What changed in this filing

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Item 1. Financial Statements

2022-08-12 compared with 2022-05-16 · 308 added, 232 removed, 814 unchanged (40% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

31, 2021 AND DECMBER 31, 2021

March 31, 2022

30, 2022 AND DECEMBER 31, 2021

June 30, 2022

December 31, 2021

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LONG-TERM DEBT

LONG-TERM DIVIDENDS PAYABLE

STOCKHOLDERS’ EQUITY

Preferred Stock, $ 0.00001 par value;

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

12,500,000 shares authorized Series B Preferred Stock, $ 0.00001 par value;

500 shares authorized, no shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

Common Stock, $ 0.00001 par value;

37,500,000 shares authorized;

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

11,677,265 and 9,668,369 , shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

Additional Paid-In Capital

Subscription Receivable

( 7,370,350 )

Accumulated Comprehensive Loss

3 unchanged sentences

Total Stockholders’ Equity (Deficit)

( 1,843,109 )

Total Liabilities and Stockholders’ Equity

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STATEMENTS OF OPERATIONS

THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021

For the Three

Equipment Sales

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LOSS FROM OPERATIONS

( 1,058,188 )

( 1,709,804 )

( 1,095,042 )

OTHER INCOME (EXPENSE)

4 unchanged sentences

LOSS BEFORE INCOME TAXES

( 1,064,978 )

( 1,728,640 )

( 1,322,297 )

BENEFIT (PROVISION) FOR INCOME TAXES

1 unchanged sentence

$ ( 687,583 )

$ ( 1,731,698 )

$ ( 1,322,297 )

BASIC AND DILUTED LOSS PER SHARE

WEIGHTED AVERAGE SHARES

* 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

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.

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Common Stock issued for conversion error

Common Stock issued for services

Exercise of options and warrants

Common Stock Offering for Cash

Subscription Receivable

Warrants sold in

Over allotment

( 1,731,698 )

Comprehensive Loss

BALANCE AT March 31, 2022

( 1,731,698 )

Comprehensive Loss

8 for 1 conversion

8 for 1 conversion adjustment

BALANCE AT June 30, 2022

$ ( 43,093,099 )

$ ( 198,572 )

* 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.

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

THE THREE MONTHS ENDING MARCH 31, 2022 AND 2021

THE SIX MONTHS ENDING JUNE 30, 2022 AND 2021

CASH FLOWS FROM OPERATING ACTIVITIES

5 unchanged sentences

Stock Option Compensation

Common Stock Issued for Services

Common Stock Warrants Issued for Services

5 unchanged sentences

Net Cash Used in Operating Activities

( 2,183,116 )

CASH FLOWS FROM INVESTING ACTIVITIES

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CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

THE THREE MONTHS ENDING MARCH 31, 2022 AND 2021

THE SIX MONTHS ENDING JUNE 30, 2022 AND 2021

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

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Common Stock issued for Consulting Agreements related to Cost of Capital

Dividends Paid with Series B Preferred Stock

Warrants Issued for Interest

Warrants Issued for Services

Debenture Accrued Interest converted to Common Stock

Debenture Principal converted to Common Stock

Rent Accounts Payable to related Party converted to Common Stock

Accrued Dividends converted to Common Stock

accompanying Notes to Condensed Consolidated Financial Statements.

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While we still offer video surveillance technologies,

our core product line has evolved to include AI intelligent search technology that provide true intelligence to any video surveillance

our core product line has evolved to include AI intelligent search technology that provides true intelligence to any video surveillance

system and IoT (Internet of Things) devices and platforms.

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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.

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.

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 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.

roadmap includes a 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

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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.

With little to no human interaction, technology

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

Dwindling public safety budgets and resources have 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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of businesses and organizations.

While we only used off-the shelf camera systems from well-known camera brands, we now source our own

cameras using manufacturers in Taiwan in order for us to be more flexible in fulfilling our customer needs.

While we originally only used off-the shelf camera systems from well-known camera brands, we now source

our own cameras using manufacturers in Taiwan in order for us to be more flexible in fulfilling our customer needs.

We now have the capability

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other from monthly licensing fees.

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.

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 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.

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

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

$ 43 million from January 2005 through June 30, 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.

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

not make any impairment for the six months ended June 30, 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 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.

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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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.

This customer is a longtime customer, and we do not expect any

problem with the collectability of these accounts receivable.

had revenue from one customer with greater than 10 % of total revenues during the six months ended June 30, 2022 and two customers for

the year ended December 31, 2021 that represented approximately 53 % and 55 % of total revenues, respectively.

We had $ 527,256 revenues

( 60 %) from Chunghwa Telecom of total revenues of $ 882,269 for the six months ended June 30, 2022.

We 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 six months ended June 30, 2022 and year ended December 31, 2021.

and Cash Equivalents

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credit valuation and specific circumstances of the customer.

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

As of June 30, 2022 and December 31, 2021 no allowance for uncollectible

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

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The allowance for slow-moving and obsolete

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

inventory is $ 0 as of June 30, 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 three

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

Depreciation expense for the six

months ended June 30, 2022 was $ 8,959 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.

Such assets are

fully amortized at December 31, 2021.

Deposits—Long-Term

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.

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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and Other Payables

SCHEDULE OF ACCOUNTS AND OTHER PAYABLES

March 31, 2022

OF ACCOUNTS AND OTHER PAYABLES

June 30, 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 March 31, 2021 and December 31, 2021, were estimated

value of stock-based compensation awards granted prior to, but not yet vested as of June 30, 2022 and December 31, 2021, were estimated

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

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We recognized $93,900 and $801,908 of stock-based

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

compensation expense for the six months ended June 30, 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 March 31,

value estimates discussed herein are based upon certain market assumptions and pertinent information available to us as of June 30, 2022

and December 31, 2021.

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.

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.

These financial instruments include cash, accounts receivable, accounts 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.

conduct operations in various geographic regions.

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for other significant geographic regions are as follows:

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

March 31, 2022 (Unaudited)

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

June 30, 2022 (Unaudited)

Net Assets (Liabilities)

United States

$ ( 2,606,975 )

Republic of China (Taiwan)

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2 RELATED PARTIES

SCHEDULE OF RELATED PARTY TRANSACTIONS

March 31, 2022 (Unaudited)

OF RELATED PARTY TRANSACTIONS

June 30, 2022 (Unaudited)

December 31, 2021

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short-term debt balances were as follows:

SCHEDULE OF SHORT-TERM DEBT

March 31, 2022 (Unaudited)

OF SHORT-TERM DEBT

June 30, 2022 (Unaudited)

December 31, 2021

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debt balances were as follows:

SCHEDULE OF LONG-TERM DEBT

March 31, 2022

OF LONG-TERM DEBT

June 30, 2022

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

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The shares issuable

pursuant to the 2010 Option Plan are registered with the SEC under Forms S-8 filed on February 4, 2010 (No.

pursuant to the 2010 Option Plan were registered with the SEC under Forms S-8 filed on February 4, 2010 (No.

333- 164691), June 24, 2011

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Outstanding at Beginning of Year

Forfeited or Canceled

Forfeited or Cancelled

Outstanding at End of Year

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

SCHEDULE OF STOCK OPTIONS OUTSTANDING AND EXERCISABLE

OF STOCK OPTIONS OUTSTANDING AND EXERCISABLE

Options Outstanding

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assumptions used for options granted.

SCHEDULE OF BLACK-SCHOLES OPTION-PRICING MODEL

OF STOCK OPTIONS, VALUATION ASSUMPTIONS

Expected Life

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transactions during 2021 and 2020 were as follows:

SCHEDULE OF WARRANT TRANSACTIONS

OF WARRANT TRANSACTIONS

Outstanding at Beginning of Year

Forfeited or Canceled

Forfeited or Cancelled

Outstanding at End of Year

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$ 1.12 - $ 3.92

$ 0.80 - $ 2.08

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

SUMMARY OF WARRANTS OUTSTANDING AND EXERCISABLE INFORMATION

OF WARRANTS OUTSTANDING AND EXERCISABLE INFORMATION

Warrants Outstanding

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weighted-average assumptions used for options granted.

SCHEDULE OF WARRANTS OUTSTANDING AND EXERCISABLE

OF STOCK WARRANT, VALUATION ASSUMPTIONS

Expected Life

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carryforward that create deferred tax assets and liabilities are as follows:

SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

OF DEFERRED TAX ASSETS AND LIABILITIES

Tax Operating Loss Carryforward - USA

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

SUMMARY OF OPERATING LOSS CARRYFORWARDS

OF OPERATING LOSS CARRYFORWARDS

Net Operating

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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 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)

We had net losses for the six months ended June 30, 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 six months ended

June 30, 2022 and 2021.

OF EARNINGS PER SHARE BASIC AND DILUTED

June 30, 2022

June 30, 2021 (Unaudited)

$ ( 1,731,698 )

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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 .

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

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

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 .

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

August 9, 2022, the Company and certain accredited investors (each an “Investor” and collectively, the

“Investors”) entered into a securities purchase agreement (the “Securities Purchase Agreement”) pursuant to

which the Company agreed to sell and issue to the Investors in a private placement (the “Private Placement”) (i) an

aggregate of 1,100,000

shares (the “Shares”) of the Company’s common stock, par value $ 0.00001

per share (the “Common Stock”), at a purchase price of $ 1.52

per share and associated warrant, (ii) an aggregate of 3,289,474

warrants to purchase Common Stock at an execution price of $ 1.40

per warrant share which are immediately exercisable and remain exercisable for a term of five and a half ( 5.5 )

years from the issuance (the “Common Warrants”), and (iii) in lieu of shares of Common Stock, 2,189,474

pre-funded warrants to purchase Common Stock, with an exercise price of $ 0,0001

per share of Common Stock, which are immediately exercisable and remain exercisable until exercised in full (the

“Pre-Funded Warrants,” and together with the “Common Warrants, the “Warrants,” and collectively

with the Shares, the “Securities”).

The exercise prices of the Warrants are subject to adjustment for stock splits, reverse splits, and similar capital

transactions as described in the Warrants.

Private Placement closed on August 11, 2022.

The Company received gross proceeds from the Private Placement of approximately five million

dollars ($ 5,000,000 ), before deducting offering expenses payable by the Company.

The Company intends to use the net proceeds of the Private

Placement for working capital and other general corporate purposes.

Company engaged Maxim Group LLC (“Maxim”) as the Company’s placement agent for the Private Placement pursuant to a

Placement Agency Agreement (the “PAA”) dated as of August 9, 2022.

Pursuant to the PAA, the Company agreed to pay Maxim a

cash placement fee equal to 7.0 %

of the gross proceeds of the Private Placement,

plus reimbursement of certain expenses and legal fees.

connection with the Private Placement, the Company and the Investors entered into a Registration Rights Agreement dated August 9, 2022

(the “Registration Rights Agreement”), providing for the registration for resale of the Securities (including the shares

of Common Stock underlying the Warrants) that are not then registered on an effective registration statement, pursuant to a registration

statement (the “Registration Statement”) to be filed with the Securities and Exchange Commission (the “SEC”)

on or prior to August 24, 2022 (the “Filing Date”).

The Company has agreed to use its best efforts to cause the Registration

Statement to be declared effective as soon as possible, but in no event later than forty-five (45) days of the closing of the Private

Placement (or seventy-five (75) days in the event of a full review of the Registration Statement by the SEC) (the “Effectiveness

Date”), and to keep the Registration Statement continuously effective for a period that extends from the first date on which the

SEC issues an order of effectiveness in relation to the Registration Statement until such date that all registrable securities (as such

term is defined in the Registration Rights Agreement) covered by the Registration Statement have been sold thereunder or pursuant to

Rule 144 or may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for

the Company to be in compliance with the current public information requirement under Rule 144.

Financial Information.

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Regarding Forward-Looking Information

Report on Form 10-Q Quarterly Report contains forward looking statements that involve risks and uncertainties.

All statements other than

statements of historical fact contained in this Form 10-Q Quarterly Report, including statements regarding future events, our future

financial performance, business strategy, and plans and objectives for future operations, are forward-looking statements.

In many cases,

you can identify forward-looking statements by terminology such as “anticipates,” “believes,” “can,”

“continue,” “could,” “estimates,” “expects,” “intends,” “may,”

“plans,” “potential,” “predicts,” “should,” or “will” or the negative of

these terms or other comparable terminology.

Although we do not make forward looking statements unless we believe we have a reasonable

basis for doing so, we cannot guarantee their accuracy.

These statements are only predictions and involve known and unknown risks, uncertainties,

and other factors, including the risks outlined under “Risk Factors”, “Liquidity and Capital Resources” with

respect to our ability to continue to generate cash from operations or new investment, or elsewhere in this Report on Form 10-Q Quarterly

Report or discussed in our audited consolidated financial statements for the year ended December 31, 2021, which may cause our or our

industry’s actual results, levels of activity, performance, or achievements to differ materially from those expressed or implied

by these forward-looking statements.

Moreover, we operate in a very competitive and rapidly changing environment.

New risks emerge from

time to time, and it is not possible for us to predict all risk factors, nor can we address the impact of all factors on our business

or the extent to which any factor, or combination of factors, may cause our actual results to differ materially from those contained

in any forward-looking statements.

Quarterly Report on Form 10-Q (or Form 10-Q Quarterly Report) contains forward looking statements that involve risks and uncertainties.

All statements other than statements of historical fact contained in this Form 10-Q Quarterly Report, including statements regarding

future events, our future financial performance, business strategy, and plans and objectives for future operations, are forward-looking

In many cases, you can identify forward-looking statements by terminology such as “anticipates,” “believes,”

“can,” “continue,” “could,” “estimates,” “expects,” “intends,”

“may,” “plans,” “potential,” “predicts,” “should,” or “will”

or the negative of these terms or other comparable terminology.

Although we do not make forward looking statements unless we believe

we have a reasonable basis for doing so, we cannot guarantee their accuracy.

These statements are only predictions and involve known

and unknown risks, uncertainties, and other factors, including the risks outlined under “Risk Factors”, “Liquidity

and Capital Resources” with respect to our ability to continue to generate cash from operations or new investment, or elsewhere

in this Report on Form 10-Q Quarterly Report or discussed in our audited consolidated financial statements for the year ended December

31, 2021, which may cause our or our industry’s actual results, levels of activity, performance, or achievements to differ materially

from those expressed or implied by these forward-looking statements.

Moreover, we operate in a very competitive and rapidly changing

New risks emerge from time to time, and it is not possible for us to predict all risk factors, nor can we address the impact

of all factors on our business or the extent to which any factor, or combination of factors, may cause our actual results to differ materially

from those contained in any forward-looking statements.

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

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

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

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 in Taiwan.

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

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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 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.

Iveda Taiwan also houses

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

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.

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:

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

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.

of Operations for the Three and Six Months Ended June 30, 2022 Compared with the Three and Six Months Ended June 30, 2021

recorded net consolidated revenue of $0.65 million for the three months ended June 30, 2022, compared with $0.56 million for the three

months ended June 30, 2021, an increase of $0.1 million, or 16%.

For the three months ended June 30, 2022, our service revenue was $.06

million, or 9% of net revenue, and our equipment sales and installation revenue was $.59 million, or 91% of net revenue.

In fiscal 2021,

our service revenue was $.08, or 15% of consolidated net revenue, and our equipment sales and installation revenue was $.475 million,

or 85% of net revenue.

The increase in total revenue in 2022 compared with the same period in fiscal 2021 is attributable primarily to

increased equipment sales from Iveda US operations.

recorded net consolidated revenue of $0.88 million for the six months ended June 30, 2022, compared with $0.89 million for the six months

ended June 30, 2021, a decrease of ($0.01) million, or (1%).

For the six months ended June 30, 2022, our service revenue was $0..10,

or 12% of net revenue, and our equipment sales and installation revenue was $0.78, or 88% of net revenue.

In fiscal 2021, our service

revenue was $0.11, or 13% of consolidated net revenue, and our equipment sales and installation revenue was $0.78, or 87% of net revenue.

The minimal decrease in total revenue in 2022 compared with the same period in fiscal 2021 is attributable primarily to decreased service

revenue from Iveda Taiwan.

cost of revenue was $0.46 million (71% of revenue;

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

gross margin of 29%) for the three months ended June 30, 2022, compared with $0..43

million (76% 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.

34% gross margin) for the three months ended June 30, 2021, an increase of $0.035 million, or 8%.

in cost of revenue was primarily driven by increased Iveda US 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.

cost of revenue was $0.55 million (63% of revenue;

gross margin of 37%) for the six months ended June 30, 2022, compared with $0.65 million

(72% of revenue;

28% gross margin) for the six months ended June 30, 2021, a decrease of ($0.09 million), or (14%).

The decrease in cost

of revenue was primarily driven by increased gross margins for 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,

expenses were $1.25 million for the three months ended June 30, 2022, compared with $0.77 million for the three months ended June 30,

2021, an increase of $0.47 million, or 61%.

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

expenses were $2.0 million for the six months ended June 30, 2022, compared with $1.3 million for the six months ended June 30, 2021,

an increase of $0.7 million, or 52%.

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

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%.

from operations increased to $1.06 million for the three months ended June 30, 2022, compared with $0.64 million for the three months

ended June 30, 2021, an increase of $0.42 million, or 65%.

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

from operations increased to $1.7 million for the six months ended June 30, 2022, compared with $1.1 million for the six months ended

June 30, 2021, an increase of $0.6 million, or 56%.

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

operating expenses.

expense-net was $6,790 for the three months ended June 30, 2022, compared with $45,162 for the three months ended June 30, 2021, a decrease

of $38,372, or 85%.

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.

expense-net was $18,836 for the six months ended June 30, 2022, compared with $227,256 for the six months ended June 30, 2021, a decrease

of $208,420, or 92%.

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 $1.1 million for the three months ended June 30, 2022, compared with $0.64 million for the three months ended June 30, 2021.

The increase of $0.38 million, or 55%, in net loss was caused primarily by an 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.

loss was $1.7 million for the six months ended June 30, 2022, compared with $1.3 million for the six months ended June 30, 2021.

increase of $0.41 million, or 31%, 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 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 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.

of June 30, 2022, we had cash and cash equivalents of $6.2 million compared to $0.82 million as of June 30, 2021.

This increase in our

cash and cash equivalents is primarily a result of our stock offering that closed April 5, 2022 offset by the operating losses during

the six months ended June 30, 2022.

There are no legal or economic factors that materially impact our ability to transfer funds between

our U.S.-based and Taiwan-based segments.

Net cash used in operating activities

during the six months ended June 30, 2022 was $2.2 million compared to $0.77 million net cash used during the six months ended June 30,

Net cash used in operating activities for the six months ended June 30, 2022 consisted primarily of the $1.7 million net loss including

$0.26 million of non-cash charges (primarily common stock for services and stock option compensation), $0.29 million of increased inventory

and a decrease by $0.8 million in accrued expenses offset by a decrease of $0.37 million in accounts receivable.

Cash used in operating

activities for the six months ended June 30, 2021 consisted primarily of the $1.3 million net loss including $0.31 million of non-cash

charges (primarily common stock for services, interest value of convertible debt features, value of warrants issued for interest and stock

option compensation) offset primarily by $0.5 million in additional accounts payable and accrued expenses.

cash used in investing activities for the six months ended June 30, 2022 was $1,964.

Net cash used by investing activities during the

six months ended June 30, 2021 was $0.

cash provided by financing activities for the six months ended June 30, 2022 was $7.05 million compared with $1.05 million provided during

the six months ended June 30, 2021.

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

offering underwritten by Maxim Group in April 2022 for the six months ended June 30, 2022.

Net cash provided by financing activities

in 2021 consisted primarily of $0.82 million unregistered common stock sold at the U.S based operations.

have experienced significant operating losses since our inception.

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

At June 30, 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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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

contracts and past experience with similar customers.

Delinquent receivables are written off based on individual credit valuation and

specific circumstances of the customer, and we generally do not charge interest on past due receivables.

we had no doubtful accounts receivable allowances for the six months ended June 30, 2022 and year ended December 31, 2021.

For our Taiwan-based

segment, we set up no doubtful accounts receivable allowances for the six months ended June 30, 2022 and year ended December 31, 2021.

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

and past experience with similar customers.

Delinquent receivables are written off based on individual credit valuation and specific

circumstances of the customer, and we generally do not charge interest on past due receivables.

COVID-19 pandemic represents a fluid situation that presents a wide range of potential impacts of varying durations for different global

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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.

and $0.3 million gross profit contribution for the twelve months 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

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 has been impacted due to the conditions noted.

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AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are a smaller reporting

company as defined by 17 C.F.R.

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