UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended:
or
For the transition period from ______ to ______
Commission
File No.
(Exact Name of Registrant as Specified in its Charter)
| (State
or other Jurisdiction of Incorporation or Organization) |
(I.R.S.
Employer Identification No.) | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s
telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||
| 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.
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
☐
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 ☐ |
| 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 August 14, 2024, the number of shares outstanding of the issuer’s sole class of common stock, $ par value per share, is .
table of contents
| 2 |
QUARTA-RAD, INC. AND SUBSIDIARIES
CONDENSED AND CONSOLIDATED BALANCE SHEETS
(unaudited)
| As of | ||||||||
| June 30, 2024 | December 31, 2023 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Marketable securities, trading | ||||||||
| Notes receivable - related party - current portion | ||||||||
| Inventory | ||||||||
| Total Current Assets | ||||||||
| Fixed Assets, Net | ||||||||
| Other Assets | ||||||||
| Notes receivable - related party, net of
current portion and discount of $ | ||||||||
| Interest receivable - related party | ||||||||
| Trade receivable | ||||||||
| Deferred tax asset | ||||||||
| Total Other Assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Payable - related parties | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies – Note 8 | ||||||||
| Stockholders’ Equity | ||||||||
| Common Stock: authorized common shares, $ par value and were issued and outstanding on June 30, 2024 and December 31, 2023, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings/(accumulated deficit) | ( | ) | ||||||
| Total Stockholders’ Equity | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
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 June 30, 2024 | For the three months ended June 30, 2023 | For the six months ended June 30, 2024 | For the six months ended June 30, 2023 | |||||||||||||
| Sales -Quarta Rad, Inc., net | $ | $ | $ | $ | ||||||||||||
| Sales - Sellavir, Inc., net - related party | ||||||||||||||||
| Total sales, net | ||||||||||||||||
| Cost of goods sold - Quarta-Rad, Inc. | ||||||||||||||||
| Cost of goods sold - Sellavir Inc. | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Expenses: | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Advertising | ||||||||||||||||
| Professional and consulting fees | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Net income/(loss) from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income - interest and dividends | ||||||||||||||||
| Other expense - foreign currency translation loss | ( | ) | ( | ) | ||||||||||||
| Other income - interest - related party | ||||||||||||||||
| Other expense - loss on loan modification | ( | ) | ||||||||||||||
| Other income - unrealized gain/(loss) on investments | ( | ) | ( | ) | ||||||||||||
| Other income - realized gain/(loss) on investments | ( | ) | ||||||||||||||
| Net income/(loss) before provision for income taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Income tax expense/(benefit) | ( | ) | ||||||||||||||
| Net income/(loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
| Income/(loss) per share - basic and diluted | $ | $ | $ | ) | $ | |||||||||||
| Weighted average shares - basic and diluted | ||||||||||||||||
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 six months ended June 30, 2024
(Unaudited)
| Common Stock | Additional Paid-In | Retained Earnings/(Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit) | Equity | ||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | ||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
CONDENSED AND CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the six months ended June 30, 2023
(Unaudited)
| Common Stock | Additional Paid-In | Retained | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Earnings | Equity | ||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | ||||||||||||||||
| Net income | - | |||||||||||||||||||
| Balance, June 30, 2023 | $ | $ | $ | $ | ||||||||||||||||
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 March 31, 2024
(Unaudited)
| Common Stock | Additional Paid-In | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
CONDENSED AND CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Three Months Ended March 31, 2023
(Unaudited)
| Common Stock | Additional Paid-In | Retained Earnings/(Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit) | Equity | ||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | $ | ||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance, June 30, 2023 | $ | $ | $ | $ | ||||||||||||||||
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 six months ended June 30, 2024 | For the six months ended June 30, 2023 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net income/(loss) | $ | ( | ) | $ | ||||
| Adjustments to reconcile net income to net cash provided by/(used in) operating activities: | ||||||||
| Depreciation | ||||||||
| Loss on loan modification | ||||||||
| Foreign currency translation loss | ||||||||
| Amortization of note premium | ( | ) | ||||||
| Net realized loss on investments | ||||||||
| Net unrealized (gain)/loss on investments | ( | ) | ||||||
| Income tax expense/(benefit) | ||||||||
| Deferred income tax | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Inventory | ||||||||
| Trade receivables | ( | ) | ||||||
| Miscellaneous receivable - related party | ( | ) | ||||||
| Accrued interest receivable - related party | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ||||||||
| Deferred revenue - related party | ( | ) | ||||||
| Deferred tax | ||||||||
| Related party payable | ||||||||
| Net cashed provided/(used) by operating activities | ( | ) | ||||||
| INVESTING ACTIVITIES: | ||||||||
| Sale of marketable securities, trading | ||||||||
| Issuance of notes receivable - related party | ( | ) | ||||||
| Payments on notes receivable – related party | ||||||||
| Purchase of marketable securities, trading | ( | ) | ||||||
| Net cash provide/(used) by Investing Activities | ( | ) | ||||||
| Net change in cash | ( | ) | ( | ) | ||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Supplemental cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
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 June 30, 2024, and the statements of operations and changes in stockholders’ equity for the three and six months ended June 30, 2024, and 2023, and the cash flows for three and six months ended June 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 June 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.
Management intends to maintain adequate working capital and adhere to prudent financial forecasting. Beginning September 2024, Sellavir will be receiving regular monthly revenue and any shortfalls will be funded with related party loans. The Company is also implanting new strategies to expand the sale of Geiger counters.
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 is 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”).
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.
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.
| 8 |
QUARTA-RAD, INC. AND SUBSIDIARIES
Notes to the (unaudited) Condensed and Consolidated Financial Statements
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 six ended June 30, 2024, and 2023, amounted to $--, $--, $
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
Quarta Rad purchased
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 potentially dilutive instruments outstanding during the periods ended June 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 June 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. |
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 June 30, 2024 about the Company’s financial assets measured at fair value on a recurring basis.
| 9 |
QUARTA-RAD, INC. AND SUBSIDIARIES
Notes to the (unaudited) Condensed and Consolidated Financial Statements
Values on June 30, 2024:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets at fair value: | ||||||||||||||||
| Marketable Securities | $ | $ | $ | $ | ||||||||||||
| Total assets at fair value, June 30, 2024 | $ | $ | $ | $ | ||||||||||||
Values on December 31. 2023:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets at fair value: | ||||||||||||||||
| Marketable Securities | $ | $ | $ | $ | ||||||||||||
| Total assets at fair value, December 31. 2023 | $ | $ | $ | $ | ||||||||||||
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.
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
| 10 |
QUARTA-RAD, INC. AND SUBSIDIARIES
Notes to the (unaudited) Condensed and Consolidated Financial Statements
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 and second 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.
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 $
| 11 |
QUARTA-RAD, INC. AND SUBSIDIARIES
Notes to the (unaudited) Condensed and Consolidated Financial Statements
The Company issued an additional loan to the Thai
Corporation in May 2023 for $
During January 2024, both notes were amended to provide a one year extension for all payment due dates.
Accrued interest at June 30, 2024 and December 31,
2023 for both loans is $
Principal amounts to be received for the two notes are as follows:
| $261,038 Note | $175,000 Note | Total | ||||||||||
| 2025 | $ | $ | $ | |||||||||
| 2026 | $ | |||||||||||
| 2027 | $ | |||||||||||
| 2028 | $ | |||||||||||
| 2029 | $ | |||||||||||
| 1Totals | $ | $ | $ | |||||||||
NOTE 5–PROPERTY AND EQUIPMENT
Property and Equipment at June 30, 2024 and December 31. 2023 consisted of:
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Computer Equipment | $ | $ | ||||||
| Accumulated Depreciation | ( |
) | ( |
) | ||||
| Net Property & Equipment | $ | $ | ||||||
The Company recognized $
| 12 |
QUARTA-RAD, INC. AND SUBSIDIARIES
Notes to the (unaudited) Condensed and Consolidated Financial Statements
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 $
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 $
In April 2021, the Company began compensating its CEO, who is the majority shareholder. The Company expensed $, $, $ and $ for the three and six months ended June 30, 2024, and 2023, respectively. As of June 30, 2024 and December 31, 2023 the Company has accrued $ and $, 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 June 30, 2024 and December 31, 2023, is due $ and $, respectively, for expenses paid on behalf of the Company. The balances are due on demand and do not accrue interest.
Sellavir recognized $--, $--, $
NOTE 7–SEGMENTS
The Company has
Segment information for the three and six months ended June 2024 and 2023 is as follows:
| For the six months ended June 30, 2024 | ||||||||||||
| Quarta-Rad | Sellavir | Consolidated | ||||||||||
| Revenues | $ | $ | ||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ||||||
| Net loss | $ | ( | ) | ( | ) | $ | ( | ) | ||||
| For the three months ended June 30, 2024 | ||||||||||||
| Quarta-Rad | Sellavir | Consolidated | ||||||||||
| Revenues | $ | $ | ||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ||||||
| Net income/(loss) | $ | ( | ) | ( | ) | $ | ( | ) | ||||
| For the six months ended June 30, 2023 | ||||||||||||
| Quarta-Rad | Sellavir | Consolidated | ||||||||||
| Revenues | $ | $ | $ | |||||||||
| Income/(loss) from operations | ( | ) | ( | ) | ||||||||
| Net income/(loss) | $ | ( | ) | $ | $ | |||||||
| For the three months ended June 30, 2023 | ||||||||||||
| Quarta-Rad | Sellavir | Consolidated | ||||||||||
| Revenues | $ | $ | $ | |||||||||
| Income/(loss) from operations | ( | ) | ( | ) | ||||||||
| Net income/(loss) | $ | ( | ) | $ | $ | ( | ) | |||||
| Total Assets | As of June 30, 2024 | As of December 31, 2023 | ||||||
| Quarta-Rad | $ | $ | ||||||
| Sellavir | ||||||||
| Total Assets | $ | $ | ||||||
| 13 |
QUARTA-RAD, INC. AND SUBSIDIARIES
Notes to the (unaudited) Condensed and Consolidated Financial Statements
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 June 30, 2024 through August 14, 2024. Based on its evaluation, other than the note below there is nothing to be disclosed herein.
| 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 six months ended June 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.
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.
As of the date of this Form 10-Q, we continue to expand our operations and expect to increase our revenues with additional working capital. Our chief executive officer and director, Prior to April 2024, Victor Shvetsky, and our director and president, Alexey Golovanov, are our only employees. Mr. Shvetsky and Mr. Golovanov will devote at least ten hours per week to us but may increase the number of hours as necessary.. In April 2024, Mr. Golovanov resigned from the Company . 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.
Our administrative office is located at 1201 N. Orange St., Suite 700, Wilmington, DE 19801, which is a virtual office.
We continue to focus our business operations on the development of our distribution agreements and reseller network as well as continue to advertise on the Internet. We plan to continue to utilize our website to promote the products to home renovation contractors and other purchasers of detection devices. We are promoting the detection products by advertising our website and marketing to independent distributors and others interested in detection devices. We purchase the products from QRR, which is owned by our minority shareholder and is the original manufacturer for RADEX product line. Under an oral agreement with QRR, we have the exclusive distribution rights for sale of QRR products in Europe, the US, and Asia (excluding China) for a period of 10 years. We sell the products we purchase from QRR directly to third party buyers and to resellers. The purchase terms require us to prepay for the products we purchase at a price that is set forth in each purchase order. During 2019, our ability to sell through our distributor in the UK was suspended due to an ongoing UK VAT examination, we are currently testing new partners for EU distribution and have resumed UK sales.
| 15 |
We have secured another factory in Kazakhstan to supply inventory. A test batch of inventory was purchased in December 2023 and partially sold during the first six months of 2024.
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
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 six months ended June 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 six months ended June 30, 2024, is comprised of:
| Quarta Rad | Sellavir | Total | ||||||||||
| Sales | $ | 51,086 | $ | - | $ | 51,086 | ||||||
| Cost of Good Sold | 28,673 | - | 28,673 | |||||||||
| Gross Profit | 22,413 | - | 22,413 | |||||||||
| Expenses: | ||||||||||||
| General & administrative | 43,639 | 55,928 | 99,567 | |||||||||
| Advertising | - | - | - | |||||||||
| Professional and consulting fees | 56,846 | 2,500 | 59,346 | |||||||||
| Operating expenses | 100,485 | 58,428 | 158,913 | |||||||||
| Net loss from operations | (78,072 | ) | (58,428 | ) | (136,500 | ) | ||||||
| Interest and dividends | - | 2 | 2 | |||||||||
| Other expense - foreign currency translation loss | (16,110 | ) | (16,110 | ) | ||||||||
| Other income - interest - related party | - | 23,406 | 23,406 | |||||||||
| Other expense - loss on loan modification | (11,469 | ) | (11,469 | ) | ||||||||
| Unrealized gain/(loss) on investments | - | (13,324 | ) | (13,324 | ) | |||||||
| Realized gain/(loss) on investments | - | - | - | |||||||||
| Interest expense | - | - | ||||||||||
| Income tax benefit | - | |||||||||||
| Net loss | $ | (78,072 | ) | $ | (75,923 | ) | $ | (153,995 | ) | |||
| 17 |
The Company has two operating segments through the operations of Quarta-Rad and Sellavir. Net income for the six months ended June 30, 2023, is comprised of:
| Quarta Rad | Sellavir | Total | ||||||||||
| Sales | 199,061 | 102,000 | 301,061 | |||||||||
| Cost of Good Sold | 131,821 | 40,966 | 172,787 | |||||||||
| Gross Profit | 67,240 | 61,034 | 128,274 | |||||||||
| Expenses: | ||||||||||||
| General & administrative | 25,920 | 484 | 26,404 | |||||||||
| Advertising | 33,577 | - | 33,577 | |||||||||
| Professional and consulting fees | 70,901 | 4,000 | 74,901 | |||||||||
| Operating expenses | 130,398 | 4,484 | 134,882 | |||||||||
| Net income (loss) from operations | (63,158 | ) | 56,550 | (6,608 | ) | |||||||
| Interest and dividends | - | 301 | 301 | |||||||||
| Other expense - foreign currency translation loss | ||||||||||||
| Other income - interest - related party | - | 13,779 | 13,779 | |||||||||
| Unrealized gain/(loss) on investments | - | 21,780 | 21,780 | |||||||||
| Realized gain/(loss) on investments | (3,529 | ) | (3,529 | ) | ||||||||
| Interest expense | - | - | ||||||||||
| Income tax benefit (/expense) | 13,263 | (18,665 | ) | (5,402 | ) | |||||||
| Net income/(loss) | (49,895 | ) | 70,216 | 20,321 | ||||||||
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:
Six months ended June 30, 2024 compared with the six months ended June 30, 2023
Revenues. Our net revenues decreased $249,975, or 83.03% to $51.086 for the six months ended June 30, 2024, compared with $301,061for the six months ended June 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 $144,114, or 83.41% to $28,673 for the six months ended June 30, 2024, compared with $172,787 for the comparable period in 2023. The decrease was a result of Quarta Rad direct costs due to reduced revenue.
Operating Expenses. For the six months ended June 30, 2024, our total operating expenses increased $24,031, or 17.82% to $158,913 for the six months ended June 30, 2024, compared with $134,882 for the six months ended June 30, 2023. The increase is primarily attributable to the Company’s classification of Sellavir contractor expenses.
| 18 |
Net Loss. Our net loss increased $174,316 to a net loss of $153,995 for the six months ended June 30, 2024 compared to net income of $20,321 for the six months ended June 30, 2023. The increase was primarily due to a decrease in sales and other losses related to investment income.
QUARTA-RAD
Six months ended June 30, 2024, compared with the six months ended June 30, 2023
Revenues. Our net revenues decreased $147,975, or 74.34% to $51,086 for the six months ended June 30, 2024, compared with $199,061for the six months ended June 30, 2023.The reduction was primarily attributable to the sales of our RD1503 model.
Cost of Goods Sold. Our Cost of Goods Sold decreased $103,148 or 78.25% to $28,673. for the six months ended June 30, 2024, compared to $131,821 for the comparable period in 2023. The decrease was a result of decreased sales.
Operating Expenses. For the six months ended June 30, 2024, our total operating expenses decreased $29.913 to $100,485 compared to $130,398 for the six months ended June 30, 2023. The decrease is primarily attributable to the Company’s reduced professional fees and advertising expenses.
Net Loss. Our net loss increased $28,177 , or 56.47% to $78,072 for the six months ended June 30, 2024, compared to a net loss of $49,895 for the six months ended June 30, 2023. The increase was primarily due to reduced sales.
SELLAVIR
Six months ended June 30, 2024, compared with the six months ended June 30, 2023
Revenues. Our net recognized revenue decreased $102,000, or 100%, to $-0- for the six months ended June 30, 2024 compared with $62,000- for the six months ended June 30, 2023. The decrease is due to timing or revenue recognized.
Cost of Goods Sold. Our Cost of Goods Sold decreased $40,966 or 100% to $-0- for the six months ended June 30, 2024, compared to $40,966 for the comparable period in 2022. The decrease was primarily due to the classification of contractor costs.
Operating Expenses. For the six months ended June 30, 2024, our total operating expenses increased $53,944 or 1203.03% to $58,428 compared to $4,484 for the six months ended June 30, 2023. The increase was primarily due to the classification of contractor costs.
Net Loss. Our net loss increased $146,139 to $75,923 for the six months ended June 30, 2024, compared to net income of $70,216 for the six months ended June 30, 2023. The increase was primarily due to a reduction in sales and other losses related to investments.
Three months ended June 30, 2024 compared with the three months ended June 30, 2023
Revenues. Our net revenues decreased $73,038, or 71.55% to $29,044 for the three months ended June 30, 2024, compared with $102,082 for the three months ended June 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 $31,067or 62.77% to $18,424 for the three months ended June 30, 2024 compared to $49,491 for 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.
| 19 |
Operating Expenses. For the three months ended June 30, 2024, our total operating expenses increased $12,591 or 17.49% to$84,562 compared to $71,971 for the three months ended June 30, 2023. The increase is primarily attributable to Sellavir’s classification of contractor costs.
Net Loss. Our net loss increased $49,092 or 370.45% to $62,344 for the three months ended June 30, 2024 compared to $13,252 for the three months ended June 30, 2023. The increase was primarily due to a decrease in sales.
QUARTA-RAD
Three months ended June 30, 2024, compared with the three months ended June 30, 2023
Revenues. Our net revenues decreased $33,038, or 53.22% to $29,044 for the three months ended June 30, 2024, compared with $62,082 for the three months ended June 30, 2023. The reduction was primarily attributable to the sales of our RD1503 model.
Cost of Goods Sold. Our Cost of Goods Sold decreased $12,832 or 41.05% to $118,424 for the three months ended June 30, 2024, compared to $31,256 for the comparable period in 2023. The decrease was a result of decreased sales.
Operating Expenses. For the three months ended June 30, 2024, our total operating expenses decreased $17,207 or 25.03% to 51,528 compared to $68,735 for the three months ended June 30, 2023. The decrease is primarily attributable to the Decrease in advertising and professional fees.
Net Loss. Our net loss increased $10,960 or 36.6% to $40,908 for the three months ended June 30, 2024, compared to a net loss of $29,948 for the three months ended June 30, 2023. The increase was primarily due to a decrease in sales.
SELLAVIR
Three months ended June 30, 2024, compared with the three months ended June 30, 2023
Revenues. Our net recognized revenue decreased $40,000 or 100% to $-0- for the three months ended June 30, 2024 compared with $40,000 for the three months ended June 30, 2023. The decrease is due to timing or revenue recognized.
Cost of Goods Sold. Our Cost of Goods Sold decreased $18,235 or 100% to $-0- for the three months ended June 30, 2024, compared to $18,235 for the comparable period in 2023. The increase was primarily due to increased contractor costs.
Operating Expenses. For the three months ended June 30, 2024, our total operating expenses incrased $1,067 or 85.16% to. $2,320 compared to $1,253 for the three months ended June 30, 2023.
The decrease was primarily due to the classification of contractor costs.
Net Loss. Our net loss increased $38,132 to ($21,436) for the three months ended June 30, 2024, compared to net income of $16,696 for the three months ended June 30, 2023. The increase was primarily due to a reduction in sales.
Liquidity and Capital Resources. During the three months ended June 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 $619,906 and $683,145 as of June 30, 2024, and December 31, 2023, respectively, consisting of $63,734 and $72,625, respectively, in cash. Our working capital deficit was ($237,849) and ($46,448) as of June 30, 2024 and December 31, 2023, respectively.
| 20 |
We had $34,413 used by and $114,920 in cash provided by operating activities for the six months ended June 30, 2024 and 2023, respectively.
We had $25,522 provided by and $271,026 in cash used by investing activities for the six months ended June 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 no cash provided by financing activities for the six months ended June 30, 2024 and 2023, respectively.
The Company had no formal long-term lines of credit or other bank financing arrangements as of June 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.
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 June 30, 2024.
Plan of Operation
Our business strategy is to continue to market our website (www.quartarad.com). We have used our website to market products for sale to consumers as well to third party distributors. We will continue to strengthen our presence on e-commerce sites. We are also focusing on expanding our reseller network by targeting large consumer retail chains.
The number of detection devices which we will be able to sell will depend upon the success of our marketing efforts through our website and the distributors that we will enter into agreement with to sell the products.
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 is 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”).
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.
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.
Secure Distribution Agreements: (Estimated cost $10,000). We plan to seek and secure distribution agreements for the sale of our detection devices.
| 21 |
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.
Off-Balance Sheet Arrangements
None.
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.
| 22 |
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 June 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.
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 June 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 June 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.
| 23 |
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.
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: |
| 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.
| 24 |
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. | |
| August 14, 2024 | /s/ Victor Shvetsky |
| Victor Shvetsky | |
| Chairman and Chief Executive Officer (Principal Executive | |
| Officer) and Chief Financial Officer (Principal Accounting and Financial Officer) |
| 25 |
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: August 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: August 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 June 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: August 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 June 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: August 14, 2024 | /s/ Victor Shvetsky |
| Victor Shvetsky | |
| Chief Financial Officer | |
| (Principal Financial Officer) |
Condensed and Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) |
Jun. 30, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Notes receivable discount | $ 12,026 | $ 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 |
Condensed and Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
|
| Total sales, net | $ 29,044 | $ 102,082 | $ 51,086 | $ 301,061 |
| Gross profit | 10,620 | 52,591 | 22,413 | 128,274 |
| Expenses: | ||||
| General and administrative | 53,725 | 13,986 | 99,567 | 26,404 |
| Advertising | 16,484 | 33,577 | ||
| Professional and consulting fees | 30,837 | 41,501 | 59,346 | 74,901 |
| Operating expenses | 84,562 | 71,971 | 158,913 | 134,882 |
| Net income/(loss) from operations | (73,942) | (19,380) | (136,500) | (6,608) |
| Other income - interest and dividends | 1 | 7 | 2 | 301 |
| Other expense - foreign currency translation loss | (2,427) | (16,110) | ||
| Other income - interest - related party | 11,703 | 13,779 | 23,406 | 13,779 |
| Other expense - loss on loan modification | (11,469) | |||
| Other income - unrealized gain/(loss) on investments | 2,321 | (32,691) | (13,324) | 21,780 |
| Other income - realized gain/(loss) on investments | 21,511 | (3,529) | ||
| Net income/(loss) before provision for income taxes | (62,344) | (16,774) | (153,995) | 25,723 |
| Income tax expense/(benefit) | (3,522) | 5,402 | ||
| Net income/(loss) | $ (62,344) | $ (13,252) | $ (153,995) | $ 20,321 |
| 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 | $ 29,044 | $ 62,082 | $ 51,086 | $ 199,061 |
| Cost of goods sold | 18,424 | 31,256 | 28,673 | 131,821 |
| Sellavir Inc [Member] | ||||
| Total sales, net | 40,000 | 102,000 | ||
| Cost of goods sold | $ 18,235 | $ 40,966 | ||
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 income (loss) | 20,321 | 20,321 | ||
| Balance at Jun. 30, 2023 | $ 1,568 | 346,726 | 21,128 | 369,422 |
| Balance, shares at Jun. 30, 2023 | 15,674,483 | |||
| Balance at Mar. 31, 2023 | $ 1,568 | 346,726 | 34,380 | 382,674 |
| Balance, shares at Mar. 31, 2023 | 15,674,483 | |||
| Net income (loss) | (13,252) | (13,252) | ||
| Balance at Jun. 30, 2023 | $ 1,568 | 346,726 | 21,128 | 369,422 |
| Balance, shares at Jun. 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 income (loss) | (153,995) | (153,995) | ||
| Balance at Jun. 30, 2024 | $ 1,568 | 346,726 | (108,696) | 239,598 |
| Balance, shares at Jun. 30, 2024 | 15,674,483 | |||
| Balance at Mar. 31, 2024 | $ 1,568 | 346,726 | (46,352) | 301,942 |
| Balance, shares at Mar. 31, 2024 | 15,674,483 | |||
| Net income (loss) | (62,344) | (62,344) | ||
| Balance at Jun. 30, 2024 | $ 1,568 | $ 346,726 | $ (108,696) | $ 239,598 |
| Balance, shares at Jun. 30, 2024 | 15,674,483 |
BASIS OF PRESENTATION |
6 Months Ended |
|---|---|
Jun. 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 June 30, 2024, and the statements of operations and changes in stockholders’ equity for the three and six months ended June 30, 2024, and 2023, and the cash flows for three and six months ended June 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 June 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.
Management intends to maintain adequate working capital and adhere to prudent financial forecasting. Beginning September 2024, Sellavir will be receiving regular monthly revenue and any shortfalls will be funded with related party loans. The Company is also implanting new strategies to expand the sale of Geiger counters.
|
NATURE OF BUSINESS |
6 Months Ended |
|---|---|
Jun. 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 is 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”).
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 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.
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.
QUARTA-RAD, INC. AND SUBSIDIARIES
Notes to the (unaudited) Condensed and Consolidated Financial Statements
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 six ended June 30, 2024, and 2023, amounted to $--, $--, $16,484 and $33,577, 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 88% of accounts receivable at December 31. 2023.
Quarta Rad purchased 100% of its inventory through a third party in 2023.
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 potentially dilutive instruments outstanding during the periods ended June 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 June 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:
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 June 30, 2024 about the Company’s financial assets measured at fair value on a recurring basis.
QUARTA-RAD, INC. AND SUBSIDIARIES
Notes to the (unaudited) Condensed and Consolidated Financial Statements
Values on June 30, 2024:
Values on December 31. 2023:
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.
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 June 30, 2024 and December 31. 2023, respectively.
QUARTA-RAD, INC. AND SUBSIDIARIES
Notes to the (unaudited) Condensed and Consolidated Financial Statements
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 and second 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.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NOTE RECEIVABLE – RELATED PARTY |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 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. In 2024, the note was amended to reduce the interest rate to 10%, effective January 2024, 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 $229,993 and $261,072 recording a loss on foreign currency translation of $16,110 and $36 at June 30, 2024 and December 31, 2023, respectively. The amount of unamortized premium at June 30, 2024 and December 31, 2023 is $12,026 and $13,362, respectively. Payments are deferred until April 1, 2025, with quarterly principal payments due through April 1, 2028. 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.
QUARTA-RAD, INC. AND SUBSIDIARIES
Notes to the (unaudited) Condensed and Consolidated Financial Statements
The Company issued an additional loan to the Thai Corporation in May 2023 for $175,000, at the rate of 15% per annum. In 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, with quarterly principal payments due through April 2028. 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 June 30, 2024 and December 31, 2023 for both loans is $54,505 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:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY AND EQUIPMENT |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| PROPERTY AND EQUIPMENT | NOTE 5–PROPERTY AND EQUIPMENT
Property and Equipment at June 30, 2024 and December 31. 2023 consisted of:
The Company recognized $200, $400, $200, and $400 in depreciation expense in each period for the three and six months ended June 30, 2024 and 2023, respectively.
QUARTA-RAD, INC. AND SUBSIDIARIES
Notes to the (unaudited) Condensed and Consolidated Financial Statements
|
|||||||||||||||||||||||||||||||||||||||||||||
RELATED PARTY TRANSACTIONS |
6 Months Ended |
|---|---|
Jun. 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 June 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 June 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 $, $, $ and $ for the three and six months ended June 30, 2024, and 2023, respectively. As of June 30, 2024 and December 31, 2023 the Company has accrued $ and $, 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 June 30, 2024 and December 31, 2023, is due $ and $, respectively, for expenses paid on behalf of the Company. The balances are due on demand and do not accrue interest.
Sellavir recognized $--, $--, $40,000 and $102,000 of revenue for the three and six months ended June 30, 2024, and 2023, respectively in services to STAR to develop software.
|
SEGMENTS |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 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 six months ended June 2024 and 2023 is as follows:
QUARTA-RAD, INC. AND SUBSIDIARIES
Notes to the (unaudited) Condensed and Consolidated Financial Statements
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES |
6 Months Ended |
|---|---|
Jun. 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.
|
SUBSEQUENT EVENTS |
6 Months Ended |
|---|---|
Jun. 30, 2024 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | NOTE 9–SUBSEQUENT EVENTS
The Company has performed an evaluation of events occurring subsequent to June 30, 2024 through August 14, 2024. Based on its evaluation, other than the note below there is nothing to be disclosed herein. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 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.
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.
QUARTA-RAD, INC. AND SUBSIDIARIES
Notes to the (unaudited) Condensed and Consolidated Financial Statements
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 six ended June 30, 2024, and 2023, amounted to $--, $--, $16,484 and $33,577, 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 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 potentially dilutive instruments outstanding during the periods ended June 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 June 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:
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 June 30, 2024 about the Company’s financial assets measured at fair value on a recurring basis.
QUARTA-RAD, INC. AND SUBSIDIARIES
Notes to the (unaudited) Condensed and Consolidated Financial Statements
Values on June 30, 2024:
Values on December 31. 2023:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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.
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 June 30, 2024 and December 31. 2023, respectively.
QUARTA-RAD, INC. AND SUBSIDIARIES
Notes to the (unaudited) Condensed and Consolidated Financial Statements
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 and second 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. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF FAIR VALUE OF FINANCIAL INSTRUMENTS | Values on June 30, 2024:
Values on December 31. 2023:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NOTE RECEIVABLE – RELATED PARTY (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF PRINCIPAL AMOUNT OF NOTES RECEIVABLES | Principal amounts to be received for the two notes are as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY AND EQUIPMENT (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF PROPERTY AND EQUIPMENT | Property and Equipment at June 30, 2024 and December 31. 2023 consisted of:
|
|||||||||||||||||||||||||||||||||||||||||||||
SEGMENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF SEGMENT INFORMATION | Segment information for the three and six months ended June 2024 and 2023 is as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SCHEDULE OF FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) |
Jun. 30, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Platform Operator, Crypto Asset [Line Items] | ||
| Marketable Securities | $ 38,824 | $ 52,148 |
| Total assets at fair value | 38,824 | 52,148 |
| Fair Value, Inputs, Level 1 [Member] | ||
| Platform Operator, Crypto Asset [Line Items] | ||
| Marketable Securities | 38,824 | 52,148 |
| Total assets at fair value | 38,824 | 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 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
Dec. 31, 2023 |
|
| Product Information [Line Items] | |||||
| Advertising expense | $ 16,484 | $ 33,577 | |||
| 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 | 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% | ||||
SCHEDULE OF PRINCIPAL AMOUNT OF NOTES RECEIVABLES (Details) |
Jun. 30, 2024
USD ($)
|
|---|---|
| Impairment Effects on Earnings Per Share [Line Items] | |
| 2025 | $ 64,379 |
| 2026 | 100,014 |
| 2027 | 100,014 |
| 2028 | 100,014 |
| 2029 | 29,947 |
| 1Totals | 394,368 |
| Notes Receivable One [Member] | |
| Impairment Effects on Earnings Per Share [Line Items] | |
| 2025 | 43,129 |
| 2026 | 57,514 |
| 2027 | 57,514 |
| 2028 | 57,514 |
| 2029 | 14,322 |
| 1Totals | 229,993 |
| 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 |
| 1Totals | $ 164,375 |
NOTE RECEIVABLE – RELATED PARTY (Details Narrative) |
1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Apr. 30, 2024
THB (฿)
|
Jan. 31, 2024 |
May 31, 2023
THB (฿)
|
Mar. 31, 2023
THB (฿)
|
Jun. 30, 2024
USD ($)
|
Jun. 30, 2023
USD ($)
|
Jun. 30, 2024
USD ($)
|
Jun. 30, 2023
USD ($)
|
Dec. 31, 2023
USD ($)
|
Jun. 30, 2024
THB (฿)
|
Dec. 31, 2023
THB (฿)
|
May 31, 2023
USD ($)
|
Mar. 31, 2023
USD ($)
|
Mar. 31, 2023
THB (฿)
|
|
| Defined Benefit Plan Disclosure [Line Items] | ||||||||||||||
| Loss on loan modification | $ 11,469 | |||||||||||||
| 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 | 54,505 | 54,505 | $ 44,172 | |||||||||||
| Thai Corporation [Member] | Sellavir Inc [Member] | ||||||||||||||
| Defined Benefit Plan Disclosure [Line Items] | ||||||||||||||
| Loans payable | $ 261,038 | ฿ 9,000,000 | ||||||||||||
| Premium | $ 12,026 | 12,026 | 13,362 | $ 16,038 | ||||||||||
| Imputed Interest rate | 10.00% | 15.00% | ||||||||||||
| Secured property selling price rate | 3.00% | |||||||||||||
| Loss on loan modification | ฿ | ฿ 8,188 | |||||||||||||
| Face amount | ฿ | ฿ 229,993 | ฿ 261,072 | ||||||||||||
| Loss on foreign currency translation | $ 16,110 | $ 36 | ||||||||||||
| Principal repayment of additional loan issued | ฿ | ฿ 14,897 | |||||||||||||
SCHEDULE OF PROPERTY AND EQUIPMENT (Details) - USD ($) |
Jun. 30, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Property, Plant and Equipment [Abstract] | ||
| Computer Equipment | $ 4,005 | $ 4,005 |
| Accumulated Depreciation | (2,835) | (2,435) |
| Net Property & Equipment | $ 1,170 | $ 1,570 |
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
|
| Property, Plant and Equipment [Abstract] | ||||
| Depreciation | $ 200 | $ 200 | $ 400 | $ 400 |
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | ||||
|---|---|---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
Dec. 31, 2023 |
Jul. 31, 2017 |
|
| Related Party Transaction [Line Items] | ||||||
| Total sales, net | $ 29,044 | $ 102,082 | $ 51,086 | $ 301,061 | ||
| Sellavir Inc [Member] | ||||||
| Related Party Transaction [Line Items] | ||||||
| Total sales, net | 40,000 | 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 | 129,356 | 129,356 | 56,125 | |||
| Compensation expense | 8,000 | $ 8,000 | 16,000 | $ 16,000 | ||
| Accrued compensation | $ 104,000 | $ 104,000 | $ 88,000 | |||
SCHEDULE OF SEGMENT INFORMATION (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
|---|---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
Dec. 31, 2023 |
|
| Segment Reporting Information [Line Items] | |||||
| Revenues | $ 29,044 | $ 102,082 | $ 51,086 | $ 301,061 | |
| Income/(loss) from operations | (73,942) | (19,380) | (136,500) | (6,608) | |
| Net income/(loss) | (62,344) | (13,252) | (153,995) | 20,321 | |
| Total Assets | 619,906 | 619,906 | $ 683,314 | ||
| Quarta-Rad Ltd [Member] | |||||
| Segment Reporting Information [Line Items] | |||||
| Revenues | 29,044 | 62,082 | 51,086 | 199,061 | |
| Income/(loss) from operations | (40,908) | (37,911) | (78,072) | (63,158) | |
| Net income/(loss) | (40,908) | (29,948) | (78,072) | (49,895) | |
| Total Assets | 127,676 | 127,676 | 151,789 | ||
| Sellavir Inc [Member] | |||||
| Segment Reporting Information [Line Items] | |||||
| Revenues | 40,000 | 102,000 | |||
| Income/(loss) from operations | (33,034) | 18,531 | (58,428) | 56,550 | |
| Net income/(loss) | (21,436) | $ 16,696 | (75,923) | $ 70,216 | |
| Total Assets | $ 492,230 | $ 492,230 | $ 531,525 | ||
SEGMENTS (Details Narrative) |
6 Months Ended |
|---|---|
|
Jun. 30, 2024
Segment
| |
| Segment Reporting [Abstract] | |
| Number of operating segments | 2 |