What changed in this filing

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Item 1. Financial Statements

2022-11-14 compared with 2022-08-12 · 147 added, 227 removed, 895 unchanged (29% of the section changed)

2 unchanged sentences

30, 2022 AND DECEMBER 31, 2021

June 30, 2022

September 30, 2022

December 31, 2021

20 unchanged sentences

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

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

Common Stock, $ 0.00001 par value;

37,500,000 shares authorized;

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

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

Additional Paid-In Capital

9 unchanged sentences

STATEMENTS OF OPERATIONS

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

THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

For the Three

September 30,

For the Three

September 30,

Equipment Sales

9 unchanged sentences

( 1,519,192 )

( 1,095,042 )

OTHER INCOME (EXPENSE)

6 unchanged sentences

( 1,775,728 )

( 1,322,297 )

BENEFIT (PROVISION) FOR INCOME TAXES

47 unchanged sentences

Common Stock issued for services

Warrants issued for services

Exercise of options and warrants

Common Stock Offering for Cash

Common Stock Offering for Cash – April 2022

Warrants sold in

Over allotment

Common Stock and Pre-Funded Warrant Offering – August 2022

( 2,398,331 )

1 unchanged sentence

Comprehensive Loss

8 for 1 conversion

8 for 1 conversion adjustment

BALANCE AT June 30, 2022

BALANCE AT September 30, 2022

$ ( 43,759,732 )

5 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

THE SIX MONTHS ENDING JUNE 30, 2022 AND 2021

THE NINE MONTHS ENDING SEPTEMBER 30, 2022 AND 2021

CASH FLOWS FROM OPERATING ACTIVITIES

14 unchanged sentences

( 3,296,178 )

( 1,179,673 )

CASH FLOWS FROM INVESTING ACTIVITIES

16 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

THE SIX MONTHS ENDING JUNE 30, 2022 AND 2021

THE NINE MONTHS ENDING SEPTEMBER 30, 2022 AND 2021

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

6 unchanged sentences

Rent Accounts Payable to related party converted to Common Stock

Accounts Payable to non-related party converted to Common Stock

Accrued Dividends converted to Common Stock

102 unchanged sentences

We generated accumulated losses of approximately

$ 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.

The consolidated financial statements do not include

any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities

that might result from this uncertainty.

$ 43 million from January 2005 through September 30, 2021 and have insufficient working capital and cash flows to support operations.

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

The consolidated financial statements do not

include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification

of liabilities that might result from this uncertainty.

of Long-Lived Assets

8 unchanged sentences

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

not make any impairment for the nine months ended September 30, 2022 and year ended December 31, 2021.

of Accounting

101 unchanged sentences

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.

had revenue from two customers with greater than 10 % of total revenues during the nine months ended September 30, 2022 and two customers

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

We had $ 0.8 million

revenues ( 34 %) from Chunghwa Telecom and $ 0.5 million from Chicony Power Technology Co.

Ltd of total revenues of $ 2.3 million for the

nine months ended September 30, 2022.

We had $ 0.8 million revenues ( 41 %) from Chunghwa Telecom and $ 0.3 million revenues ( 14 %) from Taiwan

Stock Exchange Corporation of total revenues of $ 2.0 million for the year ended December 31, 2021.

other customers represented greater than 10 % of total revenues in the nine months ended September 30, 2022 and year ended December 31,

and Cash Equivalents

7 unchanged sentences

credit valuation and specific circumstances of the customer.

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

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

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

6 unchanged sentences

The allowance for slow-moving and obsolete

inventory is $ 0 as of June 30, 2022 and December 31, 2021.

inventory is $ 0 as of September 30, 2022 and December 31, 2021.

and Equipment

3 unchanged sentences

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

Depreciation expense for the six

months ended June 30, 2022 was $ 8,959 and for the year ended December 31, 2021 was $ 15,016 .

Depreciation expense for the nine

months ended September 30, 2022 was $ 13,136 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.

12 unchanged sentences

and liabilities.

During 2021, we reevaluated the valuation allowance for deferred tax assets and determined that no current benefits

During 2021, we re-evaluated the valuation allowance for deferred tax assets and determined that no current benefits

should be recognized for the year ended December 31, 2021.

10 unchanged sentences

OF ACCOUNTS AND OTHER PAYABLES

June 30, 2022

September 30, 2022

December 31, 2021

11 unchanged sentences

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 June 30, 2022 and December 31, 2021, were estimated

value of stock-based compensation awards granted prior to, but not yet vested as of September 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.”

1 unchanged sentence

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

compensation expense for the six months ended June 30, 2022 and December 31, 2021, respectively.

compensation expense for the nine months ended September 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 June 30, 2022

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

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, 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.

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

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

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.

4 unchanged sentences

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

June 30, 2022 (Unaudited)

Net Assets (Liabilities)

September 30, 2022 (Unaudited)

(Liabilities)

United States

16 unchanged sentences

OF RELATED PARTY TRANSACTIONS

June 30, 2022 (Unaudited)

September 30, 2022 (Unaudited)

December 31, 2021

18 unchanged sentences

OF SHORT-TERM DEBT

June 30, 2022 (Unaudited)

September 30, 2022 (Unaudited)

December 31, 2021

2 unchanged sentences

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

Loan Agreement with Shanghai Bank at 2.81 % interest rate per annum due September 2023 .

Loan agreement with Hua Nam bank at 2.42 % interest rate per annum due September 2022 .

2 unchanged sentences

OF LONG-TERM DEBT

June 30, 2022

September 30, 2022

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

28 unchanged sentences

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

6 STOCK OPTION PLAN AND WARRANTS

October 15, 2009, we adopted the 2009 Stock Option Plan (the “2009 Option Plan”), with an aggregate number of 187,500 shares

of common stock issuable under the plan.

The purpose of the 2009 Option Plan was to assume options that were already issued in the 2006

and 2008 Option plans under Iveda Corporation after the merger with Charmed Homes.

6 STOCK OPTION PLANS

January 18, 2010, we adopted the 2010 Stock Option Plan (the “2010 Option Plan”), which allows the Board to grant options

13 unchanged sentences

This plan has not been approved by the shareholders.

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

of September 30, 2022 and December 31, 2021, there were 907,188 and 893,438 options outstanding, respectively, 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,

18 unchanged sentences

$ 4,500 unrecognized stock-based compensation.

option transactions during 2021 and 2020 were as follows:

SCHEDULE OF STOCK OPTION TRANSACTIONS

Outstanding at Beginning of Year

Forfeited or Cancelled

Outstanding at End of Year

Options Exercisable at Year-End

Weighted-Average Fair Value of Options Granted During the Year

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

OF STOCK OPTIONS OUTSTANDING AND EXERCISABLE

Options Outstanding

Options Exercisable

$ 0.32 - $ 16.24

fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average

assumptions used for options granted.

OF STOCK OPTIONS, VALUATION ASSUMPTIONS

Expected Life

Dividend Yield

Expected Volatility

Risk-Free Interest Rate

transactions during 2021 and 2020 were as follows:

OF WARRANT TRANSACTIONS

Outstanding at Beginning of Year

Forfeited or Cancelled

Outstanding at End of Year

Warrant Exercisable at Year-End

Weighted-Average Fair Value of Warrants Granted During the Year

$ 1.12 - $ 3.92

$ 0.80 - $ 2.08

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

OF WARRANTS OUTSTANDING AND EXERCISABLE INFORMATION

Warrants Outstanding

Warrants Exercisable

Average Remaining Contractual

$ 2.80 - $ 13.20

fair value of each warrant granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following

weighted-average assumptions used for options granted.

OF STOCK WARRANT, VALUATION ASSUMPTIONS

Expected Life

Dividend Yield

Expected Volatility

Risk-Free Interest Rate

0.18 - 1.00 %

0.19 - 1.59 %

7 INCOME TAXES

41 unchanged sentences

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

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.

We had net losses for the nine months ended September 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 nine months

ended September 30, 2022 and 2021.

OF EARNINGS PER SHARE BASIC AND DILUTED

June 30, 2022

June 30, 2021 (Unaudited)

September 30, 2022

September 30, 2021

$ ( 2,398,331 )

15 unchanged sentences

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.

150 unchanged sentences

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

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.

of Operations for the Three and Nine months Ended September 30, 2022 Compared with the Three and Nine months Ended September 30, 2021

recorded net consolidated revenue of $1.5 million for the three months ended September 30, 2022, compared with $0.4 million for the three

months ended September 30, 2021, an increase of $1.1 million, or 257%.

For the three months ended September 30, 2022, our equipment sales

and installation revenue was $1.36 million, or 93% of net revenue, and our service revenue was $.10 million, or 7% of net revenue.

fiscal 2021, our equipment sales and installation revenue was $.30 million, or 73% of consolidated net revenue, and our service revenue

was $.11 million, or 26% of net revenue.

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

primarily to increased equipment and installation sales from Iveda Taiwan and Iveda US operations, $.7 million and $.4 million, respectively..

recorded net consolidated revenue of $2.3 million for the nine months ended September 30, 2022, compared with $1.3 million for the nine

months ended September 30, 2021, an increase of $1.0 million, or 80%.

For the nine months ended September 30, 2022, our equipment sales

and installation revenue was $2.14 million, or 91% of net revenue, and our service revenue was $.20 million, or 9% of net revenue.

fiscal 2021, our equipment sales and installation revenue was $1.08 million, or 83% of consolidated net revenue, and our service revenue

was $.22 million, or 17% 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 and installation revenue from Iveda Taiwan and Iveda US, $.6 million and $.4 million, respectively.

cost of revenue was $1.1 million (76% of revenue;

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

gross margin of 24%) for the three months ended September 30, 2022, compared with $0.14

million (33% of 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.

67% gross margin) for the three months ended September 30, 2021, an increase of $.98 million, or 713%.

in cost of revenue was primarily driven by increased revenue.

The decrease in overall gross margin was also primarily attributed to the

increase in equipment sales versus the higher margin service revenue of Iveda Taiwan.

cost of revenue was $1.7 million (71% 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 $1.25 million for the three months ended June 30, 2022, compared with $0.77 million for the three months ended June 30,

gross margin of 29%) for the nine months ended September 30, 2022, compared with $0.8

million (60% of revenue;

40% gross margin) for the nine months ended September 30, 2021, an increase of $0.9 million, or 113%.

in cost of revenue was primarily driven by increased equipment sales revenues for Iveda Taiwan and Iveda US operations.

in overall gross margin was also primarily attributed to the increase in equipment sales versus the higher margin service revenue of

Iveda Taiwan.

expenses were $1.03 million for the three months ended September 30, 2022, compared with $0.70 million for the three months ended September

30, 2021, an increase of $0.33 million, or 48%.

1 unchanged sentence

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,

expenses were $3.07 million for the nine months ended September 30, 2022, compared with $2.04 million for the nine months ended September

30, 2021, an increase of $1.03 million, or 50%.

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

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 $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.

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.

from operations increased to $0.68 million for the three months ended September 30, 2022, compared with $0.42 million for the three months

ended September 30, 2021, an increase of $0.26 million, or 60%.

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

to increased operating expenses.

from operations increased to $2.39 million for the nine months ended September 30, 2022, compared with $1.52 million for the nine months

ended September 30, 2021, an increase of $0.87 million, or 57%.

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

to increased operating expenses.

Income (Expense)-Net

income (expense) -net was $10,593 for the three months ended September 30, 2022, compared with ($29,280) for the three months ended September

30, 2021, a change of $39,873.

The majority of the other expense for 2021 was interest expense and the majority of the other income for

2022 was interest earned.

income (expense) -net was $(8,242) for the nine months ended September 30, 2022, compared with ($256,535) for the nine months ended September

30, 2021, a decrease of $248,293, or 97%.

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.

The significant decrease from 2021 to 2022 is related to the conversion of the majority of the convertible debentures in 2021 and interest

earned increase in 2022.

loss was $0.67 million for the three months ended September 30, 2022, compared with $0.45 million for the three months ended September

The increase of $0.22 million, or 47%, 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

loss was $2.4 million for the nine months ended September 30, 2022, compared with $1.78 million for the nine months ended September 30,

The increase of $0.62 million, or 35%, 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 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.

of September 30, 2022, we had cash and cash equivalents of $10.6 million compared to $1.4 million as of September 30, 2021.

in our cash and cash equivalents is primarily a result of our stock offerings that closed April 2022 and August 2022 with net proceeds

of $11.5 million with an offset of the operating losses during the nine months ended September 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.

cash used in operating activities during the nine months ended September 30, 2022 was $3.3 million compared to $1.2 million net cash

used during the nine months ended September 30, 2021.

Net cash used in operating activities for the nine months ended September 30, 2022

consisted primarily of the $2.4 million net loss including $0.26 million of non-cash charges (primarily common stock for services and

stock option compensation), $0.4 million of increased inventory, a decrease by $0.8 million in accrued expenses, and an increase of $0.1

million in accounts receivable.

Cash used in operating activities for the nine months ended September 30, 2021 consisted primarily of

the $1.8 million net loss including $0.3 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 $0.6 million in additional accounts

payable and accrued expenses.

cash used in investing activities for the nine months ended September 30, 2022 was $5,184.

Net cash used by investing activities during

the nine months ended September 30, 2021 was $17,352.

cash provided by financing activities for the nine months ended September 30, 2022 was $12.6 million compared with $2.2 million provided

during the nine months ended September 30, 2021.

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

from equity offerings underwritten by Maxim Group in April 2022 and August 2022 for the nine months ended September 30, 2022.

provided by financing activities in 2021 consisted primarily of $2.1 million unregistered common stock sold at the U.S based operations.

have experienced significant operating losses since our inception.

At June 30, 2022, we had approximately $29 million in net operating

At September 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.

40 unchanged sentences

For our U.S.-based segment,

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.

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

our Taiwan-based segment, we set up no doubtful accounts receivable allowances for the nine months ended September 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

65 unchanged sentences

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