What changed in this filing

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Item 1. Financial Statements

2022-05-16 compared with 2021-11-15 · 328 added, 603 removed, 718 unchanged (56% of the section changed)

FINANCIAL STATEMENTS.

SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS

30, 2021 ( Unaudited ) AND DECEMBER 31, 2020

September 30, 2021

31, 2021 AND DECMBER 31, 2021

March 31, 2022

December 31, 2021

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Preferred Stock, $ 0.00001 par value;

100,000,000 shares authorized

Series B Preferred Stock, $ 0.00001 par value;

500 shares authorized, 0 and 257.2 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

12,500,000 shares authorized Series B

Preferred Stock, $ 0.00001 par value;

500 shares authorized, no shares issued and outstanding as of March 31, 2022 and December 31,

2021, respectively

Common Stock, $ 0.00001 par value;

37,500,000 shares authorized;

74,070,292 and 52,671,395 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

11,561,647 and 9,668,369 , shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

Additional Paid-In Capital

Subscription Receivable

( 7,370,350 )

Accumulated Comprehensive Loss

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( 1,843,109 )

( 3,706,568 )

Total Liabilities and Stockholders’ Equity

accompanying Notes to Condensed Consolidated Financial Statements.

IVEDA SOLUTIONS, INC.

CONSOLIDATED STATEMENTS

OF OPERATIONS (UNAUDITED)

FOR NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

For the Three

September 30,

For the Three

September 30,

SOLUTIONS, INC.

STATEMENTS OF OPERATIONS

THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Equipment Sales

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LOSS FROM OPERATIONS

( 1,519,193 )

( 1,107,626 )

OTHER INCOME (EXPENSE)

4 unchanged sentences

LOSS BEFORE INCOME TAXES

( 1,775,728 )

( 1,185,493 )

BENEFIT (PROVISION) FOR INCOME TAXES

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$ ( 634,714 )

$ ( 1,775,728 )

$ ( 1,185,493 )

BASIC AND DILUTED LOSS PER SHARE

WEIGHTED AVERAGE SHARES

See accompanying Notes to Condensed Consolidated Financial Statements

IVEDA SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Paid-in-Capital

Comprehensive

Income (loss)

Stockholders’

Equity(Deficit)

* All share amounts

and per share amounts reflect a reverse stock split of the outstanding shares of our Common Stock at a ratio of 1-for-8 effected on March

accompanying Notes to Condensed Consolidated Financial Statements.

SOLUTIONS, INC.

STATEMENTS OF STOCKHOLDERS’ EQUITY

Paid-in-Capital

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Equity(Deficit)

AT December 31, 2019

BALANCE AT December 31, 2020

$ ( 38,322,456 )

$ ( 153,254 )

Stock Issued for Cash

Stock Issued for Cash, shares

Based Compensation

Stock for Accounts Payable

Stock for Accounts Payable , shares

Stock for Costs of Financing

Stock for Costs of Financing , shares

for Interest Expense

Debenture Value

Stock - Series B

Stock - Series B for Dividend

Stock - Series B Shares and Dividend Payable

to Common Stock

Stock - Series B Shares and Dividend Payable

to Common Stock , shares

- P/S Series B

$ ( 3,706,568 )

Common Stock Issued for Cash

Costs of Capital

( 2,091,101 )

Stock Based Compensation

Common Stock for Accounts Payable

Common Stock for Costs of Financing

Warrants for Services

Warrants for Interest Expense

Convertible Debenture Value

Preferred Stock - Series B for Dividend

Preferred Stock - Series B Shares and Dividend Payable to Common Stock

Dividends - P/S Series B

Conversion of Debt & Interest to Common Stock

of Debt & Interest to Common Stock , shares

of Debt to stock

of options and warrants

on Stockholder Prom Note

Exercise of options and warrants

( 2,998,644 )

Comprehensive

AT December 31, 2020

Comprehensive Loss

BALANCE AT December 31, 2021

$ ( 41,361,401 )

$ ( 143,493 )

Stock Issued for Cash

$ ( 777,279 )

Costs of Capital

( 1,105,142 )

Based Compensation

Stock for Accounts Payable

Stock for Costs of Financing

for Interest Expense

Debenture Value

Stock - Series B for Dividend

Stock - Series B Shares and Dividend Payable

to Common Stock

- P/S Series B

of Debt & Interest to Common Stock

of options and warrants

( 1,105,142 )

Stock Based Compensation

Common Stock issued for conversion error

Exercise of options and warrants

Common Stock Offering for Cash

Subscription Receivable

( 7,370,350 )

Comprehensive

AT September 30, 2021 (Unaudited)

Comprehensive Loss

BALANCE AT March 31, 2022

$ ( 42,028,199 )

$ ( 168,783 )

See accompanying Notes to Condensed Consolidated Financial Statements

IVEDA SOLUTIONS, INC.

CONDENSED CONSOLIDATED

STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE NINE MONTHS ENDING SEPTEMBER 30, 2021 AND 2020

$ ( 1,843,109 )

* All share amounts and

per share amounts reflect a reverse stock split of the outstanding shares of our Common Stock at a ratio of 1-for-8 effected on

March 31, 2022.

accompanying Notes to Condensed Consolidated Financial Statements

SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

THE THREE MONTHS ENDING MARCH 31, 2022 AND 2021

CASH FLOWS FROM OPERATING ACTIVITIES

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Depreciation and Amortization

Amortization of Deferred Financing Costs

Interest Value of Convertible Debt Issued

Stock Option Compensation

Bad Debt Expense

Convertible Debt Value

Common Stock Warrants Issued for Services

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Net Cash Used in Operating Activities

( 1,179,673 )

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of Property and Equipment

Proceeds from Sale of Equipment

Net Cash Provided by (Used in) Investing Activities

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Proceeds from (Payments on) Short-Term Notes Payable/Debt

Proceeds from (Payments on) Long-Term Notes Payable/Debt

Proceeds from Exercise of Stock Options

Proceeds from (Payments to) Due to Related Parties

Deferred Finance Costs, Net

Proceeds from (Payments to) Long-Term Debt

Payments for Deferred Finance Costs

Common Stock Issued, Net of (Cost of Capital)

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CASH AND CASH EQUIVALENTS - END OF PERIOD

See accompanying Notes

to Condensed Consolidation Financial Statements

accompanying Notes to Condensed Consolidated Financial Statements.

SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS ( Unaudited ) - CONTINUED

THE NINE MONTHS ENDING SEPTEMBER 30, 2021 AND 2020

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

THE THREE MONTHS ENDING MARCH 31, 2022 AND 2021

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

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SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

Debenture Principal converted to Common Stock

Debenture Accrued Interest converted to Common Stock

Rent Accounts Payable to related Party converted to Common Stock

Common Stock issued for Consulting Agreements related to Cost of Capital

Accrued Dividends converted to Common Stock

Dividends Paid with Series B Preferred Stock

Warrants Issued for Interest

Warrants Issued for Services

accompanying Notes to Condensed Consolidated Financial Statements.

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IvedaAI products are designed to maximize efficiency, save time, and cut cost.

Instead of watching hours of video recording after-the-fact, users can set up alerts.

offers many IoT sensors and devices for various applications such as energy management, smart home, smart building, smart community and

patient/elder care.

Our gateway and station serve as the main hub for sensors and devices in any given area.

They are equipped with high-level

communication protocols such as Zigbee, WiFi, Bluetooth, and USB.

They connect to the Internet via Ethernet or cellular data network.

We provide IoT platforms that enable centralized device management and push digital services on a massive scale.

Our smart devices include

water sensor, environment sensor, entry sensor, smart plug, siren, body temperature pad, care watch and tracking devices.

Users can set up alerts instead of watching hours of video recording after-the-fact.

offers many IoT sensors and devices for a variety of applications such as energy management, smart home, smart building, smart

community, and patient/elder care.

Together, our gateway and station serve as the main hub for sensors and devices in any

They are equipped with high-level communication protocols such as Zigbee, WiFi, Bluetooth, and USB.

They connect to the Internet

via Ethernet or cellular data network.

We provide IoT platforms that enable centralized device management and push digital services on

a massive scale.

Our smart devices include water sensor, environment sensor, entry sensor, smart plug, siren, body temperature pad, care

watch and tracking devices.

also offer smart power technology for office buildings, schools, shopping centers, hotels, hospitals, and smart city projects.

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user interface.

roadmap includes dashboard for all of Iveda’s platforms for central management of all devices.

Cerebro is system agnostic and will

support cross-platform interoperability.

The common unified user interface will allow remote control of platforms, sensors and subsystems

throughout an entire environment.

This integration and unification of all subsystems enable acquisition and analysis of all information

on one central command center, allowing comprehensive, effective, and overall management and protection of a city.

the last few years, smart city has been a hot topic among cities across the globe.

With little to no human interaction, technology increases

efficiency, expedites decision making, and reduces response time.

Dwindling public safety budgets and resources has necessitated the

transformation.

More and more municipalities are using next-generation technologies to improve the safety and security of its citizens.

Our response is our complete suite of IoT technologies, including AI intelligent video search technology, smart sensors, tracking devices,

video surveillance systems, and smart power.

roadmap includes dashboard for all of Iveda’s platforms for central device management.

Cerebro is system

agnostic and will support cross-platform interoperability.

The common unified user interface will allow remote control of platforms,

sensors and subsystems throughout an entire environment.

This integration and unification of all subsystems enable acquisition and analysis

of all information on one central command center, allowing comprehensive, effective, and overall management and protection of a city.

Utilus smart pole technology is a smart power management and wireless mesh communications network deployed on new or existing light pole

The Utilus network uses WiFi, 4G and 5G small cell capabilities, and other wireless protocols to provide distributed video

surveillance with AI video search technology and remote management of local devices such as trackers, water meters, electrical meters,

valves, circuit breakers and sensors.

the last few years, smart city has been a hot topic among municipalities across the globe.

With little to no human interaction,

technology increases efficiency, expedites decision making, and reduces response time.

Dwindling public safety budgets and resources

has necessitated the transformation.

More and more municipalities are using next-generation technologies to improve the safety and security

of its citizens.

Our response is our complete suite of IoT technologies, including AI intelligent video search technology, smart sensors,

tracking devices, video surveillance systems, and smart power.

Historically,

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other from monthly licensing fees.

our subsidiary in Taiwan, specializes in deploying new, and integrating existing, video surveillance systems for airports, commercial

buildings, government customers, data centers, shopping centers, hotels, banks, and Safe City.

MEGAsys combines security surveillance

products, software, and services to provide integrated security solutions to the end user.

Through MEGAsys, we have access not only to

Asian markets but also to Asian manufacturers and engineering expertise.

MEGAsys is our research and development arm, working with a

team of developers in Taiwan.

April 2009, after eighteen months of due diligence by the Department of Homeland Security (DHS), the DHS approved us as a Qualified Anti-Terrorism

Technology (QATT) provider under a formal SAFETY Act Designation giving the technology a measure of liability protection.

Due diligence

included interviewing key employees responsible for developing and deploying our technology, partners, and customers.

The purpose of

completing the SAFETY Act Designation application is for the seller of a technology, to explain to the DHS how the technology qualifies

for the system of risk management and litigation management under the SAFETY Act.

The application is designed to elicit the information

that will allow the DHS to understand exactly what the seller’s technology is, and how it relates to the criteria for Designation

set forth in the SAFETY Act.

technology could not receive Certification status without having first received Designation status and holding that status for 5 years.

To receive SAFETY Act Certification, the Department must conclude that the technology will perform as intended, conforms to the seller’s

specifications, and is safe for use as intended.

Similar to the Designation application process, due diligence included interviewing

key employees responsible for developing and deploying our technology, partners, and customers.

We applied for certification in 2014

and after additional months of due diligence by DHS in January 2016 our Designation was elevated to a Certification.

SAFETY Act Certification

provides sellers of a Qualified Anti-Terrorism Technology (QATT) with an additional measure of liability protection.

This additional

measure of liability protection is not specifically quantified by the Safety Act.

The sellers of QATTs that receive SAFETY Act Certification

are entitled to all of the liability protections that accompany SAFETY Act Designation as well as the rebuttable presumption that the

government contractor defense applies to claims arising out of, relating to, or resulting from an act of terrorism.

QATTs that received

Certification are placed on the Approved Technologies list for Homeland Security.

submitted our renewal application in August 2019 prior to the expiration of our Certification in October 2019.

During this time, we have

been in constant communication with the Science and Technology Directorate at the SAFETY Act office related to updating our information.

We are now awaiting final approval for recertification.

Our products are not considered to be certified during the renewal process, but

we don’t expect this to significantly impact our ability to sell our technology in the U.S.

or international customers.

SAFETY Act Certification covers the entire company.

MEGAsys is our wholly-owned subsidiary and we use the same technology and products

to provide solutions to our Customers.

However, the liability protection is limited to the U.S, and we would not expect that the certification

has had or will have any significant effect on the MEGAsys results of operations.

Taiwan-based subsidiary Iveda Taiwan, formerly known as

MEGAsys, our wholly-owned subsidiary, specializes in deploying new, and integrating existing, video surveillance systems for airports,

commercial buildings, government customers, data centers, shopping centers, hotels, banks, and safe city.

Iveda Taiwan combines

security surveillance products, software, and services to provide integrated security solutions to the end user.

Through Iveda Taiwan,

we have access not only to Asian markets but also to Asian manufacturers and engineering expertise.

Iveda Taiwan is our research

and development arm, working with a team of developers in Taiwan.

Consolidation

April 30, 2011, we completed our acquisition of Sole Vision Technologies (dba MEGAsys), a company based in Taiwan.

We consolidate our

financial statements with the financial statements of MEGAsys.

All intercompany balances and transactions have been eliminated in consolidation.

April 30, 2011, we completed our acquisition of Taiwan-based Sole Vision Technologies (dba Iveda Taiwan).

We consolidate

our financial statements with the financial statements of Iveda Taiwan.

All intercompany balances and transactions have been eliminated

in consolidation.

accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates

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We generated accumulated losses of approximately

$ 38 million from January 2005 through December 31, 2020 and have insufficient working capital and cash flows to support operations.

$ 42 million from January 2005 through March 31, 2021 and have insufficient working capital and cash flows to support operations.

factors raise substantial doubt about our ability to continue as a going concern.

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the impairment to be recognized is measured as the amount by which the carrying value of the assets exceeds their fair value.

no t make any impairment for the nine months ended September 30, 2021 or the years ended December 31, 2020 and 2019.

not make any impairment for the three months ended March 31, 2022 and year ended December 31, 2021.

of Accounting

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Company sells its products and services primarily to municipalities and commercial customers in the following manner:

majority of MEGAsys sales are project sales to Taiwan customers and are made direct to the end customer (typically a municipality

or a commercial customer) through its sales force, which is composed of its employees.

Revenue is recorded when the equipment is

shipped to the end customer and charged for service when installation or maintenance work is performed.

majority of Iveda Taiwan sales are project sales to Taiwan customers and are made direct to the end customer (typically a

municipality or a commercial customer) through its sales force, which is composed of its employees.

Revenue is recorded when the

equipment is shipped to the end customer and charged for service when installation or maintenance work is performed.

from fixed-price equipment installation contracts (project sales) are recognized on the percentage-of-completion method.

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US also sells software that include licensing fees that are paid either monthly or yearly.

The revenues are recorded monthly, if

the license is paid yearly the revenue will be recorded as deferred revenue and amortized on a straight-line basis over the respective

The revenues are recorded monthly, annual

license revenue will be recorded as deferred revenue and amortized on a straight-line basis over the respective time period.

Comprehensive

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United States may be in excess of the FDIC insurance limit.

Deposits in Taiwan financial institutions are insured by CDIC (Central

Deposits in Taiwan financial institutions are insured by CDIC (Central Deposit

Insurance Corporation) with maximum coverage of NTD 3 million.

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of our customers’ financial condition and generally do not require collateral.

Two customers represented approximately 40 % and

77 % of total accounts receivable of $ 76,063 and $ 226,614 as of September 30, 2021 and December 31, 2020, respectively.

These customers

are longtime customers, and we don’t expect any problem with collectability of these accounts receivable.

had revenue from one customer with greater than 10% of total revenues during the nine months ended September 30, 2021 that represented

approximately 25 %

of total revenues.

We had $ 219,222

revenues ( 25 % )

from Chunghwa Telecom.

had revenue from two customers with greater than 10% of total revenues during 2020 that represented approximately 39 %

of total revenues.

We had $ 414,415

revenues ( 28 % )

from Chunghwa Telecom and $ 159,048

revenues ( 11 % )

from Siemens .

other customers represented greater than 10 % of total revenues in nine months ended September 30, 2021 and 2020.

One customer (Chunghwa Telecom) represented approximately

95 % of total accounts receivable of $ 492,752 as of December 31, 2021.

This customer is a longtime customer, and we don’t expect

any problem with collectability of these accounts receivable.

had revenue from two customers with greater than 10 % of total revenues during the three months ended March 31, 2022 and the year ended

December 31, 2021 that represented approximately 39 % and 55 % of total revenues, respectively.

We had $ 58,086 revenues ( 25 %) from Chunghwa

Telecom and $ 29,013 revenues ( 13 %) from Taiwan Stock Exchange Corporation of total revenues of $ 230,857 for the three months ended March

had $ 786,686 revenues ( 41 %) from Chunghwa Telecom and $ 260,946 revenues ( 14 %) from Taiwan Stock Exchange Corporation of total revenues

of $ 1,917,848 for the year ended December 31, 2021.

other customers represented greater than 10 % of total revenues in the three months ended March 31, 2022 and year ended December 31, 2021.

and Cash Equivalents

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credit valuation and specific circumstances of the customer.

As of September 30, 2021 and December 31, 2020, respectively, an allowance

for uncollectible accounts of $ 0 and $ 0 was deemed necessary for our U.S.-based segment.

As of March 31, 2022 and December 31, 2021 no allowance for uncollectible

accounts was deemed necessary for our U.S.-based segment.

current deposits represent tender deposits placed with local governments and major customers in Taiwan during the bidding process for

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The allowance for slow-moving and obsolete

inventory is $ 0 and $ 0 , as of September 30, 2021 and December 31, 2020, respectively.

inventory is $ 0 as of March 31, 2022 and December 31, 2021.

and Equipment

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Expenditures for routine maintenance and repairs are charged to expense as incurred.

Depreciation expense for the nine

months ended September 30, 2021 and September 30, 2020 was $ 10,482 and $ 5,000 , respectively.

assets consist of trademarks and other intangible assets associated with the purchase price allocation of MEGAsys.

Such assets are being

amortized over their estimated useful lives of nine months to ten years .

Other intangible assets and trademarks are fully amortized at

September 30, 2021.

Current year amortization of trademarks was as follows:

SCHEDULE OF FUTURE AMORTIZATION OF TRADEMARKS

Depreciation expense for the three

months ended March 31, 2022 was $ 4,657 and for the year ended December 31, 2021 was $ 15,016 .

assets consist of trademarks and other intangible assets associated with the purchase price allocation of Iveda Taiwan.

are fully amortized at December 31, 2021.

Deposits—Long-Term

deposits consist of a deposit related to the leases of MEGAsys’ office space, and tender deposits placed with local governments

and major customers in Taiwan as part of the bidding process, which are anticipated to be held more than one year if the bid is accepted.

deposits consist of a deposit related to the leases of Iveda Taiwan’ office space, and tender deposits placed with local

governments and major customers in Taiwan as part of the bidding process, which are anticipated to be held more than one year if the

bid is accepted.

income taxes are recognized in the consolidated financial statements for the tax consequences in future years of differences between

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SCHEDULE OF ACCOUNTS AND OTHER PAYABLES

September 30, 2021

March 31, 2022

December 31, 2021

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We recognize stock-based compensation expense on a straight-line basis over the requisite service period of the award.

value of stock-based compensation awards granted prior to, but not yet vested as of December 31, 2020 and 2019, were estimated using

the “minimum value method” as prescribed by original provisions of ASC 718, “Accounting for Stock-Based Compensation.”

value of stock-based compensation awards granted prior to, but not yet vested as of March 31, 2021 and December 31, 2021, were estimated

using the “minimum value method” as prescribed by original provisions of ASC 718, “Accounting for Stock-Based Compensation.”

Therefore, no compensation expense is recognized for these awards in accordance with ASC 718.

We recognized $ 67,500 and $ 801,908 of stock-based

compensation expense for the years ended December 31, 2020 and 2019, respectively and $ 88,000 for the nine months ended September 30,

compensation expense for the three months ended March 31, 2022 and December 31, 2021, respectively.

Value of Financial Instruments

value estimates discussed herein are based upon certain market assumptions and pertinent information available to us as of September

value estimates discussed herein are based upon certain market assumptions and pertinent information available to us as of March 31,

2022 and December 31, 2021.

The respective carrying values of certain on-balance-sheet financial instruments approximate their fair

The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values.

These financial instruments include cash, accounts receivable, 0 payable, accrued expenses, and amounts due to related parties.

Fair values were assumed to approximate carrying values for these financial instruments because they are short-term in nature and their

carrying amounts approximate their fair values or because they are receivable or payable on demand.

values were assumed to approximate carrying values for these financial instruments because they are short-term in nature and their carrying

amounts approximate their fair values or because they are receivable or payable on demand.

conduct operations in various geographic regions.

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SCHEDULE OF NET REVENUE AND NET ASSETS (LIABILITIES) FOR OTHER SIGNIFICANT GEOGRAPHIC REGIONS

September 30, 2021

(Liabilities)

March 31, 2022 (Unaudited)

Net Assets (Liabilities)

United States

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SCHEDULE OF RELATED PARTY TRANSACTIONS

September 30, 2021

March 31, 2022 (Unaudited)

December 31, 2021

During 2020 one of the three MEGAsys directors loaned money to MEGAsys at no interest.

On October 18, 2018, we entered into a debenture agreement for $ 50,000 with Quadrant International LLC (four partners, three of which are related parties) at 0.0 % interest per annum with interest and principal payable on the maturity date of December 31, 2019 .

On September 10, 2014, we entered into a debenture agreement with Mr.

Alex Kuo, a member of the Board of Directors, for $ 30,000 , through his wife, Li-Min Hsu, at 9.5 % interest per annum with interest and principal payable on the extended maturity date of December 31, 2015 .

As consideration for the extension of the debenture, we granted Mrs.

Hsu options to purchase 3,000 shares of our common stock with an exercise price of $ 0.77 per share.

*No longer a Director

On September 8, 2014, we entered into a debenture agreement with Mr.

Kuo’s wife, Li-Min Hsu, for

interest per annum with interest and principal payable on the extended maturity date of December

As consideration for the extension of the debenture, we granted Mrs.

Hsu options to purchase 10,000

shares of our common stock with an exercise price of $ 0.77

*No longer a Director

On August 28, 2014, we entered into a debenture agreement with Mr.

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Less Current Portion

Debt Discount

Total Long-Term

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SCHEDULE OF SHORT-TERM DEBT

September 30, 2021

March 31, 2022 (Unaudited)

December 31, 2021

Unsecured loan from a shareholder in April 2018 for $ 100,000 at a 50 % interest rate and six month maturity, was due October 2018 .

principal and interest convertible at $ 0.35 per share into common stock at the option of the holder until repaid.

Note Payable to Siemens due December 31, 2021 at 0 % interest.

Loan from Hua Nan Bank in 2020 at 2.42 % interest rate per annum and due December 2021 , 2019 loan at 2.61 % interest paid, February - April 2020

Debenture agreements with various shareholders at 10 % interest rate beginning in February 2019 - December 2019, one year maturity, were due February 2020 – December 2020 , principal and interest convertible at $ 0.35 per share into common stock at the option of the holder until repaid.

Debenture agreements with various shareholders at 10 % - 20 % interest rate beginning in January 2020 - February 2021, one year maturity, due January 2021 – February 2022 , principal and interest convertible at $ 0.35 per share into common stock at the option of the holder until repaid.

Short-term three month loan at 0 % interest from a shareholder in June 2020 , was due September 2020.

Debenture agreements with a shareholder at 10 % interest rate beginning in February 2019 - December 2019, one year maturity, were due February 2020 – December 2020 , principal and interest convertible at $ 2.80 per share into common stock at the option of the holder until repaid.

All principal and accrued interest converted during 2021 except one remaining $ 50,000 debenture and accrued interest of $ 12,079 .

Loan Agreement with Shanghai Bank at 2.68 % interest rate per annum due January 2023 .

Loan agreement with Hua Nam bank at 2,42 % interest rate per annum due September 2022 .

Balance at end of period

Long-term debt balances were as follows:

debt balances were as follows:

SCHEDULE OF LONG-TERM DEBT

Loans from Shanghai Bank with interest rates 1.00 % per annum due February 2024

March 31, 2022

Loans from Shanghai Bank with interest rates 1.00 % - 1.5 % per annum due February 2024 – November 2026

Current Portion of Long-term debt

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delaying, or preventing a change in control of our company.

A Preferred Stock

are authorized to issue up to 10,000,000 shares of Series A Preferred Stock.

Each share of Series A Preferred Stock accrues cumulative

dividends at a rate of 9.5 % per annum of the original issue price of $ 1.00 per share.

Accrued but unpaid dividends are payable by us,

either in cash or in shares of our common stock, upon the occurrence of a Liquidation Event (as defined in our Articles of Incorporation)

or upon conversion of the shares into shares of our common stock.

In addition, in the event of any liquidation, dissolution, or winding

up of our company, the holders of Series A Preferred Stock are entitled to receive distributions of any of the assets of our company

prior and in preference to the holders of our common stock, but after distribution of any assets of our company to the holders of our

Series B Preferred Stock in an amount equal to the Series B Preferred Stock’s original issue price plus any accrued but unpaid

share of Series A Preferred Stock is convertible at the option of the holder, at any time, into shares of our common stock equal to the

original issue price divided by an initial conversion price of $ 1.00 per share of Series A Preferred Stock, subject to certain adjustments.

On June 30, 2017, all shares of Series A Preferred Stock not already converted automatically converted into shares of our common stock

at the then-applicable conversion price.

holders of Series A Preferred Stock have the same voting rights as, and vote as a single class with, the holders of our common stock.

Each holder of our Series A Preferred Stock is entitled to the number of votes equal to the number of shares of our common stock into

which such shares of Series A Preferred Stock may be converted.

In addition, in the event we sell, grant, or issue any Common Stock Equivalent

(as defined in our Articles of Incorporation) at a price per share that is lower than the then-applicable conversion price for the Series

A Preferred Stock, the conversion price for the Series A Preferred Stock will be adjusted to account for the dilutive issuance.

effectuate a stock split or subdivision of our common stock or our Board of Directors declares a dividend payable in our common stock,

the conversion price for the Series A Preferred Stock will be appropriately decreased to protect the Series A Preferred Stock holders

from any dilutive effect of the stock split, subdivision, or stock dividend.

Similarly, if the number of shares of our common stock outstanding

decreases due to a reverse stock split or other combination of the outstanding shares of our common stock, then the applicable conversion

price of the Series A Preferred Stock will increase in order to proportionately decrease the number of shares issuable upon conversion .

Holders of our Series A Preferred Stock have no sinking fund or redemption rights.

B Preferred Stock

are authorized to issue up to 500 shares of Series B Preferred Stock.

Each share of Series B Preferred Stock accrues dividends at a rate

of 9.5 % per annum of the original issue price of $ 10,000 per share.

Dividends on the Series B Preferred Stock accrue daily and compound

All accrued but unpaid dividends on the Series B Preferred Stock must be paid, declared, or set aside prior to the declaration

of any dividend on any class of stock that is junior in preference to the Series B Preferred Stock.

Dividends on the Series B Preferred

Stock are paid quarterly, beginning on July 1, 2015 in either cash or shares of our common stock.

In addition, all accrued but unpaid

dividends are payable by us, either in cash or in shares of our common stock, upon the occurrence of a Liquidation Event (as defined

in our Articles of Incorporation) or upon the conversion of the shares into shares of our common stock.

the event of any liquidation, dissolution, or winding up of our company, the holders of Series B Preferred Stock are entitled to receive

distributions of any of the assets of our company equal to 100% of the original issue price plus all accrued but unpaid dividends prior

and in preference to the holders of Series A Preferred Stock and holders of our common stock.

We also have the option to redeem all,

but not less than all, of the Series B Preferred Stock, provided that certain conditions have been met.

Should we choose to redeem the

shares of our Series B Preferred Stock outstanding, we are required to pay the original purchase price plus all accrued but unpaid dividends.

Each share of Series B Preferred Stock is convertible at the option of the holder, at any time, into shares of our common stock equal

to the original issue price divided by an initial conversion price of $ 0.75 per share of Series B Preferred Stock, subject to certain

holders of Series B Preferred Stock have no voting rights, except as are expressly provided in our Articles of Incorporation or required

Without the approval of at least a majority of the outstanding Series B Preferred Stock, we may not authorize or issue (i) any

additional or other shares of capital stock that are of senior rank to the shares of Series B Preferred Stock in respect of the preferences

as to dividends, distributions, or payments upon the liquidation, dissolution, and winding up of our company, (ii) any additional or

other shares of capital stock that are of equal rank to the shares of Series B Preferred Stock in respect of the preferences as to dividends,

distributions, or payments upon the liquidation, dissolution, and winding up of our company, or (iii) any capital stock junior in preference

to the Series B Preferred Stock having a maturity date that is prior to the maturity date of the Series B Preferred Stock.

if we consummate a Fundamental Transaction (as defined in our Articles of Incorporation) while shares of our Series B Preferred Stock

are outstanding, then the holders of those outstanding shares have the right to receive, upon conversion of the Series B Preferred Stock,

the same amount and kind of securities, cash, or property as they would have received if they would have been holders of the number of

shares of common stock issuable upon conversion in full of all shares of our Series B Preferred Stock immediately prior to the Fundamental

addition, in the event we sell, grant, or issue any Common Stock Equivalent (as defined in our Articles of Incorporation) at a price

per share that is lower than the then-applicable conversion price for the Series B Preferred Stock (the “Effective Price”),

the conversion price for the Series B Preferred Stock will be adjusted to the Effective Price.

we effectuate a stock split or subdivision of our common stock or our Board of Directors declares a dividend payable in our common stock,

the conversion price for the Series B Preferred Stock will be appropriately decreased to protect the Series B Preferred Stockholders

from any dilutive effect of the stock split, subdivision, or stock dividend.

Similarly, if the number of shares of our common stock outstanding

decreases due to a reverse stock split or other combination of the outstanding shares of our common stock, then the applicable conversion

price of the Series B Preferred Stock will increase in order to proportionately decrease the number of shares issuable upon conversion.

Holders of our Series B Preferred Stock have no sinking fund rights.

As of September 30, 2021, we have no outstanding shares of Series

B Preferred Stock.

are authorized to issue up to 37,500,000 shares of common stock, par value $ 0.00001 per share.

All outstanding shares of our common

stock are of the same class and have equal rights and attributes.

The holders of our common stock are entitled to one vote per share

on all matters submitted to a vote of the stockholders of our company.

All outstanding shares of our common stock

are of the same class and have equal rights and attributes.

The holders of our common stock are entitled to one vote per share on all

matters submitted to a vote of the stockholders of our company.

Our common stock does not have cumulative voting rights.

who hold a majority of the outstanding shares of our common stock entitled to vote on the election of directors can elect all of the

directors who are eligible for election.

Holders of our common stock are entitled to share equally in dividends, if any, as may be declared

from time to time by our Board of Directors.

hold a majority of the outstanding shares of our common stock entitled to vote on the election of directors can elect all of the directors

who are eligible for election.

Holders of our common stock are entitled to share equally in dividends, if any, as may be declared from

time to time by our Board of Directors.

In the event of liquidation, dissolution, or winding up of our company, subject to the preferential

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Board of Directors in its sole discretion) and have no preemptive rights to subscribe for any of our securities.

Company raised $ 2,113,000 during the nine months ended September 30, 2021 issuing 5,355,238 shares of common stock and warrants to purchase

common shares with a Fair Market Value of approximately $ 900,000 .

6 STOCK OPTION PLAN AND WARRANTS

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This plan has not been approved by the shareholders.

and as of December 31, 2020 and 2,500,000 options were outstanding under the 2020 Option Plan.

of December 31, 2021, there were 893,438 options outstanding under all the option plans.

options may be granted as either incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986,

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is recognized as expense on the straight-line basis over the options’ vesting periods.

At December 31, 2020, we had no unrecognized

stock- based compensation.

At December 31, 2021, we had approximately

$ 4,500 unrecognized stock-based compensation.

option transactions during 2021 and 2020 were as follows:

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Outstanding at Beginning of Year

( 1,270,000 )

Forfeited or Canceled

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Options Exercisable

Outstanding at

Exercisable at

$ 0.32 - $ 16.24

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Forfeited or Canceled

( 2,203,331 )

Outstanding at End of Year

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$ 1.12 - $ 3.92

$ 0.00 - $ 0.22

with respect to warrants outstanding and exercisable at December 31, 2021 is as follows:

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Warrants Exercisable

Number Outstanding at

Average Remaining Contractual

Number Exercisable at

$ 2.80 - $ 13.20

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begin to expire in 2025 .

We also had Arizona and California net operating loss carryforwards for income tax purposes of approximately

$ 19.4 million and $ 2.0 million, respectively, which began to expire in 2014 .

These carryforwards have been utilized in the determination

of the deferred income taxes for financial statement purposes.

The following table accounts for federal net operating loss carryforwards

We also have Arizona net operating loss carryforwards for income tax purposes of approximately $ 2.0 million

which expire after five years.

These carryforwards have been utilized in the determination of the deferred income taxes for financial

statement purposes.

The following table accounts for federal net operating loss carryforwards only.

SUMMARY OF OPERATING LOSS CARRYFORWARDS

Net Operating

(Republic of China) Corporate Tax

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earnings per share (“EPS”) is computed by dividing reported earnings available to stockholders by the weighted average shares

We had net losses for the years ended December 31, 2020 and 2019 and the effect of including dilutive securities in the

earnings per common share would have been anti-dilutive for the purpose of calculating EPS.

Accordingly, all options, warrants, and shares

potentially convertible into common shares were excluded from the calculation of diluted earnings per share for the periods ended September

30, 2021 and 2020.

We had net losses for the three months ended March 31, 2022 and 2021 and the effect of including dilutive securities in

the earnings per common share would have been anti-dilutive for the purpose of calculating EPS.

Accordingly, all options, warrants, and

shares potentially convertible into common shares were excluded from the calculation of diluted earnings per share for the Three months

ended March 31, 2022 and 2021.

SCHEDULE OF EARNINGS PER SHARE BASIC AND DILUTED

March 31, 2022

March 31, 2021 (Unaudited)

$ ( 666,798 )

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9 CONTINGENT LIABILITIES—TAIWAN

to certain contracts with Siemens, Chung-Hsin Electric and Machinery Manufacturing Corp, MEGAsys is required to provide after-project

If MEGAsys fails to provide these after-project services in the future, other parties of the related contract would have recourse.

The financial exposure to MEGAsys in the event of failure to provide after- project services in the future as of September 30, 2021 is

to certain contracts with Siemens, Chung-Hsin Electric and Machinery Manufacturing Corp, Iveda Taiwan is required to provide after-project

If Iveda Taiwan fails to provide these after-project services in the future, other parties of the related contract would

have recourse.

The financial exposure to Iveda Taiwan in the event of failure to provide after- project services in the future

as of December 31, 2021 is $ 61,435 .

10 SUBSEQUENT EVENTS

October 1, 2021 to November 8, 2021, short-term debenture holders converted $ 110,000

principal and $ 22,809

accrued interest into 384,454

shares of common stock, we sold 756,000

shares of unregistered restricted common

stock at $ 0.75

for $ 567,000

of proceeds and a warrant to purchase

shares of common stock at $ 0.35

was exercised for $ 94,500 .

The Company evaluates

subsequent events and transactions that occur after the balance sheet date up to the date that the financial statements are available

to be issued.

Any material events that occur between the balance sheet date and the date that the financial statements were available

for issuance are disclosed as subsequent events, while the financial statements are adjusted to reflect any conditions that existed at

the balance sheet date.

Based upon this review, except as disclosed within the footnotes or as discussed below, the Company did not identify

any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements

April 5, 2022 we closed the Stock and Warrant Offering that was committed to by Underwriting Agreement effective March 31, 2022 for $ 8,011,250 .

Financial Information.

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in any forward-looking statements.

Accounting Policies and Estimates

Discussion and Analysis of Financial Conditions and Results of Operations is based upon our financial statements, which have been prepared

in accordance with GAAP.

The preparation of these financial statements requires us to make estimates and judgments that affect the reported

amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.

We base our estimates

on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.

Actual results may

differ from these estimates under different assumptions or conditions.

A description of our critical accounting policies and related

judgments and estimates that affect the preparation of our financial statements is set forth in our audited consolidated financial statements

for the year ended December 31, 2020.

Such policies are unchanged.

has been offering real-time IP video surveillance technologies to our customers since 2005.

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IvedaAI products are designed to maximize efficiency, save time, and cut cost.

Instead of watching hours of video recording after-the-fact, users can set up alerts.

offers many IoT sensors and devices for various applications such as energy management, smart home, smart building, smart community and

patient/elder care.

Our gateway and station serve as the main hub for sensors and devices in any given area.

They are equipped with high-level

communication protocols such as Zigbee, WiFi, Bluetooth, and USB.

They connect to the Internet via Ethernet or cellular data network.

Users can set up alerts instead of watching hours of video recording after the fact.

offers many IoT sensors and devices for a variety of applications such as energy management, smart home, smart building, smart community,

and patient/elder care.

Together, our gateway and station serve as the main hub for sensors and devices in any given area.

They are equipped

with high-level communication protocols such as Zigbee, WiFi, Bluetooth, and USB.

They connect to the Internet via Ethernet or cellular

data network.

We provide IoT platforms that enable centralized device management and push digital services on a massive scale.

Our smart devices include

water sensor, environment sensor, entry sensor, smart plug, siren, body temperature pad, care watch and tracking devices.

devices include water sensor, environment sensor, entry sensor, smart plug, siren, body temperature pad, care watch and tracking devices.

also offer smart power technology for office buildings, schools, shopping centers, hotels, hospitals, and smart city projects.

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user interface.

roadmap includes dashboard for all of Iveda’s platforms for central management of all devices.

Cerebro is system agnostic and will

support cross-platform interoperability.

The common unified user interface will allow remote control of platforms, sensors and subsystems

throughout an entire environment.

This integration and unification of all subsystems enable acquisition and analysis of all information

on one central command center, allowing comprehensive, effective, and overall management and protection of a city.

the last few years, the smart city concept has been a hot topic among cities across the globe.

roadmap includes a dashboard for all Iveda’s platforms for central device management.

Cerebro is system-agnostic and will support

cross-platform interoperability.

The common unified user interface will allow remote control of platforms, sensors, and subsystems throughout

an entire environment.

This integration and unification of all subsystems enable acquisition and analysis of all information on one central

command center, allowing comprehensive, effective, and overall management and protection of a city.

Utilus smart pole technology is a smart power management and wireless mesh communications network deployed on new or existing light pole

The Utilus network uses WiFi, 4G and 5G small cell capabilities, and other wireless protocols to provide distributed video

surveillance with AI video search technology and remote management of local devices such as trackers, water meters, electrical meters,

valves, circuit breakers and sensors.

the last few years, smart city has been a hot topic among municipalities across the globe.

With little to no human interaction, technology

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dual revenue streams – one from hardware sales and the other from monthly licensing fees.

April 2009, after eighteen months of due diligence by the Department of Homeland Security (DHS), the DHS approved us as a Qualified Anti-Terrorism

Technology (QATT) provider under a formal SAFETY Act Designation giving the technology a measure of liability protection.

Due diligence

included interviewing key employees responsible for developing and deploying our technology, partners, and customers.

The purpose of

completing the SAFETY Act Designation application is for the seller of a technology, to explain to the DHS how the technology qualifies

for the system of risk management and litigation management under the SAFETY Act.

The application is designed to elicit the information

that will allow the DHS to understand exactly what the seller’s technology is, and how it relates to the criteria for Designation

set forth in the SAFETY Act.

technology could not receive Certification status without having first received Designation status and holding that status for 5 years.

To receive SAFETY Act Certification, the Department must conclude that the technology will perform as intended, conforms to the seller’s

specifications, and is safe for use as intended.

Similar to the Designation application process, due diligence included interviewing

key employees responsible for developing and deploying our technology, partners, and customers.

We applied for certification in 2014

and after additional months of due diligence by DHS, in January 2016, our Designation was elevated to a Certification.

SAFETY Act Certification

provides sellers of a Qualified Anti-Terrorism Technology (QATT) with an additional measure of liability protection.

This additional

measure of liability protection is not specifically quantified by the Safety Act.

The sellers of QATTs that receive SAFETY Act Certification

are entitled to all of the liability protections that accompany SAFETY Act Designation as well as the rebuttable presumption that the

government contractor defense applies to claims arising out of, relating to, or resulting from an act of terrorism.

QATTs that received

Certification are placed on the Approved Technologies list for Homeland Security.

submitted our renewal application in August 2019 prior to the expiration of our Certification in October 2019.

During this time, we have

been in constant communication with the Science and Technology Directorate at the SAFETY Act office related to updating our information.

We are now awaiting final approval for recertification.

Our products are not considered to be certified during the renewal process, but

we do not expect this to significantly impact our ability to sell our technology in the U.S.

or international customers.

communicate the results of this process to investors through a press release distributed via a news wire service and will be posted on

SAFETY Act Certification covers the entire company as a Qualified Anti-Terrorism Technology.

The SAFETY Act creates certain liability

limitations for “claims arising out of, relating to, or resulting from an Act of Terrorism” where Qualified Anti-Terrorism

Technologies have been deployed.

The term “act of terrorism” means any act that the Secretary determines meets the requirements

under subparagraph (b) of the Act.

An act meets the requirements of this subparagraph if the act- (i) is unlawful;

(ii) causes harm to

a person, property, or entity, in the United States, and (iii) uses or attempts to use instrumentalities, weapons or other methods designed

or intended to cause mass destruction, injury or other loss to citizens or institutions of the United States.

MEGAsys is our wholly owned

subsidiary, and we use the same technology and products to provide solutions to our customers.

The Certification, if renewed is granted

government and the liability protection only applies to customers that are U.S.-based MEGAsys does not receive liability

protection from the Certification.

The Company believes the lack of liability protection from the Certification will have no significant

effect on the MEGAsys results of operations.

The Company believes the Certification has an intrinsic value for the company as a whole

as a marketing tool but does not believe it will have a material effect on the results of operations if it is not renewed.

our subsidiary in Taiwan, specializes in deploying new, and integrating existing, video surveillance systems for airports, commercial

buildings, government customers, data centers, shopping centers, hotels, banks, and Safe City.

MEGAsys combines security surveillance

products, software, and services to provide integrated security solutions to the end user.

Through MEGAsys, we have access not only to

Asian markets but also to Asian manufacturers and engineering expertise.

MEGAsys is our research and development arm, working with a

team of developers in Taiwan.

April, 2011, we completed our acquisition of MEGAsys ® , a company founded in 1998 by a group of sales and research and

development professionals from Taiwan Panasonic Company.

MEGAsys, our subsidiary in Taiwan, specializes in deploying new, and integrating

existing, video surveillance systems for airports, commercial buildings, government customers, data centers, shopping centers, hotels,

banks, and Safe City initiatives in Taiwan and other neighboring countries.

MEGAsys combines security surveillance products, software,

and services to provide integrated security solutions to the end user.

Through MEGAsys, we have access not only to Asian markets but

also to Asian manufacturers and engineering expertise.

MEGAsys is our research and development arm, working with a team of developers

and managing our relationship with the Industrial Technology Research Institute (“ITRI”) in Taiwan.

MEGAsys also houses the

application engineering team that supports Sentir implementation for our service provider customers in Asia.

The Company depends on MEGAsys

as the majority of the company’s revenues have come from MEGAsys since we acquired them in April 2011.

For the nine months

ended September 30, 2021 MEGAsys operations accounted for 95% of the total revenue.

For the years ended December 31, 2020

and 2019, MEGAsys’s operations accounted for 71% and 95% of our total revenue, respectively.

acquisition of MEGAsys provided the following benefits to our business:

Taiwan, our subsidiary in Taiwan, specializes in

deploying new, and integrating existing, video surveillance systems for airports, commercial buildings, government customers, data centers,

shopping centers, hotels, banks, and Safe City.

Iveda Taiwan combines security surveillance products, software, and services to

provide integrated security solutions to the end user.

Through Iveda Taiwan, we have access not only to Asian markets but also

to Asian manufacturers and engineering expertise.

Iveda Taiwan is our research and development arm, working with a team of developers

April, 2011, we completed our acquisition of Iveda Taiwan, a company founded in 1998 by a group of sales and research and development

professionals from Taiwan Panasonic Company.

Iveda Taiwan, specializes in deploying new, and integrating existing, video surveillance

systems for airports, commercial buildings, government customers, data centers, shopping centers, hotels, banks, and Safe City initiatives

in Taiwan and other neighboring countries.

Iveda Taiwan combines security surveillance products, software, and services to provide

integrated security solutions to the end user.

Through Iveda Taiwan, we have access not only to Asian markets but also to Asian

manufacturers and engineering expertise.

Iveda Taiwan is our research and development arm, working with a team of developers.

Iveda Taiwan also houses the application engineering team that supports Sentir implementation for our service provider customers

The Company depends on Iveda Taiwan as the majority of the company’s revenues have come from Iveda Taiwan

since the acquisition in April 2011.

For the years ended December 31, 2021 and 2020, Iveda Taiwan’s operations accounted

for 93% and 71% of our total revenue, respectively.

acquisition of Iveda Taiwan provided the following benefits to our business:

established presence and credibility in Asia and access to the Asian market.

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in Asia for cost-effective research and development of new product offerings and securing the best pricing for end user devices.

of products directly using MEGAsys’s product sourcing expertise to enhance our custom integration capabilities.

of products directly using Iveda Taiwan’s product sourcing expertise to enhance our custom integration capabilities.

to the global distribution potential for our products and services.

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we have developed cloud-video services.

Pursuant to the cooperation agreement, we received the right to license some of ITRI’s

patents that were used in the development.

We also have exclusive rights to license the products and services we develop in cooperation

Pursuant to the cooperation agreement, we licensed, through our subsidiary, Sole-Vision Technologies,

Inc., the right to use U.S.

8,719,442 (as well as its Taiwanese and Chinese counterparts) with respect to the development

of cloud-video technologies.

June and August 2014, in collaboration with our local partner in the Philippines, we shipped our ZEE cloud plug-and-play cameras for

delivery to the Philippine Long Distance Telephone Company (“PLDT”) for distribution to its customers with a cloud video

surveillance service offering, utilizing our Sentir platform.

Accounting Policies and Estimates

Discussion and Analysis of Financial Conditions and Results of Operations is based upon our financial statements, which have been prepared

in accordance with GAAP.

The preparation of these financial statements requires us to make estimates and judgments that affect the reported

amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.

We base our estimates

on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.

Actual results may

differ from these estimates under different assumptions or conditions.

A description of our critical accounting policies and related

judgments and estimates that affect the preparation of our financial statements is set forth in our audited consolidated financial statements

for the year ended December 31, 2020.

Such policies are unchanged.

Accounting Standards

were no new standards recently issued which would have an impact on our operations or disclosures.

of Operations

We recorded net consolidated revenue of $411,452 for the three months ended September 30, 2021, compared to $278,238

for the three months ended September 30, 2020, an increase of $133,214, or 48%.

In the three months ended September 30, 2021, our recurring

service revenue was $106,434, or 26% of net consolidated revenue, and our equipment sales and installation revenue was $300,756, or 73%

of net consolidated revenue, compared to recurring service revenue of $143,945, or 52% of net consolidated revenue, and equipment sales

and installation revenue of $132,315, or 48% of net consolidated revenue, for the same period in 2020.

Our U.S.-based segment saw an

increase of $11,748, or 42% in net consolidated revenue during the three months ended September 30, 2021, while our Taiwan-based segment

revenue increased by $121,466, or 49% during the same period.

The minimal increase in U.S.-based segment revenue was due to limited sales

of equipment to our customers during our transition to IvedaAI products.

The increase in Taiwan-based segment revenue was primarily due

to additional long-term contracts awarded and started during the three months ended September 30, 2021.

See COVID-19 effects discussion

below in Liquidity and Capital Resources.

recorded net consolidated revenue of $1,304,725 for the nine months ended September 30, 2021, compared to $1,164,640 for the nine months

ended September 30, 2020, an increase of 140,084 or 12%.

For the nine months ended September 30, 2021 MEGAsys operations accounted for

95% of the total revenue.

In the nine months ended September 30, 2021, our recurring service revenue was $219,414 or 17% of revenue,

and our equipment sales and installation revenue was $1,079,861 or 83% of revenue, compared to recurring service revenue of $244,296

or 21% of revenue, and equipment sales and installation revenue of $912,822 or 78% of revenue for the same period in 2020.

in consolidated net revenue was primarily related to long-term contracts that were awarded starting in the second quarter of 2021

in Taiwan but the U.S.-based segment revenue decrease of ($376,306) was due to limited sales of equipment to our customers during our

transition to IvedaAI products.

See also COVID-19 effects discussion below in Liquidity and Capital Resources.

Total cost of revenue was $136,887 (33% of revenue, representing a gross margin of 67%) for the three months ended

September 30, 2021, compared to $447,248 (161% of revenue;

representing a gross margin of (61%) for same period in 2020, a decrease of

$310,361, or 69%.

The U.S.-based segment decrease in cost of revenue corresponds with decreased equipment sales.

The Taiwan-based segment

significant decrease in cost of revenue were primarily due to cost reductions related to COVID-19 delays from the same period in 2020.

cost of revenue was $781,895 (60% of revenues;

gross margin of 40%) for the nine months ended September 30, 2021, compared to $1,007,321

(86% of revenues;

representing a gross margin of 14%) for the nine months ended September 30, 2020, a decrease of $225,426 or 22%.

decrease of cost of revenue was primarily related to the reduction of low margin equipment sales in the U.S.-based segment and resulted

in an increased of gross margin.

The Taiwan based segment has seen positive momentum coming out of COVID-19 delays in large project revenues

in 2020 during the nine months ended June 30, 2021.

Operating expenses were $698,717 for the three months ended September 30, 2021, compared to $411,286 for the same period

in 2020, an increase of $287,431, or 70%.

The increase in operating expenses was primarily related to a ramp up in personnel in the US

based administrative, sales and technical support personnel as well as research and development expenses for IvedaAI.

Additional professional

expenses have been incurred during this period with an effort to get financial information filed with the OTC Markets and filing of the

Form 10-12g registration statement.

expenses were $2,042,022 for the nine months ended September 30, 2021, compared to $1,264,945 for the nine months ended September 30,

2020, an increase of $777,077 or 66%.

The increase in operating expenses was primarily related to a ramp up in personnel in the US based

administrative, sales and technical support personnel as well as research and development expenses for IvedaAI.

Additional professional

expenses have been incurred during this period with an effort to get financial information filed with the OTC Markets and filing of the

Form 10-12g registration statement.

from Operations.

As a result of Taiwan based segment increase in revenues and gross margins, loss from operations decreased to

($424,151) for the three months ended September 30, 2021, compared to ($580,296) for the same period in 2020, a decrease in loss of $156,145,

as a result of the increase in operating expenses the loss from operations increased to ($1,519,193) for the nine months ended September

30, 2021, compared to ($1,107,626) for the nine months ended September 2020, an increase in loss of ($411,567) or (37%).

Other expense-net was ($29,280) for the three months ended September 30, 2021, compared to ($19,831) for the same

period in 2020, an increase of ($9,449), or (48%).

The change is primarily due to the increase in interest expense related to US based

debentures issued starting in 2019 to February 2021.

expense-net was ($256,535) for the nine months ended September 30, 2021, compared to ($77,867) for the nine months ended September 30,

2020, an increase of ($178,668) or (229%) primarily related to the increase in interest expense from the US based debentures issued starting

in 2019 to February 2021.

A significant non-cash interest expense has been recorded for the value of convertible features of debentures

issued as well as the warrants issued as incentives for the convertible debentures.

Net loss was ($453,411) for the three months ended September 30, 2021, compared to ($600,127) for the same period in 2020.

The decrease of $146,695, or 24%, was primarily due to the Taiwan based segment increase in revenues and gross margins offsetting the

increase in operating expenses which was primarily related to a ramp up in personnel in the US based administrative, sales and technical

support personnel as well as research and development expenses for IvedaAI.

Additional professional expenses have been incurred during

this period with an effort to get financial information filed with the OTC Markets and filing of the Form 10-12g registration statement.

Net loss was ($1,775,328) for the nine months ended September 30, 2021, compared to ($1,185,493) for the nine months ended September

The increase of ($590,235) or (50%) in net loss was primarily the effect of the increase in operating expenses which was related

of Operations for the Three Months Ended March 31, 2022 Compared with the Three Months Ended March 31, 2021

recorded net consolidated revenue of $0.23 million for the three months ended March 31, 2022, compared with $0.33 million for the three

months ended March 31, 2021, a decrease of ($0.1) million, or (31%).

For the three months ended March 31, 2022, our recurring service

revenue was $41,336, or 18% of net revenue, and our equipment sales and installation revenue was $189,521, or 82% of net revenue.

fiscal 2021, our recurring service revenue was $28,298, or 9% of consolidated net revenue, and our equipment sales and installation revenue

was $304,105, or 91% of net revenue.

The decrease in total revenue in 2021 compared with the same period in fiscal 2020 is attributable

primarily to decreased equipment sales from Iveda Taiwan as a result of delivery timing related to long-term contracts awarded

and started during 2021.

cost of revenue was $0.09 million (39% of revenue;

gross margin of 61%) for the three months ended March 31, 2022, compared with $0.02

million (65% of revenue;

35% gross margin) for the three months ended March 31, 2021, a decrease of ($0.10 million), or (58%).

in cost of revenue was primarily driven by decreased Iveda Taiwan revenue.

The increase in overall gross margin was also primarily

attributed to increased margin Iveda Taiwan revenue as a result of additional long-term contracts awarded and started during 2021.

expenses were $0.8 million for the three months ended March 31, 2022, compared with $0.6 million for the three months ended March 31,

2021, an increase of $0.2 million, or 40%.

This net increase in operating expenses in 2022 compared with 2021 is due primarily related

to a ramp up in personnel in the US based administrative, sales and technical support personnel as well as research and development expenses

Additional professional expenses have been incurred during this period with an effort to get financial information filed

with the OTC Markets and filing of the Form 10-12g registration statement.

from Operations

from operations increased to $0.65 million for the three months ended March 31, 2022, compared with $0.45 million for the three months

ended March 31, 2021, an increase of $0.2 million, or 44%.

A majority of the increase in loss from operations was primarily due to increased

operating expenses.

expense-net was $12,045 for the three months ended March 31, 2022, compared with $182,094 for the three months ended March 31, 2021,

a decrease of $170,048, or 93%.

The majority of the other expense for 2021 was interest expense accrued for convertible debentures, valuation

of the convertible debenture features and the value of warrants given as incentive for the convertible debentures during 2021.

loss was $0.67 million for the three months ended March 31, 2022, compared with $0.63 million for the three months ended March 31, 2021.

The increase of $0.32 million, or 5%, in net loss was caused primarily by a increase in operating expenses related to a ramp up in personnel

in the US-based administrative, sales and technical support personnel as well as research and development expenses for IvedaAI.

and Capital Resources

of September 30, 2021, we had cash and cash equivalents of $939,399 in our U.S.-based segment and $292,035 in our Taiwan-based segment,

compared to $32,574 in our U.S.-based segment and $216,947 in our Taiwan-based segment as of December 31, 2020.

This increase in our

cash and cash equivalents is primarily a result of the $2.1 million sale of Common Stock with Warrants during the nine months ended September

There are no legal or economic factors that materially impact our ability to transfer funds between our U.S.-based and Taiwan-based

cash used in operating activities during the nine months ended September 30, 2021 was $1.2 million compared to $0.1 million net cash

used during the nine months ended September 30, 2020.

Net cash used in operating activities for the nine months ended September 30, 2021

consisted primarily of the $1.8 million net loss, $0.3 million in inventory, $0.3 of prepaids and advances to suppliers offset by approximately

$0.6 million in additional accrued expenses.

Cash used in operating activities for the nine months ended September 30, 2020 consisted

primarily of the net loss and offset by $0.6 million in additional accrued expenses as well as $0.6 million collection of accounts receivable.

cash used in investing activities for the nine months ended September 30, 2021 was $17,352.

of March 31, 2022, we had cash and cash equivalents of $0.75 million compared to $0.82 million as of March 31, 2021.

This decrease in

our cash and cash equivalents is primarily a result of the operating losses during the three months ended March 31, 2022.

legal or economic factors that materially impact our ability to transfer funds between our U.S.-based and Taiwan-based segments.

cash used in operating activities during the three months ended March 31, 2022 was $0.77 million compared to $0.16 million net cash used

during the three months ended March 31, 2021.

Net cash used in operating activities for the three months ended March 31, 2022 consisted

primarily of the $0.67 million net loss including $0.07 million of non-cash charges (primarily stock option compensation), $0.24 of

inventory and a decrease by $0.3 million in additional accrued expenses offset by a decrease of $0.3 million in accounts receivable.

Cash used in operating activities for the three months ended March 31, 2021 consisted primarily of the $0.44 million net loss, $0.1 increase

in inventory and offset by $0.18 million in additional accrued expenses.

cash used in investing activities for the three months ended March 31, 2022 was $4,696.

Net cash used by investing activities during

the nine months ended September 30, 2020 was $35,305.

cash provided by financing activities for the nine months ended September 30, 2021 was $2.2 million compared with $0.1 million provided

during the nine months ended September 30, 2020.

Net cash provided by financing activities in 2021 is primarily a result of the $2.1

million sale of Common Stock with Warrants during the nine months ended September 30, 2021.

Net cash provided by financing activities

in 2020 consisted primarily of an increase in short-term debt balances at the U.S based operations.

of September 30, 2021, we had $485,000 outstanding Short-Term Debt on the Iveda US books and $385,000 is past the maturity date and the

remaining $100,000 comes due February 2022.

There are no penalties related to the past due Notes, interest continues to accrue until

paid or converted to common Stock at $0.35 per share.

During the nine months ended September 30, 2021, Noteholders converted $499,750

of principal and the company expects a significant portion of the remaining Short-Term Debt to be converted to common stock over the

next twelve months.

The company expects to pay the remaining Short-Term Debt, if any, from operations and future equity capital raises.

There can be no assurance that the company will be able to generate enough operating cashflow or raise equity funds in a timely manner

hence the entire Short-Term Debt balance would be past due as of the end of February 2022.

the nine months ended March 31, 2021 was $2,466.

cash provided by financing activities for the three months ended March 31, 2022 was $0.15 million compared with $0.63 million provided

during the three months ended March 31, 2021.

Net cash provided by financing activities in 2022 is primarily a result of the proceeds

from bank loans in Taiwan for the three months ended March 31, 2022.

Net cash provided by financing activities in 2020 consisted primarily

of $0.63 million common stock sold at the U.S based operations.

have experienced significant operating losses since our inception.

At December 31, 2020, we had approximately $25 million in net operating

At March 31, 2022, we had approximately $29 million in net operating

loss carryforwards available for federal income tax purposes, which will begin to expire in 2025.

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provided on credit.

Taiwan-based segment revenue from three customers represented approximately 74% of total revenue for the quarter

ended September 30, 2021, and accounts receivable from two customers represented approximately 59% of total accounts receivable at September

No other customers represented greater than 10% of total revenue in the quarter ended September 30, 2021.

provide an allowance for doubtful collections, which is based upon a review of outstanding receivables, historical collection information,

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Payment terms for our U.S.-based segment require prepayment for most products before they are shipped

and monthly service fees, which are due in advance on the first day of each month.

and monthly Sentir licensing fees, which are due in advance on the first day of each month.

For our U.S.-based segment, accounts receivable

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we retain 5% of the total payment amount and release such amount one year after the completion of the project.

Although our Taiwan-based

segment had minimal gross accounts receivables aged over 180 days at September 30, 2021, we provide an allowance for doubtful accounts

for any receivables that will not be paid within one year, which excludes such retained amounts.

For our U.S.-based segment, we had no

doubtful accounts receivable allowances for the quarters ended September 30, 2021 and 2020, respectively.

For our Taiwan-based segment,

we set up doubtful accounts receivable allowances of approximately $3,000 and $3,000 for the quarters ended September 30, 2021 and 2020,

respectively.

For our U.S.-based segment,

we had no doubtful accounts receivable allowances for the three months ended March 31, 2022 and year ended December 31, 2021.

Taiwan-based segment, we set up no doubtful accounts receivable allowances for the three months ended March 31, 2022 and year ended December

We deem the rest of our accounts receivable to be collectible based on certain factors, including the nature of the customer

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project timelines in Taiwan.

However, the Company is beginning to experience an increase in demand for the six months ended September

30, 2021, compared to the last half of 2020.

The Company estimates that the COVID-19 pandemic resulted in decreases of approximately $1.2 million revenues

and $0.3 million gross profit contribution for the year ended March 31, 2021 and $0.2 million revenues and $0.05 million gross profit

contribution for the three months ended March 31, 2021.

However, the Company is beginning to experience an increase in demand for the

twelve months ended March 31, 2022, compared to the last half of 2020.

the fact that the Company’s products are sold through a variety of distribution channels, the Company expects its sales will experience

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and it remains possible that challenges may arise in the future.

actions the Company has taken so far during the COVID-19 pandemic include, but are not limited to requiring all employees who can work

from home to work from home and increasing its IT networking capability to best assure employees can work effectively outside the office.

Company currently believes revenue for the year ending December 31, 2021 will still be impacted due to the conditions noted.

the Company’s current cash position and its projected cash flow from operations, the Company believes that it will have sufficient

actions the Company has taken so far during the COVID-19 pandemic include, but are not limited to, requiring all employees who

can work from home to work from home and increasing its IT networking capability to best assure employees can work effectively outside

Company currently believes revenue for the year ending December 31, 2021 has been impacted due to the conditions noted.

Company’s current cash position and its projected cash flow from operations, the Company believes that it will have sufficient

capital and or have access to sufficient capital through public and private equity and debt offerings to sustain operations for a period

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Likewise, we do not believe that the current levels of inflation in Taiwan have had

a significant impact on the operations of MEGAsys.

a significant impact on the operations of Iveda Taiwan.

Balance Sheet Arrangements

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if we had engaged in such relationships.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are a smaller reporting

company as defined by 17 C.F.R.

229 (10)(f)(i) and are not required to provide information under this item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements