QURT 10-K
Quarta-Rad, Inc. (QURT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the fiscal year ended:
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:
| Common Stock, $0.0001 par value per share | None | |
| (Title of Each Class) | (Name of Each Exchange on Which Registered) |
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 if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934
during the preceding 12 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 corporate Website, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S−K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10−K or any amendment to this Form 10−K. ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Smaller
reporting company | ||
| Emerging
Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
The
aggregate market value of the voting stock held by non-affiliates of the registrant as of April 1,2024, based upon the last sale price
of the common stock of such date: $
The number of shares of the registrant’s common stock issued and outstanding as of April 1, 2024, was .
table of contents
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CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS
The information contained in this Report includes some statements that are not purely historical and that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and as such, may involve risks and uncertainties. These forward-looking statements relate to, among other things, expectations of the business environment in which we operate, perceived opportunities in the market and statements regarding our mission and vision. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. You can generally identify forward-looking statements as statements containing the words “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “possible,” “potential,” “predicts,” “projects,” “seeks,” “should,” “will,” “would” and similar expressions, or the negatives of such terms, but the absence of these words does not mean that a statement is not forward-looking.
Forward-looking statements involve risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The forward-looking statements contained herein are based on various assumptions, many of which are based, in turn, upon further assumptions. Our expectations, beliefs and forward-looking statements are expressed in good faith on the basis of management’s views and assumptions as of the time the statements are made, but there can be no assurance that management’s expectations, beliefs or projections will result or be achieved or accomplished.
In addition to other factors and matters discussed elsewhere herein, the following are important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements: technological advances, impact of competition, dependence on key personnel and the need to attract new management, effectiveness of cost and marketing efforts, acceptances of products, ability to expand markets and the availability of capital or other funding on terms satisfactory to us. We disclaim any obligation to update forward-looking statements to reflect events or circumstances after the date hereof.
For a discussion of the risks, uncertainties, and assumptions that could affect our future events, developments or results, you should carefully review the “Risk Factors” set forth under “Item 1. Description of Business” below. Considering these risks, uncertainties and assumptions, the future events, developments or results described by our forward-looking statements herein could turn to be materially different from those we discuss or imply.
PART I
Item 1. Description of Business.
Organization
We were incorporated in the State of Delaware as a for-profit company on November 29, 2011, under the name Quatra-Rad, Inc. and our incorporator adopted our bylaws and appointed our two directors. On February 29, 2012, we amended our Certificate of Incorporation to change our name to Quarta-Rad, Inc. On July 16, 2012, we amended and restated its Certificate of Incorporation to increase its authorized shares of common stock to 50,000,000, $0.0001 par value from 1,500, no par value and effected a 10,000 to 1 forward split. On February 4, 2015, we filed a Certificate of Correction to our Certificate of Amendment to Certificate of Incorporation to correct it for inadvertently excluding the 10,000 to 1 forward stock split, which our shareholders and directors approved on June 29, 2012. From November 29, 2011 (inception) through May 2012, we had limited operations. Commencing in May 2012, we began sales and implemented our business plan to distribute detection devices, including but not limited to Geiger counters, to homeowners and interested customers in North America by selling them on consignment on behalf of a related party owned by our majority shareholder and which are purchased from a company owned by our minority shareholder. We also purchase the products directly from the company owned by our minority shareholder and sell them to independent third party resellers. A Geiger counter is an instrument used for measuring ionizing radiation. It detects radiation such as Beta particles, Gamma rays and X-rays using the ionization produced in a Geiger–Müller tube, which gives its name to the instrument. We do not currently manufacture any of the products that we sell. We intend to continue to target homebuilders and home renovation contractors for the sale of products and resellers that market to these customers. Our business activities are now focused on expanding our Internet sales. We have established a fiscal year end of December 31. Initially we sold the products on consignment on behalf of Star Systems Corporation, a Japanese company owned by Victor Shvetsky, our majority shareholder, and purchase products from Quarta-Rad, Ltd., a Russian company owned by Alexey Golovanov, our minority shareholder, which we sell to independent third party resellers. Commencing in 2013, we began selling the products directly to third parties through Internet sales.
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On November 29, 2011, we issued 1,500 pre-split shares of our no par value common stock, valued at $1 per share, to our 2 founders, which includes 1,200 pre-split common shares to our chief executive officer, Victor Shvetsky and 300 pre-split common shares to our president, Alexey Golovanov in exchange for organizational services incurred in our formation valued at $1,200 and $300, respectively. We believe that our present capital is sufficient to cover our monthly burn rate for the next 12 months. However, we believe that we will require between $70,000 to $400,000 in cash in to accomplish the goals set out in our plan of operation (See Item 7). To the extent we are unable to accomplish our goals with the proceeds from the issuance of our common stock, then we intend to use our existing cash or raise additional capital from investors through the sale of our common stock or from loans or advances from our majority shareholder. Our majority shareholder has orally agreed to advance us the funds without interest and has agreed to defer repayment until we are able to repay him. In the fourth quarter of 2016, we raised $65,230 from 34 investors through the issuance of our common stock pursuant to our registration statement. No additional funds were raised in 2022 or 2023.
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 December 31, 2023.
During December 2020, we acquired Sellavir, Inc, a Delaware corporation, under common control, as a wholly owned subsidiary We acquired the company in exchange for 333,333 shares on 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.
Our principal business, executive and registered statutory office is located at 1201 N. Orange St., Suite 700, Wilmington, DE 19801-1186 and our telephone number is (302) 887-9916 and email contact is [email protected]. Our URL address is www.quartarad.com.
Business
We commenced operations in May 2012, by selling products on consignment from a company owned by our majority shareholder. In 2012, we purchased products from a company owned by our minority shareholder and sold them to a company owned by our majority shareholder and to third party resellers. We believe the terms of those sales were arms-length. In 2012, we began use of the Internet as well as the services of an independent sales representative to market the products to homeowners and interested customers in North America and the majority of our sales were from unrelated third parties. We market the products to homebuilders and home renovation contractors. We have had limited operations and have limited financial resources. In 2011, our operations were devoted primarily to start-up, development and operational activities as well as related party and third party sales, which included:
| 1. | Formation of the Company; | |
| 2. | Development of our business plan; | |
| 3. | Evaluating various detection devices; | |
| 4. | Research on marketing channels/strategies for our detection devices and the industry; | |
| 5. | Secured our website domain www.quartarad.com and beginning the development of our initial online website; and | |
| 6. | Research on future products to distribute. | |
| 7. | Consignment sales on behalf of a related party. | |
| 8. | Sales to third party resellers. |
In May 2012, we commenced our business operations by selling products on consignment from a related party company and developing our distribution network. In June 2012, we began to utilize our website to market the products we sell on consignment to our potential customers. We also began implementing our business plan by promoting these products for sale on various websites. We also engaged independent, third party distributors to sell the products. In 2013, increased our Internet presence and increased our sales whereby the majority of our sales were from unrelated third parties. From 2014 to the present, we have continued to sell the products through the Internet to unrelated third parties. In October 2018, our United Kingdom retail platform was suspended due to certain UK restrictions. We are in the process of becoming compliant in order to lift these restrictions and exploring and testing new partners for EU distribution. We have reserved $100,000 on our balance sheet as accrued expenses in connection with this matter.
The Company paid $41,822 during 2020, $35,680 during 2021, and $3,783 during 2022 towards the estimated liability, During April 2023 a final payment was made of $3,783 and the remaining $18,715 reserve reversed in 2023. There was $ZERO and $22,498 due on December 31, 2023 and 2022 respectively.
We believe that our principal source of revenue will continue through Sellavir as Quarta-Rad wind down the Internet Sales and sales to resellers for the following products;
Radiation Detection Equipment
RADEX RD1503 – basic model of a hand-held radiation detector for the consumer market.
RADEX RD1706 – enhanced model of a hand-held radiation detector; additional radiation counter provides for a more accurate results (confirmed by JQA – Japan Quality Assurance organization), vibration alarm and several additional functions improve on the RD1503 design specifications.
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RADEX RD1008 – high-end radiation detection device that provides readings for Gamma- and Beta- radiation values separately. Equivalent devices from other manufacturers cost 5-10 times more.
RADEX RD1212 – new model of hand-held radiation detector for the consumer market. It includes all the functionality of RD1503 model as well as ability to store measured values in memory for later transfer to PC. This device comes with newly developed software, RadexRead, developed by Quarta-Rad Inc to further enhances the RADEX family of Geiger counters by combining the power of PC and Internet, allowing the user to visualize and share their measurements with other RADEX consumers.
RADEX RD1212-BT – upgraded version of RD1212 with Bluetooth, now capable of linking to smartphones or tablets to transfer data in real time. Also measures atmospheric pressure and air temperature. Special Android/iOS application for smartphones can be used alongside with this product.
RADEX RD ONE – compact personal radiation detector, smaller and less expensive than any of the other models. Besides the size, the device has additional features such as: counts accumulative dose, can display measurements in CPMs and links via USB cord to PC for data transfer and analysis. Other standard features include audio/vibration alarm and adjustable alarm thresholds like on all other models. New analytical software was created to chart and analyze received data.
Radon Detection Equipment
RADEX M107 – simple Radon gas detector that provides visual/audio alarm when a certain (or legal) threshold is reached.
EMI Detection Equipment
RADEX EMI50 – hand-held device that provides real-time measuring of Electric Field Strength (in kiloVolt/meter) and Electro Magnetic Field (in microTesla).
Light and brightness Detection Equipment
RADEX Lupin – Light Meter, Pulse meter and Lucimeter. A hand-held device that measures illumination, brightness and flicker ratio of LED screens, any type of light bulbs or monitors at work or at home. RadexLight Software allows PC connection and data transfer. Spectral sensitivity is identical to a human eye, which separates this model from the competition.
Although we have commenced our marketing sales campaign with our own resources and are selling products through online retailers and through resellers, we believe that we need additional capital to increase our sales and expand our marketing program. Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to cost effectively purchase and sell the products and market them through the Internet and through distributors. We intend to rely on our Chairman and President’s relationships in the industry to supply us with products and introduce us to resellers. We also intend to market our website to the home renovation industry to solicit orders for the sale of products. There can be no guarantee or assurance that our Chairman or President and/or our website will enable us to purchase products on attractive terms that will allow us to resale them to independent third party distributors.
No assurance can be given that the products we purchase will be sold to resellers and, if sold to them, will return an investment or make a profit. To achieve the goal of purchasing products on favorable terms, we plan to be selective in our choice of suppliers and work with our shareholders’ companies as well as other cost-effective suppliers.
Major advantages that can be capitalized on immediately are:
| ● | existing brand recognition of RADEX name; | |
| ● | existing product line up that can be sold now; | |
| ● | access to device library that are in the prototyping stage for a quicker push into production and sales phases; | |
| ● | access to Quarta-Rad, Ltd. engineers and its proprietary tech library that would allow for quick prototyping and manufacture of devices based on reports from the field sales-force; and | |
| ● | Exclusive distribution rights for the RADEX brand in the United States, Canada and the European Union |
Quarta-Rad, Ltd.’s proprietary tech library is combination of source code, database, firmware and hardware used for measuring and displaying radiation measurements. The source code is for the: (i) RD1212 web program; (ii) RD1212 BT application for Android and iPhone; (iii) Web RadexRead; and (iv) database of radiation measurements
At the end of 2023, we discontinued the RADEX series, thereby eliminating our reliance on Quarta-Rad Ltd, the Russian producer, including any dependency on their firmware. We maintain ownership of the RadexRead component’s source code and are investigating the potential for its compatibility with the SMADEV series. Victor Shvetsky remains responsible for the ongoing maintenance of this product’s source code.
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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 initial services were focused on offering customized solutions for image processing.. Quarta-Rad had initially 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
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. These products are designed to process live video, audio, as well as meta-data related to the call and agent performance, thereby significantly enhancing the operational efficiency of call centers.
Our target market includes users of prominent platforms such as Genesys and Nice. By developing sophisticated tools that integrate seamlessly with these platforms, we aim to simplify the complex tasks faced by call center operators. Our solutions will not only expedite problem resolution for callers but also refine the overall user experience. By proactively detecting potential issues and either automatically resolving them or equipping agents with the necessary information for resolution, Sellavir intends to revolutionize the call center industry’s approach to customer service and support. This strategic direction underscores our commitment to innovation and excellence in the realm of AI technology, setting a new standard for operational efficiency and customer satisfaction in call centers.
Financing Strategy
Our ability to increase our inventory will depend on additional outside financing, advances from our majority shareholder and reinvesting our profits. Primary responsibility for the overall inventory planning and management will rest with our management. For each detection device product, we plan to purchase, management will need to assess the market and our financing needs to acquire product at cost-effective prices. All decisions will be subject to budgetary restrictions and our business control. We cannot provide any guarantee that we will be able to ever purchase product on cost-effect terms or employ independent distributors to effectively sell the products.
Once we determine our inventory needs, there are various methods of obtaining the funds needed to complete the purchase of the detection devices. Examples of financing alternatives include the assignment of our rights to purchase order financing. Alternatively, we may form a limited liability company or partnership where we will be the managing member or the general partner and raise funds to finance inventory. We may also obtain favorable pre-sales commitments from various customers such as home restoration contractors, distributors and developers. These various techniques, which are commonly used in the industry, can be combined to finance our inventory without a major bank financing.
Distribution Arrangements
Effective distribution is critical to the economic success of the detection devices, particularly when made by a small company without sufficient marketing resources. We have negotiated a few independent distribution agreements.
We intend to continue to distribute the products in the United States through existing independent distributors and the Internet. Our primary emphasis will be on marketing to homebuilders, home renovation contractors and general contractors. In addition, we intend to also target direct consumers via the Internet through online retailers and through national and regional retailers.
To the extent that we may engage in distribution of the products in foreign markets, we will be subject to all of the additional risks of doing business abroad including, but not limited to, government censorship, currency fluctuations, exchange controls, greater risk of “piracy” copying, and licensing or qualification fees.
It is not possible to predict, with certainty, the nature of the distribution arrangements, if any, that we may secure for the detection devices we sell.
We believe that the catastrophic events such as the March 11, 2011 nuclear accident in Japan will drive consumers and the market to radiation detection devices and other detection devices will either be in demand from the construction community and will be cost effective for the consumer and the industry professional.
We believe that effective Internet advertising along with participation in trade shows is the quickest and most cost effective method to let consumers know about the products. Additionally, large resellers and distributors will require promotional packages that we will need to develop and produce.
Competition
The detection device industry is highly competitive. We compete with a variety of companies, many of which have greater financial and other resources than us, or are subsidiaries or divisions of larger organizations. In particular, the industry is characterized by a small number of large, dominant organizations that perform this service, such as United Technologies Corporation, Radiation Alert, Osun Technologies, Lutron, General Tools, Mazur Instruments, First Alert, Inc./BRK Brands, Inc., which is wholly owned by Sunbeam Corporation, as well as many companies that have greater financial and other resources than us.
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The major competitive factors in our business are the timeliness and quality of customer service, the quality of finished products and price. Our ability to compete effectively in providing customer service and quality finished products depends primarily on our manufacturers’ standards and the level of training of our future staff, the utilization of computer software and equipment and the ability to deliver the Products we sell. We believe we will compete effectively in all of these areas.
Many of our competitors have substantially greater financial, technical, managerial, marketing and other resources than we do and they may compete more effectively than we can. If our competitors offer detection devices at lower prices than we do, we may have to lower the prices we charge, which will adversely affect our results of operations. Furthermore, many of our competitors are able to obtain more experienced employees than we can.
Intellectual Property Rights
We do not currently have any intellectual property rights. In the summer of 2013, Victor Shvetsky, our majority shareholder and director developed a software program called RadexRead, which Quarta-Rad, Ltd is using in the manufacture of its RD1212 products that we purchase as party of our inventory. We are not incurring any additional costs or benefits from Mr. Shvetsky’ s ownership of this software and, there are no current plans for Mr. Shvetsky to sell the software to the Company or contribute it for additional shares of our common stock.
Through Sellavir, we are in the process of obtaining patents.
Status Of Any Publicity Announced New Products and Services
In late 2013, we began distributing a new product named RD1212, which we believe has a sleek new design. It has the ability to store measurements in internal memory and transfer this data to a personal computer (“PC”). The RadexRead software utilized in this device allows users to view values retrieved from the Geiger counter, map them on Google Maps, and share their data with other Radex users.
We estimate that the cost for us to purchase software from an independent party that performs the same functions as RadexRead would be approximately $30,000. This software allows us to retrieve data from the RD1212 device to a Windows PC, analyze it, and geo-tag the values and place them on Google Map. The software offers an interactive view of the world map with readings other Radex RD1212 users can, at their option, submit.
We believe RadexRead brings numerous advantages to us over our competition, specifically:
| ● | RadexRead distinguishes the products we sell from other Geiger counters in its price range by providing free visualization software; | |
| ● | RadexRead, to the best of our knowledge, is the only software for Geiger counters in the RD1212 price range that allows users to mark radiation values collected by Geiger counters and place them on a map; | |
| ● | RadexRead is the only software in this Geiger counter class that allows users to share their data with each other over the Internet; | |
| ● | RadexRead is designed for use by users with little or no scientific background, making it simple and fun to collect, visualize and share radiation measurements with the community; and | |
| ● | RadexRead allows us to further increase its visibility through collaboration with Safecast, a worldwide volunteer organization that collects radiation data. RadexRead gives user an option of saving data online and submit its radiation and geographical data shared with other users to Safecast monitoring network. |
We believe RadexRead has increased RADEX’s appeal over our competition and helped RD1212 become one of our top selling Geiger counters, despite the product’s manufacturer’s suggested retail price being almost forty percent higher than the previous top-selling device, the low-cost RD1503.
At the end of 2023, we discontinued the RADEX series, thereby eliminating our reliance on Quarta-Rad Ltd, the Russian producer, including any dependency on their firmware. We maintain ownership of the RadexRead component’s source code and are investigating the potential for its compatibility with the SMADEV series. Victor Shvetsky remains responsible for the ongoing maintenance of this product’s source code.
Our Website
Our website is located at www.quartarad.com and provides a description of our company, the products we sell and our contact information including our address, telephone number and e-mail address.
Trademarks And Patents
We do not have any registered trademarks or patents.
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Need for any Government Approval of Principal Products or Services
We are also subject to federal, state and local laws and regulations generally applied to businesses, such as payroll taxes on the state and federal levels. Sales of the products we sell on consignment or sell to independent, third party distributors and services we may provide internationally are subject to U.S. and local government regulations and procurement policies and practices including regulations relating to import-export control. Violations of export control rules could result in suspension of our ability to export items from one or more businesses or the entire corporation. Depending on the scope of the suspension, this could have a material effect on our ability to perform certain international contracts. We believe that we are in conformity with all applicable laws in the states we conduct business and the United States.
Research and Development
From our inception through September 30, 2014, we have not spent any money on research and development activities. In the fourth quarter of 2014, we began spending money on research and development for a new software program that we may license to others and $155,000 to our related party supplier for the development of a new product for us to sell. In 2022 and 2023, we spent $-0- and -0-, respectively, on research and development with our related party. We have paid an independent contractor to improve and upgrade our website and Victor Shvetsky, our majority shareholder and director, has developed, at no cost to us, a software program called RadexRead, which was used in the manufacture of our RD1212 products.In 2018, we also entered into an agreement with our related party developer for $180,000 to develop software for the device RADEX AQ.
Employees
Presently, we do not have any employees other than our officers and directors who devote their time as needed to our business and expect to devote 10 hours per week.
Item 1A. Risk Factors
Not required to disclose since we are a “smaller reporting” company.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
We hold no real property. We do not presently own any interests in real estate. Our executive, administrative and operating offices are located at 1201 N. Orange St., Suite 700, Wilmington, DE 19801. We do not have a written lease with the landlord and rent space on a month-to-month basis at the rate of $30 per month.
Item 3. Legal Proceedings
We are not involved in any legal proceedings nor are we aware of any pending or threatened litigation against us. None of our officers or director is a party to any legal proceeding or litigation. None of our officers or director has been convicted of a felony or misdemeanor relating to securities or performance in corporate office.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Beginning in February 2018, our common stock is traded on the OTC Bulletin Board under the symbol “QURT.” The following table sets forth the high and low bid information of our common stock on the OTC Bulletin Board for each quarter during the last two fiscal years, as reported by the OTC Bulletin Board. This information reflects inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
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| Year | Period | High Bid | Low Bid | |||||||
| 2023 | First Quarter | 0.45 | 0.21 | |||||||
| Second Quarter | 0.31 | 0.30 | ||||||||
| Third Quarter | 0.42 | 0.30 | ||||||||
| Fourth Quarter | 1.00 | 0.15 | ||||||||
| Year | Period | High Bid | Low Bid | |||||||
| 2022 | February and March | 0.50 | 0.18 | |||||||
| Second Quarter | 0.45 | 0.18 | ||||||||
| Third Quarter | 0.45 | 0.10 | ||||||||
| Fourth Quarter | 0.35 | 0.23 | ||||||||
Common Stock Currently Outstanding
As of April 1, 2024, we have 15,659,483 shares of our common stock outstanding.
Holders
As of the date of this Report, we had 39 stockholders of record of our common stock.
Dividends
We have not declared any cash dividends on our common stock since our Date of Incorporation and do not anticipate paying any dividends in the foreseeable future. We plan to retain future earnings, if any, for use in our business. Any decisions as to future payments of dividends will depend on our earnings and financial position and such other facts, as our Director deems relevant.
Transfer Agent
Globex Stock Transfer, LLC, is our independent stock transfer agent.
Recent Sales of Unregistered Securities
None.
Additional Information
Copies of our annual reports on Form 10−K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, are available free of charge on the Internet at www.sec.gov. All statements made in any of our filings, including all forward-looking statements, are made as of the date of the document, in which the statement is included, and we do not assume or undertake any obligation to update any of those statements or documents unless we are required to do so by law.
Item 6. Selected Financial Data
Not required under Regulation S-K for “smaller reporting companies.”
Item 7. Management’s Discussion and Analysis of Financial Conditions and Results of Operations
This Annual Report on Form 10−K contains forward-looking statements. Our actual results could differ materially from those set forth because of general economic conditions and changes in the assumptions used in making such forward-looking statements. The following discussion and analysis of our financial condition and results of operations should be read together with the audited consolidated financial statements and accompanying notes and the other financial information appearing elsewhere in this Report. The analysis set forth below is provided pursuant to applicable Securities and Exchange Commission regulations and is not intended to serve as a basis for projections of future events. Refer also to “Risk Factors” and “Cautionary Note Regarding Forward Looking Statements” in Item 1 above.
The following is management’s discussion and analysis of financial condition and results of operations and is provided as a supplement to the accompanying 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 financial statements.
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In this Annual Report on Form 10-K, “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 as of December 31, 2023 and 2022 and our results of operations for the year ended December 31, 2023 and December 31, 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.
As of the date of this Form 10-K, we continue to expand our operations and expect to increase our revenues with additional working capital by increasing our advertising and marketing. Our chief executive officer and director, 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 2012, Messrs. Shvetsky and Golovanov’s companies have been the source of commissionable consignment sales and we did not carry any inventory. In 2013, we discontinued selling the products on consignment from our majority shareholder’s company for a commission or consignment fee and began purchasing inventory directly from Quarta-Rad, Ltd (Russia) (“QRR”) to sell on the Internet to direct consumers and to third party resellers. In 2012, when a reseller placed an order from us we purchased the product from our related party supplier and have it ship the product directly to the reseller. 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.
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 will focus on the expansion of this line of business.
Our administrative office is located at 1201 N. Orange St., Suite 700, Wilmington, DE 19801, which is a virtual office.
In 2022, we generated $1,100,431 in sales, and incurred a net profit of $14,578 In 2023, we generated $508,316 in sales, and incurred a net profit of $44,492. We anticipate that we will be able to increase our revenues. We believe that we have sufficient working capital to continue our operations for the next 12 months; however, we believe that we need to seek additional financing to expand our sales. As of December 31, 2023, we had $72,625 in cash on hand in our corporate bank account and liabilities of $289,721, which consisted of $184,477 in related party payables, and $105,244 in accounts payable and accrued expenses We currently have two officers and directors. These individuals allocate time and personal resources to us on a part-time basis and devote approximately 10 hours per week to us. Our sales are to independent, third parties. Since May 2012, we have utilized the services of an independent contractor to assist us in selling the products. He is paid on a commission only basis.
In 2018, we continued 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 which expires in 2027. 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. The product pricing has been discounted pursuant to a discount agreement. We have extended this agreement thru 2027. 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.
We have secured another factory in Kazakhstan to supply inventory. A test batch of inventory was purchased in December 2023.
During December 2011, Quarta-Rad we acquired Sellavir, Inc, a Delaware corporation, under common control, as a wholly owned subsidiary We acquired the company in exchange for 333,333 shares on 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 had 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 the radiation measurement. Beginning in 2024, Sellavir will strategically focus on harnessing its advanced AI capabilities and extensive experience to innovate within the call center industry.
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The Company has two operating segments through the operations of Quarta-Rad and Sellavir. Net income for the year ended December 31, 2023 is comprised of:
| Quarta Rad | Sellavir | Total | ||||||||||
| Sales | $ | 321,316 | $ | 187,000 | $ | 508,316 | ||||||
| Cost of Good Sold | 233,944 | 91,009 | 324,953 | |||||||||
| Gross Profit | 87,372 | 95,991 | 183,363 | |||||||||
| Expenses: | ||||||||||||
| General & administrative | 28,356 | 3,162 | 31,518 | |||||||||
| Advertising | 49,940 | - | 49,940 | |||||||||
| Professional and consulting fees | 110,671 | 4,000 | 114,671 | |||||||||
| Operating expenses | 188,967 | 7,162 | 196,129 | |||||||||
| Net income (loss) from operations | (101,595 | ) | 88,829 | (12,766 | ) | |||||||
| Interest and dividends | - | 303 | 303 | |||||||||
| Other expense - foreign currency translation loss | - | (36 | ) | (36 | ) | |||||||
| Other income - interest - related party | - | 46,578 | 46,578 | |||||||||
| Unrealized gain on investments | - | 25,769 | 25,769 | |||||||||
| Realized loss on investments | - | (3,529 | ) | (3,529 | ) | |||||||
| Interest expense | - | - | - | |||||||||
| Income tax benefit/(expense) | 21,335 | (33,162 | ) | (11,827 | ) | |||||||
| Net income/(loss) | $ | (80,260 | ) | $ | 124,752 | $ | 44,492 | |||||
Revenues for the year ended December 31, 2023 were $508,316 comprised of $321,316 from Quarta-Rad and $187,000 from Sellavir.
Operating expenses for the year ended December 31, 2023 were $196,129 comprised of $188,967 from Quarta-Rad and $7,162 from Sellavir.
Income tax expense/benefit for the year ended December 31, 2023 was $11,827 net expense, comprised of $21,335 income tax benefit from Quarta-Rad and $33,162 income tax expense from Sellavir.
Net Income for the year ended December 31, 2023 was $44,492, comprised of $80,260 net loss from Quarta-Rad and a $124,752 net income from Sellavir.
FOR YEAR ENDED DECEMBER 31, 2022:
| Quarta Rad | Sellavir | Total | ||||||||||
| Sales | $ | 973,431 | $ | 127,000 | $ | 1,100,431 | ||||||
| Cost of Good Sold | 622,123 | 81,658 | 703,781 | |||||||||
| Gross Profit | 351,308 | 45,342 | 396,650 | |||||||||
| Expenses: | ||||||||||||
| General & administrative | 44,201 | 3,504 | 47,705 | |||||||||
| Advertising | 43,735 | - | 43,735 | |||||||||
| Professional and consulting fees | 157,766 | 10,000 | 167,766 | |||||||||
| Operating expenses | 245,702 | 13,504 | 259,206 | |||||||||
| Net income (loss) from operations | 105,606 | 31,838 | 137,444 | |||||||||
| Interest and dividends | - | 285 | 285 | |||||||||
| Unrealized loss on investments | - | (78,158 | ) | (78,158 | ) | |||||||
| Realized loss on investments | - | (41,118 | ) | (41,118 | ) | |||||||
| Income tax (expense)/benefit | (22,177 | ) | 18,302 | (3,875 | ) | |||||||
| Net income/(loss) | $ | 83,429 | $ | (68,851 | ) | $ | 14,578 | |||||
Revenues for the year ended December 31, 2022 were $1,100,431 comprised of $973,431 from Quarta-Rad and $127,000 from Sellavir.
Operating expenses for the year ended December 31, 2022 were $259,206 comprised of $245,702 from Quarta-Rad and $13,504 from Sellavir.
Income tax expense/benefit for the year ended December 31, 2022 was $3,875 net benefit, comprised of $22,177 income tax expense from Quarta-Rad and $18,302 income tax benefit from Sellavir.
Net Income for the year ended December 31, 2022 was $14,578, comprised of $83,429 net income from Quarta-Rad and a $68,851 net loss from Sellavir.
Critical Accounting Policy and Estimates. Our Management’s Discussion and Analysis of Financial Condition and Results of Operations section discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the 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, foreign investments and contingencies. 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 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 financial statements included in this Annual Report on Form 10-K.
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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 December 31, 2023 and 2022, respectively.
The following discussion of our financial condition and results of operations should be read in conjunction with our audited financial statements for the year ended December 31, 2023 and 2022, respectively, together with notes thereto, which are included in this Annual Report on Form 10-K.
For the Year Ended December 31, 2023 compared to the Year Ended December 31, 2022
Revenues. Our net revenues decreased $592,115, or 53.81%, to $508,316 for the year ended December 31, 2023, compared with $1,100,431 for comparable period in 2022. The decrease was primarily due to a decrease in revenue recognized through Quarta-Rad due to temporary distribution restrictions.
Cost of Goods Sold. Our Cost of Goods Sold decreased $378,828, or 53.83% to $324,953 for the year ended December 31, 2023, compared to $703,781 for the comparable period in 2022. The decrease is due to the decrease in sales.
Operating Expenses. For the year ended December 31, 2023, our total operating expenses decreased $63,077 or 24.33%, to $196,129 compared to $259,206 for the comparable period in 2022. Operating expenses were comprised of general and administrative expenses, professional and consulting fees advertising costs. The components of operating expenses are discussed below.
| ● | General and administrative expenses, including advertising, decreased $9,982 or 10.92%, to $81,458 for the year ended December 31, 2023 from $91,440 for the comparable period in 2022. The decrease is primarily attributable to a full year of Sellavir expenses. | |
| ● | Professional and consulting fees decreased $53,095 or 31.65% for the year ended December 31, 2023, to $114,671 from $167,766 for the comparable period in 2022. The decrease primarily due to reduced professional fees through Quarta-Rad. |
Net Income. Our net income increased by $29,914 to $44,492 or 205.20% for the year ended December 31, 2023, compared to $14,578 for the year ended December 31, 2022. The increase is primarily attributable to a reduction of expenses in 2023 and an increase in investment income through Sellavir.
QUARTA-RAD
For the Year Ended December 31, 2023 compared to the Year Ended December 31, 2022
Revenues Our net revenues decreased $652,115, or 66.99%, to $321,316 for the year ended December 31, 2023 compared with $973,431 or comparable period in 2022. The decrease was primarily due to temporary distribution restrictions.
Cost of Goods Sold. Our Cost of Goods Sold decreased $388,179 or 62.40% to $233,944 for the year ended December 31, 2023, compared to $622,123 for the comparable period in 2022. The decrease is primarily due to the decrease in sales.
Operating Expenses. For the year ended December 31, 2023, our total operating expenses decreased $56,735 or 23.09%, to $188,967 compared to $245,704 for the comparable period in 2022. The decrease was attributable to a decrease in professional fees.
Net Loss. Our net loss increased by $163,689 to a net loss of <$80,260> for the year ended December 31, 2023 compared to net income of $83,429 for the year ended December 31, 2022. The increase is primarily attributable to a reduction of sales in 2023.
SELLAVIR
For the Year Ended December 31, 2023 compared to the Year Ended December 31, 2022
Revenues Our net revenues increased $60,000 or 47.24% to $187,000 for the year ended December 31, 2023 compared with $127,000 for comparable period in 2022. The increase was due to research and development of current technology.
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Cost of Goods Sold. Our Cost of Goods Sold increased $9,351 or 11.45% to $91,009 for the year ended December 31, 2023, compared to $81,658 for the comparable period in 2022. The increase is due to direct project costs.
Operating Expenses. For the year ended December 31, 2023, our total operating expenses decreased $6,342 or 46.96%, to $7,162 compared to $13,504 for the comparable period in 2022. The decrease was attributable to a decrease in professional fees and general and administrative expenses.
Net Income. Our net income increased $193,603 to net income of $124,752 for the year ended December 31, 2023 compared to a net loss of <$68,851> for the year ended December 31, 2022. The increase is primarily attributable an increase in sales and investment income.
Liquidity and Capital Resources. During the year ended December 31, 2023, we used cash for operating expenses from cash on hand and the sale of products on the Internet and from independent third-party resellers.
Our total assets were $683,314 and $753,752 as of December 31, 2023 and December 31, 2022, respectively, consisting of $72,625 and $293,878, respectively, in cash. Our working capital was a deficit of $46,448 of as December 31, 2023 and our working capital surplus was $310,835 as of December 31, 2022.
Our total liabilities were $289,721 and $404,651 as of December 31, 2023 and December 31, 2022, respectively.
Our stockholders’ equity was $393,593 and $349,101 as of December 31, 2023 and 2022, respectively. Our retained earnings were $45,299 and $807 as of December 31, 2023 and December 31, 2022, respectively.
We had $49,773 and $200,206 in cash provided by operating activities for the year ended December 31, 2023 and 2022, respectively.
We had $271,026 and $166,348 in cash used by investing activities for year ended December 31, 2023 and 2022, respectively.
We had no cash provided by financing activities for the year ended December 31, 2023 and 2022, respectively.
We do not have sufficient funds for pursuing our plan of operation, but we are in the process of trying to procure funds sufficient to fund our operations until we are able to finance our operations through cash flow. There can be no assurance that we will be able to procure funds sufficient for such purpose. If operating difficulties or other factors (many of which are beyond our control) delay our realization of revenues or cash flows from operations, we may be limited in our ability to pursue our business plan. Moreover, if our resources from obtaining additional capital or cash flows from operations, once we commence them, do not satisfy our operational needs or if unexpected expenses arise due to unanticipated pressures or if we decide to expand our business plan beyond its currently anticipated level or otherwise, we will require additional financing to fund our operations, in addition to anticipated cash generated from our operations. Additional financing might not be available on terms favorable to us, or at all. If adequate funds were not available or were not available on acceptable terms, our ability to fund our operations, take advantage of unanticipated opportunities, develop or enhance our business or otherwise respond to competitive pressures would be significantly limited. In a worst-case scenario, we might not be able to fund our operations or to remain in business, which could result in a total loss of our stockholders’ investment. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders would be reduced, and these newly issued securities might have rights, preferences or privileges senior to those of existing stockholders.
The Company had no formal long-term lines of credit or other bank financing arrangements as of April 1, 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.
Management intends to focus on raising funds going forward. The Company cannot provide any assurance or guarantee that it will be able to raise funds. Potential investors must be aware if it is unable to raise funds through the sale of its common stock and generate sufficient revenues, any investment made into the Company would be lost in its entirety.
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The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Income Tax Expense (Benefit)
The Company has a prospective income tax benefit resulting from a net operating loss carry forward and startup costs that may offset any future operating profit. The Company has deferred tax assets of $24,069.
Impact of Inflation
The Company believes that inflation has had a negligible effect on operations over the past year.
Capital Expenditures
The Company expended no amounts on capital expenditures for the years ended December 31, 2023 and 2022, respectively.
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.
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-$100,000). In addition to the website development 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. We intend to market our services through Sellavir to obtain new clients and opportunities.
Secure Distribution Agreements: (Estimated cost $10,000). We plan to seek and secure distribution agreements for the sale of our detection devices.
Our management does not anticipate the need to hire additional full or part- time employees over the next six (6) 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 early stage. While we believe that the addition of employees is not required over the next six (6) 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 plants or 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.
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.
Item 7A. 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 8. Financial Statements and Supplementary Data
Our audited financial statements are set forth in this Annual Report beginning on page F-1.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Quarta-Rad, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Quarta-Rad, Inc. (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2022, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current year audit of the financial statements that was communicated, or required to be communicated, to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Related Party Transactions including Revenue Recognition
Description of the Matters:
As discussed in Notes 2 and 7to the financial statements, the Company generated revenues from a related party. Our auditing of the recognition of revenue was complex and is based on a thorough understanding of the Company’s related party relationships, contracts, and business activities. These were the principal considerations that led us to determine this as a critical audit matter.
How We Addressed the Matter in our Audit:
We evaluated the controls over the Company’s identification of, and recording of related party transactions, and of the revenue recognition process, including walkthroughs. To evaluate the related party’s satisfaction of performance obligations, our audit procedures included, among others, reviewing contracts and evaluating management’s assumptions used to determine the distinct performance obligations, and reviewing the final work product provided to the related entity by the Company.
/s/
PCAOB #
We have served as the Company’s auditor since 2022.
April 1, 2024
| F-1 |
QUARTA-RAD, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| As of | ||||||||
| December 31, 2023 | December 31, 2022 | |||||||
| 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 | $ | $ | ||||||
| Deferred revenue - related party | ||||||||
| Payable - related parties | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity | ||||||||
| Common Stock: authorized common shares, $ par value and were issued and outstanding on December 31, 2023 and December 31, 2022, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings/(Accumulated deficit) | ||||||||
| Total Stockholders’ Equity | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
| F-2 |
QUARTA-RAD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
| For the year ended December 31, 2023 | For the year ended December 31, 2022 | |||||||
| 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 from operations | ( | ) | ||||||
| Other income - interest and dividends | ||||||||
| Other expense - foreign currency translation loss | ( | ) | ||||||
| Other income - interest - related party | ||||||||
| Other income - unrealized gain/(loss) on investments | ( | ) | ||||||
| Other income - realized loss on investments | ( | ) | ( | ) | ||||
| Net income before provision for income taxes | ||||||||
| Income tax benefit | ||||||||
| Net income | $ | $ | ||||||
| Income per share - basic and diluted | $ | $ | ||||||
| Weighted average shares - basic and diluted | ||||||||
| F-3 |
QUARTA-RAD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
For the Years Ended December 31, 2023 and 2022
| Common Stock | Additional Paid-In | Retained Earnings/ (Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit) | Equity | ||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Net income | - | |||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | ||||||||||||||||
| Net income | - | |||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | ||||||||||||||||
| F-4 |
QUARTA-RAD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the year ended December 31, 2023 | For the year ended December 31, 2022 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | ||||||||
| Foreign currency translation loss | ||||||||
| Net realized loss on investments | ||||||||
| Net unrealized (gain)/loss on investments | ( | ) | ||||||
| Income tax benefit | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Accounts receivable - related party | ||||||||
| Inventory | ( | ) | ||||||
| Trade receivables | ( | ) | ||||||
| Accrued interest receivable - related party | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Deferred revenue - related party | ( | ) | ||||||
| Related party payable | ( | ) | ||||||
| Net cashed provided by operating activities | ||||||||
| INVESTING ACTIVITIES: | ||||||||
| Sale of marketable securities, trading | ||||||||
| Purchase of marketable securities, trading | ( | ) | ( | ) | ||||
| Issuance of notes payable - related party | ( | ) | ||||||
| Net cash used in 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 | $ | $ | ||||||
| F-5 |
QUARTA-RAD, INC.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
NOTE 1 - NATURE OF BUSINESS
Quarta-Rad,
Inc. (the “Company”) was incorporated under the laws of the state of Delaware on November 29, 2011, under the name Quatra-Rad,
Inc. and amended its Certificate of Incorporation on February 29, 2012 to change its name to Quarta-Rad, Inc. On July 2, 2012, the Company
amended and restated its Certificate of Incorporation to increase its authorized shares of common stock to , $ par value
from ,
During April 2020, the Company 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 December 31, 2023.
During December 2020, the Company acquired Sellavir, Inc., a Delaware. Corporation, as a wholly owned subsidiary, as discussed in Note 7. 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.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States and are expressed in United States (US) dollar. The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a December 31 fiscal year end.
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.
Cash and Cash Equivalents
The
Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents. The Company
maintains its cash balances in one financial institution. The balances are insured by the Federal Deposit Insurance Corporation (“FDIC”)
up to $
| F-6 |
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 notes receivable. The Company bases its estimates on historical experience, knowledge of current conditions and belief of what could occur in the future considering available information. The Company reviews its estimates on an on-going basis. The actual results experienced by the Company may differ materially and adversely from its estimates. To the extent there are material differences between the estimates and actual results, future results of operations will be affected.
Advertising
The
Company expenses advertising costs, primarily consisting of Amazon and other online marketing including search optimization, and placement
in multiple publications, along with design and printing costs of sales materials, when incurred. Advertising expense for the years ended
December 31, 2023 and 2022 amounted to $
Accounts Receivable
Accounts Receivable amounts from sales to various suppliers and online platforms. 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 December 31, 2023 and 2022, respectively.
Quarta-Rad
sold certain inventory held on consignment to a third party supplier for $
Notes Receivable – related party
Notes Receivable – related party consists of loan agreements entered into by Sellavir discussed in Note 3.
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
Inventory
Inventories
are stated at the lower of cost or market (net realizable value). The Company periodically reviews the value of items in inventory and
provides write-downs or write-offs of inventory based on its assessment of market conditions. Write-downs and write-offs are charged
to cost of goods sold. The Company’s inventory consists entirely of finished goods available for sale. The Company maintains an
inventory reserve for damaged and obsolete inventory. The balance of the reserve was $
Equity Investments
Under ASU 2016-01, the Company’s accounting treatment for equity investments differs for those with and without readily determinable fair values. Equity investments with readily determinable fair values are recorded at fair value with changes in fair value recorded in “Unrealized Gain/Loss on Investments.” For equity investments without readily determinable fair values, the Company has elected the “measurement alternative,” and therefore carry these investments at cost, less impairment (if any), plus or minus changes in observable prices. On a quarterly basis, the Company reviews their equity investments without readily determinable fair values for impairment and consider a number of qualitative factors such as whether there is a significant deterioration in earnings performance, credit rating, asset quality, or business prospects of the investee in determining if impairment exists. If the investment is considered impaired, an impairment loss equal to the amount by which the carrying value exceeds its fair value is recorded through a charge to earnings. The impairment loss may be reversed in a subsequent period if there are observable transactions for the identical or similar investment of the same issuer at a higher amount than the carrying amount that was established when the impairment was recognized. Impairment as well as upward or downward adjustments resulting from observable price changes in orderly transactions for identical or similar investments are included in “Income – other.”
Realized gains or losses resulting from the sale of equity investments are calculated using the specific identification method and are included in “Realized gain(loss) on investments.”
Property and Equipment
Property and equipment are stated at cost. Depreciation is provided on the straight-line method over the estimated useful lives of the related assets, which is five years. Leasehold improvements are amortized over the shorter of their estimated useful lives or their related lease terms. Repairs and maintenance costs are charged to expense when incurred.
| F-7 |
Long-Lived Assets
Property and equipment are stated at cost. Depreciation is provided on the straight-line method over the estimated useful lives of the related assets, which is five years. Leasehold improvements are amortized over the shorter of their estimated useful lives or their related lease terms. Repairs and maintenance costs are charged to expense when incurred.
Income Taxes
The Company uses the asset and liability method of accounting for income taxes in accordance with ASC 740-10, “Accounting for Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year; and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if, based on the weight of available positive and negative evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
ASC
740-10 prescribes a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken or
expected to be taken on a tax return. Under ASC 740-10, a tax benefit from an uncertain tax position taken or expected to be taken may
be recognized only if it is “more likely than not” that the position is sustainable upon examination, based on its technical
merits. The tax benefit of a qualifying position under ASC 740-10 would equal the largest amount of tax benefit that is
As of December 31, 2023, we have analyzed filing positions in each of the federal and state jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions. We have identified the U.S. federal and Delaware as our “major” tax jurisdictions. Generally, we remain subject to Internal Revenue Service examination of our 2020 through 2023 tax returns. However, we have certain tax attribute carry forwards, which will remain subject to review and adjustment by the relevant tax authorities until the statute of limitations closes with respect to the year in which such attributes are utilized.
We believe that our income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change to our financial position. Therefore, no reserves for uncertain income tax position have been recorded pursuant to ASC 740. In addition, we did not record a cumulative effect adjustment related to the adoption of ASC 740. Related interest and penalties, if any, are included as components of income tax expense and income taxes payable.
The Company accounts for share-based compensation in accordance with the fair value recognition provision of FASB ASC 718, Compensation – Stock Compensation (“ASC 718”), prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the consolidated financial statements based on the estimated grant date fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
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 are dilutive instruments at December 31, 2023 and 2022.
| F-8 |
Fair Value of Financial Instruments
The Company’s financial instruments as defined by ASC 825, “Financial Instruments” include cash, trade accounts receivable, and accounts payable and accrued expenses. All instruments are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at December 31, 2023 and 2022.
FASB ASC 820 “Fair Value Measurements and Disclosures” defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, 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 preferred stock. 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 December 31, 2023 and 2022 about the Company’s financial assets measured at fair value on a recurring basis
Values at December 31, 2023:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets at fair value: | ||||||||||||||||
| Marketable securities | $ | $ | $ | $ | ||||||||||||
| Total assets at fair value | $ | $ | $ | $ | ||||||||||||
Values at December 31, 2022:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets at fair value: | ||||||||||||||||
| Marketable securities | $ | $ | $ | $ | ||||||||||||
| Total assets at fair value | $ | $ | $ | $ | ||||||||||||
Revenue Recognition
We adopted FASB Accounting Standards Codification ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). The new guidance sets forth a new 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 new 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.
| F-9 |
Our principal activities from which we generate our revenue are product sales.
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. 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. A reserve for sales returns and allowances is considered immaterial and, as a result, there was no reserve for sales returns and allowances, at December 31, 2023 and December 31, 2022, respectively.
We recognize revenue when we satisfy a performance obligation in a contract by transferring control over a product to a customer when 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 fulfillment cost and are included in cost of product sales.
We recognize consulting revenue over time as services are performed.
During
2022, Sellavir billed and received $
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326). This ASU amends guidance on reporting credit losses for assets held at amortized cost and available for sale debt securities. For assets held at amortized cost, the amendment eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost of the financial assets to present the net amount expected to be collected. The Company adopted ASU 2016-13 effective January 1, 2023, which did not have a material impact on the Company’s consolidated financial statements.
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 has been adversely 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 potential factory to supply inventory in Kazakhstan, which received a shipment of 200 units at year-end.
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.
| F-10 |
NOTE 3–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 $
The
Company issued an additional loan to the Thai Corporation in May 2023 for $
Accrued
interest at 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 | ||||||||||
| 2024 | $ | $ | $ | |||||||||
| 2025 | ||||||||||||
| 2026 | ||||||||||||
| 2027 | ||||||||||||
| 2028 | ||||||||||||
| Totals | $ | $ | $ | |||||||||
NOTE 4–PROPERTY AND EQUIPMENT
Property and Equipment at December 31, 2023 & 2022 consisted of:
| 2023 | 2022 | |||||||
| Computer Equipment | $ | $ | ||||||
| Accumulated Depreciation | ( | ) | ( | ) | ||||
| Net Property & Equipment | $ | $ | ||||||
The
Company recognized $
NOTE 5–INCOME TAXES
The Company is subject to taxation in the United States and California. The benefit from income taxes for the years ended December 31, 2023 and 2022 are summarized below:
| 2023 | 2022 | |||||||
| Current: | ||||||||
| Federal | $ | $ | ||||||
| State | ||||||||
| Total current | ||||||||
| Deferred: | ||||||||
| Federal | ||||||||
| State | ||||||||
| Change in valuation allowance | ||||||||
| Total deferred | ||||||||
| Income tax provision (benefit) | $ | $ | ||||||
At
December 31, 2023, the Company had federal net operating loss carry forwards of approximately $
At December 31, 2023 and 2022, deferred tax assets (liabilities) consist of the following:
| 2023 | 2022 | |||||||
| Net operating loss carry-forwards | $ | $ | ||||||
| Inventory reserve | ||||||||
| Accrued interest – related party | ( | ) | ||||||
| Accrued expenses – related party | ( | ) | ||||||
| Unrealized loss on investments | ||||||||
| Total deferred tax assets | ||||||||
| Less: valuation allowance | ||||||||
| Net deferred tax assets | $ | $ | ||||||
| F-11 |
A reconciliation of the statutory federal income tax rate for the year ended December 31, 2023 and 2022 to the effective tax rate is as follows:
| 2023 | 2022 | |||||||
| Expected federal tax | % | % | ||||||
| Valuation allowance | % | |||||||
| Total | % | % | ||||||
The
Company follows ASC 740-10, Uncertainty in Income Taxes. The Company recognizes interest and penalties associated with uncertain tax
positions as a component of income tax expense. The Company does
NOTE 6–STOCKHOLDERS’ EQUITY
The
Company was formed with one class of no-par value common stock and was authorized to issue common shares, as amended.
NOTE 7–RELATED PARTY TRANSACTIONS
The
Company sells radiation monitors and to date purchased all of it inventory from Quarta-Rad, LTD (“QRR”), a company in
Russia, which is owned by the Company’s minority shareholder through 2022. During 2023 the Company began purchasing inventory
through a supplier in Kazakhstan. Total inventory purchased from QRR was $-
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. $-
During
July 2017 the Company entered into an agreement with the Russian affiliate to develop and update software for a new device for $
| F-12 |
In April 2021, the Company began compensating its CEO, who is the majority shareholder. The Company expensed $ and $ for the years ended December 31, 2023, and 2022, respectively. As of December 31, 2023 and 2022 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 December 31, 2023 and 2022, is due $ and $--, respectively, for expenses paid on behalf of the Company. The balances are due on demand and do not accrue interest.
During
2023 and 2022, the Company, through Sellavir, Inc recognized $
See Note 3 for additional related party transactions.
NOTE 8–SEGMENTS
The
Company has
Segment information for the years ended December 31, 2023 and 2022 is as follows:
| For the year ended December 31, 2023 | ||||||||||||
| Quarta-Rad | Sellavir | Consolidated | ||||||||||
| Revenues | $ | $ | $ | |||||||||
| Income/(loss) from operations | ( | ) | ( | ) | ||||||||
| Net income/(loss) | $ | ( | ) | $ | $ | |||||||
| For the year ended December 31, 2022 | ||||||||||||
| Quarta-Rad | Sellavir | Consolidated | ||||||||||
| Revenues | $ | $ | ||||||||||
| Income from operations | ||||||||||||
| Net income/(loss) | $ | ( | ) | $ | ||||||||
| Total Assets | As of December 31, 2023 | As of December 31, 2022 | ||||||
| Quarta-Rad | $ | $ | ||||||
| Sellavir | ||||||||
| Total Assets | $ | $ | ||||||
NOTE 9– COMMITMENTS AND CONTINGENCIES
Contingencies
The
Company had a multi-year VAT tax examination by certain European tax authorities. The Company had originally accrued $
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 10–SUBSEQUENT EVENTS
The Company has performed an evaluation of events occurring subsequent to December 31, 2023, through April 1, 2024. Based on its evaluation, other than the note below, there is nothing to be disclosed herein.
During January 2024, Sellavir reduced the interest
rates on certain related party notes, referenced in Note 3, to
| F-13 |
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures.
None.
Item 9A. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures.
Disclosure controls and procedures are designed with an objective of ensuring that information required to be disclosed in our periodic reports filed with the Securities and Exchange Commission, such as this Annual Report on Form 10-K, is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission. Disclosure controls are also designed with an objective of ensuring that such information is accumulated and communicated to our management, including our chief executive officer, in order to allow timely consideration regarding required disclosures.
The evaluation of our disclosure controls by our principal executive officer included a review of the controls’ objectives and design, the operation of the controls, and the effect of the controls on the information presented in this Annual Report. Our management, including our chief executive officer, does not expect that disclosure controls can or will prevent or detect all errors and all fraud, if any. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Also, projections of any evaluation of the disclosure controls and procedures to future periods are subject to the risk that the disclosure controls and procedures may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures as of December 31, 2023 were not effective in timely alerting them to material information which is required to be included in our periodic reports filed with the SEC as of the end of the period covering this report and to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. There have been no material changes in our internal controls over financial reporting or in other factors that could materially affect, or are reasonably likely to affect, our internal controls over financial reporting during the years ended December 31, 2023 and 2022.
(b) Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term as defined in Exchange Act Rule 13a-15(f). Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
As of December 31, 2023, our management assessed the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013 Framework). Based on this assessment, our management concluded that, as of December 31, 2023, our internal control over financial reporting was not effective as of December 31, 2023 and identified the material weaknesses described below.
| 15 |
Description of Material Weaknesses and Management’s Remediation Initiatives
The following material weaknesses in our internal control over financial reporting were identified by management and the Company’s independent auditor as of December 31, 2023:
Ineffective control environment. The Company did not maintain an effective control environment, which is the foundation necessary for effective internal control over financial reporting. Specifically, the Company (i) did not maintain a functioning independent audit committee; (ii) did not have its Board of Directors review and approve significant transactions; (iii) had an insufficient number of personnel appropriately qualified to perform control design, execution and monitoring activities; (iv) had an insufficient number of personnel with an appropriate level of U.S. GAAP knowledge and experience and ongoing training in the application of U.S. GAAP and SEC disclosure requirements commensurate with the Company’s financial reporting requirements; (v) had inadequate segregation of duties consistent with control objectives; (vi) lack of written documentation of the Company’s key internal control policies and procedures over financial reporting (vii) lack of procedures to identify and disclose related party transactions and (viii) lack of procedures to properly relieve inventory. The Company is required under Section 404 of the Sarbanes-Oxley Act to have written documentation of key internal controls over financial reporting. The Company did not formally document policies and controls to enable management and other personnel to understand and carry out their internal control responsibilities including the lack of closing checklists, budget-to-actual analyses, balance sheet variation analysis, and pro-forma financial statements. Additionally, the Company did not have an adequate process in place to complete its testing and assessment of the design and operating effectiveness of internal control over financial reporting in a timely manner.
Ineffective controls over financial statement close and reporting process. The Company did not maintain effective controls over its financial statement close and reporting process. Specifically, the Company: (i) had insufficient preparation and review procedures for disclosures accompanying the Company’s financial statements; and (ii) did not provide reasonable assurance that accounts were complete and accurate and agreed to detailed support and that reconciliations of accounts were properly performed, reviewed and approved; and
Insufficient segregation of duties in our finance and accounting functions due to limited personnel. We do not have sufficient segregation of duties within accounting functions. During the year ended December 31, 2023, we had limited personnel that performed nearly all aspects of our financial reporting process, including, but not limited to, access to the underlying accounting records and systems, the ability to post and record journal entries and responsibility for the preparation of the financial statements. Due to the fact that these duties were often performed by the same person, this creates a lack of review over the financial reporting process that would likely result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the SEC. These control deficiencies could result in a material misstatement to our interim or annual financial statements that would not be prevented or detected.
| 16 |
As of the date of this report, our remediation efforts continue related to each of the material weaknesses that we have identified in our internal control over financial reporting, and additional time and resources will be required in order to fully address these material weaknesses. We have not been able to complete all actions necessary and test the remediated controls in a manner that would enable us to conclude that such controls are effective. We are committed to implementing the necessary controls to remediate the material weaknesses described below as our resources permit. These material weaknesses will not be considered remediated until (1) the new processes are designed, appropriately controlled and implemented for a sufficient period of time and (2) we have sufficient evidence that the new processes and related controls are operating effectively.
This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to the rules of the SEC that permit us to provide only management’s report in this annual report.
(c) Changes in internal controls.
There was no change in our internal control over financial reporting that occurred during the fourth quarter of our fiscal year ended December 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Our director serves until his successor is elected and qualified. Our director elects our officers to a term of one (1) year and they serve until their successors are duly elected and qualified, or until they are removed from office. The board of directors has no nominating or compensation committees.
The name, address, age, and position of our present officers and director is set forth below:
| Name | Age | Title(s) | ||
| Victor Shvetsky | 49 | Chairman, Chief Executive Officer, Principal Executive Officer, Chief Financial Officer, Principal Financial Officer, Principal Accounting Officer and Secretary | ||
| Alexey Golovanov | 45 | President and Director |
The persons named above have held their offices/positions since November 29, 2011, and we expect them to hold their offices/positions at least until the next annual meeting of our shareholders.
| 17 |
Mr. Victor Shvetsky, Chairman, President, Chief Executive Officer, Chief Financial Officer
Victor Shvetsky is our Chairman, Chief Executive Officer, Chief Financial Officer and Secretary and has served in that capacity since November 29, 2011. Mr. Shvetsky is also the Chairman and Chief Executive Officer of Star Systems Corporation, which is a Japanese corporation he founded in 1998 and headquartered in Tokyo, Japan. Star Systems in engaged in the distribution and resale of various consumer products and provides IT services to customers in Japan. Since its inception, Mr. Shvetsky has grown Star Systems from inception to $6,000,000 (US) in revenues and believes he has established it as one of the leading distributers of Geiger counters in Japan having sold over 15,000 units in 2011. Mr. Shvetsky has established distribution channels for detection products with retailers, including department stores and specialty shops, as well as developing an online marketing presence through online retailers. Mr. Shvetsky has over 16 years’ experience in sales, marketing, product development and branding as well as corporate compliance in the executive office including overseeing his company’s accounting, compliance and finance departments.
Mr. Alexey Golovanov, President and Director
Alexey Golovanov is our President and Director and has served in this capacity since November 29, 2011. From July 2007 to the present, Mr. Golovanov has held several positions at Quarta-Rad, Ltd, a Russian Federation corporation that designs, manufactures and sells various detection devices around the world. Most recently, Mr. Golovanov is the Managing Director of Quarta-Rad, Ltd. and oversees the company’s product designs and product introductions in the various consumer markets in Russia and Europe. Mr. Golovanov has also overseen all of Quarta-Rad, Ltd.’s R&D activities, which led to the development of the RADEX and SINMOR model lines of detection devices. Mr. Golovanov has extensive experience in developing supply channels to procure the various components necessary for the production of cost-effective detection products, which allows the products to be distributed at competitive prices.
Possible Potential Conflicts
The OTCBB does not currently have any director independence requirements.
No member of management will be required by us to work on a full time basis. Accordingly, certain conflicts of interest may arise between us and our officer and director in that he may have other business interests in the future to which he devotes his attention, and he may be expected to continue to do so although management time must also be devoted to our business. As a result, conflicts of interest may arise that can be resolved only through his exercise of such judgment as is consistent with each officer’s understanding of his fiduciary duties to us. In the course of other business activities, they may become aware of business opportunities that may be appropriate for presentation to us, as well as the other entities with which they are affiliated. As such, there may be conflicts of interest in determining to which entity a particular business opportunity should be presented.
In an effort to resolve such potential conflicts of interest, our officers and sole director have orally agreed that any opportunities that they are aware of independently or directly through their association with us (as opposed to disclosure to them of such business opportunities by management or consultants associated with other entities) would be presented by them solely to us.
We cannot provide assurances that our efforts to eliminate the potential impact of conflicts of interest will be effective.
Currently we have two officers and directors and will seek to add additional officer(s) and/or director(s) as and when the proper personnel are located and terms of employment are mutually negotiated and agreed, and we have sufficient capital resources and cash flow to make such offers.
We cannot provide assurances that our efforts to eliminate the potential impact of conflicts of interest will be effective.
Code of Business Conduct and Ethics
On November 30, 2011, we adopted a Code of Ethics and Business Conduct which is applicable to our future employees, and which also includes a Code of Ethics for our chief executive and principal financial officers and any persons performing similar functions. A code of ethics is a written standard designed to deter wrongdoing and to promote:
| ● | honest and ethical conduct, |
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| ● | full, fair, accurate, timely and understandable disclosure in regulatory filings and public statements, | |
| ● | compliance with applicable laws, rules and regulations, | |
| ● | the prompt reporting violation of the code, and | |
| ● | accountability for adherence to the code. |
A copy of our Code of Business Conduct and Ethics has been filed with the Securities and Exchange Commission as Exhibit 14.1 to our registration statement.
Board of Directors
Our directors hold office until the completion of their term of office, which is not longer than one year, or until a successor(s) have been elected. Our directors’ term of office expires on April 17, 2024. All officers are appointed annually by the board of directors and, subject to existing employment agreements (of which there are currently none), serve at the discretion of the board. Currently, directors receive no compensation for their role as directors but may receive compensation for their role as officers.
Involvement in Certain Legal Proceedings
During the past ten years, no present director, executive officer or person nominated to become a director or an executive officer of us:
| (1) | had a petition under the federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent or similar officer appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing; | |
| (2) | was convicted in a criminal proceeding or subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); | |
| (3) | was subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any of the following activities: |
| i. | acting as a futures commission merchant, introducing broker, commodity trading advisor commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; | |
| ii. | engaging in any type of business practice; or | |
| iii. | engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws; or |
| (4) | was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of an federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (3) (i), above, or to be associated with persons engaged in any such activity; or | |
| (5) | was found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and for which the judgment has not been reversed, suspended or vacated. |
Committees of the Board of Directors
Concurrent with having sufficient members and resources, our board of directors will establish an audit committee and a compensation committee. We believe that we will need a minimum of five directors to have effective committee systems. The audit committee will review the results and scope of the audit and other services provided by the independent auditors and review and evaluate the system of internal controls. The compensation committee will manage any stock option plan we may establish and review and recommend compensation arrangements for the officers. No final determination has yet been made as to the memberships of these committees or when we will have sufficient members to establish committees. See “Executive Compensation” hereinafter.
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We will reimburse all directors for any expenses incurred in attending directors’ meetings provided that we have the resources to pay these fees. We will consider applying for officers and directors’ liability insurance at such time when we have the resources to do so.
Item 11. Executive Compensation
Summary Executive Compensation Table
The following table shows, for the years ended December 31, 2023 and 2022, compensation awarded to or paid to, or earned by, our Chief Executive Officer (the “Named Executive Officer”).
| Non-Equity | Nonqualified | |||||||||||||||||||||||||||||||||||
| Name | Incentive | Deferred | All | |||||||||||||||||||||||||||||||||
| and | Stock | Option | Plan | Compensation | Other | |||||||||||||||||||||||||||||||
| principal | Salary | Bonus | Awards | Awards | Compensation | Earnings | Compensation | Total | ||||||||||||||||||||||||||||
| position | Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||
| 1 Victor Shvetsky CEO, CFO and Director | ||||||||||||||||||||||||||||||||||||
| 2023 | $ | 32,000 | - | - | - | - | - | - | $ | 32,000 | ||||||||||||||||||||||||||
| 2022 | 32,000 | - | - | - | - | - | - | 32,000 | ||||||||||||||||||||||||||||
| 2 Alexey Golovanov, President | ||||||||||||||||||||||||||||||||||||
| 2023 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
| 2022 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
We have no formal employment arrangement with Mr. Shvetsky or Mr. Golovanov at this time. Mr. Shvetsky’s and Mr. Golovanov’s compensation has not been fixed or based on any percentage calculations. Mr. Shvetsky will make all decisions determining the amount and timing of their compensation and, for the immediate future, will not receive any compensation. Mr. Shvetsky’s compensation amounts will be formalized if and when his annual compensation exceeds $50,000.
Grants of Plan-Based Awards Table
We currently do not have any equity compensation plans. Therefore, none of our named executive officers received any grants of stock, option awards or other plan-based awards for the years ended December 31, 2023 and 2022.
Outstanding Equity Awards at Fiscal Year-End Table
None. We do not have any equity award compensation plans.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth, as of December 31, 2023, the total number of shares owned beneficially by our officers and directors, and key employees, individually and as a group, and the present owners of 5% or more of our total outstanding shares. The shareholders listed below have direct ownership of their shares and possess sole voting and dispositive power with respect to the shares. As of April 17, 2024, we had 15,659,483 shares of common stock outstanding, which are held by 36 shareholders. There are not any pending or anticipated arrangements that may cause a change in control.
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| Title of Class | Name and Address of Beneficial Owner(1) | Amount and Nature of Beneficial Owner | Percent of Class | |||||||
| Common Stock | Victor Shvetsky | 12,268,103 | 78.27 | % | ||||||
| Common Stock | Alexey Golovanov | 3,000,000 | 19.14 | % | ||||||
| All Officers and Directors as a Group (2 persons) | 15,268,103 | 97.41 | % | |||||||
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Our promoters are Mr. Shvetsky, our chairman, chief executive officer, chief financial officer and secretary, and Mr. Golovanov, our president.
Our office and mailing address is 1201 N. Orange St., Suite 700, Wilmington, DE 19801.
On November 29, 2011, we issued 12,000,000 post-split shares of our common stock to Victor Shvetsky, our chief executive officer, chief financial officer, secretary and director and 3,000,000 post-split shares of our common stock to Alexey Golovanov, our president. These shares were issued in exchange for services valued at $1,200 and $300, respectively or $1.00 per share.
Our officers and sole director are required to commit time to our affairs and, accordingly, may have conflicts of interest in allocating management time among various business activities. In the course of other business activities, they may become aware of business opportunities that may be appropriate for presentation to us, as well as the other entities with which they are affiliated. As such, there may be conflicts of interest in determining to which entity a particular business opportunity should be presented.
In an effort to resolve such potential conflicts of interest, our officers and directors have orally agreed that any opportunities that they are aware of independently or directly through their association with us (as opposed to disclosure to them of such business opportunities by management or consultants associated with other entities) would be presented by them solely to us.
We cannot provide assurances that our efforts to eliminate the potential impact of conflicts of interest will be effective.
Mr. Golovanov, our president, owns Quarta-Rad, Ltd. (“Quarta-Rad Russia”), which is part of the International Scientific and Technical Park of Moscow Engineering and Physical Institute (“MIFI”) and which is a developer and manufacturer of radiometric, acoustical and pyrometric devices, radiation detecting indicators, Radon detecting indicators and acoustical leak detectors that are used by fuel-energy enterprises of Moscow and other cities of the Russian Federation. In 2011 and 2012, we acted as a consignment agent and purchased products from Quarta-Rad Russia pursuant to a written agreement and sold the merchandise to Star Systems Japan Corporation, a company owned by our majority shareholder, Victor Shvetsky. For the years ended December 31, 2023 and 2022, we purchased $-0- and $506,834, respectively, of inventory from Quarta-Rad Russia and, as of December 31, 2023 and 2022, we owed Quarta-Rad Russia $91,850 and $91,850 in related party payables. In 2017, we entered into an agreement with our related party developer for $180,000 to develop software for the device RADEX AQ. The amount above due at December 31, 2023 and 2022 primarily relates to the development contract.
We believe that each reported transaction and relationship is on terms that are at least as fair to us as would be expected if those transactions were negotiated with third parties.
There have been no other related party transactions, or any other transactions or relationships required to be disclosed pursuant to Item 404 of Regulation S-K.
With regard to any future related party transaction, we plan to fully disclose any and all related party transactions, including, but not limited to, the following:
| ● | disclose such transactions in prospectuses where required; | |
| ● | disclose in any and all filings with the Securities and Exchange Commission, where required; | |
| ● | obtain disinterested directors’ consent; and | |
| ● | obtain shareholder consent where required. |
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Item 14. Principal Accountant Fees and Services.
The following table sets forth the aggregate fees billed or expected to be billed to our company for professional services rendered by our independent registered public accounting firms, for the fiscal years ended December 31, 2023 and 2022:
| 2023 | 2022 | |||||||
| Audit Fees | $ | 51,601 | $ | 48,000 | ||||
| Audit Related Fees | - | - | ||||||
| Tax Fees | Nil | Nil | ||||||
| All Other Fees | Nil | Nil | ||||||
| Total Fees | $ | 51,601 | $ | 48,000 | ||||
Audit Fees. Consist of fees billed for professional services rendered for the audits of our financial statements, reviews of our interim financial statements included in quarterly reports, services performed in connection with regular filings with the Securities and Exchange Commission and other services that are normally provided for the fiscal years ended December 31, 2023 and 2022, in connection with statutory and regulatory filings or engagements.
Audit Related Fees. None.
Policy on Pre-Approval by Audit Committee of Services Performed by Independent Registered Public Accounting Firm
Our board of directors pre-approves all services provided by our independent registered public accounting firm. All of the above services and fees were reviewed and approved by our board of directors before the respective services were rendered.
For the 2023 and 2022 audits, our Director has considered the nature and amount of fees billed or expected to be billed by DBB McKennon, and believes that the provision of services for activities unrelated to the audit was compatible with maintaining DBB’s independence.
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PART IV
Item 15. Exhibits, Financial Statement Schedules.
EXHIBITS
The following exhibits are filed as part of this Report, pursuant to Item 601 of Regulation S-K.
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SignatureS
Pursuant to the requirements of Section 13 or 15(d) 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. | |
| /s/ Victor Shvetsky | |
|
Victor
Shvetsky Chairman and Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Accounting and Financial Officer) |
In accordance with the Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| /s/ Victor Shvetsky | |
|
Victor
Shvetsky Chairman and Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Accounting and Financial Officer) and Director |
| /s/ Alexey Golovanov | |
| Alexey Golovanov | |
| President and Director |
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