Iveda Solutions(IVDA) - 2022 Q1 - Quarterly Report

Financial Performance - Net consolidated revenue for the three months ended March 31, 2022, was $0.23 million, a decrease of 31% compared to $0.33 million for the same period in 2021[124]. - Recurring service revenue accounted for 18% of net revenue in Q1 2022, up from 9% in Q1 2021, while equipment sales and installation revenue decreased from 91% to 82%[124]. - Total cost of revenue was $0.09 million for Q1 2022, representing 39% of revenue with a gross margin of 61%, compared to $0.02 million (65% of revenue; 35% gross margin) in Q1 2021[126]. - Operating expenses increased by 40% to $0.8 million in Q1 2022, primarily due to increased personnel and R&D expenses for IvedaAI[127]. - Loss from operations rose to $0.65 million in Q1 2022, an increase of 44% compared to $0.45 million in Q1 2021[128]. - Net loss for Q1 2022 was $0.67 million, a 5% increase from $0.63 million in Q1 2021, driven by higher operating expenses[130]. Cash Flow and Liquidity - Cash and cash equivalents decreased to $0.75 million as of March 31, 2022, down from $0.82 million a year earlier, primarily due to operating losses[131]. - Net cash used in operating activities was $0.77 million in Q1 2022, compared to $0.16 million in Q1 2021[132]. - Net cash provided by financing activities was $0.15 million in Q1 2022, a decrease from $0.63 million in Q1 2021, mainly due to bank loan proceeds in Taiwan[134]. - The company has limited liquidity and has not established a stabilized source of revenue sufficient to cover operating costs, making its continuation as a going concern dependent on generating greater revenue or raising additional funds[136]. - The company believes it will have sufficient capital to sustain operations for a period of one year following the date of the filing, based on its current cash position and projected cash flow from operations[148]. Revenue Sources and Risks - Iveda Taiwan accounted for 93% of total revenue in 2021, highlighting its critical role in the company's revenue generation[118]. - As of March 31, 2022, the company had approximately $29 million in net operating loss carryforwards available for federal income tax purposes, which will begin to expire in 2025[135]. - The company has not recognized any benefit from federal net operating loss carryforwards in 2021 or 2020[135]. - The company has set up no doubtful accounts receivable allowances for its U.S. and Taiwan-based segments for the three months ended March 31, 2022[139]. - The company’s accounts receivable are unsecured, posing a risk if amounts become uncollectible[138]. Impact of External Factors - The company estimates that the COVID-19 pandemic resulted in decreases of approximately $1.2 million in revenues and $0.3 million in gross profit contribution for the year ended March 31, 2021[141]. - The company has taken actions to comply with government restrictions during the COVID-19 pandemic, including requiring employees to work from home[147]. - The company does not expect current levels of inflation in the United States or Taiwan to have a significant impact on its operations[149]. - The company has no relationships with unconsolidated entities or financial partnerships that would expose it to financing, liquidity, market, or credit risk[150].