IVDA 10-K & 10-Q changes, risk factors and insider trading

The recent invasion of Ukraine by Russia and the sanctions, bans and other measures taken by governments, organizations and companies against Russia and certain Russian citizens in response thereto has increased the political uncertainty in Europe and has strained the relations between Russia and a significant number of governments, including the U.S. The duration and outcome of this conflict, any retaliatory actions taken by Russia and the impact on regional or global economies is unknown, but could have a material adverse effect on our business, financial condition and results of our operations.

Cost ofThe decrease in revenue for the Taiwan operations were $4.1 million for the year ended December 31, 2024,2025, compared with $4.5 million for the year endedsame December 31, 2023, the decreaseperiod in cost2024 is attributable primarily to decreased equipment sales from Iveda Taiwan as a result of revenuedelivery wastiming related to thelong-term decreasegovernment in revenuecontracts and thea marginsdecreased remainedUS consistent.revenues through its distributors.

As of December 31, 2024,2025, we had cash and cash equivalents of $3.9 million in our U.S.-based segment and $1.3 million in our Taiwan-based segment, compared to $1.6 million in our U.S.-based segment and $1.0 million in our Taiwan-based segment, compared to $2.9 million in our U.S.-based segment and $1.8 million in our Taiwan-based segment as of December 31, 2023.2024. This decrease increase in our cash and cash equivalents is primarily a result of the cash usedprovided infrom operatingthe activitiessale of $4.4securities of $5.2 million during the year ended December 31, 2024.2025. There are no legal or economic factors that materially impact our ability to transfer funds between our U.S.-based and Taiwan-based segments.

Net cash used in operating activities during the year ended December 31, 20242025 was $4.4$2.0 million compared to $3.3$4.4 million net cash used during during the year ended December 31, 2023.2024. Net cash used in operating activities for the year ended December 31, 2025 consisted primarily of the $3.2 million net loss including $0.5 million of non-cash charges (primarily stock option compensation and common stock issued for investor relations services), and $0.8 million net decrease of accounts payable and accrued operating expenses. Net cash used in operating activities for the year ended December 31, 2024 consisted primarily of the $4.0 million net loss including $0.2 million of non-cash charges (primarily stock option compensation and common stock issued for investor relations services), $0.5 million deferred cost of goods sold, $0.3 million of Taiwan vendor deposits, prepaids and advances to suppliers and $0.4 million net increase of accounts payable and accrued operating expenses. Net cash used in operating activities for the year ended December 31, 2023 consisted primarily of the $4.1 million net loss including $0.3 million of non-cash charges (primarily stock option compensation and common stock issued for investor relations services), $0.1 million of Taiwan vendor deposits, prepaids and advances to suppliers and $0.6 million net payments for accounts payable and accrued operating and interest expenses with an offsetting $0.8 million collection of accounts receivable Net cash used in investing activities for the year ended December 31, 2024 was minimal. Net cash used by investing activities during the year ended December 31, 2023 was $0.30 million.

Net cash provided by financing activities for the year ended December 31, 20242025 was $2.3$4.6 million compared with $1.0$2.3 million provided during the year ended December 31, 2023.2024. Net cash provided by financing activities in 2025 is primarily a result of the $4.9 million At-The-Market (ATM) offering of Common Stock. Net cash provided by financing activities in 2024 is primarily a result of the $1.7 million net direct offering of Common Stock and Pre-Funded warrants at $3.44 per share. Net cash provided by financing activities in 2023 is primarily a result of the $1.3 million issuance of Common Stock from the exercise of warrants issued during the August 2022 offering at $11.20.

Results of Operations for the Three Months Ended MarchJune 31,30, 2026 Compared with the Three Months Ended MarchJune 31,30, 2025

The increasedecrease in revenue for the three months ended MarchJune 31,30, 2026 compared with the same period in 2025 is attributable primarily to increaseddecreased equipment sales from Iveda Taiwan as a result of delivery timing related to long-term government contracts.

The increase in overall gross margin was primarily attributed to the higher margin contract sales in Taiwan.Taiwan and US.

The net decreaseincrease in operating expenses in the three months ended MarchJune 31,30, 20262026, compared with the same period in 2025 is due primarily to reductioninvestor inrelations general operation expensesactivities in the US based operations during this period.

A majority of the decreaseincrease in loss from operations was primarily due to increaseda grossslight margins and reductionincrease in operating expenses.

The decreaseincrease in net loss was primarily due to a reductionslight increase in operating expenses for the three months ended MarchJune 31,30, 2026 compared to the the same period in 2025.

As of MarchJune 31,30, 2026, we had cash and cash equivalents of $5.7$4.8 million compared to $5.2 million as of December 31, 2025. This increasedecrease in our cash and cash equivalents for the threesix months ended MarchJune 31,30, 2026 is related to the sale of common stock offset by the operating losses losses during the threesix months ended MarchJune 31,30, 2026. There are no legal or economic factors that materially impact our ability to transfer funds funds between our U.S.-based and Taiwan-based segments.

Net cash used in operating activities during the threesix months ended MarchJune 31,30, 2026 was ($0.9$2.4) million compared to ($0.1$1.5) million net cash used used during the threesix months ended MarchJune 31,30, 2025. Net cash used in operating activities for the threesix months ended MarchJune 31, 30, 2026 consisted primarily of the net loss of ($0.5$1.3) million.million and increase in deferred cost of goods sold of $0.9 million, related to government entity sales in Taiwan. Net cash used by operating activities for the threesix months ended MarchJune 31, 30, 2025 consisted primarily of the net loss of ($0.8$1.4) million.

Net cash used in investing activities for the threesix months ended MarchJune 31,30, 2026 and 20242025 were negligible.

Net cash provided by financing activities for the threesix months ended MarchJune 31,30, 2026 werewas $1.4$1.9 million compared with $0$0.3 million provided during during the threesix months ended MarchJune 31,30, 2025. Net cash provided by financing activities in 2026 included $1.6 million from the sale of stock in a direct offering in February 2026 managed by H.C.Wainwright.H.C.Wainwright and $0.3 million from the exercise of warrants during June 2026.

We provide an allowance for doubtful collections, which is based upon a review of outstanding receivables, historical collection information, 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. For our U.S.-based segment, accounts receivable that are more than 120 days past due are considered delinquent. Payment terms for our Taiwan-based segment vary based on our agreements with our customers. Generally, we receive payment for our products and services within one year of commencing the project, except that we retain 5% of the total payment amount and release such amount one year after the completion of the project. For our U.S.-based segment, we had a reserve for doubtful collections of $20,000 of accounts receivable for the six months ended June 30, 2026 and no reserve for the year ended December 31, 2025. For our Taiwan-based segment, we set up no doubtful accounts receivable allowances for the Threesix Monthsmonths ended MarchJune 31,30, 2026 and year ended December 31, 2025. For our Taiwan-based segment, we set up no doubtful accounts receivable allowances for the Three Months ended March 31, 2026 and year ended December 31, 2025. We deem the rest of 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 specific circumstances of the customer, and we generally do not charge interest on past due receivables.