Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended October 31, 2008, for Charmed Homes Inc. (a Nevada corporation). The registrant is classified as a Development Stage Company and a Shell Company. While the metadata references "Iveda Solutions, Inc.," the filing text indicates Charmed Homes Inc. entered a Letter of Intent on November 12, 2008, to merge with IntelaSight, Inc. (dba Iveda Solutions), with plans to change its name to "Iveda Corporation" upon closing.
The company's principal business was originally the sale of constructed homes. However, due to a slowing market in Calgary, the company discontinued home building operations and is pivoting to the remote video monitoring services business of Iveda Solutions pending the merger.
Key Financial Metrics
| Metric | Period Ended Oct 31, 2008 (9 Months) | Period Ended Oct 31, 2007 (9 Months) | Accumulated from Inception (June 27, 2006) |
|---|---|---|---|
| Revenue | $505,665 | $0 | $505,665 |
| Cost of Goods Sold | $490,598 | $0 | $490,598 |
| Gross Profit | $15,067 | $0 | $15,067 |
| Net Loss | $(24,642) | $(35,525) | $(94,097) |
| Cash and Cash Equivalents | $140,159 | $128,776 | $140,159 |
| Total Assets | $140,159 | $512,592 | $140,159 |
| Total Liabilities | $46,256 | $398,547 | $46,256 |
| Stockholders' Equity | $93,903 | $114,045 | $93,903 |
Debt and Liquidity: Total liabilities consist primarily of $45,500 due to a related party (the President) and $756 in accounts payable. The related party debt is unsecured, non-interest bearing, and due on demand. The company holds $140,159 in cash.
Material Changes vs. Prior Period
- Revenue Generation: The company generated $505,665 in revenue during the nine months ended October 31, 2008, compared to zero in the prior year. This resulted from the sale of a single home on June 3, 2008.
- Inventory Liquidation: Inventory decreased from $489,844 at January 31, 2008, to $0 at October 31, 2008, following the sale of the real estate property.
- Liability Reduction: Total liabilities dropped significantly from $398,547 to $46,256. This was driven by the repayment of $344,202 in related party advances using proceeds from the home sale and public offering.
- Foreign Exchange: The company recorded a foreign exchange loss of $12,376 for the nine-month period, compared to a gain of $1,719 in the prior year's three-month period.
Outlook, Risks, and Management Commentary
- Going Concern: The auditors have issued a "going concern" opinion. Management states there is substantial doubt about the company's ability to continue as a going concern without additional capital. The company has accumulated losses of $94,097 since inception.
- Strategic Pivot: Due to the Calgary housing market downturn, the company discontinued home building. It has entered a Letter of Intent to merge with Iveda Solutions (remote video monitoring). The merger is expected to close by December 31, 2008, involving a 1-for-2 reverse stock split and a name change to "Iveda Corporation."
- Capital Needs: The company relies on shareholder support and equity financing. Management believes current funds will last approximately 12 months but notes that if additional cash is needed and cannot be raised, operations may be suspended or ceased.
- Risks: Risks include limited operating history, dependence on a single project for past revenue, potential dilution from future equity financing, and the uncertainty of closing the proposed merger.
Investor Verification Checklist
- Merger Status: Verify if the merger with Iveda Solutions (IntelaSight, Inc.) was successfully closed by the December 31, 2008 deadline, as the business model depends entirely on this transaction.
- Related Party Debt: Confirm the terms and repayment status of the $45,500 loan from the President, which is unsecured and due on demand.
- Going Concern Resolution: Assess whether the company has secured the necessary financing to sustain operations beyond the current cash balance of $140,159.
- Stock Split Execution: Verify the completion of the 1-for-2 reverse stock split mentioned in the merger agreement.
- Revenue Sustainability: Evaluate the viability of the new remote video monitoring business model, as the company has no historical revenue in this sector.