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Iveda Solutions(IVDA) - 2024 Q4 - Annual Report
IVDAIveda Solutions(IVDA)2025-04-15 20:43

Revenue Sources and Financial Performance - Iveda's revenue primarily comes from Iveda Taiwan, which specializes in deploying and integrating video surveillance systems, contributing significantly to the company's financial performance since its acquisition in April 2011[17]. - Revenue from five key customers accounted for approximately 67% of total revenue for the year ended December 31, 2024, with Chunghwa Telecom contributing 18%[82]. - Iveda Taiwan accounted for 85% and 87% of the company's total revenue for the years ended December 31, 2024 and 2023, respectively[85]. - Revenue from Taiwan operations was 5.2millionin2024,adecreaseof5.2 million in 2024, a decrease of 0.5 million or 9% from 5.6millionin2023,attributedtothetimingoflargeprojectcompletions[194].−ConsolidatednetrevenuefortheyearendedDecember31,2024,was5.6 million in 2023, attributed to the timing of large project completions[194]. - Consolidated net revenue for the year ended December 31, 2024, was 6.0 million, a decrease of 0.5millionor70.5 million or 7% compared to 6.5 million in 2023[193]. Market Opportunities and Growth Potential - The global smart city platforms market is projected to grow at a CAGR of 9% from 2026 to 2032, increasing from USD 208.8 billion to USD 416.1 billion, indicating a strong market opportunity for Iveda's offerings[20]. - The global IoT market, valued at USD 308.97 billion in 2020, expanded by 23.1% that year and is expected to surge to USD 1,854.76 billion by 2028, highlighting the growth potential for Iveda's IoT solutions[20]. - The International Data Corporation (IDC) projects global spending on artificial intelligence will double from USD 50.1 billion in 2020 to over USD 110 billion in 2024, indicating a growing demand for Iveda's AI-driven solutions[21]. Product Offerings and Innovations - IvedaAI enables accurate search across dozens to thousands of cameras in less than 1 second, maximizing efficiency and reducing operational costs for users[24]. - Iveda's smart power solutions, including smart meters and lighting control systems, are designed for various applications in office buildings, schools, and smart city projects, enhancing energy management[32]. - IvedaCare, launched in November 2022, provides a suite of wireless health and wellness devices for real-time monitoring, fall detection, and medication reminders, targeting the elderly care market[47]. - Iveda's smart drones are equipped with AI-based software for autonomous operation, capable of performing various industrial, commercial, and military applications, enhancing operational efficiency[42]. - The company offers a comprehensive suite of IoT technologies, including AI intelligent video search technology and smart sensors, to improve public safety and operational efficiency in urban environments[35]. - Iveda's Cerebro platform integrates multiple systems for centralized management, providing a unified interface for monitoring and controlling city infrastructure[33]. - The company plans to license its CEREBRO platform and sell IoT hardware to service providers, creating dual revenue streams from hardware sales and monthly licensing fees[185]. - Iveda's smart power technology includes a comprehensive management platform, Cerebro, which integrates energy, security, and safety applications[181]. Financial Challenges and Losses - For the year ended December 31, 2024, the company incurred a net loss of approximately 3.7million,followinganetlossof3.7 million, following a net loss of 4.0 million for the year ended December 31, 2023, with accumulated losses totaling around 51million[73].−Thecompanyhasgeneratedaccumulatedlossesofapproximately51 million[73]. - The company has generated accumulated losses of approximately 53 million since inception, raising substantial doubt about its ability to continue as a going concern[72]. - Consolidated loss from operations for 2024 was 4.1million,anincreaseof4.1 million, an increase of 0.1 million or 2% compared to 4.0millionin2023[201].−NetlossfortheyearendedDecember31,2024,was4.0 million in 2023[201]. - Net loss for the year ended December 31, 2024, was 4.0 million, a slight improvement from a net loss of 4.1millionin2023[205].OperationalRisksandChallenges−Thecompanyreliesonthird−partymanufacturersandsuppliersforallhardwarecomponents,whichposesriskssuchasreducedcontroloverdeliveryschedulesandqualityassurance[89].−Thetimingofrevenuecanvarysignificantlyduetolengthyevaluationperiodsbycustomers,particularlygovernmentalones[97].−ThecompanyfacesrisksassociatedwithoperatinginTaiwan,includingeconomicdownturnsandpoliticalinstability,whichmayadverselyaffectrevenue[100].−Recentgeopoliticalissues,suchastheconflictinUkraine,couldadverselyimpactthecompany′sresultsofoperationsandfinancialcondition[102].−Thecompanymayneedtodecreasepricestoremaincompetitiveagainstrivalswithgreaterresources[94].−ThecompanyissubjecttorisksfromchangesinU.S.tradepolicy,whichcoulddisruptitssupplychainandincreasecosts[107].−Thecompanymayfacedifficultiesinintegratingacquiredbusinesses,whichcoulddisruptoperationsandadverselyaffectfinancialresults[113].−CompliancewithU.S.andforeignexportcontrolsandtradesanctionscouldharminternationalsalesandadverselyaffectrevenue[109].InternalControlsandGovernance−AsofDecember31,2024,thecompanyconcludedthatitsinternalcontroloverfinancialreportingwasnoteffectiveduetoinadequatecontrolsrelatedtochangemanagementwithinthetechnologysupportingfinancialreporting[133].−Thecompanyrecognizestheimportanceofmaintainingeffectiveinternalcontrolstopreventfraudandensurereliablefinancialreporting[134].−Thecompanyplanstoengageexternalauditorsandconsultantstoassessitsinternalcybersecurityprogramsandcompliancewithapplicablestandards[154].StockandMarketPerformance−Thecompany′scommonstockexperiencedsignificantpricevolatility,withahighbidof4.1 million in 2023[205]. Operational Risks and Challenges - The company relies on third-party manufacturers and suppliers for all hardware components, which poses risks such as reduced control over delivery schedules and quality assurance[89]. - The timing of revenue can vary significantly due to lengthy evaluation periods by customers, particularly governmental ones[97]. - The company faces risks associated with operating in Taiwan, including economic downturns and political instability, which may adversely affect revenue[100]. - Recent geopolitical issues, such as the conflict in Ukraine, could adversely impact the company's results of operations and financial condition[102]. - The company may need to decrease prices to remain competitive against rivals with greater resources[94]. - The company is subject to risks from changes in U.S. trade policy, which could disrupt its supply chain and increase costs[107]. - The company may face difficulties in integrating acquired businesses, which could disrupt operations and adversely affect financial results[113]. - Compliance with U.S. and foreign export controls and trade sanctions could harm international sales and adversely affect revenue[109]. Internal Controls and Governance - As of December 31, 2024, the company concluded that its internal control over financial reporting was not effective due to inadequate controls related to change management within the technology supporting financial reporting[133]. - The company recognizes the importance of maintaining effective internal controls to prevent fraud and ensure reliable financial reporting[134]. - The company plans to engage external auditors and consultants to assess its internal cybersecurity programs and compliance with applicable standards[154]. Stock and Market Performance - The company's common stock experienced significant price volatility, with a high bid of 8.05 and a low bid of 1.27inthefourthquarteroffiscalyear2024[164].−Thecompanyhasneverdeclaredorpaidanycashdividendsonitscommonstockandanticipatesretainingfutureearningsforbusinessdevelopmentandexpansion[137].−Therewereapproximately2,808,071sharesofcommonstockoutstandingasofDecember31,2024,heldby96shareholdersofrecord[166].−Thetradingmarketforthecompany′scommonstockmaydeclineifsecuritiesanalystsdonotpublishadequateorfavorableresearchaboutthecompany[147].−Thecompanyhaslimitedtradingactivityinitssecurities,raisingconcernsaboutthesustainabilityofaregulartradingmarketforitscommonstock[165].LiquidityandCashFlow−Cashandcashequivalentsdecreasedto1.27 in the fourth quarter of fiscal year 2024[164]. - The company has never declared or paid any cash dividends on its common stock and anticipates retaining future earnings for business development and expansion[137]. - There were approximately 2,808,071 shares of common stock outstanding as of December 31, 2024, held by 96 shareholders of record[166]. - The trading market for the company's common stock may decline if securities analysts do not publish adequate or favorable research about the company[147]. - The company has limited trading activity in its securities, raising concerns about the sustainability of a regular trading market for its common stock[165]. Liquidity and Cash Flow - Cash and cash equivalents decreased to 1.6 million in the U.S. segment and 1.0millionintheTaiwansegmentasofDecember31,2024,downfrom1.0 million in the Taiwan segment as of December 31, 2024, down from 2.9 million and 1.8millionrespectivelyin2023[206].−Netcashusedinoperatingactivitiesincreasedto1.8 million respectively in 2023[206]. - Net cash used in operating activities increased to 4.4 million in 2024 from 3.3millionin2023,primarilyduetothenetlossandvariousoperationalexpenses[207].−Netcashprovidedbyfinancingactivitiesroseto3.3 million in 2023, primarily due to the net loss and various operational expenses[207]. - Net cash provided by financing activities rose to 2.3 million in 2024, compared to 1.0millionin2023,mainlyfroma1.0 million in 2023, mainly from a 1.7 million direct offering of Common Stock[209]. - The company has limited liquidity and has not established a stable revenue source to cover operating costs, making future financing critical[211]. - Approximately $35 million in net operating loss carryforwards available for federal income tax purposes will begin to expire in 2025, with no benefits recognized in 2024 or 2023[210]. - Substantially all cash is deposited in three financial institutions, with potential exposure exceeding insurance limits in both the U.S. and Taiwan[212]. - Accounts receivable are unsecured, posing a risk of uncollectibility without requiring collateral from customers[213].