Iveda Solutions, Inc. 10-K

ITEM 9A – CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Our Chief Executive Officer and Principal Financial Officer, after evaluating the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Annual Report on Form 10-K (the “Evaluation Date”), concluded that as of the Evaluation Date, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms. Based on their evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2024, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities  Exchange Act of 1934 Rule 13a-15(f). Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO Framework”). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with U.S. GAAP. As of December 31, 2024, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control-Integrated Framework of 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and SEC guidance on conducting such assessments. Based on that evaluation under this framework, our management concluded that as of December 31, 2024, our internal control over financial reporting was not effective because of the following material weaknesses: The material weaknesses identified include (i) the Company had inadequate segregation of duties consistent with control objectives and (ii) the Company had an insufficient number of personnel with an appropriate level of U.S. GAAP knowledge and experience and ongoing training in the application of U.S. GAAP and SEC disclosure requirements commensurate with the Company’s financial reporting requirements. We are working to remediate the deficiencies and material weaknesses. Our remediation efforts are ongoing, and we will continue our initiatives to implement and document policies, procedures, and internal controls. We have taken steps to enhance our internal control environment and plan to take additional steps to remediate the deficiencies and address material weaknesses. In addition, we continue to evaluate, remediate and improve our internal control over financial reporting, executive management may elect to implement additional measures to address control deficiencies or may determine that the remediation efforts described above require modification. Executive management, in consultation with and at the direction of our Audit Committee, will continue to assess the control environment and the above-mentioned efforts to remediate the underlying causes of the identified material weaknesses. Although we plan to complete this remediation process as quickly as possible, we are unable, at this time to estimate how long it will take; and our efforts may not be successful in remediating the deficiencies or material weaknesses. This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to rules of the SEC that permit the company to provide only management’s report on internal control in this annual report. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting during the year ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 33 Inherent Limitations on Effectiveness of Controls Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. These include the fact that human judgment in decision-making can be faulty and that breakdowns in internal control can occur because of human failures such as simple errors or mistakes or intentional circumvention of the established process. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Changes in Disclosure Controls and Procedures None ITEM 9B – OTHER INFORMATION (a) None. (b) Corporate Governance During the period covered by this Annual Report on Form 10-K, there were no changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors. (c) Insider Trading Arrangements and Policies During the quarter ended December 31, 2024, no director or officer of the Company “ adopted ” or “ terminated ” a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” as each term is defined in Item 408 of Regulation S-K. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 34 PART III ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Executive Officers and Directors Set forth below is information concerning our directors, director nominees, executive officers and other key employees. Name Age Position David Ly 49 Chief Executive Officer, Chairman of the Board of Directors and President Robert J. Brilon 64 Chief Financial Officer, Treasurer and Corporate Secretary Gregory Omi 63 Chief Technology Officer Joseph Farnsworth 65 Director Alejandro Franco 71 Director Robert D. Gillen 70 Director David Ly founded our company and has served as our Chief Executive Officer and Chairman of the Board of Directors since October 2009. Mr. Ly also served as our President from October 2009 to February 2014. Mr. Ly served in Business-to-Business Sales for T-Mobile USA, a wireless network and communications company, from August 2002 to September 2003. From September 2001 to July 2002, Mr. Ly served as Market Manager of Door To Door Storage, a moving and portable storage company. Mr. Ly served as an Applications Engineer at Metricom, Inc., the first micro cellular data network, from November 1998 to August 2001. Mr. Ly holds a Bachelor of Science Degree in Civil Engineering with a minor in International Business from San Francisco State University. We believe Mr. Ly’s position as our Chief Executive Officer, his extensive knowledge and understanding of the video surveillance and AI industries, and his business and engineering expertise and management skills provide the requisite qualifications, skills, perspectives, and experience that make him well qualified to serve on our Board of Directors. Robert J. Brilon has served as our Chief Financial Officer since December 2013. He was also our President from February 2014 to July 2018 and Treasurer from December 2013 to July 2018 and was appointed Treasurer again on December 15, 2021. Mr. Brilon served as our Executive Vice President of Business Development from December 2013 to February 2014 and as our interim Chief Financial Officer and Treasurer from December 2008 to August 2010. Mr. Brilon is a Board Director and independent contract CFO for Bimergen Energy Corporation from October 2021 to present. Mr. Brilon joined New Gen Management Services, Inc. in July 2017 as the CFO (subsequently becoming President and CFO of New Gen in July 2018). Mr. Brilon was the President, Chief Financial Officer, Corporate Secretary, and Director of both Vext Science, Inc and New Gen until he resigned in February 2020. Mr. Brilon served as Chief Financial Officer and Executive Vice President of Business Development of Brain State Technologies, a brainwave optimization software licensing and hardware company, from August 2010 to November 2013. From January 2010 to August 2010, Mr. Brilon served as Chief Financial Officer of MD Helicopters, a manufacturer of commercial and light military helicopters. Mr. Brilon also served as Chief Executive Officer, President, and Chief Financial Officer of InPlay Technologies (NASDAQ: NPLA), formerly, Duraswitch (NASDAQ: DSWT), a company that licensed patented electronic switch technology and manufactured digital pen technology, from November 1998 to June 2007. Mr. Brilon served as Chief Financial Officer of Gietz Master Builders from 1997 to 1998, Corporate Controller of Rental Service Corp. (NYSE: RRR) from 1995 to 1996, Chief Financial Officer and Vice President of Operations of DataHand Systems, Inc. from 1993 to 1995, and Chief Financial Officer of Go-Video (AMEX:VCR) from 1986 to 1993. Mr. Brilon is a certified public accountant and practiced with several leading accounting firms, including McGladrey Pullen, Ernst and Young and Deloitte and Touche. Mr. Brilon holds a Bachelor of Science degree in Business Administration from the University of Iowa. 35 Gregory Omi has served as our Chief Technology Officer since May 2021. Prior, Mr. Omi served as director of our company from October 2009 to November 2016. Mr. Omi served as a senior programmer for Zynga, an online and mobile social gaming company, from November 2009 to March 2014 and then again briefly in 2016 and 2019 as architect. Mr. Omi served as senior engineer at Tesla, an electric vehicle manufacturer, from October 2016 to October 2017. Prior to that, Mr. Omi served as a programmer for Monkey Gods, LLC, a video game developer, from January 2009 to November 2009. Mr. Omi also served as Senior Programmer for Flektor, Inc., a developer of online audio and video editing tools, from October 2006 to January 2009. From October 1996 to June 2006, Mr. Omi served as a Senior Programmer for Naughty Dog, a computer game developer. Prior to that, Mr. Omi served in programming roles for 3DO from 1992 to 1996, TekMagic in 1992, Epyx from 1986 to 1992, Atari in 1991, Nexa from 1982 to 1983 and 1985 to 1986, and HES in 1983. Mr. Omi attended DeVry Institute in Phoenix, Arizona from 1979 to 1980 where he studied industrial electronics engineering. Joseph Farnsworth has served as a director of our company since January 2010. Mr. Farnsworth has served as President and as a director of Farnsworth Realty & Management Co., an Arizona-based privately held real estate company, and as a director of Farnsworth Development, a closely held real estate developer, since 1995. Mr. Farnsworth has also served as a director of The Farnsworth Companies since 2008. Mr. Farnsworth has also served as a director of Venture West Aviation since 2022. From 1990 to 1995, Mr. Farnsworth served as President of Alfred’s International, with operations in China and Korea. Prior to that, Mr. Farnsworth served as President of Farnsworth International, a real estate investment company based in Taipei, Taiwan from 1987 to 1991. Mr. Farnsworth holds a Bachelor of Science degree in Real Estate Finance from Brigham Young University and is a licensed real estate broker in Arizona. We believe Mr. Farnsworth’s experience leading companies with operations in Asia and his business and management skills provide the requisite qualifications, skills, perspectives, and experience that make him well qualified to serve on our Board of Directors. Alejandro Franco has served as a director of our company since November 2011. Mr. Franco has also served as a consultant to our company since 2011, advising on business development and strategic partnership opportunities in Mexico. Mr. Franco is the founder and has served as President of Amextel, a telecommunications company in Mexico, since June 2003. Mr. Franco founded the Mexican American Business Council, a non-profit organization facilitating border relationships to increase business, support trade growth and investments, and has been the CEO since June 2015. Mr. Franco also founded and served as President of Bela Corp., a cloud technology and services company, from 1988 to 2000. Prior to that, Mr. Franco founded and served as President of TVM, Inc., a television and technology company in Mexico, from 1985 to 1988. Mr. Franco attended UNAM University, Mexico where he studied Economics. Mr. Franco also attended IBERO University, Mexico, where he studied Industrial Design. Mr. Franco holds a Master degree in Theology from the Oblate School of Theology in San Antonio, Texas. We believe Mr. Franco’s experience leading businesses with operations in Asia and Mexico, his experience as a consultant for our company, his extensive knowledge and understanding of the telecommunications and cloud technology industries, and his business and management skills provide the requisite qualifications, skills, perspectives, and experience that make him well qualified to serve on our Board of Directors. Robert D. Gillen has served as a director of our company since November 2011. Mr. Gillen founded and has served as President of the Law Offices of Robert D. Gillen, Ltd., a law firm located in Scottsdale, Arizona and Naperville, Illinois, which specializes in advising small- and medium-size businesses on domestic and international tax planning, since 1979. Mr. Gillen retired in October 2014. Mr. Gillen holds a Bachelor of Science degree in Business Administration from the University of Illinois and a J.D. from the Illinois Institute of Technology – Chicago Kent College of Law. Mr. Gillen also has extensive experience educating, CPAs, attorneys, and other financial and business professionals about asset protection and tax planning. We believe Mr. Gillen’s experience advising, clients operating the cellular industry, his experience leading a business involved in the lease and sale of cellular sites, his experience navigating international business and legal issues, and his prior board experience provide the requisite qualifications, skills, perspectives, and experience that make him well qualified to serve on our Board of Directors. 36 Family Relationships There are no family relationships among any of our directors, director nominees or executive officers. Terms of Directors and Executive Officers The number of directors of the Company shall be not less than one nor more than thirteen. Each of our directors holds office until the next annual meeting of shareholders and until his or her successor shall have been elected and qualified, until his or her resignation, or until his or her office is otherwise vacated in accordance with our articles of incorporation. Our officers are elected by and serve at the discretion of the board of directors. Board of Directors and Board Committees Our board of directors consists of four directors, three of whom are independent as such term is defined by the Nasdaq Capital Market. We have determined that Joseph Farnsworth, Alejandro Franco and Robert D. Gillen satisfy the “independence” requirements under NASDAQ Rule 5605. Board Committees We have established three committees under the board of directors: an audit committee, a compensation committee and a nomination and corporate governance committee, and adopted a charter for each of the three committees. Copies of our committee charters are posted on our corporate investor relations website. Each committee’s members and functions are described below. Audit Committee. Our audit committee consists of Joseph Farnsworth, Alejandro Franco and Robert D. Gillen. Mr. Farnsworth is the chair of our audit committee. The audit committee will oversee our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among other things: ● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● discussing the annual audited financial statements with management and the independent auditors; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; ● reviewing and approving all proposed related party transactions; ● meeting separately and periodically with management and the independent auditors; and ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance. Compensation Committee. Our compensation committee consists of Joseph Farnsworth, Alejandro Franco and Robert D. Gillen. Mr. Farnsworth is the chair of our compensation committee. The compensation committee will be responsible for, among other things: ● reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers; ● reviewing and recommending to the shareholders for determination with respect to the compensation of our directors; ● reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and ● selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management. 37 Nominations and Corporate Governance Committee. Our Nominations and Corporate Governance committee consists of Joseph Farnsworth, Alejandro Franco and Robert D. Gillen. Mr. Gillen is the chair of our Nominations and Corporate Governance committee. The nominating and corporate governance committee is responsible for, among other things, (i) determining the qualifications, qualities and skills required to be a director of the Company and evaluating, selecting and approving nominees to serve as directors, (ii) periodically reviewing, assessing and making recommendations for changes to the Board of Directors and its committees and (iii) overseeing the process for evaluation of the Board of Directors. Pursuant to the nominating and corporate governance committee charter, the nominating and corporate governance committee has the authority to delegate all or a portion of its duties and responsibilities to a subcommittee of the nominating and corporate governance committee. In addition, the nominating and corporate governance committee has unrestricted access to and assistance from our officers, employees and independent auditors and the authority to employ experts, consultants and professionals to assist with performance of their duties. The nominating and corporate governance committee is also responsible for establishing procedures regarding director nominees put forward by stockholders. The committee is also responsible for establishing procedures for shareholder communications with the Board of Directors. Involvement in Certain Legal Proceedings None of our directors or officers has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, nor has any been a party to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction or settlement. Except as set forth in our discussion below in “Related Party Transactions,” our directors and officers have not been involved in any transactions with us or any of our affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC. Code of Business Conduct and Ethics We have adopted a code of business conduct and ethics which is applicable to all of our directors, executive officers and employees. A copy of the code of business conduct and ethics is posted on our corporate investor relations website as required for our listing on the Nasdaq Capital Market. ITEM 11 – EXECUTIVE COMPENSATION Summary Compensation Table We believe that it is important to design a compensation program that supports our business strategy. As a result, our compensation program emphasizes performance-based compensation and is designed to support our business goals, promote short- and long-term growth, and attract, retain, and motivate key talent. Our compensation program is comprised of three components: base salary, bonus awards, and long-term performance incentives. We believe that our executive officers and other key employees should have a portion of their potential annual compensation tied to our profitability and our other goals. Additionally, we seek to align the ability to earn long-term incentives directly with the interests of our stockholders through the use of equity-based incentives. We strive to ensure compensation is competitive with companies similar to us; however, we acknowledge that base salaries are currently below market. The following table sets forth certain information with respect to compensation for the years ended December 31, 2024 and 2023, earned by or paid to our chief executive officer and principal executive officer, our principal financial officer, and our other most highly compensated executive officers whose total compensation exceeded US $100,000 (the “named executive officers”). Name and Principal Position Year Salary (1) Warrants Awards (2) Option Awards (3) All Other Compensation (4) Total David Ly 2024 $ 190,000 $ 18,367 $ 16,586 $ 224,953 Chairman and Chief Executive Officer 2023 $ 190,000 $ 23,859 $ 11,968 $ 225,827 Sid Sung Former President (5) 2023 $ 150,000 $ 2,130 $ 152,130 Robert J. Brilon 2024 $ 180,000 $ 18,367 $ 198,367 Chief Financial Officer, Treasurer and Corporate Secretary 2023 $ 180,000 $ 20,450 $ 200,450 Gregory Omi 2024 - $ - $ - Chief Technology Officer 2023 - $ 2,130 $ 2,130 (1) The amounts in this column reflect the amounts earned during the fiscal year, whether or not actually paid during such year. (2) The amounts in this column reflect the aggregate probable grant date fair value of warrants awards to our named executive officers during the fiscal year calculated in accordance with FASB ASC Topic 718, Stock Compensation . The amounts reported in this column do not correspond to the actual economic value that may be received by our named executive officers from their option awards. (3) The amounts in this column reflect the aggregate probable grant date fair value of option awards to our named executive officers during the fiscal year calculated in accordance with FASB ASC Topic 718, Stock Compensation . The amounts reported in this column do not correspond to the actual economic value that may be received by our named executive officers from their option awards. (4) The amounts in this column reflect the amount of perquisites related to a vehicle allowance. (5) Resigned effective December 31, 2023. 38 Outstanding Equity Awards as of December 31, 2024 The following table provides information regarding outstanding equity awards held by our named executive officers as of December 31, 2024. Outstanding Equity Awards at Fiscal Year Ended December 31, 2024 Name and Principal Position Grant Date Number of Securities Underlying Unexercised Options/Warrants (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Option Exercise Price ($) Option Expiration Date David Ly Chairman and Chief Executive Officer 2/25/2015 1,563 (1) - - $ 49.28 2/25/2025 12/11/2015 3,125 (1) - - $ 46.08 12/11/2025 12/15/2020 10,938 (1) - - $ 23.68 12/15/2030 12/30/2021 2,344 (1) - - $ 129.92 12/31/2031 6/15/2022 1,563 (1) - - $ 11.36 6/15/2032 10/03/2022 625 (1) - - $ 6.00 10/03/2032 12/01/2022 1,875 (1) - - $ 4.32 12/01/2032 11/3/2023 8,750 (2) - - $ 5.44 11/3/2033 12/7/2024 15,000 (2) - - $ 1.71 12/7/2034 Robert J. Brilon Chief Financial Officer 12/30/2021 1,563 (1) - - $ 129.92 12/31/2031 6/15/2022 1,563 (1) - - $ 11.36 6/15/2032 10/03/2022 625 (1) - - $ 6.00 10/03/2032 12/01/2022 1,563 (1) - - $ 4.32 12/01/2032 11/3/2023 7,500 (2) - - $ 5.44 11/3/2033 12/7/2024 15,000 (2) - - $ 1.71 12/7/2034 Sid Sung President 12/20/2019 1,563 (1) - - $ 17.92 12/20/2029 12/15/2020 1,563 (1) - - $ 23.68 12/15/2030 12/30/2021 1,563 (1) - - $ 129.92 12/30/2031 10/03/2022 625 (1) - - $ 6.00 10/03/2032 12/01/2022 782 (1) - - $ 4.32 12/01/2032 11/3/2023 782 (2) - - $ 5.44 11/3/2033 Gregory Omi Chief Technology Officer 02/25/2015 313 (1) - - $ 49.28 02/25/2025 12/11/2015 782 (1) - - $ 46.08 12/11/2025 01/05/2016 313 (1) - - $ 41.60 01/05/2026 12/29/2016 313 (1) - - $ 16.64 12/29/2026 05/10/2021 2,344 (1) - - $ 48.00 5/10/2031 12/30/2021 1,563 (1) - - $ 129.92 12/30/2031 10/03/2022 625 (1) - - $ 6.00 10/03/2032 12/01/2022 782 (1) - - $ 4.32 12/01/2032 11/3/2023 782 (2) - - $ 5.44 11/3/2033 (1) The options became fully vested on the date of grant. (2) The options became fully vested on December 31, 2024. Equity Compensation Plans On January 18, 2010, we adopted the 2010 Stock Option Plan (the “2010 Option Plan”), which allows the Board to grant options to purchase up to 15,625 shares of common stock to directors, officers, key employees, and service providers of our company. In 2011, the 2010 Option Plan was amended to increase the number of shares issuable under the 2010 Option Plan to 375,000 shares. In 2012, 2010 Option Plan was again amended to increase the number of shares issuable under the 2010 Option Plan to 203,125 shares. The shares issuable pursuant to the 2010 Option Plan are registered with the SEC under Forms S-8 filed on February 4, 2010 (No. 333- 164691), June 24, 2011 (No. 333-175143), and December 4, 2013 (No. 333-192655). The 2010 Option Plan expired on January 18, 2020. As of December 31, 2024 there were 23,659 options outstanding under the 2010 Option Plan. On December 15, 2020, we adopted the Iveda Solutions, Inc. 2020 Plan (the “2020 Plan”). The 2020 Plan has a maximum of 156,250 shares authorized with similar terms and conditions to the 2010 Option Plan. As of December 31, 2024 there were 193,397 options outstanding under the 2020 Option Plan. The shares issuable pursuant to the 2020 Option Plan are registered with the SEC under Forms S-8 filed on October 7, 2022 (No. 333- 267792). In 2024, the 2020 Option Plan was amended to increase the number of shares issuable under the 2020 Option Plan to 656,250 shares. As of December 31, 2024 and December 31, 2023, there were 217,056 and 162,265 options outstanding, respectively, under all the option plans. Stock options may be granted as either incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or as options not qualified under Section 422 of the Code. All options are issued with an exercise price at or above the fair market value of the common stock on the date of the grant as determined by our Board of Directors. Incentive stock option plan awards of restricted stock are intended to qualify as deductible performance-based compensation under Section 162(m) of the Code. Incentive Stock Option awards of unrestricted stock are not designed to be deductible to us under Section 162(m). Under the plans, stock options will terminate on the tenth anniversary date of the grant or earlier if provided in the grant. 39 We have also granted non-qualified stock options to employees and contractors. All non-qualified options are generally issued with an exercise price no less than the fair value of the common stock on the date of the grant as determined by our Board of Directors. Options may be exercised up to ten years following the date of the grant, with vesting schedules determined by us upon grant. Vesting schedules vary by grant, with some fully vesting immediately upon grant to others that ratably vest over a period of time up to four years. Standard vested options may be exercised up to three months following date of termination of the relationship unless alternate terms are specified at grant. The fair values of options are determined using the Black-Scholes option-pricing model. The estimated fair value of options is recognized as expense on the straight-line basis over the options’ vesting periods. At December 31, 2024, we had approximately $7,854 unrecognized stock-based compensation. Director Compensation Non-employee directors receive stock-based compensation for their service on our Board of Directors and are reimbursed for their cost of attending meetings. For the year ended December 31, 2024, Joseph Farnsworth, Alejandro Franco and Robert Gillen received 15,000 options to purchase shares of our common stock as compensation for services during the year ended December 31, 2024. For the year ended December 31, 2023, Joseph Farnsworth, Alejandro Franco and Robert Gillen received 6,250 options to purchase shares of our common stock as compensation for services during the year ended December 31, 2024. We do not pay additional compensation to our directors for their service, either as Chair or as a member, on the Audit Committee, Compensation Committee, or Nominations and Corporate Governance Committee. Name Fees Earned or paid in Cash $ Stock Awards $ 2024 Options Awards $ Non-Equity Incentive Plan Compensation Nonqualified Deferred Compensation Earnings $ All Other Compensation $ Total $ Joseph Farnsworth - - $ 18,367 (1) - - - $ 18,367 Alejandro Franco - - $ 18,367 (2) - - - $ 18,367 Robert Gillen - - $ 18,367 (3) - - - $ 18,367 (1) As of December 31, 2024, Mr. Farnsworth had outstanding options to purchase 34,457 shares of our common stock. (2) As of December 31, 2024, Mr. Franco had outstanding options to purchase 28,912 shares of our common stock. (3) As of December 31, 2024, Mr. Gillen had outstanding options to purchase 29,538 shares of our common stock. Incentive-Based Compensation Recovery Policy The Company adopted an Incentive-Based Compensation Recovery Policy in order to comply with Nasdaq Listing Rules and Rule 10D-1 under the Exchange Act. In the event the Company is required to prepare an accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period, subject to the terms of the policy, the Company must recover reasonably promptly from its current and former executive officers the amount of any erroneously awarded incentive based compensation received on or after October 2, 2023 and during the three years preceding the date that the Company is required to prepare such accounting restatement. 40 ITEM 12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table and accompanying footnotes set forth as of December 31, 2024, certain information regarding the beneficial ownership of shares of our common stock by: (i) each person who is known by us to own beneficially more than 5% of such stock; (ii) each member of our Board of Directors, and each of our named executive officers and (iii) all of our directors and executive officers as a group. Except as otherwise indicated, all Common Stock is owned directly, and the beneficial owners listed in the table below possess sole voting and investment power with respect to the stock indicated, and the address for each beneficial owner is c/o Iveda Solutions, Inc., 1744 S. Val Vista Drive, Suite 213, Mesa, Arizona 85204. Name of Beneficial Owner Common Shares % of Common Shares Directors and Officers David Ly (1) 106,802 3.7 % Robert J. Brilon (2) 47,723 1.7 % Gregory Omi (3) 21,940 0.8 % Joseph Farnsworth (4) 47,826 1.7 % Alejandro Franco (5) 32,819 1.2 % Robert D. Gillen (6) 49,869 1.8 % All Directors and Officers 306,979 10.3 % (1) Includes options to purchase 45,784 shares of common stock, which are exercisable within 60 days of December 31, 2024. (2) Includes options to purchase 27,503 shares of common stock, which are exercisable within 60 days of December 31, 2024. (3) Includes options to purchase 7,817 shares of common stock, which are exercisable within 60 days of December 31, 2024. (4) Consists of (a) options to purchase 34,457 shares of common stock, which are exercisable within 60 days of December 31, 2024, (b) 2,491 shares of common stock held by Farnsworth Realty, an entity owned by Mr. Farnsworth and (c) 10,878 shares of common stock. (5) Consists of (a) options to purchase 28,912 shares of common stock, which are exercisable within 60 days of December 31, 2024, and (b) 3,907 shares of common stock held by Amextel S.A. De C.V. an entity owned by Mr. Franco. (6) Consists (a) options to purchase 29,538 shares of common stock, which are exercisable within 60 days of December 31, 2024, and (b) 20,331 shares of common stock. 41 Shares Authorized for Issuance Under Equity Compensation Plans The following table shows the number of securities to be issued upon exercise of outstanding options under equity compensation plans approved by our stockholders and under equity compensation plans not approved by our stockholders as of December 31, 2024. Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans Equity compensation plans approved by stockholders (1) 23,659 $ 25.60 - Equity compensation plans approved by stockholders (2) 193,397 $ 17.69 463,853 Equity compensation plans not approved by stockholders (3) 1,882,076 $ 9.42 - Total 2,099,132 $ 10.36 463,853 (1) Consists of our 2010 and 2012 Option Plan. (2) Consists of our 2020 Option Plan (3) Warrants issued not under a plan ITEM 13 – CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Transactions with Related Persons, Promoters and Certain Control Persons Other than equity and other compensation, termination, change in control and other similar arrangements, which are described under “Executive and Director Compensation.”, since January 1, 2024 there are no transactions to which we were a party in which (i) the amount involved exceeded or will exceed the lesser of $120,000 of one percent (1%) of our average total assets at year-end for the last two completed fiscal years and (ii) any of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family of, or person sharing the household with, any of the foregoing persons, had or will have a direct or indirect material interest. Director Independence Our Board of Directors has undertaken a review of its composition, the composition of its committees, and the independence of each director. Our Board of Directors has determined, after considering all of the relevant facts and circumstances, that Messrs. Farnsworth, Franco, Gillen, and Omi do not have a relationship with us that would interfere with their exercise of independent judgment in carrying out their responsibilities as a director and that each of these directors is “independent” as that term is defined under the applicable rules and regulations of the SEC. In making this determination, our Board of Directors considered the current and prior relationships that each non-employee director has with our company and all other facts and circumstances our Board of Directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director. Our Board of Directors did not consider any relationship or transaction between our company and the independent directors not already disclosed in this Annual Report on Form 10-K in making this determination. Mr. Ly is an employee director. The Audit Committee currently consists of Messrs. Farnsworth (Chairman), Franco and Gillen, each of whom is an independent director of our company. The Compensation Committee currently consists of Messrs. Farnsworth (Chairman), Franco and Gillen, each of whom is an independent director of our company. The Nominations and Corporate Governance Committee currently consists of Messrs. Gillen (Chairman), Farnsworth, and Franco, each of whom is an independent director of our company. ITEM 14 – PRINCIPAL ACCOUNTANT FEES AND SERVICES Fees Paid to Independent Registered Public Accounting Firm In February 2025, with the approval of the Audit Committee of the Board of Directors, we appointed Weinberg &Co (“Weinberg”) as our principal accounting firm. Weinberg has served as the principal audit firm for Iveda 2024 and 2023 Financial Statements since February 2025. No fees were paid to or accrued in 2024 related to Weinberg’s services. We paid or accrued $283,000 and $137,500 for audit fees, during the year ended December 31, 2024 and 2023, respectively. During 2024 we paid $93,500 to BF Borgers for the audit of 2023. BF Borgers was sanctioned by the SEC in May 2024. No other fees were paid to Borgers for the respective periods. On May 10, 2024 we engaged Kreit and Chiu CPA LLP (“KC”) to do the quarterly 10-Q reviews for 2024 and a re-audit of 2023 and 2024. We paid KC $189,500 for their 10-Q reviews and their work on the re-audit until we replaced them with Weinberg in February 2025. KC did not finish or opine on the 2023 or 2024 audits. No other fees were paid to KC. Audit Committee Pre-Approval Policies As part of its responsibility for oversight of the independent registered public accountants, the Audit Committee has established a pre-approval policy for engaging audit and permitted non-audit services provided by our independent registered public accountants, Weinberg. In accordance with this policy, each type of audit, audit-related, tax and other permitted service to be provided by the independent auditors is specifically described and each such service, together with a fee level or budgeted amount for such service, is pre-approved by the Audit Committee. The Audit Committee has delegated authority to its Chairman to pre-approve additional non-audit services (provided such services are not prohibited by applicable law) up to a pre-established aggregate dollar limit. All services pre-approved by the Chairman of the Audit Committee must be presented at the next Audit Committee meeting for review and ratification. All of the services provided by Weinberg described above were approved by the Audit Committee pursuant to our Audit Committee’s pre-approval policy. Our principal accountants, Weinberg, did not engage any other persons or firms other than their respective full-time, permanent employees. 42 PART IV ITEM 15 – EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Financial Statements and Financial Statement Schedules 1. Consolidated Financial Statements are listed in the Index to Consolidated Financial Statements on page F-1 of this Annual Report on Form 10-K. 2. Other schedules are omitted because they are not applicable, not required, or because required information is included in the Consolidated Financial Statements or notes thereto. (b) Exhibits Exhibit Number Description of Exhibit 2.1 Agreement and Plan of Merger, dated March 21, 2011, by and among Iveda Solutions, Inc., a Nevada corporation, Sole-Vision Technologies, Inc. (doing business as MEGAsys), a corporation organized under the laws of the Republic of China, and the shareholders of MEGAsys (Incorporated by reference to the Form 10-K/A filed on 2/9/2012) 4.1 Specimen Stock Certificate (Incorporated by reference to the Form SB-2 filed on 4/27/2007) 4.5 Form of Common Stock Purchase Warrant issued by Iveda Corporation in conjunction with the Merger (Incorporated by reference to the Form 8-K filed on 10/21/2009) 4.6 2010 Stock Option Plan, dated January 18, 2010 (Incorporated by reference to the Form S-8 filed on 2/4/2010) 4.7 Form of Notice of Grant of Stock Option under the Iveda Solutions, Inc. 2010 Stock Option Plan, as amended (Incorporated by reference to Form S-8 filed on 6/24/2011) 4.8 Form of Stock Option Agreement under the Iveda Solutions, Inc. 2010 Stock Option Plan, as amended (Incorporated by reference to Form S-8 filed on 6/24/2011) 4.9 Form of Stock Option Exercise Notice under the Iveda Solutions, Inc. 2010 Stock Option Plan, as amended (Incorporated by reference to Form S-8 filed on 6/24/2011) 4.13 2020 Stock Option Plan, dated January 18, 2020 (filed with amended Form 10-12g filed on 10/25/2021) 4.14 Form of Warrant to purchase common stock to officers, directors, employees, and consultants (Incorporated by reference to the Form S-1 filed on 12/30/2021) 4.15 Form of Convertible Debenture(Incorporated by reference to the Form S-1 filed on 12/30/2021) 4.16 Form of Warrant(Incorporated by reference to the Form S-1 filed on 12/30/2021) 10.1 Application Development Service Agreement dated July 14, 2006 by and between Axis Communications AB and IntelaSight, Inc. (Incorporated by reference to the Form S-4/A2 filed on 8/2/2009) 10.2 Partner Agreement dated January 30, 2007 by and between Milestone Systems, Inc. and IntelaSight, Inc. (Incorporated by reference to the Form S-4/A1 filed on 7/10/2009) 10.3 Solution Partner Agreement dated March 13, 2008 by and between Milestone Systems A/S and IntelaSight, Inc. (Incorporated by reference to the Form S-4/A1 filed on 7/10/2009) 10.4 Channel Partner Program Membership Agreement – Gold Solution Partner Level – dated June 23, 2009 by and between Axis Communications Inc. and IntelaSight, Inc. (Incorporated by reference to the Form S-4/A1 filed on 7/10/2009) 10.5 Stock Purchase Agreement, dated October 15, 2009, by and among Iveda Corporation, IntelaSight, Inc., Ian Quinn and Kevin Liggins (Incorporated by reference to the Form 8-K filed on 10/21/2009) 10.11 Side Letter, dated March 21, 2011, by and among Iveda Solutions, Inc., a Nevada corporation, Sole-Vision Technologies, Inc. (doing business as MEGAsys), a corporation organized under the laws of the Republic of China, and the shareholders of MEGAsys (Incorporated by reference to Form 10-K filed on 3/30/2011) 10.12 Non-Exclusive Strategic Collaboration Agreement between Iveda Solutions, Inc. and Telmex, U.S.A., LLC, dated October 28, 2011 (Incorporated by reference to Form 10-Q/A filed on 3/7/2012) 10.13 2010 Digital Video Remote Monitoring Recording System Procurement Contract between Sole-Vision Technology, Inc. and New Taipei City Police Department Purchasing Authority, dated January 9, 2012 (Incorporated by reference to Form 10-K filed on 3/30/2012) 10.14 Consulting Agreement between Iveda Solutions, Inc. and Amextel S.A. de C.V. dated November 2, 2011 (Incorporated by reference to Form 10-K/A filed on 5/11/2012) 10.17 Cooperation Agreement with Industrial Technology Research Institute dated November 2012 (Incorporated by reference to the Form S-1 filed on 12/30/2021) 14.1 Code of Conduct and Ethics (Incorporated by reference to the Form 10-K filed on 4/15/2010) 14.2 Code of Ethics for Chief Executive Officer and Senior Financial Officers (Incorporated by reference to the Form 10-K filed on 4/15/2010) 21 Subsidiaries of the Registrant (Incorporated by reference to Form 10-K filed on 3/30/2012) 23.1* Consent of Weinberg & Company P.A. 31.1* Certification of Principal Executive Officer pursuant to Exchange Act Rule 15d-14(a) 31.2* Certification of Principal Financial Officer pursuant to Exchange Act Rule 15d-14(a) 32.1* Certification of Principal Executive Officer Pursuant to Section 1350 32.2* Certification of Principal Financial Officer Pursuant to Section 1350 97.1 Compensation Recovery Policy of Iveda Solutions, Inc. 101.INS* Inline XBRL Instance Document 101.SCH* Inline XBRL Taxonomy Extension Schema Document 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * Filed herewith. ** Furnished herewith. † Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. 43 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: April 15, 2025 IVEDA SOLUTIONS, INC. By: /s/ David Ly David Ly Chief Executive Officer and Chairman Date: April 15, 2025 IVEDA SOLUTIONS, INC. By: /s/ Robert J. Brilon Robert J. Brilon Chief Financial Officer, Treasurer and Secretary Pursuant to the requirements of Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Capacity Date /s/ David Ly Chief Executive Officer and Chairman April 15, 2025 David Ly (Principal Executive Officer) /s/ Robert J. Brilon Chief Financial Officer, Treasurer and Secretary April 15, 2025 Robert J. Brilon (Principal Financial and Accounting Officer) /s/ Joseph Farnsworth Director April 15, 2025 Joseph Farnsworth /s/ Alejandro Franco Director April 15, 2025 Alejandro Franco /s/ Robert D. Gillen Director April 15, 2025 Robert D. Gillen 44 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID: 572 ) F-2 CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2024 AND 2023 (as restated) F-3 CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 ( as restated) F-4 CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 (as restated) F-6 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 (as restated) F-7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-9 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Iveda Solutions, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Iveda Solutions, Inc. (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company experienced net losses and negative operating cash flows during the years ended December 31, 2024 and 2023. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provided a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate. Deferred Costs of Goods As described further in Note 1 to the consolidated financial statements, the Company’s accounting policy is to classify inventory that has been purchased and delivered to customer locations in Taiwan as a deferred cost until the Company has completed its performance obligations. These deferred costs totaled $507,308 as of December 31, 2024. We identified the existence and realization of these assets as a critical audit matter because of the materiality of the deferred costs, and that a high degree of auditor judgment was required to evaluate various factors used in the Company’s evaluation of the existence and realization of these assets. Our audit procedures related to the existence and realization of this asset included the following: ● We obtained an understanding of Managements policy and process for assessing the existence and realization of these assets. ● We obtained detail schedules of these deferred costs at December 31, 2024, and examined the underlying documentation relating to the purchase of these assets. ● Verified through our testing that the inventories were delivered to the customer site. ● Verified realization of these assets through examination of subsequent collections, completion of performance obligation and corresponding recognition of revenue. The December 31, 2023 consolidated financial statements, which were audited by another auditor, have been restated (See Note 11). We have served as the Company’s auditor since 2025. /s/ Weinberg & Company, P.A. Weinberg & Company, P.A. Los Angeles, California April 15, 2025 F- 2 IVEDA SOLUTIONS, INC. CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2024 AND 2023 December 31, 2024 December 31, 2023 (Restated) ASSETS CURRENT ASSETS Cash and Cash Equivalents $ 2,629,287 $ 4,738,504 Restricted Cash 29,013 129,778 Accounts Receivable, Net 1,277,635 281,049 Deferred Cost of Goods 507,308 Inventory, Net 148,120 324,515 Other Current Assets 435,052 435,581 Total Current Assets 5,026,415 5,909,427 PROPERTY AND EQUIPMENT, NET 68,677 98,575 Other Assets 84,424 298,163 Total Assets $ 5,179,516 $ 6,306,165 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts and Other Payables $ 1,748,857 $ 1,308,914 Short Term Debt 427,025 348,771 Current Portion of Long-Term Debt 122,007 - Total Current Liabilities 2,297,889 1,657,685 LONG-TERM DEBT 376,188 - STOCKHOLDERS’ EQUITY Preferred Stock, $ 0.00001 par value; 12,500,000 shares authorized Series B Preferred Stock, $ 0.00001 par value; 500 shares authorized, no shares issued and outstanding as of December 31, 2024 and December 31, 2023. - - Common Stock, $ 0.00001 par value; 300,000,000 shares authorized; 2,808,071 and 2,021,236 shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively 28 20 Additional Paid-In Capital 55,962,337 54,065,775 Accumulated Comprehensive Loss ( 280,209 ) ( 221,418 ) Accumulated Deficit ( 53,176,717 ) ( 49,195,897 ) Total Stockholders’ Equity 2,505,439 4,648,480 Total Liabilities and Stockholders’ Equity $ 5,179,516 $ 6,306,165 See accompanying Notes to Consolidated Financial Statements. F- 3 IVEDA SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 2024 AND 2023 2024 2023 (Restated) REVENUE Equipment Sales $ 5,592,395 $ 6,052,298 Service Revenue 428,244 443,567 Other Revenue - - TOTAL REVENUE 6,020,639 6,495,865 COST OF REVENUE 4,719,005 5,428,261 GROSS PROFIT 1,301,634 1,067,604 OPERATING EXPENSES General & Administrative 5,008,587 4,311,367 Research and Development 363,350 797,112 Total Operating Expenses 5,371,937 5,108,479 LOSS FROM OPERATIONS ( 4,070,303 ) ( 4,040,875 ) OTHER INCOME (EXPENSE) Miscellaneous Income (Expense) 34,323 ( 28,099 ) Loss from investment in Iveda Phils JV - ( 180,000 ) Interest Income 113,728 131,870 Interest Expense ( 26,183 ) ( 7,254 ) Total Other Income (Expense) 121,868 ( 83,483 ) LOSS BEFORE INCOME TAXES ( 3,948,435 ) ( 4,124,358 ) BENEFIT (PROVISION) FOR INCOME TAXES ( 32,385 ) ( 18,308 ) NET LOSS $ ( 3,980,820 ) $ ( 4,142,666 ) BASIC AND DILUTED LOSS PER SHARE $ ( 1.81 ) $ ( 2.07 ) WEIGHTED AVERAGE SHARES 2,203,893 1,996,678 See accompanying Notes to Consolidated Financial Statements. F- 4 COMPREHENSIVE LOSS For the Year ended December 31, 2024 For the Year ended December 31, 2023 (Restated) Net Loss $ ( 3,980,820 ) $ ( 4,142,666 ) Other Comprehensive Loss Foreign Currency Translation, Net of Tax ( 58,792 ) ( 775 ) Comprehensive Loss $ ( 4,039,612 ) $ ( 4,143,441 ) See accompanying Notes to Consolidated Financial Statements . F- 5 IVEDA SOLUTIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Accumulated Common Additional Other Total Common Stock Paid-in- Accumulated Comprehensive Stockholders’ Stock Amount Capital Deficit (Loss) Equity BALANCE AT December 31, 2022, as originally reported 1,883,342 19 52,497,045 $ ( 44,706,671 ) $ ( 220,643 ) $ 7,569,750 Prior Period Adjustments - - - ( 346,560 ) - ( 346,560 ) BALANCE AT December 31, 2022, as restated 1,883,342 $ 19 $ 52,497,045 $ ( 45,053,231 ) - $ ( 220,643 ) $ 7,223,190 Exercise of warrants issued August 2022 118,238 1 1,322,884 - - - 1,322,885 Warrants issued for services - - 2,700 - - - 2,700 Common Stock for Services 19,656 - 138,546 - - - 138,546 Stock Option Compensation - - 104,600 - - - 104,600 Net Loss - - - ( 4,142,666 ) - - ( 4,142,666 ) Comprehensive Loss - - - - - ( 775 ) ( 775 ) BALANCE AT December 31, 2023, as restated 2,021,236 $ 20 $ 54,065,775 $ ( 49,195,897 ) $ ( 221,418 ) $ 4,648,480 BALANCE 2,021,236 $ 20 $ 54,065,775 $ ( 49,195,897 ) $ ( 221,418 ) $ 4,648,480 Common Stock for Services 12,500 - 90,000 - - 90,000 Stock Option Compensation - 122,600 - - 122,600 Common Stock Issued in September Direct Offering (including Pre-Funded Warrants sold and exercised 625,000 6 1,683,964 - - 1,683,970 Reverse Split fractional shares 149,335 2 ( 2 ) - - - Net Loss - - - ( 3,980,820 ) - ( 3,980,820 ) Comprehensive Loss - - - - ( 58,791 ) ( 58,791 ) BALANCE AT December 31, 2024 2,808,071 $ 28 $ 55,962,337 $ ( 53,176,717 ) $ ( 280,209 ) $ 2,505,439 BALANCE 2,808,071 $ 28 $ 55,962,337 $ ( 53,176,717 ) $ ( 280,209 ) $ 2,505,439 * All share amounts and per share amounts reflect a reverse stock split of the outstanding shares of our Common Stock at a ratio of 1-for-8 effected on September 17, 2024. See accompanying Notes to Consolidated Financial Statements F- 6 IVEDA SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS DECEMBER 31, 2024 AND 2023 2024 2023 (restated) CASH FLOWS FROM OPERATING ACTIVITIES Net Loss $ ( 3,980,820 ) $ ( 4,142,666 ) Adjustments to Reconcile Net Loss to Net Cash Used by Operating Activities Depreciation and Amortization 31,805 19,753 Stock Option Compensation 122,600 104,600 Common Stock Warrants Issued for Services - 2,700 Common Stock issued for Services 90,000 138,546 Loss from Iveda Phils Joint Venture - 180,000 (Increase) Decrease in Operating Assets Accounts Receivable ( 996,586 ) 930,803 Deferred Cost of Goods ( 507,308 ) - Inventory 176,395 199,124 Other Current Assets 528 ( 66,995 ) Other Assets 203,693 ( 175,592 ) Increase (Decrease) in Accounts and Other Payables 439,945 ( 523,633 ) Net Cash Used in Operating Activities ( 4,419,748 ) ( 3,333,360 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Property and Equipment ( 2,608 ) ( 85,593 ) Investment in Iveda Phils Joint Venture ( 180,000 ) Net Cash Used in Investing Activities ( 2,608 ) ( 265,593 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from (Payments on) Short-Term Notes Payable/Debt 78,254 ( 47,554 ) Proceeds from (Payments to) Long-Term Debt 498,195 ( 251,498 ) Common Stock Issued, Net of (Cost of Capital) 1,683,970 1,322,885 Net Cash Provided by Financing Activities 2,260,419 1,023,833 EFFECT OF EXCHANGE RATE CHANGES ON CASH ( 48,045 ) 1,780 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ( 2,209,982 ) ( 2,573,340 ) Cash and Cash Equivalents- Beginning of Period 4,868,282 7,441,622 CASH AND CASH EQUIVALENTS - END OF PERIOD $ 2,658,300 $ 4,868,282 See accompanying Notes to Consolidated Financial Statements. F- 7 IVEDA SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED FOR THE YEARS ENDING DECEMBER 31, 2024 AND 2023 2024 2023 (restated) SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest Paid $ 15,316 $ 9,793 Income Tax Paid $ 38,544 $ 28,779 See accompanying Notes to Consolidated Financial Statements. F- 8 IVEDA SOLUTIONS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2024 AND 2023 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Iveda Solutions, Inc. (“Iveda”, or the “Company”) was incorporated in Nevada as Charmed Homes, Inc. in June 2006. On October 15, 2009, IntelaSight, d/b/a Iveda, a Washington corporation, became a wholly owned subsidiary of the Company. In December 2010, IntelaSight merged with and into the Company and the Company became the surviving company. Iveda offered the first cloud hosting of streaming and recorded video from security cameras for its customers and real-time remote surveillance service utilizing intervention specialists to watch our customers’ cameras in real time, 24/7. Iveda offers smart city technologies globally, offering advanced AI-driven video surveillance solutions and a robust suite of Internet of Things (IoT) platforms that power digital transformation for cities and commercial clients worldwide. Consolidation Effective April 30, 2011, we completed our acquisition of Sole Vision Technologies (fka MEGAsys and dba Iveda Taiwan), a company based in Taiwan. We consolidate our financial statements with the financial statements of Iveda Taiwan. All intercompany balances and transactions have been eliminated in consolidation. Going Concern The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplates the continuation of the Company as a going concern. The Company experienced net losses and negative operating cash flows during the years ended December 31, 2024 and 2023. These factors raise substantial doubt about the Company’s ability to continue as a going concern. At December 31, 2024, the Company had cash on hand in the amount of $ 2,658,300 . Management does not expect that its current liquidity will support operations from a date of twelve months from the issuance of this financial statement. As a result, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the company cannot continue as a going concern. The continuation of the Company as a going concern is dependent upon its ability to obtain necessary debt or equity financing to continue operations until it begins generating positive cash flow. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations in the case of debt financing, or cause substantial dilution for our stockholders, in case of equity financing. Basis of Accounting Our consolidated financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Accordingly, actual results could differ from those estimates. On an ongoing basis, we evaluate our estimates, including those related to accounts receivable, deferred cost of revenue, share-based compensation, deferred income taxes, provisions for losses, and inventory reserve, among other items. Revenue and Expense Recognition The Company applies the provisions of Accounting Standards Codification (ASC) 606-10, Revenue from Contracts with Customers , and all related appropriate guidance. The Company recognizes revenue under the core principle to depict the transfer of control to its customers in an amount reflecting the consideration to which it expects to be entitled. In order to achieve that core principle, the Company applies the following five-step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied. The Company considers customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with the customer. In situations where sales are to a distributor, the Company had concluded its contracts are with the distributor as the Company holds a contract bearing enforceable rights and obligations only with the distributor. As part of its consideration for the contract, the Company evaluates certain factors including the customers’ ability to pay (or credit risk). For each contract, the Company considers the promise to transfer products, each of which is distinct, to be the identified performance obligations. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which it expects to be entitled. As the Company’s standard payment terms are less than one year, it has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company allocates the transaction price to each distinct product based on its relative standalone selling price. The product price as specified on the purchase order is considered the standalone selling price as it is an observable input which depicts the price as if sold to a similar customer in similar circumstances. Revenue is recognized when control of the product is transferred to the customer ( i.e. , when the Company’s performance obligations is satisfied), which typically occurs at shipment unless installation is required as with certain of our Taiwan sales – see below. Further in determining whether control has been transferred, the Company considers if there is a present right to payment and legal title, along with risks and rewards of ownership having transferred to the customer. Customers do not have a right to return the product other than for warranty reasons for which they would only receive repair services or replacement product. The Company has also elected the practical expedient under ASC 340-40-25-4 to expense commissions for product sales when incurred as the amortization period of the commission asset the Company would have otherwise recognized is less than one year. F- 9 The Company sells its products and services primarily to municipalities and commercial customers in the following manner: ● The majority of Iveda Taiwan sales are project sales to Taiwan customers and are made direct to the end customer (typically a municipality or a commercial customer) through its sales force, which is composed of its employees. Revenue is recorded when the equipment is shipped to the end customer unless the contract requires the inventory to be installed before it can be billed and charged for service when installation or maintenance work is performed. If inventory is shipped to the customer before it is installed the inventory is reclassified to Deferred Cost of Goods. Revenue for product and software sales without installation is recorded when the product and/or software has been shipped to the customer. Revenue from fixed-price equipment installation contracts, if any, is recognized as the contracts allow for invoicing at various milestones. 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 deemed earned by the contract. ● Iveda US hardware sales are to domestic and international customers and are made through independent distributors or integrators who purchase products from the Company at a wholesale price and sell to the end user (typically municipalities or a commercial customer) at a retail price. The distributor retains the margin as its compensation for its role in the transaction. The distributor or integrator generally maintains product inventory or product is drop shipped from the manufacturer, customer receivables and all related risks and rewards of ownership. Accordingly, upon application of steps one through five above, revenue is recorded when the product is shipped to the distributor or as directed by the distributor consistent with the terms of the distribution agreement. ● Iveda US also sells software that include licensing fees that are paid either monthly or yearly. The revenues are recorded monthly, if the license is paid yearly the revenue will be recorded as deferred revenue and amortized on a straight-line basis over the respective time period. ● Iveda US also sells hardware and software warranty and maintenance for an annual fee that are paid yearly. The revenues are recorded annually, if the revenue is a material amount it will be recorded as deferred revenue and amortized on a straight-line basis over the respective time period. The following table presents our net sales by revenue source and the period over period percentage change, for the period presented: Schedule of Disaggregation of Revenue Years Ended December 31, 2024 2023 % Change Net Sales Source Commercial Enterprises $ 4,675,122 $ 6,104,478 ( 23 %) Distributors 762,660 88,047 766 % Municipalities 170,467 156,701 9 % Taiwan Government 319,767 - 100 % Other 92,625 148,311 ( 38 %) Total Net Sales Source 6,020,639 6,495,865 ( 7 %) The Company sells and installs video surveillance systems comprised of various components of hardware and software. Comprehensive Loss Comprehensive loss is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. Our current component of other comprehensive income is the foreign currency translation adjustment. Concentrations Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash and cash equivalents and trade accounts receivable. Substantially all cash is deposited in three financial institutions, two in the United States and one in Taiwan. At times, amounts on deposit in the United States may be in excess of the FDIC insurance limit. Deposits in Taiwan financial institutions are insured by CDIC (Central Deposit Insurance Corporation) with maximum coverage of NTD 3 million. At times, amounts on deposit in Taiwan may be in excess of the CDIC Insurance limit. F- 10 Revenue from five customers out of approximately 70 total customers represented approximately 67 % of total revenue for the year ended December 31, 2024. These specific customers were 1) Chunghwa Telecom with 18 % 2) SECURITY INTEGRATION & CONSULTANT TECHNOLOGY CO., LTD. with 16 %, 3) Chicony Power Technology Co Ltd with 11 % and 4) HWACOM SYSTEMS INC. 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 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 do not require collateral in exchange for our products and services provided on credit. These customers are longtime customers, and we don’t expect any problem with the collectability of these accounts receivable. No other customers represented greater than 10 % of total revenues in years ended December 31, 2024 and 2023. Cash and Cash Equivalents For purposes of the statement of cash flows, we consider all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. The Company’s consolidated financial statements include the results of operations and financial position of its subsidiary located in Taiwan. The subsidiary’s functional currency is the Taiwan New Dollar (TWD). For consolidation purposes, the subsidiary’s financial statements are translated into US Dollars (USD) using the following methods: Assets and liabilities are translated using the exchange rate at the balance sheet date. Income statement items are translated using the average exchange rate for the period. Exchange rate fluctuations between TWD and USD result in gains or losses that are included in Other Comprehensive Income (Loss) until they are realized. The Company had $ 1,025,675 and $ 1,959,399 of its cash and cash equivalents in Taiwan New Dollars at December 31, 2024 and 2023, respectively. Accounts Receivable We provide an allowance for doubtful collections, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. For our U.S.-based segment, receivables past due more than 120 days, if any, are considered delinquent. For our Taiwan-based segment, receivables over one year are considered delinquent. Delinquent receivables are written off based on individual credit valuation and specific circumstances of the customer. As of December 31, 2024 and 2023, no allowance for uncollectible accounts was deemed necessary. Other Current Assets Other current assets represent cash paid in advance to vendors for service coverage extending into subsequent periods, advances to suppliers of product and tender deposits placed with local governments and major customers in Taiwan during the bidding process for new proposed projects. Deferred Cost of Goods In Taiwan we ship product to be held at the customer locations in advance of installment per the contract with the customer. We reclassify inventory that we have purchased and delivered to the customer location to Deferred Cost of Goods until this product is installed and can be invoiced to the customer. Inventories Inventory is stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out (“FIFO”) basis. We review our inventories for excess or obsolete products or components based on an analysis of historical usage and an evaluation of estimated future demand, market conditions, and alternative uses for possible excess or obsolete parts. There was no allowance for slow-moving and obsolete inventory necessary as of December 31, 2024 and 2023, respectively. Property and Equipment Property and equipment are stated at cost. Depreciation is computed primarily using the straight-line method over estimated useful lives of three 3 to seven years . Expenditures for routine maintenance and repairs are charged to expense as incurred. Depreciation expense for the years ended December 31, 2024 and 2023 was $ 31,805 and $ 19,753 , respectively. We 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 value. Management determined that there was no indicator of impairment as of December 31, 2024 and 2023. F- 11 Equity Method Investment The Company accounts for investments in entities in which the Company has significant influence over the entity’s financial and operating policies, but does not control, using the equity method of accounting. The equity method investments are initially recorded at cost, and subsequently increased for capital contributions and allocations of net income, and decreased for capital distributions and allocations of net loss. Equity in net income (loss) from the equity method investment is allocated based on the Company’s economic interest. Equity method investments are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If it is determined that a loss in value of the equity method investment is other than temporary, an impairment loss is measured based on the excess of the carrying amount of an investment over its estimated fair value. Impairment analyses are based on current plans, intended holding periods, and available information at the time the analysis is prepared. During 2023 the Company made a $ 180,000 investment for a 40 % interest in Iveda Phils Joint Venture (located in the Philippines). Based on Management’s assessment, the value of its equity method investment was impaired as of December 31, 2023, and as such, recorded an impairment charge of $ 180,000 . As of December 31, 2023 and 2024, the remaining value of its investments was $ 0 . Income Taxes Deferred income taxes are recognized in the consolidated financial statements for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates. Temporary differences arise from sales cut-off, depreciation, deferred rent expense, and net operating losses. Valuation allowances are established when necessary to reduce deferred tax assets to the amount that represents our best estimate of such deferred tax assets that, more likely than not, will be realized. Income tax expense is the tax payable for the year and the change during the year in deferred tax assets and liabilities. We are subject to U.S. federal income tax as well as state income tax. Our U.S. income tax returns are subject to review and examination by federal, state, and local authorities. Our U.S. tax returns for the years 2020 to 2023 are open to examination by federal, local, and state authorities. Our Taiwan tax returns are subject to review and examination by the Taiwan Ministry of Finance. Our Taiwan tax return for the years 2020 to 2023 are open to examination by the Taiwan Ministry of Finance. Restricted Cash Restricted cash represents time deposits on account to secure short-term bank loans in our Taiwan-based segment. Deferred Revenue Advance payments received from customers on future installation projects are recorded as deferred revenue until such time our performance obligations on the contracts are completed. F- 12 Stock-Based Compensation The Company periodically issues stock, stock options and restricted stock awards to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for such grants issued and vesting based on ASC 718, Compensation-Stock Compensation whereby the value of the award is measured on the date of grant and recognized for employees as compensation expense on the straight-line basis over the vesting period. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services. The fair value of the Company’s stock options is estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or restricted stock, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods. We recognized $ 122,600 and $ 104,600 of stock-based compensation expense for the years ended December 31, 2024 and 2023, respectively. Fair Value of Financial Instruments The Company uses various inputs in determining the fair value of its financial assets and liabilities and measures these assets on a recurring basis. Financial assets recorded at fair value are categorized by the level of subjectivity associated with the inputs used to measure their fair value. Accounting Standards Codification Section 820 defines the following levels of subjectivity associated with the inputs: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly. Level 3—Unobservable inputs in which there is little or no market data for the asset or liability which requires the Company to develop its own assumptions. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to us as of December 31, 2024 and December 31, 2023. The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, accounts receivable, accounts payable, accrued expenses, and amounts due to related parties. Fair values were assumed to approximate carrying values for these financial instruments because they are short-term in nature and their carrying amounts approximate their fair values or because they are receivable or payable on demand. The carrying values of financing obligations approximate their fair values because interest rates on these obligations are based on prevailing market interest rates. New Accounting Standards In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure , which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expense categories that are regularly provided to the chief operating decision maker and included in each reported measure of a segment’s profit or loss. The update also requires all annual disclosures about a reportable segment’s profit or loss and assets to be provided in interim periods and for entities with a single reportable segment to provide all the disclosures required by ASC 280, Segment Reporting , including the significant segment expense disclosures. This standard became effective for the Company on January 1, 2024. The adoption of 2023-7 did not have a material impact on the Company’s results of operations, financial position or cash flows. In November 2024, FASB issued ASU 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses. The guidance in ASU 2024-03 requires public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory; employee compensation; and depreciation and amortization expense for each caption on the income statement where such expenses are included. The update is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied prospectively to reporting periods after the effective date or retrospectively to all periods presented in the financial statements. We are currently evaluating the provisions of this guidance and assessing the potential impact on our financial statement disclosures. Other recent accounting pronouncements and guidance issued by the FASB, its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements. F- 13 NOTE 2 Accounts and Other Payables Schedule Of Accounts and Other Payables December 31, 2024 December 31, 2023 Accounts Payable $ 730,297 $ 379,949 Accrued Expenses 981,769 899,755 Deferred Revenue and Customer Deposits 36,791 29,210 Accounts and Other Payables $ 1,748,857 $ 1,308,914 NOTE 3 SHORT-TERM AND LONG-TERM DEBT The short-term debt balances were as follows: SCHEDULE OF SHORT-TERM DEBT December 31, 2024 December 31, 2023 Loan from Shanghai Commercial Bank at 3.1 %- 3.2 % interest rate per annum. Due originally in January 2025 and subsequently replaced with a new loan which matures January 2026. $ 183,011 $ 88,032 Loan from HuaNam Bank at 3.4 % interest rate per annum. Due in June 2025. 91,505 97,777 Loan from ChangHwa Bank at 3 % - 3.3 % interest rate per annum. Due in May 2025. 152,509 162,962 Balance at end of period $ 427,025 $ 348,771 As of December 31, 2024, there was $29,013 of restricted cash pledged as security for the Shanghai Commercial Bank short term loan. The Long-term debt balances were as follows: SCHEDULE OF LONG-TERM DEBT Loans from Shanghai Commercial Bank with interest rates 2.1 % per annum due January 2029 (1) $ 498,195 $ - Current Portion of Long-term debt ( 122,007 ) - Balance at end of period $ 376,188 $ - SCHEDULE OF MINIMUM PAYMENT OF LONG TERM DEBT 2025 $ 122,007 2026 122,007 2027 122,007 2028 122,007 Thereafter 10,167 Total $ 498,195 (1) On January 24, 2024, the Company received a facility notice from Shanghai Commercial Bank, granting a revolving loan facility totaling up to TWD 10,000,000 (approximately $ 300,000 USD) and term loan facility amounting of TWD 20,000,000 (approximately ($ 600,000 USD) . The term for the revolving loan is 1 year and for the term loan is 5 years. The 5 year term loan requires monthly payments including interest and principle, and the revolving loan requires a full principal repayment at the maturity date. The short-term Shanghai Commercial Bank loan is 75 % securitized by the government guarantee fund called SME credit guarantee fund and 10 % by saving deposit security. The guarantors of this loan are Mr. Siu and Mr. Cheung, who are both part of Iveda Taiwan’s management team. F- 14 NOTE 4 PREFERRED STOCK We are currently authorized to issue up to 12,500,000 shares of preferred stock, par value $ 0.00001 per share, 1,250,000 shares of which are designated as Series A Preferred Stock and 500 shares of which are designated as Series B Preferred Stock. Our Articles of Incorporation authorize the issuance of shares of preferred stock with designations, rights, and preferences determined from time to time by our Board of Directors. Accordingly, our Board of Directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting, or other rights which could adversely affect the voting power or other rights of the stockholders of our common stock. In the event of issuance, the preferred stock could be utilized, under certain circumstances, as a method of discouraging, delaying, or preventing a change in control of our company. NOTE 5 EQUITY Common Stock We are authorized to issue up to 300,000,000 shares of common stock, par value $ 0.00001 per share. We effectuated a reverse stock split on September 17, 2024 of 1 for 8 shares of common stock. All share values within this report have been retroactively adjusted to the post reverse split values. All outstanding shares of our common stock are of the same class and have equal rights and attributes. The holders of our common stock are entitled to one vote per share on all matters submitted to a vote of the stockholders of our company. Our common stock does not have cumulative voting rights. Persons who hold a majority of the outstanding shares of our common stock entitled to vote on the election of directors can elect all of the directors who are eligible for election. Holders of our common stock are entitled to share equally in dividends, if any, as may be declared from time to time by our Board of Directors. In the event of liquidation, dissolution, or winding up of our company, subject to the preferential liquidation rights of any series of preferred stock that we may from time to time designate, the holders of our common stock are entitled to share ratably in all of our assets remaining after payment of all liabilities and preferential liquidation rights. Holders of our common stock have no conversion, exchange, sinking fund, redemption, or appraisal rights (other than such as may be determined by the Board of Directors in its sole discretion) and have no preemptive rights to subscribe for any of our securities. During September 2024 we sold to a certain institutional investor pursuant to a prospectus supplement and prospectus (i) 225,000 shares of common stock, par value $ 0.00001 per share (the “Common Stock”), at an offering price of $ 3.44 per share, and (ii) pre-funded warrants to purchase up to 400,000 shares of Common Stock, at an offering price of $ 3.43 per pre-funded warrant, to the investor whose purchase of Common Stock in this offering would otherwise result in the investor, together with its affiliates and certain related parties, beneficially own more than 4.99% (or at the election of the investor, 9.99%) of our outstanding common stock immediately following the consummation of the offering. Each of the pre-funded warrants will be exercisable for one share of Common Stock. The pre-funded warrants had an exercise price of $ 0.01 per share, were immediately exercisable and could be exercised at any time until all of the pre-funded warrants issued in the offering were exercised in full. All 400,000 pre-funded warrants were exercised during October and November 2024. The Company issued an aggregate of 625,000 shares of common stock resulting in net proceeds of $ 1,683,970 as a result of the direct offering. In a concurrent private placement, we issued to such institutional investor unregistered Series A warrants to purchase up to 625,000 shares of Common Stock and unregistered Series B warrants to purchase up to 625,000 shares of Common Stock, which warrants will be exercisable on the effective date of stockholder approval of the issuance of the shares upon exercise of the unregistered warrants (the “Stockholder Approval”), at an exercise price of $ 3.44 per share. The Series A warrants will expire five years following the Stockholder Approval and the Series B warrants will expire 18 months following the Stockholder Approval. The unregistered warrants and the unregistered common stock issuable upon the exercise of the warrants were offered pursuant to the exemptions provided in Section 4(a)(2) under the Securities Act of 1933, as amended, or the Securities Act, and/or Regulation D promulgated thereunder. The Company adjourned its annual meeting until June 2, 2025 to continue to solicit votes for the approval of the unregistered Series A and Series B warrants. The company issued 46,876 warrants to the underwriters of the September 2024 direct offering, with an exercise price of $ 4.30 per common share and an expiration date of September 4, 2029. Restricted Common shares issued for services The Company issued 12,500 shares of its common stock with a fair value of $ 90,000 for services during the year ended December 31, 2024. The Company issued 19,656 shares of its common stock with a fair value of $ 138,546 for services during the year ended December 31, 2023. NOTE 6 STOCK OPTION PLAN AND WARRANTS Stock Options On January 18, 2010, we adopted the 2010 Stock Option Plan (the “2010 Option Plan”), which allows the Board to grant options to purchase up to 15,625 shares of common stock to directors, officers, key employees, and service providers of our company. In 2011, the 2010 Option Plan was amended to increase the number of shares issuable under the 2010 Option Plan to 375,000 shares. In 2012, 2010 Option Plan was again amended to increase the number of shares issuable under the 2010 Option Plan to 203,125 shares. The shares issuable pursuant to the 2010 Option Plan are registered with the SEC under Forms S-8 filed on February 4, 2010 (No. 333- 164691), June 24, 2011 (No. 333-175143), and December 4, 2013 (No. 333-192655). The 2010 Option Plan expired on January 18, 2020. As of December 31, 2024 there were 23,659 options outstanding under the 2010 Option Plan. On December 15, 2020, we adopted the Iveda Solutions, Inc. 2020 Plan (the “2020 Plan”). The 2020 Plan has a maximum of 156,250 shares authorized with similar terms and conditions to the 2010 Option Plan. As of December 31, 2024 there were 193,397 options outstanding under the 2020 Option Plan. The shares issuable pursuant to the 2020 Option Plan are registered with the SEC under Forms S-8 filed on October 7, 2022 (No. 333- 267792). In 2024, the 2020 Option Plan was amended to increase the number of shares issuable under the 2020 Option Plan to 656,250 shares. F- 15 As of December 31, 2024 and December 31, 2023, there were 217,056 and 162,265 options outstanding, respectively, under all the option plans. Stock options may be granted as either incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or as options not qualified under Section 422 of the Code. All options are issued with an exercise price at or above the fair market value of the common stock on the date of the grant as determined by our Board of Directors. Incentive stock option plan awards of restricted stock are intended to qualify as deductible performance-based compensation under Section 162(m) of the Code. Incentive Stock Option awards of unrestricted stock are not designed to be deductible to us under Section 162(m). Under the plans, stock options will terminate on the tenth anniversary date of the grant or earlier if provided in the grant. We have also granted non-qualified stock options to employees and contractors. All non-qualified options are generally issued with an exercise price no less than the fair value of the common stock on the date of the grant as determined by our Board of Directors. Options may be exercised up to ten years following the date of the grant, with vesting schedules determined by us upon grant. Vesting schedules vary by grant, with some fully vesting immediately upon grant to others that ratably vest over a period of time up to four years. Standard vested options may be exercised up to three months following date of termination of the relationship unless alternate terms are specified at grant. The fair values of options are determined using the Black-Scholes option-pricing model. The estimated fair value of options is recognized as expense on the straight-line basis over the options’ vesting periods. At December 31, 2024, we had approximately $ 32,800 unrecognized stock-based compensation. During 2024 and 2023, the Company granted 79,000 and 37,188 stock options with a weighted average fair value of $ 1.10 and $ 0.34 per share, respectively. The Company recorded stock compensation costs of $ 122,600 and $ 104,600 on vesting of the options during 2024 and 2023, respectively. Stock option transactions during 2024 and 2023 were as follows: SCHEDULE OF STOCK OPTION TRANSACTIONS 2024 2023 Shares Weighted- Average Exercise Price Shares Weighted- Average Exercise Price Outstanding at Beginning of Year 162,625 $ 36.01 126,805 $ 36.08 Granted 79,000 1.78 37,188 5.48 Exercised - - - - Forfeited or Cancelled ( 24,569 ) 75.86 ( 1,367 ) 10.78 Outstanding at End of Year 217,056 18.56 162,625 36.01 Options Exercisable at Year-End 214,525 $ 18.74 157,547 $ 36.96 Information with respect to stock options outstanding and exercisable at December 31, 2024 is as follows: SCHEDULE OF STOCK OPTION OUTSTANDING AND EXERCISABLE AND EXERCISABLE EXERCISE PRICE RANGE Options Outstanding Options Exercisable Range of Exercise Prices Number Outstanding at December 31, 2024 Weighted- Average Remaining Contractual Life Weighted- Average Exercise Price Number Exercisable at December 31, 2024 Weighted- Average Exercise Price $ 1.58 - 142.08 217,056 7.7 $ 4.50 214,525 $ 18.74 The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for options granted. F- 16 Warrant transactions during 2024 and 2023 were as follows: SCHEDULE OF WARRANT TRANSACTIONS 2024 2023 Shares Weighted- Average Exercise Price Shares Weighted- Average Exercise Price Outstanding at Beginning of Year 631,737 $ 75.34 779,208 $ 21.28 Granted 1,296,876 3.47 1,406 5.72 Exercised - - ( 118,238 ) 11.20 Forfeited or Cancelled ( 46,537 ) 24.23 ( 30,639 ) 26.74 Outstanding at End of Year 1,882,076 2.84 631,737 75.34 Warrant Exercisable at Year-End 585,200 2.84 631,737 75.34 Weighted-Average Fair Value of Warrants Granted During the Year $ 0.25 $ 0.24 Information with respect to warrants outstanding and exercisable at December 31, 2024 is as follows: SUMMARY OF WARRANTS OUTSTANDING AND EXERCISABLE Warrants Outstanding Warrants Exercisable Range of Exercise Prices Number Outstanding at December 31, 2024 Weighted- Average Remaining Contractual Life Weighted- Average Exercise Price Number Exercisable at December 31, 2024 Weighted- Average Exercise Price $ 3.44 -$ 85.12 1,882,076 2.3 $ 3.47 585,200 $ 22.59 The fair value of each warrant granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for options granted. During the year ended December 31, 2023, warrant holders exercised 118,238 warrants to acquire 118,238 shares for net proceeds to the Company of $ 1,322,885 . F- 17 NOTE 7 INCOME TAXES U.S. Federal Corporate Income Tax The Company uses an asset and liability approach for accounting and reporting for income taxes that allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. At December 31, 2024, the Company had available Federal and state net operating loss carryforwards to reduce future taxable income. As of December 31, 2024, we had federal and state net operating loss carryforwards for income tax purposes of approximately $ 38 million which will begin to expire in 2025. We also have Arizona net operating loss carryforwards for income tax purposes of approximately $ 12.0 million which expire after five years. These carryforwards have been utilized in the determination of the deferred income taxes for financial statement purposes. Given the Company’s history of net operating losses, management has determined that it is more likely than not that the Company will not be able to realize the tax benefit of the carryforwards. Accordingly, The Company has not recognized a deferred tax asset for this benefit. Section 382 generally limits the use of NOLs and credits following an ownership change, which occurs when one or more 5 percent shareholders increase their ownership, in aggregate, by more than 50 percentage points over the lowest percentage of stock owned by such shareholders at any time during the “testing period” (generally three years). The Company has adopted FASB guidelines that address the determination of whether lax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this guidance, we may recognize the lax benefit from an uncertain lax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. This guidance also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of December 31, 2024 and 2023, the Company did not have a liability for unrecognized tax benefits, and no adjustment was required at adoption. The Company’s policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of December 31, 2024, and 2023, the Company has not accrued interest or penalties related to uncertain tax positions. Additionally, tax years 2021 through 2024 remain open to examination by the major taxing jurisdictions to which the Company is subject. Upon the attainment of taxable income by the Company, management will assess the likelihood of realizing the tax benefit associated with the use of the carryforwards and will recognize the appropriate deferred tax asset at that time. The Company’s effective income tax rate differs from the amount computed by applying the federal statutory income tax rate to loss before income taxes as follows: SCHEDULE OF EFFECTIVE TAX RATE December 31, 2024 December 31, 2023 Income tax benefit at federal statutory rate ( 21.0 )% ( 21,0 )% State income tax benefit, net of federal benefit ( 5.0 )% ( 5.0 )% Change in valuation allowance 26 % 26.0 % Income taxes at effective rate - % - % F- 18 Temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities and tax credit and operating loss carryforward that create deferred tax assets and liabilities are as follows: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES 2024 2023 Tax Operating Loss Carryforward $ 9,900,000 $ 7,800,000 Unamortized Research and Development Costs 207,000 175,000 Valuation Allowance ( 10,107,000 ) ( 7,975,000 ) Deferred Tax Assets, Net $ - $ - The valuation allowance increased approximately $ 0.8 million, primarily as a result of the increased net operating losses of our U.S.- based segment. Taiwan (Republic of China) Corporate Tax Sole-Vision Technologies, Inc. is a subsidiary of the Company which is operating in Taiwan as a profit-seeking enterprise. Its applicable corporate income tax rate is 20%. In addition, Taiwan’s corporate tax system allows the government to levy a 10% profit retention tax on undistributed earnings for the prior year. This tax will not be provided if the company distributed the earnings before the ended of the fiscal year . According to the Taiwan corporate income tax (“TCIT”) reporting system, the TCIT sales cut-off base is concurrent with the business tax classified as value-added type (“VAT”) which will be reported to the Ministry of Finance (“MOF”) on a bi-monthly basis. Since the VAT and TCIT are accounted for on a VAT tax basis that recorded all sales on business tax on a VAT tax reporting system, the Company is bound to report the TCIT according to the MOF prescribed tax reporting rules. Under the VAT tax reporting system, sales cut-off did not take the accrual base but rather on a VAT taxable reporting basis. Therefore, when the company adopted US GAAP on accrual basis, the sales cut-off TCIT timing difference which derived from the VAT reporting system will create a temporary sales cut-off timing difference and this difference is reflected in the deferred tax assets or liabilities calculations. F- 19 NOTE 8 EARNINGS (LOSS) PER SHARE The following table provides a reconciliation of the numerators and denominators reflected in the basic and diluted earnings per share computations, as required by ASC No. 260, “Earnings per Share.” Basic earnings per share (“EPS”) is computed by dividing reported earnings available to stockholders by the weighted average shares outstanding. We had net losses for the years ended December 31, 2024 and 2023 and the effect of including dilutive securities in the earnings per common share would have been anti-dilutive for the purpose of calculating EPS. Accordingly, all options, warrants, and shares potentially convertible into common shares were excluded from the calculation of diluted earnings per share for the periods ended December 31, 2024 and 2023. SCHEDULE OF EARNINGS PER SHARE BASIC AND DILUTED December 31, 2024 December 31, 2023 Basic EPS Net Loss $ ( 3,980,820 ) $ ( 4,142,666 ) Weighted Average Shares 2,203,893 1,996,678 Basic Loss Per Share $ ( 1.81 ) $ ( 2.07 ) For the years ended December 31, 2024 and 2023, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have had an anti-dilutive effect. The potentially dilutive securities consisted of the following: SCHEDULE OF BASIC AND DILUTED LOSS PER SHARES SECURITIES December 31, 2024 December 31, 2023 Warrants 1,882,076 631,737 Options 217,016 162,625 Total 2,099,092 794,362 NOTE 9 CONTINGENT LIABILITIES The Company may be involved in certain legal proceedings that arise from time to time in the ordinary course of our business. Except for income tax contingencies, we record accruals for contingencies to the extent that our management concludes that the occurrence is probable and that the related amounts of loss can be reasonably estimated. Management believes the accompanying financial statements include all provisions, of any, for any potential losses. Legal expenses associated with the contingency are expensed as incurred. On September 13, 2024 Aegis Capital Corp. commenced an action against the Company alleging that it had breached the provisions of a Placement Agency Agreement (PPA) dated June 24, 2024 and that the Company was required to pay the plaintiff placement agent fees as a result of the Company’s September 4, 2024 direct offering of $2.15 million with H. C. Wainwright. The Company rejects the Plaintiff’s claims that it is due the 7% plus expenses in the PPA and asserts that the PAA had been terminated on August 15, 2024 due to the plaintiff’s non-performance and that the plaintiff is not entitled to any fees in the offering since it raised none of the funds in the offering. The action is currently in the discovery stage and the Company intends to vigorously defend the action. Related to Iveda Taiwan pursuant to certain contracts with Chicony Power Technology Co., Ltd., Shihlin Electric & Engineering Corporation, Chung-Hsin Electric and Machinery Manufacturing Corp., and National Chung Shan Institute of Science and Technology, Iveda Taiwan is required to provide after-project services. If Iveda Taiwan fails to provide these after-project services in the future, other parties of the related contract would have recourse. The financial exposure to Iveda Taiwan in the event of failure to provide after- project services in the future as of December 31, 2024 is $ 339,042 . NOTE 10 SEGMENT INFORMATION The Company operates and manages its business as two reportable and operating segments. The Company’s CODM reviews financial information presented and decides how to allocate resources based on net income (loss). Net income (loss) is used for evaluating financial performance. Significant segment expenses include salaries and payroll, stock based compensation, marketing, public company expenses, audit and accounting, consulting, research and development, travel and entertainment, software subscription and other administrative expenses for the US and salaries and payroll, insurance, rent, travel and entertainment, office supplies and postage, pension and other administrative expenses. The following table presents the significant segment expenses and other segment items regularly reviewed by our CODM. F- 20 SCHEDULE OF SEGMENT INFORMATION - Consolidated US Taiwan Consolidated US Taiwan December 31, 2024 December 31, 2023 Revenues $ 6,020,639 $ 869,261 $ 5,151,378 $ 6,495,865 $ 852,136 $ 5,643,729 Cost of Goods Sold 4,719,005 615,010 4,103,995 5,428,261 932,868 4,495,393 Gross Profit 1,301,634 254,251 1,047,383 1,067,604 ( 80,732 ) 1,148,336 - Operating Expenses - Salaries and Payroll Expenses 1,667,330 967,793 699,537 1,756,364 988,848 767,516 Pension 21,832 21,832 20,518 20,518 Travel and Entertainment 552,123 483,146 68,977 640,815 587,317 53,498 Stock-based compensation 122,600 122,600 104,600 104,600 Marketing 757,736 757,736 332,852 332,852 Public Company expenses 520,966 520,966 354,215 354,215 Audit and Accounting 312,920 312,920 162,700 162,700 Consulting Services 412,962 412,962 367,148 367,148 Research and Development 363,350 363,350 797,112 797,112 Software Subscription 85,111 85,111 42,209 42,209 Insurance 60,873 12,664 48,209 57,851 12,270 45,581 Rent 142,986 101,731 41,255 123,255 83,002 40,253 Office Supplies and Postage 34,276 34,276 25,813 25,813 Other operating expenses 316,872 215,849 101,023 323,027 270,937 52,090 Total Operating Expenses 5,371,937 4,356,828 1,015,109 5,108,479 4,103,210 1,005,269 Loss (Income) from Operations ( 4,070,303 ) ( 4,102,577 ) 32,274 ( 4,040,875 ) ( 4,183,943 ) 143,068 Interest Income and Other (Expenses), net 121,868 95,330 26,538 ( 83,483 ) ( 84,452 ) 969 Net loss before Income Tax $ ( 3,948,435 ) $ ( 4,007,247 ) $ 58,812 $ ( 4,124,358 ) $ ( 4,268,395 ) $ 144,037 Furthermore, due to operations in various geographic locations, we are susceptible to changes in national, regional, and local economic conditions, demographic trends, consumer confidence in the economy, and discretionary spending priorities that may have a material adverse effect on our future operations and results. We are required to collect certain taxes and fees from customers on behalf of government agencies and remit them back to the applicable governmental agencies on a periodic basis. The taxes and fees are legal assessments to the customer, for which we have a legal obligation to act as a collection agent. Because we do not retain the taxes and fees, we do not include such amounts in revenue. We record a liability when the amounts are collected and relieve the liability when payments are made to the applicable governmental agencies. The net assets (liabilities) for our significant geographic regions are as follows: SCHEDULE OF NET ASSETS LIABILITIES BY GEOGRAPHIC REGIONS Net Assets (Liabilities) For the Year Ended For the Year Ended December 31, 2024 December 31, 2023 United States $ 1,775,554 $ 3,741,367 Republic of China (Taiwan) $ 729,885 $ 907,113 Total Consolidated $ 2,505,439 $ 4,648,480 NOTE 11 RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS The financial statements for the year ended December 31, 2023 and the accumulated deficit as of December 31, 2022 have been restated. Subsequent to the original issuance of these financial statements, our audit committee and management determined the following: As of December 31, 2022 ● the Company erroneously did not recognize a valuation decrease in recorded deferred tax assets in its Taiwan subsidiary. ● the Company erroneously did not recognize an intercompany payable to its subsidiary, Iveda Taiwan. Assets affected included other assets and liabilities affected included accounts and other payables. As of December 31, 2023 ● the Company had erroneously capitalized software development costs during 2023 and 2024 Quarterly filings. ● In addition, the Company is making certain reclassification entries. The effects on the previously issued financial statements are as follows: For periods before 2022, Management of the Company determined that the following: [1] The Deferred Tax asset of $ 146,560 was no longer a valid tax difference. The amount was recorded as an adjustment to accumulated deficit at December 31, 2022. [2} The intercompany amount due to Iveda Taiwan was understated by $ 200,000 related to a payment made on behalf of Iveda US by Iveda Taiwan. For the year ending December 31, 2023, Management of the Company determined that the following: [3] An adjustment for $ 792,612 related to expensing the research and development expense was needed related to activity in 2023. The amount was recorded as a reduction to assets and the associated expense was recorded to the statement of operations. [4] An adjustment for $ 180,000 to expense its investment in Iveda Phils JV originally recorded as a consolidation but we have determined this investment should have been recorded as the equity method. This effected cash, account and other payables, Joint Venture Non-Controlled Equity Portion, Accumulated Other Comprehensive Income (Loss) and accumulated deficit The following table presents the effect of the restatements of the Company’s previously issued balance sheet: SCHEDULE OF RESTATEMENTS As of December 31, 2023 As Previously Reported Adjustments As Restated Other Assets $ 444,723 $ ( 146,560 ) [1] $ 298,163 Accounts and Other Payables ( 1,110,087 ) ( 200,000 ) [2] - 1,173 [4] ( 1,308,914 ) Property and Equipment, Net 891,187 ( 792,612 )[3] 98,575 Joint Venture Non-Controlled Equity Portion $ 99,048 ( 99,048 ) [4] - Cash and Cash Equivalents 4,754,597 ( 16,093 ) [4] 4,738,504 Accumulated Other Comprehensive Income (Loss) ( 222,380 ) ( 962 ) [4] ( 221,418 ) Accumulated Deficit $ ( 47,941,796 ) $ ( 1,254,101 )[5] $ ( 49,195,897 ) [1] Deferred Tax Asset eliminated from Other Assets [2] The intercompany amount due to Iveda Taiwan was understated by $ 200,000 related to a payment made on behalf of Iveda US by Iveda Taiwan added back to Accounts and Other Payables [3] 2023 capitalized software expensed to Research and Development [4] An adjustment for $ 180,000 to expense its investment in Iveda Phils JV originally recorded as a consolidation but we have determined this investment should have been recorded using the equity method. On the balance sheet this effected Cash and Cash equivalents, Accounts and Other Payables, Joint Venture Non-Controlled Equity Portion, Accumulated Other Comprehensive Income (Loss). [5] Each of the above restatements effected Accumulated Deficit F- 21 The following table presents the effect of the restatements and reclassification on the Company’s previously issued and reported statement of operations As of December 31, 2023 As Previously Reported Adjustments As Restated Research and Development $ 4,500 $ 792,612 $ 797,112 Loss from Investment in Iveda Phils JV - 180,000 180,000 Eliminate JV G&A recorded 2023 162,686 ( 162,686 ) - Eliminate JV Interest Income recorded 2023 ( 11 ) 11 - Eliminate Loss attributable to non-controlled interest ( 97,605 ) 97,605 - Net Loss $ ( 3,235,124 ) $ ( 907,542 ) $ ( 4,142,666 ) Basic and Diluted Cost per Share $ 0.20 $ 2.07 * * Restated per share amount reflects a reverse stock split of the outstanding shares of our Common Stock at a ratio of 1-for-8 effected on September 17, 2024. The following table presents the effect of the restatements and reclassification on the Company’s previously issued and reported statement of operations Common Stock Common Stock Amount Additional Paid in Capital Accumulated Deficit Non-Controlling Interest Accumulated Other Comprehensive (Loss) Total Stockholders’ Equity Balance, December 31, 2022 as previously reported 1,883,342 $ 19 $ 52,497,045 $ ( 44,706,671 ) $ - $ ( 220,643 ) $ 7,569,750 Correction of Deferred Tax Asset - - - ( 146,560 ) - - ( 146,560 ) Correction of Prior Period Intercompany Accounts Payable - - - ( 200,000 ) - - ( 200,000 ) Balance, December 31, 2022 as restated 1,883,342 19 52,497,045 ( 45,053,171 ) - ( 220,643 ) 7,223,190 Balance, December 31, 2023 as previously reported 2,021,236 20 54,065,775 ( 47,941,796 ) ( 99,048 ) ( 222,380 ) $ 5,802,571 Balance 2,021,236 20 54,065,775 ( 47,941,796 ) ( 99,048 ) ( 222,380 ) $ 5,802,571 Correction of Deferred Tax Asset - - - $ ( 146,560 ) - - $ ( 146,560 ) Correction of Prior Period Intercompany Accounts Payable - - - ( 200,000 ) - - ( 200,000 ) Capitalized Software expensed to Research and Development - - - $ ( 792,612 ) - - $ ( 792,612 ) Expense Investment in Iveda Phils JV, net - - - ( 114,929 ) 99,048 962 ( 14,919 ) Balance, December 31, 2023 as restated 2,021,236 $ 20 $ 54,065,775 $ ( 49,195,897 ) - $ ( 221,418 ) $ 4,648,480 Balance 2,021,236 $ 20 $ 54,065,775 $ ( 49,195,897 ) - $ ( 221,418 ) $ 4,648,480 The following table presents the effect of the restatements of the Company’s previously issued statement of cashflows: As Previously Reported Adjustments As Restated As of December 31, 2023 As Previously Reported Adjustments As Restated Net Loss $ ( 3,235,124 ) ( 792,612 ) [3] $ - ( 114,930 ) [4] ( 4,142,666 ) Loss from Iveda Phils Joint Venture 180,000 180,000 Increase (Decrease) in Accounts and Other Payables ( 522,460 ) ( 1,173 ) [4] ( 523,633 ) Net Cash Used in Operating Activities ( 2,604,645 ) ( 792,612 ) [3] 180,000 [4] ( 114,930 ) [4] ( 1,173 ) [4] (3,333,360 ) Purchase of Property and Equipment, Net $ ( 878,205 ) $ ( 792,612 ) [3] $ ( 85,593 ) Net Cash Provided by (Used in) Investing Activities $ ( 878,205 ) $ ( 792,612 ) [3] $ ( 85,593 ) Joint Venture Non-Controlled Equity Portion ( 99,048 ) 99,048 [4] - Change in restricted Cash ( 685 ) 685 [5] - Net Cash Provided by Financing Activities 924,100 99,048 [4] 685 [5] 1,023,833 EFFECT OF EXCHANGE RATE CHANGES ON CASH 1,252 528 [4] 1,780 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ( 2,557,499 ) ( 15,841 ) [4] ( 2,573,540 ) CASH AND CASH EQUIVALENTS – END OF PERIOD 4,754,596 ( 16,092 ) [4] 129,778 [6] 4,868,282 [3] 2023 Capitalized Software expensed to Research and Development [4] An adjustment for $ 180,000 to expense its investment in Iveda Phils JV originally recorded as a consolidation but we have determined this investment should have been recorded as the equity method. The net loss effect is $ 180,000 less the $ 65,070 loss recorded in 2023 in consolidation. Net $ 114,930 additional loss recorded in 2023. [5] Eliminate line item for change in restricted cash of $ 685 [6] Added Restricted Cash to Cash and Cash Equivalents F- 22 NOTE 12 SUBSEQUENT EVENTS On February 27, 2025, Iveda Solutions, Inc. (the “Company”) entered into an At the Market Offering Agreement (the “Sales Agreement”) with H.C. Wainwright & Co., LLC (the “Sales Agent), pursuant to which the Company may offer and sell, from time to time, through or to the Sales Agent, shares (the “Placement Shares”) of the Company’s common stock, par value $ 0.00001 per share (the “Common Stock”), having an aggregate offering price of up to $ 5,082,431 (the “ATM Offering”). Sales pursuant to the Sales Agreement will be made only upon instructions by the Company to the Sales Agent, and the Company cannot provide any assurances that it will issue any Shares pursuant to the Sales Agreement. The issuance and sale, if any, of the Placement Shares by the Company under the Sales Agreement will be made pursuant to the Company’s effective “shelf” registration statement on Form S-3 (Registration Statement No. 333-276676) (the “Registration Statement”), the base prospectus contained therein, and a prospectus supplement relating to the ATM offering, dated February 27, 2025. Under the terms of the Sales Agreement, the Company may sell the Placement Shares by any method permitted that is deemed an “at the market offering” as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”). The Sales Agent will use its commercially reasonable efforts consistent with its normal trading and sales practices and applicable state and federal laws, rules and regulations to sell the Placement Shares from time to time, based upon the Company’s instructions (including any price, time or size limits or other customary parameters or conditions the Company may impose). Actual sales will depend on a variety of factors to be determined by the Company from time to time, including (among others) market conditions, the trading price of the Company’s Common Stock, capital needs and determinations by the Company of the appropriate sources of funding for the Company. The Company is not obligated to make any sales of Placement Shares under the Sales Agreement and the Company cannot provide any assurances that it will issue any Placement Shares pursuant to the Sales Agreement. The Company will pay a commission rate of 3% of the gross sales price per share sold and agreed to reimburse the Sales Agent for certain specified expenses, including the fees and disbursements of its legal counsel in an amount not to exceed $ 50,000 and have agreed to reimburse the Sales Agents an amount not to exceed $ 5,000 per due diligence update session conducted in connection with each such date the Company files its Quarterly Reports on Form 10-Q, its Annual Report on Form 10-K and amendments or supplements to the Registration Statement, the accompanying prospectus, or any prospectus supplement. The Company has also agreed pursuant to the Sales Agreement to provide the Sales Agent with customary indemnification and contribution rights. On March 14, 2025, the “Company redomiciled to Delaware form Nevada with authorized to issue 312,500,000 shares of capital stock. Of which (i) 300 million shares shall be common stock, $ 0.00001 par value and (ii) 12,500,000 shares shall be shares of preferred stock, $ 0.00001 par value. The Company headquarters lease in Mesa Arizona expired February 28, 2025 and has been renewed for 5 years at similar terms to the previous lease. F- 23