
As of December 31, 2022, Lease liabilities are presented
in the statement of financial position as:
Current portion of lease liabilities: $836,382
Non-Current portion of lease liabilities: $13,696,729
Short-term
leases and leases of low-value assets
The Company
applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or
less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption
to leases of office equipment that are considered to be low value. Low value asset consideration are those less than USD 5,000. Lease
payments on short-term leases and leases of low value assets are recognized as expense on a straight-line basis over the lease term.
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. The Company is currently assessing the potential impact of the
adoption of ASU 2017-04 on its consolidated financial statements.
Rounding
Off
Figures
are rounded off to the nearest $, except value of EPS and
number of shares.
Note
3: Cash and Cash Equivalents
| Particulars | |
December
31,2022 | |
December
31,2021 |
| Cash
in Hand | |
| 12,098 | | |
| 16,827 | |
| Balance
with Banks | |
| 1,466,604 | | |
| 159,841 | |
| Total | |
| 1,478,702 | | |
| 176,668 | |
Note
4: Other Current Assets
| Particulars |
|
December
31, 2022 |
|
December
31, 2021 |
| Staff Advances |
|
$ |
49,605 |
|
|
$ |
9,310 |
| Loans advanced |
|
|
578,367 |
|
|
|
— |
| Advance given to suppliers and sub contractors |
|
|
7,572,440 |
|
|
|
76,760 |
| Director's current accounts |
|
|
2,096,777 |
|
|
|
797,396 |
| Statutory dues receivable |
|
|
46,326 |
|
|
|
— |
| Deposits |
|
|
1,550,914 |
|
|
|
25,942 |
| Accrual of discount on notes |
|
|
100,000 |
|
|
|
— |
| Prepayments/Prepaid Assets |
|
|
278,192 |
|
|
|
74,553 |
| Other Receivables |
|
|
1,314,832 |
|
|
|
|
| Retention Receivables |
|
|
1,485,780 |
|
|
|
|
| Amount due from Related
Party |
|
|
1,794,218 |
|
|
|
|
| Other current assets |
|
|
194,938 |
|
|
|
1,599,052 |
| Total |
|
$ |
17,062,388 |
|
|
$ |
2,583,013 |
| · | 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
required in the process of manufacturing of pressure vessels, tanks, heat exchangers and
construction of storage tanks and pipes. |
| · | The
Industrial and Manufacturing Division engages in the production of process equipment, pressure
vessels, and substantial offshore structures. To undertake these projects, the company is
required to make substantial upfront investments in materials and machinery. s. These projects
involve many processes and take a long time to complete. |
| · | Directors
Current Account includes amount incurred for Company’s Annual shareholders meeting,
events for investor relationship, advances for our investment project in Serbia 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 amount paid for set up of new businesses. |
| · | Retention
Receivables relates to a percentage of the contract price being retained by the customers
for a period of 12 to 18 months (as per contract agreements), for the purpose of repair of
damages (if any), that arise as a result of work done on the projects by the Company. These
amounts are received at the expiration of the retention period. |
| · | Other
Receivables represents claims for damages from suppliers. |
| · | Amount
due from related Party refers to the amount that the Company had amounts due from Gerab National
Enterprises LLC a shareholder of Quality International, a subsidiary of the Company. |
Note
5: Goodwill
As a part of
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 Internatinal 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 December 31, 2022, the Additional
Goodwill has been generated through acquisition of our subsidiaries -Bull
Head Products Inc., Georgia Fire & Rescue and
Quality Industrial Corp. Goodwill accounted in the books is primarily a result of acquisitions, 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 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.
As all the subsidiaries were acquired in 2022, hence
company would start impairment process from the next year 2023 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.
As of December 31, 2023, goodwill and intangible assets
amount to $60,934,060 as compared to total assets amounting to $ 251,417,462.
Note
7: Other Assets
| Particulars |
|
December
31, 2022 |
|
December
31, 2021 |
| Investments: |
|
|
|
|
|
|
|
|
| Due from Officer |
|
|
— |
|
|
|
143,385 |
|
| Investment in TVC - Brand |
|
|
20,500 |
|
|
|
— |
|
| Investment in FB Fire Technologies Ltd |
|
|
3,172,175 |
|
|
|
3,172,175 |
|
| Investment in Dear Cashmere Holding Co. |
|
|
12,000,000 |
|
|
|
12,000,000 |
|
| Capital Advance |
|
|
1,496,695 |
|
|
|
— |
|
| Loan to Fb Fire Technologies
Ltd |
|
|
1,678,995 |
|
|
|
— |
|
| Total |
|
$ |
18,368,326 |
|
|
$ |
15,315,560 |
|
Notes:
Due from Officer: This was carried forward from the
year 2020 as 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.
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 fair market value of $1.20 with a grant
date as of May 21, 2021, in accordance with ASC 718 and issued by, Chairman, Nicolas Link and CEO, James Gibbons, of DRCR.
Investment in FB Fire technologies
| 1. | 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. for acquisition of FB Fire Technologies
Ltd. |
Capital Advance of $1,496,695 represents amount advanced
for two subsidiaries -Bull head and Georgia Fire security LLC.
Note
8: Tangible Assets
| Particulars |
|
December
31, 2022 |
|
December
31, 2021 |
| Tangible Assets |
|
|
|
|
|
|
|
|
| Land and Buildings |
|
$ |
17,390,322 |
|
|
$ |
22,158 |
|
| Plant and Machineries |
|
|
1,419,800 |
|
|
|
106,528 |
|
| Furniture, Fixtures and Fittings |
|
|
221,330 |
|
|
|
30,126 |
|
| Vehicles |
|
|
70,326 |
|
|
|
2,725 |
|
| Computer and Computer Equipment |
|
|
31,067 |
|
|
|
42,774 |
|
| |
|
|
|
|
|
|
|
|
| Capital WIP |
|
|
1,884,569 |
|
|
|
— |
|
| Total |
|
$ |
21,017,415 |
|
|
$ |
204,311 |
|
Depreciation on tangible assets in accordance with ASC 360
| |
|
Plant & Machinery |
|
Leasehold Improvements & Building |
|
Furniture, Fixtures & Office Equipment |
|
Vehicles |
|
Computer and Computer Equipment |
|
Capital work in Progress |
|
Total |
| As of December 31, 2021 |
|
|
106,528 |
|
|
|
22,158 |
|
|
|
30,126 |
|
|
|
2,725 |
|
|
|
42,774 |
|
|
|
— |
|
|
|
204,311 |
|
| Additions during the year |
|
|
(4576) |
|
|
|
— |
|
|
|
55,311 |
|
|
|
70,326 |
|
|
|
9,680 |
|
|
|
627,737 |
|
|
|
758,478 |
|
| Additions on account of acquision of Subdidiary |
|
|
25,415,465 |
|
|
|
27,086,143 |
|
|
|
5,735,797 |
|
|
|
0 |
|
|
|
— |
|
|
|
1,256,832 |
|
|
|
59,494,237 |
|
| December 31, 2022 |
|
|
25,517,417 |
|
|
|
27,108,301 |
|
|
|
5,821,234 |
|
|
|
73,051 |
|
|
|
52,454 |
|
|
|
1,884,569 |
|
|
|
60,457,026 |
|
| |
| Accumulated depreciation and carrying value of the assets |
| Acc dep as December 31, 2021 of the assets acquired on account
of Acquistion of subsidiary |
|
|
23,049,947 |
|
|
|
8,613,635 |
|
|
|
5,419,774 |
|
|
|
0 |
|
|
|
— |
|
|
|
— |
|
|
|
37,083,356 |
|
| Charge for the year |
|
|
1,047,670 |
|
|
|
1,104,343 |
|
|
|
180,130 |
|
|
|
2,725 |
|
|
|
21,387 |
|
|
|
— |
|
|
|
2,356,255 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Carrying value December 31, 2022 |
|
|
1,419,800 |
|
|
|
17,390,323 |
|
|
|
221,330 |
|
|
|
70,326 |
|
|
|
31,067 |
|
|
|
1,884,569 |
|
|
|
21,017,415 |
|
| Depreciation for the year ended December 31, 2022 |
| |
|
|
| General administrative Expenses |
|
|
2,356,255 |
|
| |
|
|
|
|
| TOTAL |
|
|
2,356,255 |
|
Note
9: Intangible Assets
| Particulars | |
December
31, 2022 | |
December
31, 2021 |
| Intangible
Assets | |
| | | |
| | |
| Intellectual Property Rights | |
| 617,240 | | |
| 1,249,977 | |
| Website | |
| 6,112 | | |
| 6,112 | |
| Trade
Mark | |
| 240 | | |
| 240 | |
| Total | |
$ | 623,592 | | |
$ | 1,256,329 | |
Note
10: Other Current Liabilities
| Particulars |
|
December
31, 2022 |
|
December
31, 2021 |
| Credit Cards |
|
$ |
6,895 |
|
|
$ |
— |
|
| Bank Overdraft |
|
|
101,141 |
|
|
|
— |
|
| Loans Payable |
|
|
82,235,560 |
|
|
|
2,578,225 |
|
| Discount on Convertible Notes |
|
|
0.00 |
|
|
|
276,018 |
|
| Payroll Liability |
|
|
119,987 |
|
|
|
31,043 |
|
| Payable to Government Authorities |
|
|
31,421 |
|
|
|
243,398 |
|
| Provision for Management Charge |
|
|
9,416 |
|
|
|
— |
|
| Accrued Interest on Convertible Notes |
|
|
31,855 |
|
|
|
123,648 |
|
| Accrued Expenses |
|
|
1,303,229 |
|
|
|
9 |
|
| Current portion of Bank Borrowings |
|
|
18,220,315 |
|
|
|
477,932 |
|
| Total |
|
$ |
102,059,820 |
|
|
$ |
3,730,264 |
|
As of December 31, 2022
| 1. | Loan
Payable amounting to $82,235,560 is the liability of the company
on account of its acquisition of subsidiaries. The Major portion of $81 million is payable in tranches to Quality International as a part
of purchase consideration. Other amounts include payment to other subsidiaries, Al Shola Modea Safety and Security LLC, Georgia Fire and
Bull head products Inc. |
| 2. | Borrowings
amounting to $ 18,220,315, is the current portion of bank borrowings, which correspond to
our subsidiary Quality International. |
As per the applicable accounting standards,
Borrowings from financial institutions have been bifurcated into current and non-Current liabilities.
Note 11:
Non-Current Liabilities
| Particulars |
|
December
31, 2022 |
|
December
31, 2021 |
| Provision for Convertible Notes |
|
$ |
1,155,338 |
|
|
$ |
— |
|
| Accounts Payable |
|
|
— |
|
|
|
— |
|
| Convertible Notes Payable |
|
|
— |
|
|
|
2,550,000 |
|
| Borrowings from Financial Institution |
|
|
12,378,098 |
|
|
|
— |
|
| Interest on Convertible Notes |
|
|
461,994 |
|
|
|
— |
|
| Employees' End of Service Benefits |
|
|
1,953,853 |
|
|
|
— |
|
| Other Misc. Liabilities |
|
|
66,276 |
|
|
|
— |
|
| Total |
|
$ |
16,015,558 |
|
|
$ |
2,550,000 |
|
As of December 31, 2022:
The borrowings from financial institutions amounting to
$12,378,098 belong to our subsidiary, Quality International. These terms loans were acquired from commercial banks in the UAE for the
purchase of machinery and equipment. These term loans carry financing costs at commercial rates plus 1 to 3-month EIBOR per annum.
Quality International was acquired in the year 2022, hence
all the liabilities as a result of the acquisition of Quality International are recorded in the year of acquisition, 2022. This is the
reason of increase in liabilities as compared to the year 2021.
These Borrowings are secured by the personal and corporate
guarantee of the founding shareholder of the company along with a registered mortgage over plant and machineries belonging to the company
Quality International, located in Hamriyah Free Zone phase-II, UAE.
Furthermore, in the year 2022, a provision for convertible
notes has been created for the matured notes and notes issued prior to 2020.
As of December 31, 2021:
The Company had notes outstanding of $ 3,398,838. Details
of which are as under:
| Notes
Outstanding as of 31st December 2021 |
| Sr.
No. |
|
Issue
Date |
Maturity
Date |
Amount
|
| |
| 1 |
GPL
Ventures LLC |
09-Jul-19 |
09-Jul-20 |
15,000.00
|
| 2 |
GPL
Ventures LLC |
20-Dec-18 |
20-Dec-19 |
3,000.00
|
| 3 |
GPL
Ventures LLC |
04-Apr-19 |
04-Apr-20 |
12,232.00
|
| 4 |
GPL
Ventures LLC |
17-Jan-19 |
17-Jan-20 |
5,000.00
|
| 5 |
GPL
Ventures LLC |
12-Sep-19 |
12-Sep-20 |
180,000.00
|
| 6 |
AES
Capital |
10-Sep-21 |
10-Sep-22 |
300,000.00
|
| 7 |
Old
Notes prior to 2020* |
333,606.00
|
| Total
Short term notes liability as of 31st December 2021 |
848,838.00
|
| |
|
|
|
|
| 6 |
GPL
Ventures LLC |
26-Jan-21 |
25-Jan-23 |
50,000.00
|
| 7 |
GPL
Ventures LLC |
05-Feb-21 |
4-Feb-23 |
250,000.00
|
| 8 |
GPL
Ventures LLC |
24-Feb-21 |
23-Feb-23 |
250,000.00
|
| 9 |
GPL
Ventures LLC |
06-Apr-21 |
5-Apr-23 |
500,000.00
|
| 10 |
GPL
Ventures LLC |
28-Apr-21 |
27-Apr-23 |
500,000.00
|
| 11 |
GPL
Ventures LLC |
14-Jun-21 |
13-Jun-23 |
500,000.00
|
| 13 |
GPL
Ventures LLC |
05-Aug-21 |
05-Aug-23 |
500,000.00
|
| Total
Long term notes liability as of 31st December 2021 |
2,550,000.00
|
*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.
** Sr. 1 to 5 Although above notes issued to GPL
ventures LLC are already matured, balance in respect of them are still outstanding and appearing in the balance sheet as there was no
claim by GPL Ventures for maturity proceeds of Notes.
Note
12: Common stock and Preferred
Stock
In August 2019
the Company’s 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 – 10,000,000
preferred shares that convert at 3 common shares for every 1 preferred class B common share.
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.
On
February 14, 2020, the Company designated 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.
On May 28,
2020, the Company designated preferred Class E shares - 5,000,000
preferred shares; par value $0.001; non-cumulative. Dividends are 6% a year commencing
a year after issuance. Dividends 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 130% premium to the redemption value. The shares do not have voting rights.
On August
26, 2021, the company amended its Articles
of Incorporation to updated authorized Class
B preferred shares to 100,000,000 (10,000,000
previously) with par value $0.001 that will
be converted at 100 common shares (3 common shares previously) 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.
On July 20,
2021, the Company designed preferred Class F shares – 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.
As of December 31,
2021,
| 1. | 2,000,000,000
shares of common stock are authorized and 1,243,530,699
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 81,913,175 shares of the Company’s
all classes of Preferred stock are issued and outstanding. |
As of December 31, 2022,
| 1. | 2,000,000,000
shares of common stock are authorized, and 1,355,230,699 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 78,946,425 shares of the Company’s
Preferred stock are issued and outstanding. |
As of December 31, 2022, the
number of shares outstanding of our Common Stock was 1,355,230,699.
Note 14: Expenses
| General, selling and Administration
expenses | |
December 31, 2022 | |
December 31, 2021 |
| Administration and General Expense | |
$ | 10,055,032 | | |
$ | 393,863 | |
| Selling and Distribution Expense | |
| 486,314 | | |
| 158,876 | |
| Payroll Expense | |
| 3,769,112 | | |
| 391,017 | |
| Stock Based Compensation | |
| 3,319,150 | | |
| | |
| Depreciation | |
| 2,356,255 | | |
| | |
| Other Expenses | |
| 61,928 | | |
| 221,473 | |
| Total | |
$ | 20,047,791 | | |
$ | 1,165,229 | |
General and administrative expenses includes , finance
administration and human resources, facility costs (including rent), professional service fees, and other general overhead costs to support
company's operations.
| Non-
Operating Expenses |
December
31,2022 |
December
31,2021 |
| Commitment
Fees |
5,200,000 |
|
| Interest
On convertible notes |
516,200 |
149,724 |
| Discount
on Convertible Notes |
324,166 |
276,018 |
| Misc
Non- Operating Expenses |
567,753.14 |
38,144 |
| Interest
on Bank Borrowings |
3,872,175 |
— |
| Loss
on License agreement |
104,550 |
— |
| Total |
10,584,844 |
463,886 |
Note
15 : Net Loss Per Share
| |
|
|
|
|
| Particulars |
December 31, 2022 |
December 31, 2021 |
|
Basic EPS
Numerator
Net income
/ (loss) |
4,559,375 |
|
| 13,980,477 |
| Net Income attributable to common stockholders |
$ |
4,559,375 |
$ |
13,980,477 |
|
Denominator
Weighted average
shares outstanding |
1,355,230,699 |
1,050,462,845 |
| Number of shares used for basic EPS computation |
1,355,230,699 |
1,050,462,845 |
| Basic
EPS |
$ |
0.00 |
$ |
0.01 |
|
Diluted EPS
Numerator
Net income
/ (loss) |
4,559,375 |
13,980,477 |
| Net Income attributable to common stockholders |
$ |
4,559,375 |
$ |
13,980,477 |
| Denominator |
1,355,230,699 |
1,050,462,845 |
| Number of shares used for basic EPS computation |
| Conversion of Class A preferred stock to common stock |
30,000,000 |
30,000,000 |
| Conversion of Class B preferred stock to common stock |
65,589,041 |
65,589,041 |
| Conversion of Class D preferred stock to common stock |
30,370,500,000 |
30,370,500,000 |
| Conversion of Class F preferred stock to common stock |
158,602,740 |
158,602,740 |
| Number of shares used for diluted EPS computation |
31,979,922,480 |
31,516,551,886 |
| Diluted EPS |
$ |
0.00 |
$ |
0.00 |
Note
16: 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.
Note
17: Commitment and
Contingencies
(1)
Contingencies towards government authorities
As
a part of 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.
Due
to above facts, we
lack much information and evidence to support the assertions of financial statements
and there are chances that preceding
management of the company might have missed compliances for which we are not aware.
Thus, our company may have to bear consequences for that from authorities. We cannot reasonably
ascertain an amount for those contingencies.
(2)
We are not aware of any other commitments or contingencies that may
take place in future as
a result of past transactions by preceding management
Note
18: Consolidation basis
of Mergers & Acquisitions
Following
companies are consolidating basis of Mergers & Acquisitions
of management:
| 1) | ILUS
International UK Ltd. |
| | | |
| 2) | Firebug
Mechanical Equipment LLC. |
| 3) | Bull
Head Products Inc. |
| 5) | Bright
Concept and protection System LLC |
| 6) | Quality
Industrial Corp. |
Please note due to the ongoing uncertainty regarding
the outcome of the litigation on lien marked shares, the company has decided not to consolidate FB Fire Technology Ltd 's financial statements
with its own. Details of the litigation are provided in the Note no 19.
Note
19: Litigations with preceding
management.
FB
Fire Technology Ltd:
As a part
of 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. But later in 2022, due to ongoing uncertainty regarding the outcome of the litigation on lien-marked shares, hence we
decided not to consolidate FB Fire's financial statements.
We have been named as a defendant in
an action commenced by our former CEO, Larson Elmore. In general, we lack much information and evidence to support the assertions of
financial statements prior to the current management taking over and there are chances that preceding management of the company might
have missed compliances for which we are not aware. In compliance with Rule 12b-21, Given the ongoing legal proceeding it would require
unreasonable effort and/or expense with Larson Elmore with whom the knowledge and the information rests. We do not have the information
on the following items:
| 1. | Due
from Officer amounting to $ 143,385, part of other assets for the reporting year 2021. |
| | | |
| 2. | Goodwill
amounting to $472651, part of Intangible Assets for the reporting year 2021 |
| | | |
| 3. | Accrued
Liabilities, Deferred liabilities and Real Estate Earnest funds amounting
to $6,304, $26,003 and $3,500 respectively for the reporting period 2020. |
| | | |
| | 4. | Notes
payable amounting to $ 333,606, part of liabilities for the reporting period 2021. |
Ilustrato
Pictures International Inc:
We have been named as a defendant
in an action commenced by Steve Nicol, who claims that he loaned $12,000 to 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 settlement on September 6, 2023, and awaits
the final court order.
We
have been named as a defendant in an action commenced by our former
CEO, Larson Elmore. A case also has been filed
in the Eight Judicial District Court of the State of
Nevada (Case No. A-22-858343-C). Plaintiff alleges that we breached a stock purchase
agreement dated May 10, 2020, and promissory notes
and is therefore entitled to damages. We have
potential counterclaims against the former CEO which are being prepared to arise out of
improper action and lack of disclosures during the takeover process. We filed a motion to
dismiss Larson Elmore’s complaint on the basis that it fails to state a claim and lacks jurisdiction in the Nevada courts. At
the hearing on this motion, the court determined that discovery would be required before ruling for the company and denied the motion
without prejudice. The company is evaluating a motion for reconsideration once the order has been entered. In the interim,
the parties have discussed a tentative discovery schedule and the possibility of a mediation and settlement conference.
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 dispute the legitimacy of the note. On June 5, 2023, we got a service of process by Superior Court of California,
County of San Diego, with a reschedule hearing on March 3, 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
in the amount of $3.772 million for the historic note with a principal amount of $4,000. ILUS’
last day to file an opposition is October 20, 2023.
We
cannot predict whether the action against involving
our former CEO 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.
Note
20: Update of Financial
Statements
The previously
issued financial statements have been updated
to reflect the true and fair position and performance of the company.
Note
21: 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, 2022 the Company also had a working capital
deficit and an accumulated deficit.
These factors raise substantially 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
purpose. 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 current year.
Note 22:
Notes Payable
The following is the list of Notes payable as of
December 31, 2022. Convertible Notes issued during the reported period are accounted in the books as liability, accrued Interest and
discount on notes is also accounted accordingly as per general accounting principles.
| a. | On
June 14, 2021, the company entered into a convertible note with GPL Ventures LLC –
Alexander Dillon, for the amount of $500,000. The note is convertible at 25% below the average
past 10-day share price. The note was assigned to RB Capital note assigned from GPL Ventures
LLC to RB Capital on October 24, 2022. |
| b. | On
January 28, 2022, the company entered into a convertible note with RB Capital Partners Inc.
– Brett Rosen for the amount of $500,000. The note is convertible at a fixed price
$0.20 and bears 5% interest per annum. The note matures on January 27, 2024. |
| c. | 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 a 35% below
the lowest past 15-day share price and bears 12% interest per annum. The note matures on
February 4, 2023, and is currently in default. The Company signed a Forbearance Agreement
with Discover Growth Fund on May 3, 2023, the agreement has been filed as an exhibit with
this amended the registration statement. 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. The first four payments of $450,000
have been made as of the date of this filing. |
| d. | On
April 26, 2022, the company entered into a convertible note with RB Capital Partners Inc.,
for the amount of $500,000. The note is convertible into common stock at the rate of $0.20
and bears 5% interest per annum. The note matures on April 25, 2024. |
| e. | On
May 20, 2022, the company entered into a convertible note with RB Capital Partners Inc.,
for the amount of $500,000. The note is convertible into common stock at the rate of $0.50
and bears 5% interest per annum. The note matures on May 19, 2024. |
| f. | On
May 27, 2022, the company entered into a convertible note with RB Capital Partners Inc.,
for the amount of $500,000. The note is convertible into common stock at the rate of $0.50
and bears 5% interest per annum. The note matures on May 26, 2024. |
| g. | On
June 01, 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. |
| h. | On
July 12, 2022, the company entered into a convertible note with RB Capital Partners Inc.,
for the amount of $500,000. The note is convertible into common stock at the rate of $0.50
and bears 5% interest per annum. The note matures on July 11, 2024. |
| i. | On
August 10, 2022, the company entered into a convertible note with RB Capital Partners Inc.,
for the amount of $500,000. The note is convertible into common stock at the rate of $0.50
and bears 5% interest per annum. The note matures on August 09, 2024. |
| j. | On
August 25, 2022, the company entered into a convertible note with RB Capital Partners Inc.,
for the amount of $200,000. The note is convertible into common stock at the rate of $0.50
and bears 5% interest per annum. The note matures on August 24, 2024. |
| k. | On
September 21, 2022, the company entered into a convertible note with RB Capital Partners
Inc., for the amount of $650,000. The note is convertible into common stock at the rate of
$0.50 and bears 5% interest per annum. The note matures on September 20, 2024. |
| l. | On
November 14, 2022, the company entered into a convertible note with RB Capital Partners Inc.,
for the amount of $400,000. The note is convertible into common stock at the rate of $0.50
and bears 5% interest per annum. The note matures on November 13, 2024. |
| m. | On
December 02, 2022, the company entered into a convertible note with AJB Capital Investment
LLC for the amount of $1,200,000. 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 June 01, 2023. |
Long term Liabilities include
payment towards convertible notes, interest thereon and lease liabilities along with bank Borrowings of our newly acquired subsidiary.
During the year 2022 and subsequently, following
notes were converted into shares of common stock of the company:
| Date
of Issue of Note |
Name
of the party |
Amount
of Note payable $ |
Date
of issuance of common stock |
Number
of common stock issued |
| April
6, 2021 |
RB
Capital Partners Inc |
500,000 |
May
4, 2022 |
53,000,000 |
| April
28, 2021 |
RB
Capital Partners Inc |
500,000 |
July
26, 2022 |
53,700,000 |
| June
14, 2021 |
RB
Capital Partners Inc |
500,000 |
March
21, 2023 |
53,850,000 |
| January
28, 2022 |
RB
Capital Partners Inc |
500,000 |
June
1, 2023 |
53,300,000 |
| September
10, 2021 |
AES
Capital |
375,000 |
November
9, 2022 |
10,000,000 |
Note
23: Subsequent Events
In accordance with ASC 855-10-50 the company list events
which are deemed to have a determinable significant effect occurring after the balance sheet date that affect or that may affect the
financial statements, and without disclosure of it, the financial statements would be misleading.
The Company evaluated subsequent events through
April 10, 2023, the date on which the financial statements were available to be issued and in case of revised financial statements, company
evaluated the subsequent events through June 23, 2023, the date on the which revised financial statements are available to be issued.
The Agreement contemplated
a period of due diligence and revaluation followed by entry
into a definitive Stock Purchase Agreement. On January 18, 2023, we entered into a
definitive Stock Purchase Agreement (the “Purchase Agreement”) with the shareholders
of Quality International, which agreement provided for our purchase of 52% (increased
by 1% over the Agreement) of the shares of Quality
International Co Ltd FZC (the “Shares”).
On January 27, 2023,
our subsidiary Quality Industrial Corp. entered into a definitive
Stock Purchase Agreement (the “Purchase Agreement”) with the shareholders of Petro
Line FZ-LLC (“Petro Line”), a United
Arab Emirates headquartered company to purchase 51% of the outstanding shares (the “Shares”). Petro
Line is a revenue generating and profitable company that operates an oil refinery providing
oil refining services.
On January 26, 2023, the company entered into
a convertible note with Jefferson Street Capital for the amount of $100,000. 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 a 12% interest. The note matures
on July 26, 2023.
On April 11, 2023, ILUS entered into a note payable
of $144,200 with 1800 Diagonal Lending LLC. Repayable in 9 monthly payments and bears a 13% interest as one time charge on the issuance
date. In case of event of default, note is convertible into common stock at 65% of lowest trading price during previous ten days. The
note matures on March 11, 2024.
On April 11, 2023, ILUS entered into a note payable
of $136,500 with 1800 Diagonal Lending LLC. Repayable any time after 180 days following the date of note till maturity date and bears
a 9% interest rate per annum. The note is convertible into common stock at the rate equal to variable conversion price as defined, shall
mean 65% of lowest trading price during previous ten days. The note matures on April 11, 2024.
On
April 12, 2023, the company entered into a convertible note with RB Capital Partners Inc., for the amount of $500,000. The note is convertible
into common stock at the rate of $0.50 and bears a 5% interest per annum. The note matures on April 12, 2025.
On April 12, 2023, 100,000 Preferred F shares were
issued to John-Paul Backwell as staff compensation.
On April 12, 2023, 100,000 Preferred F shares were
converted into 10,000,000 common shares.
On May 2, 2023, the company entered into a convertible
note with RB Capital Partners Inc., for the amount of $250,000. The note is convertible into common stock at the rate of $0.50 and bears
a 5% interest per annum. The note matures on May 2, 2025.
On May 3, 2023, the company The Company signed
a Forbearance Agreement with Discover Growth Fund for the original note dated February 4, 2022. 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.
On May 12, 2023, we issued 2,000,000 shares of
common stock as commitment shares to AJB Capital Investment LLC for an aggregate price of $80,000 pursuant to Securities Purchase Agreement,
dated as of December 2, 2022.
On May 15, 2023, the company’s subsidiary QIND
has filed form 8K as acquisition of Quality International meets the significance levels outlined in Rule 1-02(w) of Regulation S-X. In
accordance with Regulation S-X ,company has filed the financial statements and related pro forma financial information outlined in Rules
8-04 and 8-05 of Regulation S-X.
On May 30, 2023, the company entered into a convertible
note with RB Capital Partners Inc., for the amount of $200,000. The note is convertible into common stock at the rate of $0.50 and bears
a 5% interest per annum. The note matures on May 30, 2025.
On May 30, 2023, the company entered into a convertible
note with RB Capital Partners Inc., for the amount of $450,000. The note is convertible into common stock at the rate of $0.50 and bears
a 5% interest per annum. The note matures on May 30, 2025.
On June 01, 2023, we issued 53,300,000 shares of
common stock as compensation to RB Capital Parters Inc. for conversion of a convertible note for an aggregate price of $533,000.
On June 21, 2023, the company entered into a note
payable of $61,868 with 1800 Diagonal Lending LLC. Repayable in 9 monthly payments and shall bear 13% interest as one time charge on
the issuance date. In case of event of default, note is convertible into common stock at 65% of lowest trading price during previous
ten days. The note matures on March 30, 2024.
On July 03, 2023, the company entered into a
convertible note with RB Capital Partners Inc., for the amount of $475,000. The note is convertible into common stock at the rate of
$0.50 and bears a 5% interest per annum. The note matures on July 3, 2025
On July 14, 2023, we issued 53,125,000 shares of
common stock as compensation to RB Capital Partners Inc. For conversion of a convertible note for an aggregate price of $531,250.
On July 14, 2023, the Company issued to Exchange
Listing LLC 21,665,710 shares of our common stock for $100 for consultancy services for the planned
uplist to a National Exchange.
On July 26, 2023, the company entered into a convertible
note with RB Capital Partners Inc., for the amount of $550,000. The note is convertible into common stock at the rate of $0.50 and bears
a 5% interest per annum. The note matures on July 26, 2025.
On January
27, 2023, we entered into the Petro Line Share Purchase Agreement, to acquire 51% of Petro Line FZ-LLC. The acquisition never materialized
after a fire at a Petro Line factory. An investigation into the fire’s impact led us to subsequently mutually terminate the Petro
Line Share Purchase Agreement on August 3, 2023, and no payments to Petro Line were made.
On August 4, 2023, the Board of Directors of our
subsidiary Quality Industrial Corp, approved a change in fiscal year end of the Company from December 31 to June 30. The Board’s
decision to change the fiscal year end was related to the Company’s intent to uplist to NYSE American and to allow investors to
accurately measure revenue and earnings year-over-year.
On August 29, 2023, 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
$0.50 and bears a 5% interest per annum. The note matures on August 29, 2025.
On September 5, 2023, the company entered into
a convertible note with RB Capital Partners Inc., for the amount of $450,000. The note is convertible into common stock at the rate of
$0.50 and bears a 5% interest per annum. The note matures on September 5, 2025.
On September
6, 2023, the company entered into a share purchase agreement with Kyle Edward Comerford to sell 5,555,556 for a purchase price of $50,000.
On September
7, 2023, the company entered into a share purchase agreement with Cameron Canzellarini to sell 10,000,000 for a purchase price of $100,000.
On September 7, 2023, the company entered into convertible
Note with Richard Astrom, for the amount of $27,500. The note is convertible into common stock at variable conversion price and bears
a 9% interest per annum. The note matures on March 6, 2024. The Note cannot be converted until 3 months from the date of issue of Note.
Note 24 Business combination
disclosure*:
*In Accordance with ASC 805-10-50, ASC 805-30-50
and ASC 805-10-25-7
On June 28, 2022, QIND (a major subsidiary of ILUS)
signed binding LOI to acquire 51% of the shares of Quality International Co Ltd FZC, a United Arab Emirates headquartered company (“Quality
International”), from the shareholders of Quality International. Quality International is a revenue generating company that manufactures
custom solutions for the Oil and Gas, Energy, Water Desalination, Wastewater, Offshore and Public Safety sectors.
It was determined that the Company acquired a majority
of Quality International, effective as of June 28, 2022, resulting in Quality International becoming a subsidiary, in a transaction accounted
for as a business combination. Pursuant to ASC 805-10-25-7, the Company determined that the acquisition date preceded the closing date.
The Current Management of Quality International Co Ltd FZC will continue to operate, but QIND as per June 28, 2022, has held the ability
to make decisions about the operations and financing of the acquired entity without impediment.
On January 18, 2023, at the time of entering into
a definitive Stock Purchase Agreement (the “Purchase Agreement”) with the shareholders of Quality International, the acquisition
was increased by 1% over the binding LOI, making it 52% of the shares of Quality International Co Ltd FZC.
On July 31, 2023, the parties to the Purchase Agreement
entered into an amendment to the Purchase Agreement to revise the payment schedule for the Purchase Price for the Shares. The agreement
has been filed with this registration statement.
The acquired business contributed
revenues of $60,943,668 and earnings of $ 3,448,544 to ILUS International for the period ended December 31, 2022. The following
unaudited pro forma summary presents consolidated information of ILUS International as if the business combination had occurred on January
1, 2021 [ASC 805-10-50-2(h)(3)].
|
Particulars
( Figures in USD) |
Pro forma year ended
December 31, 2022 |
Pro forma year ended
December 31, 2021 |
| Revenue |
78,344,131 |
72,207,543 |
| Earnings |
4,559,375 |
17,429,020 |
ILUS did not have any material, nonrecurring pro forma
adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings.
In 2022, QIND (ILUS’ majority owned Subsidiary)
incurred $13,000 as acquisition-related costs in the form of due diligence fees. These expenses are included in general and administrative
expenses on ILUS’ consolidated income statement for the year ended December 31, 2022 and are reflected in pro forma earnings for
the year ended December 31, 2021 in the table above.
In accordance with ASC 805-30-50-1 (b) and ASC 80-20-50-1(c),
the following table summarizes the consideration transferred to acquire Quality International and the amounts of identified assets acquired,
and liabilities assumed at the acquisition date, as well as the fair value of the noncontrolling interest in Quality International at
the acquisition date:
Fair value of Consideration:
Cash $82,000,000
Contingent consideration $55,000,000
Total $137,000,000
Contingent consideration amounting to $55million is subject
to achievement of financial milestones presented in a schedule of payments set forth in the Purchase Agreement. The tranches will be
payable over a period of 2 years until the audited financials for the year ended December 31, 2024.
Recognized amounts of identifiable assets acquired,
and liabilities assumed:
| Cash and cash equivalents |
|
$ |
1,309,429 |
|
| Trade receivables |
|
|
33,175,606 |
|
| Inventories |
|
$ |
1,202,674 |
|
| Receivables |
|
$ |
2,800,611 |
|
| Deposits |
|
$ |
1,503,279 |
|
| Advances and related party dues |
|
$ |
9,503,902 |
|
| Work in Progress |
|
$ |
57,433,535 |
|
| Property, plant, and equipment |
|
$ |
1,365,585 |
|
| Leasehold Improvements & Buildings |
|
$ |
17,390,067 |
|
| Furniture & Fixtures |
|
$ |
156,370 |
|
| Right of use assets |
|
|
11,906,654 |
|
| Capital WIP |
|
|
1,884,569 |
|
| Trade and other payables |
|
|
(62,347,884 |
) |
| Borrowings |
|
|
(28,028,680 |
) |
| Total identifiable net assets |
|
$ |
49,255,717 |
|
| Goodwill |
|
$ |
56,387,027 |
|
The above Goodwill represents an intangible asset recognized
by the company as a result of business combination as the fair value of consideration transferred exceeds the fair value of the tangible
and identifiable intangible assets acquired and liabilities assumed. It is a residual amount that represents the future economic benefit
arising in a business combination.
Following are the qualitative factors that make up the goodwill,
however the company’s policy is to the perform impairment teston annual basis at year end.
Cost factors, such as increases in raw materials, labor, or
other costs that have a negative effect on earnings and cash flows and overall financial performance, such as negative or declining cash
flows or a decline in actual and planned revenue or earnings compared with actual or projected results of relevant prior periods.
(b)
Exhibits.
| 2.1 |
|
Share
Purchase Agreement, dated December 13,.2022 (4) |
| 2.2 |
|
Share
Purchase Agreement, dated April 13,.2021 (4) |
| 2.3 |
|
Share
Purchase Agreement, dated January 1. 2022 (4) |
| 2.4 |
|
Share
Purchase Agreement, dated December 23,.2021 (4) |
| 2.5 |
|
Share
Purchase Agreement, dated January 26,.2021 (4) |
| 2.6 |
|
Share
Purchase Agreement, dated January 26,.2021 (4) |
| 2.7 |
|
Share
Purchase Agreement, dated February 15, 2022 (4) |
| 2.8 |
|
Share
Purchase Agreement, dated May 10, 2020 (4) |
| 2.9 |
|
Share
Purchase Agreement, dated January 18, 2023 (2) |
| 2.10 |
|
Share
Purchase Agreement, dated January 27, 2023 (3) |
| 2.11 |
|
Brand
Purchase Agreement, dated March 25, 2021 (5) |
| 2.12 |
|
Share
Purchase Agreement, dated May 28, 2022 (5) |
| 2.13 |
|
Share
Purchase Agreement, dated June 10, 2020 (5) |
| 2.14 |
|
FB
Fire Technologies, Dated June 10, 2020 (6) |
| 2.15 |
|
DRCR Consultancy Agreement, dated May 21, 2021 * |
| 2.16 |
|
Distribution Agreement
Hyperion, dated May 9, 2023* |
| 3.1 |
|
Articles
of Incorporation (incorporated by reference to the Form S-1 Registration Statement filed with the SEC on July 16, 2010) |
| 3.2 |
|
Certificate
of Amendment, dated April 25, 2012 (1) |
| 3.3 |
|
Certificate
of Amendment, dated February 11, 2013 (1) |
| 3.4 |
|
Certificate
of Change, dated February 12, 2013 (1) |
| 3.5 |
|
Certificate
of Amendment filed by Custodian, dated April 11, 2016 (1) |
| 3.6 |
|
Certificate
of Amendment, dated June 15, 2016 (1) |
| 3.7 |
|
Certificate
of Amendment, dated March 21, 2019 (1) |
| 3.8 |
|
Certificate
of Amendment, dated April 11, 2019 (1) |
| 3.9 |
|
Certificate
of Designation for preferred Classes A, B and C, dated August 5, 2019 (1) |
| 3.10 |
|
Certificate
of Amendment, dated February 2, 2021 (1) |
| 3.11 |
|
Certificate
of Designation for preferred Classes D, dated February 14, 2020 (1) |
| 3.12 |
|
Certificate
of Amendment, dated March 2, 2021 (1) |
| 3.13 |
|
Certificate
of Designation for preferred Class E, dated May 28, 2020 (1) |
| 3.14 |
|
Amended
Certificate of Designation for Class B, dated August 23, 2021 (1) |
| 3.15 |
|
Certificate
of Designation for preferred Class F, dated August 24, 2021 (1) |
| 3.16 |
|
Second
Amended Certificate of Designation for Class B, dated August 26, 2021 (1) |
| 3.17 |
|
Amended
Certificate of Designation for Class F, dated August 26, 2021 (1) |
| 3.18 |
|
Bylaws
(incorporated by reference to the Form S-1 Registration Statement filed with the SEC on July 16, 2010) |
| 4.1 |
|
Convertible
Promissory Note, dated January 28, 2022 with RB Capital Partners Inc. (1) |
| 4.2 |
|
Convertible
Promissory Note, dated February 4, 2022 with Discover Growth Fund, LLC (1) |
| 4.3 |
|
Convertible
Promissory Note, dated April 26, 2022 with RB Capital Partners Inc. (1) |
| 4.4 |
|
Convertible
Promissory Note, dated May 20, 2022 with RB Capital Partners Inc. (1) |
| 4.5 |
|
Convertible
Promissory Note, dated May 27, 2022 with RB Capital Partners Inc. (1) |
| 4.6 |
|
Convertible
Promissory Note, dated June 1, 2022 with RB Capital Partners Inc. (1) |
| 4.7 |
|
Convertible
Promissory Note, dated July 12, 2022 with RB Capital Partners Inc. (1) |
| 4.8 |
|
Convertible
Promissory Note, dated August 10, 2022 with RB Capital Partners Inc. (1) |
| 4.9 |
|
Convertible
Promissory Note, dated September 21, 2022 with RB Capital Partners Inc. (1) |
| 4.10 |
|
Common
Share Purchase Warrant, dated February 22, 2022 to Discover Growth Fund, LLC (1) |
| 4.11 |
|
Convertible
Promissory Note, dated August 25, 2022 with RB Capital Partners Inc. (4) |
| 4.12 |
|
Convertible
Promissory Note, dated November 14, 2022 with RB Capital Partners Inc. (4) |
| 4.13 |
|
Convertible
Promissory Note, dated December 2, 2022 with AJB Capital Investments, LLC (4) |
| 4.14 |
|
Convertible
Stock Purchase Warrant, dated December 2, 2022 with AJB Capital Investments, LL (4) |
| 4.15 |
|
Convertible
Promissory Note, dated January 26, 2023 with Jefferson Street Capital LLC (5) |
| 4.16 |
|
Convertible
Stock Purchase Warrant, dated January 26, 2023 with Jefferson Street Capital LLC (5) |
| 4.17 |
|
Amended
Convertible Stock Purchase Warrant, dated March 8, 2023, with AJB Capital Investments, LLC
(5) |
| 4.18 |
|
Amended
Convertible Promissory Note, dated March 8, 2023, with AJB Capital Investments, LLC (5) |
| 4.19 |
|
Convertible
Promissory Note, dated April 12, 2023, with RB Capital Partners Inc. (6) |
| 4.20 |
|
Convertible
Promissory Note, dated May 2, 2023, with RB Capital Partners Inc. (6) |
| 4.21 |
|
Addendum
Convertible Promissory Note, dated May 2, 2023, with RB Capital Partners Inc.(6) |
| 4.22 |
|
Forbearance
Agreement, dated May 3, 2023, with Discover Growth Fund LLC (6) |
| 4.23 |
|
Convertible
Promissory Note, dated May 30, 2023, with RB Capital Partners Inc. (6) |
| 4.24 |
|
Convertible
Promissory Note, dated May 30, 2023, with RB Capital Partners Inc. (6) |
| 4.25 |
|
Convertible
Promissory Note, dated April 11, 2023, with 1800 Diagonal Lending LLC (6) |
| 4.26 |
|
Convertible
Promissory Note, dated April 11, 2023, with 1800 Diagonal Lending LLC (6) |
| 4.27 |
|
Amended
Stock Purchase Agreement, dated May 12, 2023, with AJB Capital Investments, LLC (6) |
| 4.28 |
|
Amended
Stock Purchase Warrant, dated May 12, 2023, with AJB Capital Investments, LLC (6) |
| 4.29 |
|
Stock
Purchase Agreement, dated June 30, 2023, with Exchange Listing LLC (7) |
| 4.30 |
|
Convertible
Promissory Note, dated June 21, 2023, with 1800 Diagonal Lending LLC (7) |
| 4.31 |
|
Convertible
Promissory Note, dated July 3, 2023, with RB Capital Partners Inc * |
| 4.32 |
|
Convertible
Promissory Note, dated July 26, 2023, with RB Capital Partners Inc. (7) |
| 4.33 |
|
Share
Subscription and Buy Back Agreement, dated August 21, 2023, with Artelliq Software Trading. (8) |
| 4.34 |
|
Guarantee
& Indemnity Agreement dated as of August 21, 2023, by and between Quality Industrial Corp., Ilustrato Pictures International
Inc., Quality International Co Ltd FZC, Mr. Saseendran Kodapully Ramakrishnan and Artelliq Software Trading (8) |
| 4.35 |
|
Convertible Promissory Note, dated August 29, 2023, with RB Capital Partners Inc.* |
| 4.36 |
|
Convertible
Promissory Note, dated September 5, 2023, with RB Capital Partners Inc. * |
| 4.37 |
|
Stock
Purchase Agreement, dated September 6, 2023, with Kyle Edward Comerford * |
| 4.38 |
|
Stock Purchase Agreement, dated September 7, 2023, with Cameron Canzellarini * |
| 4.39 |
|
Convertible note, dated September 7, 2023, with Richard Astrom * |
| 10.1 |
|
Amended
Employment Agreement with Nicholas Link, dated January 14, 2021 (1) |
| 10.2 |
|
Amended
Employment Agreement with John-Paul Backwell, dated July 1, 2021 (1) |
| 10.3 |
|
Amended
Employment Agreement with Louise Bennett, dated February 1, 2021 (1) |
| 10.4 |
|
Amended
Employment Agreement with Krishna Moorthy, dated February 2, 2022 (1) |
| 10.5 |
|
Employment
Agreement with Carsten Falk, dated June 1, 2022 (1) |
| 10.6 |
|
Lease
Agreement with Ass, dated May 17, 2022 (4) |
| 10.7 |
|
Lease
Agreement with Bullhead, dated December 22, 2021 (4) |
| 10.8 |
|
Lease
Agreement with Firebug, dated May 24, 2022 (4) |
| 10.9 |
|
Lease
Agreement with Georgia Fire & Rescue Supply, dated March 17, 2022 (4) |
| 10.10 |
|
Lease
Agreement with ILUS, dated July 21, 2022 (4) |
| 10.11 |
|
Lease
Agreement with Quality Industrial, dated October 31, 2021 (4) |
| 10.12 |
|
Lease
Agreement with Quality International, dated June 6, 2022 (4) |
| 10.13 |
|
Lease
Agreement with Quality International, dated September 13, 2020 (4) |
| 10.14 |
|
Lease
Agreement with Quality International, dated September 13, 2020 (4) |
| 10.15 |
|
Lease
Agreement with Quality International, dated September 13, 2020 (4) |
| 10.16 |
|
Lease
Agreement with Quality International, dated September 6, 2018 (4) |
| 10.17 |
|
Lease
Agreement with Quality International, dated September 6, 2018 (4) |
| 10.18 |
|
Lease
Agreement with Quality International, dated September 6, 2018 (4) |
| 10.19 |
|
Lease
Agreement with Quality International, dated September 6, 2018 (4) |
| 14.1 |
|
Code
of Ethics (1) |
| 14.2 |
|
Insider Trading Policy, dated March 10, 2023 (5) |
| 21.1 |
|
List
of Subsidiaries (1) |
| 23.1 |
|
Consent of PIPARA & CO LLP, dated September 11, 2023* |
*
Filed Herewith
| |
(1) |
Incorporated by reference to the Registration Statement
on Form 10 filed with the Securities and Exchange Commission on October 19, 2022. |
| |
(2) |
Incorporated by reference to the Registration Statement on 8-K filed with
the Securities and Exchange Commission on January 18, 2023 |
| |
(3) |
Incorporated by reference to the Registration Statement on 8-K filed with
the Securities and Exchange Commission on January 31, 2023 |
| |
(4) |
Incorporated by reference to the Registration Statement on Form 10/A filed
with the Securities and Exchange Commission on February 1, 2023. |
| |
(5) |
Incorporated by reference to the Form 10-K filed with the Securities and
Exchange Commission on April 10, 2023. |
| |
(6) |
Incorporated
by reference to the Registration Statement on Form 10/A filed with the Securities and Exchange Commission on June 27, 2023. |
| |
(7) |
Incorporated
by reference to the Form 10-Q filed with the Securities and Exchange Commission on August 21, 2023. |
| |
(8) |
Incorporated
by reference to the Form 8-K filed with the Securities and Exchange Commission on August 25, 2023. |
SIGNATURES
Pursuant
to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized.
Ilustrato
Pictures International, Inc.
| By: |
/s/
Nicolas Link |
|
| |
Name:
Nicolas Link
Title:
Chief Executive Officer
Date:
September 12, 2023 |
|
| |
|
|
Consulting
Agreement
This Consulting Agreement effective
from May 21, 2021, (this “Agreement”), is made and entered into by and among Dear Cashmere Group Holding Company (the “Company”)
and Ilustrato Pictures International Inc. (the “Consultant”).
ARTICLE 1
SCOPE
OF WORK
1.1 Services.
The Company has engaged the Consultant to provide services such as but not limited to, free rent in offices at Al Marsa Street 66,
11th Floor, Office 1105, Dubai, free use of in-house accounting, IT and legal teams until December 31, 2023 and such other services as
requested by the Company. (Collectively, the “consulting services”).
1.2
Time and Availability.
The Consultant shall be available during the month to provide their services as and when it is required to ensure the continuity of the
company and its processes.
1.3
Confidentiality. For the Consultant to perform the consulting services, it may be necessary
for the Company to provide Consultant with Confidential Information (as defined below) regarding the Company’s business and products.
The Company will rely heavily upon Consultant’s integrity and prudent judgment to use this information only in the best interests
of the Company.
1.4
Standard of Conduct. In rendering consulting services under this Agreement, Consultant shall conform to high
professional standards of work and business ethics. Consultant shall not use time, materials, or equipment of the Company without the
prior written consent of the Company. In no event shall Consultant take any action or accept any assistance or engage in any activity
that would result in any university, governmental body, research institute or other person, entity, or organization acquiring any rights
of any nature in theresults of work performed by or for the Company.
1.5
Outside Services. Consultant shall not use the service of any other person, entity, or organization in the performance
of Consultant’s duties without the prior written consent of an officer of the Company. Should the Company consent to the use by
Consultant of the services of any other person, entity, or organization, no information regarding the services to be performed under this
Agreement shall be disclosed to that person, entity, or organization until such person, entity, or organization has executed an agreement
to protect the confidentiality of the Company’s Confidential Information (as defined in Article 5) and the Company’s absolute
and complete ownership of all right, title, and interest in the work performed under this Agreement.
1.6
Reports. Consultant shall periodically provide the Company with written reports of his or her observations and
conclusions regarding the consulting services. Upon the termination of this Agreement, Consultant shall, upon the request of Company,
prepare a final report of Consultant’s activities.
ARTICLE 2
INDEPENDENT
CONTRACTOR
2.1
Independent Contractor. Consultant is an independent contractor and is not an employee, partner, or co-venturer
of, or in any other service relationship with, the Company. The manner in which Consultant’s services are rendered shall be within
Consultant’s sole control and discretion. Consultant is not authorized to speak for, represent, or obligate the Company in any manner
without the prior express written authorization from an officer of the Company.
2.2
Taxes. Consultant shall be responsible for all taxes arising from compensation and other amounts paid under this
Agreement and shall be responsible for all payroll taxes and fringe benefits of Consultant’s employees. Neither federal, nor state,
nor local income tax, nor payroll tax of any kind, shall be withheld or paid by the Company on behalf of Consultant or his/her employees.
Consultant understands that he/she is re-sponsible to pay, according to law, Consultant’s taxes and Consultant shall, when requested
by the Company,properly document to the Company that any and all federal and state taxes have been paid.
2.3
Benefits. Consultant and Consultant’s employees will not be eligible for, and shall not participate in,any
employee pension, health, welfare, or other fringe benefit plan of the Company. No workers' compensation insurance shall be obtained by
Company covering Consultant or Consultant’s employees.
ARTICLE 3
COMPENSATION FOR CONSULTING SERVICES
3.1
Compensation – 10,000,000 Common Shares of Dear Cashmere Group Holding Company to be issued within three
months from the date of this contract.
3.2
Reimbursement. The Company agrees to reimburse Consultant for all actual reasonable and necessary expenditures,
which are directly related to the consulting services. These expenditures include, but are not limited to, expenses related to travel
(i.e., airfare, hotel, temporary housing, meals, parking, taxis, mileage, etc.), telephone calls, and postal expenditures. Expenses incurred
by Consultant will be reimbursed by the Company within 15 days from the month end of Consultant’s proper written request for reimbursement.
ARTICLE 4
TERM AND TERMINATION
4.1
Term. This Agreement shall be effective as of May 21, 2021, and shall continue in full force until 31st
December 2023. The Company and Consultant may negotiate to extend the term of this Agreement and the terms and conditions under which
the relationship shall continue.
4.2
Termination. The Company may terminate this Agreement for “Cause,” after giving Consultant written
notice of the reason. Cause means: (1) Consultant has breached the provisions of Article 5 or 7 of this Agreement in any respect, or materially
breached any other provision of this Agreement and the breachcontinues for 30 days following receipt of a notice from the Company; (2)
Consultant has committed fraud, misappropriation, or embezzlement in connection with the Company’
s business; (3) Consultant has beenconvicted of a felony; or (4) Consultant’s use of narcotics, liquor, or illicit drugs
has a detrimental effect onthe performance of his or her employment responsibilities, as determined by the Company.
4.3
Responsibility upon Termination. Any equipment provided by the Company to the Consultant inconnection with or
furtherance of Consultant’s services under this Agreement, including, but not limited to,computers, laptops, and personal management
tools, shall, immediately upon the termination of this Agreement, be returned to the Company.
4.4 Survival. The
provisions of Articles 5, 6, 7, and 8 of this Agreement shall survive the termination ofthis Agreement and remain in full force and
effect thereafter.
ARTICLE
5
CONFIDENTIAL
INFORMATION
5.1
Obligation of Confidentiality. In performing consulting services under this Agreement, Consultant may be exposed
to and will be required to use certain “Confidential Information” (as hereinafter defined) of the Company. Consultant agrees
that Consultant will not and Consultant’s employees, agents, or representatives will not use, directly or indirectly, such Confidential
Information for the benefit of any person, entity, ororganization other than the Company, or disclose such Confidential Information without
the written authorization of the President of the Company, either during or after the term of this Agreement, for as long as such information
retains the characteristics of Confidential Information.
5.2
Definition. “Confidential Information” means information not generally known and
proprietary to the Company or to a third party for whom the Company is performing work, including, without limitation, information concerning
any patents or trade secrets, confidential or secret designs, processes, formulae, source codes, plans, devices or material, research
and development, proprietary software, analysis, techniques, materials, or designs (whether or not patented or patentable), directly or
indirectly useful in any aspect of the business of the Company, any vendor names, customer and supplier lists, databases, management systems
and sales and marketing plans of the Company, any confidential secret development or research work of the Company, or any other confidential
information or proprietary aspects of the business of the Company. All information which Consultant acquires or becomes acquainted with
during the period of this Agreement, whether developed by Consultant or by others, which Consultant has a reasonable basis to believe
to be Confidential Information, or which is treated by the Company as being Confidential
Information, shall be presumed to be Confidential Information.
5.3
Property of the Company. Consultant agrees that all plans, manuals, and specific materials developed by the Consultant
on behalf of the Company in connection with services rendered under this Agreement,are and shall remain the exclusive property of the
Company. Promptly upon the expiration or termination of this Agreement, or upon the request of the Company, Consultant shall return to
the Company all documents and tangible items, including samples, provided to Consultant or created by Consultant for use in connection
with services to be rendered hereunder, including, without limitation, all Confidential Information, together with all copies and abstracts
thereof.
ARTICLE
6
RIGHTS
AND DATA
All drawings, models, designs,
formulas, methods, documents, and tangible items prepared for and submitted to the Company by Consultant in connection with the
services rendered under this Agreement shall belong exclusively to the Company and shall be deemed to be works made for hire (the
“Deliverable Items”). To the extent that any of the Deliverable Items may not, by operation of law, be works made for
hire, Consultant hereby assigns to the Company the ownership of copyright or mask work in the Deliverable Items, and the Company
shall have the right to obtain and hold in its own name any trademark, copyright, or mask work registration, and any other
registrations and similar protection which may be available in the Deliverable Items. Consultant agrees to give the Company or its
designees all assistance reasonably required to perfect such rights.
ARTICLE 7
CONFLICT
OF INTEREST AND NON-SOLICITATION
7.1
Conflict of Interest. Consultant covenants and agrees not to consult or provide any services in any manner or
capacity to a direct competitor of the Company during the duration of this Agreement unless ex- press written authorization to do so is
given by the Company’s President. A direct competitor of the Companyfor purposes of this Agreement is defined as any individual,
partnership, corporation, and/or other business entity that engages in a similar business.
7.2
Non-Solicitation. Consultant covenants and agrees that during the term of this Agreement, Consultantwill not,
directly or indirectly, through an existing corporation, unincorporated business, affiliated party, successor employer, or otherwise,
solicit, hire for employment or work with, on a part-time, consulting, advising,or any other basis, other than on behalf of the Company
any employee or independent contractor employed bythe Company while Consultant is performing services for the Company.
ARTICLE 8
RIGHT
TO INJUNCTIVE RELIEF
Consultant acknowledges that the terms of Articles
5, 6, and 7 of this Agreement are reasonably necessary to protect
the legitimate interests of the Company, are reasonable in scope and duration, and are not unduly restrictive. Consultant further acknowledges
that a breach of any of the terms of Articles 5, 6, or 7 of this Agreement will render irreparable harm to the Company, and that a remedy
at law for breach of the Agreement is inadequate, and that the Company shall therefore be entitled to seek any and all equitable relief,
including, but not limited to, injunctive relief, and to any other remedy that may be available under any applicable law or agreement
between the parties. Consultant acknowledges that an award of damages to the Company does not preclude a court from ordering injunctive
relief. Both damages and injunctive relief shall be proper modes of relief and are not to be considered as alternative remedies.
ARTICLE 9
GENERAL
PROVISIONS
9.1
Construction of Terms. If any provision of this Agreement is held unenforceable by a court of competent jurisdiction,
that provision shall be severed and shall not affect the validity or enforceability of theremaining provisions.
9.2
Governing Law. This Agreement shall be governed by and construed in accordance with the internallaws (and not
the laws of conflicts) of the State of Georgia.
9.3
Complete Agreement. This Agreement constitutes the complete agreement and sets forth the entire understanding
and agreement of the parties as to the subject matter of this Agreement and supersedes all priordiscussions and understandings in respect
to the subject of this Agreement, whether written or oral.
9.4
Modification. No modification, termination, or attempted waiver of this Agreement, or any provisionthereof, shall
be valid unless in writing signed by the party against whom the same is sought to be enforced.
9.5
Waiver of Breach. The waiver by a party of a breach of any provision of this Agreement by the otherparty shall
not operate or be construed as a waiver of any other or subsequent breach by the party in breach.
9.6
Successors and Assigns. This Agreement may not be assigned by either party without the prior written consent
of the other party; provided, however, that the Agreement shall be assignable by the Company without Consultant’s consent in the
event the Company is acquired by or merged into another corporation or business entity. The benefits and obligations of this Agreement
shall be binding upon and inure to the parties hereto, their successors and assigns.
9.7
No Conflict. Consultant warrants that Consultant has not previously assumed any obligations inconsistent with
those undertaken by Consultant under this Agreement.
IN WITNESS WHEREOF, this
Agreement is executed as of the date set forth above.
| |
[COMPANY] |
|
[CONSULTANT] |
| |
|
|
|
| |
|
|
|
|
/s/ James Gibbons |
|
/s/ Nicolas Link |
| |
Signed: |
|
Signed: |
| |
|
|
|
| |
By: James Gibbons |
|
By: Nicolas Link, CEO |
| |
|
|
|
| |
Its: CEO |
|
Its: Consultant |
DATED 2023
DISTRIBUTION
AGREEMENT
Suite
5, The Willows
Ransom Wood Business Park
Rainworth
Mansfield
NG21 0JH
|
|
 |
This agreement is dated 2023
PARTIES
| (1) | TIOGA DESIGN SERVICES LTD incorporated and registered
in England under company number 01557063 with its registered office at St. Thomas House, Mansfield Road, Derby, England, DE1 3TN (Design) |
| (2) | TIOGA LIMITED incorporated and registered in England
under company number 03167564 with its registered office at St. Thomas House, Mansfield Road, Derby, England, DE1 3TN (Tioga) |
and collectively Design and Tioga shall be referred to
as the Supplier
| (3) | HYPERION C-EID LIMITED incorporated and registered
in England under company number 14853093 with its registered office at 71-75 Shelton Street, Covent Garden, London, United Kingdom, WC2H
(Distributor) |
and
| (4) | HYPERION DEFENCE SOLUTIONS LTD incorporated and
registered in England under company number 14465834 with its registered office at 71-75 Shelton Street, Covent Garden, London, United
Kingdom, WC2H |
| (5) | ILUS INTERNATIONAL UK LTD incorporated and registered
in England under company number 13451198 with its registered office at 71-75 Shelton Street, Covent Garden, London, United Kingdom, WC2H |
(both
collectively the Guarantors) BACKGROUND
| (A) | The Supplier wishes to appoint the Distributor as
its exclusive distributor for the promotion and sale of the Products within the Territory (both as defined below), and the Distributor
wishes to promote and sell the Products within the Territory on the terms of this agreement. |
| (B) | As the Distributor is a newly formed company with
no trading or credit history, the Guarantors have entered into this agreement to guarantee the payment obligations of the Distributor
in the event of a default under this agreement. |
AGREED TERMS
The following definitions and rules of interpretation apply
in this agreement:
Business Day: a day, other than a Saturday,
Sunday or public holiday in England, when banks in London are open for business.
Business Hours: the period from 9.00 am to 5.00 pm
on any Business Day.
Commencement Date: has the meaning given in clause
2.
Guaranteed Obligations: all monies, debts and
liabilities of any nature from time to time due or owing from or incurred by Distributor to the Supplier under or in connection with this
agreement.
Intellectual Property
Rights: patents, rights to inventions, copyright and related rights, trade marks, business names and domain names, rights in get-up,
goodwill and the right to sue for passing off, rights in designs, database rights, rights to use, and protect the confidentiality of,
confidential information (including know-how) and all other intellectual property rights, in each case whether registered or unregistered
and including all applications and rights to apply for and be granted, renewals or extensions of, and rights to claim priority from, such
rights and all similar or equivalent rights or forms of protection which subsist or will subsist now or in the future in any part of the
world.
Products: the products
of the type and specification manufactured and packed under the Trade Marks and listed in Schedule 1, as varied from time to time and
any other products developed by the Supplier and which the Supplier may permit the Distributor, by express notice in writing, to distribute
in the Territory.
Supplier's Standard Supply
Terms: the Supplier's standard terms and conditions of supply as set out in Schedule 4, as amended or revised from time to time.
Term: the term of this agreement,
as determined in accordance with clause 2.
Territory: the areas specified
in Schedule 2.
Trade Marks: the trade
mark or trade names, registrations and applications listed in Schedule 3 and any further trade marks that the Supplier may, by express
notice in writing, permit or procure permission for, the Distributor to use in the Territory in respect of the Products.
VAT: value added tax or any
equivalent tax chargeable in the UK or elsewhere.
Year: the period of
12 months from the Commencement Date and each consecutive period of 12 months thereafter during the Term.
| 1.2 | Clause, Schedule and paragraph headings shall not affect the interpretation
of this agreement. |
| 1.3 | A person includes a natural person, corporate
or unincorporated body (whether or not having separate legal personality). |
| 1.4 | The Schedules form part of this agreement and shall
have effect as if set out in full in the body of this agreement. Any reference to this agreement includes the Schedules. |
| 1.5 | A reference to a company shall include any
company, corporation or other body corporate, wherever and however incorporated or established. |
| 1.6 | Unless the context otherwise requires, words in the
singular shall include the plural and in the plural shall include the singular. |
| 1.7 | Unless the context otherwise requires, a reference to one gender shall include
a reference to the other genders. |
| 1.8 | This agreement shall be binding on, and enure to
the benefit of, the parties to this agreement and their respective personal representatives, successors and permitted assigns, and references
to any party shall include that party's personal representatives, successors and permitted assigns. |
| 1.9 | A reference to legislation or a legislative provision
is a reference to it as amended, extended or re-enacted from time to time. |
| 1.10 | A reference to legislation or a legislative provision
shall include all subordinate legislation made from time to time under that legislation or legislative provisions. |
| 1.11 | A reference to writing or written excludes fax but not email. |
| 1.12 | Any obligation on a party not to do something includes an obligation not to
allow that thing to be done. |
| 1.13 | References to clauses and Schedules are to the clauses
and Schedules of this agreement and references to paragraphs are to paragraphs of the relevant Schedule. |
| 1.14 | Any words following the terms including, include,
in particular, for example or any similar expression shall be interpreted as illustrative and shall not limit the sense
of the words preceding those terms. |
| 2. | Commencement and duration |
This agreement shall commence
on the date when it has been signed by each of the parties (Commencement Date) and shall continue, unless terminated in accordance
with clause 19, for an initial term of 12 months (Initial Term) and after for periods of 12 months until terminated by either party
giving at least 3 months' prior written notice to expire on or after the expiry date of the Initial Term.
| 3.1 | The Supplier appoints the Distributor as its exclusive
authorised distributor to market, purchase, distribute and resell the Products in the Territory on the terms of this agreement, and the
Distributor accepts the appointment on those terms. |
| 3.2 | The Supplier shall not: |
| (a) | appoint any other distributor, reseller or agent for the Products the Territory;
and |
| (b) | supply any Products directly in the Territory whether for use or resale. |
| 3.3 | The Distributor shall buy the Products for its own account for resale under
this agreement. |
| 3.4 | The Distributor shall purchase the Products only
from the Supplier, and shall not for the Term or for the period of five Years from the Commencement Date (whichever shall be the shorter)
distribute or manufacture any goods which compete with the Products save that if the Option (as defined in clause 14) is exercised, this
restriction shall cease to apply. |
| 3.5 | The Distributor shall not: |
| (a) | represent itself as an agent of the Supplier for any purpose; |
| (b) | pledge the Supplier's credit; |
| (c) | give any condition or warranty on the Supplier's behalf; |
| (d) | make any representation on the Supplier's behalf; |
| (e) | commit the Supplier to any contracts; or |
| (f) | otherwise incur any liability for or on behalf of the Supplier. |
| 3.6 | The Distributor shall not, without the Supplier's
prior written consent, make any promises or guarantees about the Products beyond those contained in the promotional material supplied
by the Supplier or approved by the Supplier. |
| 4.1 | The Distributor shall supply the Supplier with a single
order for 65 units of the Product within the first 12 months of this agreement at the price defined in clause 9.1 (the Minimum Volume). |
| 4.2 | If the Minimum Volume is not purchased within the first 12 months, this agreement: |
| (a) | May be terminated by the Supplier; |
| (b) | The Option shall lapse; or |
| (c) | Remain in place but all exclusivity rights in clause
3.1 shall be removed and the Supplier shall be released from the restrictions in clause 3.2. |
| 5.1 | A good working relationship with its Distributors
is important to the Supplier. Accordingly, the Distributor and the Supplier shall hold review meetings at least once every 3 months in
the first year and at least 6 monthly thereafter. |
| 5.2 | The parties may decide to vary the above frequency. |
| 5.3 | At the review meeting, the following matters will
form part of the agenda (along with any other matters that the parties may wish to discuss): |
| (a) | Sales performance of the Distributor; |
| (b) | Achievement of the Minimum Volume requirements; |
| (c) | Delivery performance of the Supplier; |
| (d) | Compliance with the agreement; and |
| (e) | Any fault, returns or manufacture issues in relation to the Product. |
| 6. | Distributor's undertakings |
| 6.1 | The Distributor undertakes and agrees with the Supplier that at all times during
the Term it will: |
| (a) | use reasonable endeavours to promote and sell the
Products in the Territory and to expand the sale of the Products by all reasonable and proper means and not to do anything which may hinder
or interfere with such sales; |
| (b) | employ a sufficient number of suitably qualified personnel
to ensure the proper fulfilment of the Distributor's obligations under this agreement; |
| (c) | not resell the Products at a price exceeding the maximum
resale price from time to time specified by the Supplier in writing; |
| (d) | submit written reports at regular intervals to the
Supplier, showing details of stock levels and movements, sales, outstanding customer orders and orders placed by the Distributor with
the Supplier that are still outstanding,
and any other information relating to the performance of its obligations under this agreement that the Supplier may reasonably require
from time to time; |
| (e) | maintain, on its own account, an inventory of the
Products so that it can supply all orders for Products received by it without delay; |
| (f) | keep full and accurate books of account and records
clearly showing all enquiries, quotations, transactions and proceedings relating to the Products and allow the Supplier, on reasonable
notice, access to such accounts and records for inspection; |
| (g) | keep all stocks of the Products that it holds in conditions
appropriate for their storage, and provide appropriate security for the Products, all at its own cost; |
| (h) | insure at its own cost with a reputable insurance
company all stocks of the Products as are held by it against all risks which would normally be insured against by a prudent businessperson
to at least their full replacement value and produce to the Supplier on demand full particulars of that insurance and the receipt for
the then current premium; |
| (i) | inform the Supplier immediately of any change in
control of the Distributor (where the Distributor incorporates), and of any change in its organisation or method of doing business that
might be expected to affect the performance of the Distributor's duties in this agreement; |
| (j) | use reasonable endeavours to ensure that the Products
are imported into the Territory with a minimum of delay and to attend to and complete in a proper and efficient manner all necessary documents
and formalities in connection with such import; |
| (k) | pay for all carriage and insurance in relation to
the Demonstrators (as defined in clause 8.3) and shall notify the Supplier immediately if they are stolen or damaged; |
| (l) | return the Demonstrators to the Supplier upon demand; |
| (m) | bear the cost of all returns from customers relating to the Products; and |
| (n) | pay or ensure payment on the due date to the Supplier
of all sums due to the Supplier for sales of the Products. |
| 7.1 | The Supplier shall use its reasonable endeavours to
meet all orders for the Products forwarded to it by the Distributor as soon as practicable, but the Supplier may, at its discretion, refuse
any order that it reasonably considers it would be impracticable to attempt to meet. |
| 7.2 | The Supplier may make changes to the specifications
of the Products, provided the changes do not adversely affect the quality of the Products. The Supplier shall give notice of any changes
to Product specifications to the Distributor as soon as reasonably practicable. |
| 8. | Supplier's undertakings |
The Supplier agrees that at all times during the Term it shall:
| 8.1 | Provide the Distributor with such information and
support as the Supplier, in its sole discretion, considers appropriate to enable the Distributor to enable it to discharge its duties
under this agreement properly and efficiently. |
| 8.2 | Endeavour to respond as soon as practicable to any
reasonable enquiries from the Distributor concerning the Products. |
| 8.3 | Supply two demonstrator Product kits (Demonstrators)
on loan and free of charge. The Demonstrators will remain the property of the Supplier and shall be returnable on demand. The Distributor
shall pay for all carriage and insurance in relation to the Demonstrators and shall notify the Supplier immediately if they are stolen
or damaged. |
| 9.1 | The prices to be paid by the Distributor to the Supplier
for the Products for the initial order of 65 units shall be at a price per unit of £11,098 plus taxes or duties (as appropriate).
Where the specification is without metal detection, each unit will be discounted by £500 per unit. |
| 9.2 | If the Option is not exercised and this agreement
reverts to a non-exclusive arrangement, prices will be at the then current Supplier's list prices as notified to the Distributor by the
Supplier from time to time. |
| 9.3 | If the Option is exercised, the Supplier will enter
into a separate manufacturing agreement but the price for the next 85 units shall be £7,118 per unit plus taxes and duties. Where
the specification is without metal detection, each unit will be discounted by £500 per unit. The Supplier will not supply the Products
at such price if the Option has not been exercised. |
| 9.4 | Any and all expenses, costs and charges incurred
by the Distributor in the performance of its obligations under this agreement shall be paid by the Distributor, unless the Supplier has
expressly agreed in advance in writing to pay such expenses, costs and charges. |
| 9.5 | The Distributor shall pay: |
| 9.6 | As between the Supplier and the Distributor, the Distributor
is solely responsible for the collection, remittance and payments of any or all taxes, charges, levies, assessments and other fees of
any kind imposed by governmental or other authority in respect of the purchase, sale, importation, lease or other distribution of the
Products. |
| 10.1 | All sums payable under this agreement, or otherwise
payable by any party to any other party under this agreement are exclusive of any VAT chargeable on the supplies for which such sums (or
any part of them) are the whole or part of the consideration for VAT purposes. |
| 10.2 | Where, under this agreement, any party makes a supply
to any other party (Recipient) for VAT purposes and VAT is or becomes chargeable on that supply for which the supplying party is
required to account to the relevant tax authority, the Recipient shall, subject to the receipt of a valid VAT invoice, pay the supplying
party (in addition to, and at the same time as, any other consideration for that supply) the amount of such VAT. |
| 10.3 | Where any party is required by this agreement to reimburse
or indemnify any other party for any cost or expense, that first party shall reimburse or indemnify the other party for the full amount
of the cost or expense, including any VAT on that amount, except to the extent that the other party is entitled to credit or repayment
for that VAT from any relevant tax authority. |
| 10.4 | All taxes, charges, levies, assessments and other
fees of any kind imposed on the purchase, export or import of the Products shall be the responsibility of, and for the account of, the
Distributor. |
| 11. | Advertising and promotion |
| 11.1 | The Distributor shall: |
| (a) | observe all directions and instructions given to it by
the Supplier for promotion and advertisement of the Products; and |
| (b) | not make any written statement as to the promotion, quality
or manufacture of the Products without the prior written approval of the Supplier. |
| 11.2 | The Supplier shall approve or reject, in its sole
discretion, any promotional information or material or any advertising and promotional programme submitted by the Distributor within 10
days of receipt. |
| 12. | Supplier's Standard Supply Terms |
The Supplier's Standard Supply
Terms shall apply to all sales by the Supplier to the Distributor under this agreement. If there is any inconsistency between the Supplier's
Standard Supply Terms and the provisions of this agreement, the provisions of this agreement shall prevail.
| 13. | Trade Marks and Intellectual Property Rights |
| 13.1 | The Supplier grants to the Distributor the exclusive
right, in the Territory, to use the Trade Marks and Intellectual Property Rights in the promotion, advertisement and sale of the Products,
subject to exercise of the Option and/achieving the Minimum Volume, and for the duration of, this agreement. The Distributor acknowledges
and agrees that all rights in the Trade Marks or Intellectual Property Rights shall remain in the Supplier, and that the Distributor has
and will acquire no right in them by virtue of the discharge of its obligations under this agreement, except for the right to use the
Trade Marks or Intellectual Property Rights as expressly provided in this agreement or as acquired under the exercise of the Option. |
| 13.2 | The Distributor shall market and sell the Products
only under the Trade Marks, and not in association with any other trade mark, brand or trade name. |
| 13.3 | The Distributor shall not, without the prior written consent of the Supplier: |
| (a) | alter or make any addition to the labelling or packaging of the Products displaying
the Trade Marks; |
| (b) | make any addition or modifications to the Products or
to any advertising and promotional materials supplied by the Supplier; or |
| (c) | alter, deface or remove any reference to the Trade Marks,
any reference to the Supplier or any other name attached or affixed to the Products or their packaging or labelling. |
| 13.4 | The Distributor shall not sub-license, assign, transfer,
charge, or otherwise encumber the right to use, reference, or designate the Trade Marks to any other party, except as otherwise expressly
permitted under this agreement. |
| 13.5 | The Distributor shall not do, or omit to do, anything
in its use of the Trade Marks or Intellectual Property Rights that could adversely affect their validity or reputation. |
| 13.6 | The Distributor shall not, at any time during or
within one year after termination of this agreement, in connection with any business similar to that of the Supplier, adopt, use, obtain,
register or try to register without the prior written consent of the Supplier a word or symbol or a combination of the two similar to
the Trade Marks. |
| 13.7 | The Distributor shall immediately on request enter
into any further agreements with the Supplier, in a form satisfactory to the Supplier, necessary for the recording, registration or safeguarding
of the Supplier's rights in the Trade Marks or Intellectual Property Rights or the marketing of the Products under the Trade Marks. |
| 13.8 | The Distributor shall promptly give notice to the Supplier in writing if it
becomes aware of: |
| (a) | any infringement or suspected infringement of the
Trade Marks or Intellectual Property Rights relating to the Products within the Territory; or |
| (b) | any claim that any Product or the manufacture, use,
sale or other disposal of any Product within the Territory, whether or not under the Trade Marks, infringes the rights of any third party. |
| 13.9 | In respect of any matter that falls within clause 13.8(a): |
| (a) | the Supplier shall in its absolute discretion, decide what action to take in
respect of the matter (if any); |
| (b) | the Supplier shall conduct and have sole control over
any consequent action that it deems necessary and the Distributor shall on being so requested by the Supplier and at the Supplier's cost
assist in taking all steps to defend the rights of the Supplier including the institution at the Supplier's cost of any actions which
it may deem necessary to commence for the protection of any of its rights; and |
| (c) | the Supplier shall pay all costs in relation to that
action and shall be entitled to all damages and other sums that may be paid or awarded as a result of that action. |
| 13.10 | In respect of any matter that falls within clause 13.8(b): |
| (a) | the Supplier and the Distributor shall agree: |
| (i) | what steps to take to prevent or terminate the infringement; and |
| (ii) | the proportions in which they shall share the cost
of those steps and any damages and other sums that may be awarded to or against them; and |
| (b) | failing agreement between the parties, either party
may take any action as it considers necessary or appropriate, at its own expense, to defend the claim and shall be entitled to and responsible
for all damages and other sums that may be recovered or awarded against it as a result of that action. |
| 13.11 | The Distributor shall not use the Trade Marks as
part of the name under which the Distributor conducts its business, or any connected business, or under which it sells or services any
products (except the Products), or in any other way, except as expressly permitted under this agreement. |
| 13.12 | Upon termination of this agreement for any reason,
the Distributor shall immediately stop using all or any part of the Trade Marks or Intellectual Property Rights. |
| 14.1 | This is the Option referred to elsewhere in the agreement. |
| 14.2 | Subject to the placing of the initial order for 65
units of the Product, the Supplier and, in particular, Design grants to the Distributor the option to purchase the Intellectual Property
Rights in relation to the Products (Option). |
| 14.3 | The Option price shall be the sum of £250,000 which shall be payable
upon exercise of Option. |
| 14.4 | The Distributor may exercise the Option at anytime
after the order is received for the 65 units by written notification to the Supplier. |
| 14.5 | Upon notification of the Option to the Supplier and subject always to the payment
of £250,000 to the Supplier, |
| (a) | The Supplier shall execute an assignment deed in order
to assign the Intellectual Property Rights and Trademarks to Distributor; and |
| (b) | This agreement shall remain in place until a manufacturing
agreement is agreed but the terms of supply shall contain the same sale terms attached to this agreement. |
| 14.6 | The Option shall lapse if: |
| (a) | The Option is not exercised within 6 months of the final delivery of the first
65 units; or |
| (b) | The Distributor does not place the initial order for the 65 units within the
first 12 months. |
| 15. | Guarantee and Indemnity |
| 15.1 | In consideration of Supplier entering into this agreement,
the Guarantor (joint and severally) guarantees to the Supplier that, whenever Distributor does not discharge any of the Guaranteed Obligations
as and when they fall due, the Guarantor shall on demand make all payments to Supplier necessary to discharge the Guaranteed Obligations. |
| 15.2 | If the Guaranteed Obligations are, or become, unenforceable,
invalid or illegal, the Guarantor agrees to indemnify and keep indemnified Supplier in full and on demand from and against all and any
losses, costs, claims, liabilities, damages, demands, and expenses suffered or incurred by Supplier arising out of, or in connection with,
any failure of Distributor to perform or discharge the Guaranteed Obligations. |
| 15.3 | The Guarantor (jointly and severally) as principal
obligor and as a separate and independent obligation and liability from its obligations and liabilities under Clause 15.1 agrees to indemnify
and keep indemnified Supplier in full and on demand from and against all and any losses, costs claims, liabilities, damages, demands,
and expenses suffered or incurred by Supplier arising out of, or in connection with, any failure of Distributor to perform or discharge
the Guaranteed Obligations. |
| 15.4 | This guarantee is and shall at all times be a continuing
security and shall cover the ultimate balance of all monies payable under this agreement, irrespective of any intermediate payment or
discharge in full or in part of the Guaranteed Obligations. |
| 15.5 | The Guarantor waives any right it may have to require
Supplier (or any trustee or agent on its behalf) to proceed against or enforce any other right or claim for payment against any person
before claiming from the Guarantor under this Clause 15. |
| 15.6 | The Guarantor shall on a full indemnity basis pay
to the Supplier on demand the amount of all costs and expenses (including legal and out-of-pocket expenses and any value added tax on
those costs and expenses) which Supplier incurs in connection with: |
| (a) | the preservation, or exercise and enforcement, of
any rights under or in connection with this Clause 15 or any attempt so to do; and |
| (b) | any discharge or release of the obligations set out in this Clause 15. |
| 16. | Compliance with laws and policies |
| 16.1 | The Distributor shall at its own expense comply with
all laws and regulations relating to its activities under this agreement, as they may change from time to time, and with any conditions
binding on it in any applicable licences, registrations, permits and approvals. |
| 16.2 | Local regulations relating to the Products: |
| (a) | The Distributor warrants to the Supplier that it
has informed the Supplier of all laws and regulations affecting the manufacture, sale, packaging and labelling of Products which are in
force within the Territory or any part of it (Local Regulations) at the date of this agreement. |
| (b) | The Supplier, in turn, warrants to the Distributor
that the Products comply with the Local Regulations in force at the date of this agreement. |
| (c) | The Distributor shall give the Supplier as much advance
notice as reasonably possible of any prospective or actual changes in the Local Regulations. |
| (d) | On receipt of notification from the Distributor under
clause 16.2(c), the Supplier shall make reasonable commercial efforts to ensure that the Products comply with any change in the Local
Regulations by the date of implementation of that change, or as soon as is reasonably possible afterwards. |
| 17. | Product liability insurance and product recalls |
| 17.1 | During the Term, the Supplier shall maintain product
liability insurance with a reputable insurer for a claim that the Products are faulty or defective. |
| 17.2 | The Distributor undertakes to maintain appropriate,
up-to-date and accurate records to enable the immediate recall of any Products or batches of Products from the retail or wholesale markets.
These records shall include records of deliveries to customers (including batch numbers, delivery date, name and address of customer,
telephone number and email address). |
| 17.3 | The Distributor shall, at the Supplier's cost, give
any assistance that the Supplier shall reasonably require to recall, as a matter of urgency, Products from the retail or wholesale market. |
| 18. | Limitation of liability |
| 18.1 | The restrictions on liability in this clause 18 apply
to every liability arising under or in connection with this agreement including liability in contract, tort (including negligence), misrepresentation,
restitution or otherwise. |
| 18.2 | Nothing in the agreement limits any liability which cannot legally be limited,
including liability for: |
| (a) | death or personal injury caused by negligence; |
| (b) | fraud or fraudulent misrepresentation; and |
| (c) | breach of the terms implied by section 12 of the Sale
of Goods Act 1979 or section 2 of the Supply of Goods and Services Act 1982 (title and quiet possession). |
| 18.3 | Subject to clause 18.2, the Supplier's total liability
to the Distributor for all other loss or damage arising from breaches of duty occurring within any Year shall not exceed the cap. In this
clause 18.3: |
| (a) | cap. The cap is 100% per cent of the total charges in the Year in which
the breaches occurred; and |
| (b) | total charges. The total charges means all
sums paid by the Distributor and all sums payable under the agreement in respect of goods and services actually supplied by the Supplier,
whether or not invoiced to the Distributor. |
| 18.4 | This clause 18.4 sets specific heads of excluded loss: |
| (a) | The following types of loss are wholly excluded: |
| (ii) | loss of sales or business; |
| (iii) | loss of agreements or contracts; |
| (iv) | loss of anticipated savings; |
| (v) | loss of use or corruption of software, data or information; |
| (vi) | loss of or damage to goodwill; and |
| (vii) | indirect or consequential loss. |
| 18.5 | Terms implied by sections 13 to 15 of the Sale of
Goods Act 1979 and sections 3, 4 and 5 of the Supply of Goods and Services Act 1982 are, to the fullest extent permitted by law, excluded
from this agreement. |
| 19.1 | Without affecting any other right or remedy available
to it, either party may terminate this agreement with immediate effect by giving written notice to the other party if: |
| (a) | the other party fails to pay any amount due under
this agreement on the due date for payment and remains in default not less than 10 days after being notified to make such payment; |
| (b) | the other party commits a material breach of this
agreement (other than failure to pay any amounts due under this agreement) which breach is irremediable or (if that breach is remediable)
fails to remedy that breach within a period of 14 days after being notified to do so; |
| (c) | the other party repeatedly breaches any of the terms
of this agreement in such a manner as to reasonably justify the opinion that its conduct is inconsistent with it having the intention
or ability to give effect to the terms of this agreement; |
| (d) | the other party suspends, or threatens to suspend,
payment of its debts or is unable to pay its debts as they fall due or admits inability to pay its debts or |
| (e) | the other party commences negotiations with all or
any class of its creditors with a view to rescheduling any of its debts, or makes a proposal for or enters into any compromise or arrangement
with any of its creditors; |
| (f) | the other party applies to court for, or obtains, a moratorium under Part
A1 of the Insolvency Act 1986; |
| (g) | a petition is filed, a notice is given, a resolution
is passed, or an order is made, for or in connection with the winding up of the other party (being a company, limited liability partnership
or partnership); |
| (h) | an application is made to court, or an order is made,
for the appointment of an administrator, or a notice of intention to appoint an administrator is given or an administrator is appointed,
over the other party (being a company); |
| (i) | the holder of a qualifying floating charge over the
assets of that other party (being a company) has become entitled to appoint or has appointed an administrative receiver; |
| (j) | a person becomes entitled to appoint a receiver over
all or any of the assets of the other party or a receiver is appointed over all or any of the assets of the other party; |
| (k) | the other party (being an individual) is the subject of a bankruptcy petition,
application or order; |
| (l) | a creditor or encumbrancer of the other party attaches
or takes possession of, or a distress, execution, sequestration or other such process is levied or enforced on or sued against, the whole
or any part of the other party's assets and such attachment or process is not discharged within 14 days; |
| (m) | any event occurs, or proceeding is taken, with respect
to the other party in any jurisdiction to which it is subject that has an effect equivalent or similar to any of the events mentioned
in clause 19.1(d) to clause 19.1(l) (inclusive); |
| (n) | the other party suspends or ceases, or threatens
to suspend or cease, carrying on all or a substantial part of its business; |
| (o) | the other party's financial position deteriorates
so far as to reasonably justify the opinion that its ability to give effect to the terms of this agreement is in jeopardy; |
| (p) | the other party (being an individual) dies or, by
reason of illness or incapacity (whether mental or physical), is incapable of managing their own affairs or becomes a patient under any
mental health legislation; |
| (q) | The Distributor fails to purchase the Minimum Volume
for two consecutive months and the Distributor has not purchased a Shortfall or offset a Shortfall by purchasing an Excess in accordance
with clause 4; |
| (r) | there is a change of control of the other party; or |
| (s) | the other party purports to assign its rights or
obligations under this agreement (except in accordance with clause 25. |
| 20. | Consequences of termination |
| 20.1 | Any provision of this agreement that expressly or
by implication is intended to come into or continue in force on or after termination of this agreement shall remain in full force and
effect. |
| 20.2 | Termination of this agreement shall not affect any
rights, remedies, obligations or liabilities of the parties that have accrued up to the date of termination, including the right to claim
damages in respect of any breach of the agreement which existed at or before the date of termination. |
| 20.3 | On termination of this agreement: |
| (a) | the Distributor shall immediately pay to the Supplier
all of the Supplier's outstanding unpaid invoices and interest; |
| (b) | the Supplier shall have the option to buy from the
Distributor any stocks of the Products at such price as the Supplier reasonably considers to be their current market value.. The Distributor
shall be responsible for the costs of packaging, insurance and carriage of the Products; and |
| (c) | the Distributor may for a period of 2 months following
termination of this agreement, sell and distribute any stocks of the Products that it may have in store or under its control at the time.
At the end of this period the Distributor shall promptly return all remaining stocks of the Products to the Supplier at the expense of
the Distributor, or dispose of the stocks as the Supplier directs. |
| 20.4 | The termination of this agreement shall not of itself
make the Supplier liable to pay any compensation to the Distributor, including compensation for loss of profits or goodwill. |
| 20.5 | Subject to clause 20.3, all other rights and licences
of the Distributor under this agreement shall terminate on the date of termination of this agreement. |
| 21.1 | Each party undertakes that it shall not at any time
disclose to any person any confidential information concerning the business, assets, affairs, customers, clients or suppliers of the other
party, except as permitted by clause 21.2. |
| 21.2 | Each party may disclose the other party's confidential information: |
| (a) | to its employees, officers, representatives, contractors,
subcontractors or advisers who need to know such information for the purposes of exercising the party's rights or carrying out its obligations
under or in connection with this agreement. Each party shall ensure that its employees, officers, representatives, contractors, subcontractors
or advisers to whom it discloses the other party's confidential information comply with this clause 21; and |
| (b) | as may be required by law, a court of competent jurisdiction
or any governmental or regulatory authority. |
| 21.3 | No party shall use any other party's confidential
information for any purpose other than to exercise its rights and perform its obligations under or in connection with this agreement. |
Neither party shall be in
breach of this agreement or otherwise liable for any failure or delay in the performance of its obligations if such delay or failure results
from events, circumstances or causes beyond its reasonable control. The time for performance of such obligations shall be extended accordingly.
If the period of delay or non-performance continues for 6 weeks, the party not affected may terminate this agreement by giving 30 days'
written notice to the affected party.
| 23.1 | This agreement constitutes the entire agreement between the parties. |
| 23.2 | Each party acknowledges that in entering into this
agreement it does not rely on any statement, representation, assurance or warranty (whether made innocently or negligently) that is not
set out in this agreement. Each party agrees that it shall have no claim for innocent or negligent misrepresentation or negligent misstatement
based on any statement in this agreement. |
No variation of this agreement
shall be effective unless it is in writing and signed by the parties (or their authorised representatives).
| 25. | Assignment and other dealings |
| 25.1 | The Supplier may at any time assign, mortgage, charge,
subcontract, delegate, declare a trust over or deal in any other manner with any or all of its rights and obligations under this agreement. |
| 25.2 | The Distributor shall not assign, transfer, mortgage,
charge, subcontract, delegate, declare a trust over or deal in any other manner with any of its rights and obligations under this agreement. |
| 26.1 | A waiver of any right or remedy is only effective
if given in writing and shall not be deemed a waiver of any subsequent right or remedy. |
| 26.2 | A delay or failure to exercise, or the single or
partial exercise of, any right or remedy shall not waive that or any other right or remedy, nor shall it prevent or restrict the further
exercise of that or any other right or remedy. |
| 27.1 | If any provision or part-provision of this agreement
is or becomes invalid, illegal or unenforceable, it shall be deemed deleted, but that shall not affect the validity and enforceability
of the rest of this agreement. |
| 27.2 | If any provision or part-provision of this agreement
is deemed deleted under clause 27.1 the parties shall negotiate in good faith to agree a replacement provision that, to the greatest extent
possible, achieves the intended commercial result of the original provision. |
| 28.1 | This agreement does not give rise to any rights under
the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this agreement. |
| 29. | No partnership or agency |
| 29.1 | Nothing in this agreement is intended to, or shall
be deemed to, establish any partnership or joint venture between the parties, constitute either party the agent of the other party, or
authorise either party to make or enter into any commitments for or on behalf of the other party. |
| 29.2 | Each party confirms it is acting on its own behalf and not for the benefit
of any other person. |
| 30.1 | This agreement may be executed in any number of counterparts,
each of which shall constitute a duplicate original, but all the counterparts shall together constitute the one agreement. |
| 30.2 | Transmission of the executed signature page of a counterpart
of this agreement by email (in PDF, JPEG or other agreed format) shall take effect as the transmission of an executed "wet-ink"
counterpart of this agreement. |
No party shall make, or permit
any person to make, any public announcement concerning the existence, subject matter or terms of this agreement, the wider transactions
contemplated by it, or the relationship between the parties, without the prior written consent of the other parties (such consent not
to be unreasonably withheld or delayed), except as required by law, any governmental or regulatory authority (including any relevant securities
exchange), any court or other authority of competent jurisdiction.
If there is an inconsistency
between any of the provisions in the main body of this agreement and the Schedules, the provisions in the main body of this agreement
shall prevail.
The rights and remedies provided
under this agreement are in addition to, and not exclusive of, any rights or remedies provided by law.
Each party shall, and shall
use all reasonable endeavours to procure that any necessary third party shall, promptly execute and deliver such documents and perform
such acts as may reasonably be required for the purpose of giving full effect to this agreement.
All amounts due under this agreement
shall be paid in full without any set-off, counterclaim, deduction or withholding (other than any deduction or withholding of tax as required
by law).
| 36.1 | If a party fails to make a payment due to the other
party under this agreement by the due date, then the defaulting party shall pay interest on the overdue sum from the due date until payment
of the overdue sum, whether before or after judgment. |
| 36.2 | Interest under this clause will accrue each day at
4% a year above the Bank of England's base rate from time to time, but at 4% a year for any period when that base rate is below 0%. |
This agreement and any dispute
or claim (including non-contractual disputes or claims) arising out of or in connection with it or its subject matter or formation shall
be governed by and construed in accordance with the law of England and Wales.
Each party irrevocably agrees
that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute or claim (including non-contractual disputes
or claims) arising out of or in connection with this agreement or its subject matter or formation.
This agreement has been entered into
on the date stated at the beginning of it.
Schedule 1 The
Products
| 1.1 | The suite of Counter IED devices known collectively as
the “Superbroom” or SB (SB02, SB04, SB04MD, SB10, SB10MD) |
Schedule 2 The
Territory
Worldwide
Schedule 3 The
Trade Marks
Part 1 Trade mark registrations/Trade Names
Schedule 4 Supplier's
Standard Supply Terms
The customer's attention is drawn in particular to the provisions
of clause 8.
1.
Interpretation
1.1
Definitions:
Business Day:
a day other than a Saturday, Sunday or public holiday in England, when banks in London are open for business.
Business Hours: the period from 9.00 am to 5.00
pm on any Business Day.
Conditions: the terms and conditions set
out in this document as amended from time to time in accordance with clause 11.4.
Contract: the contract between the Supplier
and the Customer for the sale and purchase of the Goods in accordance with these Conditions.
Customer: the person or firm who purchases the
Goods from the Supplier.
Delivery Location: has the meaning given in clause
4.2.
Force Majeure Event: an event, circumstance or
cause beyond a party's reasonable control.
Goods: the goods (or any part of them) set out
in the Order.
Order: the Customer's order for the Goods, as
set out in the Customer's purchase order form.
Specification: any
specification for the Goods, including any related plans and drawings, that is agreed in writing by the Customer and the Supplier.
Supplier: TIOGA
DESIGN SERVICES LTD incorporated and registered in England under company number 01557063 with its registered office at St. Thomas House,
Mansfield Road, Derby, England, DE1 3TN and/or TIOGA LIMITED incorporated and registered in England under company number 03167564 with
its registered office at St. Thomas House, Mansfield Road, Derby, England, DE1 3TN.
Warranty Period: has the meaning
given in clause 5.1.
1.2
Interpretation:
(a)
A person includes a natural person, corporate or unincorporated
body (whether or not having separate legal personality).
(b)
A reference to a party includes its successors and permitted
assigns.
(c)
A reference to legislation or a legislative provision
is a reference to it as amended or re-enacted. A reference to legislation or a legislative provision includes all subordinate legislation
made under that legislation or legislative provision.
(d)
Any words following the terms including, include, in
particular, for example or any similar expression shall be interpreted as illustrative and shall not limit the sense of the words preceding
those terms.
(e)
A reference to writing or written excludes fax and email.
2.
Basis of contract
2.1
These Conditions apply to the Contract to the exclusion
of any other terms that the Customer seeks to impose or incorporate, or which are implied by law, trade custom, practice or course of
dealing.
2.2
The Order constitutes an offer by the Customer to purchase
the Goods in accordance with these Conditions. The Customer is responsible for ensuring that the terms of the Order and any applicable
Specification are complete and accurate.
2.3
The Order shall only be deemed to be accepted when the
Supplier issues a written acceptance of the Order, at which point the Contract shall come into existence.
2.4
The Customer waives any right it might otherwise have
to rely on any term endorsed upon, delivered with or contained in any documents of the Customer that is inconsistent with these Conditions.
2.5
Any samples, drawings, descriptive matter or advertising
produced by the Supplier and any descriptions or illustrations contained in the Supplier's catalogues or brochures are produced for the
sole purpose of giving an approximate idea of the Goods referred to in them. They shall not form part of the Contract nor have any contractual
force.
2.6
A quotation for the Goods given by the Supplier shall
not constitute an offer. A quotation shall only be valid for a period of 20 Business Days from its date of issue.
3.1
The Goods are described the Specification.
3.2
To the extent that the Goods are to be manufactured
in accordance with a Specification supplied by the Customer, the Customer shall indemnify the Supplier against all liabilities, costs,
expenses, damages and losses (including any direct, indirect or consequential losses, loss of profit, loss of reputation and all interest,
penalties and legal and other reasonable professional costs and expenses) suffered or incurred by the Supplier in connection with any
claim made against the Supplier for actual or alleged infringement of a third party's intellectual property rights arising out of or in
connection with the Supplier's use of the Specification. This clause 3.2 shall survive termination of the Contract.
3.3
The Supplier reserves the right to amend the Specification
if required by any applicable statutory or regulatory requirement, and the Supplier shall notify the Customer in any such event.
4.1
The Supplier shall ensure that:
(a)
each delivery of the Goods is accompanied by a delivery
note that shows the date of the Order, the type and quantity of the Goods (including the code number of the Goods, where applicable),
special storage instructions (if any) and, if the Goods are being delivered by instalments, the outstanding balance of Goods remaining
to be delivered; and
(b)
if the Supplier requires the Customer to return any
packaging materials to the Supplier, that fact is clearly stated on the delivery note. The Customer shall make any such packaging materials
available for collection at such times as the Supplier shall reasonably request. Returns of packaging materials shall be at the Supplier's
expense.
4.2
The Supplier shall deliver the Goods to the location
set out in the Order or such other location as the parties may agree (Delivery Location) at any time after the Supplier notifies the Customer
that the Goods are ready.
4.3
Delivery is completed on the completion of unloading
of the Goods at the Delivery Location.
4.4
Any dates quoted for delivery are approximate only,
and the time of delivery is not of the essence. The Supplier shall not be liable for any delay in delivery of the Goods that is caused
by a Force Majeure Event or the Customer's failure to provide the Supplier with adequate delivery instructions or any other instructions
that are relevant to the supply of the Goods.
4.5
If the Supplier fails to deliver the Goods, its liability
shall be limited to the costs and expenses incurred by the Customer in obtaining replacement goods of similar description and quality
in the cheapest market available, less the price of the Goods. The Supplier shall have no liability for any failure to deliver the Goods
to the extent that such failure is caused by a Force Majeure Event or the Customer's failure to provide the Supplier with adequate delivery
instructions or any other instructions that are relevant to the supply of the Goods.
4.6
If the Customer fails to accept delivery of the Goods
within three Business Days of the Supplier notifying the Customer that the Goods are ready, then, except where such failure or delay is
caused by a Force Majeure Event or the Supplier's failure to comply with its obligations under the Contract in respect of the Goods:
(a)
delivery of the Goods shall be deemed to have been completed
at 9.00 am on the third Business Day after the day on which the Supplier notified the Customer that the Goods were ready; and
(b)
the Supplier shall store the Goods until actual delivery
takes place, and charge the Customer for all related costs and expenses (including insurance).
4.7
If ten Business Days after the day on which the Supplier
notified the Customer that the Goods were ready for delivery the Customer has not accepted actual delivery of them, the Supplier may resell
or otherwise dispose of part or all of the Goods and, after deducting reasonable storage and selling costs, charge the Customer for any
shortfall below the price of the Goods.
4.8
The Supplier may deliver the Goods by instalments, which
shall be invoiced and paid for separately. Each instalment shall constitute a separate contract. Any delay in delivery or defect in an
instalment shall not entitle the Customer to cancel any other instalment.
5.1
The Supplier warrants that on delivery, and for a period
of 12 months from the date of delivery (Warranty Period), the Goods shall:
| (a) | Conform in all material respects
with their description the Specification; |
(b)
be free from material defects in design, material and
workmanship.
5.2
Subject to clause 5.3, if:
(a)
the Customer gives notice in writing to the Supplier
during the Warranty Period within a reasonable time of discovery that some or all of the Goods do not comply with the warranty set out
in clause 5.1;
(b)
the Supplier is given a reasonable opportunity of examining
such Goods; and
(c)
the Customer (if asked to do so by the Supplier) returns
such Goods to the Supplier's place of business at the Customer's cost,
the Supplier shall, at its option, repair or replace the
defective Goods, or refund the price of the defective Goods in full.
5.3
The Supplier shall not be liable for the Goods' failure
to comply with the warranty set out in clause 5.1 if:
(a)
the Customer makes any further use of such Goods after
giving notice in accordance with clause 5.2;
(b)
the defect arises because the Customer failed to follow
the Supplier's oral or written instructions as to the storage, commissioning, installation, use and maintenance of the Goods or (if there
are none) good trade practice regarding the same;
(c)
the defect arises as a result of the Supplier following
any drawing, design or specification supplied by the Customer;
(d)
the Customer alters or repairs such Goods without the
written consent of the Supplier;
(e)
the defect arises as a result of fair wear and tear,
wilful damage, negligence, or abnormal storage or working conditions; or
(f)
the Goods differ from the Specification as a result
of changes made to ensure they comply with applicable statutory or regulatory requirements.
5.4
Except as provided in this clause 5, the Supplier shall
have no liability to the Customer in respect of the Goods' failure to comply with the warranty set out in clause 5.1.
5.5
The terms implied by sections 13 to 15 of the Sale of
Goods Act 1979 are, to the fullest extent permitted by law, excluded from the Contract.
5.6
These Conditions shall apply to any repaired or replacement
Goods supplied by the Supplier.
6.
Title and risk
6.1
The risk in the Goods shall pass to the Customer on
completion of delivery.
6.2
Title to the Goods shall not pass to the Customer until:
(a)
the Supplier receives payment in full (in cash or cleared
funds) for the Goods in respect of which payment has become due; and
(b)
the Customer resells the Goods, in which case title
to the Goods shall pass to the Customer at the time specified in clause 6.4.
6.3
Until title to the Goods has passed to the Customer,
the Customer shall:
(a)
store the Goods separately from all other goods held
by the Customer so that they remain readily identifiable as the Supplier's property;
(b)
not remove, deface or obscure any identifying mark or
packaging on or relating to the Goods;
(c)
maintain the Goods in satisfactory condition and keep
them insured against all risks for their full price from the date of delivery;
(d)
notify the Supplier immediately if it becomes subject
to any of the events listed in clause 9.1(b) to clause 9.1(d); and
(e)
give the Supplier such information as the Supplier may
reasonably require from time to time relating to:
(i)
the Goods; and
(ii)
the ongoing financial position of the Customer.
6.4
Subject to clause 6.5, the Customer may resell or use
the Goods in the ordinary course of its business (but not otherwise) before the Supplier receives payment for the Goods. However, if the
Customer resells the Goods before that time:
(a)
it does so as principal and not as the Supplier’s
agent; and
(b)
title to the Goods shall pass from the Supplier to the
Customer immediately before the time at which resale by the Customer occurs.
6.5
At any time before title to the Goods passes to the
Customer, the Supplier may:
(a)
by notice in writing, terminate the Customer's right
under clause 6.4 to resell the Goods or use them in the ordinary course of its business; and
(b)
require the Customer to deliver up all Goods in its
possession that have not been resold, or irrevocably incorporated into another product and if the Customer fails to do so promptly, enter
any premises of the Customer or of any third party where the Goods are stored in order to recover them.
7.1
The price of the Goods shall be the price set out in
the Order, or, if no price is quoted, the price set out in the Supplier's published price list in force as at the date of delivery.
7.2
The Supplier may, by giving notice to the Customer at
any time before delivery, increase the price of the Goods to reflect any increase in the cost of the Goods that is due to:
(a)
any factor beyond the Supplier's control (including
foreign exchange fluctuations, increases in taxes and duties, and increases in labour, materials and other manufacturing costs);
(b)
any request by the Customer to change the delivery date(s),
quantities or types of Goods ordered, or the Specification; or
(c)
any delay caused by any instructions of the Customer
or failure of the Customer to give the Supplier adequate or accurate information or instructions.
7.3
The price of the Goods:
(a)
excludes amounts in respect of value added tax (VAT),
which the Customer shall additionally be liable to pay to the Supplier at the prevailing rate, subject to the receipt of a valid VAT invoice;
and
(b)
excludes the costs and charges of packaging, insurance
and transport of the Goods, which shall be invoiced to the Customer.
7.4
The Supplier may invoice the Customer for the Goods
on or at any time after the completion of delivery.
7.5
The Customer shall pay each invoice submitted by the
Supplier:
(a)
within 30 days of the date of the invoice or in accordance
with any credit or payment terms agreed by the Supplier and confirmed in writing to the Customer; and
(b)
in full and in cleared funds to a bank account nominated
in writing by the Supplier, and time for payment shall be of the essence of the Contract.
7.6
If the Customer fails to make a payment due to the Supplier
under the Contract by the due date, then, without limiting the Supplier's remedies under clause 9, the Customer shall pay interest on
the overdue sum from the due date until payment of the overdue sum, whether before or after judgment. Interest under this clause 7.6 will
accrue each day at 4% a year above the Bank of England's base rate from time to time, but at 4% a year for any period when that base rate
is below 0%.
7.7
All amounts due under the Contract shall be paid in
full without any set-off, counterclaim, deduction or withholding (other than any deduction or withholding of tax as required by law).
| 8. | Limitation of liability |
8.1
References to liability in this clause 8 include every
kind of liability arising under or in connection with the Contract including liability in contract, tort (including negligence), misrepresentation,
restitution or otherwise.
8.2
Nothing in the Contract limits any liability which cannot
legally be limited, including liability for:
| (a) | death or personal injury caused
by negligence; |
| (b) | fraud or fraudulent misrepresentation; |
| (c) | breach of the terms implied
by section 12 of the Sale of Goods Act 1979; or |
| (d) | defective products under the
Consumer Protection Act 1987. |
8.3
Subject to clause 8.2, the Supplier's total liability
to the Customer shall not exceed 100% of value of the Goods.
8.4
Subject to clause 8.2, the following types of loss are
wholly excluded:
| (b) | loss of sales or business; |
| (c) | loss of agreements or contracts; |
| (d) | loss of anticipated savings; |
| (e) | loss of use or corruption of
software, data or information; |
| (f) | loss of or damage to goodwill;
and |
| (g) | indirect or consequential loss. |
8.5
This clause 8 shall survive termination of the Contract.
9.1
Without limiting its other rights or remedies, the Supplier
may terminate this Contract with immediate effect by giving written notice to the Customer if:
(a)
the Customer commits a material breach of any term of
the Contract and (if such a breach is remediable) fails to remedy that breach within 10 days of that party being notified in writing to
do so;
(b)
the Customer takes any step or action in connection
with its entering administration, provisional liquidation or any composition or arrangement with its creditors (other than in relation
to a solvent restructuring), obtaining a moratorium, being wound up (whether voluntarily or by order of the court, unless for the purpose
of a solvent restructuring), having a receiver appointed to any of its assets or ceasing to carry on business or, if the step or action
is taken in another jurisdiction, in connection with any analogous procedure in the relevant jurisdiction;
(c)
the Customer suspends, threatens to suspend, ceases
or threatens to cease to carry on all or a substantial part of its business; or
(d)
the Customer's financial position deteriorates so far
as to reasonably justify the opinion that its ability to give effect to the terms of the Contract is in jeopardy.
9.2
Without limiting its other rights or remedies, the Supplier
may suspend provision of the Goods under the Contract or any other contract between the Customer and the Supplier if the Customer becomes
subject to any of the events listed in clause 9.1(b) to clause 9.1(d), or the Supplier reasonably believes that the Customer is about
to become subject to any of them, or if the Customer fails to pay any amount due under this Contract on the due date for payment.
9.3
Without limiting its other rights or remedies, the Supplier
may terminate the Contract with immediate effect by giving written notice to the Customer if the Customer fails to pay any amount due
under the Contract on the due date for payment.
9.4
On termination of the Contract for any reason the Customer
shall immediately pay to the Supplier all of the Supplier's outstanding unpaid invoices and interest and, in respect of Goods supplied
but for which no invoice has been submitted, the Supplier shall submit an invoice, which shall be payable by the Customer immediately
on receipt.
9.5
Termination of the Contract, however arising, shall
not affect any of the parties' rights and remedies that have accrued as at termination, including the right to claim damages in respect
of any breach of the Contract which existed at or before the date of termination.
9.6
Any provision of the Contract that expressly or by implication
is intended to come into or continue in force on or after termination of the Contract shall remain in full force and effect.
10.
Force majeure
Neither party shall be in
breach of the Contract or otherwise liable for any failure or delay in the performance of its obligations if such delay or failure results
from a Force Majeure Event. The time for performance of such obligations shall be extended accordingly. If the period of delay or non-performance
continues for 8 weeks, the party not affected may terminate the Contract by giving 30 days' written notice to the affected party.
11.
General
11.1
Assignment and other dealings.
(a)
The Supplier may at any time assign, transfer, mortgage,
charge, subcontract, delegate, declare a trust over or deal in any other manner with all or any of its rights or obligations under the
Contract.
(b)
The Customer may not assign, transfer, mortgage, charge,
subcontract, delegate, declare a trust over or deal in any other manner with any or all of its rights or obligations under the Contract
without the prior written consent of the Supplier.
11.2
Confidentiality.
(a)
Each party undertakes that it shall not at any time
disclose to any person any confidential information concerning the business, assets, affairs, customers, clients or suppliers of the other
party, except as permitted by clause 11.2(b).
| (b) | Each party may disclose the
other party's confidential information: |
(i)
to its employees, officers, representatives, contractors,
subcontractors or advisers who need to know such information for the purposes of exercising the party's rights or carrying out its obligations
under the Contract. Each party shall ensure that its employees, officers, representatives, contractors, subcontractors or advisers to
whom it discloses the other party's confidential information comply with this clause 11.2; and
| (ii) | as may be required by law,
a court of competent jurisdiction or any governmental or regulatory authority. |
(c)
Neither party shall use the other party's confidential
information for any purpose other than to exercise its rights and perform its obligations under or in connection with the Contract.
| (a) | The Contract constitutes the
entire agreement between the parties. |
(b)
Each party acknowledges that in entering into the Contract
it does not rely on any statement, representation, assurance or warranty (whether made innocently or negligently) that is not set out
in the Contract. Each party agrees that it shall have no claim for innocent or negligent misrepresentation or negligent misstatement based
on any statement in the Contract.
11.4
Variation. No variation of this Contract shall
be effective unless it is in writing and signed by the parties (or their authorised representatives).
(a)
A waiver of any right or remedy is only effective if
given in writing and shall not be deemed a waiver of any subsequent right or remedy.
(b)
A delay or failure to exercise, or the single or partial
exercise of, any right or remedy shall not waive that or any other right or remedy, nor shall it prevent or restrict the further exercise
of that or any other right or remedy.
11.6
Severance. If any provision or part-provision
of the Contract is or becomes invalid, illegal or unenforceable, it shall be deemed deleted, but that shall not affect the validity and
enforceability of the rest of the Contract. If any provision of the Contract is deemed deleted under this clause 11.6 the parties shall
negotiate in good faith to agree a replacement provision that, to the greatest extent possible, achieves the intended commercial result
of the original provision.
| (a) | Any notice given to a party
under or in connection with the Contract shall be in writing and shall be: |
(i)
delivered by hand or by pre-paid first-class post or
other next working day delivery service at its registered office (if a company) or its principal place of business (in any other case);
or
| (ii) | sent by email to the relevant
parties last communicated address. |
| (b) | Any notice shall be deemed
to have been received: |
| (i) | if delivered by hand, at the
time the notice is left at the proper address; |
(ii)
if sent by pre-paid first-class post or other next working
day delivery service, at 9.00 am on the second Business Day after posting; or
(iii)
if sent by email, at the time of transmission, or, if
this time falls outside Business Hours in the place of receipt, when Business Hours resume.
(c)
This clause does not apply to the service of any proceedings
or other documents in any legal action or, where applicable, any arbitration or other method of dispute resolution.
(a)
The Contract does not give rise to any rights under
the Contracts (Rights of Third Parties) Act 1999 to enforce any term of the Contract.
| (b) | The rights of the parties to
rescind or vary the Contract are not subject to the consent of any other person. |
11.9
Governing law. The Contract, and any dispute
or claim (including non-contractual disputes or claims) arising out of or in connection with it or its subject matter or formation, shall
be governed by and construed in accordance with the law of England and Wales.
11.10
Jurisdiction. Each party irrevocably agrees that
the courts of England and Wales shall have exclusive jurisdiction to settle any dispute or claim (including non-contractual disputes or
claims) arising out of or in connection with the Contract or its subject matter or formation.
| Signed by a director for and on |
|
/s/ Warwick Adams |
| behalf of TIOGA DESIGN
SERVICES LTD |
|
Director |
| |
|
|
| |
|
|
| Signed by a director for and on |
|
/s/ Russell Hoyle |
| behalf of TIOGA
LIMITED |
|
Director |
| |
|
|
| |
|
|
| Signed by a director for and on |
|
/s/ Chris Derbyshire |
| behalf of HYPERION DEFENCE
SOLUTIONS LTD |
|
Director |
| |
|
|
| |
|
|
| Signed by a director for and on |
|
/s/ Tim Grey |
| behalf of HYPERION C-IED
LTD |
|
Director |
| |
|
|
| |
|
|
| Signed by a director for and on |
|
/s/ John-Paul Backwell |
| behalf of ILUS
INTERNATIONAL UK LTD |
|
Director |
| |
|
|
THE
SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION
OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
ILUSTRATO
PICTURES INTERNATIONAL, INC.
CONVERTIBLE PROMISSORY NOTE
Principal Amount: $475,000.00 USD
July
3, 2023
WHEREAS on July 3,
2023, RB Capital Partners, Inc., with its offices at 2856 Torrey Pines Road, La Jolla, California 92037 (the "Holder")
loaned funds totaling, $475,000.00 to Ilustrato Pictures International, Inc., a Nevada corporation
with its office at 26 Broadway; Suite 934; New York, NY 10004 (the "Company"). Payment
for the loan was made directly to the Company in the form of a Wire Transfer.
WHEREAS the
Company and Holder further agreed that such services provided by the Holder to the Company would be evidenced in a convertible note, which
convertible note would be convertible into shares of common stock of the Company at the rate of $0.50 in accordance with Section 3 below;
NOW
THEREFORE THIS AGREEMENT WITNESSES that for and in consideration of the mutual premises and the mutual covenants and agreements contained
herein, the parties covenant and agree each with the other as
follows:
| 1. | Principal and Interest. |
1.1
The Company, for value received, hereby promises to pay to the order of the Holder
the sum of Four Hundred Sevety-Five Thousand Dollars ($475,000.00),
which amount represents the amount owed to Holder as of July 3, 2023.
1.2
This Convertible Promissory Note (the "Note") shall bear five percent (5%) interest per
annum. The Note is for a period of (24) months and cannot be converted until (12) months from the date first written above has passed.
1.3
Upon payment in full of the principal, this Note shall be surrendered to the Company for cancellation.
1.4
The principal under this Note shall be payable at the principal office of the Company and shall
be forwarded to the address of the Holder hereof as such Holder shall from time to time designate.
2.
Attorney's Fees. If
the indebtedness represented by this Note or any part thereof is collected in
bankruptcy, receivership or other judicial proceedings or if this Note is placed in the hands of attorneys for collection after default,
the Company agrees to pay, in addition to the principal payable hereunder, reasonable attorneys' fees and costs incurred by the Holder.
3.1
Voluntary Conversion. The Holder shall have the right, exercisable in whole
or in part, to convert the outstanding principal into a number of fully paid and non-assessable whole shares of the Company's $0.001 Par
Value common stock ("Common Stock") determined in accordance with Section
3.2 below.
3.2 Shares
Issuable. The number of whole shares of Common Stock into which this Note may be voluntarily converted (the "Conversion Shares")
shall be determined by dividing the aggregate principal amount borrowed hereunder by $0.50 (the "Note Conversion
Price"); provided, however, that, in no event, shall Holder be entitled to convert any portion of this Note in excess of that
portion of this Note upon conversion of which the sum of (1) the number of shares of Common stock beneficially owned by Holder and
its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted
portion of this Note or the unexercised or unconverted portion of any other security of Maker subject to a limitation on conversion
or exercise analogous to the limitations contained herein) and (2) the number of shares of
common stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is
being made, would result in the beneficial ownership by Holder and its affiliates of more than 4.99% of the outstanding shares of
common stock of the Company. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of 1934 and Regulation 13D-G thereunder, except as
otherwise provided in clause (1) of
such proviso. The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing
the Conversion Amount (as defined below) by the Note Conversion Price. The Term "Conversion Amount"
means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such
conversion plus, (2) at the Company's option, accrued and unpaid interest, if any, on such principal amount at the interest rate
provided in this Note to the conversion date, provided; however, that the Company shall have the right to pay any or all interest in
cash.
3.3
Notice and Conversion Procedures. After receipt of demand for repayment,
the Company agrees to give the Holder notice at least five (5) business days prior to the time that the Company repays this Note.
If the Holder elects
to convert this Note, the Holder shall provide the Company with a written notice of conversion setting forth the amount to be converted.
The notice must be delivered to the Company together with this Note. Within twenty (20) business days of receipt of such notice, the Company
shall deliver to the Holder certificate(s) for the Common Stock issuable upon
such conversion and, if the entire principal amount was not so converted, a new note representing such balance.
| 3.4 | Other Conversion Provisions. |
(a)
Adjustment of Note Conversion Price. In the event the Company shall in any manner, subsequent
to the issuance of this Note, approve a reclassification involving a reverse stock split and subdivision of the Company's issued and outstanding
shares of Common Stock, the Note Conversion Price shall forthwith be unaffected. In the event the Company shall in any manner, subsequent
to the issuance of this Note, approve a reclassification involving a forward stock split and subdivision of the Company's issued and outstanding
shares of Common Stock, the Note Conversion Price shall forthwith be unaffected.
(b)
Common Stock Defined. Whenever reference is made in this Note to the shares of Common Stock,
the term "Common Stock" shall mean the Common Stock of the Company authorized as of the
date hereof, and any other class of stock ranking on a parity with such Common Stock. Shares issuable upon conversion hereof shall
include only shares of Common Stock of the Company.
3.5
No Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion
of this Note. In lieu of the Company issuing any fractional shares to the Holder upon the conversion of this Note, the Company shall pay
to the Holder the amount of outstanding principal hereunder that is not so converted.
4.
Representations, Warranties and Covenants of the Company. The Company represents, warrants
and covenants with the Holder as follows:
(a)
Authorization; Enforceability. All corporate action on the part of the Company, its officers,
directors and stockholders necessary for the authorization, execution and delivery of this Note and the performance of all obligations
of the Company hereunder has been taken, and this Note constitutes a valid and legally binding obligation of the Company, enforceable
in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally, and (ii) as limited by laws relating to the availability of
specific performance, injunctive relief or other equitable remedies.
(b)
Governmental Consents. No consent, approval, qualification, order or authorization of, or
filing with, any local, state or federal governmental authority is required on the part of the Company in connection with the Company's
valid execution, delivery or performance of this Note except any notices required to be filed with the Securities and Exchange Commission
under Regulation D of the Securities Act of 1933, as amended (the "1933 Act"), or such filings as may be required under applicable
state securities laws, which, if applicable, will be timely filed within the applicable periods therefor.
(c)
No Violation. The execution, delivery and performance by the Company of this Note and the
consummation of the transactions contemplated hereby will not result in a violation of its
Certificate
of Incorporation or Bylaws, in any material respect of any provision of any mortgage, agreement, instrument or contract to which it is
a party or by which it is bound or, to the best of its knowledge, of any federal or state judgment, order, writ, decree, statute, rule
or regulation applicable to the Company or be in material conflict with or constitute, with or without the passage of time or giving of
notice, either a material default under any such provision or an event that results in the creation of any material lien,
charge or encumbrance upon any assets of the Company or the suspension, revocation, impairment, forfeiture
or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business or operations, or any
of its assets or properties.
5.
Representations and Covenants of the Holder. The Company has entered into this Note in reliance
upon the following representations and covenants of the Holder:
(a)
Investment Purpose. This Note and the Common Stock issuable upon conversion of the Note
are acquired for investment and not with a view to the sale or distribution of any part thereof, and the Holder has no present intention
of selling or engaging in any public distribution of the same except pursuant to a registration or exemption.
(b)
Private Issue. The Holder understands (i) that this Note and the
Common Stock issuable upon conversion of this Note are not registered under the 1933 Act or qualified
under applicable state securities laws, and (ii) that the Company is relying on an exemption from registration predicated on the representations
set forth in this Section 8.
(c)
Financial Risk. The Holder has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of its investment, and has the ability to bear the economic risks of its investment.
(d)
Risk of No Registration. The Holder understands that if the Company does
not register with the Securities and Exchange Commission pursuant to Section 12 of the Securities Exchange Act of 1934 (the "1934
Act"), or file reports pursuant to Section 15(d) of the 1934 Act, or if a registration statement covering the securities under the
1933 Act is not in effect when it desires to sell the Common Stock issuable upon conversion of the Note,
it may be required to hold such securities for an indefinite period. The Holder
also understands that any sale of the Note or the Common Stock which might be made by it in reliance upon Rule 144 under the 1933 Act
may be made only in accordance with the terms and conditions of that Rule.
6.
Assignment. Subject to the restrictions on transfer described in Section 8 below, the rights
and obligations of the Company and the Holder shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees
of the parties.
7.
Waiver and Amendment. Any provision of this Note may be amended, waived or modified upon
the written consent of the Company and the Holder.
8.
Transfer of This Note or Securities Issuable on Conversion Hereof. With respect to any offer,
sale or other disposition of this Note or securities into which this Note may be converted, the Holder will give written notice to the
Company prior thereto, describing briefly the manner
thereof.
Unless the Company reasonably determines that such transfer would violate applicable
securities laws, or that such transfer would adversely affect the Company's ability to account for future transactions to which it is
a party as a pooling of interests, and notifies the Holder thereof within five (5) business days after receiving notice of the transfer,
the Holder may effect such transfer. The Note thus transferred and each certificate representing the securities thus transferred shall
bear a legend as to the applicable restrictions on transferability in order to ensure compliance with the 1933 Act, unless in the opinion
of counsel for the Company such legend is not required in order to ensure compliance with the 1933 Act. The Company may issue stop transfer
instructions to its transfer agent in connection with such restrictions.
9.
Notices. Any notice, other communication or payment required or permitted
hereunder shall be in writing and shall be deemed to have been given upon delivery if personally delivered or three (3) business days
after deposit if deposited in the United States mail for mailing by certified mail, postage prepaid. Each of the above addressees may
change its address for purposes of this Section by giving to the other
addressee notice of such new address in conformance with this Section.
10.
Governing Law. This Note is being delivered in and shall be construed in accordance with
the laws of the State of California, without regard to the conflicts of law provisions thereof.
11.
Heading; References. All headings used herein are used for convenience only
and shall not be used to construe or interpret this Note. Except as
otherwise indicated, all references herein to Sections refer to Sections hereof.
12.
Waiver by the Company. The Company hereby waives demand, notice, presentment, protest and
notice of dishonor.
13.
Delays. No delay by the Holder in exercising any power or right hereunder shall operate
as a waiver of any power or right.
14.
Severability. If one or more provisions of this Note are held to be unenforceable under
applicable law, such provision shall be excluded from this Note and the balance of the Note shall be interpreted as if such provision
was so excluded and shall be enforceable in accordance with its terms.
15.
No Impairment. The Company will not, by any voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith
assist in the carrying out of all the provisions of this Note and in the taking of all such action as may be necessary or appropriate
in order to protect the rights of the Holder of this Note against impairment.
[SIGNATURE
PAGE TO FOLLOW]
IN
WITNESS WHEREOF, Ilustrato Pictures International, Inc. has caused this Note to be executed in its corporate name and this Note to be
dated, issued and delivered, all on the date first above written.
| |
|
|
ILUSTRATO PICTURES INTERNATIONAL, INC. |
|
| |
|
|
|
|
| |
|
|
|
|
| |
Date:
July 3, 2023 |
|
By /s/ Nicolas Link |
|
| |
|
|
Nicolas Link |
|
| |
|
|
Its: CEO & Director |
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
RB CAPITAL PARTNERS, INC. |
|
| |
|
|
|
|
| |
|
|
|
|
| |
Date: July 3, 2023 |
|
By: /s/ Brett Rosen |
|
| |
|
|
Brett Rosen |
|
| |
|
|
Its: Managing Member |
|
THE SECURITIES REPRESENTED BY
THIS INSTRUMENT HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO
SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
ILUSTRATO PICTURES INTERNATIONAL,
INC.
CONVERTIBLE PROMISSORY NOTE
Principal Amount: $100,000.00 USD
August
29, 2023
WHEREAS on August 29, 2023, RB Capital Partners, Inc.,
with its offices at 2856 Torrey Pines Road, La Jolla, California 92037 (the “Holder”) loaned funds totaling, $100,000.00 to
Ilustrato Pictures International, Inc., a Nevada corporation with its office at 26 Broadway; Suite 934; New York, NY 10004 (the “Company”).
Payment for the loan was made directly to the Company in the form of a Wire Transfer.
WHEREAS the Company and Holder further
agreed that such services provided by the Holder to the Company would be evidenced in a convertible note, which convertible note would
be convertible into shares of common stock of the Company at the rate of $0.50 in accordance with Section 3 below;
NOW THEREFORE THIS AGREEMENT WITNESSES
that for and in consideration of the mutual premises and the mutual covenants and agreements contained herein, the parties covenant and
agree each with the other as follows:
| 1. | Principal and Interest. |
1.1
The Company, for value received, hereby promises to pay to the order of the Holder the sum of One
Hundred Thousand Dollars ($100,000.00), which amount represents the amount owed to Holder as of August 29, 2023.
1.2
This Convertible Promissory Note (the "Note") shall bear five percent (5%) interest per
annum. The Note is for a period of (24) months and cannot be converted until (12) months from the date first written above has passed.
1.3
Upon payment in full of the principal, this Note shall be surrendered to the Company for cancellation.
1.4
The principal under this Note shall be payable at the principal office of the Company and shall be
forwarded to the address of the Holder hereof as such Holder shall from time to time designate.
2.
Attorney's Fees. If the indebtedness represented by this Note or any part thereof is collected
in bankruptcy, receivership or other judicial proceedings or if this Note is placed in the hands of attorneys for collection after default,
the Company agrees to pay, in addition to the principal payable hereunder, reasonable attorneys' fees and costs incurred by the Holder.
3.1
Voluntary Conversion. The Holder shall have the right, exercisable in whole or in part, to
convert the outstanding principal into a number of fully paid and non-assessable whole shares of the Company's $0.001 Par Value common
stock ("Common Stock") determined in accordance with Section 3.2 below.
3.2 Shares
Issuable. The number of whole shares of Common Stock into which this Note may be voluntarily converted (the “Conversion
Shares”) shall be determined by dividing the aggregate principal amount borrowed hereunder by $0.50 (the “Note
Conversion Price”); provided, however, that, in no event, shall Holder be entitled to convert any portion of this Note in
excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common stock beneficially owned
by Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the
unconverted portion of this Note or the unexercised or unconverted portion of any other security of Maker subject to a limitation on
conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of common stock issuable upon the
conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in the
beneficial ownership by Holder and its affiliates of more than 9.99% of the outstanding shares of common stock of the Company. For
purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934 and Regulation 13D-G thereunder, except as otherwise provided in clause (1)
of such proviso. The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing
the Conversion Amount (as defined below) by the Note Conversion Price. The Term “Conversion Amount” means, with respect
to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion plus, (2) at the
Company’s option, accrued and unpaid interest, if any, on such principal amount at the interest rate provided in this Note to
the conversion date, provided; however, that the Company shall have the right to pay any or all interest in cash.
3.3
Notice and Conversion Procedures. After receipt of demand for repayment, the Company agrees
to give the Holder notice at least five (5) business days prior to the time that the Company repays this Note. If the Holder elects to
convert this Note, the Holder shall provide the Company with a written notice of conversion setting forth the amount to be converted.
The notice must be delivered to the Company together with this Note. Within twenty (20) business days of receipt of such notice, the Company
shall deliver to the Holder certificate(s) for the Common Stock issuable upon such conversion and, if the entire principal
amount was not so converted, a new note representing such balance.
| 3.4 | Other Conversion Provisions. |
(a)
Adjustment of Note Conversion Price. In the event the Company shall in any manner, subsequent
to the issuance of this Note, approve a reclassification involving a reverse stock split and subdivision of the Company’s issued
and outstanding shares of Common Stock, the Note Conversion Price shall forthwith be unaffected. In the event the Company shall in any
manner, subsequent to the issuance of this Note, approve a reclassification involving a forward stock split and subdivision of the Company’s
issued and outstanding shares of Common Stock, the Note Conversion Price shall forthwith be unaffected.
(b)
Common Stock Defined. Whenever reference is made in this Note to the shares of Common Stock,
the term "Common Stock” shall mean the Common Stock of the Company authorized as of the date hereof, and any other class of
stock ranking on a parity with such Common Stock. Shares issuable upon conversion hereof shall include only shares of Common Stock of
the Company.
3.5
No Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion
of this Note. In lieu of the Company issuing any fractional shares to the Holder upon the conversion of this Note, the Company shall pay
to the Holder the amount of outstanding principal hereunder that is not so converted.
4.
Representations, Warranties and Covenants of the Company. The Company represents, warrants
and covenants with the Holder as follows:
(a)
Authorization; Enforceability. All corporate action on the part of the Company, its officers,
directors and stockholders necessary for the authorization, execution and delivery of this Note and the performance of all obligations
of the Company hereunder has been taken, and this Note constitutes a valid and legally binding obligation of the Company, enforceable
in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally, and (ii) as limited by laws relating to the availability of
specific performance, injunctive relief or other equitable remedies.
(b)
Governmental Consents. No consent, approval, qualification, order or authorization of, or
filing with, any local, state or federal governmental authority is required on the part of the Company in connection with the Company's
valid execution, delivery or performance of this Note except any notices required to be filed with the Securities and Exchange Commission
under Regulation D of the Securities Act of 1933, as amended (the "1933 Act"), or such filings as may be required under applicable
state securities laws, which, if applicable, will be timely filed within the applicable periods therefor.
(c)
No Violation. The execution, delivery and performance by the Company of this Note and the
consummation of the transactions contemplated hereby will not result in a violation of its
Certificate of Incorporation or
Bylaws, in any material respect of any provision of any mortgage, agreement, instrument or contract to which it is a party or by which
it is bound or, to the best of its knowledge, of any federal or state judgment, order, writ, decree, statute, rule or regulation applicable
to the Company or be in material conflict with or constitute, with or without the passage of time or giving of notice, either a material
default under any such provision or an event that results in the creation of any material lien, charge or encumbrance upon any assets
of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any material
permit, license, authorization or approval applicable to the Company, its business or operations, or any of its assets or properties.
5.
Representations and Covenants of the Holder. The Company has entered into this Note in reliance
upon the following representations and covenants of the Holder:
(a)
Investment Purpose. This Note and the Common Stock issuable upon conversion of the Note are
acquired for investment and not with a view to the sale or distribution of any part thereof, and the Holder has no present intention of
selling or engaging in any public distribution of the same except pursuant to a registration or exemption.
(b)
Private Issue. The Holder understands (i) that this Note and the Common Stock issuable upon
conversion of this Note are not registered under the 1933 Act or qualified under applicable state securities laws, and (ii) that the Company
is relying on an exemption from registration predicated on the representations set forth in this Section 8.
(c)
Financial Risk. The Holder has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of its investment, and has the ability to bear the economic risks of its investment.
(d)
Risk of No Registration. The Holder understands that if the Company does not register with
the Securities and Exchange Commission pursuant to Section 12 of the Securities Exchange Act of 1934 (the "1934 Act"), or file
reports pursuant to Section 15(d) of the 1934 Act, or if a registration statement covering the securities under the 1933 Act is not in
effect when it desires to sell the Common Stock issuable upon conversion of the Note, it may be required to hold such securities for an
indefinite period. The Holder also understands that any sale of the Note or the Common Stock which might be made by it in reliance upon
Rule 144 under the 1933 Act may be made only in accordance with the terms and conditions of that Rule.
6.
Assignment. Subject to the restrictions on transfer described in Section 8 below, the rights
and obligations of the Company and the Holder shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees
of the parties.
7.
Waiver and Amendment. Any provision of this Note may be amended, waived or modified upon the
written consent of the Company and the Holder.
8.
Transfer of This Note or Securities Issuable on Conversion Hereof. With respect to any offer,
sale or other disposition of this Note or securities into which this Note may be converted, the Holder will give written notice to the
Company prior thereto, describing briefly the manner
thereof. Unless the Company reasonably
determines that such transfer would violate applicable securities laws, or that such transfer would adversely affect the Company's ability
to account for future transactions to which it is a party as a pooling of interests, and notifies the Holder thereof within five (5) business
days after receiving notice of the transfer, the Holder may effect such transfer. The Note thus transferred and each certificate representing
the securities thus transferred shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance
with the 1933 Act, unless in the opinion of counsel for the Company such legend is not required in order to ensure compliance with the
1933 Act. The Company may issue stop transfer instructions to its transfer agent in connection with such restrictions.
9.
Notices. Any notice, other communication or payment required or permitted hereunder shall
be in writing and shall be deemed to have been given upon delivery if personally delivered or three (3) business days after deposit if
deposited in the United States mail for mailing by certified mail, postage prepaid. Each of the above addressees may change its address
for purposes of this Section by giving to the other addressee notice of such new address in conformance with this Section.
10.
Governing Law. This Note is being delivered in and shall be construed in accordance with the
laws of the State of California, without regard to the conflicts of law provisions thereof.
11.
Heading; References. All headings used herein are used for convenience only and shall not
be used to construe or interpret this Note. Except as otherwise indicated, all references herein to Sections refer to Sections hereof.
12.
Waiver by the Company. The Company hereby waives demand, notice, presentment, protest and
notice of dishonor.
13.
Delays. No delay by the Holder in exercising any power or right hereunder shall operate as
a waiver of any power or right.
14.
Severability. If one or more provisions of this Note are held to be unenforceable under applicable
law, such provision shall be excluded from this Note and the balance of the Note shall be interpreted as if such provision was so excluded
and shall be enforceable in accordance with its terms.
15.
No Impairment. The Company will not, by any voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in
the carrying out of all the provisions of this Note and in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder of this Note against impairment.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, Ilustrato
Pictures International, Inc. has caused this Note to be executed in its corporate name and this Note to be dated, issued and delivered,
all on the date first above written.
| |
|
|
ILUSTRATO PICTURES INTERNATIONAL, INC. |
|
| |
|
|
|
|
| |
|
|
|
|
| |
Date:
August 29, 2023 |
|
By /s/ Nicolas Link |
|
| |
|
|
Nicolas Link |
|
| |
|
|
Its: CEO & Director |
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
RB CAPITAL PARTNERS, INC. |
|
| |
|
|
|
|
| |
|
|
|
|
| |
Date: August 29, 2023 |
|
By: /s/ Brett Rosen |
|
| |
|
|
Brett Rosen |
|
| |
|
|
Its: Managing Member |
|
THE SECURITIES REPRESENTED BY
THIS INSTRUMENT HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO
SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
ILUSTRATO PICTURES INTERNATIONAL,
INC.
CONVERTIBLE PROMISSORY NOTE
Principal Amount: $450,000.00 USD
September
5, 2023
WHEREAS on September 5, 2023, RB Capital Partners,
Inc., with its offices at 2856 Torrey Pines Road, La Jolla, California 92037 (the “Holder”) loaned funds totaling, $450,000.00
to Ilustrato Pictures International, Inc., a Nevada corporation with its office at 26 Broadway; Suite 934; New York, NY 10004 (the “Company”).
Payment for the loan was made directly to the Company in the form of a Wire Transfer.
WHEREAS the Company and Holder further
agreed that such services provided by the Holder to the Company would be evidenced in a convertible note, which convertible note would
be convertible into shares of common stock of the Company at the rate of $0.50 in accordance with Section 3 below;
NOW THEREFORE THIS AGREEMENT WITNESSES
that for and in consideration of the mutual premises and the mutual covenants and agreements contained herein, the parties covenant and
agree each with the other as follows:
| 1. | Principal and Interest. |
1.1
The Company, for value received, hereby promises to pay to the order of the Holder the sum of Four
Hundred Fifty Thousand Dollars ($450,000.00), which amount represents the amount owed to Holder as of September 5, 2023.
1.2
This Convertible Promissory Note (the "Note") shall bear five percent (5%) interest per
annum. The Note is for a period of (24) months and cannot be converted until (12) months from the date first written above has passed.
1.3
Upon payment in full of the principal, this Note shall be surrendered to the Company for cancellation.
1.4
The principal under this Note shall
be payable at the principal office of the Company and shall be forwarded to the address of the Holder hereof as such Holder shall from
time to time designate.
2.
Attorney's Fees. If the indebtedness represented by this Note or any part thereof is collected
in bankruptcy, receivership or other judicial proceedings or if this Note is placed in the hands of attorneys for collection after default,
the Company agrees to pay, in addition to the principal payable hereunder, reasonable attorneys' fees and costs incurred by the Holder.
3.1
Voluntary Conversion. The Holder shall have the right, exercisable in whole or in part, to
convert the outstanding principal into a number of fully paid and non-assessable whole shares of the Company's $0.001 Par Value common
stock ("Common Stock") determined in accordance with Section 3.2 below.
3.2 Shares
Issuable. The number of whole shares of Common Stock into which this Note may be voluntarily converted (the “Conversion
Shares”) shall be determined by dividing the aggregate principal amount borrowed hereunder by $0.50 (the “Note
Conversion Price”); provided, however, that, in no event, shall Holder be entitled to convert any portion of this Note in
excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common stock beneficially owned
by Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the
unconverted portion of this Note or the unexercised or unconverted portion of any other security of Maker subject to a limitation on
conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of common stock issuable upon the
conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in the
beneficial ownership by Holder and its affiliates of more than 9.99% of the outstanding shares of common stock of the Company. For
purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934 and Regulation 13D-G thereunder, except as otherwise provided in clause (1)
of such proviso. The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing
the Conversion Amount (as defined below) by the Note Conversion Price. The Term “Conversion Amount” means, with respect
to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion plus, (2) at the
Company’s option, accrued and unpaid interest, if any, on such principal amount at the interest rate provided in this Note to
the conversion date, provided; however, that the Company shall have the right to pay any or all interest in cash.
3.3
Notice and Conversion Procedures. After receipt of demand for repayment, the Company agrees
to give the Holder notice at least five (5) business days prior to the time that the Company repays this Note. If the Holder elects to
convert this Note, the Holder shall provide the Company with a written notice of conversion setting forth the amount to be converted.
The notice must be delivered to the Company together with this Note. Within twenty (20) business days of receipt of such notice, the Company
shall deliver to the Holder certificate(s) for the Common Stock issuable upon such conversion and, if the entire principal
amount was not so converted, a new note representing such balance.
| 3.4 | Other Conversion Provisions. |
(a)
Adjustment of Note Conversion Price. In the event the Company shall in any manner, subsequent
to the issuance of this Note, approve a reclassification involving a reverse stock split and subdivision of the Company’s issued
and outstanding shares of Common Stock, the Note Conversion Price shall forthwith be unaffected. In the event the Company shall in any
manner, subsequent to the issuance of this Note, approve a reclassification involving a forward stock split and subdivision of the Company’s
issued and outstanding shares of Common Stock, the Note Conversion Price shall forthwith be unaffected.
(b)
Common Stock Defined. Whenever reference is made in this Note to the shares of Common Stock,
the term "Common Stock” shall mean the Common Stock of the Company authorized as of the date hereof, and any other class of
stock ranking on a parity with such Common Stock. Shares issuable upon conversion hereof shall include only shares of Common Stock of
the Company.
3.5
No Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion
of this Note. In lieu of the Company issuing any fractional shares to the Holder upon the conversion of this Note, the Company shall pay
to the Holder the amount of outstanding principal hereunder that is not so converted.
4.
Representations, Warranties and Covenants of the Company. The Company represents, warrants
and covenants with the Holder as follows:
(a)
Authorization; Enforceability. All corporate action on the part of the Company, its officers,
directors and stockholders necessary for the authorization, execution and delivery of this Note and the performance of all obligations
of the Company hereunder has been taken, and this Note constitutes a valid and legally binding obligation of the Company, enforceable
in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally, and (ii) as limited by laws relating to the availability of
specific performance, injunctive relief or other equitable remedies.
(b)
Governmental Consents. No consent, approval, qualification, order or authorization of, or
filing with, any local, state or federal governmental authority is required on the part of the Company in connection with the Company's
valid execution, delivery or performance of this Note except any notices required to be filed with the Securities and Exchange Commission
under Regulation D of the Securities Act of 1933, as amended (the "1933 Act"), or such filings as may be required under applicable
state securities laws, which, if applicable, will be timely filed within the applicable periods therefor.
(c)
No Violation. The execution, delivery and performance by the Company of this Note and the
consummation of the transactions contemplated hereby will not result in a violation of its
Certificate of Incorporation or
Bylaws, in any material respect of any provision of any mortgage, agreement, instrument or contract to which it is a party or by which
it is bound or, to the best of its knowledge, of any federal or state judgment, order, writ, decree, statute, rule or regulation applicable
to the Company or be in material conflict with or constitute, with or without the passage of time or giving of notice, either a material
default under any such provision or an event that results in the creation of any material lien, charge or encumbrance upon any assets
of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any material
permit, license, authorization or approval applicable to the Company, its business or operations, or any of its assets or properties.
5.
Representations and Covenants of the Holder. The Company has entered into this Note in reliance
upon the following representations and covenants of the Holder:
(a)
Investment Purpose. This Note and the Common Stock issuable upon conversion of the Note are
acquired for investment and not with a view to the sale or distribution of any part thereof, and the Holder has no present intention of
selling or engaging in any public distribution of the same except pursuant to a registration or exemption.
(b)
Private Issue. The Holder understands (i) that this Note and the Common Stock issuable upon
conversion of this Note are not registered under the 1933 Act or qualified under applicable state securities laws, and (ii) that the Company
is relying on an exemption from registration predicated on the representations set forth in this Section 8.
(c)
Financial Risk. The Holder has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of its investment, and has the ability to bear the economic risks of its investment.
(d)
Risk of No Registration. The Holder understands that if the Company does not register with
the Securities and Exchange Commission pursuant to Section 12 of the Securities Exchange Act of 1934 (the "1934 Act"), or file
reports pursuant to Section 15(d) of the 1934 Act, or if a registration statement covering the securities under the 1933 Act is not in
effect when it desires to sell the Common Stock issuable upon conversion of the Note, it may be required to hold such securities for an
indefinite period. The Holder also understands that any sale of the Note or the Common Stock which might be made by it in reliance upon
Rule 144 under the 1933 Act may be made only in accordance with the terms and conditions of that Rule.
6.
Assignment. Subject to the restrictions on transfer described in Section 8 below, the rights
and obligations of the Company and the Holder shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees
of the parties.
7.
Waiver and Amendment. Any provision of this Note may be amended, waived or modified upon the
written consent of the Company and the Holder.
8.
Transfer of This Note or Securities Issuable on Conversion Hereof. With respect to any offer,
sale or other disposition of this Note or securities into which this Note may be converted, the Holder will give written notice to the
Company prior thereto, describing briefly the manner
thereof.
Unless the Company reasonably determines that such transfer would violate applicable securities laws, or that such transfer would adversely
affect the Company's ability to account for future transactions to which it is a party as a pooling of interests, and notifies the Holder
thereof within five (5) business days after receiving notice of the transfer, the Holder may effect such transfer. The Note thus transferred
and each certificate representing the securities thus transferred shall bear a legend as to the applicable restrictions on transferability
in order to ensure compliance with the 1933 Act, unless in the opinion of counsel for the Company such legend is not required in order
to ensure compliance with the 1933 Act. The Company may issue stop transfer instructions to its transfer agent in connection with such
restrictions.
9.
Notices. Any notice, other communication or payment required or permitted hereunder shall
be in writing and shall be deemed to have been given upon delivery if personally delivered or three (3) business days after deposit if
deposited in the United States mail for mailing by certified mail, postage prepaid. Each of the above addressees may change its address
for purposes of this Section by giving to the other addressee notice of such new address in conformance with this Section.
10.
Governing Law. This Note is being delivered in and shall be construed in accordance with the
laws of the State of California, without regard to the conflicts of law provisions thereof.
11.
Heading; References. All headings used herein are used for convenience only and shall not
be used to construe or interpret this Note. Except as otherwise indicated, all references herein to Sections refer to Sections hereof.
12.
Waiver by the Company. The Company hereby waives demand, notice, presentment, protest and
notice of dishonor.
13.
Delays. No delay by the Holder in exercising any power or right hereunder shall operate as
a waiver of any power or right.
14.
Severability. If one or more provisions of this Note are held to be unenforceable under applicable
law, such provision shall be excluded from this Note and the balance of the Note shall be interpreted as if such provision was so excluded
and shall be enforceable in accordance with its terms.
15.
No Impairment. The Company will not, by any voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in
the carrying out of all the provisions of this Note and in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder of this Note against impairment.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, Ilustrato
Pictures International, Inc. has caused this Note to be executed in its corporate name and this Note to be dated, issued and delivered,
all on the date first above written.
| |
|
|
ILUSTRATO PICTURES INTERNATIONAL, INC. |
|
| |
|
|
|
|
| |
|
|
|
|
| |
Date:
September 5, 2023 |
|
By /s/ Nicolas Link |
|
| |
|
|
Nicolas Link |
|
| |
|
|
Its: CEO & Director |
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
RB CAPITAL PARTNERS, INC. |
|
| |
|
|
|
|
| |
|
|
|
|
| |
Date: September 5, 2023 |
|
By: /s/ Brett Rosen |
|
| |
|
|
Brett Rosen |
|
| |
|
|
Its: Managing Member |
|
ILUSTRATO PICTURES INTERNATIONAL
INC.
COMMON STOCK PURCHASE AGREEMENT
This Common
Stock Purchase Agreement (the "Agreement") is made as of September 06, 2023, among Ilustrato Pictures International Inc., a
Nevada corporation (the "Company") and Kyle Edward Comerford, (the "Investor").
The Investor
understands that the Company proposes to offer and sell to the Investor 5,555,556 shares of its Common Stock for a purchase price of $50,000.00.
| 1. | Purchase and Sale of Common Stock. |
a.
Common Stock Subject to the terms and conditions of this Agreement, the Investor agrees to
purchase from the Company 5,555,556 shares of Company Common Stock for an aggregate purchase price of $50,000.00, payable by delivery
to the Company of a check or wire in the amount of $50,000.00.
The purchase
and sale of the Units shall take place at the offices of the Company at 26 Broadway, Suite 934, New York, NY 10004 ("Closing").
At the Closing, the Company shall deliver to the Investor the Common Stock, which such Investor is purchasing against delivery to the
Company by such Investor of a check, wire transfer, or cancellation of indebtedness in the aggregate amount of the purchase price therefor
payable to the Company's order.
2.
The Company's Representations and Warranties. The Company represents and warrants to the
Investor as follows:
a.
Organization and Standing. The Company is a corporation duly organized and validly existing
under the laws of the State of Nevada.
b.
Authorization. The execution, delivery and performance of this Agreement by the Company has
been duly authorized by all requisite corporate action, and this Agreement constitutes the legal, valid and binding obligation of the
Company enforceable in accordance with its terms, subject as to enforcement of remedies to applicable bankruptcy, insolvency, reorganization
or similar laws relating to or affecting the enforcement of creditors' rights. The execution, delivery and performance of this Agreement
and compliance with the provisions hereof by the Company does not conflict with, or result in a breach or violation of the terms, conditions
or provisions of, or constitute a default (or an event with which the giving of notice or passage of time, or both could result in a default)
under, or result in the creation or imposition of any lien pursuant to the terms of, the Articles of Incorporation or the Bylaws of the
Company.
c.
Securities. When issued pursuant to the terms of this Agreement, the Common Stock will be
validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances caused or created by the Company; provided,
however, that the Common Stock shall be subject to restrictions on transfer under state or
federal securities laws as set forth in this Agreement or otherwise required at the time a transfer is proposed.
| 3. | Representations, Warranties of Investor and Restrictions on Transfer |
a.
Representations and Warranties of Investor. The Investor represents and warrants to the
Company with respect to the purchase of Securities under this Agreement as follows:
i.
This Agreement constitutes the Investor’s valid and legally binding obligation, enforceable
in accordance with its terms.
ii.
The Investor is acquiring the Common Stock for its own account for investment purposes only and not
with a view to, or for the resale in connection with, any "distribution" thereof for purposes of the Securities Act of 1933,
as amended (the "Act"). The Investor understands that the shares of Common Stock have not been registered under the Act or any
applicable state securities laws by reason of a specific exemption therefrom that depends upon, among other things, the bona fide nature
of the investment intent as expressed herein.
iii.
The Investor has discussed the Company and its plans, operations and financial condition with its
officers and has received all such information as the Investor deems necessary and appropriate to enable the Investor to evaluate the
financial risk inherent in making an investment in the Common Stock. The Investor has received satisfactory and complete information concerning
the business and financial condition of the Company in response to the Investor's inquiries.
iv.
The Investor realizes that the acquisition of the Common Stock will be a highly speculative investment.
The Investor is able, without impairing the Investor's financial condition, to hold the Common Stock for an indefinite period of time
and to suffer a complete loss of the Investor's investment. The Investor recognizes that the Company has only recently been organized
and that it has a limited financial and operating history and the investment in the Company involves substantial risks. The Investor understands
all of the risks related to the acquisition of the Common Stock. By virtue of the Investor's experience in evaluating and investing in
private placement transactions of securities in companies similar to the Company, the Investor is capable of evaluating the merits and
risks of the Investor's investment in the Company and has the capacity to protect the Investor's own interests.
v.
The Investor understands that the Common Stock must be held indefinitely unless subsequently registered
under the Act or unless an exemption from registration is otherwise available. Moreover, the Investor understands that the Company is
under no obligation to register the Common Stock. The Investor is aware of Rule 144 promulgated under the Act that permits limited resale
of securities purchased in a private placement subject to the satisfaction of certain conditions. The Investor understands that the Common
Stock will be imprinted with a legend which prohibits the transfer of the Common Stock unless they are registered or such registration
is not required in the opinion of counsel for the Company.
b.
Legends. In addition to any legend imposed by state securities laws, each certificate representing
the Common Stock shall be endorsed with the following legends:
THE SECURITIES REPRESENTED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER
THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY
MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE
AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE
WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
The Company need
not register a transfer of Common Stock unless the conditions specified in the foregoing legends are satisfied. The Company may also instruct
its transfer agent not to register the transfer of any of the Common Stock unless the conditions specified in the foregoing legends are
satisfied.
c.
Removal of Legends and Transfer Restrictions. The legend relating to the Act endorsed on a
stock certificate pursuant to paragraph 4(b) of this Agreement and the stop transfer instructions with respect to such Common Stock shall
be removed and the Company shall issue a stock certificate without such legend to the holder of such Common Stock if such Shares are registered
under the Act and a prospectus meeting the requirements of Section 10 of the Act is available, or if such holder provides to the Company
an opinion of counsel for such holder of the Shares or Note reasonably satisfactory to the Company or a no-action letter or interpretive
opinion of the staff of the Commission to the effect that a public sale, transfer or assignment of such Shares or Note may be made without
registration and without compliance with any restriction such as Rule 144. Any legend imposed by state securities laws will be removed
if the state agency imposing such legend has consented to its removal.
a.
Governing Law. This Agreement shall be governed in all respects by the laws of the State of
New York without regard to the conflict of law provisions thereof.
b.
Survival. The representations and warranties contained herein shall survive the execution
and delivery of this Agreement and the sale of the Common Stock.
c.
Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
d.
Entire Agreement. This Agreement embodies the entire understanding and agreement between each
Investor and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof.
e.
Notices, etc. All notices and other communications required or permitted hereunder shall be
effective upon receipt and shall be in writing and may be delivered in person, by telecopy, electronic mail, overnight delivery service
or U.S. mail, addressed (a) if to an Investor, at his or her address set forth opposite such Investors name on the last page of this Agreement,
or at such other address as such Investor shall have furnished the Company in writing, or (b) if to the Company, at the address of its
principal office, or at such other address as the Company shall have furnished to the Investor in writing.
f.
Titles and Subtitles. The titles of the paragraphs and subparagraphs of this Agreement are
for convenience of reference only and are not to be considered in construing this Agreement.
g.
Counterparts. This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the same instrument.
h.
Amendments and Waivers. Any term of this Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and the holders of the Common Stock. Any amendment or waiver effected in accordance with this Section
shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into
which such securities are convertible), each future holder of all such securities, and the Company.
IN WITNESS WHEREOF, the parties have
caused this Agreement to be duly executed and delivered as of the day and year first written above.
COMPANY: ILUSTRATO PICTURES INTERNATIONAL INC.
a Nevada corporation
By:
/s/ Nicolas Link
Nicolas
Link, CEO
INVESTOR:
$50,000
Amount of
Investment
Kyle Edward Corneford
By:
/s/ Kyle Edward Corneford
Title:
[Signature page to Ilustrato Pictures
International Inc. Common Stock]
ILUSTRATO
PICTURES INTERNATIONAL INC.
COMMON STOCK PURCHASE AGREEMENT
This
Common Stock Purchase Agreement
(the "Agreement") is made
as of September 07, 2023,
among Ilustrato Pictures International Inc.,
a Nevada corporation (the
"Company") and Cameron
Canzellarini,
(the "Investor").
The
Investor understands that
the Company proposes to offer and
sell to the Investor
I 0,000,000 shares of its
Common Stock for a purchase
price of $100,000.00.
| 1. | Purchase and Sale of Common Stock. |
a.
Common Stock
Subject to the
terms and conditions
of this Agreement, the
Investor agrees to purchase from
the Company 10,000,000
shares of Company
Common Stock for an aggregate
purchase price of $100,000.00,
payable by delivery to the Company of a
check or wire in
the amount of $100,000.00.
The
purchase and sale of
the Units shall
take place
at the offices of the Company
at 26 Broadway, Suite 934, New York, NY 10004 ("Closing").
At the Closing,
the Company
shall deliver to the Investor the
Common Stock, which
such Investor is purchasing against delivery to the Company
by such Investor
of a check, wire transfer,
or cancellation of
indebtedness in the aggregate
amount of the purchase price therefor
payable to the Company's order.
2.
The Company's Representations and Warranties. The
Company represents and warrants
to the Investor as follows:
a.
Organization and Standing.
The Company is a
corporation duly organized and validly
existing under the laws
of the State of Nevada.
b.
Authorization. The execution,
delivery and performance
of this Agreement by the Company
has been duly authorized by all requisite corporate action,
and this Agreement constitutes
the legal,
valid and binding obligation of the
Company enforceable in accordance
with its terms, subject as
to enforcement of remedies to applicable bankruptcy,
insolvency,
reorganization
or similar laws
relating to or affecting the
enforcement of creditors'
rights. The execution, delivery
and performance of this
Agreement and compliance with the
provisions hereof by the Company
does not conflict with, or result in a breach or violation of
the terms, conditions
or provisions of, or constitute a
default (or an event with which
the giving
of notice or passage of time,
or both could result in a
default) under, or result
in the creation or imposition of any lien
pursuant to the terms
of, the Articles of
Incorporation or
the Bylaws of the Company.
c.
Securities.
When issued pursuant to the terms
of this Agreement,
the Common Stock
will be validly
issued, fully paid and nonassessable,
and will be
free of any liens or
encumbrances caused or created by
the Company; provided,
however, that the
Common Stock shall
be
subject to restrictions
on transfer under
state or federal
securities laws as
set forth in this
Agreement or otherwise required at the time
a transfer is proposed.
| 3. | Representations, Warranties of Investor and
Restrictions on Transfer |
a.
Representations and
Warranties of
Investor. The
Investor represents and warrants
to the Company
with respect to the
purchase of Securities
under this Agreement as
follows:
i.
This Agreement constitutes
the Investor's valid
and legally binding
obligation, enforceable in
accordance with
its terms.
ii.
The Investor is
acquiring the Common Stock
for its own account for investment
purposes only and
not with a view to,
or for the resale in connection
with, any "distribution" thereof
for purposes of the Securities
Act of 1933, as
amended (the "Act"). The Investor understands that the
shares of Common
Stock have not been registered under
the Act or any applicable
state securities laws by
reason of a specific exemption therefrom
that depends upon,
among other things, the bona
fide nature of the
investment intent as expressed
herein.
111. The
Investor has discussed the
Company and its
plans, operations and
financial condition with
its officers and has received
all such information as
the Investor deems necessary
and appropriate to enable the
Investor to evaluate the
financial risk inherent in
making an investment
in the Common Stock.
The Investor has received
satisfactory and complete
information concerning
the business and
financial condition
of the Company
in response to the
Investor's inquiries.
iv.
The Investor realizes that
the acquisition of the
Common Stock will be a
highly speculative investment.
The Investor is able,
without impairing the Investor's
financial condition, to
hold the Common Stock for an indefinite
period of time and
to suffer a complete
loss of the
Investor's investment. The
Investor recognizes that
the Company has
only recently been organized
and that it has a
limited financial and operating
history and the investment
in the Company involves
substantial
risks. The Investor understands
all of the
risks related to the acquisition of
the Common Stock.
By virtue of
the Investor's experience
in evaluating and
investing in private placement
transactions of securities
in companies similar to
the Company, the Investor
is capable of evaluating
the merits and risks of
the Investor's
investment in the Company
and has the capacity
to protect the Investor's
own interests.
v.
The Investor
understands that the Common Stock must be
held indefinitely unless
subsequently registered under the
Act or unless an exemption
from registration is
otherwise available.
Moreover, the
Investor understands that
the Company is under no
obligation to register
the Common Stock. The
Investor is aware of
Rule 144 promulgated under
the Act that permits limited resale
of securities purchased
in a private placement
subject to the satisfaction
of certain conditions.
The Investor understands that the
Common Stock will be imprinted
with a legend which
prohibits the transfer of
the Common Stock unless
they are registered or
such registration
is not required in the opinion of counsel
for the Company.
b.
Legends. In addition to any
legend imposed by state securities
laws, each certificate
representing the Common Stock shall be endorsed with the following
legends:
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE
"ACT"), OR UNDER THE SECURITIES
LAWS OF CERTAIN STATES. THESE
SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED
UNDER THE ACT AND THE APPLICABLE
STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
INVESTORS SHOULD BE AWARE THAT THEY MAY
BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME. THE ISSUER OF THESE SECURITIES
MAY REQUIRE AN OPINION OF COUNSEL
IN FORM AND SUBSTANCE SATISFACTORY TO
THE ISSUER TO THE
EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE
ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
The
Company need not register
a transfer of Common
Stock unless the conditions specified
in the foregoing legends
are satisfied. The Company
may also instruct its transfer
agent not to register the
transfer of any of the Common
Stock unless the conditions specified in
the foregoing legends are satisfied.
c.
Removal of Legends and Transfer Restrictions.
The legend relating
to the Act endorsed
on a stock certificate pursuant
to paragraph 4(b) of this Agreement
and the stop transfer instructions with
respect to such
Common Stock shall be removed and
the Company shall issue a stock certificate
without such legend
to the holder
of such Common Stock if
such Shares are registered
under the Act
and a prospectus meeting the requirements of Section 10
of the Act is
available, or if such holder
provides to the Company an
opinion of
counsel
for such holder
of the Shares or Note
reasonably satisfactory
to the Company or a no-action
letter or interpretive opinion of the staff
of the
Commission to the effect that
a public sale, transfer
or assignment of such Shares or Note may be made without
registration and without compliance
with any restriction such as Rule
144. Any legend imposed
by state securities laws will
be removed if the state agency
imposing such legend has
consented to its removal.
a. Governing
Law. This Agreement shall be governed in all respects
by the laws of the State of
New York without regard to the conflict of
law provisions thereof.
b.
Survival. The representations
and warranties contained herein shall
survive the execution and delivery
of this Agreement and the sale
of the Common Stock.
c.
Successors and Assigns. Except as otherwise expressly
provided herein, the provisions hereof shall
inure to the benefit of, and
be binding upon, the successors,
assigns, heirs, executors
and administrators of the parties hereto.
d.
Entire Agreement. This Agreement
embodies the entire understanding
and agreement between each
Investor and the Company
and supersedes all prior agreements
and understandings relating to the
subject
matter hereof.
e.
Notices, etc. All notices and
other communications required or permitted hereunder
shall be effective upon
receipt and shall be
in writing and may be delivered
in person, by
, electronic mail,
overnight delivery service
or U.S. mail,
addressed (a) if to an
Investor,
at his or her
address set forth opposite
such Investors name on the
last page of this Agreement,
or at such other address as such
Investor shall have furnished the
Company in writing, or (b)
if to the Company,
at the address of its
principal office, or
at such other address as the
Company shall have furnished to the
Investor in writing.
f.
Titles and
Subtitles. The titles
of the paragraphs and
subparagraphs of this Agreement
are for convenience of reference
only and are not to
be considered in construing
this Agreement.
g.
Counterparts. This Agreement may be executed in
two or more counterparts, each
of which shall
be deemed an original, but
all of which together shall constitute one and the same
instrument.
h. Amendments
and Waivers. Any term of this Agreement may be
amended and the observance of any term
of this Agreement may be waived (either generally or in a particular
instance and either retroactively or
prospectively), only with the written
consent of the Company and the holders of the Common Stock.
Any amendment or waiver effected in accordance
with this Section shall be binding
upon each holder of any securities purchased under
this Agreement at the time outstanding (including
securities into which such securities are convertible), each future
holder of all such securities, and
the Company.
IN
WITNESS WHEREOF, the parties have caused
this Agreement to be duly
executed and delivered as of the day and year first written
above.
COMPANY:
ILUSTRATO PICTURES INTERNATIONAL INC.
a Nevada corporation
By:
/s/ Nicolas Link
Nicolas
Link, CEO
INVESTOR:
$100,000
Amount of
Investment
Cameron Canzellarini
By:
/s/ Cameron Canzellarini
Title:
[Signature
page to Ilustrato Pictures International
Inc. Common Stock]
Consent of Independent Registered Public Accounting Firm
To,
Ilustrato Pictures International Inc. (“ILUS”)
New York, NY
We consent to the inclusion of our following reports Dated April 06, 2023, relating to financial statements of Ilustrato Pictures International,
Inc. (the “Company”) of Independent Registered Public Accounting Firm in this Amendment No. 5 of the Registration Statement
of Ilustrato Pictures International, Inc. (the “Company”) on Form 10, as issued for FY 2021 and FY 2022 and the references
to our firm in this regard in form 10 so being filed by the company.
For, PIPARA & CO
LLP (6841)
Pipara &
Co LLP
Place: Ahmedabad, India
Date: September 11,
2023
| |
New York Office:
1270, Ave of Americas,
Rockfeller Center, FL7,
New York – 10020, USA
|
|
Corporate Office:
“Pipara
Corporate House”
Near
Bandhan Bank Ltd.,
Netaji
Marg, Law Garden,
Ahmedabad
- 380006, INDIA
|
|
Mumbai Office:
#3, 13th floor,
Tradelink,
‘E’ Wing, A - Block,
Kamala
Mills, Senapati Bapat Marg,
Lower Parej, Mumbai - 400013
|
|
Delhi Office:
1602,
Ambadeep Building,
KG Marg, Connaught Place
New Delhi- 110001
|
|
Contact:
T: +1 (646) 387
- 2034
F: 91 79 40 370376
E:usa@pipara.com
naman@piara.com
|
Ilustrato Pictures (PK) (USOTC:ILUS)
Historical Stock Chart
From Oct 2024 to Nov 2024
Ilustrato Pictures (PK) (USOTC:ILUS)
Historical Stock Chart
From Nov 2023 to Nov 2024
