Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Conditions and Results of Operations

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

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

We intend the following discussion to assist in the understanding of our financial position and our results of operations for the three months ended March 31, 2026, and 2025. 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 initially formed to distribute and sell radiation detection devices and related products to consumers and businesses in North America.

Beginning in 2013, we purchased products from Quarta-Rad, Ltd. ("QRR"), a company located in Russia, and shipped products to third-party online retailers and resellers for distribution. In recent periods, the Company has reduced its focus on its historical radiation detection product line and has shifted its primary business focus toward software development and AI-driven technologies.

During April 2020, we acquired Quarta-Rad USA, Inc., a Delaware corporation, as a wholly owned subsidiary. No consideration was paid for the shares. The purpose of the acquisition was to separate certain operations into a separate entity. There was no activity, assets, or liabilities in the subsidiary through March 31, 2026.

During December 2020, we acquired Sellavir, Inc. ("Sellavir"), an AI software company focused on advanced analytics, image processing, and call center software solutions. Sellavir's technology platform is designed to assist organizations in analyzing video and operational data through proprietary AI technologies.

Sellavir has developed CenterEye, a software platform intended to simplify the use and management of cloud-based call center systems. CenterEye is designed to enhance call center operations through AI-driven analytics, automation, and operational monitoring capabilities.

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

The Company's current focus is the continued development and commercialization of CenterEye and related AI-driven software solutions. Management is actively pursuing opportunities in the United States, Japan, and other international markets. The Company currently generates revenue primarily through relationships with its Japanese reseller associated with Sellavir's software and development services.

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

Our business strategy is focused on expanding the development, marketing, and deployment of CenterEye and related technologies. We aim to enhance call center efficiency and customer engagement through AI-driven solutions while pursuing strategic relationships with businesses requiring advanced customer service and operational analytics platforms.

Sellavir Consulting

We expanded our operations through the acquisition of Sellavir in December 2020. Sellavir leverages its expertise in neural networks and artificial intelligence technologies to provide customized software development and AI-related services to clients. These services include image processing applications, operational analytics, and call center software solutions.

Our business model is focused on identifying customer-specific operational needs and developing software solutions to address those needs. Currently, the Company's revenue associated with Sellavir operations is generated primarily through its Japanese reseller relationships.

The Company acquired Sellavir to:

● leverage Sellavir's AI capabilities in connection with future technology initiatives;

● expand operations beyond the Company's historical radiation detection product business; and

● pursue opportunities within the call center software industry through the development and commercialization of CenterEye.

CenterEye is intended to be offered as a subscription-based software platform, which management believes may provide recurring revenue opportunities in future periods. Sellavir began recognizing revenue related to call center software operations during 2024.

The Company has two operating segments through the operations of Quarta-Rad and Sellavir. Net loss for the three months ended March 31, 2026, is comprised of:

		Quarta Rad				Sellavir				Total
Sales		$	856			$	25,000			$	25,856
Cost of Good Sold			-				19,640				19,640
Gross Profit			856				5,360				6,216
Expenses:
General & administrative			11,268				64,429				75,697
Professional and consulting fees			24,600				850				25,450
Operating expenses			35,868				65,279				101,147
Net loss from operations			(35,012	)			(59,919	)			(94,931	)
Other expense - foreign currency translation loss							(10,053	)			(10,053	)
Other income - interest - related party			-				802				802
Unrealized gain/(loss) on investments			-				4				4
Net loss		$	(35,012	)		$	(69,166	)		$	(104,178	)

Management's Plan to Address Going Concern Considerations

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

Management intends to fund operations through existing cash balances, revenues generated from operations, related party support, and, if necessary, additional capital raises or strategic financing arrangements. There can be no assurance that such financing will be available on acceptable terms or at all.

Consolidated Totals:

Three months ended March 31, 2026 compared with the three months ended March 31, 2025

Revenues. Our net revenues decreased $7,031 or 21.38% to $25,856 for the three months ended March 31, 2026, compared with $32,887 for the three months ended March 31, 2025. The decrease was primarily attributable to the phase-out of Quarta-Rad sales and the timing of Sellavir revenue recognition.

Cost of Goods Sold. Our Cost of Goods Sold decreased $14,607 or 42.65% to $19,640 for the three months ended March 31, 2026, compared to $34,247 for the comparable period in 2025. The decrease was primarily due to the decreased sales in Quarta-Rad and Sellavir.

Operating Expenses. For the three months ended March 31, 2026, our total operating expenses increased $12,610 or 14.24% to $101,147 compared to $88,537 for the three months ended March 31, 2025. The increase is primarily attributable to Sellavir's operating expenses.

Net Loss. Our net loss increased $26,769 or 34.58% to $104,178 for the three months ended March 31, 2026 compared to $77,409 for the three months ended March 31, 2025. The increase is primarily attributable to Sellavir's issuance of stock-based compensation and loss on foreign currency translation.

QUARTA-RAD

Three months ended March 31, 2026, compared with the three months ended March 31, 2025

Revenues. Our net revenues decreased $2,031 or 70.35% to $856 for the three months ended March 31, 2026, compared with $2,887 for the three months ended March 31, 2025. The reduction was primarily attributable to the phase out of Quarta-Rad sales.

Cost of Goods Sold. Our Cost of Goods Sold decreased $2,349 or 100.00% to $0 for the three months ended March 31, 2026, compared to $2,349 for the comparable period in 2025. The decrease was a result of decreased sales.

Operating Expenses. For the three months ended March 31, 2026, our total operating expenses decreased $5,910 or 14.15% to $35,868 compared to $41,778 for the three months ended March 31, 2025. The decrease is primarily attributable to the decrease in administrative expenses.

Net Loss. Our net loss decreased $6,228 or 15.10% to $35,012 for the three months ended March 31, 2026, compared to a net loss of $41,240 for the three months ended March 31, 2025. The decrease is primarily attributable to the decrease in administrative expenses.

SELLAVIR

Three months ended March 31, 2026, compared with the three months ended March 31, 2025

Revenues. Our net recognized revenue decreased $5,000 or 16.67% to $25,000 for the three months ended March 31, 2026 compared with $30,000 for the three months ended March 31, 2025. The decrease is due to the decrease in Sellavir revenue recognition.

Cost of Goods Sold. Our Cost of Goods Sold decreased $12,258 or 38.43% to $19,640 for the three months ended March 31, 2026, compared to $31,898 for the comparable period in 2025. The decrease was primarily due to decreased sales.

Operating Expenses. For the three months ended March 31, 2026, our total operating expenses increased $18,520 or 39.61% to $65,279 compared to $46,759 for the three months ended March 31, 2025. The increase was primarily due to increase in operating expenses.

Net Loss. Our net loss increased $32,997 to $69,166 or 91.23% for the three months ended March 31, 2026, compared to $36,169 for the three months ended March 31, 2025. The increase was primarily due to the issuance of stock based compensation, foreign translation loss and the cessation of accrual of certain related party interest obligations.

Liquidity and Capital Resources. During the three months ended March 31, 2026, we used cash for operating expenses from cash on hand and the sale of products on the Internet and from independent, third-party resellers and from consulting revenue from Sellavir.

Our total assets were $366,779 and $413,511 as of March 31, 2026, and December 31, 2025, respectively, consisting of $14,568 and $72,909, respectively, in cash. Our working capital deficit was ($293,847) and ($216,617) as of March 31, 2026 and December 31, 2025, respectively.

We had $58,341 and $13,267 in cash used by operating activities for the three months ended March 31, 2026, and 2025, respectively.

We had no cash provided by investing activities for the three months ended March 31, 2026, and 2025, respectively.

We had no cash provided by financing activities for the three months ended March 31, 2026, and 2025, respectively.

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.

Impact of Inflation

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

Capital Expenditures

The Company expended no amounts on capital expenditures for the three months ended March 31, 2026.

Plan of Operation

Our business strategy has evolved from primarily marketing radiation detection products to focusing on the development and commercialization of CenterEye, our proprietary AI-driven call center software platform. We aim to enhance call center efficiency, operational visibility, and customer engagement through advanced analytics, automation, and monitoring solutions. While we continue to maintain our online presence related to our historical product lines, management's primary efforts are directed toward software development, marketing, and establishing strategic relationships with businesses requiring advanced customer service and operational analytics platforms.

While we continue to maintain our website at www.quartarad.com, we have increased our focus on Sellavir's operations and related marketing efforts as part of our long-term business strategy.

During December 2020, Quarta-Rad acquired Sellavir, Inc., a Delaware corporation under common control, as a wholly owned subsidiary in exchange for 333,333 shares of common stock. The value of the shares issued was approximately $170,000 on the date of issuance.

Sellavir is an AI software and analytics company focused on advanced operational analytics, image processing, and call center software technologies. Sellavir's platform utilizes artificial intelligence ("AI") and proprietary technologies designed to assist organizations in analyzing operational and video-based data to improve business performance and customer engagement.

Sellavir, Inc., our wholly-owned subsidiary, is currently focused on the continued development and commercialization of CenterEye, a call center software platform that leverages AI and advanced analytics to improve call center operations. CenterEye is designed to provide real-time insights, operational metrics, monitoring capabilities, and customer engagement tools intended to improve efficiency and customer satisfaction.

Management is actively pursuing opportunities in Japan, the United States, and other international markets through reseller relationships and direct marketing efforts.

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

Software Development:

We intend to continue investing in the development and enhancement of CenterEye to meet the evolving needs of the call center industry. This includes adding new features, improving user experience, enhancing reporting and analytics capabilities, and improving scalability and platform functionality.

Marketing:

(Estimated cost $25,000 - $75,000). We intend to increase our marketing efforts to generate additional leads, reseller opportunities, and customer relationships for CenterEye and related software solutions. Marketing efforts may include digital advertising, website enhancements, promotional materials, and attendance at industry-related events and conferences.

Partnerships and Client Acquisition:

(Estimated cost $20,000). We intend to pursue strategic relationships with call center operators, technology providers, and resellers. Management intends to focus on pilot projects, reseller arrangements, and initial software deployments designed to demonstrate the effectiveness of CenterEye and support future recurring revenue opportunities.

Historical Product Operations:

While the Company continues to maintain limited activities associated with its historical radiation detection product business, management's primary operational focus has shifted toward AI-driven software and analytics solutions.

Our management does not currently anticipate the need to hire additional full-time employees over the next three months, as the services currently provided by our officers, directors, and independent contractors are expected to be sufficient for current operations. As our software development and commercialization activities expand, we may engage additional independent contractors or consultants to support development, marketing, operational, or business development activities.

We currently do not own material equipment that we intend to sell in the near future, do not have any off-balance sheet arrangements, and have not paid material expenses on behalf of our directors outside the ordinary course of business.

Off-Balance Sheet Arrangements

None.

Forward Looking Statements

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

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

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

Critical Accounting Policies

Our condensed financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make estimates, judgments and assumptions that affect reported amounts of assets, liabilities, revenues and expenses. We continually evaluate the accounting policies and estimates used to prepare the condensed financial statements. The estimates are based on historical experience and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management. Certain accounting policies that require significant management estimates and are deemed critical to our results of operations or financial position are discussed in our Annual Report on Form 10-K for the year ended December 31, 2025, and Note 1 to the Condensed and Consolidated Financial Statements in this Form 10-Q.

Accounts Receivable Accounts Receivable and related party notes receivable amounts from sales to various suppliers and online platforms and loans. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectable amounts through a charge to bad debt expense and a credit to a valuation allowance based on its assessment of the current status of individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. A reserve for sales returns and allowances is considered immaterial and, as a result, there was no reserve for sales returns and allowances, at March 31, 2026, and December 31, 2025, respectively.