Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended April 30, 2009, for Charmed Homes Inc. (a Nevada corporation), which is currently in the process of merging with IntelaSight, Inc. (d/b/a Iveda Solutions). The registrant is classified as a Development Stage Company and a Shell Company. While originally formed to construct and sell homes, the company discontinued home building operations due to market conditions and is pivoting to remote video monitoring services via the pending merger.
Key Financial Metrics
| Metric | Three Months Ended April 30, 2009 | Accumulated from Inception (June 27, 2006) |
|---|---|---|
| Revenue | $0 | $505,665 |
| Net Loss | $(15,356) | $(121,312) |
| Cash and Cash Equivalents | $83,531 | $83,531 |
| Total Assets | $83,531 | $83,531 |
| Total Liabilities | $13,843 | $13,843 |
| Stockholders' Equity | $69,688 | $69,688 |
| Net Cash Used in Operating Activities | $(3,426) | $(90,469) |
| Shares Outstanding | 6,690,000 | 6,690,000 |
Note: The filing does not provide specific gross margin or operating margin percentages for the current quarter as there was no revenue generated during the period.
Material Changes vs. Prior Period
- Revenue: The company reported $0 revenue for the three months ended April 30, 2009, compared to $0 in the same period in 2008. All historical revenue ($505,665) was generated from a single home sale completed in June 2008.
- Expenses: Total expenses for the quarter were $15,356, a decrease from $18,020 in the prior year quarter. This reduction is primarily due to lower professional fees ($13,844 vs. $10,238) and the absence of foreign exchange losses in the prior year quarter ($12,376 loss in current quarter vs. $6,101 in prior year).
- Liquidity: Cash decreased by $3,426 during the quarter, from $86,957 to $83,531.
- Liabilities: Accounts payable and accrued liabilities increased significantly from $3,413 to $13,843.
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 $121,312 since inception.
- Pending Merger: On January 8, 2009, the company entered into a merger agreement with IntelaSight, Inc. (Iveda Solutions). The transaction involves a 1-for-2 reverse stock split and the exchange of IntelaSight securities for Charmed Homes stock. Upon completion, the company will change its name to "Iveda Corporation" and shift its business focus to remote video monitoring.
- Capital Needs: Management states that funds raised from a previous public offering are expected to last approximately twelve months. However, the company has no current arrangements for additional financing and may need to suspend operations or cease entirely if further capital cannot be raised.
- Related Party Transactions: The President provides management services and office space valued at $1,500 per quarter ($900 services, $600 rent), which are recorded as donated expenses.
Investor Verification Checklist
- Verify the status of the merger agreement with IntelaSight, Inc., including shareholder approval and closing conditions.
- Confirm the company's ability to secure additional financing to sustain operations beyond the current cash runway of approximately $83,531.
- Review the details of the 1-for-2 reverse stock split and its impact on share ownership and liquidity.
- Assess the financial health and operational viability of Iveda Solutions, as the registrant's future business model depends entirely on this entity.
- Monitor the resolution of the "Going Concern" qualification in future filings.