What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-31 compared with 2025-04-15 · 95 added, 152 removed, 211 unchanged (54% of the section changed)

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IvedaAI comes with an appliance or server, preconfigured with multiple AI functions based on the end user requirements.

Object Search

Face Search (No Database

Face Recognition (from

License Plate Recognition

(100+ Countries), includes make and model

Intrusion Detection

Weapon Detection

Fire Detection

People Counting

Vehicle Counting

Temperature Detection

Public Health Analytics

(Facemask Detection,)

QR and Barcode Detection

Live Tracking

Abnormality Detection –

Vehicle/Person wrong direction detection

Vehicle/Person Loitering

Fall Detection

Illegal Parking Detection

Heatmap Generation

Search (No Database Required)

Recognition (from a Database)

Plate Recognition (100+ Countries), includes make and model

Health Analytics (Facemask Detection,)

and Barcode Detection

Detection – Vehicle/Person wrong direction detection

Vehicle/Person

Loitering Detection

Parking Detection

consists of deep-learning video analytics software running in a computer/server environment that can either be deployed at an edge level

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video surveillance systems, and smart power.

will license our CEREBRO platform and sell IoT hardware to service providers such as telecommunications companies, integrators and

other technology resellers already providing services to an existing customer base.

Partnering with service providers that have an

existing loyal customer base allows us to focus on servicing just a handful of our partners and concentrating on our technology

Service providers leverage their end-user infrastructure to sell, bill, and provide customer service for Iveda’s

product offering.

This business model provides dual revenue streams – one from hardware sales and the other from monthly

licensing fees.

will license our CEREBRO platform and sell IoT hardware to service providers such as telecommunications companies, integrators and other

technology resellers already providing services to an existing customer base.

Partnering with service providers that have an existing

loyal customer base allows us to focus on servicing just a handful of our partners and concentrating on our technology offering.

providers leverage their end-user infrastructure to sell, bill, and provide customer service for Iveda’s product offering.

business model provides 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

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

An established

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

Relationships in Asia for

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

Sourcing of products directly

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

Enhancements to the global

distribution potential for our products and services.

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

Relationships

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 Iveda Taiwan’s product sourcing expertise to enhance our custom integration capabilities.

to the global distribution potential for our products and services.

November 2012, we signed a cooperation agreement with ITRI, a research and development organization based in Taiwan.

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Accounting Standards

See Financial Statement Footnotes for discussion.

Financial Statement Footnotes for discussion.

of Operations for the Year Ended December 31, 2025 Compared with the Year Ended December 31, 2024

recorded net consolidated revenue of $6.0 million for the year ended December 31, 2024, compared with $6.5 million for the year ended

December 31, 2023, a decrease of ($0.5) million, or (7%).

For the year ended December 31, 2024, our service revenue was $0.43 million,

or 7% of net revenue, and our equipment sales and installation revenue was $5.6 million, or 93% of net revenue.

In fiscal 2023, our service

revenue was $0.44 million, or 7% of consolidated net revenue, and our equipment sales and installation revenue was $6.1 million, or 93%

of net revenue.

The decrease in total revenue in 2024 compared with the same period in fiscal 2023 is attributable primarily to decreased

equipment sales from Iveda Taiwan as a result of delays of long-term contracts awarded and started during 2024.

for the US operations were $0.9 million for the year ended December 31, 2024, compared with $0.9 million for the year ended December

31, 2023, a slight increase of 2%.

for the Taiwan operations were $5.2 million for the year ended December 31, 2024, compared with $5.6 million for the year ended December

31, 2023, a decrease of ($0.5) million, or (9%).

This decrease in revenue in 2024 compared with 2023 is due primarily to timing of completion

of large projects at year end.

cost of revenue was $4.7 million (78% of revenue;

gross margin of 22%) for the year ended December 31, 2024, compared with $5.4 million

(84% of revenue;

16% gross margin) for the year ended December 31, 2023, a decrease of $0.7 million, or 54%.

The decrease in cost of

revenue was primarily driven by decreased Iveda Taiwan revenue.

The increase in overall gross margin was also primarily attributed to

higher margin sales to smaller customers within Iveda Taiwan revenue and higher margin service revenue maintaining during 2024.

of revenue for the US operations were $0.6 million for the year ended December 31, 2024, compared with $0.9 million for the year ended

December 31, 2023, a decrease of $0.3 million, or 33%.

This net decrease in cost of revenue in 2024 compared with 2023 is due primarily

related to an increase in sales to our distribution partners in the US with better margins than prior year revenue.

of revenue for the Taiwan operations were $4.1 million for the year ended December 31, 2024, compared with $4.5 million for the year

ended December 31, 2023, the decrease in cost of revenue was related to the decrease in revenue and the margins remained consistent.

expenses for the consolidated operations were $5.4 million for the year ended December 31, 2024, compared with $5.1 million for the

year ended December 31, 2023, an increase of $0.3 million, or 5%.

This net increase in operating expenses in 2024 compared with 2023

is due primarily related to increases in marketing and public company related expenses including audit cost increases

related to changing auditors.

Operating expenses for the US

operations were $4.3 million for the year ended December 31, 2024, compared with $4.1 million for the year ended December 31, 2023, an

increase of $0.2 million, or 5%.

This net increase in operating expenses in 2024 compared with 2023 is due primarily related to a increases

in marketing and public company related expenses including audit cost increases related to changing auditors.

Operating expenses for the Taiwan

operations were $1.0 million for the year ended December 31, 2024, compared with $1.0 million for the year ended December 31, 2023, there

were no significant fluctuations in the Taiwan operating expenses in 2024 compared with 2023.

from Operations

Consolidated Loss from operations increased to $4.1 million for the year ended December 31, 2024, compared with $4.0 million for the year

ended December 31, 2023, an increase of $0.1 million, or 2%.

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

a minimal increase in operating expenses offset by increased gross margins.

loss from operations decreased to $4.1 million for the year ended December 31, 2024, compared with $4.2 million for the year ended December

31, 2023, a decrease of $0.1 million, or 2%.

Taiwan income from operations decreased to $0.03 million for the year ended December 31, 2024, compared with $0.14 million for the year

ended December 31, 2023, a decrease of $0.11 million, or 77%.

A majority of the decrease in income from operations was primarily due

to a reduction in revenue of $0.5 million for 2024.

Income (Expense)-Net

Other income (expense)-net was $0.12 million other income for the year

ended December 31, 2024, compared with ($0.08) million other expense for the year ended December 31, 2023.

The majority of the other income

in 2024 is interest income from cash balances and 2023 income was offset by the $0.18 loss from investment in Iveda Phils JV.

loss was $4.0 million for the year ended December 31, 2024, compared with $4.1 million for the year ended December 31, 2023.

consistent amount in net loss was caused primarily from the offsetting effects of increased operating expenses and increased gross

The table below sets forth the

Net Revenue, Cost of Goods Sold, Operating Expenses, Other Income and Expenses, Tax Expense and Net Income by segment for each of the

respective periods and a comparison period over period.

Year ended December 31, 2025

Year ended December 31, 2024

Comparison of Year ended December 31, 2025 and 2024

Cost of Goods Sold

Operating Expenses

Salaries and Payroll Expenses

Travel and Entertainment

Stock-based compensation

Public Company expenses

Audit and Accounting

Consulting Services

Research and Development

Software Subscription

Office Supplies and Postage

Other operating expenses

Total Operating Expenses

Income (Loss) from Operations

Interest Income and Other (Expenses), net

Net loss before Income Tax

Provision For Income Taxes

Net Income (Loss)

The decrease in revenue for the

year ended December 31, 2025, compared with the same period in 2024 is attributable primarily to decreased equipment sales from Iveda

Taiwan as a result of delivery timing related to long-term government contracts and a decreased US revenues through its distributors.

The overall gross margin had a

slight increase attributed to the higher margin contract sales in Iveda Taiwan.

The net decrease in operating

expenses in the year ended December 31, 2025, compared with the same period in 2024 is due primarily to a reduction in R&D expense

in the US, reduction in public company expenses and no significant investor relations campaigns in the US based operations during this

A majority of the decrease in

loss from operations was primarily due to the reduction in operating expenses.

The decrease in net loss was primarily

due to a reduction in operating expenses for the year ended December 31, 2025, compared to the same period in 2024.

and Capital Resources

of December 31, 2024, we had cash and cash equivalents of $1.6 million in our U.S.-based segment and $1.0 million in our Taiwan-based

segment, compared to $2.9 million in our U.S.-based segment and $1.8 million in our Taiwan-based segment as of December 31, 2023.

decrease in our cash and cash equivalents is primarily a result of the cash used in operating activities of $4.4 million during the year

ended December 31, 2024.

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, 2024 was $4.4 million compared to $3.3 million net cash used during

the year ended December 31, 2023.

Net cash used in operating activities for the year ended December 31, 2024 consisted primarily of the

$4.0 million net loss including $0.2 million of non-cash charges (primarily stock option compensation and common stock issued for investor

relations services), $0.5 million deferred cost of goods sold, $0.3 million of Taiwan vendor deposits, prepaids and advances to suppliers

and $0.4 million net increase of accounts payable and accrued operating expenses.

Net cash used in operating activities for the year

ended December 31, 2023 consisted primarily of the $4.1 million net loss including $0.3 million of non-cash charges (primarily stock

option compensation and common stock issued for investor relations services), $0.1 million of Taiwan vendor deposits, prepaids and advances

to suppliers and $0.6 million net payments for accounts payable and accrued operating and interest expenses with an offsetting $0.8 million

collection of accounts receivable

cash used in investing activities for the year ended December 31, 2024 was minimal.

Net cash used by investing activities during the

year ended December 31, 2023 was $0.30 million.

of December 31, 2025, we had cash and cash equivalents of $3.9 million in our U.S.-based segment and $1.3 million in our

Taiwan-based segment, compared to $1.6 million in our U.S.-based segment and $1.0 million in our Taiwan-based segment as of December

This increase in our cash and cash equivalents is primarily a result of the cash provided from the sale of securities of $5.2

million during the year ended December 31, 2025.

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, 2025 was $2.0 million compared to $4.4 million net cash used

during the year ended December 31, 2024.

Net cash used in operating activities for the year ended December 31, 2025 consisted

primarily of the $3.2 million net loss including $0.5 million of non-cash charges (primarily stock option compensation and common

stock issued for investor relations services), and $0.8 million net decrease of accounts payable and accrued operating expenses.

cash used in operating activities for the year ended December 31, 2024 consisted primarily of the $4.0 million net loss including $0.2 million of non-cash charges (primarily stock option

compensation and common stock issued for investor relations services), $0.5 million deferred cost of goods sold, $0.3 million of Taiwan

vendor deposits, prepaids and advances to suppliers and $0.4 million net increase of accounts payable and accrued operating expenses.

cash used in investing activities for the year ended December 31, 2025 and 2024 was minimal.

cash provided by financing activities for the year ended December 31, 2025 was $4.6 million compared with $2.3 million provided during

the year ended December 31, 2024.

Net cash provided by financing activities in 2025 is primarily a result of the $4.9 million At-The-Market (ATM) offering

of Common Stock.

Net cash provided by financing activities in 2024 is primarily a result of the $1.7 million net direct

offering of Common Stock and Pre-Funded warrants at $3.44 per share.

Net cash provided by financing activities in 2023 is primarily a

result of the $1.3 million issuance of Common Stock from the exercise of warrants issued during the August 2022 offering at $11.20.

have experienced significant operating losses since our inception.

At December 31, 2024, we had approximately $35 million in net operating

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

We did not recognize any benefit from

the federal net operating loss carryforwards in 2024 or 2023.

We also had approximately $5.0 million in state net operating loss carryforwards,

which expire after five years.

At December 31, 2025, we had approximately $40 million in net

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

We did not recognize any

benefit from the federal net operating loss carryforwards in 2025 or 2024.

We also had approximately $9.0 million in state net

operating loss carryforwards, which expire after five years.

have limited liquidity and have not yet established a stabilized source of revenue sufficient to cover operating costs, based on our

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and existing economic conditions.

Payment terms for our U.S.-based segment require a deposit with the order and 15 days after they are shipped.

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

that are more than 120 days past due are considered delinquent.

Payment terms for our Taiwan-based segment vary based on our agreements

with our customers.

Generally, we receive payment for our products and services within one year of commencing the project, except that

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

For our U.S.-based segment,

we had no doubtful accounts receivable allowances for the years ended December 31, 2024 and 2023, respectively.

For our Taiwan-based

segment, we set up no doubtful accounts receivable allowances for the years ended December 31, 2024 and 2023, 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.

Payment terms for our U.S.-based segment require a deposit with the order and 15 days after they are

For our U.S.-based segment, accounts receivable that are more than 120 days past due are considered delinquent.

Payment terms

for our Taiwan-based segment vary based on our agreements with our customers.

Generally, we receive payment for our products and services

within one year of commencing the project, except that we retain 5% of the total payment amount and release such amount one year after

the completion of the project.

For our U.S.-based segment, we had no doubtful accounts receivable allowances for the years ended December

31, 2025 and 2024, respectively.

For our Taiwan-based segment, we set up no doubtful accounts receivable allowances for the years ended

December 31, 2025 and 2024, respectively.

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.

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.

the periods for which financial information is presented, we do not believe that the current levels of inflation in the United States

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The expected life of options and warrants is based on the average of three public companies offering services similar to ours.

of Long-Lived Assets

have a relatively minimal amount of property and equipment, consisting primarily of office equipment.

We review the recoverability of

the carrying value of long-lived assets using the methodology prescribed in ASC 360 “Property, Plant and Equipment.” We review

our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset

group may not be recoverable.

Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount

of an asset to the undiscounted future net operating cash flows expected to be generated by the asset.

If such assets are considered

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

We did not make any impairment for the years ended December 31, 2024 and 2023.

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