What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2023-03-31 compared with 2022-03-31 · 74 added, 81 removed, 318 unchanged (33% of the section changed)

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

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

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

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

valves, circuit breakers and sensors.

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

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

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

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.

MEGAsys combines security surveillance

Iveda Taiwan combines security surveillance

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

Through MEGAsys, we have access not only to

Asian markets but also to Asian manufacturers and engineering expertise.

MEGAsys is our research and development arm, working with a

team of developers in Taiwan.

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

from Taiwan Panasonic Company.

MEGAsys, our subsidiary in Taiwan, specializes in deploying new, and integrating existing, video surveillance

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

in Taiwan and other neighboring countries.

MEGAsys combines security surveillance products, software, and services to provide integrated

security solutions to the end user.

Through MEGAsys, we have access not only to Asian markets but also to Asian manufacturers and engineering

MEGAsys is our research and development arm, working with a team of developers and managing our relationship with the Industrial

Technology Research Institute (“ITRI”) in Taiwan.

MEGAsys also houses the application engineering team that supports Sentir

implementation for our service provider customers in Asia.

The Company depends on MEGAsys as the majority of the company’s revenues

have come from MEGAsys since we acquired them in April 2011.

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

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

acquisition of MEGAsys provided the following benefits to our business:

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

professionals from Taiwan Panasonic Company.

Iveda 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 initiatives in Taiwan and other neighboring countries.

Iveda Taiwan combines security surveillance products, software, and

services to provide integrated security solutions to the end user.

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

also to Asian manufacturers and engineering expertise.

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

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

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 we acquired them in April 2011.

the years ended December 31, 2022 and 2021, Iveda Taiwan’s operations accounted for 93% and 71% of our total revenue, respectively.

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

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

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

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

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

to the global distribution potential for our products and services.

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or 7% of net revenue, and our equipment sales and installation revenue was $4.2 million, or 93% of net revenue.

In fiscal 2020, our

recurring service revenue was $325,680, or 22% of consolidated net revenue, and our equipment sales and installation revenue was $1.2

million, or 78% of net revenue.

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

to increased equipment sales from MEGAsys as a result of additional long-term contracts awarded and started during 2021.

In fiscal 2021, our recurring

service revenue was $264,402, or 14% of consolidated net revenue, and our equipment sales and installation revenue was $1.65 million,

or 86% 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 Taiwan as a result of additional long-term contracts awarded and started during 2022.

cost of revenue was $3.5 million (78% of revenue;

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The increase in cost

of revenue was primarily driven by increased MEGAsys revenue.

The increase in overall gross margin was also primarily attributed to increased

MEGAsys revenue as a result of additional long-term contracts awarded and started during 2021.

of revenue was primarily driven by increased Iveda Taiwan revenue.

The decrease in overall gross margin was also primarily attributed

to increased equipment sales proportion within Iveda Taiwan revenue as a result of additional long-term contracts awarded and started

expenses were $4.3 million for the year ended December 31, 2022, compared with $3.6 million for the year ended December 31, 2021, an

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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 for

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

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

up in personnel in sales and technical support personnel as well as research and development expenses for Cerebro IoT Platform and IvedaAI.

Additional professional expenses have been incurred during this period with an effort to increase investor relations and marketing.

from Operations

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

expenses offset by a $0.3 million increase in gross profit.

expense-net was $13,004 for the year ended December 31, 2022, compared with $273,295 for the year ended December 31, 2021, a decrease

of $260,291, or 95%.

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

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

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

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

loss was $3.3 million for the year ended December 31, 2022, compared with $3.0 million for the year ended December 31, 2021.

of $1.4 million, or 87%, 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.

Additional professional

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

Form 10-12g registration statement.

of $0.3 million, or 12%, in net loss was caused primarily by a increase in operating expenses related to a ramp up in sales and technical

support personnel as well as research and development expenses for Cerebro IoT Platform and IvedaAI.

Additional professional expenses

have been incurred during this period with an effort to increase investor relations and marketing.

and Capital Resources

of December 31, 2021, we had cash and cash equivalents of $1,091,246 in our U.S.-based segment and $294,029 in our Taiwan-based segment,

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

This increase in our

cash and cash equivalents is primarily a result of the $2.8 million sale of Common Stock with Warrants during the year ended December

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

cash used in operating activities during the year ended December 31, 2021 was $2.0 million compared to $0.1 million net cash used during

the nine months ended December 31, 2020.

Net cash used in operating activities for the year ended December 31, 2021 consisted primarily

of the $3.08 million net loss including $1.1 million of non-cash charges (primarily stock option compensation and warrants for services),

$0.3 million in accounts receivable, $0.3 of inventory, prepaids and advances to suppliers offset by approximately $0.5 million in additional

accrued expenses.

Cash used in operating activities for the year ended December 31, 2020 consisted primarily of the net loss and offset

by $0.4 million in additional accrued expenses as well as $0.7 million collection of accounts receivable.

of December 31, 2022, we had cash and cash equivalents of $6.0 million in our U.S.-based segment and $1.3 million in our Taiwan-based

segment, compared to $1.1 million in our U.S.-based segment and $0.3 million in our Taiwan-based segment as of December 31, 2021.

increase in our cash and cash equivalents is primarily a result of the $11.5 million sale of Common Stock and Pre-Funded warrants during

the year ended December 31, 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 year ended December 31, 2022 was $5.4 million compared to $2.0 million net cash used

during the year ended December 31, 2021.

Net cash used in operating activities for the year ended December 31, 2022 consisted

primarily of the $3.3 million net loss including $0.4 million of non-cash charges (primarily stock option compensation and common

stock issued for investor relations services), $0.8 million in accounts receivable, $0.2 million of inventory, $0.2 million of

Taiwan vendor deposits, prepaids and advances to suppliers and $1.2 million net payments for accounts payable and accrued operating

and interest expenses.

Net cash used in operating activities for the year ended December 31, 2021 consisted primarily of the $3.08

million net loss including $1.1 million of non-cash charges (primarily stock option compensation and warrants for services), $0.3

million in accounts receivable, $0.3 of inventory, prepaids and advances to suppliers in total, offset by approximately $0.5 million

in additional accrued expenses

cash used in investing activities for the year ended December 31, 2022 was $14,165.

Net cash used by investing activities during the

nine months ended December 31, 2020 was $21,915.

year ended December 31, 2021 was $24,513.

cash provided by financing activities for the year ended December 31, 2022 was $11.4 million compared with $3.1 million provided during

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Net cash provided by financing activities in 2022 is primarily a result of the $11.5 million sale of

Common Stock with Warrants during the year ended December 31, 2021.

Net cash provided by financing activities in 2020 consisted primarily

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

Common Stock and Pre-Funded warrants during the year ended December 31, 2022.

Net cash provided by financing activities in 2021 is primarily

a result of the $2.8 million sale of Common Stock with Warrants during the year ended December 31, 2021.

have experienced significant operating losses since our inception.

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For our U.S.-based segment,

we had no doubtful accounts receivable allowances for the quarters ended December 31, 2021 and 2020, respectively.

we had no doubtful accounts receivable allowances for the years ended December 31, 2022 and 2021, respectively.

For our Taiwan-based

segment, we set up no doubtful accounts receivable allowances for the years ended December 31, 2021

and 2020, respectively.

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.

segment, we set up no doubtful accounts receivable allowances for the years ended December 31, 2022 and 2021, respectively.

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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contribution for the three months ended March 31, 2021.

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

nine months ended December 31, 2021, compared to the last half of 2020.

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

months ended December 31, 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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Likewise, we do not believe that the current levels of inflation in Taiwan have had

a significant impact on the operations of MEGAsys.

a significant impact on the operations of Iveda Taiwan.

Balance Sheet Arrangements

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as the amount by which the carrying value of the assets exceeds their fair value.

of Accounting and Going Concern

financial statements have been prepared on the accrual basis of accounting in conformity with GAAP.

In addition, the accompanying 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 $31.0 million through December

31, 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 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.

and Expense Recognition

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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 7. Management’s Discussion and Analysis