What changed in this filing

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Item 1A. Risk Factors

2025-04-15 compared with 2024-04-01 · 101 added, 121 removed, 631 unchanged (26% of the section changed)

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Related to Our Company and Business

Our financial statements contain a going concern

The 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 $53 million since

inception 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.

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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future success is dependent on the efforts of key management personnel, particularly David Ly, our Chairman and Chief Executive Officer

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.

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.

and Robert J.

Brilon, our Chief Financial 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.

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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a significant portion of our revenue has come from a limited number of key customers.

Revenue from two customers out of 65 total customers

represented approximately 48% of total revenue for the year ended December 31, 2023.

These specific customers were 1) YOU MING HUEI CO.

LTD with 25%, 2) Chicony Power Technology Co Ltd with 23%, (both Taiwan companies).

Revenue from two customers out of 42 total customers

Revenue from five customers out of 70 total customers

represented approximately 67% of total revenue for the year ended December 31, 2024.

These specific customers were 1) Chunghwa Telecom

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

Total number of customers were 65 and 42, for the years

ended December 31, 2023 and 2022, respectively.

50% of the total accounts receivable at December 31, 2023 was from one customer out of

a total of 24 customer accounts receivable accounts.

with 18% 2) SECURITY INTEGRATION & CONSULTANT TECHNOLOGY CO., LTD.

With 16%, 3) Chicony Power Technology Co Ltd with 11% and 4) HWACOM

with 10%, (all Taiwan companies) and Claro Enterprise Solutions (a US company) with 12%.

Revenue from two customers out

of 65 total customers represented approximately 48% of total revenue for the year ended December 31, 2023.

These specific customers were

1) YOU MING HUEI CO.

LTD with 25%, 2) Chicony Power Technology Co Ltd with 23%, (both Taiwan companies).

Total number of customers were

approximately 70 and 65, for the years ended December 31, 2024 and 2023, respectively.

52% of the total accounts receivable at December

31, 2024 was from one customer out of a total of 42 customer accounts receivable accounts.

This specific customer was Chunghwa Telecom.

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.

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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terms for our U.S.-based segment require 50% prepayment for our Products before 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.

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, 2023 and 2022.

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.

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.

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

ended December 31, 2024 and 2023.

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.

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We have direct relationships with camera manufacturers in Taiwan for camera systems.

Risks associated with our dependence upon third-party manufacturers include the following:

Risks associated with our dependence upon third-party

manufacturers include the following:

(i) reduced control over delivery schedules;

(ii) lack of control over quality assurance;

(iii) poor manufacturing yields and high costs;

poor manufacturing yields and high costs;

(iv) potential lack of adequate capacity during periods of excess demand;

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However, some companies may be developing

a similar product, including companies that may have significantly greater financial, technical, and marketing resources, larger

distribution networks, and that generate greater revenue and have greater name recognition than we do.

Those companies may develop

products that are superior to those that we offer.

Such competition may potentially affect our chances of achieving

profitability.

a similar product, including companies that may have significantly greater financial, technical, and marketing resources, larger distribution

networks, and that generate greater revenue and have greater name recognition than we do.

Those companies may develop products that are

superior to those that we offer.

Such competition may potentially affect our chances of achieving profitability.

of our competitors may conduct more extensive promotional activities and may offer lower prices to customers than we can, which could

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economic and political changes;

imposition of governmental controls or changes in government regulations, including tax laws, regulations, trade policies, and

imposition of governmental controls or changes in government regulations, including tax laws, regulations, trade policies, and treaties;

in, or impositions of, legislative or regulatory requirements regarding the pharmaceutical industry;

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on transfers of funds and assets between jurisdictions;

disruption to supply chains, impacting access to raw materials, labor, or finished products from third-party manufacturers;

uncertainty in financial markets, leading to currency fluctuations, changes in interest rates, and stock market volatility;

risk of elevated security concerns, including cyber threats, protests, or civil unrest;

to supply chains, impacting access to raw materials, labor, or finished products from third-party manufacturers;

in financial markets, leading to currency fluctuations, changes in interest rates, and stock market volatility;

of elevated security concerns, including cyber threats, protests, or civil unrest;

Taiwan geo-political instability.

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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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stock and/or Warrants.

September 28, 2023 , the Company received

written notice (the “Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”)

notifying the Company that, based on the closing bid price of the Company’s Common

Stock , the Company no longer complies with the minimum bid price requirement for continued

listing on The Nasdaq Capital Market.

Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00

per share (the “Minimum Bid Price Requirement”), and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the

Minimum Bid Price Requirement exists if the deficiency continues for a period of 30 consecutive trading days.

regain compliance, the closing bid price of the Common Stock must be at least $1.00 per share for a minimum of 10 consecutive trading

days prior to March 26, 2024, and the Company

must otherwise satisfy The Nasdaq Capital Market’s requirements for listing.

If the Company does not regain

compliance by March 26, 2024 , the Company may be eligible for an additional 180 calendar

day compliance period if it meets the continued listing requirement for market value of publicly held shares and all other initial listing

standards for The Nasdaq Capital Market, with the exception of the bid price requirement, and will need to provide written notice of

its intention to cure the deficiency during the second compliance period.

If the Company

does not qualify for the second compliance period or fails to regain compliance during the second

compliance period, then Nasdaq will notify the Company of its determination to delist the Company’s common stock, at which point

the Company will have an opportunity to appeal the delisting determination to a Hearings Panel.

Company intends to monitor the closing bid price of the Common Stock and consider its available options to resolve the noncompliance

with the Minimum Bid Price Requirement.

There can be no assurance that the

Company will be able to regain compliance with The Nasdaq Capital Market’s continued listing

requirements or that Nasdaq will grant the Company a further extension of time to regain compliance, if applicable.

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

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CYBERSECURITY.

Cybersecurity Risk Management and Strategy

We recognize the importance of assessing, identifying,

and managing material risks associated with cybersecurity threats, as such term is defined in Item 106(a) of Regulation

Cybersecurity

Risk Management and Strategy

recognize the importance of assessing, identifying, and managing material risks associated with cybersecurity threats, as such term is

defined in Item 106(a) of Regulation S-K.

These risks include, among other things:

operational risks, intellectual property theft, fraud, extortion, harm to employees or customers

and violation of data privacy or security laws.

We do not presently

have any general processes for assessing, identifying, and managing material risks from cybersecurity threats.

As we expand our

business operations, we plan to develop processes that will allow for the identification and assessment of cybersecurity risk that

will be integrated into an overall risk management system, which will be managed by senior management and overseen by

the Board of Directors.

As part of this development, we plan to identify and address cybersecurity risks related to our business,

privacy and compliance issues through a multi-faceted approach that is expected to include third party assessments, internal

information technology (IT) audit, IT security, governance, risk and compliance reviews.

In connection with these planned

approaches, and to defend, detect and respond to cybersecurity incidents, we, among other things, will consider:

proactive privacy and cybersecurity reviews of systems and applications, audits of applicable data policies, performing penetration

testing using external third-party tools and techniques to test security controls, conducting employee training, monitoring emerging

laws and regulations related to data protection and information security, and implementing appropriate changes.

As part of the above planned processes, we may engage

external auditors and consultants with expertise in cybersecurity to assess our internal cybersecurity programs and compliance with applicable

practices and standards.

We plan to design our risk management program to also

assesses third party risks, and we plan to perform third-party risk management to identify and mitigate risks from third parties, such

as vendors, suppliers, and other business partners associated with our use of third-party service providers.

In addition to new vendor

onboarding, we plan to perform risk management during third-party cybersecurity compromise incidents to identify and mitigate risks to

us from third-party incidents.

Cybersecurity Governance

We expect that cybersecurity

will become an important part of our risk management processes and an area of focus for our Board of Directors and management.

that our Board of Directors will be responsible for the oversight of risks from cybersecurity threats.

We expect our senior management

will provide our Board of Directors updates on a quarterly basis regarding matters of cybersecurity.

This is expected to include existing

and new cybersecurity risks, status on how management is addressing and/or mitigating those risks, cybersecurity and data privacy incidents

(if any) and status on key information security initiatives.

We expect that our Board members will also engage in periodic conversations

with management on cybersecurity-related news events and discuss any updates to our cybersecurity risk management and strategy programs.

Currently, our Chief Financial Officer is expected

to lead our cybersecurity risk assessment and management processes and oversees their implementation and maintenance.

Our Chief Financial

Officer will be tasked with staying informed about, and monitoring the prevention, mitigation, detection and remediation of cybersecurity

incidents through his management of, and participation in, the cybersecurity risk management and strategy processes we plan to develop

and as described above, including the operation of an incident response plan, and report to the Board of Directors on any appropriate

operational risks, intellectual property theft, fraud,

extortion, harm to employees or customers and violation of data privacy or security laws.

do no t presently have any general processes for assessing, identifying, and managing material risks from cybersecurity threats.

expand our business operations, we plan to develop processes that will allow for the identification and assessment of cybersecurity risk

that will be integrated into an overall risk management system, which will be managed by senior management and overseen by the Board

of Directors.

As part of this development, we plan to identify and address cybersecurity risks related to our business, privacy and compliance

issues through a multi-faceted approach that is expected to include third party assessments, internal information technology (IT) audit,

IT security, governance, risk and compliance reviews.

In connection with these planned approaches, and to defend, detect and respond

to cybersecurity incidents, we, among other things, will consider:

conducting proactive privacy and cybersecurity reviews of systems

and applications, audits of applicable data policies, performing penetration testing using external third-party tools and techniques

to test security controls, conducting employee training, monitoring emerging laws and regulations related to data protection and information

security, and implementing appropriate changes.

part of the above planned processes, we may engage external auditors and consultants with expertise in cybersecurity to assess our internal

cybersecurity programs and compliance with applicable practices and standards.

plan to design our risk management program to also assesses third party risks, and we plan to perform third-party risk management to

identify and mitigate risks from third parties , such as vendors, suppliers, and other business partners associated with our use of third-party

service providers.

In addition to new vendor onboarding, we plan to perform risk management during third-party cybersecurity compromise

incidents to identify and mitigate risks to us from third-party incidents.

Cybersecurity

expect that cybersecurity will become an important part of our risk management processes and an area of focus for our Board of Directors

and management.

We expect that our Board of Directors will be responsible for the oversight of risks from cybersecurity threats.

our senior management will provide our Board of Directors updates on a quarterly basis regarding matters of cybersecurity.

This is expected

to include existing and new cybersecurity risks, status on how management is addressing and/or mitigating those risks, cybersecurity

and data privacy incidents (if any) and status on key information security initiatives.

We expect that our Board members will also engage

in periodic conversations with management on cybersecurity-related news events and discuss any updates to our cybersecurity risk management

and strategy programs.

our Chief Financial Officer is expected to lead our cybersecurity risk assessment and management processes and oversees their implementation

and maintenance.

Our Chief Financial Officer will be tasked with staying informed about, and monitoring the prevention, mitigation, detection

and remediation of cybersecurity incidents through his management of, and participation in, the cybersecurity risk management and strategy

processes we plan to develop and as described above, including the operation of an incident response plan, and report to the Board of

Directors on any appropriate items.

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