What changed in this filing

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Item 1A. Risk Factors

2023-03-31 compared with 2022-03-31 · 146 added, 104 removed, 581 unchanged (30% of the section changed)

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Related to Our Company and Business

Financial Statements Contain A Going Concern Opinion.

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

the realization of assets and the liquidation of liabilities in the normal course of business.

We generated accumulated losses of approximately

$41 million from January 2005 through December 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.

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.

Have Incurred Significant Net Losses Since Our Inception And May Not Be Able To Achieve Or Maintain Profitability On An Annual Basis

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project timelines in Taiwan.

However, the Company is beginning to experience an increase in demand for the last half of 2021, compared

to the last half of 2020.

The Company subsequently experienced an increase in demand for the last half of 2021, 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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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

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

of one year following the date of this filing.

If business interruptions resulting from the COVID-19 pandemic were to be prolonged or

expanded in scope, the business, financial condition, results of operations and cash flows would be negatively impacted.

will continue to actively monitor this situation and will implement actions necessary to maintain business continuity.

Need To Raise Significant Additional Funding.

our current estimated burn rate, we have sufficient capital to continue our operations for only a short period of time.

we must raise capital to continue as a going concern.

In December 2020, our Board of Directors approved a new private financing round

to accredited investors up to $5 million.

As of December 31, 2021, we raised approximately $4.0 million through the sale of our Common

There is no assurance that we can raise additional funding to continue as a going concern or to operate profitably.

Any inability

to obtain additional financing when needed could require us to significantly curtail or cease operations.

if funding is available to us, we cannot assure investors that additional financing will be available on terms that are favorable to

us or to our existing stockholders.

Additional funding may be accomplished through the issuance of equity or debt securities that could

be significantly dilutive to the percentage ownership of our existing stockholders.

In addition, these newly issued securities may have

rights, preferences, or privileges senior to those of existing stockholders.

Accordingly, such a financing transaction could materially

and adversely impact the price of our common stock.

for the year ending December 31, 2021 was negatively impacted due to the conditions noted.

If business interruptions resulting from the

COVID-19 pandemic were to be prolonged or expanded in scope, the business, financial condition, results of operations and cash flows

will continue to be negatively impacted.

The Company will continue to actively monitor this situation and will implement actions necessary

to maintain business continuity.

Depend On Certain Key Personnel.

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Sid Sung, our President, Robert J.

Brilon, our Chief Financial Officer, Luz Berg our Chief Operating Officer and Chief Marketing Officer,

and Gregory Omi, our Chief Technology Officer, each of whom is employed by us at will.

Ly’s relationships within our industry

are vital to our continued operations, and if Mr.

Ly were no longer actively involved with us, we would likely be unable to continue

our operations.

The loss of one or more of our other key employees could also have a material adverse effect on our business, financial

condition, and results of operations.

Brilon, our Chief Financial Officer, and Gregory Omi, our Chief Technology Officer, each of whom is

employed by us at will.

Ly’s relationships within our industry are vital to our continued operations, and if Mr.

longer actively involved with us, we would likely be unable to continue our operations.

The loss of one or more of our other key employees

could also have a material adverse effect on our business, financial condition, and results of operations.

also believe that our future success will be largely dependent on our ability to attract and retain highly qualified management, sales,

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These specific customers were 1) Chunghwa Telecom

with 21%, 2) Chicony Power Technology Co Ltd with 31%, (both Taiwan companies).

Revenue from two customers out of 36 total customers

represented approximately 55% of total revenue for the year ended December 31, 2021.

These specific customers were 1) Chunghwa Telecom

with 41%, 2) Taiwan Stock Exchange with 14%, (both Taiwan companies).

Chunghwa Telecom revenues represented 39% of total revenue for

the year ended December 31, 2020, and Siemens represented 11%of total revenues for the year ended December 31, 2020.

Total number of

customers were 36, and 35, for the years ended December 31, 2021 and 2020, respectively.

95% of the total accounts receivable at December

31, 2021 was from one customer out of a total of 20 customer accounts receivable accounts.

This specific customer was Chunghwa Telecom..

Our accounts receivable are unsecured, and we are at risk to the extent such amounts become uncollectible.

Although we perform periodic

evaluations of our customers’ credit and financial condition, we generally do not require collateral in exchange for our products

and services provided on credit.

Chunghwa Telecom agreement provides for an initial contract period of one year January 1, 2021 through December 31, 2021 and is renewable

automatically for additional one-year periods.

Pursuant to the Chunghwa Telecom agreement, the Company provides hardware/software system

maintenance as required, including an 8-hour response time during office hours and hardware and software is billed as required.

The agreement

may be terminated due to a breach of the contract that is not cured within 10 days.

Total number of customers were 42 and 36, for the years ended December

31, 2022 and 2021, respectively.

52% of the total accounts receivable at December 31, 2022 was from one customer out of a total of 36

customer accounts receivable accounts.

This specific customer was Chicony Power Technology Co Ltd.

Our accounts receivables are unsecured,

and we are at risk to the extent such amounts become uncollectible.

Although we perform periodic evaluations of our customers’

credit and financial condition, we generally do not require collateral in exchange for our products and services provided on credit.

licensing business, in particular, may be susceptible to concentration of revenue, if through our licensing customers’ large consumer

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

MEGAsys provides an allowance

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

We have set up

doubtful accounts receivable allowances of $0 and $0 for our Taiwan-based and U.S.-based segments, respectively, as of the years ended

Iveda Taiwan provides

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

have set up no doubtful accounts receivable allowances for our Taiwan-based and U.S.-based segments, respectively, as of the years ended

December 31, 2022 and 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.

Rely On MEGAsys, Our Taiwan Subsidiary, For A Significant Portion Of Our Revenue.

rely on MEGAsys, our Taiwan subsidiary, for a significant portion of our revenue.

For the years ended December 31, 2021 and 2020, MEGAsys’s

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

If MEGAsys experiences a decline in customer demand for its

services, an increase in supplier pricing, currency fluctuations, or general economic or governmental instability, our business, financial

condition, and results of operations may be materially and adversely affected.

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

contracts and past experience with similar customers.

Rely On Iveda Taiwan, Our Taiwan Subsidiary, For A Significant Portion Of Our Revenue.

rely on Iveda Taiwan, our Taiwan subsidiary, for a significant portion of our revenue.

For the years ended December 31, 2022 and 2021,

Iveda Taiwan’s operations accounted for 79% and 93% of our total revenue, respectively.

If Iveda Taiwan experiences a decline in

customer demand for its services, an increase in supplier pricing, currency fluctuations, or general economic or governmental instability,

our business, financial condition, and results of operations may be materially and adversely affected.

Growth May Strain Our Resources.

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of operations.

the majority of the Company’s revenues come from our MEGASys subsidiary, which is located in Taiwan, the Company is subject to

the risks of doing business in Taiwan, including periodic foreign economic downturns and political instability, which may adversely affect

the Company’s revenue and cost of doing business in Taiwan.

Technologies (doing business as MEGAsys) is the Company’s wholly-owned subsidiary and generates the majority of the Company’s

MEGASys’ primary place of business is in Taiwan, Republic of China, and the Company has certain key employees in Taiwan.

the majority of the Company’s revenues come from our Iveda Taiwan subsidiary, which is located in Taiwan, the Company is subject

to the risks of doing business in Taiwan, including periodic foreign economic downturns and political instability, which may adversely

affect the Company’s revenue and cost of doing business in Taiwan.

Technologies (doing business as Iveda Taiwan) is the Company’s wholly-owned subsidiary and generates the majority of the Company’s

Iveda Taiwan’ primary place of business is in Taiwan, Republic of China, and the Company has certain key employees in

Foreign economic downturns may affect our results of operations in the future.

Additionally, other facts relating to the operation of

the Company’s business outside of the U.S.

Additionally, other facts relating to the operation

of the Company’s business outside of the U.S.

may have a material adverse effect on the Company’s business, financial condition

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and results of operations.

Geopolitical issues, conflicts and other global events could adversely affect our results of operations and financial condition.

a substantial portion of our business is conducted outside of the United States, our business is subject to global political issues and

Such political issues and conflicts could have a material adverse effect on our results of operations and financial condition

if they escalate in areas in which we do business.

In addition, changes in and adverse actions by governments in foreign markets in which

we do business could have a material adverse effect on our results of operations and financial condition.

For example, the recent and

continuing conflict arising from the invasion of Ukraine by Russia could adversely impact macroeconomic conditions, give rise to regional

instability and result in heightened economic tariffs, sanctions and import-export restrictions from the U.S.

and the international community

in a manner that adversely affects us, including to the extent that any such actions cause material business interruptions, restrict

our ability to conduct business with certain suppliers or vendors, utilize the banking system, or repatriate cash.

face risks associated with increased political uncertainty.

recent invasion of Ukraine by Russia and the sanctions, bans and other measures taken by governments, organizations and companies against

Russia and certain Russian citizens in response thereto has increased the political uncertainty in Europe and has strained the relations

between Russia and a significant number of governments, including the U.S.

The duration and outcome of this conflict, any retaliatory

actions taken by Russia and the impact on regional or global economies is unknown, but could have a material adverse effect on our business,

financial condition and results of our operations.

the U.S., the change in the U.S.

government to the Biden administration has resulted in uncertainty regarding potential changes in regulations,

fiscal policy, social programs, domestic and foreign relations and international trade policies.

In addition, potential changes in relationships

among the U.S.

and China and other countries including Taiwan could have significant impacts on global trade and regional economic conditions,

among other things.

In addition, changes in the relationships between the U.S.

and its neighbors, such as Mexico, could have significant,

potentially negative, impacts on commerce.

Further, anti-American sentiment could harm the reputation and success of U.S.

companies doing

business abroad.

ability to respond to these developments or comply with any resulting new legal or regulatory requirements, including those involving

economic and trade sanctions, could reduce our sales, increase our costs of doing business, reduce our financial flexibility and otherwise

have a material adverse effect on our business, financial condition and results of our operations.

supply chain may be disrupted by changes in U.S.

trade policy.

rely on domestic and foreign suppliers to provide us with products in a timely manner and at favorable prices.

We have experienced, and

expect to continue to experience, increased international transit times.

A disruption in the flow of our imported products or a material

increase in the cost of those goods or transportation without any offsetting price increases may significantly decrease our profits.

tariffs or other actions against foreign nations including China and any responses by such nations including China, could impair

our ability to meet customer demand and could result in lost sales or an increase in our cost of products This would have a material

adverse impact on our business and results of operations.

business activities may be subject to the U.S.

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Related to Ownership of Our Securities

Or Until We List Our Common Stock On NASDAQ Or Another Securities Exchange, Our Common Stock Will Be Deemed A “Penny Stock,”

Which Makes It More Difficult For Our Investors To Sell Their Shares.

or until our common stock lists on the Nasdaq Capital Market or another securities exchange, our common stock is subject to the “penny

stock” rules adopted under Section 15(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

penny stock rules generally apply to companies whose common stock is not listed on a national securities exchange and trades at less

than $5.00 per share, other than companies that have had average revenue of at least $6,000,000 for the last three years or that have

tangible net worth of at least $5,000,000 ($2,000,000 if the company has been operating for three or more years).

These rules require,

among other things, that brokers who trade penny stocks to persons other than “established customers” complete certain documentation,

make suitability inquiries of investors, and provide investors with certain information concerning trading in the security, including

a risk disclosure document and quote information under certain circumstances.

Many brokers have decided not to trade penny stocks because

of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities

If we remain subject to the penny stock rules for any significant period, it could have an adverse effect on the market,

if any, for our common stock.

If our common stock is subject to the penny stock rules, investors will find it more difficult to dispose

of our common stock.

May Not Be Able To Access The Equity Or Credit Markets.

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Is A Limited Market For Our Common Stock.

common stock is quoted on OTC Markets under the symbol “IVDA”.

We have applied to list our common stock on the Nasdaq Capital

No assurance can be given that our application will be approved or that, if approved an active trading market for our shares

will develop or be maintained.

If our common stock is not approved for listing on the Nasdaq Capital Market, we will not complete this

Even if our common stock is approved for listing on the Nasdaq Capital Market, an active trading trading market for our common

stock may not develop or be sustained.

common stock is listed on the Nasdaq Capital Markets under the symbol “IVDA”.

No assurance can be given that an active trading

market for our shares will be maintained.

In the absence of an active trading market for our common stock, the ability of our stockholders

to sell their shares could be limited.

Warrants are speculative in nature.

Warrants do not confer any rights of common stock ownership on its holders, such as voting rights or the right to receive dividends,

but rather merely represent the right to acquire common stock at a fixed price for a limited period of time.

Commencing on the date of

issuance, holders of the Warrants may exercise their rights to acquire the common stock and pay an exercise price of $4.25 per share,

subject to certain adjustments, prior to the fifth anniversary of the date of issuance, after which date any unexercised Warrants will

expire and have no further value.

Reporting Obligations As A Public Company Are Costly.

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our normal operations.

we are not able to comply with the applicable continued listing requirements or standards of the Nasdaq Capital Market, Nasdaq could

delist our securities.

are listed on The Nasdaq Capital Market under the symbol “IVDA”.

We also list the Warrants under the symbol “IVDAW.”

We cannot assure you that our securities will continue to be, listed on The Nasdaq Capital Market in the future.

In order to maintain

that listing, we must satisfy minimum financial and other continued listing requirements and standards, including those regarding director

independence and independent committee requirements, minimum stockholders’ equity, minimum share price, and certain corporate governance

requirements.

We may not be able to comply with the applicable listing standards and Nasdaq could delist our securities as a result.

cannot assure you that our common stock and/or Warrants, if delisted from The Nasdaq Capital Market, will be listed on another national

securities exchange.

If our common stock and/or Warrants are delisted by The Nasdaq Capital Market, they would likely trade on the OTCQB

where an investor may find it more difficult to sell our securities or obtain accurate quotations as to the market value of our common

stock and/or Warrants.

employed by short sellers may drive down the market price of the common stock.

selling is the practice of selling securities that the seller does not own but rather has borrowed from a third party with the intention

of buying identical securities back at a later date to return to the lender.

The short seller hopes to profit from a decline in the value

of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the short seller expects

to pay less in that purchase than it received in the sale.

it is in the short seller’s interest for the price of the security to decline, many short sellers publish, or arrange for the publication

of, negative opinions regarding the relevant issuer and its prospects to create negative market momentum and generate profits for themselves

after selling a security short.

These short attacks have, in the past, led to selling of shares in the market.

is not clear what effect such negative publicity could have on us.

If we were to become the subject of any unfavorable allegations, whether

such allegations are proven to be true or untrue, we could have to expend significant resources to investigate such allegations and/or

defend ourselves.

we would strongly defend against any such short seller attacks, we may be constrained in the manner in which we can proceed against the

relevant short seller by principles of freedom of speech, applicable state law or issues of commercial confidentiality.

Such a situation

could be costly and time-consuming, and could distract our management from growing our business.

Even if such allegations are ultimately

proven to be groundless, allegations against us could severely impact our business, and any investment in the common stock could be greatly

reduced or even rendered worthless.

securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the market

price for the common stock and trading volume could decline.

trading market for the common stock will depend in part on the research and reports that securities or industry analysts publish about

us or our business.

If research analysts do not establish and maintain adequate research coverage or if one or more of the analysts who

covers us downgrades the common stock or publishes inaccurate or unfavorable research about our business, the market price for the common

stock would likely decline.

If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly,

we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for the common stock

articles of incorporation contain anti-takeover provisions that could materially adversely affect the rights of holders of our common

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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-K

Item 1A. Risk Factors