What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-04-15 compared with 2024-04-01 · 133 added, 116 removed, 230 unchanged (52% 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.

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

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

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.

license our 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.

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

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.

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:

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.

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.

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

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surveillance service offering, utilizing our Sentir platform.

Accounting Policies and Estimates

Discussion and Analysis of Financial Conditions and Results of Operations is based upon our financial statements, which have been prepared

in accordance with GAAP.

The preparation of these financial statements requires us to make estimates and judgments that affect the reported

amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.

We base our estimates

on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.

Actual results may

differ from these estimates under different assumptions or conditions.

A description of our critical accounting policies and related

judgments and estimates that affect the preparation of our financial statements is set forth in our audited consolidated financial statements

for the year ended December 31, 2023.

Such policies are unchanged.

Accounting Standards

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

See Financial Statement Footnotes for discussion.

of Operations for the Year Ended December 31, 2024 Compared with the Year Ended December 31, 2023

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, 2022, an increase of $2.0 million, or 45%.

For the year ended December 31, 2023, our recurring service revenue was $0.44

million, or 7% of net revenue, and our equipment sales and installation revenue was $6.0 million, or 93% of net revenue.

In fiscal 2022,

our recurring service revenue was $0.31 million, or 7% of consolidated net revenue, and our equipment sales and installation revenue

was $4.2 million, or 93% of net revenue.

The increase in total revenue in 2023 compared with the same period in fiscal 2022 is attributable

primarily to increased equipment sales from Iveda Taiwan as a result of additional long-term contracts awarded and started during 2023.

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;

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(84% of revenue;

22% gross margin) for the year ended December 31, 2022, an increase of ($1.1 million), or (55%).

The increase in cost

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 $4.5 million for the year ended December 31, 2023, compared with $4.3 million for the year ended December 31, 2022, an

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 2023 compared with 2022 is due primarily related to a ramp

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.

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

from operations increased to $3.4 million for the year ended December 31, 2023, compared with $3.3 million for the year ended December

31, 2022, an increase of $0.1 million, or 2%.

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

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

income (expense)-net was $96,527 other income for the year ended December 31, 2023, compared with ($13,004) other expense for the year

ended December 31, 2022, a positive change of $109,531.

The majority of the other income in 2023 is interest income from cash balances.

Non-Controlled

Portion of Joint Venture

Non-Controlled

Portion of the Philippines Joint Venture net loss was $97,605 for the year ended December 31, 2023.

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.

of $0.1 million, or 3%, in net loss was caused primarily by a decrease 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.

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

and Capital Resources

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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 $3.5 million and $0.9 million

investment in software platform development (Cerebro) during the year ended December 31, 2023.

There are no legal or economic factors

that materially impact our ability to transfer funds between our U.S.-based and Taiwan-based segments.

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

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$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), $0.2 million of Taiwan vendor deposits, prepaids and advances to suppliers and $0.5 million net payments for accounts

payable and accrued operating expenses.

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.

cash used in investing activities for the year ended December 31, 2023 was $0.9 million.

Net cash used by investing activities during

the year ended December 31, 2022 was $14,165.

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.

cash provided by financing activities for the year ended December 31, 2024 was $2.3 million compared with $1.0 million provided during

the year ended December 31, 2023.

Net cash provided by financing activities in 2023 is primarily a result of the $1.3 million exercise

of warrants to purchase Common Stock at $1.40 per share issued with the offering of August 2022.

Net cash provided by financing activities

in 2022 is primarily a result of the $11.5 million sale of Common Stock and Pre-Funded warrants during the year ended December 31, 2023.

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.

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and existing economic conditions.

Payment terms for our U.S.-based segment require prepayment for most products before they are shipped

and monthly Sentir licensing fees, which are due in advance on the first day of each month.

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

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if we had engaged in such relationships.

of Critical Accounting Policies

Accounting Policies and Estimates

have identified the policies below as critical to our business operations and the understanding of our results of operations.

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of Long-Lived Assets

have a significant amount of property and equipment primarily consisting of leased equipment.

We review the recoverability of the carrying

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

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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Expenses are recognized as incurred.

from fixed-price equipment installation contracts are recognized on the percentage-of-completion method.

The percentage completed is

measured by the costs incurred to date as a percentage of estimated total costs for each contract.

This method is used because we consider

expended costs to be the best available measure of progress on these contracts.

Because of inherent uncertainties in estimating costs

and revenue, it is at least reasonably possible that the estimates used will change.

costs include all direct material, subcontractors, labor costs, and equipment costs and those indirect costs related to contract performance.

General and administrative costs are charged to expense as incurred.

Provisions for estimated losses on uncompleted contracts are made

in the period in which such losses are determined.

Changes in job performance, job conditions, and estimated profitability may result

in revisions to costs and income and are recognized in the period in which the revisions are determined.

Changes in estimated job profitability

resulting from job performance, job conditions, contract penalty provisions, claims, change orders, and settlements are accounted for

as changes in estimates in the current period.

Profit incentives are included in revenue when their realization is reasonably assured.

Claims are included in revenue when realization is probable and the amount can be reliably estimated.

liability, “Billings in excess of costs and estimated earnings on uncompleted contracts,” represents billings in excess of

revenue recognized.

for product and software sales without installation is recorded when the product and/or software has been shipped to the customer.

from fixed-price equipment installation contracts is recognized as the contracts allow for invoicing at various milestones.

and administrative costs are charged to expense as incurred.

Provisions for estimated losses on uncompleted contracts are made in the

period in which such losses are determined.

Changes in job performance, job conditions, and estimated profitability may result in revisions

to costs and income and are recognized in the period in which the revisions are determined.

Changes in estimated job profitability resulting

from job performance, job conditions, contract penalty provisions, claims, change orders, and settlements are accounted for as changes

in estimates in the current period.

Profit incentives are included in revenue when their realization is deemed earned by the contract.

January 1, 2006, we adopted the fair value recognition provisions of ASC 718, “Share-Based Payment,” which requires the recognition

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7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Item 10(f)

of Regulation S-K and are not required to provide the information otherwise required under this item.

are a smaller reporting company as defined by Item 10(f) of Regulation S-K and are not required to provide the information otherwise

required under this item.

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