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.
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, 2025 and 2024 and our results of operations for the year ended December 31, 2025 and December 31, 2024. 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 a fiscal year end of December 31. We were formed to distribute and sell detection devices to homeowners and interested consumers in North America, however, these activities are no longer a significant part of our operations. 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 a former 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.
While the Company historically operated a radiation detection equipment business, these activities have been significantly reduced and are being phased out, and the Company’s primary focus has shifted to its Sellavir operations.
As of the date of this Form 10-K, we continue to expand our operations and expect to increase our revenues through Sellavir. The Company currently has no full-time employees. Its Chief Executive Officer, Victor Shvetsky, devotes approximately 10 hours per week to the Company’s operations.
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. Sellavir is now focused on developing and selling the CenterEye software product and other related tools for the call center market, leveraging AI and advanced analytics to improve call center operations and targeting integration with major platforms including Genesys Cloud, NICE CXone, and Avaya.
Our administrative office is located at 1201 N. Orange St., Suite 700, Wilmington, DE 19801, which is a virtual office.
In 2024, we generated $106,797 in sales and incurred a net loss of ($216,755). In 2025, we generated $244,955 in sales and incurred a net loss of ($256,929). As of December 31, 2025, we had $72,909 in cash on hand and liabilities of $289,529, which consisted of $155,429 in related party payables, and $134,100 in accounts payable and accrued expenses. Our working capital deficit was $216,617. These conditions, together with our accumulated deficit of $428,385 and net loss of $256,929, raise substantial doubt about our ability to continue as a going concern.
Management believes the following factors partially mitigate these conditions: During the year ended December 31, 2025, Sellavir generated $235,000 in software development revenue through its existing contract with Star Systems Corporation, representing a 488% increase over the prior year. In January 2026, we entered into an Independent Software Vendor Partner Agreement with Genesys Cloud Services, Inc. to integrate our CenterEye platform into the Genesys Cloud ecosystem, which we believe will expand our addressable market and create additional revenue opportunities. We are actively pursuing additional client engagements for our AI-driven contact center solutions.
Notwithstanding these developments, we do not currently have sufficient working capital to sustain operations for the next twelve months without additional financing or a significant increase in revenue. There can be no assurance that we will be able to generate sufficient revenue from our existing or anticipated contracts, or that additional financing will be available on acceptable terms, or at all. If we are unable to secure additional capital or achieve profitability, we may be unable to continue as a going concern, which could result in a total loss of our stockholders’ investment. We currently have one officer and two directors. These individuals allocate time and personal resources to us on a part-time basis and devote approximately 10 hours per week to us.
During December 2020, Quarta-Rad acquired Sellavir, Inc., a Delaware corporation, under common control, as a wholly owned subsidiary We acquired the company in exchange for 333,333 shares 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. In January 2026, we entered into an Independent Software Vendor Partner Agreement with Genesys Cloud Services, Inc., pursuant to which the Company will integrate its proprietary contact center technologies into the Genesys Cloud platform, one of the world’s leading AI-powered experience orchestration engines.
The Company has two operating segments through the operations of Quarta-Rad and Sellavir. Net income for the year ended December 31, 2025 is comprised of:
Quarta Rad
Sellavir
Total
Sales
Cost of Goods Sold
Gross Profit
Expenses:
General & administrative
Professional and consulting fees
Operating expenses
Net loss from operations
Interest and dividends
Other expense - foreign currency translation loss
Other income - interest - related party
Unrealized loss on investments
Income tax expense
Net loss
Revenues for the year ended December 31, 2025 were $244,955 comprised of $9,955 from Quarta-Rad and $235,000 from Sellavir.
Operating expenses for the year ended December 31, 2025 were $393,036 comprised of $144,937 from Quarta-Rad and $248,099 from Sellavir.
Income tax expense for the year ended December 31, 2025 was $2,900 net expense, comprised of $0 income tax expense from Quarta-Rad and $2,900 income tax expense from Sellavir.
Net loss for the year ended December 31, 2025 was $256,929, comprised of $138,807 net loss from Quarta-Rad and a $118,122 net loss from Sellavir.
FOR YEAR ENDED DECEMBER 31, 2024:
Quarta Rad
Sellavir
Total
Sales
Cost of Goods Sold
Gross Profit
Expenses:
General & administrative
Advertising
Professional and consulting fees
Operating expenses
Net loss from operations
Interest and dividends
Other expense - foreign currency translation loss
Other income - interest - related party
Other expense - loss on loan modification
Unrealized gain on investments
Realized loss on investments
Income tax benefit/(expense)
Net loss
Revenues for the year ended December 31, 2024 were $106,797 comprised of $66,797 from Quarta-Rad and $40,000 from Sellavir.
Operating expenses for the year ended December 31, 2024 were $246,549 comprised of $155,334 from Quarta-Rad and $91,215 from Sellavir.
Income tax expense/benefit for the year ended December 31, 2024 was $34,976 net expense, comprised of $55,496 income tax expense from Quarta-Rad and $20,520 income tax benefit from Sellavir.
Net loss for the year ended December 31, 2024 was $216,755, comprised of $181,273 net loss from Quarta-Rad and a $35,482 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.
Note Receivable Related Party
Significant estimates made by management include the recoverability of the 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
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 each note. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and credit to notes receivable- related party. Management has evaluated collectability based on available information and believes no allowance is required as of December 31, 2025; however, this assessment involves significant judgment.
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, 2025 and 2024, respectively, together with notes thereto, which are included in this Annual Report on Form 10-K.
For the Year Ended December 31, 2025, compared to the Year Ended December 31, 2024
Revenues. Our net revenues increased $138,158, or 129.37%, to $244,955 for the year ended December 31, 2025, compared with $106,797 for comparable period in 2024. The increase was primarily due to an increase in revenue recognized through Sellavir.
Cost of Goods Sold. Our Cost of Goods Sold increased $76,195, or 113.53% to $143,307 for the year ended December 31, 2025, compared to $67,112 for the comparable period in 2024. The increase is due to the increase in sales.
Operating Expenses. For the year ended December 31, 2025, our total operating expenses increased $146,487 or 59.41%, to $393,036 compared to $246,549 for the comparable period in 2024. Operating expenses were comprised of general and administrative expenses, professional and consulting fees and advertising costs. The components of operating expenses are discussed below.
General and administrative expenses, increased $161,366 or 114.01%, to $302,898 for the year ended December 31, 2025 from $141,532 for the comparable period in 2024. The increase is primarily attributable to an increase in stock based compensation related to Sellavir.
Professional and consulting fees decreased $14,879 or 14.17% for the year ended December 31, 2025, to $90,138 from $105,017 for the comparable period in 2024. The decrease is primarily due to reduced professional fees through Quarta-Rad.
Net Income. Our net loss increased by $40,174 or 18.53% to a net loss of $256,929 for the year ended December 31, 2025, compared to a net loss of $216,755 for the year ended December 31, 2024. The increase is primarily attributable to an increase in operating expense.
QUARTA-RAD
For the Year Ended December 31, 2025, compared to the Year Ended December 31, 2024
Revenues Our net revenues decreased $56,842, or 85.10%, to $9,955 for the year ended December 31, 2025 compared with $66,797 for the comparable period in 2024. The decrease was primarily due to the wind down of sales of detection equipment.
Cost of Goods Sold. Our Cost of Goods Sold decreased $33,415 or 89.73% to $3,825 for the year ended December 31, 2025, compared to $37,240 for the comparable period in 2024. The decrease is primarily due to the decrease in sales.
Operating Expenses. For the year ended December 31, 2025, our total operating expenses decreased $10,397 or 6.69%, to $144,937 compared to $155,334 for the comparable period in 2024. The decrease was attributable to a decrease in professional fees.
Net Loss. Our net loss decreased by $82,640, or 23.43% to a net loss of $138,807 for the year ended December 31, 2025 compared to a net loss of $181,273 for the year ended December 31, 2024. The decrease primarily attributable to a reduction of income tax expense due to the reversal on a deferred tax asset in 2024.
SELLAVIR
For the Year Ended December 31, 2025, compared to the Year Ended December 31, 2024
Revenues Our net revenues increased $195,000 or 487.50% to $235,000 for the year ended December 31, 2025 compared with $40,000 for comparable period in 2024. The increase was due to increased production.
Cost of Goods Sold. Our Cost of Goods Sold increased $109,610 or 366.93% to $139,482 for the year ended December 31, 2025, compared to $29,872 for the comparable period in 2024. The increase is due to an increase in sales.
Operating Expenses. For the year ended December 31, 2025, our total operating expenses increased $156,884 or 171.99%, to $248,099 compared to $91,215 for the comparable period in 2024. The increase was attributable to an increase in stock-based compensation.
Net loss. Our net loss increased $82,640 or 232.91% to a net loss of $118,122 for the year ended December 31, 2025 compared to a net loss of $35,482 for the year ended December 31, 2024. The increase was attributable to an increase in stock-based compensation.
Liquidity and Capital Resources . During the year ended December 31, 2025, 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 $413,511 and $577,814 as of December 31, 2025 and December 31, 2024, respectively, consisting of $72,909 and $63,021, respectively, in cash. Our working capital was a deficit of $216,617 and $260,907 of as December 31, 2025, and December 31, 2024, respectively.
Our total liabilities were $289,529 and $400,976 as of December 31, 2025, and December 31, 2024, respectively.
Our stockholders’ equity was $123,982 and $176,838 as of December 31, 2025 and December 31, 2024, respectively. Our accumulated deficit was $428,385 and $171,456 as of December 31, 2025 and December 31, 2024, respectively.
We had $9,888 in cash provided by operating activities and $75,124 in cash used by operating activities for the year ended December 31, 2025 and 2024, respectively.
We had $0 and $65,520 in cash provided by investing activities for year ended December 31, 2025 and December 31, 2024, respectively.
We had no cash provided by financing activities for the year ended December 31, 2025 and December 31, 2024, 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 of , develop or our business or otherwise respond to competitive pressures would be significantly limited. In a -case scenario, we might not be to fund our operations or to remain in business, which could result in a total 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 March 31, 2026.
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.
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 net deferred tax assets of $126,496 with a valuation allowance of $126,496.
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, 2025 and December 31, 2024, respectively.
Plan of Operation
Our business strategy is focused on the continued development and commercialization of Sellavir’s AI-driven software solutions, including the CenterEye platform. The Company does not expect to generate material revenues from its legacy radiation detection business going forward.
We intend to implement the following tasks within the next twelve months:
Marketing : Estimated cost $25,000-$100,000). We intend to allocate these funds exclusively toward commercialization and lead generation for our Sellavir AI software solutions, primarily the CenterEye platform. Our marketing strategy will focus on B2B digital campaigns, search engine optimization, and direct outreach targeting enterprise call centers and customer engagement operations. Additionally, we plan to utilize funds to promote our recent Independent Software Vendor Partner Agreement with Genesys Cloud Services, Inc., and to support our efforts in securing and marketing further integrations with other major cloud-based contact center platforms, including NICE CXone and Avaya. We have completely ceased marketing efforts and expenditures related to our legacy radiation detection equipment.
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.
