These financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions
to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating
results for the interim period ended June 30, 2022 are not necessarily indicative of the results that can be expected for the full year.
The accompanying notes are an integral part of these
unaudited consolidated financial statements.
The accompanying notes are an integral part of
these unaudited consolidated financial statements.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
AND NATURE OF BUSINESS
Organization
Quality Industrial Corp. (“we”, “our”, the "Company") was incorporated in the state of Nevada in May
1998 as Sensor Technologies Inc. On June 27, 2022, the Company amended its articles of incorporation and changed its name from Wikisoft
Corp. to Quality Industrial Corp.
Nature of operations
The Company is a public M&A Company focused on the Industrial, Oil & Gas and Utility Sectors. We aim to be a global leader
in the manufacture and assembly of industrial equipment and precision engineered technology for the Industrial, Oil & Gas, and Utility
sectors.
Change
of control
On
May 28, 2022, Modern Art Foundation Inc. (“Modern Art”) Rene Lauritsen and Fastbase Holding Inc. agreed to transfer 77,669,078
shares of common stock in the Company to Ilustrato Pictures International Inc. (“Ilustrato”).
Pursuant
to a Stock Transfer Agreement, Ilustrato purchased the shares for an aggregate amount of $500,000. Mr. Nicolas Link is CEO of Ilustrato who
is the beneficial owner.
As
a result of this transaction, there has been a change in control of the Company. The 77,669,078 shares transferred amounts to 77% of
the outstanding shares in our Company. Consequently, Ilustrato is now able to unilaterally control the election of our board of
directors, all matters upon which shareholder approval is required and, ultimately, the direction of our Company.
As
a result of the Change of Control, Mr. Quintal resigned as Chairman of the Board, and Mr. Link was appointed as the Company's Chairman
of the Board. There was no known disagreement with Mr. Qunital on any matter relating to our operations, policies or practices. There
are no further arrangements known to the Company, the operation of which may, at a subsequent date, result in a change in control of
the Company. There are no arrangements or understandings among Modern Art Foundation Inc. (“Modern Art”) Rene Lauritsen and
Fastbase Holding Inc., Ilustrato and their associates with respect to election of directors or other matters.
2.
SUMMARY OF SIGNIFICANT POLICIES
Basis
of Presentation and Principles of consolidation
The
accompanying condensed consolidated financial statements represent the results of operations, financial position and cash flows of the
Company prepared on the accrual basis of accounting and conform to accounting principles generally accepted in the United States of America.
The
consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. – On March 31, 2019, the
Company, a Nevada corporation, entered into an Agreement and Plan of Merger with WikiSoft DE, a Delaware corporation, and WikiSoft Acquisition,
Inc., a Delaware corporation. WikiSoft Acquisition, Inc. merged with and into WikiSoft DE (the “Merger”) on April 30, 2019,
with the filing of Articles of Merger with the Delaware Secretary of State. All significant inter-company transactions and balances have
been eliminated.
Use
of estimates
The
preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure
of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates. Significant estimates include estimates used to review
the Company’s, impairments and estimations of long-lived assets, revenue recognition of Contract based revenue, allowances for
uncollectible accounts, and the valuations of non-cash capital stock issuances. The Company bases its estimates on historical experience
and on various other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions.
Fair
value of financial instruments
• |
Level
1 - |
Quoted
prices in active markets for identical assets or liabilities. These are typically obtained from real-time quotes for transactions
in active exchange markets involving identical assets.
|
|
|
|
• |
Level
2 - |
Quoted
prices for similar assets and liabilities in active markets; quoted prices included for identical or similar assets and liabilities
that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable
in active markets. These are typically obtained from readily-available pricing sources for comparable instruments.
|
|
|
|
• |
Level
3 - |
Unobservable
inputs, where there is little or no market activity for the asset or liability. These inputs reflect the reporting entity’s
own beliefs about the assumptions that market participants would use in pricing the asset or liability, based on the best information
available in the circumstances. |
The
carrying value of cash, accounts payable and accrued expenses, and debt approximate their fair values because of the short-term nature
of these instruments. Management believes the Company is not exposed to significant interest or credit risks arising from these financial
instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit
price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants
on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of
unobservable inputs. The Company utilizes a fair value hierarchy based on three levels of inputs, of which the first two are considered
observable and the last unobservable.
Revenue
Recognition
The
Company recognizes revenue in accordance with ASC Topic 606. The accounting policy on revenue recognition is provided below.
Service
Contracts
The
company recognizes service contract revenue over time, as performance obligations are satisfied, due to the continuous transfer of control
to the customer. Service contracts are generally accounted for as a single unit of account (a single performance obligation) and are
not segmented between types of services. The company recognizes revenue based primarily on contract cost incurred to date compared to
total estimated contract cost (an input method). The input method is the most faithful depiction of the company’s performance because
it directly measures the value of the services transferred to the customer. Changes to total estimated contract cost or losses, if any,
are recognized in the period in which they are determined as assessed at the contract level. Pre-contract costs are expensed as incurred
unless they are expected to be recovered from the client. Project mobilization costs are generally charged to project costs as incurred
when they are an integrated part of the performance obligation being transferred to the client. Customer payments on service contracts
are typically due in advance, depending on the contract.
For
service contracts in which the company has the right to consideration from the customer in an amount that corresponds directly with the
value to the customer of the company’s performance completed to date, revenue is recognized when services are performed and contractually
billable. Service contracts that include multiple performance obligations are segmented between types of services. For contracts with
multiple performance obligations, the company allocates the transaction price to each performance obligation using an estimate of the
stand-alone selling price of each distinct service in the contract. Revenue recognized on service contracts that have not been billed
to clients is classified as a current asset under contract assets on the Consolidated Balance Sheet. Amounts billed to clients more than
revenue recognized on service contracts to date are classified as a current liability under contract liabilities. Customer payments on
service contracts are typically due within 30 days of billing, depending on the contract.
Cash
and cash equivalents
For
purposes of the statements of cash flows, the Company considers all highly liquid investments and short-term debt instruments with original
maturities of six months or less to be cash equivalents.
Stock-based
compensation
The
Company follows the guidelines in FASB Codification Topic ASC 718-10 “Compensation-Stock Compensation,” which requires companies
to measure the cost of employee services received in exchange for an award of an equity instrument based on the grant-date fair value
of the award. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period. The Company
accounts for non-employee share-based awards in accordance with FASB ASC 505-50 under which the awards are valued at the earlier of a
commitment date or upon completion of the services, based on the fair value of the equity instruments, and are recognized as expense
over the service period.
Earnings
(loss) per share
The
Company reports earnings (loss) per share in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting
Standards Codification (“ASC”) 260-10 “Earnings Per Share,” which provides for calculation of “basic”
and “diluted” earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income or
loss available to common stockholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect
the potential dilution of securities that could share in the earnings of an entity. The calculation of diluted net loss per share gives
effect to common stock equivalents; however, potential common shares are excluded if their effect is anti-dilutive.
Long-lived
Assets
In
accordance with the Financial Accounting Standards Board ("FASB") Accounts Standard Codification (ASC) ASC 360-10, "Property,
Plant and Equipment," the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the
existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted
future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying
amount of the asset over its estimated fair value.
Income
taxes
The
Company accounts for its income taxes in accordance with FASB Codification Topic ASC 740-10, “Income Taxes”, which requires
recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carryforwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
Recently
issued accounting pronouncements
The
Company has evaluated all other recent accounting pronouncements and believes that none of them are expected to have a material effect
on the Company's financial position, results of operations or cash flows.
3.
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.
4.
PURCHASE OF MEMBERSHIP INTEREST IN ETHERALABS LLC
On
February 28, 2022, the Company entered into a definitive agreement to acquire 51%
of Etheralabs LLC for 2,550,000
of the Company’s common stock valued at
$104,550.
Etheralabs LLC is a New York City based venture lab and ecosystem that invests in, builds, and deploys disruptive technologies across
the Blockchain space and the transaction includes a global access to Etheralabs´ full stack of technologies across the Blockchain
and global funding landscape. Etheralabs ecosystem allows development and finance partnerships throughout the blockchain world and beyond,
and connects the blockchain community, investors and venture capital to relevant data intelligence and direct investment opportunities.
Wikisoft intends to ensure that Etheralabs future product and technology roadmap supports wikiprofile.com and the upcoming Wikifunding
platform aiming to accelerate matching investors to startups. On May 25, 2022 the Company entered into an agreement to transfer its 51%
ownership interest in Etheralabs LLC to settle
$300,000
of Line of credit – related party debt, as well as $41
of interest.
5.
RELATED PARTY TRANSACTIONS
Related
party advances
As
of June 30, 2022 and December 31, 2021, the Company had amounts due to Ilustrato Pictures International Inc, a majority shareholder of
the Company, of $30,000 and $0, respectively. During the six months ended June 30, 2022 and 2021, the Company received advances in the
amounts of $30,000 and $0, respectively, and the Company made payments on the advances in the amounts of $0 and $0, respectively.
6.
ADVANCES PAYABLE
As
of June 30, 2022 and December 31, 2021, the Company had amounts due to Fastbase Inc, of $29,626 and $29,626, respectively. During the
six months ended June 30, 2022 and 2021, the Company received additional advances in the amounts of $0 and $0, respectively, and the
Company made payments on the advances in the amounts of $0 and $0, respectively.
7.
LINE OF CREDIT
On
December 30, 2020 the company entered into a $1,000,000 revolving note agreement. The note carries and 0.01% interest rate and is due
on the later of the date the Company has the funds to repay the note or 24 months. During the six months ended June 30, 2022, the Company
borrowed $5,000 under the revolving note. On May 25, 2022 the balance of the line of credit was settled in full with the transfer of
the Companys 51% ownership interest in Etheralabs LLC to the shareholder. As of June 30, 2022 and December 31, 2021, the note had a balance
of $0 and $295,000, respectively. Interest expense related to the line of credit was $12 and $12 for the six months ending June 30, 2022
and 2021, respectively.
8.
LOANS PAYABLE
On
June 1, 2020, the Company entered into a loan agreement with Fastbase Inc, in the amount of $30,215. The amount bears no interest and
is due upon request.
On
September 1, 2020, the Company entered into a loan agreement with Fastbase Inc, in the amount of $15,000. The note bears an interest
rate of 4.25% and is due on September 1, 2022.
On
October 24, 2020, the Company entered into a loan agreement with Fastbase Inc in the amount of $7,875. The note bears an
interest rate of 4.25% and is due on January 1, 2023. On April 29, 2022 the Company paid the loan in full as well as accrued interest of $506. As of
June 30, 2022 the balance of principal owed was $0.
On
December 3, 2020, the Company entered into a loan agreement with Fastbase Inc in the amount of $10,000.
The note bears an interest rate of 4.25% and
is due on January
1, 2023.. On January 20, 2022 the Company paid the loan in full as well as accrued interest of $477. As
of June 30, 2022 the balance of principal owed was $0.
On
May 15, 2022, the Company entered into a loan agreement with Fastbase Inc in the amount of $37,000. The note bears an interest rate of
3% and is due on January 1, 2024. On May 25, 2022 the loan was forgiven in full as well as accrued interest of $30, and a gain on forgiveness
of debt of $37,030 was recorded. As of June 30, 2022 the balance of principal owed was $0.
As
of June 30, 2022 and December 31, 2021, the Company had loans payable of $45,215 and 63,090, respectively. Interest expense related to
related party loans was $1,984 and $2,203 for the six months ending June 30, 2022 and 2021, respectively, of which $1,498 was imputed
interest and recorded against additional paid in capital for the period ended June 30, 2022.
9.
STOCKHOLDERS’ EQUITY
The
Company’s authorized capital stock consists of 200,000,000 shares of common stock and 1,000,000 shares of preferred stock, par
value $0.001 per share. As of June 30, 2022 and December 31, 2021, there were 100,883,709 and 94,738,209 shares of common stock issued
and outstanding, respectively.
As
of June 30, 2022 and December 31, 2021, there were 0 and 0 shares of preferred stock of the Company issued and outstanding,
respectively.
Common
Stock issuances during the six months ending June 30, 2022
| • | On
January 3, 2022, the Company issued 500,000 shares of common stock for $20,523 cash. |
| • | On
January 10, 2022, the Company issued 500,000 shares of common stock for $15,975 cash. |
| • | On
March 10, 2022, the Company issued 500,000 shares of common stock for $7,688 cash. |
| • | On
March 21, 2022, the Company issued 750,000 shares of common stock for $13,638 cash. |
| • | On
March 29, 2022, the Company issued 750,000 shares of common stock for $11,725 cash. |
| • | On
February 28 2022 the company entered into a definitive agreement to acquire 51% of Etheralabs
LLC for 2,550,000 of the Company’s common stock valued at $104,550. See note 4 for
additional information. |
| • | On
May 10, 2022 the Company issued 595,500 shares of common stock for $27,017 cash. |
10.
SUBSEQUENT EVENTS
In
accordance with ASC 855-10, we have analyzed our operations subsequent to June 30, 2022 through the date these financial statements and
determined the following were material to these financial statements:
On
August 3, 2022, the Company issued to an accredited investor a two year convertible promissory note in the principal amount of $1,100,000.
The Note bears interest at 7%
per annum. The Company has the right to prepay the Note at any time. All
principal on the Note is convertible into shares of our common stock after six months from issuance at the election of the holder at
a conversion price equal $1.00
per share.
On
August 4, 2022, the Company authorized a change in our name to “Quality Industrial Corp.”.