Iveda Solutions(IVDA) - 2022 Q3 - Quarterly Report

Revenue Performance - Net consolidated revenue for Q3 2022 was $1.5 million, a 257% increase from $0.4 million in Q3 2021, driven by equipment sales and installation revenue of $1.36 million, or 93% of net revenue [115]. - For the nine months ended September 30, 2022, net consolidated revenue was $2.3 million, an 80% increase from $1.3 million in the same period in 2021, with equipment sales and installation revenue at $2.14 million, or 91% of net revenue [117]. - Iveda Taiwan accounted for 93% of total revenue in 2021, highlighting its critical role in the company's financial performance [109]. - Iveda's acquisition of Iveda Taiwan in 2011 has significantly contributed to its revenue growth and access to Asian markets [109]. Cost and Expenses - Total cost of revenue for Q3 2022 was $1.1 million, representing 76% of revenue and a gross margin of 24%, compared to $0.14 million (33% of revenue; 67% gross margin) in Q3 2021 [118]. - Operating expenses for Q3 2022 were $1.03 million, a 48% increase from $0.70 million in Q3 2021, primarily due to increased personnel and R&D expenses for IvedaAI [120]. - Loss from operations for Q3 2022 increased to $0.68 million, a 60% rise from $0.42 million in Q3 2021, mainly due to higher operating expenses [122]. Net Loss and Cash Flow - Net loss for the nine months ended September 30, 2022, was $2.4 million, an increase of $0.62 million or 35% compared to $1.78 million for the same period in 2021 [128]. - Cash and cash equivalents increased to $10.6 million as of September 30, 2022, compared to $1.4 million as of September 30, 2021, primarily due to stock offerings with net proceeds of $11.5 million [129]. - Net cash used in operating activities for the nine months ended September 30, 2022, was $3.3 million, up from $1.2 million for the same period in 2021 [130]. - Net cash provided by financing activities for the nine months ended September 30, 2022, was $12.6 million, compared to $2.2 million in 2021, mainly from equity offerings [132]. Tax and Liquidity - The company has approximately $29 million in net operating loss carryforwards available for federal income tax purposes, which will begin to expire in 2025 [133]. - The company has experienced significant operating losses since inception and has limited liquidity, relying on increased sales or additional capital to continue operations [135]. - The company has no off-balance sheet arrangements or undisclosed borrowings, minimizing exposure to financing or liquidity risks [148]. Impact of External Factors - The company does not expect material changes to its assets or its ability to account for those assets despite the ongoing COVID-19 pandemic [142]. - The company has taken actions to comply with government restrictions during the COVID-19 pandemic, allowing it to operate effectively and maintain business continuity [144]. - The company does not believe current inflation levels in the U.S. or Taiwan have significantly impacted its operations [147]. Product Development and Partnerships - The company has developed AI intelligent video search technology, enhancing its product offerings in response to digital transformation demands [95]. - Iveda's smart power technology includes a comprehensive management platform, Cerebro, which integrates energy, security, and safety applications [103]. - The company has established partnerships with service providers, creating dual revenue streams from hardware sales and monthly licensing fees [107].