What changed in Iveda Solutions, Inc.'s 10-K — 2023 vs 2024
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Paragraph-level year-over-year comparison of Iveda Solutions, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.
+82 added−77 removedSource: 10-K (2025-04-15) vs 10-K (2024-04-01)
Top changes in Iveda Solutions, Inc.'s 2024 10-K
82 paragraphs added · 77 removed · 55 edited across 1 sections
- Item 1C. Cybersecurity+82 / −77 · 55 edited
Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
55 edited+27 added−22 removed62 unchanged
Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
55 edited+27 added−22 removed62 unchanged
2023 filing
2024 filing
Biggest changeThere have not been any other changes in our internal control over financial reporting identified by management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 32 Limitations on the Effectiveness of Controls Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud.
Biggest changeChanges 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.
AI Functions ● Object Search ● Face Search (No Database Required) ● Face Recognition (from a Database) ● License Plate Recognition (100+ Countries), includes make and model ● Intrusion Detection ● Weapon Detection ● Fire Detection ● People Counting ● Vehicle Counting ● Temperature Detection ● Public Health Analytics (Facemask Detection, ) ● QR and Barcode Detection 26 Key Features ● Live Camera View ● Live Tracking ● Abnormality Detection – Vehicle/Person wrong direction detection ● Vehicle/Person Loitering Detection ● Fall Detection ● Illegal Parking Detection ● Heatmap Generation IvedaAI consists of deep-learning video analytics software running in a computer/server environment that can either be deployed at an edge level or data center for centralized cloud model.
AI Functions ● Object Search ● Face Search (No Database Required) ● Face Recognition (from a Database) ● License Plate Recognition (100+ Countries), includes make and model ● Intrusion Detection ● Weapon Detection ● Fire Detection ● People Counting ● Vehicle Counting ● Temperature Detection ● Public Health Analytics (Facemask Detection,) ● QR and Barcode Detection 27 Key Features ● Live Camera View ● Live Tracking ● Abnormality Detection – Vehicle/Person wrong direction detection ● Vehicle/Person Loitering Detection ● Fall Detection ● Illegal Parking Detection ● Heatmap Generation IvedaAI consists of deep-learning video analytics software running in a computer/server environment that can either be deployed at an edge level or data center for centralized cloud model.
We believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial condition and results of operations and require our most difficult, subjective, and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. 30 The material estimates for our company are that of the stock-based compensation recorded for options and warrants issued and the income tax valuation allowance recorded for deferred tax assets.
We believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial condition and results of operations and require our most difficult, subjective, and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. 31 The material estimates for our company are that of the stock-based compensation recorded for options and warrants issued and the income tax valuation allowance recorded for deferred tax assets.
We license our platform and sell IoT hardware to service providers such as telecommunications companies, integrators and other technology resellers already providing services to an existing customer base. Partnering with service providers that have an existing loyal customer base allows us to focus on servicing just a handful of our partners and concentrating on our technology offering.
We will license our CEREBRO platform and sell IoT hardware to service providers such as telecommunications companies, integrators and other technology resellers already providing services to an existing customer base. Partnering with service providers that have an existing loyal customer base allows us to focus on servicing just a handful of our partners and concentrating on our technology offering.
This business model provides dual revenue streams – one from hardware sales and the other from monthly licensing fees. 27 Iveda Taiwan, our subsidiary in Taiwan, specializes in deploying new, and integrating existing, video surveillance systems for airports, commercial buildings, government customers, data centers, shopping centers, hotels, banks, and Safe City.
This business model provides dual revenue streams – one from hardware sales and the other from monthly licensing fees. 28 Iveda Taiwan, our subsidiary in Taiwan, specializes in deploying new, and integrating existing, video surveillance systems for airports, commercial buildings, government customers, data centers, shopping centers, hotels, banks, and Safe City.
The fair value of stock-based compensation awards granted prior to, but not yet vested as of December 31, 2023 and 2022, was estimated using the “minimum value method” as prescribed by the original provisions of ASC 718, “Accounting for Stock-Based Compensation” and therefore, no compensation expense was recognized for these awards in accordance with ASC 718.
The fair value of stock-based compensation awards granted prior to, but not yet vested as of December 31, 2024 and 2023, was estimated using the “minimum value method” as prescribed by the original provisions of ASC 718, “Accounting for Stock-Based Compensation” and therefore, no compensation expense was recognized for these awards in accordance with ASC 718.
Equity Compensation Plans For equity compensation plans information refer to Item 12 of Part III of this Annual Report on Form 10-K. 25 Recent Sales of Unregistered Securities Set forth below are the sales of all securities by the Company within the past three years which were not registered under the Securities Act.
Equity Compensation Plans For equity compensation plans information refer to Item 12 of Part III of this Annual Report on Form 10-K. 26 Recent Sales of Unregistered Securities Set forth below are the sales of all securities by the Company within the past three years which were not registered under the Securities Act.
ITEM 4 – MINE SAFETY DISCLOSURES Not applicable. 24 PART II ITEM 5 – MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed on The Nasdaq Capital Market under the symbol “IVDA” since April 1, 2022.
ITEM 4 – MINE SAFETY DISCLOSURES Not applicable. 25 PART II ITEM 5 – MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed on The Nasdaq Capital Market under the symbol “IVDA” since April 1, 2022.
(c) Insider Trading Arrangements and Policies During the quarter ended December 31, 2023, 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.
(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.
Liquidity and Capital Resources As of December 31, 2023, we had cash and cash equivalents of $2.9 million in our U.S.-based segment and $1.8 million in our Taiwan-based segment, compared to $6.0 million in our U.S.-based segment and $1.3 million in our Taiwan-based segment as of December 31, 2022.
Liquidity and Capital Resources As of December 31, 2024, we had cash and cash equivalents of $1.6 million in our U.S.-based segment and $1.0 million in our Taiwan-based segment, compared to $2.9 million in our U.S.-based segment and $1.8 million in our Taiwan-based segment as of December 31, 2023.
For the years ended December 31, 2023 and 2022, Iveda Taiwan’s operations accounted for 93% and 71% of our total revenue, respectively.
For the years ended December 31, 2024 and 2023, Iveda Taiwan’s operations accounted for 93% and 71% of our total revenue, respectively.
There were approximately 700 beneficial owners of our Common Stock. There is limited trading activity in our securities, and there can be no assurance that a regular trading market for our common stock will be sustained.
There were approximately 25,000 beneficial owners of our Common Stock. There is limited trading activity in our securities, and there can be no assurance that a regular trading market for our common stock will be sustained.
Application of Critical Accounting Policies We have identified the policies below as critical to our business operations and the understanding of our results of operations.
Critical Accounting Policies and Estimates We have identified the policies below as critical to our business operations and the understanding of our results of operations.
At December 31, 2023, we had approximately $32 million in net operating loss carryforwards available for federal income tax purposes, which will begin to expire in 2025. We did not recognize any benefit from the federal net operating loss carryforwards in 2023 or 2022.
At December 31, 2024, we had approximately $35 million in net operating loss carryforwards available for federal income tax purposes, which will begin to expire in 2025. We did not recognize any benefit from the federal net operating loss carryforwards in 2024 or 2023.
We recognized $104,600 and $120,581 of stock-based compensation expense for the years ended December 31, 2023 and 2022, respectively. 31 ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are a smaller reporting company as defined by Item 10(f) of Regulation S-K and are not required to provide the information otherwise required under this item.
We recognized $122,600 and $104,600 of stock-based compensation expense for the years ended December 31, 2024 and 2023, respectively. 32 ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are a smaller reporting company as defined by Item 10(f) of Regulation S-K and are not required to provide the information otherwise required under this item.
Net cash used in operating activities during the year ended December 31, 2023 was $3.5 million compared to $5.4 million net cash used during the year ended December 31, 2022.
Net cash used in operating activities during the year ended December 31, 2024 was $4.4 million compared to $3.3 million net cash used during the year ended December 31, 2023.
The expected life of options and warrants is based on the average of three public companies offering services similar to ours. Impairment of Long-Lived Assets We have a significant amount of property and equipment primarily consisting of leased equipment.
The expected life of options and warrants is based on the average of three public companies offering services similar to ours. Impairment of Long-Lived Assets We have a relatively minimal amount of property and equipment, consisting primarily of office equipment.
We do not presently have any general processes for assessing, identifying, and managing material risks from cybersecurity threats.
We do no t presently have any general processes for assessing, identifying, and managing material risks from cybersecurity threats.
This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Our management’s report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this Annual Report on Form 10-K.
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.
Net cash used in operating activities for the year ended December 31, 2023 consisted primarily of the $3.2 million net loss including $0.3 million of non-cash charges (primarily stock option compensation and common stock issued for investor relations services), $0.2 million of Taiwan vendor deposits, prepaids and advances to suppliers and $0.5 million net payments for accounts payable and accrued operating expenses.
Net cash used in operating activities for the year ended December 31, 2024 consisted primarily of the $4.0 million net loss including $0.2 million of non-cash charges (primarily stock option compensation and common stock issued for investor relations services), $0.5 million deferred cost of goods sold, $0.3 million of Taiwan vendor deposits, prepaids and advances to suppliers and $0.4 million net increase of accounts payable and accrued operating expenses.
Operating Expenses Operating expenses were $4.5 million for the year ended December 31, 2023, compared with $4.3 million for the year ended December 31, 2022, an increase of $0.2 million, or 4%.
Operating expenses for the US operations were $4.3 million for the year ended December 31, 2024, compared with $4.1 million for the year ended December 31, 2023, an increase of $0.2 million, or 5%.
We recognize revenue in accordance with ASC 60, “Revenue Recognition.” Sales are recorded net of sales returns and discounts, which are estimated at the time of shipment based upon historical data. Revenue from monitoring services are recognized when the services are provided. Expenses are recognized as incurred. Revenue from fixed-price equipment installation contracts are recognized on the percentage-of-completion method.
We recognize revenue in accordance with ASC 60, “Revenue Recognition.” Sales are recorded net of sales returns and discounts, which are estimated at the time of shipment based upon historical data. Revenue from monitoring services are recognized when the services are provided. Expenses are recognized as incurred.
We elected the modified prospective transition method as permitted by ASC 718. Under this transition method, stock-based compensation expense for the years ended December 31, 2023 and 2022 includes compensation expense for stock-based compensation granted on or after the date ASC 718 was adopted based on the grant-date fair value estimated in accordance with the provisions of ASC 718.
Under this transition method, stock-based compensation expense for the years ended December 31, 2024 and 2023 includes compensation expense for stock-based compensation granted on or after the date ASC 718 was adopted based on the grant-date fair value estimated in accordance with the provisions of ASC 718.
Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act.
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).
The increase in total revenue in 2023 compared with the same period in fiscal 2022 is attributable primarily to increased equipment sales from Iveda Taiwan as a result of additional long-term contracts awarded and started during 2023.
The decrease in total revenue in 2024 compared with the same period in fiscal 2023 is attributable primarily to decreased equipment sales from Iveda Taiwan as a result of delays of long-term contracts awarded and started during 2024.
Net cash used in operating activities for the year ended December 31, 2022 consisted primarily of the $3.3 million net loss including $0.4 million of non-cash charges (primarily stock option compensation and common stock issued for investor relations services), $0.8 million in accounts receivable, $0.2 million of inventory, $0.2 million of Taiwan vendor deposits, prepaids and advances to suppliers and $1.2 million net payments for accounts payable and accrued operating and interest expenses.
Net cash used in operating activities for the year ended December 31, 2023 consisted primarily of the $4.1 million net loss including $0.3 million of non-cash charges (primarily stock option compensation and common stock issued for investor relations services), $0.1 million of Taiwan vendor deposits, prepaids and advances to suppliers and $0.6 million net payments for accounts payable and accrued operating and interest expenses with an offsetting $0.8 million collection of accounts receivable Net cash used in investing activities for the year ended December 31, 2024 was minimal.
For the year ended December 31, 2023, our recurring service revenue was $0.44 million, or 7% of net revenue, and our equipment sales and installation revenue was $6.0 million, or 93% of net revenue.
For the year ended December 31, 2024, our service revenue was $0.43 million, or 7% of net revenue, and our equipment sales and installation revenue was $5.6 million, or 93% of net revenue.
Based on this evaluation, our Chief Executive Officer and Chief Financial Officer, as of December 31, 2023, concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act was 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.
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.
This decrease in our cash and cash equivalents is primarily a result of the cash used in operating activities of $3.5 million and $0.9 million investment in software platform development (Cerebro) during the year ended December 31, 2023. There are no legal or economic factors that materially impact our ability to transfer funds between our U.S.-based and Taiwan-based segments.
This decrease in our cash and cash equivalents is primarily a result of the cash used in operating activities of $4.4 million during the year ended December 31, 2024. There are no legal or economic factors that materially impact our ability to transfer funds between our U.S.-based and Taiwan-based segments.
Loss from Operations Loss from operations increased to $3.4 million for the year ended December 31, 2023, compared with $3.3 million for the year ended December 31, 2022, an increase of $0.1 million, or 2%. A majority of the increase in loss from operations was primarily due to increased operating expenses.
Loss from Operations Consolidated Loss from operations increased to $4.1 million for the year ended December 31, 2024, compared with $4.0 million for the year ended December 31, 2023, an increase of $0.1 million, or 2%. A majority of the increase in loss from operations was primarily due to a minimal increase in operating expenses offset by increased gross margins.
Changes in estimated job profitability resulting from job performance, job conditions, contract penalty provisions, claims, change orders, and settlements are accounted for as changes in estimates in the current period. Profit incentives are included in revenue when their realization is reasonably assured. Claims are included in revenue when realization is probable and the amount can be reliably estimated.
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.
Security Holders As of December 31, 2023, we had 16,169,891 shares of our common stock outstanding held by 103 shareholders of record, 0 shares of our Series A Preferred Stock outstanding and 0 shares of our series B Preferred Stock. Dividend Policy We have never paid a cash dividend on our common stock.
Security Holders As of December 31, 2024, we had 2,808,071 shares of our common stock outstanding held by 96 shareholders of record, 0 shares of our Series A Preferred Stock outstanding and 0 shares of our series B Preferred Stock. Dividend Policy We have never paid a cash dividend on our common stock.
We review the recoverability of the carrying value of long-lived assets using the methodology prescribed in ASC 360 “Property, Plant and Equipment.” Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future net operating cash flows expected to be generated by the asset.
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.
In fiscal 2022, our recurring service revenue was $0.31 million, or 7% of consolidated net revenue, and our equipment sales and installation revenue was $4.2 million, or 93% of net revenue.
In fiscal 2023, our service revenue was $0.44 million, or 7% of consolidated net revenue, and our equipment sales and installation revenue was $6.1 million, or 93% of net revenue.
Cost of Revenue Total cost of revenue was $5.4 million (84% of revenue; gross margin of 16%) for the year ended December 31, 2023, compared with $3.5 million (78% of revenue; 22% gross margin) for the year ended December 31, 2022, an increase of ($1.1 million), or (55%).
Cost of Revenue Total cost of revenue was $4.7 million (78% of revenue; gross margin of 22%) for the year ended December 31, 2024, compared with $5.4 million (84% of revenue; 16% gross margin) for the year ended December 31, 2023, a decrease of $0.7 million, or 54%.
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.
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. We did not make any impairment for the years ended December 31, 2024 and 2023.
See the High and Low Bid data below: Fiscal Year 2023 High Bid Low Bid First Quarter $ 2.91 $ 0.57 Second Quarter $ 1.90 $ 1.04 Third Quarter $ 1.15 $ 0.74 Fourth Quarter $ 0.95 $ 0.57 Fiscal Year 2022 High Bid Low Bid First Quarter $ 18.00 $ 5.28 Second Quarter $ 4.87 $ 1.07 Third Quarter $ 0.80 $ 0.47 Fourth Quarter $ 1.00 $ 0.50 As of December 31, 2023, we had 16,169,891 shares of our Common Stock, par value $0.00001, issued and outstanding.
See the High and Low Bid data below: Fiscal Year 2024 High Bid Low Bid First Quarter $ 2.91 $ 0.57 Second Quarter $ 1.90 $ 1.04 Third Quarter $ 1.15 $ 0.74 Fourth Quarter $ 8.05 $ 1.27 Fiscal Year 2023 High Bid Low Bid First Quarter $ 10.16 $ 4.40 Second Quarter $ 7.60 $ 3.60 Third Quarter $ 4,56 $ 1.51 Fourth Quarter $ 7.60 $ 4.56 As of December 31, 2024, we had 2,808,071 shares of our Common Stock, par value $0.00001, issued and outstanding.
Net cash used in investing activities for the year ended December 31, 2023 was $0.9 million. Net cash used by investing activities during the year ended December 31, 2022 was $14,165. 29 Net cash provided by financing activities for the year ended December 31, 2023 was $0.9 million compared with $11.4 million provided during the year ended December 31, 2022.
Net cash used by investing activities during the year ended December 31, 2023 was $0.30 million. 30 Net cash provided by financing activities for the year ended December 31, 2024 was $2.3 million compared with $1.0 million provided during the year ended December 31, 2023.
Net cash provided by financing activities in 2022 is primarily a result of the $11.5 million sale of Common Stock and Pre-Funded warrants during the year ended December 31, 2023. We have experienced significant operating losses since our inception.
Net cash provided by financing activities in 2023 is primarily a result of the $1.3 million issuance of Common Stock from the exercise of warrants issued during the August 2022 offering at $11.20. We have experienced significant operating losses since our inception.
Iveda Taiwan pays an aggregate of approximately $3,136 per month under the terms of the three leases, which expire on June 30, 2024, September 15, 2024 and September 11, 2024.
Iveda Taiwan leases its principal executive offices in Taiwan, comprised of three suites totaling approximately 4,567 square feet. Iveda Taiwan pays an aggregate of approximately $3,147 per month under the terms of the three leases, which expire on June 30, 2025, September 15, 2025 and September 11, 2025.
Delinquent receivables are written off based on individual credit valuation and specific circumstances of the customer, and we generally do not charge interest on past due receivables.
We deem our accounts receivable to be collectible based on certain factors, including the nature of the customer contracts and past experience with similar customers. Delinquent receivables are written off based on individual credit valuation and specific circumstances of the customer, and we generally do not charge interest on past due receivables.
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
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.
Net cash provided by financing activities in 2023 is primarily a result of the $1.3 million exercise of warrants to purchase Common Stock at $1.40 per share issued with the offering of August 2022.
Net cash provided by financing activities in 2024 is primarily a result of the $1.7 million net direct offering of Common Stock and Pre-Funded warrants at $3.44 per share.
Between January 1, 2022 and December 31, 2022 the Company issued 8,215 shares of common stock to warrant holders upon exercise of $23,000 in proceeds. Between January 1, 2023 and December 31, 2023 the Company issued 157,252 shares of restricted common stock for services valued at $138,547.
Between January 1, 2023 and December 31, 2023 the Company issued 19,656 shares of restricted common stock for services valued at $138,547.
The Company believes that each of such issuances was exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act and/or Regulation S under the Securities Act.
The Company believes that each of such issuances was exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act and/or Regulation S under the Securities Act. Between January 1, 2022 and December 31, 2022 the Company issued 8,215 shares of common stock to warrant holders upon exercise of $23,000 in proceeds.
ITEM 2 – PROPERTIES We currently rent for our principal executive offices approximately 3,000 square feet until February 2025 for approximately $4,500 per month. We believe that our current office space is adequate for the foreseeable future. Iveda Taiwan leases for its principal executive offices in Taiwan, comprised of three suites totaling approximately 4,567 square feet.
ITEM 2 – PROPERTIES We currently rent for our principal executive offices approximately 3,000 square feet until February 2025 for approximately $6,000 per month. In February 2025 we have renewed our lease for an additional five years under similar terms and conditions. We believe that our current office space is adequate for the foreseeable future.
Generally, we receive payment for our products and services within one year of commencing the project, except that we retain 5% of the total payment amount and release such amount one year after the completion of the project. For our U.S.-based segment, we had no doubtful accounts receivable allowances for the years ended December 31, 2023 and 2022, respectively.
Payment terms for our Taiwan-based segment vary based on our agreements with our customers. Generally, we receive payment for our products and services within one year of commencing the project, except that we retain 5% of the total payment amount and release such amount one year after the completion of the project.
The liability, “Billings in excess of costs and estimated earnings on uncompleted contracts,” represents billings in excess of revenue recognized. Stock-Based Compensation On January 1, 2006, we adopted the fair value recognition provisions of ASC 718, “Share-Based Payment,” which requires the recognition of an expense related to the fair value of stock-based compensation awards.
Stock-Based Compensation On January 1, 2006, we adopted the fair value recognition provisions of ASC 718, “Share-Based Payment,” which requires the recognition of an expense related to the fair value of stock-based compensation awards. We elected the modified prospective transition method as permitted by ASC 718.
We utilized the criteria and framework established by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission in Internal Control – Integrated Framework (2013) in performing this assessment. Based on this evaluation, management concluded that our internal control over financial reporting was not effective as of December 31, 2023.
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.
We provide an allowance for doubtful collections, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Payment terms for our U.S.-based segment require prepayment for most products before they are shipped and monthly Sentir licensing fees, which are due in advance on the first day of each month.
We provide an allowance for doubtful collections, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Payment terms for our U.S.-based segment require a deposit with the order and 15 days after they are shipped. For our U.S.-based segment, accounts receivable that are more than 120 days past due are considered delinquent.
The increase in cost of revenue was primarily driven by increased Iveda Taiwan revenue. The decrease in overall gross margin was also primarily attributed to increased equipment sales proportion within Iveda Taiwan revenue as a result of additional long-term contracts awarded and started during 2023.
The decrease in cost of revenue was primarily driven by decreased Iveda Taiwan revenue. The increase in overall gross margin was also primarily attributed to higher margin sales to smaller customers within Iveda Taiwan revenue and higher margin service revenue maintaining during 2024.
For our Taiwan-based segment, we set up no doubtful accounts receivable allowances for the years ended December 31, 2023 and 2022, respectively. We deem our accounts receivable to be collectible based on certain factors, including the nature of the customer contracts and past experience with similar customers.
For our U.S.-based segment, we had no doubtful accounts receivable allowances for the years ended December 31, 2024 and 2023, respectively. For our Taiwan-based segment, we set up no doubtful accounts receivable allowances for the years ended December 31, 2024 and 2023, respectively.
Other Income (Expense)-Net Other income (expense)-net was $96,527 other income for the year ended December 31, 2023, compared with ($13,004) other expense for the year ended December 31, 2022, a positive change of $109,531. The majority of the other income in 2023 is interest income from cash balances.
Other Income (Expense)-Net Other income (expense)-net was $0.12 million other income for the year ended December 31, 2024, compared with ($0.08) million other expense for the year ended December 31, 2023. The majority of the other income in 2024 is interest income from cash balances and 2023 income was offset by the $0.18 loss from investment in Iveda Phils JV.
New Accounting Standards There were no new standards recently issued which would have an impact on our operations or disclosures. 28 Results of Operations for the Year Ended December 31, 2023 Compared with the Year Ended December 31, 2022 Net Revenue We recorded net consolidated revenue of $6.5 million for the year ended December 31, 2023, compared with $4.5 million for the year ended December 31, 2022, an increase of $2.0 million, or 45%.
New Accounting Standards See Financial Statement Footnotes for discussion. 29 Results of Operations for the Year Ended December 31, 2024 Compared with the Year Ended December 31, 2023 Net Revenue We recorded net consolidated revenue of $6.0 million for the year ended December 31, 2024, compared with $6.5 million for the year ended December 31, 2023, a decrease of ($0.5) million, or (7%).
Non-Controlled Portion of Joint Venture Non-Controlled Portion of the Philippines Joint Venture net loss was $97,605 for the year ended December 31, 2023. Net Loss Net loss was $3.2 million for the year ended December 31, 2023, compared with $3.3 million for the year ended December 31, 2022.
US loss from operations decreased to $4.1 million for the year ended December 31, 2024, compared with $4.2 million for the year ended December 31, 2023, a decrease of $0.1 million, or 2%.
Removed
Between January 1, 2020 and December 31, 2021 the Company issued and sold an aggregate of 835,757 shares of common stock to investors for aggregate proceeds of approximately $2,790,000 in gross proceeds. Between January 1, 2020 and December 31, 2021 the Company issued 439,527 shares of common stock to convertible debt holders upon conversion of $1,294,580 in principal and interest.
Added
On September 6, 2024, the Company agreed to sell and issue to investors unregistered Series A Common Stock Purchase Warrants (the “Series A Warrants”) to purchase up to 5,000,000 shares of Common Stock and unregistered Series B Common Stock Purchase Warrants (the “Series B Warrants,” and collectively with the Series A Warrants, the “Common Warrants”) to purchase up to 5,000,000 shares of Common Stock.
Removed
Critical Accounting Policies and Estimates Management’s Discussion and Analysis of Financial Conditions and Results of Operations is based upon our financial statements, which have been prepared in accordance with GAAP.
Added
The Common Warrants will be exercisable on the effective date the Company obtains stockholder approval (the “Stockholder Approval”) of the issuance of the shares underlying the exercise of the Common Warrants (the “Common Warrant Shares”), at an exercise price of $0.43 per share.
Removed
The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.
Added
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. Between January 1, 2024 and December 31, 2024 the Company issued 12,500 shares of restricted common stock for services valued at $90,000.
Removed
Actual results may differ from these estimates under different assumptions or conditions. A description of our critical accounting policies and related judgments and estimates that affect the preparation of our financial statements is set forth in our audited consolidated financial statements for the year ended December 31, 2023. Such policies are unchanged.
Added
Revenue for the US operations were $0.9 million for the year ended December 31, 2024, compared with $0.9 million for the year ended December 31, 2023, a slight increase of 2%.
Removed
This net increase in operating expenses in 2023 compared with 2022 is due primarily related to a ramp up in personnel in sales and technical support personnel as well as research and development expenses for Cerebro IoT Platform and IvedaAI. Additional professional expenses have been incurred during this period with an effort to increase investor relations and marketing.
Added
Revenue for the Taiwan operations were $5.2 million for the year ended December 31, 2024, compared with $5.6 million for the year ended December 31, 2023, a decrease of ($0.5) million, or (9%). This decrease in revenue in 2024 compared with 2023 is due primarily to timing of completion of large projects at year end.
Removed
The decrease of $0.1 million, or 3%, in net loss was caused primarily by a decrease in operating expenses related to a ramp up in sales and technical support personnel as well as research and development expenses for Cerebro IoT Platform and IvedaAI.
Added
Cost of revenue for the US operations were $0.6 million for the year ended December 31, 2024, compared with $0.9 million for the year ended December 31, 2023, a decrease of $0.3 million, or 33%.
Removed
Additional professional expenses have been incurred during this period with an effort to increase investor relations and marketing.
Added
This net decrease in cost of revenue in 2024 compared with 2023 is due primarily related to an increase in sales to our distribution partners in the US with better margins than prior year revenue.
Removed
For our U.S.-based segment, accounts receivable that are more than 120 days past due are considered delinquent. Payment terms for our Taiwan-based segment vary based on our agreements with our customers.
Added
Cost of revenue for the Taiwan operations were $4.1 million for the year ended December 31, 2024, compared with $4.5 million for the year ended December 31, 2023, the decrease in cost of revenue was related to the decrease in revenue and the margins remained consistent.
Removed
The percentage completed is measured by the costs incurred to date as a percentage of estimated total costs for each contract. This method is used because we consider expended costs to be the best available measure of progress on these contracts.
Added
Operating Expenses Operating expenses for the consolidated operations were $5.4 million for the year ended December 31, 2024, compared with $5.1 million for the year ended December 31, 2023, an increase of $0.3 million, or 5%.
Removed
Because of inherent uncertainties in estimating costs and revenue, it is at least reasonably possible that the estimates used will change. Contract costs include all direct material, subcontractors, labor costs, and equipment costs and those indirect costs related to contract performance. General and administrative costs are charged to expense as incurred.
Added
This net increase in operating expenses in 2024 compared with 2023 is due primarily related to increases in marketing and public company related expenses including audit cost increases related to changing auditors.
Removed
ITEM 9A – CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act).
Added
This net increase in operating expenses in 2024 compared with 2023 is due primarily related to a increases in marketing and public company related expenses including audit cost increases related to changing auditors.
Removed
Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our internal control over financial reporting as of December 31, 2023 as required by Rule 13a-15(c) under the Exchange Act.
Added
Operating expenses for the Taiwan operations were $1.0 million for the year ended December 31, 2024, compared with $1.0 million for the year ended December 31, 2023, there were no significant fluctuations in the Taiwan operating expenses in 2024 compared with 2023.
Removed
Changes in Internal Control over Financial Reporting In December 2013, we hired Robert J. Brilon, as Chief Financial Officer who has experience in SEC reporting and disclosures.
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