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MESA, Ariz.--In a move company president and CEO David Ly said shows "public markets are optimistic about the future growth and viability of high-technology security companies," Iveda Solutions announced it is now a public company.
Iveda Solutions, a video monitoring company, announced Nov. 12 that it became a wholly owned subsidiary of Iveda Corporation, formerly Charmed Homes, Inc., a publicly traded company. The deal, which involved an Oct. 15 reverse merger, has allowed Iveda to save time and money by avoiding an expensive and time-consuming review with state and federal regulators while securing funding for expanded, future operations.
"For Iveda Solutions, being a publicly traded company allows us expanded reach into the capital markets to fuel our growth, capacity, and innovation," Ly said in an email interview.
According to SEC filings, the company generated accumulated losses of $2,968,820 through Dec. 31, 2008. More recently, operating expenses were $924,916 for the six months ended June 30, 2009, against $332,404 in net revenue.
The numbers improved this year, as loss from operations decreased to $345,128 for the three months ended June 30, 2009, compared to $457,867 for the three months ended June 30, 2008. However, 82 percent of revenue in the most recently reported quarter came from recurring revenue, so new installations have slowed.
Ly said the move to public status was about more than fundraising, however. "More awareness of our company beyond the security industry opens up opportunities for strategic alliances outside the industry and in international markets. These alliances will allow us to develop new applications beyond security, utilizing our video-hosting infrastructure."
Michael Barnes, a partner in investment banking firm Barnes Associates, which specializes in the security alarm industry, and co-sponsors the Barnes Buchanan Conference, believed time would tell if the merger was good news for an industry battered by a harsh economic climate. "It is not clear yet to what extent this will be good for Iveda or the industry. Going public through a reverse merger of this nature puts Iveda on the map, but the hard part is now getting the markets interested in the stock," Barnes said in an email interview.
"Being public is only worth the cost and the hassle if it provides a consistent liquid market for investors, causes the stock to trade at a value that is rational and truly reflective of the company's performance, and ultimately provides a conduit for the company to raise capital through the issuance of additional shares," Barnes said. "Initially it should be good for the industry, if for no other reason than it will give more people another opportunity to look at another player, and, in this case, one that operates in a niche of the market that is particularly exciting."
Recently, GVI | Samsung CEO Steve Walin said his company's move from public to private holding was largely influenced by the desire to get out from under as much as $1 million annually in costs associated with being public.
Iveda, approved early in 2009 as a Qualified Anti-Terrorism Technology provider under a formal SAFETY Act Designation by the Department of Homeland Security, will continue to be the operating company while Iveda Corporation will serve as the holding company in a non-operational, parent-company capacity.
Ly said the merger was good news for Iveda's customers. "[This means] renewed confidence and credibility," Ly said via email. "As long as we continuously satisfy our customers, we will have a better means to fund ongoing R & D efforts and build infrastructure to improve the quality and reduce cost of our video surveillance cloud computing technology and services."
Security industry observer Les Gold, of law firm Mitchell Silberberg & Knupp, LLP, was sanguine about the move. "The performance of the stock price will ultimately determine whether it was or was not a good deal. From the standpoint of the industry, I believe it is good news," Gold said in an email interview. "I recently heard [Imperial Capital managing director] Jeff Kessler state that there are not enough public companies in the security industry so this transaction should enhance the image of the industry and the confidence the public has in the industry particularly since Iveda is a solid company with good technology."
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