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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒ quarterly REPORT under SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: September 30, 2024

 

or

 

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______ to _______

 

Commission File No. 000-55964

 

Quarta-Rad, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware   45-4232089
(State or other Jurisdiction of
Incorporation or Organization)		   (I.R.S. Employer
Identification No.)

 

1201 N. Orange St., Suite 700    
Wilmington, DE   19801
(Address of Principal Executive Offices)   (Zip Code)

 

Registrant’s telephone number, including area code: 732-887-8511

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class   Trading Symbol   Name of Each Exchange on Which Registered
Common Stock, par value $0.0001 per share   QURT   OTC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§230.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

Yes ☐ No ☒

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated file,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐ Accelerated filer ☐
   
Non-accelerated filer ☐ (Do not check if a smaller reporting company) Smaller reporting company ☒

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

Yes ☐ No ☒

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section l2, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

 

Yes ☐ No ☐

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of November 14, 2024, the number of shares outstanding of the issuer’s sole class of common stock, $0.0001 par value per share, is 15,674,483.

 

 

 

 
 

 

table of contents

 

Part I – FINANCIAL INFORMATION 3
Item 1. Financial Statements 3
Condensed and Consolidated Balance Sheets 3
Condensed and Consolidated Statements of Operations 4
Condensed and Consolidated Statements of Stockholders’ Equity 5
Condensed and Consolidated Statements of Cash Flows 7
Notes to the Condensed and Consolidated Unaudited Financial Statements 8
Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations 15
Item 3. Quantitative and Qualitative Disclosures about Market Risk 23
Item 4. Controls and Procedures 24
PART II — OTHER INFORMATION 25
Item 1. Legal Proceedings 25
Item 1A. Risk Factors 25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 25
Item 3. Defaults Upon Senior Securities 25
Item 4. Mine Safety Disclosures 25
Item 5. Other Information 25
Item 6. Exhibits 25
Signatures 26

 

2
 

 

QUARTA-RAD, INC. AND SUBSIDIARIES

 

CONDENSED AND CONSOLIDATED BALANCE SHEETS

(unaudited)

 

         
   As of 
   September 30, 2024   December 31, 2023 
ASSETS          
Current Assets          
Cash  $50,281   $72,625 
Accounts receivable   7,468    7,289 
Accounts receivable - related party   10,000    - 
Marketable securities, trading   1    52,148 
Notes receivable - related party - current portion   73,411    80,813 
Inventory   4,732    30,398 
Total Current Assets   145,893    243,273 
           
Fixed Assets, Net   970    1,570 
           
Other Assets          
Notes receivable - related party, net of current portion and discount of $11,224 and $13,360 at September 30, 2024 and December 31, 2023, respectively   343,033    341,557 
Interest receivable - related party   65,406    44,172 
Trade receivable   31,241    28,673 
Deferred tax asset   34,976    24,069 
Total Other Assets   474,656    438,471 
           
TOTAL ASSETS  $621,519   $683,314 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
           
Current Liabilities          
Accounts payable and accrued expenses  $124,800   $105,244 
Payable - related parties   259,730    184,477 
Total Liabilities   384,530    289,721 
           
Commitments and Contingencies - Note 8   -    - 
           
Stockholders’ Equity          
Common Stock: authorized 50,000,000 common shares, $0.0001 par value 15,674,483 and 15,674,483 were issued and outstanding on September 30, 2024 and December 31, 2023, respectively   1,568    1,568 
Additional paid-in capital   346,726    346,726 
Retained earnings/(accumulated deficit)   (111,305)   45,299 
Total Stockholders’ Equity   236,989    393,593 
           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $621,519   $683,314 

 

See accompanying notes to unaudited condensed and consolidated financial statements

 

3
 

 

QUARTA-RAD, INC. AND SUBSIDIARIES

 

CONDENSED AND CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

   For the three months ended September 30, 2024   For the three months ended September 30, 2023   For the nine months ended September 30, 2024   For the nine months ended September 30, 2023 
                 
Sales -Quarta Rad, Inc., net  $8,697   $61,683   $59,783   $260,744 
Sales - Sellavir, Inc., net - related party   10,000    -    10,000    102,000 
                     
Total sales, net   18,697    61,683    69,783    362,744 
                     
Cost of goods sold - Quarta-Rad, Inc.   5,194    38,154    33,867    169,975 
Cost of goods sold - Sellavir Inc.   4,000    20,599    4,000    61,565 
                     
Gross profit   13,503    2,930    31,916    131,204 
                     
Expenses:                    
General and administrative   24,168    12,065    123,735    38,469 
Advertising   -    15,744    -    49,321 
Professional and consulting fees   34,156    25,770    93,502    100,671 
Operating expenses   58,324    53,579    217,237    188,461 
                     
Net loss from operations   (48,821)   (50,649)   (185,321)   (57,257)
Other income - interest and dividends   34    1    36    302 
Other income/(expense) - foreign currency translation gain/(loss)   33,300    (18,036)   17,190    (18,036)
Other income - interest - related party   11,703    13,965    35,109    27,744 
Other expense - loss on loan modification   -    -    (11,469)   - 
Other income - unrealized gain/(loss) on investments   111,736    (2,166)   98,412    19,614 
Other income - realized loss on investments   (110,561)   -    (110,561)   (3,529)
Net loss before provision for income taxes   (2,609)   (56,885)   (156,604)   (31,162)
                     
Income tax benefit   -    (11,946)   -    (6,544)
                     
Net loss  $(2,609)  $(44,939)  $(156,604)  $(24,618)
                     
Income/(loss) per share - basic and diluted  $-   $-   $(0.01)  $- 
                     
Weighted average shares - basic and diluted   15,674,483    15,674,483    15,674,483    15,674,483 

 

See accompanying notes to unaudited condensed and consolidated financial statements

 

4
 

 

QUARTA-RAD, INC. AND SUBSIDIARIES

 

CONDENSED AND CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the nine months ended September 30, 2024

(Unaudited)

 

                      
               Retained Earnings/   Total 
   Common Stock   Additional   (Accumulated   Stockholders’ 
   Shares   Amount   Paid-In Capital   Deficit)   Equity 
Balance, December 31, 2023   15,674,483   $1,568   $346,726   $45,299   $393,593 
Net loss   -    -    -    (156,604)   (156,604)
Balance, September 30, 2024   15,674,483   $1,568   $346,726   $(111,305)  $236,989 

 

CONDENSED AND CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the nine months ended September 30, 2023

(Unaudited)

 

                  Total 
   Common Stock   Additional   Retained   Stockholders’ 
   Shares   Amount   Paid-In Capital   Earnings   Equity 
Balance, December 31, 2022   15,674,483   $1,568   $346,726   $807   $349,101 
Net loss   -    -    -    (24,618)   (24,618)
Balance, September 30, 2023   15,674,483   $1,568   $346,726   $(23,811)  $324,483 

 

See accompanying notes to unaudited condensed and consolidated financial statements

 

5
 

 

QUARTA-RAD, INC. AND SUBSIDIARIES

 

CONDENSED AND CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Three Months Ended September 30, 2024

(Unaudited)

 

                   Total 
   Common Stock   Additional   Accumulated   Stockholders’ 
   Shares   Amount   Paid-In Capital   Deficit   Equity 
Balance, June 30, 2024   15,674,483   $1,568   $346,726   $(108,696)  $239,598 
Net loss   -    -    -    (2,609)   (2,609)
Balance, September 30, 2024   15,674,483   $1,568   $346,726   $(111,305)  $236,989 

 

CONDENSED AND CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Three Months Ended September 30, 2023

(Unaudited)

 

               Retained Earnings/   Total 
   Common Stock   Additional   (Accumulated   Stockholders’ 
   Shares   Amount   Paid-In Capital   Deficit)   Equity 
Balance, June 30, 2023   15,674,483   $1,568   $346,726   $21,128   $369,422 
Net loss   -    -    -    (44,939)   (44,939)
Balance, September 30, 2023   15,674,483   $1,568   $346,726   $(23,811)  $324,483 

 

See accompanying notes to unaudited condensed and consolidated financial statements

 

6
 

 

QUARTA-RAD, INC. AND SUBSIDIARIES

 

CONDENSED AND CONSOLIDATED STATEMENTS OF CASH FLOWS

 

   For the nine months ended September 30, 2024   For the nine months ended September 30, 2023 
         
OPERATING ACTIVITIES:          
Net loss  $(156,604)  $(24,618)
           
Adjustments to reconcile net income to net cash provided by/(used in) operating activities:          
Depreciation   600    600 
Foreign currency translation (income)/loss   (17,190)   18,036 
Loss on loan modification   11,469    - 
Amortization of note premium   (2,406)   - 
Net realized loss on investments   110,561    3,529 
Net unrealized (gain) on investments   (98,412)   (19,614)
Income tax benefit   

-

    

(6,544

)
Deferred income tax   (10,907)    
Changes in operating assets and liabilities:          
Accounts receivable   (179)   46,571 
Accounts receivable – related party   

(10,000

)   - 
Inventory   25,666    132,602 
Trade receivables   (2,568)   - 
Accrued interest receivable - related party   (32,703)   (32,744)
Accounts payable and accrued expenses   19,556    37,241 
Deferred revenue - related party   -    (102,000)
Related party payable   75,253    71,658 
Net cashed provided/(used) by operating activities   (87,864)   124,717 
           
INVESTING ACTIVITIES:          
Sale of marketable securities, trading   39,998    201,894 
Issuance of notes receivable - related party   -    (415,000)
Purchase of marketable securities, trading   -    (57,921)
Payments on notes receivable, related party   

25,522

      
Cash from acquisition   -    - 
Net cash provided/(used) in Investing Activities   65,520    (271,027)
           
Net change in cash   (22,344)   (146,310)
Cash, beginning of period   72,625    293,878 
Cash, end of period  $50,281   $147,568 
           
Supplemental cash flow information:          
           
Cash paid for interest  $-   $- 
           
Cash paid for income taxes  $10,907   $- 

 

See accompanying notes to unaudited condensed and consolidated financial statements

 

7
 

 

QUARTA-RAD, INC. AND SUBSIDIARIES

 

Notes to the (unaudited) Condensed and Consolidated Financial Statements

 

NOTE 1 - BASIS OF PRESENTATION

 

The condensed and consolidated balance sheet of Quarta-Rad, Inc. and Subsidiaries (the “Company”) as of September30, 2024, and the statements of operations and changes in stockholders’ equity for the three and nine months ended September 30, 2024, and 2023, and the cash flows for three and nine months ended September 30, 2024, and 2023 have not been audited. However, in the opinion of management, such information includes all adjustments (consisting of normal recurring adjustments), which are necessary to accurately reflect the financial position of the Company as of September 30, 2024, the results of operations and cash flows for the periods ended March 31, 2024, and 2023.

 

The condensed and consolidated balance sheet as of December 31. 2023 has been derived from audited financial statements. Certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted, although management believes that the disclosures are adequate to make the information presented not misleading. Interim period results are not necessarily indicative of the results to be achieved for an entire year. These condensed and consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31. 2023.

 

The Company has experienced recurring operating losses, primarily due to limited revenues. The Company’s current financial conditions and recurring losses raise substantial doubt about its ability to continue as a going concern.

 

The current shareholder is currently funding operations. During October 2024, subsequent to the balance sheet date, the Company is exploring plans to distribute the current operations in a spin-off.

 

NOTE 2 - NATURE OF BUSINESS

 

The Company distributes detection devices, including but not limited to Geiger counters, to homeowners and interested customers in North America and Europe. The Company targets homebuilders and home renovation contractors. As noted in RISKS AND UNCERTAINTIES, the Company has encountered certain restrictions in securing inventory and has secured a new supplier.

 

Sellavir has started a video analytics company whose platform empowers organizations to decode videos to develop creative marketing strategies and analysis and call center management solutions through advanced and proprietary technologies using artificial intelligence (“AI”).

 

Sellavir is now focused on developing CenterEye, a call center software platform that leverages AI and advanced analytics to improve call center operations.

 

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Principles of Consolidation

 

The consolidated financial statements include the accounts Quarta-Rad, Inc. and its wholly-owned subsidiaries Quarta-Rad USA, Inc. and Sellavir, Inc. All significant intercompany balances and transactions have been eliminated in consolidation.

 

Use of Estimates and Assumptions

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and judgments that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods.

 

8
 

 

QUARTA-RAD, INC. AND SUBSIDIARIES

 

Notes to the (unaudited) Condensed and Consolidated Financial Statements

 

Significant estimates made by management include, among others, provisions for the valuation of related party revenue,and notes receivable. The Company bases its estimates on historical experience, knowledge of current conditions and belief of what could occur in the future considering available information. The Company reviews its estimates on an on-going basis. The actual results experienced by the Company may differ materially and adversely from its estimates. To the extent there are material differences between the estimates and actual results, future results of operations will be affected.

 

Advertising

 

The Company expenses advertising costs, consisting primarily of placement in multiple publications, along with design and printing costs of sales materials, when incurred. Advertising expenses for the three and nine ended September 30, 2024, and 2023, amounted to $-0-, $-0-, $15,744 and $49,321, respectively.

 

Notes Receivable – related party

 

Notes Receivable – related party consists of loan agreements entered into by Sellavir discussed in Note 4. Amounts payable marked to value in functional currency at the balance sheet date where the Company records foreign translation gain or loss. The Company’s functional currency is the United States Dollar.

 

Concentration of Credit Risk

 

Credit is extended to online platforms and suppliers based on an evaluation of their financial condition, and collateral is generally not required. The Company performs ongoing credit evaluations of its customers and provides an allowance for doubtful accounts as appropriate.

 

Two selling platforms/distributors accounted for 96% of accounts receivable at September 30, 2024 and 88% of accounts receivable at December 31. 2023.

 

Quarta Rad purchased 100% of its inventory through a third party in 2023.

 

Earnings per Share

 

The Company’s basic earnings per share are calculated by dividing its net income available to common stockholders by the weighted average number of common shares outstanding for the period. The Company’s dilutive earnings per share is calculated by dividing its net income available to common shareholders by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There were no potentially dilutive instruments outstanding during the periods ended September 30, 2024, and 2023.

 

Fair Value of Financial Instruments

 

The Company’s financial instruments as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 825, “Financial Instruments” include cash, trade accounts receivable, and accounts payable and accrued expenses. All instruments, except marketable securities are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at September 30, 2024 and December 31. 2023. Marketable securities are level one assets recorded at fair value.

 

FASB ASC 820 “Fair Value Measurements and Disclosures” defines fair value, establishes a framework for measuring fair value in accordance with U.S. GAAP, and expands disclosures about fair value measurements. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

 

  ● Level 1. Observable inputs such as quoted prices in active markets;

 

  ● Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
     
  ● Level 3. Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.

 

9
 

 

QUARTA-RAD, INC. AND SUBSIDIARIES

 

Notes to the (unaudited) Condensed and Consolidated Financial Statements

 

The Company’s investment securities consist of common and options. Substantially all the Company’s investments are Level 1. The fair market value is based on quoted prices in active markets for identical assets. Financial assets are measured at fair value on a recurring basis. The following table provides information at September 30, 2024 about the Company’s financial assets measured at fair value on a recurring basis.

 

Values on September 30, 2024:

 

   Level 1   Level 2   Level 3   Total 
Assets at fair value:                    
Marketable Securities  $  1   $  -   $  -   $  1 
                     
Total assets at fair value, September 30, 2024  $1   $-   $-   $1 

 

Values on December 31. 2023:

 

   Level 1   Level 2   Level 3   Total 
Assets at fair value:                    
Marketable Securities  $52,148   $  -   $  -   $52,148 
                     
Total assets at fair value, December 31. 2023  $52,148   $-   $-   $52,148 

 

Revenue Recognition

 

The Company follows guidance from FASB Accounting Standards Codification ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). The guidance sets forth a five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in U.S. GAAP. The underlying principle of the standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance.

 

Our principal activities from which we generate our revenue are product sales and consulting services.

 

Revenue is measured based on consideration specified in a contract with a customer. A contract with a customer exists when we enter into an enforceable contract with a customer. The contract is based on either the acceptance of standard terms and conditions on the websites for e-commerce customers and via telephone with our third-party call center for our print media and direct mail customers, or the execution of terms and conditions contracts with retailers and wholesalers. These contracts define each party’s rights, payment terms and other contractual terms and conditions of the sale. Consideration is typically paid prior to shipment via credit card or check when our products are sold direct to consumers or approximately 30 days from the time control is transferred when sold to wholesalers, distributors and retailers. We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience and, in some circumstances, published credit and financial information pertaining to the customer.

 

10
 

 

QUARTA-RAD, INC. AND SUBSIDIARIES

 

Notes to the (unaudited) Condensed and Consolidated Financial Statements

 

A performance obligation is a promise in a contract to transfer a distinct product to the customer, which for us is transfer of devices to our customers. Performance obligations promised in a contract are identified based on the goods that will be transferred to the customer that are both capable of being distinct and are distinct in the context of the contract, whereby the transfer of the goods is separately identifiable from other promises in the contract. We have concluded the sale of goods and related shipping and handling are accounted for as the single performance obligation.

 

The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. The transaction price is determined based on the consideration to which we will be entitled to receive in exchange for transferring goods to the customer. We issue refunds to e-commerce and print media customers, upon request, within 30 days of delivery. We estimate the amount of potential refunds at each reporting period using a portfolio approach of historical data, adjusted for changes in expected customer experience, including seasonality and changes in economic factors. For retailers, distributors and wholesalers, we do not offer a right of return or refund and revenue is recognized at the time products are shipped to customers. In all cases, judgment is required in estimating these reserves. Actual claims for returns could be materially different from the estimates. There was no reserve for sales returns and allowances, at September 30, 2024 and December 31. 2023, respectively.

 

We recognize revenue when we satisfy a performance obligation in a contract by transferring control over a product to a customer when a product is shipped. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by us from a customer, are excluded from revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfilment cost and are included in cost of product sales.

 

We recognize consulting revenue over time as services are performed.

 

Recent Accounting Pronouncements

 

We have adopted all recently issued accounting pronouncements. The adoption of the new accounting pronouncements is not anticipated to have a material effect on our operations.

 

Risks and Uncertainties

 

RUSSIAN INVASION OF UKRAINE

 

In February 2022, Russia invaded the nation of Ukraine and certain sanctions and banking restrictions were levied upon Russia. As a result, the Company’s ability to purchase inventory from Russia has been impacted.

 

The Company is actively monitoring the situation and working closely with their suppliers and logistics companies to mitigate the impact. During October 2022 the Company has encountered additional restrictions in the EU and believes their ability to continue to sell in the EU will be diminished. The Company has found another factory to supply inventory in Kazakhstan, which received a shipment of 200 units at the end of 2023. The units were partially sold during the first, second and third quarters of 2024.

 

The Company is continuing to expand its Artificial Intelligence business through development of new services and software, and consulting on strategies and implementation, and are in the process of transforming our company from an import heavy revenue entity to AI services revenue becoming the majority of total sales. Due to the constraints with the Quarta Rad related income, additional focus and resources will be utilized by Sellavir Beginning in 2024, Sellavir will strategically focus on harnessing its advanced AI capabilities and extensive experience to innovate within the call center industry. The industry’s evolving landscape, particularly the shift from traditional on-premise solutions to cloud-hosted platforms, presents a unique opportunity for Sellavir to introduce a suite of AI-driven products.

 

The success of call center product, CenterEye, depends on our ability to develop features that meet client needs, keep up with technological advancements, and address any software bugs or security vulnerabilities promptly. There is no guarantee that CenterEye will achieve market acceptance. Failure to gain traction could adversely affect our financial condition and results of operations.

 

11
 

 

QUARTA-RAD, INC. AND SUBSIDIARIES

 

Notes to the (unaudited) Condensed and Consolidated Financial Statements

 

NOTE 4–NOTE RECEIVABLE – RELATED PARTY

 

During March 2023, Sellavir entered into a loan agreement with a related Thai Corporation. for the purchase of land and to ultimately build a structure. The Company’s CEO and majority shareholder became the CEO and a minority shareholder in the Thai entity in May 2023. The Thai Corporation will repay Sellavir $9,000,000 Thai Bhat, valued at $261,038, at the time of the loan, which includes a premium of $16,038 plus interest a rate of 15% per annum. As of January 2024, the note was amended to reduce the interest rate to 10% and for Sellavir to receive 3% of the selling price of the secured property. The Company recorded a loss of $8,188 in connection with this loan modification. The Company marked the note to Thai Bhat, valued at $278,226 and $261,072 recording a gain /(loss)on foreign currency translation of $17,154 and ($36) at September 30, 2024 and December 31, 2023, respectively. The amount of unamortized premium at September 30, 2024 and December 31, 2023 is $12,830 and $13,362, respectively. Payments are deferred until April 1, 2025, for the initial payment, with quarterly principal payments starting April 1, 2025 are due through April 1, 2029. Interest is payable at the end of the loan. The Company will amortize the premium over the life of the loan. Payments are payable in Thai Baht. The loan is secured by land located in Thailand. Sellavir received a $14,897 principal payment in April 2024 in connection with this loan.

 

The Company issued an additional loan to the Thai Corporation in May 2023 for $175,000, at the rate of 15% per annum. In January 2024, the note was amended to reduce the interest rate to 10% effective January 2024 and for Sellvir to receive 3% of the selling price of the secured property. The Company recorded a loss of $3,281 in connection with this loan modification. Payments are deferred until April 1, 2025, for the initial payment, with quarterly principal payments starting April 1, 2025 are due through April 1, 2029. Interest is payable at the end of the loan.. The loan is secured by land located in Thailand. . Sellavir received a $10,625 principal payment in April 2024 in connection with this loan.

 

During January 2024, both notes were amended to provide a one year extension for all payment due dates.

 

Accrued interest at September 30, 2024 and December 31, 2023 for both loans is $65,406 and $44,172, respectively, included as a long-term asset, interest receivable – related party.

 

Principal amounts to be received for the two notes are as follows:

 

    $261,038 Note   $175,000 Note   Total 
2025   $49,379   $21,250   $70,629 
2026   65,839    42,500    108,339 
2027   65,839    42,500    108,339 
2028   65,839    42,500    108,339 
2029   16,397    15,625    32,022 
Totals   $263,293   $164,375   $427,668 

 

12
 

 

QUARTA-RAD, INC. AND SUBSIDIARIES

 

Notes to the (unaudited) Condensed and Consolidated Financial Statements

 

NOTE 5–PROPERTY AND EQUIPMENT

 

Property and Equipment at September 30, 2024 and December 31. 2023 consisted of:

 

   September 30,   December 31, 
   2024   2023 
Computer Equipment  $4,005   $4,005 
Accumulated Depreciation   (3,035)   (2,435)
Net Property & Equipment  $970   $1,570 

 

The Company recognized $200, $600, $200, and $600 in depreciation expense in each period for the three and nine months ended September 30, 2024 and 2023, respectively.

 

NOTE 6–RELATED PARTY TRANSACTIONS

 

During July 2017, the Company entered into an agreement with Quarta Rad, LTD (“QRR”), a company in Russia, which is owned by the Company’s minority shareholder to develop and update software for a new device for $180,000. The development contract ended December 31, 2019. The amount due in connection with this agreement as of September 30, 2024, and December 31. 2023, is $91,850 and $91,850, respectively. The balances are due on demand and do not incur interest. In April 2024, the minority shareholder sold their total shares and is no longer affiliated with the Company.

 

In May 2022, the Company began using Star Systems Corporation (“STAR”:), a Japanese entity owned by the Company’s majority shareholder, as an intermediary to purchase inventory from QRR. The Company owes Star $42,502 and $42,502 on September 30, 2024 and December 31, 2023, for purchasers and inventory and upgrades from 2022. The balances are due on demand and do not incur interest.

 

In April 2021, the Company began compensating its CEO, who is the majority shareholder. The Company expensed $8,000, $24,000, $8,000 and $24,000 for the three and nine months ended September 30,, 2024, and 2023, respectively. As of September 30, 2024 and December 31, 2023 the Company has accrued $112,000 and $88,000, respectively for this compensation, included within accounts payable and accrued expenses on the accompanying balance sheets.

 

From time to time the CEO advanced funds for operations. As of September 30, 2024 and December 31, 2023, is due $125,378 and $56,125, respectively, for expenses paid on behalf of the Company. The balances are due on demand and do not accrue interest.

 

Sellavir recognized $10,000, $10,000, $0 and $102,000 of revenue for the three and nine months ended September 30, 2024, and 2023, respectively. Revenue for the three months ended September 30, 2024 is in connection with a licensing agreement. The services prior are related to services to STAR to develop software. The license agreement relates to software customization for several of Star’s clients to improve their call center platforms.

 

13
 

 

QUARTA-RAD, INC. AND SUBSIDIARIES

 

Notes to the (unaudited) Condensed and Consolidated Financial Statements

 

NOTE 7–SEGMENTS

 

The Company has two operating segments through the operations of Quarta-Rad and Sellavir. The Company evaluates the performance of its segments based on revenues, operating income(loss) and net income(loss).

 

Segment information for the three and nine months ended September 2024 and 2023 is as follows:

 

             
For the nine months ended September 30, 2024
   Quarta-Rad   Sellavir   Consolidated 
Revenues  $59,783    10,000   $69,783 
Loss from operations   (108,517)   (76,804)   (185,321)
Net loss  $(108,517)   (48,087)  $(156,604)

 

             
For the three months ended September 30, 2024
   Quarta-Rad   Sellavir   Consolidated 
Revenues  $8,697    10,000   $18,697 
Loss from operations   (30,445)   (18,376)   (48,821)
Net income/(loss)  $(30,445)   27,836   $(2,609)

 

             
For the nine months ended September 30, 2023
   Quarta-Rad   Sellavir   Consolidated 
Revenues  $260,744   $102,000   $362,744 
Income/(loss) from operations   (89,899)   32,642    (57,257)
Net income/(loss)  $(71,020)  $46,402   $(24,618)

 

             
For the three months ended September 30, 2023
   Quarta-Rad   Sellavir   Consolidated 
Revenues  $61,683   $-   $61,683 
Loss from operations   (26,741)   (23,908)   (50,649)
Net loss  $(21,125)  $(23,814)  $(44,939)

 

Total Assets  As of September 30, 2024   As of December 31, 2023 
Quarta-Rad  $85,728   $151,789 
Sellavir   535,791    531,525 
Total Assets  $621,519   $683,314 

 

NOTE 8– COMMITMENTS AND CONTINGENCIES

 

Contingencies

 

Legal

 

In the normal course of business, the Company may become involved in various legal proceedings. The Company knows of no pending or threatened legal proceeding to which the Company is or will be a party that, if successful, might result in material adverse change in the Company’s business, properties or financial condition.

 

NOTE 9–SUBSEQUENT EVENTS

 

The Company has performed an evaluation of events occurring subsequent to September 30, 2024 through November 14, 2024. Based on its evaluation, other than the note below there is nothing to be disclosed herein. During October 2024, subsequent to the balance sheet date, the Company is exploring plans to distribute the current operations in a spin-off.

 

14
 

 

Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations

 

The following is management’s discussion and analysis of financial condition and results of operations and is provided as a supplement to the accompanying unaudited condensed financial statements and notes to help provide an understanding of our financial condition, results of operations and cash flows during the periods included in the accompanying unaudited condensed financial statements.

 

In this Quarterly Report on Form 10-Q, “Company,” “the Company,” “us,” and “our” refer to Quarta-Rad, Inc., a Delaware corporation, unless the context requires otherwise.

 

We intend the following discussion to assist in the understanding of our financial position and our results of operations for the three and nine months ended September 30, 2024 and 2022. You should refer to the Financial Statements and related Notes in conjunction with this discussion.

 

Results of Operations

 

General

 

We were incorporated under the laws of the State of Delaware on November 29, 2011 with fiscal year end in December 31. We were formed to distribute and sell detection devices to homeowners and interested consumers in North America. Initially, our business plan was to sell products on consignment from Star Systems Japan, a corporation owned by our majority shareholder. We purchased these products from Quarta-Rad, Ltd., a company owned by our minority shareholder. We also targeted direct-to-consumer sales since we believe we can distribute these products through the Internet. We have never been party to any bankruptcy, receivership or similar proceeding, nor have we undergone any material reclassification, merger, consolidation, purchase or sale of a significant amount of assets not in the ordinary course of business.

 

Beginning in 2013, we began purchasing the products from Quarta-Rad, Ltd., our related party supplier and it shipped the products to us. We then shipped the products to a third-party online retailer, to hold for Internet sales and sales to our third-party resellers

 

During April 2020, we acquired Quarta-Rad USA, Inc., a Delaware corporation, as a wholly owned subsidiary. There was no consideration paid for the shares. The purpose of the acquisition is to separate the sales of certain products in separate entities. There was no activity, assets or liabilities in the subsidiary through March 31, 2024.

 

During December 2020, we acquired Sellavir, Inc. Sellavir is an AI company whose platform empowers organizations to decode videos to develop creative marketing strategies and analysis through advanced and proprietary technologies. Sellavir is set to launch a new product specifically designed to simplify the use of complex cloud-based call center platforms.

 

Prior to April 2024, our chief executive officer and director, Victor Shvetsky, and our director and president, Alexey Golovanov, were our only employees. In April 2024, Mr. Golovanov resigned from the Company.

 

We were formed to distribute and sell detection devices, including Geiger counters, but we are currently expanding our focus to the development and marketing of our call center software, CenterEye. CenterEye is designed to enhance call center operations through advanced analytics and AI technologies. We are actively developing this software and pursuing sales opportunities in the U.S., Japan, and other international markets. Recent traction in Japan indicates growing interest in our product.

 

During October 2024, the Company is exploring plans to potentially distribute its current operations of both Quarta-Rad and Sellavir and use the company to support operations in alternate services lines.

 

Our administrative office is located at 1201 N. Orange St., Suite 700, Wilmington, DE 19801, which is a virtual office.

 

15
 

 

Our business strategy is expanding to the development and marketing of CenterEye, our proprietary call center software. We aim to enhance call center efficiency and customer engagement through innovative AI-driven solutions. While we maintain our online presence, our primary efforts are directed toward software development, marketing, and establishing partnerships with call centers and businesses requiring advanced customer service solutions.

 

Sellavir Consulting:

 

We expanded our operations through the acquisition of Sellavir Inc. in December 2020. Sellavir is an AI company that leverages its knowledge in neural networks to provide customized AI and development services to our clients. Our services are focused on offering customized solutions for image processing. Our current business model relies on identifying the specific customer needs and developing a software solution to address them. We currently do not have any clients in the US, and our sole revenue stream is from our Japanese reseller. We rely on their sales staff for the identification of new opportunities in the Japanese market. Quarta-Rad has acquired the company to:

 

- leverage Sellavir capabilities to combine it with its Radex series to offer AI-enhanced radiation detection capabilities

- expand its scope outside the radiation measurement

- recognizing the potential in the call center industry and leveraging Sellavir’s, we are set to launch a new product specifically designed to simplify the use of complex cloud-based call center platforms. This product will be offered as a monthly subscription service, which is anticipated to provide a steady and predictable stream of revenue/ Sellavir began recognizing revenue in September 2024 in connection with the call center software.

 

Critical Accounting Policy and Estimates. Our Management’s Discussion and Analysis of Financial Condition and Results of Operations section discusses our condensed financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these condensed financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of our condensed financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources. In addition, these accounting policies are described at relevant sections in this discussion and analysis and in the notes to the condensed financial statements included in this Quarterly Report on Form 10-Q.

 

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited financial statements for the three and nine months ended September 30, 2024, and 2023, together with notes thereto, which are included in this Quarterly Report on Form 10-Q.

 

16
 

 

The Company has two operating segments through the operations of Quarta-Rad and Sellavir. Net income for the nine months ended September 30, 2024, is comprised of:

 

   Quarta Rad   Sellavir   Total 
Sales  $59,783   $10,000   $69,783 
Cost of Good Sold   33,867    4,000    37,867 
Gross Profit   25,916    6,000    31,916 
                
Expenses:               
General & administrative   43,431    80,304    123,735 
Advertising   -    -    - 
Professional and consulting fees   91,002    2,500    93,502 
Operating expenses   134,433    82,804    217,237 
                
Net loss from operations   (108,517)   (76,804)   (185,321)
                
Interest and dividends   -    36    36 
Other expense - foreign currency translation loss   17,190    17,190      
Other income - interest - related party   -    35,109    35,109 
Other expense - loss on loan modification        (11,469)   (11,469)
Unrealized gain/(loss) on investments   -    98,412    98,412 
Realized gain/(loss) on investments   -    (110,561)   (110,561)
Interest expense        -    - 
Income tax benefit             - 
                
Net loss  $(108,517)  $(48,087)  $(156,604)

 

17
 

 

The Company has two operating segments through the operations of Quarta-Rad and Sellavir. Net income for the three months ended September 30, 2023, is comprised of:

 

   Quarta Rad   Sellavir   Total 
Sales  $260,744   $102,000   $362,744 
Cost of Good Sold   169,975    61,565    231,540 
Gross Profit   90,769    40,435    131,204 
                
Expenses:               
General & administrative   35,676    2,793    38,469 
Advertising   49,321    -    49,321 
Professional and consulting fees   95,671    5,000    100,671 
Operating expenses   180,668    7,793    188,461 
                
Net income (loss) from operations   (89,899)   32,642    (57,257)
                
Interest and dividends   -    302    302 
Other expense - foreign currency translation loss   (18,036)   (18,036)     
Other income - interest - related party   -    27,744    27,744 
Unrealized gain/(loss) on investments   -    19,614    19,614 
Realized gain/(loss) on investments        (3,529)   (3,529)
Interest expense        -    - 
Income tax benefit (/expense)   18,879    (12,335)   6,544 
                
Net income/(loss)  $(71,020)  $46,402   $(24,618)

 

18
 

 

Management’s Plan to Address Going Concern Considerations

 

The Company has experienced recurring operating losses, primarily due to limited revenues. The Company’s current financial conditions and recurring losses raise substantial doubt about its ability to continue as a going concern.

 

Management intends to maintain adequate working capital and adhere to prudent financial forecasting.

 

Consolidated Totals:

 

Nine months ended September 30, 2024 compared with the nine months ended September 30, 2023

 

Revenues. Our net revenues decreased $292,961, or 80.76% to $69,783 for the nine months ended September 30, 2024, compared with $362,744 for the nine months ended September 30, 2023.The reduction was primarily attributable to the sales of our RD1503 model and reduction in recognized Sellavir revenue.

 

Cost of Goods Sold. Our Cost of Goods Sold decreased $193,673, or 83.6% to $37,867 for the nine months ended September 30, 2024, compared with $231,540 for the comparable period in 2023. The decrease was a result of Quarta Rad direct costs due to reduced revenue.

 

Operating Expenses. For the nine months ended September 30, 2024, our total operating expenses increased $28,776, or 15.27% to $217,237, compared to $188,461 for the nine months ended September 30, 2023. The increase is primarily attributable to the classification of Sellavir’s contractor costs.

 

Net Loss. Our net loss increased $131,986, or 536.14% to $156,604 for the nine months ended September 30, 2024, compared to a net loss of $31,162 for the nine months ended September 30, 2023. The increase was primarily due to reduced sales and realized loss on investments.

 

QUARTA-RAD

 

Nine months ended September 30, 2024, compared with the nine months ended September 30, 2023

 

Revenues. Our net revenues decreased $200,961, or 77.07% to $59,783 for the nine months ended September 30, 2024, compared with $260,744 for the nine months ended September 30, 2023. The reduction was primarily attributable to the sales of our RD1503 model.

 

Cost of Goods Sold. Our Cost of Goods Sold decreased $136,108 or 77.07% to $33,867. for the nine months ended September 30, 2024, compared to $169,975 for the comparable period in 2023. The decrease was a result of decreased sales.

 

Operating Expenses. For the nine months ended September 30, 2024, our total operating expenses decreased $46,235, or 25.59% to $134,433, compared to $180,668 for the nine months ended September 30, 2023. The decrease is primarily attributable to the Company’s reduced professional fees and advertising expenses.

 

19
 

 

Net Loss. Our net loss increased $37,497, or 52.80%% to $108,517 for the nine months ended September 30, 2024, compared to a net loss of $71,020 for the nine months ended September 30, 2023. The increase was primarily due to reduced sales.

 

SELLAVIR

 

Nine months ended September 30, 2024, compared with the nine months ended September 30, 2023

 

Revenues. Our net recognized revenue decreased $92,000, or 90.20%, to $10,000 for the nine months ended September 30, 2024 compared with $62,000- for the nine months ended September 30, 2023. The decrease is due to timing or revenue recognized.

 

Cost of Goods Sold. Our Cost of Goods Sold decreased $57,565 or 93.50% to $4,000 for the nine months ended September 30, 2024, compared to $61,565 for the comparable period in 2023. The decrease was primarily due to the classification of contractor costs and reduction in revenue.

 

Operating Expenses. For the nine months ended September 30, 2024, our total operating expenses increased $75,011 or 952.54% to $82.804 compared to $7,793 for the nine months ended September 30, 2023. The increase was primarily due to the classification of contractor costs.

 

Net Loss. Our net loss increased $94,489 to $48,087 for the nine months ended September 30, 2024, compared to net income of $46,402 for the nine months ended September 30, 2023. The increase was primarily due to a reduction in sales.

 

Three months ended September 30, 2024 compared with the three months ended September 30, 2023

 

Revenues. Our net revenues decreased $52,986, or 85.90% to $8,697 for the three months ended September 30, 2024, compared with $61,683 for the three months ended September 30, 2023. The reduction was primarily attributable to the sales of our RD1503 model.

 

Cost of Goods Sold. Our Cost of Goods Sold decreased $49,559 or 91.16% to $9,194 for the three months ended September 30, 2024 compared to $58,753for the comparable period in 2023. The decrease was a result of Quarta Rad direct costs due to reduced revenue and classification of Sellavir contractor costs.

 

Operating Expenses. For the three months ended September 30, 2024, our total operating expenses increased $4,745 or 8.86% to $58,324 compared to $53,579 for the three months ended September 30, 2023. The increase is primarily attributable to Sellavir’s classification of contractor costs.

 

Net Loss. Our net loss decreased $42,330 or 94.19% to $2,609 for the three months ended September 30, 2024 compared to $44,939 for the three months ended September 30, 2023. The decrease was primarily due to a decrease in advertising and an increase in foreign currency translation gain.

 

QUARTA-RAD

 

Three months ended September 30, 2024, compared with the three months ended September 30, 2023

 

Revenues. Our net revenues decreased $52,986, or 85.90% to $8,697 for the three months ended September 30, 2024, compared with $61,683 for the three months ended September 30, 2023. The reduction was primarily attributable to the sales of our RD1503 model.

 

Cost of Goods Sold. Our Cost of Goods Sold decreased $32,960 or 86.39% to $5,194 for the three months ended September 30, 2024, compared to $38,154 for the comparable period in 2023. The decrease was a result of decreased sales.

 

20
 

 

Operating Expenses. For the three months ended September 30, 2024, our total operating expenses decreased $16,332 or 32.47% to $33,948 compared to $50,270 for the three months ended September 30, 2023. The decrease is primarily attributable to the decrease in advertising.

 

Net Loss. Our net loss increased $9,320 or 44.12% to $30,445 for the three months ended September 30, 2024, compared to a net loss of $21,125 for the three months ended September 30, 2023. The increase was primarily due to a decrease in sales.

 

SELLAVIR

 

Three months ended September 30, 2024, compared with the three months ended September 30, 2023

 

Revenues. Our net recognized revenue increased $10,000 to $10,000 for the three months ended September 30, 2024 compared with $-0- for the three months ended September 30, 2023. The increase is due to timing or revenue recognized.

 

Cost of Goods Sold. Our Cost of Goods Sold decreased $16,599 or 80.58% to $4,000 for the three months ended September 30, 2024, compared to $20,599 for the comparable period in 2023. The decrease was primarily due to the classification of contractor costs.

 

Operating Expenses. For the three months ended September 30, 2024, our total operating expenses increased $21,067 or 636.66% to $24,376 compared to $3,309 for the three months ended September 30, 2023. The increase was primarily due to the classification of contractor costs.

 

Net Loss. Our net income increased $51,650 to $27,836 for the three months ended September 30, 2024, compared to a net loss of ($23,814) for the three months ended September 30, 2023. The increase was primarily due to a gain on foreign currency translation and increased sales.

 

Liquidity and Capital Resources. During the three months ended September 30, 2024, we used cash for operating expenses from cash on hand and the sale of products on the Internet and from independent, third-party resellers and from consulting revenue from Sellavir.

 

Our total assets were $621,519 and $683,145 as of September 30, 2024, and December 31, 2023, respectively, consisting of $50,281 and $72,625, respectively, in cash. Our working capital deficit was ($238,637) and ($46,448) as of September 30, 2024 and December 31, 2023, respectively.

 

We had $87,864 used by and $124,717 in cash provided by operating activities for the nine months ended September 30, 2024 and 2023, respectively.

 

We had $65,520 in cash provided by and $271,027 cash used by investing activities for the three months ended September 30, 2024 and 2023, respectively. During March and May 2023 Sellavir entered into loan agreements with a related Thai Corporation. The investment includes a premium of $16,038 plus interest rate of 15% per annum, adjusted to 10% in January 2024. The loan is secured by land located in Thailand.

 

We had $-0- and $-0- in cash provided by financing activities for the nine months ended September 30, 2024 and 2023, respectively.

 

The Company had no formal long-term lines of credit or other bank financing arrangements as of September 30, 2024.

 

The Company has no current plans for the purchase or sale of any plant or equipment.

 

The Company has no current plans to make any changes in the number of employees.

 

21
 

 

Impact of Inflation

 

The Company believes that inflation has had a negligible effect on operations over the past quarter.

 

Capital Expenditures

 

The Company expended no amounts on capital expenditures for the nine months ended September 30, 2024.

 

Plan of Operation

 

Our business strategy is to expand from Geiger counter sales to the development and marketing of CenterEye, our proprietary call center software. We aim to enhance call center efficiency and customer engagement through innovative AI-driven solutions. While we maintain our online presence, our primary efforts are directed toward software development, marketing, and establishing partnerships with call centers and businesses requiring advanced customer service solutions.

 

While we continue to market our website (www.quartarad.com) we have also started to focus on Sellavir website sellavir.com as part of our business strategy.

 

During December 2020, Quarta-Rad acquired Sellavir, Inc, a Delaware corporation, under common control, as a wholly owned subsidiary. We acquired the company in exchange for 333,333 shares of our common stock. The value of the stock on the date of issue was approximately $170,000. Sellavir was a video analytics company whose platform empowers organizations to decode videos to develop creative marketing strategies and analysis through advanced and proprietary technologies. Quarta-Rad has acquired the company to leverage Sellavir capabilities to combine it with its Radex series to offer AI-enhanced radiation detection capabilities and expand its scope outside of radiation measurement. Sellavir’s platform empowers organizations to decode videos to develop creative marketing strategies and analysis and call center management solutions through advanced and proprietary technologies using artificial intelligence (“AI”). Sellavir, Inc., our wholly-owned subsidiary, is now focused on developing CenterEye, a call center software platform that leverages AI and advanced analytics to improve call center operations. CenterEye provides real-time insights, performance metrics, and customer engagement tools that enable organizations to enhance efficiency and customer satisfaction. We are starting to see traction in Japan and are expanding our marketing efforts to the U.S. and other international markets.

 

We intend to implement the following tasks within the next twelve months:

 

Inventory: We intend to purchase inventory to increase our sales. We believe that these funds will be initially sufficient for us to increase our inventory from Quarta-Rad, Ltd. The amount needed for inventory purchases is directly related to the demand for sales of our product.

 

Software Development: We will continue to invest in the development and enhancement of CenterEye to meet the evolving needs of the call center industry. This includes adding new features, improving user experience, and ensuring scalability.

 

Marketing: (Estimated cost $25,000-$75,000). In addition to the website modification costs, we intend to increase our marketing efforts on the Internet to generate leads and sales. We will also utilize funds to develop marketing brochures and materials to market the products to industry professionals such as home renovation contractors.

 

Partnerships and Client Acquisition: (Estimated cost $20,000). We aim to establish partnerships with call center operators and technology resellers. Efforts will be made to secure pilot projects and initial deployments to showcase the effectiveness of CenterEye.

 

Our management does not anticipate the need to hire additional full or part- time employees over the next three (3) months, as the services provided by our officers and directors and our independent contractor appear sufficient at this time. We believe that our operations are currently on a small scale that is manageable by these two individuals as well

as our independent contractor. Our management’s responsibilities are mainly administrative at this stage. While we believe that the addition of employees is not required over the next three (3) months, the professionals we plan to utilize will be considered independent contractors. We do not intend to enter into any employment agreements with any of these professionals. Thus, these persons are not intended to be employees of our company.

 

We currently do not own any equipment that we would seek to sell in the near future; we do not have any off-balance sheet arrangements; and we have not paid for expenses on behalf of our directors.

 

The current majority shareholder is currently funding operations. During October 2024, the Company is exploring plans to potentially distribute its current operations of both Quarta-Rad and Sellavir and use the company to support operations in alternate services lines.

 

Off-Balance Sheet Arrangements

 

None.

 

22
 

 

Forward Looking Statements

 

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this report include forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995 (collectively, the “Reform Act”). The Reform Act provides a safe harbor for forward-looking statements to encourage companies to provide prospective information about themselves so long as they identify these statements as forward-looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. All statements, other than statements of historical fact that we make in this Quarterly Report on Form 10-Q, are forward-looking. The words “anticipates,” “believes,” “expects,” “intends,” “will continue,” “estimates,” “plans,” “projects,” the negative of these terms and similar expressions are intended to identify forward-looking statements. However, the absence of these words does not mean the statement is not forward-looking.

 

Forward-looking statements involve risks, uncertainties or other factors which may cause actual results to differ materially from the future results, performance or achievements expressed or implied by the forward-looking statements. These statements are based on our management’s beliefs and assumptions, which in turn are based on currently available information. Certain risks, uncertainties or other important factors are detailed in this Quarterly Report on Form 10-Q and may be detailed from time to time in other reports we file with the Securities and Exchange Commission, including on Forms 8-K and 10-K.

 

We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all those risks, nor can we assess the impact of all those risks on our business or the extent to which any factor may cause actual results to differ materially from those contained in any forward-looking statement. We believe these forward-looking statements are reasonable. However, you should not place undue reliance on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and unless required by law, we expressly disclaim any obligation or undertaking to update publicly any of them considering new information or future events.

 

Critical Accounting Policies

 

Our condensed financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make estimates, judgments and assumptions that affect reported amounts of assets, liabilities, revenues and expenses. We continually evaluate the accounting policies and estimates used to prepare the condensed financial statements. The estimates are based on historical experience and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management. Certain accounting policies that require significant management estimates and are deemed critical to our results of operations or financial position are discussed in our Annual Report on Form 10-K for the year ended December 31, 2023, and Note 1 to the Condensed and Consolidated Financial Statements in this Form 10-Q.

 

Accounts Receivable Accounts Receivable and related party notes receivable amounts from sales to various suppliers and online platforms and loans. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectable amounts through a charge to bad debt expense and a credit to a valuation allowance based on its assessment of the current status of individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. A reserve for sales returns and allowances is considered immaterial and, as a result, there was no reserve for sales returns and allowances, at September 30, 2024 and December 31, 2023, respectively.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item.

 

23
 

 

Item 4. Controls and Procedures

 

Disclosure of controls and procedures.

 

The Company is responsible for establishing and maintaining adequate internal control over financial reporting in accordance with the Rule 13a-15 of the Securities Exchange Act of 1934. The Company’s officer, its president, conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of September 30, 2024 based on the criteria establish in Internal Control Integrated Framework issued by the 2013 Committee of Sponsoring Organizations of the Treadway Commission. Based on the foregoing evaluation, we have concluded that our disclosure controls and procedures were not effective as of September 30, 2024 and that they do not allow for information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission (“SEC”) rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to the Company’s management, including its Chief Executive and Principal Accounting & Financial Officers as appropriate to allow timely decisions regarding required disclosure.

 

The material weaknesses relate to the following:

 

  ● We do not have adequate segregation of duties in the handling of our financial reporting. This is caused by a very limited number of personnel.
     
  ● Our accounting staff does not have sufficient technical accounting knowledge relating to accounting for income taxes and complex US GAAP matters.
     
  ● The Company has not performed a risk assessment and mapped our process to control objectives.
     
  ● The Company has not implemented comprehensive entity-level internal controls.
     
  ● The Company has not implemented adequate system and manual controls.

 

Plan for Remediation of Material Weaknesses

 

We intend to take appropriate and reasonable steps to make the necessary improvements to remediate this deficiency as resources to do so become available. We intend to consider the results of our remediation efforts and related testing as part of our year-end 2022 assessment of the effectiveness of our internal control over financial reporting.

 

Such remediation would entail enhancing the training and oversight of the accounting personnel responsible for non-routine transactions involving complex accounting matters and engaging the services of an independent consultant with sufficient expertise in income tax and complex U.S. GAAP matters to assist us in the preparation of our financial statements.

 

Management believes that the aforementioned material weaknesses did not impact our financial reporting or result in a material misstatement of our condensed financial statements.

 

Changes in internal controls over financial reporting.

 

There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

24
 

 

PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings

 

None.

 

Item 1A. Risk Factors

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

None.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

  (a) The following exhibits are filed with this quarterly report on Form 10-Q or are incorporated herein by reference:

 

Exhibit    
Number   Description
     
31.1   Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934*.
     
31.2   Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934*.
     
32.1   Certification of the Chief Executive Officer pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*.
     
32.2   Certification of the Chief Financial Officer pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*.
     
101.INS*   Inline XBRL Instance Document
101.SCH*   Inline XBRL Taxonomy Extension Schema
101.CAL*   Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF*   Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB*   Inline XBRL Taxonomy Extension Label Linkbase
101.PRE*   Inline XBRL Taxonomy Presentation Linkbase
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

* Filed herewith.

 

25
 

 

Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  QUARTA-RAD, INC.
   
November 14, 2024 /s/ Victor Shvetsky
  Victor Shvetsky
  Chairman and Chief Executive Officer (Principal Executive
  Officer) and Chief Financial Officer (Principal Accounting and Financial Officer)

 

26

 

Exhibit 31.1

 

CERTIFICATION PURSUANT TO SECTION 302 (a) OF THE SARBANES-OXLEY ACT OF 2002

 

I, Victory Shvetsky, Chairman and Chief Executive Officer, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of Quarta-Rad, Inc. (the “registrant”);

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

 

3. Based on my knowledge, the financial statements and other financial information included in this quarterly report fairly presents in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within the entity, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal controls over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

 

Dated: November 14, 2024 /s/ Victor Shvetsky
  Victor Shvetsky
  Chief Executive Officer
  (Principal Executive Officer)

 

 

 

Exhibit 31.2

 

CERTIFICATION PURSUANT TO SECTION 302 (a) OF THE SARBANES-OXLEY ACT OF 2002

 

I, Victory Shvetsky, Chief Financial Officer of Quarta-Rad, Inc., certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of Quarta-Rad, Inc. (the “registrant”);

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

 

3. Based on my knowledge, the financial statements and other financial information included in this quarterly report fairly presents in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within the entity, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal controls over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

 

Dated: November 14, 2024 /s/ Victor Shvetsky
  Victor Shvetsky
  Chief Financial Officer
  (Principal Financial Officer)

 

 

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report on Form 10-Q of Quarta-Rad, Inc. (the “Company”) for the quarter ended September 30, 2024, as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, Victory Shvetsky, the Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

 

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: November 14, 2024 /s/ Victor Shvetsky
  Victor Shvetsky
  Chief Executive Officer
  (Principal Executive Officer)

 

 

 

Exhibit 32.2

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ENACTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report on Form 10-Q of Quarta-Rad, Inc. (the “Company”) for the quarter ended September 30, 2024, as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, Victory Shvetsky, the Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

 

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: November 14, 2024 /s/ Victor Shvetsky
  Victor Shvetsky
  Chief Financial Officer
  (Principal Financial Officer)

 

 

v3.24.3
Cover - $ / shares
 9 Months Ended
Sep. 30, 2024
Nov. 14, 2024
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Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2024  
Current Fiscal Year End Date --12-31  
Entity File Number 000-55964  
Entity Registrant Name Quarta-Rad, Inc.  
Entity Central Index Key 0001549631  
Entity Tax Identification Number 45-4232089  
Entity Incorporation, State or Country Code DE  
Entity Address, Address Line One 1201 N. Orange St.  
Entity Address, Address Line Two Suite 700  
Entity Address, City or Town Wilmington  
Entity Address, State or Province DE  
Entity Address, Postal Zip Code 19801  
City Area Code 732  
Local Phone Number 887-8511  
Title of 12(b) Security Common Stock, par value $0.0001 per share  
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Entity Current Reporting Status Yes  
Entity Interactive Data Current No  
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Entity Common Stock, Shares Outstanding   15,674,483
Entity Listing, Par Value Per Share $ 0.0001  
v3.24.3
Condensed and Consolidated Balance Sheets (Unaudited) - USD ($)
Sep. 30, 2024
Dec. 31, 2023
Current Assets    
Cash $ 50,281 $ 72,625
Marketable securities, trading 1 52,148
Inventory 4,732 30,398
Total Current Assets 145,893 243,273
Fixed Assets, Net 970 1,570
Other Assets    
Trade receivable 31,241 28,673
Deferred tax asset 34,976 24,069
Total Other Assets 474,656 438,471
TOTAL ASSETS 621,519 683,314
Current Liabilities    
Accounts payable and accrued expenses 124,800 105,244
Total Liabilities 384,530 289,721
Commitments and Contingencies - Note 8
Stockholders’ Equity    
Common Stock: authorized 50,000,000 common shares, $0.0001 par value 15,674,483 and 15,674,483 were issued and outstanding on September 30, 2024 and December 31, 2023, respectively 1,568 1,568
Additional paid-in capital 346,726 346,726
Retained earnings/(accumulated deficit) (111,305) 45,299
Total Stockholders’ Equity 236,989 393,593
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 621,519 683,314
Nonrelated Party [Member]    
Current Assets    
Accounts receivable 7,468 7,289
Related Party [Member]    
Current Assets    
Accounts receivable 10,000
Notes receivable - related party - current portion 73,411 80,813
Other Assets    
Notes receivable - related party, net of current portion and discount of $11,224 and $13,360 at September 30, 2024 and December 31, 2023, respectively 343,033 341,557
Interest receivable - related party 65,406 44,172
Current Liabilities    
Payable - related parties $ 259,730 $ 184,477
v3.24.3
Condensed and Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)
Sep. 30, 2024
Dec. 31, 2023
Statement of Financial Position [Abstract]    
Notes receivable discount $ 11,224 $ 13,360
Common stock, shares authorized 50,000,000 50,000,000
Common stock, par value $ 0.0001 $ 0.0001
Common stock, shares issued 15,674,483 15,674,483
Common stock, shares outstanding 15,674,483 15,674,483
v3.24.3
Condensed and Consolidated Statements of Operations (Unaudited) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Total sales, net $ 18,697 $ 61,683 $ 69,783 $ 362,744
Gross profit 13,503 2,930 31,916 131,204
Expenses:        
General and administrative 24,168 12,065 123,735 38,469
Advertising 15,744 49,321
Professional and consulting fees 34,156 25,770 93,502 100,671
Operating expenses 58,324 53,579 217,237 188,461
Net loss from operations (48,821) (50,649) (185,321) (57,257)
Other income - interest and dividends 34 1 36 302
Other income/(expense) - foreign currency translation gain/(loss) 33,300 (18,036) 17,190 (18,036)
Other income - interest - related party 11,703 13,965 35,109 27,744
Other expense - loss on loan modification (11,469)
Other income - unrealized gain/(loss) on investments 111,736 (2,166) 98,412 19,614
Other income - realized loss on investments (110,561) (110,561) (3,529)
Net loss before provision for income taxes (2,609) (56,885) (156,604) (31,162)
Income tax benefit (11,946) (6,544)
Net loss $ (2,609) $ (44,939) $ (156,604) $ (24,618)
Income per share - basic $ (0.01)
Income per share - diluted $ (0.01)
Weighted average shares - basic 15,674,483 15,674,483 15,674,483 15,674,483
Weighted average shares - diluted 15,674,483 15,674,483 15,674,483 15,674,483
Quarta Rad, Inc., [Member]        
Total sales, net $ 8,697 $ 61,683 $ 59,783 $ 260,744
Cost of goods sold 5,194 38,154 33,867 169,975
Sellavir Inc [Member]        
Total sales, net 10,000 10,000 102,000
Cost of goods sold $ 4,000 $ 20,599 $ 4,000 $ 61,565
v3.24.3
Condensed and Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Total
Balance at Dec. 31, 2022 $ 1,568 $ 346,726 $ 807 $ 349,101
Balance, shares at Dec. 31, 2022 15,674,483      
Net loss (24,618) (24,618)
Balance at Sep. 30, 2023 $ 1,568 346,726 (23,811) 324,483
Balance, shares at Sep. 30, 2023 15,674,483      
Balance at Jun. 30, 2023 $ 1,568 346,726 21,128 369,422
Balance, shares at Jun. 30, 2023 15,674,483      
Net loss (44,939) (44,939)
Balance at Sep. 30, 2023 $ 1,568 346,726 (23,811) 324,483
Balance, shares at Sep. 30, 2023 15,674,483      
Balance at Dec. 31, 2023 $ 1,568 346,726 45,299 393,593
Balance, shares at Dec. 31, 2023 15,674,483      
Net loss (156,604) (156,604)
Balance at Sep. 30, 2024 $ 1,568 346,726 (111,305) 236,989
Balance, shares at Sep. 30, 2024 15,674,483      
Balance at Jun. 30, 2024 $ 1,568 346,726 (108,696) 239,598
Balance, shares at Jun. 30, 2024 15,674,483      
Net loss (2,609) (2,609)
Balance at Sep. 30, 2024 $ 1,568 $ 346,726 $ (111,305) $ 236,989
Balance, shares at Sep. 30, 2024 15,674,483      
v3.24.3
Condensed and Consolidated Statements of Cash Flows - USD ($)
 3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Dec. 31, 2023
OPERATING ACTIVITIES:          
Net loss $ (2,609) $ (44,939) $ (156,604) $ (24,618)  
Adjustments to reconcile net income to net cash provided by/(used in) operating activities:          
Depreciation 200 200 600 600  
Foreign currency translation (income)/loss (33,300) 18,036 (17,190) 18,036  
Loss on loan modification 11,469  
Amortization of note premium     (2,406)  
Net realized loss on investments 110,561 110,561 3,529  
Net unrealized (gain) on investments (111,736) 2,166 (98,412) (19,614)  
Income tax benefit (11,946) (6,544)  
Deferred income tax     (10,907)    
Changes in operating assets and liabilities:          
Accounts receivable     (179) 46,571  
Accounts receivable – related party     (10,000)  
Inventory     25,666 132,602  
Trade receivables     (2,568)  
Accrued interest receivable - related party     (32,703) (32,744)  
Accounts payable and accrued expenses     19,556 37,241  
Deferred revenue - related party     (102,000)  
Related party payable     75,253 71,658  
Net cashed provided/(used) by operating activities     (87,864) 124,717  
INVESTING ACTIVITIES:          
Sale of marketable securities, trading     39,998 201,894  
Issuance of notes receivable - related party     (415,000)  
Purchase of marketable securities, trading     (57,921)  
Payments on notes receivable, related party     25,522    
Cash from acquisition      
Net cash provided/(used) in Investing Activities     65,520 (271,027)  
Net change in cash     (22,344) (146,310)  
Cash, beginning of period     72,625 293,878 $ 293,878
Cash, end of period $ 50,281 $ 147,568 50,281 147,568 $ 72,625
Supplemental cash flow information:          
Cash paid for interest      
Cash paid for income taxes     $ 10,907  
v3.24.3
BASIS OF PRESENTATION
 9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
BASIS OF PRESENTATION

NOTE 1 - BASIS OF PRESENTATION

 

The condensed and consolidated balance sheet of Quarta-Rad, Inc. and Subsidiaries (the “Company”) as of September30, 2024, and the statements of operations and changes in stockholders’ equity for the three and nine months ended September 30, 2024, and 2023, and the cash flows for three and nine months ended September 30, 2024, and 2023 have not been audited. However, in the opinion of management, such information includes all adjustments (consisting of normal recurring adjustments), which are necessary to accurately reflect the financial position of the Company as of September 30, 2024, the results of operations and cash flows for the periods ended March 31, 2024, and 2023.

 

The condensed and consolidated balance sheet as of December 31. 2023 has been derived from audited financial statements. Certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted, although management believes that the disclosures are adequate to make the information presented not misleading. Interim period results are not necessarily indicative of the results to be achieved for an entire year. These condensed and consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31. 2023.

 

The Company has experienced recurring operating losses, primarily due to limited revenues. The Company’s current financial conditions and recurring losses raise substantial doubt about its ability to continue as a going concern.

 

The current shareholder is currently funding operations. During October 2024, subsequent to the balance sheet date, the Company is exploring plans to distribute the current operations in a spin-off.

 
v3.24.3
NATURE OF BUSINESS
 9 Months Ended
Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
NATURE OF BUSINESS

NOTE 2 - NATURE OF BUSINESS

 

The Company distributes detection devices, including but not limited to Geiger counters, to homeowners and interested customers in North America and Europe. The Company targets homebuilders and home renovation contractors. As noted in RISKS AND UNCERTAINTIES, the Company has encountered certain restrictions in securing inventory and has secured a new supplier.

 

Sellavir has started a video analytics company whose platform empowers organizations to decode videos to develop creative marketing strategies and analysis and call center management solutions through advanced and proprietary technologies using artificial intelligence (“AI”).

 

Sellavir is now focused on developing CenterEye, a call center software platform that leverages AI and advanced analytics to improve call center operations.

 
v3.24.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Principles of Consolidation

 

The consolidated financial statements include the accounts Quarta-Rad, Inc. and its wholly-owned subsidiaries Quarta-Rad USA, Inc. and Sellavir, Inc. All significant intercompany balances and transactions have been eliminated in consolidation.

 

Use of Estimates and Assumptions

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and judgments that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods.

 

 

QUARTA-RAD, INC. AND SUBSIDIARIES

 

Notes to the (unaudited) Condensed and Consolidated Financial Statements

 

Significant estimates made by management include, among others, provisions for the valuation of related party revenue,and notes receivable. The Company bases its estimates on historical experience, knowledge of current conditions and belief of what could occur in the future considering available information. The Company reviews its estimates on an on-going basis. The actual results experienced by the Company may differ materially and adversely from its estimates. To the extent there are material differences between the estimates and actual results, future results of operations will be affected.

 

Advertising

 

The Company expenses advertising costs, consisting primarily of placement in multiple publications, along with design and printing costs of sales materials, when incurred. Advertising expenses for the three and nine ended September 30, 2024, and 2023, amounted to $-0-, $-0-, $15,744 and $49,321, respectively.

 

Notes Receivable – related party

 

Notes Receivable – related party consists of loan agreements entered into by Sellavir discussed in Note 4. Amounts payable marked to value in functional currency at the balance sheet date where the Company records foreign translation gain or loss. The Company’s functional currency is the United States Dollar.

 

Concentration of Credit Risk

 

Credit is extended to online platforms and suppliers based on an evaluation of their financial condition, and collateral is generally not required. The Company performs ongoing credit evaluations of its customers and provides an allowance for doubtful accounts as appropriate.

 

Two selling platforms/distributors accounted for 96% of accounts receivable at September 30, 2024 and 88% of accounts receivable at December 31. 2023.

 

Quarta Rad purchased 100% of its inventory through a third party in 2023.

 

Earnings per Share

 

The Company’s basic earnings per share are calculated by dividing its net income available to common stockholders by the weighted average number of common shares outstanding for the period. The Company’s dilutive earnings per share is calculated by dividing its net income available to common shareholders by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There were no potentially dilutive instruments outstanding during the periods ended September 30, 2024, and 2023.

 

Fair Value of Financial Instruments

 

The Company’s financial instruments as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 825, “Financial Instruments” include cash, trade accounts receivable, and accounts payable and accrued expenses. All instruments, except marketable securities are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at September 30, 2024 and December 31. 2023. Marketable securities are level one assets recorded at fair value.

 

FASB ASC 820 “Fair Value Measurements and Disclosures” defines fair value, establishes a framework for measuring fair value in accordance with U.S. GAAP, and expands disclosures about fair value measurements. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

 

  ● Level 1. Observable inputs such as quoted prices in active markets;

 

  ● Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
     
  ● Level 3. Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.

 

 

QUARTA-RAD, INC. AND SUBSIDIARIES

 

Notes to the (unaudited) Condensed and Consolidated Financial Statements

 

The Company’s investment securities consist of common and options. Substantially all the Company’s investments are Level 1. The fair market value is based on quoted prices in active markets for identical assets. Financial assets are measured at fair value on a recurring basis. The following table provides information at September 30, 2024 about the Company’s financial assets measured at fair value on a recurring basis.

 

Values on September 30, 2024:

 

   Level 1   Level 2   Level 3   Total 
Assets at fair value:                    
Marketable Securities  $  1   $  -   $  -   $  1 
                     
Total assets at fair value, September 30, 2024  $1   $-   $-   $1 

 

Values on December 31. 2023:

 

   Level 1   Level 2   Level 3   Total 
Assets at fair value:                    
Marketable Securities  $52,148   $  -   $  -   $52,148 
                     
Total assets at fair value, December 31. 2023  $52,148   $-   $-   $52,148 

 

Revenue Recognition

 

The Company follows guidance from FASB Accounting Standards Codification ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). The guidance sets forth a five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in U.S. GAAP. The underlying principle of the standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance.

 

Our principal activities from which we generate our revenue are product sales and consulting services.

 

Revenue is measured based on consideration specified in a contract with a customer. A contract with a customer exists when we enter into an enforceable contract with a customer. The contract is based on either the acceptance of standard terms and conditions on the websites for e-commerce customers and via telephone with our third-party call center for our print media and direct mail customers, or the execution of terms and conditions contracts with retailers and wholesalers. These contracts define each party’s rights, payment terms and other contractual terms and conditions of the sale. Consideration is typically paid prior to shipment via credit card or check when our products are sold direct to consumers or approximately 30 days from the time control is transferred when sold to wholesalers, distributors and retailers. We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience and, in some circumstances, published credit and financial information pertaining to the customer.

 

 

QUARTA-RAD, INC. AND SUBSIDIARIES

 

Notes to the (unaudited) Condensed and Consolidated Financial Statements

 

A performance obligation is a promise in a contract to transfer a distinct product to the customer, which for us is transfer of devices to our customers. Performance obligations promised in a contract are identified based on the goods that will be transferred to the customer that are both capable of being distinct and are distinct in the context of the contract, whereby the transfer of the goods is separately identifiable from other promises in the contract. We have concluded the sale of goods and related shipping and handling are accounted for as the single performance obligation.

 

The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. The transaction price is determined based on the consideration to which we will be entitled to receive in exchange for transferring goods to the customer. We issue refunds to e-commerce and print media customers, upon request, within 30 days of delivery. We estimate the amount of potential refunds at each reporting period using a portfolio approach of historical data, adjusted for changes in expected customer experience, including seasonality and changes in economic factors. For retailers, distributors and wholesalers, we do not offer a right of return or refund and revenue is recognized at the time products are shipped to customers. In all cases, judgment is required in estimating these reserves. Actual claims for returns could be materially different from the estimates. There was no reserve for sales returns and allowances, at September 30, 2024 and December 31. 2023, respectively.

 

We recognize revenue when we satisfy a performance obligation in a contract by transferring control over a product to a customer when a product is shipped. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by us from a customer, are excluded from revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfilment cost and are included in cost of product sales.

 

We recognize consulting revenue over time as services are performed.

 

Recent Accounting Pronouncements

 

We have adopted all recently issued accounting pronouncements. The adoption of the new accounting pronouncements is not anticipated to have a material effect on our operations.

 

Risks and Uncertainties

 

RUSSIAN INVASION OF UKRAINE

 

In February 2022, Russia invaded the nation of Ukraine and certain sanctions and banking restrictions were levied upon Russia. As a result, the Company’s ability to purchase inventory from Russia has been impacted.

 

The Company is actively monitoring the situation and working closely with their suppliers and logistics companies to mitigate the impact. During October 2022 the Company has encountered additional restrictions in the EU and believes their ability to continue to sell in the EU will be diminished. The Company has found another factory to supply inventory in Kazakhstan, which received a shipment of 200 units at the end of 2023. The units were partially sold during the first, second and third quarters of 2024.

 

The Company is continuing to expand its Artificial Intelligence business through development of new services and software, and consulting on strategies and implementation, and are in the process of transforming our company from an import heavy revenue entity to AI services revenue becoming the majority of total sales. Due to the constraints with the Quarta Rad related income, additional focus and resources will be utilized by Sellavir Beginning in 2024, Sellavir will strategically focus on harnessing its advanced AI capabilities and extensive experience to innovate within the call center industry. The industry’s evolving landscape, particularly the shift from traditional on-premise solutions to cloud-hosted platforms, presents a unique opportunity for Sellavir to introduce a suite of AI-driven products.

 

The success of call center product, CenterEye, depends on our ability to develop features that meet client needs, keep up with technological advancements, and address any software bugs or security vulnerabilities promptly. There is no guarantee that CenterEye will achieve market acceptance. Failure to gain traction could adversely affect our financial condition and results of operations.

 

 

QUARTA-RAD, INC. AND SUBSIDIARIES

 

Notes to the (unaudited) Condensed and Consolidated Financial Statements

 
v3.24.3
NOTE RECEIVABLE – RELATED PARTY
 9 Months Ended
Sep. 30, 2024
Receivables [Abstract]  
NOTE RECEIVABLE – RELATED PARTY

NOTE 4–NOTE RECEIVABLE – RELATED PARTY

 

During March 2023, Sellavir entered into a loan agreement with a related Thai Corporation. for the purchase of land and to ultimately build a structure. The Company’s CEO and majority shareholder became the CEO and a minority shareholder in the Thai entity in May 2023. The Thai Corporation will repay Sellavir $9,000,000 Thai Bhat, valued at $261,038, at the time of the loan, which includes a premium of $16,038 plus interest a rate of 15% per annum. As of January 2024, the note was amended to reduce the interest rate to 10% and for Sellavir to receive 3% of the selling price of the secured property. The Company recorded a loss of $8,188 in connection with this loan modification. The Company marked the note to Thai Bhat, valued at $278,226 and $261,072 recording a gain /(loss)on foreign currency translation of $17,154 and ($36) at September 30, 2024 and December 31, 2023, respectively. The amount of unamortized premium at September 30, 2024 and December 31, 2023 is $12,830 and $13,362, respectively. Payments are deferred until April 1, 2025, for the initial payment, with quarterly principal payments starting April 1, 2025 are due through April 1, 2029. Interest is payable at the end of the loan. The Company will amortize the premium over the life of the loan. Payments are payable in Thai Baht. The loan is secured by land located in Thailand. Sellavir received a $14,897 principal payment in April 2024 in connection with this loan.

 

The Company issued an additional loan to the Thai Corporation in May 2023 for $175,000, at the rate of 15% per annum. In January 2024, the note was amended to reduce the interest rate to 10% effective January 2024 and for Sellvir to receive 3% of the selling price of the secured property. The Company recorded a loss of $3,281 in connection with this loan modification. Payments are deferred until April 1, 2025, for the initial payment, with quarterly principal payments starting April 1, 2025 are due through April 1, 2029. Interest is payable at the end of the loan.. The loan is secured by land located in Thailand. . Sellavir received a $10,625 principal payment in April 2024 in connection with this loan.

 

During January 2024, both notes were amended to provide a one year extension for all payment due dates.

 

Accrued interest at September 30, 2024 and December 31, 2023 for both loans is $65,406 and $44,172, respectively, included as a long-term asset, interest receivable – related party.

 

Principal amounts to be received for the two notes are as follows:

 

    $261,038 Note   $175,000 Note   Total 
2025   $49,379   $21,250   $70,629 
2026   65,839    42,500    108,339 
2027   65,839    42,500    108,339 
2028   65,839    42,500    108,339 
2029   16,397    15,625    32,022 
Totals   $263,293   $164,375   $427,668 

 

 

QUARTA-RAD, INC. AND SUBSIDIARIES

 

Notes to the (unaudited) Condensed and Consolidated Financial Statements

 
v3.24.3
PROPERTY AND EQUIPMENT
 9 Months Ended
Sep. 30, 2024
Property, Plant and Equipment [Abstract]  
PROPERTY AND EQUIPMENT

NOTE 5–PROPERTY AND EQUIPMENT

 

Property and Equipment at September 30, 2024 and December 31. 2023 consisted of:

 

   September 30,   December 31, 
   2024   2023 
Computer Equipment  $4,005   $4,005 
Accumulated Depreciation   (3,035)   (2,435)
Net Property & Equipment  $970   $1,570 

 

The Company recognized $200, $600, $200, and $600 in depreciation expense in each period for the three and nine months ended September 30, 2024 and 2023, respectively.

 
v3.24.3
RELATED PARTY TRANSACTIONS
 9 Months Ended
Sep. 30, 2024
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 6–RELATED PARTY TRANSACTIONS

 

During July 2017, the Company entered into an agreement with Quarta Rad, LTD (“QRR”), a company in Russia, which is owned by the Company’s minority shareholder to develop and update software for a new device for $180,000. The development contract ended December 31, 2019. The amount due in connection with this agreement as of September 30, 2024, and December 31. 2023, is $91,850 and $91,850, respectively. The balances are due on demand and do not incur interest. In April 2024, the minority shareholder sold their total shares and is no longer affiliated with the Company.

 

In May 2022, the Company began using Star Systems Corporation (“STAR”:), a Japanese entity owned by the Company’s majority shareholder, as an intermediary to purchase inventory from QRR. The Company owes Star $42,502 and $42,502 on September 30, 2024 and December 31, 2023, for purchasers and inventory and upgrades from 2022. The balances are due on demand and do not incur interest.

 

In April 2021, the Company began compensating its CEO, who is the majority shareholder. The Company expensed $8,000, $24,000, $8,000 and $24,000 for the three and nine months ended September 30,, 2024, and 2023, respectively. As of September 30, 2024 and December 31, 2023 the Company has accrued $112,000 and $88,000, respectively for this compensation, included within accounts payable and accrued expenses on the accompanying balance sheets.

 

From time to time the CEO advanced funds for operations. As of September 30, 2024 and December 31, 2023, is due $125,378 and $56,125, respectively, for expenses paid on behalf of the Company. The balances are due on demand and do not accrue interest.

 

Sellavir recognized $10,000, $10,000, $0 and $102,000 of revenue for the three and nine months ended September 30, 2024, and 2023, respectively. Revenue for the three months ended September 30, 2024 is in connection with a licensing agreement. The services prior are related to services to STAR to develop software. The license agreement relates to software customization for several of Star’s clients to improve their call center platforms.

 

 

QUARTA-RAD, INC. AND SUBSIDIARIES

 

Notes to the (unaudited) Condensed and Consolidated Financial Statements

 
v3.24.3
SEGMENTS
 9 Months Ended
Sep. 30, 2024
Segment Reporting [Abstract]  
SEGMENTS

NOTE 7–SEGMENTS

 

The Company has two operating segments through the operations of Quarta-Rad and Sellavir. The Company evaluates the performance of its segments based on revenues, operating income(loss) and net income(loss).

 

Segment information for the three and nine months ended September 2024 and 2023 is as follows:

 

             
For the nine months ended September 30, 2024
   Quarta-Rad   Sellavir   Consolidated 
Revenues  $59,783    10,000   $69,783 
Loss from operations   (108,517)   (76,804)   (185,321)
Net loss  $(108,517)   (48,087)  $(156,604)

 

             
For the three months ended September 30, 2024
   Quarta-Rad   Sellavir   Consolidated 
Revenues  $8,697    10,000   $18,697 
Loss from operations   (30,445)   (18,376)   (48,821)
Net income/(loss)  $(30,445)   27,836   $(2,609)

 

             
For the nine months ended September 30, 2023
   Quarta-Rad   Sellavir   Consolidated 
Revenues  $260,744   $102,000   $362,744 
Income/(loss) from operations   (89,899)   32,642    (57,257)
Net income/(loss)  $(71,020)  $46,402   $(24,618)

 

             
For the three months ended September 30, 2023
   Quarta-Rad   Sellavir   Consolidated 
Revenues  $61,683   $-   $61,683 
Loss from operations   (26,741)   (23,908)   (50,649)
Net loss  $(21,125)  $(23,814)  $(44,939)

 

Total Assets  As of September 30, 2024   As of December 31, 2023 
Quarta-Rad  $85,728   $151,789 
Sellavir   535,791    531,525 
Total Assets  $621,519   $683,314 

 
v3.24.3
COMMITMENTS AND CONTINGENCIES
 9 Months Ended
Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

NOTE 8– COMMITMENTS AND CONTINGENCIES

 

Contingencies

 

Legal

 

In the normal course of business, the Company may become involved in various legal proceedings. The Company knows of no pending or threatened legal proceeding to which the Company is or will be a party that, if successful, might result in material adverse change in the Company’s business, properties or financial condition.

 
v3.24.3
SUBSEQUENT EVENTS
 9 Months Ended
Sep. 30, 2024
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

NOTE 9–SUBSEQUENT EVENTS

 

The Company has performed an evaluation of events occurring subsequent to September 30, 2024 through November 14, 2024. Based on its evaluation, other than the note below there is nothing to be disclosed herein. During October 2024, subsequent to the balance sheet date, the Company is exploring plans to distribute the current operations in a spin-off.
v3.24.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
 9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Principles of Consolidation

Principles of Consolidation

 

The consolidated financial statements include the accounts Quarta-Rad, Inc. and its wholly-owned subsidiaries Quarta-Rad USA, Inc. and Sellavir, Inc. All significant intercompany balances and transactions have been eliminated in consolidation.

 
Use of Estimates and Assumptions

Use of Estimates and Assumptions

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and judgments that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods.

 

 

QUARTA-RAD, INC. AND SUBSIDIARIES

 

Notes to the (unaudited) Condensed and Consolidated Financial Statements

 

Significant estimates made by management include, among others, provisions for the valuation of related party revenue,and notes receivable. The Company bases its estimates on historical experience, knowledge of current conditions and belief of what could occur in the future considering available information. The Company reviews its estimates on an on-going basis. The actual results experienced by the Company may differ materially and adversely from its estimates. To the extent there are material differences between the estimates and actual results, future results of operations will be affected.

 
Advertising

Advertising

 

The Company expenses advertising costs, consisting primarily of placement in multiple publications, along with design and printing costs of sales materials, when incurred. Advertising expenses for the three and nine ended September 30, 2024, and 2023, amounted to $-0-, $-0-, $15,744 and $49,321, respectively.

 
Notes Receivable – related party

Notes Receivable – related party

 

Notes Receivable – related party consists of loan agreements entered into by Sellavir discussed in Note 4. Amounts payable marked to value in functional currency at the balance sheet date where the Company records foreign translation gain or loss. The Company’s functional currency is the United States Dollar.

 
Concentration of Credit Risk

Concentration of Credit Risk

 

Credit is extended to online platforms and suppliers based on an evaluation of their financial condition, and collateral is generally not required. The Company performs ongoing credit evaluations of its customers and provides an allowance for doubtful accounts as appropriate.

 

Two selling platforms/distributors accounted for 96% of accounts receivable at September 30, 2024 and 88% of accounts receivable at December 31. 2023.

 

Quarta Rad purchased 100% of its inventory through a third party in 2023.

 
Earnings per Share

Earnings per Share

 

The Company’s basic earnings per share are calculated by dividing its net income available to common stockholders by the weighted average number of common shares outstanding for the period. The Company’s dilutive earnings per share is calculated by dividing its net income available to common shareholders by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There were no potentially dilutive instruments outstanding during the periods ended September 30, 2024, and 2023.

 
Fair Value of Financial Instruments

Fair Value of Financial Instruments

 

The Company’s financial instruments as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 825, “Financial Instruments” include cash, trade accounts receivable, and accounts payable and accrued expenses. All instruments, except marketable securities are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at September 30, 2024 and December 31. 2023. Marketable securities are level one assets recorded at fair value.

 

FASB ASC 820 “Fair Value Measurements and Disclosures” defines fair value, establishes a framework for measuring fair value in accordance with U.S. GAAP, and expands disclosures about fair value measurements. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

 

  ● Level 1. Observable inputs such as quoted prices in active markets;

 

  ● Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
     
  ● Level 3. Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.

 

 

QUARTA-RAD, INC. AND SUBSIDIARIES

 

Notes to the (unaudited) Condensed and Consolidated Financial Statements

 

The Company’s investment securities consist of common and options. Substantially all the Company’s investments are Level 1. The fair market value is based on quoted prices in active markets for identical assets. Financial assets are measured at fair value on a recurring basis. The following table provides information at September 30, 2024 about the Company’s financial assets measured at fair value on a recurring basis.

 

Values on September 30, 2024:

 

   Level 1   Level 2   Level 3   Total 
Assets at fair value:                    
Marketable Securities  $  1   $  -   $  -   $  1 
                     
Total assets at fair value, September 30, 2024  $1   $-   $-   $1 

 

Values on December 31. 2023:

 

   Level 1   Level 2   Level 3   Total 
Assets at fair value:                    
Marketable Securities  $52,148   $  -   $  -   $52,148 
                     
Total assets at fair value, December 31. 2023  $52,148   $-   $-   $52,148 

 
Revenue Recognition

Revenue Recognition

 

The Company follows guidance from FASB Accounting Standards Codification ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). The guidance sets forth a five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in U.S. GAAP. The underlying principle of the standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance.

 

Our principal activities from which we generate our revenue are product sales and consulting services.

 

Revenue is measured based on consideration specified in a contract with a customer. A contract with a customer exists when we enter into an enforceable contract with a customer. The contract is based on either the acceptance of standard terms and conditions on the websites for e-commerce customers and via telephone with our third-party call center for our print media and direct mail customers, or the execution of terms and conditions contracts with retailers and wholesalers. These contracts define each party’s rights, payment terms and other contractual terms and conditions of the sale. Consideration is typically paid prior to shipment via credit card or check when our products are sold direct to consumers or approximately 30 days from the time control is transferred when sold to wholesalers, distributors and retailers. We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience and, in some circumstances, published credit and financial information pertaining to the customer.

 

 

QUARTA-RAD, INC. AND SUBSIDIARIES

 

Notes to the (unaudited) Condensed and Consolidated Financial Statements

 

A performance obligation is a promise in a contract to transfer a distinct product to the customer, which for us is transfer of devices to our customers. Performance obligations promised in a contract are identified based on the goods that will be transferred to the customer that are both capable of being distinct and are distinct in the context of the contract, whereby the transfer of the goods is separately identifiable from other promises in the contract. We have concluded the sale of goods and related shipping and handling are accounted for as the single performance obligation.

 

The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. The transaction price is determined based on the consideration to which we will be entitled to receive in exchange for transferring goods to the customer. We issue refunds to e-commerce and print media customers, upon request, within 30 days of delivery. We estimate the amount of potential refunds at each reporting period using a portfolio approach of historical data, adjusted for changes in expected customer experience, including seasonality and changes in economic factors. For retailers, distributors and wholesalers, we do not offer a right of return or refund and revenue is recognized at the time products are shipped to customers. In all cases, judgment is required in estimating these reserves. Actual claims for returns could be materially different from the estimates. There was no reserve for sales returns and allowances, at September 30, 2024 and December 31. 2023, respectively.

 

We recognize revenue when we satisfy a performance obligation in a contract by transferring control over a product to a customer when a product is shipped. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by us from a customer, are excluded from revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfilment cost and are included in cost of product sales.

 

We recognize consulting revenue over time as services are performed.

 
Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

We have adopted all recently issued accounting pronouncements. The adoption of the new accounting pronouncements is not anticipated to have a material effect on our operations.

 
Risks and Uncertainties

Risks and Uncertainties

 

RUSSIAN INVASION OF UKRAINE

 

In February 2022, Russia invaded the nation of Ukraine and certain sanctions and banking restrictions were levied upon Russia. As a result, the Company’s ability to purchase inventory from Russia has been impacted.

 

The Company is actively monitoring the situation and working closely with their suppliers and logistics companies to mitigate the impact. During October 2022 the Company has encountered additional restrictions in the EU and believes their ability to continue to sell in the EU will be diminished. The Company has found another factory to supply inventory in Kazakhstan, which received a shipment of 200 units at the end of 2023. The units were partially sold during the first, second and third quarters of 2024.

 

The Company is continuing to expand its Artificial Intelligence business through development of new services and software, and consulting on strategies and implementation, and are in the process of transforming our company from an import heavy revenue entity to AI services revenue becoming the majority of total sales. Due to the constraints with the Quarta Rad related income, additional focus and resources will be utilized by Sellavir Beginning in 2024, Sellavir will strategically focus on harnessing its advanced AI capabilities and extensive experience to innovate within the call center industry. The industry’s evolving landscape, particularly the shift from traditional on-premise solutions to cloud-hosted platforms, presents a unique opportunity for Sellavir to introduce a suite of AI-driven products.

 

The success of call center product, CenterEye, depends on our ability to develop features that meet client needs, keep up with technological advancements, and address any software bugs or security vulnerabilities promptly. There is no guarantee that CenterEye will achieve market acceptance. Failure to gain traction could adversely affect our financial condition and results of operations.
v3.24.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
 9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
SCHEDULE OF FAIR VALUE OF FINANCIAL INSTRUMENTS

Values on September 30, 2024:

 

   Level 1   Level 2   Level 3   Total 
Assets at fair value:                    
Marketable Securities  $  1   $  -   $  -   $  1 
                     
Total assets at fair value, September 30, 2024  $1   $-   $-   $1 

 

Values on December 31. 2023:

 

   Level 1   Level 2   Level 3   Total 
Assets at fair value:                    
Marketable Securities  $52,148   $  -   $  -   $52,148 
                     
Total assets at fair value, December 31. 2023  $52,148   $-   $-   $52,148 
v3.24.3
NOTE RECEIVABLE – RELATED PARTY (Tables)
 9 Months Ended
Sep. 30, 2024
Receivables [Abstract]  
SCHEDULE OF PRINCIPAL AMOUNT OF NOTES RECEIVABLES

Principal amounts to be received for the two notes are as follows:

 

    $261,038 Note   $175,000 Note   Total 
2025   $49,379   $21,250   $70,629 
2026   65,839    42,500    108,339 
2027   65,839    42,500    108,339 
2028   65,839    42,500    108,339 
2029   16,397    15,625    32,022 
Totals   $263,293   $164,375   $427,668 
v3.24.3
PROPERTY AND EQUIPMENT (Tables)
 9 Months Ended
Sep. 30, 2024
Property, Plant and Equipment [Abstract]  
SCHEDULE OF PROPERTY AND EQUIPMENT

Property and Equipment at September 30, 2024 and December 31. 2023 consisted of:

 

   September 30,   December 31, 
   2024   2023 
Computer Equipment  $4,005   $4,005 
Accumulated Depreciation   (3,035)   (2,435)
Net Property & Equipment  $970   $1,570 
v3.24.3
SEGMENTS (Tables)
 9 Months Ended
Sep. 30, 2024
Segment Reporting [Abstract]  
SCHEDULE OF SEGMENT INFORMATION

Segment information for the three and nine months ended September 2024 and 2023 is as follows:

 

             
For the nine months ended September 30, 2024
   Quarta-Rad   Sellavir   Consolidated 
Revenues  $59,783    10,000   $69,783 
Loss from operations   (108,517)   (76,804)   (185,321)
Net loss  $(108,517)   (48,087)  $(156,604)

 

             
For the three months ended September 30, 2024
   Quarta-Rad   Sellavir   Consolidated 
Revenues  $8,697    10,000   $18,697 
Loss from operations   (30,445)   (18,376)   (48,821)
Net income/(loss)  $(30,445)   27,836   $(2,609)

 

             
For the nine months ended September 30, 2023
   Quarta-Rad   Sellavir   Consolidated 
Revenues  $260,744   $102,000   $362,744 
Income/(loss) from operations   (89,899)   32,642    (57,257)
Net income/(loss)  $(71,020)  $46,402   $(24,618)

 

             
For the three months ended September 30, 2023
   Quarta-Rad   Sellavir   Consolidated 
Revenues  $61,683   $-   $61,683 
Loss from operations   (26,741)   (23,908)   (50,649)
Net loss  $(21,125)  $(23,814)  $(44,939)

 

Total Assets  As of September 30, 2024   As of December 31, 2023 
Quarta-Rad  $85,728   $151,789 
Sellavir   535,791    531,525 
Total Assets  $621,519   $683,314 
v3.24.3
SCHEDULE OF FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($)
Sep. 30, 2024
Dec. 31, 2023
Platform Operator, Crypto Asset [Line Items]    
Marketable Securities $ 1 $ 52,148
Total assets at fair value 1 52,148
Fair Value, Inputs, Level 1 [Member]    
Platform Operator, Crypto Asset [Line Items]    
Marketable Securities 1 52,148
Total assets at fair value 1 52,148
Fair Value, Inputs, Level 2 [Member]    
Platform Operator, Crypto Asset [Line Items]    
Marketable Securities
Total assets at fair value
Fair Value, Inputs, Level 3 [Member]    
Platform Operator, Crypto Asset [Line Items]    
Marketable Securities
Total assets at fair value
v3.24.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)
 3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Dec. 31, 2023
Product Information [Line Items]          
Advertising expense $ 15,744 $ 49,321  
Potentially dilutive instruments outstanding     0 0  
Reserve for sales returns and allowances     $ 0   $ 0
Accounts Receivable [Member] | Credit Concentration Risk [Member] | Two Selling Platform/Distributor [Member]          
Product Information [Line Items]          
Concentration risk, percentage     96.00%   88.00%
Cost of Goods and Service Benchmark [Member] | Supplier Concentration Risk [Member] | Third Party [Member]          
Product Information [Line Items]          
Concentration risk, percentage         100.00%
v3.24.3
SCHEDULE OF PRINCIPAL AMOUNT OF NOTES RECEIVABLES (Details)
Sep. 30, 2024
USD ($)
Impairment Effects on Earnings Per Share [Line Items]  
2025 $ 70,629
2026 108,339
2027 108,339
2028 108,339
2029 32,022
Totals 427,668
Notes Receivable One [Member]  
Impairment Effects on Earnings Per Share [Line Items]  
2025 49,379
2026 65,839
2027 65,839
2028 65,839
2029 16,397
Totals 263,293
Notes Receivable Two [Member]  
Impairment Effects on Earnings Per Share [Line Items]  
2025 21,250
2026 42,500
2027 42,500
2028 42,500
2029 15,625
Totals $ 164,375
v3.24.3
NOTE RECEIVABLE – RELATED PARTY (Details Narrative)
 1 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended
Apr. 30, 2024
USD ($)
Jan. 31, 2024
May 31, 2023
THB (฿)
Mar. 31, 2023
USD ($)
Sep. 30, 2024
USD ($)
Sep. 30, 2023
USD ($)
Sep. 30, 2024
USD ($)
Sep. 30, 2023
USD ($)
Dec. 31, 2023
USD ($)
May 31, 2023
USD ($)
Mar. 31, 2023
THB (฿)
Defined Benefit Plan Disclosure [Line Items]                      
Loss on loan modification         $ 11,469      
Loss on foreign currency translation         33,300 $ (18,036) 17,190 $ (18,036)      
Thai Corporation [Member]                      
Defined Benefit Plan Disclosure [Line Items]                      
Imputed Interest rate   10.00%                  
Secured property selling price rate   3.00%                  
Loss on loan modification | ฿     ฿ 3,281                
Principal repayment of additional loan issued $ 10,625                    
Additional loan issued                   $ 175,000  
Interest rate                   15.00%  
Accrued interest         65,406   65,406   $ 44,172    
Thai Corporation [Member] | Sellavir Inc [Member]                      
Defined Benefit Plan Disclosure [Line Items]                      
Loans payable       $ 261,038             ฿ 9,000,000
Premium       $ 16,038 12,830   12,830   13,362    
Imputed Interest rate   10.00%   15.00%              
Secured property selling price rate   3.00%                  
Loss on loan modification       $ 8,188              
Face amount         $ 278,226   278,226   261,072    
Loss on foreign currency translation             $ 17,154   $ 36    
Principal repayment of additional loan issued $ 14,897                    
v3.24.3
SCHEDULE OF PROPERTY AND EQUIPMENT (Details) - USD ($)
Sep. 30, 2024
Dec. 31, 2023
Property, Plant and Equipment [Abstract]    
Computer Equipment $ 4,005 $ 4,005
Accumulated Depreciation (3,035) (2,435)
Net Property & Equipment $ 970 $ 1,570
v3.24.3
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Property, Plant and Equipment [Abstract]        
Depreciation $ 200 $ 200 $ 600 $ 600
v3.24.3
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Dec. 31, 2023
Jul. 31, 2017
Related Party Transaction [Line Items]            
Total sales, net $ 18,697 $ 61,683 $ 69,783 $ 362,744    
Sellavir Inc [Member]            
Related Party Transaction [Line Items]            
Total sales, net 10,000 10,000 102,000    
Quarta-Rad Ltd [Member]            
Related Party Transaction [Line Items]            
Due to related party 91,850   91,850   $ 91,850  
Quarta-Rad Ltd [Member] | Software Development [Member]            
Related Party Transaction [Line Items]            
Capitalized Computer Software, Net           $ 180,000
Star Systems Corporation [Member]            
Related Party Transaction [Line Items]            
Due to related party 42,502   42,502   42,502  
Majority Shareholder [Member] | Chief Executive Officer [Member]            
Related Party Transaction [Line Items]            
Due to related party 125,378   125,378   56,125  
Compensation expense 8,000 $ 8,000 24,000 $ 24,000    
Accrued compensation $ 112,000   $ 112,000   $ 88,000  
v3.24.3
SCHEDULE OF SEGMENT INFORMATION (Details) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Dec. 31, 2023
Segment Reporting Information [Line Items]          
Revenues $ 18,697 $ 61,683 $ 69,783 $ 362,744  
Income/(loss) from operations (48,821) (50,649) (185,321) (57,257)  
Net income/(loss) (2,609) (44,939) (156,604) (24,618)  
Total Assets 621,519   621,519   $ 683,314
Quarta-Rad Ltd [Member]          
Segment Reporting Information [Line Items]          
Revenues 8,697 61,683 59,783 260,744  
Income/(loss) from operations (30,445) (26,741) (108,517) (89,899)  
Net income/(loss) (30,445) (21,125) (108,517) (71,020)  
Total Assets 85,728   85,728   151,789
Sellavir Inc [Member]          
Segment Reporting Information [Line Items]          
Revenues 10,000 10,000 102,000  
Income/(loss) from operations (18,376) (23,908) (76,804) 32,642  
Net income/(loss) 27,836 $ (23,814) (48,087) $ 46,402  
Total Assets $ 535,791   $ 535,791   $ 531,525
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