Quality Industrial Corp (QIND): 2024 10-K Deep Dive\n\nInvestors seeking exposure to the industrial and energy sectors often overlook smaller reporting companies on the OTC markets. Quality Industrial Corp (QIND) is one such hidden gem undergoing a dynamic transformation. After a series of strategic acquisitions, including a controlling stake in Al Shola Al Modea Gas Distribution LLC (ASG), QIND has evolved from a legacy technology portal to an industrial powerhouse specializing in liquefied petroleum gas (LPG) systems in the UAE. Here is your comprehensive 10-K review covering the most important items: business overview, financial performance, risks, and our view on QIND’s investment potential.\n\n## 1. Who Is Quality Industrial Corp?\nQIND is a Nevada-incorporated public company trading on the OTC Markets under ticker QIND. Following a change in control in mid-2022, QIND pivoted from digital content to the energy sector. Its wholly-owned subsidiary, Al Shola Al Modea Gas Distribution LLC (ASG), is an ISO-9001-certified LPG engineering, contracting, and distribution firm based in Dubai, UAE. ASG supplies central gas systems, LPG cylinders, and bulk LPG to commercial, industrial, and hospitality customers throughout the region.\n\n### Core Services at ASG\n- Central Gas Systems (LPG): End-to-end design, supply, installation, and maintenance of regulated pipeline networks, LPG tanks, leak detection, and metering.\n- Cylinder Distribution: A fleet of 56 delivery trucks distributes over 20,000 LPG cylinders per month.\n- Bulk LPG Supply: Approved supplier to Emirates General Petroleum Corp, with three bulk transporters delivering 500,000+ liters of LPG monthly.\n\n

🔑 Key takeaway: QIND now operates in a stable, regulated utility niche with recurring revenue streams and visible margins. ASG’s approval by Dubai Civil Defense and 34+ years of track record are competitive moats. \n\n## 2. FY 2024 Financial Highlights\nQIND’s first consolidated 10-K since the ASG acquisition, covering April–December 2024, reveals a dramatic change:\n\n| Metric | FY 2024 (9 mo.) | FY 2023 | % Change |\n|----------------------------------|------------------|------------------|-----------|\n| Revenue | $11.18 million | $0 | n/a |\n| Gross Profit | $3.96 million | $0 | n/a |\n| Operating Expenses | $3.28 million | $2.77 million | +18.5% |\n| Non-Operating Expense | $0.26 million | $1.47 million | -82.3% |\n| Net Income (Loss) | $0.42 million | -$4.23 million | n/a |\n| Net Income Attributable to Parent| -$0.52 million | -$4.23 million | n/a |\n\nNet income improved to a positive $0.27 million after non-controlling interest thanks to ASG’s profitability. Excluding one-time acquisition and restructuring expenses, the underlying cash EBITDA trend is positive.\n\n

📈 Growth driver: ASG generated $14.27 million in full-year 2024 revenue (up 31% year-over-year) and $2.05 million in net profit, despite UAE corporate taxes of 9% in FY 2024. \n\n### Balance Sheet & Cash Flow\n- Total Assets: $18.11 million (up from $8.84 million) after recording $8.41 million goodwill for ASG.\n- Working Capital: Deficit of $3.9 million, up slightly from $3.8 million due to acquisition financing.\n- Debt: $2.68 million of convertible/promissory notes (net) and $11.36 million short-term liabilities include acquisition earnouts and shareholder payments.\n- Cash: $0.23 million at year-end.\n- Operating Cash Flow: $1.15 million provided.\n- Investing Cash Flow: $5,636 used.\n- Financing Cash Flow: $0.93 million used.\n\n ⚠️ Going concern watch: QIND remains technically a going concern with a heavy working capital deficit. Management plans to finance operations through equity and convertible debt, but unexpected market weakness could tighten liquidity quickly. \n\n## 3. Business Combination & Goodwill\nIn March 2024, QIND acquired 51% of ASG for $10 million ($9 million deferred in stock/cash tranches, $1 million cash).\n- Identifiable net assets at closing: $3.12 million.\n- Allocation: Parent share (51%) = $1.59 million; Non-controlling interest (49%) = $1.53 million.\n- Goodwill: $8.41 million recorded.\n\n### Terms & Payment Structure\n- $9M in quarterly stock/cash tranches over 24 months post-uplisting.\n- $1M cash within 12 months of closing.\n- Board seats: QIND received two non-compensated seats (including Chairman) on ASG’s board.\n- Operational control: Remains with legacy ASG management unless performance triggers termination.\n

Warren.AI 💰 6.8 / 10

🔍 *What to watch:* Lapse of management earn-out tranches and timing of National Exchange uplisting will affect when QIND issues new shares and pay cash outflows.

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4. Risk Factors

QIND faces the usual energy/industrial risks plus those of a smaller reporting company:

1. Working capital and debt risk: Positive EBITDA but a working capital deficit and $2.7M in notes. Refinancing or equity raises are critical.
2. Going concern: The Auditor flagged substantial doubt about QIND’s ability to continue without new financing.
3. Acquisition integration: The success of ASG integration and reversal of a failed Quality International deal may hurt credibility.
4. UAE exposure: Single-country risk in the UAE could be impacted by regulatory, visa, or geopolitical changes. Corporate tax at 9% since 2024 .
5. Liquidity & equity dilution: Eight tranches of stock to ASG sellers and potential NASDAQ uplisting shares could dilute current shareholders.
6. Competition and pricing: ASG competes in the LPG contracting space; price wars or supply chain constraints could pinch margins.
7. Operational hazards: Engineering and gas distribution carry liability exposures and require insurance.
8. Cyber-security: While no incidents in 2024, QIND must maintain robust controls for its systems and outsourced IT.

5. Governance & Management

• Board Change: November 2024 saw Fusion Fuel Green PLC acquire ~67.4% voting power, replacing Ilustrato Pictures as the majority shareholder.
• Leadership: Nicolas Link as Executive Chairman, John-Paul Backwell as CEO, Krishnamoorthy CFO, Carsten Falk CCO, Louise Bennett COO, and a new Managing Director for Middle East.
• Insiders’ Participation: Certain directors/officers have other board roles (e.g., Fusion Fuel, Ilustrato, DRCR)—watch for time allocation and conflicts.

6. Accounting Highlights

• Revenue recognition under ASC 606 for project-based contracts and gas sales.
• Lease accounting under ASC 842: QIND recognized right-of-use assets of $0.22M and liabilities of $0.23M for leased fleet.
• Stock-based compensation: Non-cash expense of $0.10M in 2024; $2.30M in 2023 for management equity grants.
• Warrants and notes: Convertible notes ($2.68M net) and warrants are carried at fair value and amortized.
• Goodwill test: No impairment recorded as of Dec 31, 2024.

7. Investment Outlook & Score

QINDs pivot into energy contracting and distribution through ASG provides a recurring revenue base and profit visibility. The companys near-term financials look better, but it still carries acquisition-related goodwill, working capital deficits, and debt maturities. Achieving a successful NASDAQ uplisting and delivering on the earnouts without excessive dilution will be key catalysts.\n\nOur Investment Score: 6.8 / 10\n- Strengths: Established regional player in a niche energy distribution business with ISO certification and Civil Defense approval; positive 2024 net income.

• Weaknesses: Small reporting company, going concern issues, working capital deficit, contingent equity dilution, lack of US institutional investor coverage.
• Catalysts: Chinese asphalt prices Chinese hype, record yield, inflation trending, Saudi energy policy, gas price rally, new vehicle orders.
• Risks: Failure to raise capital, integration missteps, UAE regulatory changes, conflict of interest.

8. Next Milestones to Watch:

• QIND NASDAQ uplisting and associated share issuance.
• Completion of ASG stock/debt tranches and cash payments in 2025–26.
• 2025 acquisition pipeline—any new deals or joint ventures.
• 2025 audited financials with ASG full-year consolidation.

Conclusion: QIND is at a pivotal inflection point. Investors comfortable with small-cap, high-growth industrial plays, and the linked NASDAQ uplisting prospect can consider adding QIND at current levels, but be prepared for volatility and dilution risk.\n\n\n---\nEmpower Your Portfolio with Informed Small-Cap Picks