Business Context and Reporting Period
Company: Charmed Homes Inc. (Note: Request metadata listed "Iveda Solutions, Inc.", but the filing text identifies the registrant as Charmed Homes Inc.)
Reporting Period: Fiscal year ended January 31, 2008.
Status: Development stage company incorporated in Nevada on June 27, 2006. The company is a speculative homebuilder operating in Calgary, Alberta, Canada. It has not generated any revenue from operations to date.
Key Financial Metrics
| Metric | Value (USD) |
|---|---|
| Revenue | $0 |
| Net Loss (Year Ended Jan 31, 2008) | $(50,569) |
| Accumulated Deficit (Since Inception) | $(69,455) |
| Total Assets | $512,592 |
| Cash and Cash Equivalents | $22,748 |
| Inventory (Real Estate Property) | $489,844 |
| Total Liabilities | $398,547 |
| Debt (Due to Related Party) | $395,751 |
| Stockholders' Equity | $114,045 |
Material Changes and Operational Status
- Inventory Acquisition: The company completed construction of its first home in December 2007. This asset is recorded as inventory valued at $489,844 (comprising land, building, and other costs).
- Financing: The company raised $169,000 in July 2007 via a private placement of 1,690,000 shares at $0.10 per share. Additionally, the President, Ian Quinn, advanced $395,751 to cover legal, accounting, and construction costs. This loan is unsecured, non-interest bearing, and due on demand.
- Market Conditions: Management notes a significant slowdown in the Calgary real estate market starting mid-2007, with rising inventory and dipping prices. Consequently, the first home, listed after completion, has not yet sold.
- Going Concern: Auditors have issued a "going concern" opinion, stating substantial doubt exists regarding the company's ability to continue operations for the next 12 months without additional capital.
Guidance, Outlook, and Risks
- Outlook: Management anticipates selling the first home within the next three months, expecting a market pickup in the spring. Future operations depend entirely on the sale of this first property to fund the acquisition of the next lot.
- Capital Needs: The company estimates it has sufficient cash to operate for 12 months but requires the sale of the first home to proceed with the second project. No arrangements for additional financing are currently in place.
- Risks:
- Liquidity Risk: Heavy reliance on the sale of a single asset to fund future operations and repay related-party debt.
- Market Risk: Exposure to the volatile Calgary housing market; failure to sell the home at a profit could render the business insolvent.
- Related Party Dependence: Significant debt ($395,751) is owed to the President, who also provides donated services and rent.
- Regulatory: Shares are subject to "penny stock" rules under Section 15(g) of the Exchange Act, which may limit liquidity for investors.
Investor Verification Checklist
- Asset Valuation: Verify the fair market value of the completed home (Inventory: $489,844) against current Calgary real estate listings to assess potential recovery value.
- Related Party Loan Terms: Confirm the enforceability and repayment terms of the $395,751 oral loan from the President, as no written documentation exists.
- Cash Runway: Assess the $22,748 cash balance against monthly operating expenses to validate the 12-month liquidity claim.
- Stock Ownership: Note that officers and directors (Ian Quinn and Kevin Liggins) collectively own 74.74% of outstanding shares.
- Going Concern Status: Review the auditor's report (Manning Elliott LLP) for specific details on the substantial doubt regarding continuance.