Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended July 31, 2009, for Charmed Homes Inc. (a Nevada corporation), which is currently operating as a development-stage company. The registrant is a smaller reporting company and a shell company. While the filing metadata references "Iveda Solutions, Inc.," the document text confirms the registrant is Charmed Homes Inc., which is in the process of merging with IntelaSight, Inc. (d/b/a Iveda Solutions). The company has discontinued its original home-building operations due to market conditions and is pivoting to a remote video monitoring business via the pending merger.
Key Financial Metrics
| Metric | Six Months Ended July 31, 2009 | Six Months Ended July 31, 2008 | Accumulated from Inception (June 27, 2006) |
|---|---|---|---|
| Revenue | $0 | $0 | $505,665 |
| Net Loss | $(24,482) | $(17,481) | $(130,438) |
| Cash and Cash Equivalents | $64,233 | $157,574 | N/A |
| Total Assets | $64,233 | $157,574 | N/A |
| Total Liabilities | $2,171 | $2,171 | N/A |
| Stockholders' Equity | $62,062 | $83,544 | N/A |
| Net Cash Used in Operating Activities | $(22,724) | $479,028 | N/A |
Note: The company reported no revenue for the six months ended July 31, 2009. The accumulated revenue of $505,665 relates to a single home sale completed in June 2008.
Material Changes vs. Prior Period
- Cash Position: Cash decreased by approximately $22,724 during the six-month period, primarily due to operating losses. This contrasts with the prior year period where cash increased significantly due to inventory sales.
- Operating Loss: The net loss for the six months ended July 31, 2009, was $24,482, compared to a loss of $17,481 in the same period in 2008. The increase in loss is driven by professional fees and foreign exchange losses.
- Business Pivot: The company has ceased home-building operations. The prior period included significant activity related to the construction and sale of a single home in Lake Chaparral, which is no longer part of the current operational strategy.
- Liabilities: Current liabilities decreased slightly from $3,413 to $2,171, reflecting the payment of accounts payable.
Guidance, Outlook, Risks, and Contingencies
- Going Concern: The company's auditors have issued a "going concern" opinion. There is substantial doubt about the company's ability to continue as a going concern for the next twelve months without additional capital. The company has accumulated losses of $130,438 since inception.
- Merger with Iveda: On January 8, 2009, the company entered into a merger agreement with IntelaSight, Inc. (Iveda Solutions). Upon completion, the company will change its name to "Iveda Corporation" and shift its business to remote video monitoring services. The merger is subject to shareholder approval and closing conditions.
- Capital Needs: Management states that funds raised from a previous public offering are expected to last approximately twelve months. However, if the company cannot raise additional cash through a second public offering, private placement, or loans, it may be forced to suspend or cease operations.
- Risks: Key risks include the failure to secure additional financing, the inability to attract clients for the new security monitoring business, and the inherent risks of a development-stage enterprise with limited operating history.
- Unusual Items: The financial statements include $3,000 in donated services and rent from the President for the six-month period. Additionally, a foreign exchange loss of $12,376 is recorded in the accumulated totals due to operations in Canada.
Investor Verification Checklist
- Merger Status: Verify the current status of the merger agreement with IntelaSight, Inc. and whether shareholder approval has been obtained.
- Liquidity Runway: Confirm the company's current cash burn rate and whether the projected 12-month runway remains accurate given the lack of revenue.
- Going Concern Resolution: Determine if the company has secured the additional equity financing required to satisfy the going concern doubt raised by auditors.
- Asset Valuation: Review the valuation of the single home sold in 2008 to ensure the historical revenue and cost figures are accurate, as this represents the only significant revenue event in the company's history.
- Related Party Transactions: Verify the terms and fair value of the ongoing donated services and rent provided by the President.