UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ____________

Commission File No. 001-41345

IVEDA SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

Delaware		20-2222203
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

1744 S Val Vista, Suite 213
Mesa, Arizona		85204
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (480) 307-8700

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.00001 per share

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

	Large accelerated filer ☐	Accelerated filer ☐
	Non-accelerated filer ☒	Smaller reporting company ☒
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act): Yes ☐ No ☒

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.00001 par value per share	IVDA	The Nasdaq Stock Market LLC
Common Stock Purchase Warrants	IVDAW	The Nasdaq Stock Market LLC

Class		Outstanding as of August 10, 2026
Common Stock, $0.00001 par value per share		12,519,027

TABLE OF CONTENTS

		Page
	PART I - FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	3
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	19
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	27
ITEM 4.	CONTROLS AND PROCEDURES	27
	PART II - OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	28
ITEM 1A.	RISK FACTORS	28
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	28
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	28
ITEM 4.	MINE SAFETY DISCLOSURES	28
ITEM 5.	OTHER INFORMATION	28
ITEM 6.	EXHIBITS	28
SIGNATURES		29

PART 1 – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS.

IVEDA SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2026			December 31, 2025
	(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents	$	4,762,665		$	5,156,252
Restricted Cash		63,001			63,694
Accounts Receivable, Net		303,450			256,699
Deferred Cost of Goods		1,026,864			116,951
Inventory, Net		242,605			235,958
Other Current Assets		269,360			326,005
Total Current Assets		6,667,945			6,155,559

Property and Equipment, Net		35,325			47,093
Right of Use Asset, Net		127,719			148,943
Other Assets		153,763			76,195
Total Assets	$	6,984,752		$	6,427,790

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts and Other Payables	$	799,746		$	938,560
Short Term Debt		314,535			159,500
Current Portion of Long-Term Debt		125,814			127,600
Current Portion of Lease Liability		44,056			41,632
Total Current Liabilities		1,284,151			1,267,292

Long Term Debt		199,204			265,832
Long Term Lease Liability, Net of Current Portion		94,442			114,904

Total Liabilities		1,577,797			1,648,028

STOCKHOLDERS’ EQUITY
Preferred Stock, $0.00001 par value; 12,500,000 shares authorized, no preferred shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively		-			-
Common Stock, $0.00001 par value; 300,000,000 shares authorized; 12,519,027 and 5,879,741 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively		125			59
Additional Paid-In Capital		63,371,181			61,403,700
Accumulated Other Comprehensive Loss		(263,222	)		(249,168	)
Accumulated Deficit		(57,701,129	)		(56,374,829	)
Total Stockholders’ Equity		5,406,955			4,779,762

Total Liabilities and Stockholders’ Equity	$	6,984,752		$	6,427,790

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

IVEDA SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the Three Months ended June 30, 2026			For the Three Months ended June 30, 2025			For the Six Months ended June 30, 2026			For the Six Months ended June 30, 2025

REVENUE
Equipment Sales	$	723,243		$	1,448,998		$	2,142,583		$	2,857,730
Service Revenue		78,603			78,909			153,437			144,754

TOTAL REVENUE		801,846			1,527,907			2,296,020			3,002,484

COST OF REVENUE		363,284			1,083,138			1,362,250			2,269,503

GROSS PROFIT		438,562			444,769			933,770			732,981

OPERATING EXPENSES
General & Administrative		1,050,916			925,629			2,081,826			2,016,399
Research & Development		97,769			51,500			127,769			84,500
Total Operating Expenses		1,148,685			977,129			2,209,595			2,100,899

LOSS FROM OPERATIONS		(710,123	)		(532,360	)		(1,275,825	)		(1,367,918	)

OTHER INCOME (EXPENSE)
Miscellaneous Income (Expense)		4,340			(275	)		10,481			32,147
Interest Income		32,726			10,280			65,062			25,541
Interest Expense		(6,316	)		(12,116	)		(11,922	)		(17,913	)
Total Other Income (Expense), Net		30,750			(2,111	)		63,621			39,775

LOSS BEFORE INCOME TAXES	$	(679,373	)	$	(534,471	)	$	(1,212,204	)	$	(1,328,143	)

PROVISION FOR INCOME TAXES		(114,096	)		(29,778	)		(114,096	)		(29,778	)

NET LOSS	$	(793,469	)	$	(564,249	)	$	(1,326,300	)	$	(1,357,921	)

BASIC AND DILUTED LOSS PER SHARE	$	(0.07	)	$	(0.20	)	$	(0.13	)	$	(0.48	)

WEIGHTED AVERAGE SHARES		11,822,360			2,837,226			10,413,088			2,822,729

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

IVEDA SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

	For the Three Months ended June 30, 2026			For the Three Months ended June 30, 2025			For the Six Months ended June 30, 2026			For the Six Months ended June 30, 2025

Net Loss	$	(793,469	)	$	(564,249	)	$	(1,326,300	)	$	(1,357,921	)
Other Comprehensive Loss
Change in Equity Adjustment from Foreign Currency Translation, Net of Tax		5,302			120,324	)		(14,054	)		109,444	)

Comprehensive Loss	$	(788,167	)	$	(443,925	)	$	(1,340,354	)	$	(1,248,477	)

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

IVEDA SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

										Accumulated
			Common		Additional					Other			Total
	Common		Stock		Paid-in-		Accumulated			Comprehensive			Stockholders’
	Stock		Amount		Capital		Deficit			(Loss)			Equity

BALANCE AT December 31, 2024		2,808,071	$	28	$	55,962,337	$	(53,176,717	)	$	(280,209	)	$	2,505,439

Net Loss		-		-		-		(793,672	)		-			(793,672	)
Comprehensive Loss		-		-		-		-			(10,880	)		(10,880	)
BALANCE AT March 31, 2025		2,808,071		28		55,962,337		(53,970,389	)		(291,089	)		1,700,887

Sale of Common Stock		98,655		1		223,594								223,595
Net Loss								(564,249	)					(564,249	)
Comprehensive Loss											120,324			120,324

BALANCE AT June 30, 2025		2,906,726	$	29	$	56,185,931	$	(54,534,638	)	$	(170,765	)	$	1,480,557

BALANCE AT December 31, 2025		5,879,741	$	59	$	61,403,700	$	(56,374,829	)	$	(249,168	)	$	4,779,762

Sale of Common Stock		5,714,286		57		1,624,627								1,624,684
Stock Option Compensation						12,000								12,000

Net Loss								(532,831	)					(532,831	)
Comprehensive Loss											(19,356	)		(19,356	)
BALANCE AT March 31, 2026		11,594,027		116		63,040,327		(56,907,660	)		(268,524	)		5,864,259

Sale of Common Stock, warrant exercise		825,000		8		272,855								272,863
Common Stock for Services		100,000		1		57,999								58,000
Net Loss								(793,469	)					(793,469	)
Comprehensive Loss											5,302			5,302
BALANCE AT June 30, 2026		12,519,027	$	125	$	63,371,181	$	(57,701,129	)	$	(263,222	)	$	5,406,955

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

IVEDA SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDING JUNE 30, 2026 AND 2025 (UNAUDITED)

	June 30, 2026			June 30, 2025

CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(1,326,300	)	$	(1,357,921	)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities
Depreciation and Amortization		11,768			13,341
Stock Compensation Expense		12,000			-
Stock Issued for Services		58,000			-
Increase in allowance for uncollectible accounts		20,000			-
Changes in operating assets and liabilities
Accounts Receivable		(66,751	)		(88,822
Inventory		(6,647	)		(126,805	)
Deferred Cost of Goods		(909,913	)		18,905
Right of Use Asset		21,224			13,301
Other Current Assets		56,644			106,368
Other Assets		(77,568	)		6,233
Increase in Accounts and Other Payables		(138,813	)		(38,080	)
Lease Liability		(18,038	)		(4,594	)
Net Cash Used in Operating Activities		(2,364,394	)		(1,458,074	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Property and Equipment		-			(1,201	)
Net Cash Used in Investing Activities		-			(1,201	)

CASH FLOWS FROM FINANCING ACTIVITIES
Payments on Short-Term Debt, net		(153,249	)		102,500
Proceeds from Short-Term Debt		306,498			(7,261	)
Proceeds from (Payments on) Long-Term Debt		(66,628	)		223,595
Common Stock Issued, Net of Cost of Financing		1,897,547			-

Net Cash Provided by Financing Activities		1,984,168			318,834

EFFECT OF EXCHANGE RATE CHANGES ON CASH		(14,054	)		108,575

NET DECREASE IN CASH, RESTRICTED CASH AND CASH EQUIVALENTS		(394,280	)		(1,031,866	)

Cash, Restricted Cash and Cash Equivalents- Beginning of Period		5,219,946			2,658,300

CASH, RESTRICTED CASH AND CASH EQUIVALENTS - END OF PERIOD	$	4,825,666		$	1,626,434

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

IVEDA SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

FOR THE SIX MONTHS ENDING JUNE 30, 2026 AND 2025 (UNAUDITED)

	June 30, 2026		June 30, 2025

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest Paid	$	11,922	$	2,525
Income Tax Paid	$	21,569	$	-

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Present Value of Right of Use Asset and Lease Obligations on New Lease	$	-	$	182,668

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

IVEDA SOLUTIONS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDING JUNE 30, 2026 AND 2025 (UNAUDITED)

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Iveda Solutions, Inc. (“Iveda”, or the “Company”) was incorporated in Nevada as Charmed Homes, Inc. in June 2006. On October 15, 2009, IntelaSight, d/b/a Iveda, a Washington corporation, became a wholly owned subsidiary of the Company. In December 2010, IntelaSight merged with and into the Company and the Company became the surviving company. Iveda offered the first cloud hosting of streaming and recorded video from security cameras for its customers and real-time remote surveillance service utilizing intervention specialists to watch our customers’ cameras in real time, 24/7. Iveda offers smart city technologies globally, offering advanced AI-driven video surveillance solutions and a robust suite of Internet of Things (IoT) platforms that power digital transformation for cities and commercial clients worldwide.

Consolidation

Effective April 30, 2011, we completed our acquisition of Sole Vision Technologies (fka MEGAsys and dba Iveda Taiwan), a company based in Taiwan. We consolidate our financial statements with the financial statements of Iveda Taiwan. All intercompany balances and transactions have been eliminated in consolidation.

Liquidity

The Company recorded a net loss of $1.3 million and used cash in operations of $2.4 million during the period ended June 30, 2026. During 2025, and subsequently, the Company took significant steps to raise capital to fund operations, and to reduce its historical operating losses. In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, the Company’s management has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the accompanying financial statements were issued. As of the issuance date of these financial statements, management expects that the Company’s cash of $4.8 million at June 30, 2026, will be sufficient to fund the Company’s current operating plan for at least twelve months from the date of issuance of these financial statements.

Management’s assessment whether there is sufficient cash on hand, together with expected capital raises, to assure operations for a period of at least twelve months from the date these financial statements are issued, is based on conditions that are known and reasonably knowable to management, considering various scenarios, projections, and estimates and certain key assumptions. These assumptions include, among other factors, management’s ability to increase operating efficiencies, raise additional capital, and the expected timing and nature of the Company’s forecasted cash expenditures.

Historically, the Company has financed its operations through public and private sales of common stock, credit lines from financial institutions, and cash generated from operations. As we seek additional sources of financing, there can be no assurance that such financing would be available to us on favorable terms or at all. Our ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, our performance and investor sentiment with respect to us and our industry.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Accordingly, actual results could differ from those estimates. On an ongoing basis, we evaluate our estimates, including those related to accounts receivable, deferred cost of revenue, share-based compensation, deferred income taxes, provisions for losses, and inventory reserve, among other items.

Revenue and Expense Recognition

The Company applies the provisions of Accounting Standards Codification (ASC) 606-10, Revenue from Contracts with Customers, and all related appropriate guidance. The Company recognizes revenue under the core principle to depict the transfer of control to its customers in an amount reflecting the consideration to which it expects to be entitled. In order to achieve that core principle, the Company applies the following five-step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.

The Company considers customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with the customer. In situations where sales are to a distributor, the Company had concluded its contracts are with the distributor as the Company holds a contract bearing enforceable rights and obligations only with the distributor. As part of its consideration for the contract, the Company evaluates certain factors including the customers’ ability to pay (or credit risk). For each contract, the Company considers the promise to transfer products, each of which is distinct, to be the identified performance obligations. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which it expects to be entitled. As the Company’s standard payment terms are less than one year, it has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company allocates the transaction price to each distinct product based on its relative standalone selling price. The product price as specified on the purchase order is considered the standalone selling price as it is an observable input which depicts the price as if sold to a similar customer in similar circumstances. Revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligations is satisfied), which typically occurs at shipment unless installation is required as with certain of our Taiwan sales – see below. Further in determining whether control has been transferred, the Company considers if there is a present right to payment and legal title, along with risks and rewards of ownership having transferred to the customer. Customers do not have a right to return the product other than for warranty reasons for which they would only receive repair services or replacement product. The Company has also elected the practical expedient under ASC 340-40-25-4 to expense commissions for product sales when incurred as the amortization period of the commission asset the Company would have otherwise recognized is less than one year.

The Company sells its products and services primarily to municipalities and commercial customers in the following manner:

●

The majority of Iveda Taiwan sales are project sales to Taiwan customers and are made direct to the end customer (typically a municipality or a commercial customer) through its sales force, which is composed of its employees. Revenue is recorded when the equipment is shipped to the end customer unless the contract requires the inventory to be installed before it can be billed and charged for service when installation or maintenance work is performed. If inventory is shipped to the customer before it is installed, the inventory is reclassified to Deferred Cost of Goods.

Revenue for product and software sales without installation is recorded when the product and/or software has been shipped to the customer. Revenue from fixed-price equipment installation contracts, if any, is recognized as the contracts allow for invoicing at various milestones.

General and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability may result in revisions to costs and income and are recognized in the period in which the revisions are determined. 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.

	●	Iveda US hardware sales are to domestic and international independent distributors or integrators who purchase products from the Company at a wholesale price and sell to the end user (typically municipalities or a commercial customer) at a retail price. The Company will maintain product inventory and ship to the distributor or integrator or product is drop shipped from the manufacturer at the request of the Company to the distributor or integrator, and the Company at all times maintains the obligation to pay vendors and all related risks and rewards of ownership of customer receivables. Accordingly, upon application of steps one through five above, revenue is recorded when the product is shipped to the distributor or as directed by the distributor consistent with the terms of the distribution agreement.

	●	Iveda US also sells a one time software license to customers that allows them to activate software embedded in the purchased hardware. The software revenues are recorded as the license is delivered.

	●	Iveda US also sells hardware and software warranty and maintenance for an annual fee that is paid yearly. The revenues are recorded annually, if the revenue is a material amount it will be recorded as deferred revenue and amortized on a straight-line basis over the respective time period.

The Company sells and installs video surveillance systems comprised of various components of hardware and software.

The following table presents our net sales by revenue source and the period over period percentage change, for the period presented:

SCHEDULE OF DISAGGREGATION OF REVENUE

	For the three months ended June 30, 2026		For the three months ended June 30, 2025		For the six months ended June 30, 2026		For the six months ended June 30, 2025

Net Sales Source
Commercial Enterprises	$	707,502	$	929,073	$	1,210,932	$	1,595,467
Distributors	$	71,566	$	220,295	$	95,048	$	398,462
Municipalities	$	22,306	$	45,263	$	41,030	$	63,394
Taiwan Government	$	472	$	333,276	$	949,010	$	945,161

Net Sales Source	$	801,846	$	1,527,907	$	2,296,020	$	3,002,484

The Company sells and installs video surveillance systems comprised of various components of hardware and software.

Concentrations

Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash and cash equivalents and trade accounts receivable.

Substantially all cash is deposited in three financial institutions, two in the United States and one in Taiwan. At times, amounts on deposit in the United States may be in excess of the FDIC insurance limit. Deposits in Taiwan financial institutions are insured by CDIC (Central Deposit Insurance Corporation) with maximum coverage of 3 million New Taiwan Dollar (NTD). At times, amounts on deposit in Taiwan may be in excess of the CDIC Insurance limit.

Revenue from three customers out of approximately 74 total customers represented approximately 72% of total revenue for the six months ended June 30, 2026. These specific customers were 1) National Chung Shan Institute of Science and Technology with 41%, 2) Chunghwa Telecom with 17% and Security Integration & Consultant Technology Co., LTD. with 14% (all Taiwan companies).

Revenue from two customers out of approximately 70 total customers represented approximately 52% of total revenue for the six months ended June 30, 2025. These specific customers were 1) National Chung Shan Institute of Science and Technology with 31% and 2) Taiwan Stock Exchange with 21% (both Taiwan companies).

No other customers represented greater than 10% of total revenues the six months ended June 30, 2026, and 2025.

93% of the total accounts receivable at June 30, 2026 was from four customers out of a total of 32 customer accounts receivable accounts. These specific customers included US customer Claro Enterprise Systems at 28%, Taiwan customers; Chunghwa Telecom at 27%, MiTAC Advance Technology Corp. at 20% and HWACOM Systems Inc. at 17%. Our accounts receivable are unsecured, and we are at risk to the extent such amounts become uncollectible. Although we perform periodic evaluations of our customers’ credit and financial condition, we do not require collateral in exchange for our products and services provided on credit. These customers are longtime customers, and we don’t expect any problem with the collectability of these accounts receivable.

Cash and Cash Equivalents

For purposes of the statement of cash flows, we consider all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

The Company’s consolidated financial statements include the results of operations and financial position of its subsidiary located in Taiwan. The subsidiary’s functional currency is the Taiwan New Dollar (TWD). For consolidation purposes, the subsidiary’s financial statements are translated into US Dollars (USD) using the following methods: Assets and liabilities are translated using the exchange rate at the balance sheet date. Income statement items are translated using the average exchange rate for the period. Exchange rate fluctuations between TWD and USD result in gains or losses that are included in Other Comprehensive Income (Loss) until they are realized. The Company had approximately $1 million and $1.4 million of its cash and cash equivalents in Taiwan New Dollars at June 30, 2026, and December 31, 2025, respectively.

Accounts Receivable

We provide an allowance for doubtful collections, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. For our U.S.-based segment, receivables past due more than 120 days, if any, are considered delinquent. For our Taiwan-based segment, receivables over one year, if any, are considered delinquent. Delinquent receivables are written off based on individual credit valuation and specific circumstances of the customer. As of June 30, 2026, we had a reserve for doubtful collections of $20,000 and no reserve necessary at December 31, 2025.

Warrant Instruments

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the instruments’ specific terms and applicable authoritative guidance in ASC 480 and ASC 815. The assessment considers whether the instruments are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company’s own Common Stock and whether the instrument holders could potentially require net cash settlement in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and, for liability-classified warrants, at each reporting period end date while the warrants are outstanding.

Restricted Cash

Restricted cash represents time deposits on account to secure short-term bank loans in our Taiwan-based segment.

Stock-Based Compensation

The Company periodically issues stock, stock options and restricted stock awards to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for such grants issued and vesting based on ASC 718, Compensation-Stock Compensation whereby the value of the award is measured on the date of grant and recognized for employees as compensation expense on the straight-line basis over the vesting period. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services. The fair value of the Company’s stock options is estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or restricted stock, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods. We recognized $12,000 and $0 of stock-based compensation expense for the three months ended June 30, 2026 and 2025 and we recognized $12,000 and $0 of stock-based compensation expense for the six months ended June 30, 2026 and 2025, respectively, related to the amortization of stock options.

Fair Value of Financial Instruments

The Company uses various inputs in determining the fair value of its financial assets and liabilities and measures these assets on a recurring basis. Financial assets recorded at fair value are categorized by the level of subjectivity associated with the inputs used to measure their fair value. Accounting Standards Codification Section 820 defines the following levels of subjectivity associated with the inputs:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly.

Level 3—Unobservable inputs in which there is little or no market data for the asset or liability which requires the Company to develop its own assumptions.

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to us as of June 30, 2026 and 2025. The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, accounts receivable, accounts payable, accrued expenses, and amounts due to related parties. Fair values were assumed to approximate carrying values for these financial instruments because they are short-term in nature and their carrying amounts approximate their fair values or because they are receivable or payable on demand. The carrying values of financing obligations approximate their fair values because interest rates on these obligations are based on prevailing market interest rates.

New Accounting Standards

In November 2024, FASB issued ASU 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses. The guidance in ASU 2024-03 requires public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory; employee compensation; and depreciation and amortization expense for each caption on the income statement where such expenses are included. The update is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied prospectively to reporting periods after the effective date or retrospectively to all periods presented in the financial statements. We are currently evaluating the provisions of this guidance and assessing the potential impact on our financial statement disclosures.

Other recent accounting pronouncements and guidance issued by the FASB, its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

NOTE 2 Accounts and Other Payables

SCHEDULE OF ACCOUNTS AND OTHER PAYABLES

	June 30, 2026		December 31, 2025

Accounts Payable	$	503,482	$	459,308
Accrued Expenses		294,339		479,057
Deferred Revenue and Customer Deposits		1,925		195
Accounts and Other Payables	$	799,746	$	938,560

NOTE 3 SHORT-TERM AND LONG-TERM DEBT

The short-term debt balances were as follows:

SCHEDULE OF SHORT-TERM DEBT

	June 30, 2026		December 31, 2025

Loan from ChangHwa Bank at 3.3% interest rate per annum. Due in Aug 2026.		157,267
Loan from ChangHwa Bank at 3.3% interest rate per annum. Due in Aug 2026.		157,267		-
Revolving Loans from Shanghai Bank at 3.2% interest rate per annum. Due in January, 2027. (1)		157,268		-

Term Loan from HuaNam Bank at 3.45% interest rate per annum. Due in July 2026. (2)		-		159,500
Balance at end of period	$	314,535	$	159,500

The Long-term debt balances were as follows:

SCHEDULE OF LONG-TERM DEBT

Loans from Shanghai Commercial Bank with interest rates 2.1% per annum due January 2029 (1)	$	325,018		$	393,432
Loans from Shanghai Commercial Bank with interest rates 2.1% per annum due January 2029 (1)	$	325,018		$	393,432
Current Portion of Long-term debt		(125,814	)		(127,600	)
Balance at end of period	$	199,204		$	265,832

	(1)	On January 24, 2024, the Company received a facility notice from Shanghai Commercial Bank, granting a revolving loan facility totaling up to TWD 10,000,000 (approximately $300,000 USD) and term loan facility amounting of TWD 20,000,000 (approximately ($600,000 USD). The term for the revolving loan is 1 year and for the term loan is 5 years. The 5 year term loan requires monthly payments including interest and principal, and the revolving loan requires a full principal repayment at the maturity date. The guarantors of this loan are Mr. Siu and Mr. Cheung, who are both part of Iveda Taiwan’s management team.

		As of June 30, 2026, and December 31, 2025, there was $63,001 and $63,694, respectively, of restricted cash pledged as security for the Shanghai Commercial Bank long term loan.

	(2)	The Company repaid the outstanding loan balance during the period ended June 30, 2026, and there are no further obligations due to this bank.

NOTE 4 PREFERRED STOCK

We are currently authorized to issue up to 12,500,000 shares of preferred stock, par value $0.00001 per share, 1,250,000 shares of which are designated as Series A Preferred Stock and 500 shares of which are designated as Series B Preferred Stock. Our Articles of Incorporation authorize the issuance of shares of preferred stock with designations, rights, and preferences determined from time to time by our Board of Directors. Accordingly, our Board of Directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting, or other rights which could adversely affect the voting power or other rights of the stockholders of our common stock. In the event of issuance, the preferred stock could be utilized, under certain circumstances, as a method of discouraging, delaying, or preventing a change in control of our company.

NOTE 5 EQUITY

Common Stock

We are authorized to issue up to 300,000,000 shares of common stock, par value $0.00001 per share. We effectuated a reverse stock split on September 17, 2024 of 1 for 8 shares of common stock. All share values within this report have been retroactively adjusted to the post reverse split values. All outstanding shares of our common stock are of the same class and have equal rights and attributes. The holders of our common stock are entitled to one vote per share on all matters submitted to a vote of the stockholders of our company. Our common stock does not have cumulative voting rights. Persons who hold a majority of the outstanding shares of our common stock entitled to vote on the election of directors can elect all of the directors who are eligible for election. Holders of our common stock are entitled to share equally in dividends, if any, as may be declared from time to time by our Board of Directors. In the event of liquidation, dissolution, or winding up of our company, subject to the preferential liquidation rights of any series of preferred stock that we may from time to time designate, the holders of our common stock are entitled to share ratably in all of our assets remaining after payment of all liabilities and preferential liquidation rights. Holders of our common stock have no conversion, exchange, sinking fund, redemption, or appraisal rights (other than such as may be determined by the Board of Directors in its sole discretion) and have no preemptive rights to subscribe for any of our securities.

On February 11, 2026, Iveda Solutions, Inc., a Delaware corporation (the “Company”) consummated a public offering (the “Offering”) for aggregate gross proceeds of approximately $2 million before deducting placement agent fees and other offering expenses payable by the Company. Net proceeds to the Company after the payment of all costs was $1.6 Million. The Offering included (i) 5,259,999 shares (the “Shares”) of the Company’s common stock, par value $0.00001 per share (“Common Stock”) at an offering price of $0.35 per share of Common Stock, and (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 454,287 shares of Common Stock, at an offering price of $0.3499 per Pre-Funded Warrant and (iii) accompanying Series X warrants (the “Series X Warrants”) to purchase up to 11,428,572 shares of Common Stock and accompanying Series X Warrant.

The Pre-Funded Warrants are immediately exercisable subject to certain ownership limitations, have an exercise price of $0.0001 per share, and may be exercised at any time until all of the Pre-Funded Warrants have been exercised in full. The Series X Warrants are exercisable at a price of $0.35 per share, are exercisable from and after the date of their issuance and expire on the second (2)-year anniversary of the original issuance date. All of the pre-funded warrants were exercised during the period ended March 31, 2026 resulting in an aggregate issuance of 5,714,286 shares of common stock from the offering.

In addition, the Company issued two year placement agent warrants to purchase 400,000 shares of common stock at an exercise price of $0.4375 per share.

The Company issued 100,000 shares of common stock for services values at $58,000 during the six months ended June 30, 2026.

On June 16, 2026, warrant holders exercised 825,000 of the series X warrants at $0.35 per warrant resulting in net proceeds to the Company of $272,863.

NOTE 6 STOCK OPTION PLANS

Stock Options

On January 18, 2010, we adopted the 2010 Stock Option Plan (the “2010 Option Plan”), which allows the Board to grant options to purchase up to 15,625 shares of common stock to directors, officers, key employees, and service providers of our company. In 2011, the 2010 Option Plan was amended to increase the number of shares issuable under the 2010 Option Plan to 375,000 shares. In 2012, 2010 Option Plan was again amended to increase the number of shares issuable under the 2010 Option Plan to 203,125 shares. The shares issuable pursuant to the 2010 Option Plan are registered with the SEC under Forms S-8 filed on February 4, 2010 (No. 333- 164691), June 24, 2011 (No. 333-175143), and December 4, 2013 (No. 333-192655). The 2010 Option Plan expired on January 18, 2020. As of June 30, 2026 there were 14,308 options outstanding under the 2010 Option Plan and as of December 31, 2025 there were 14,778 options outstanding under the 2010 Option Plan.

On December 15, 2020, we adopted the Iveda Solutions, Inc. 2020 Plan (the “2020 Plan”). The 2020 Plan had a maximum of 156,250 shares authorized with similar terms and conditions to the 2010 Option Plan. The shares issuable pursuant to the 2020 Option Plan are registered with the SEC under Forms S-8 filed on October 7, 2022 (No. 333- 267792). In 2025 and 2024, the 2020 Option Plan was amended to increase the number of shares issuable under the 2020 Option Plan to 1,156,250 and 656,250 shares, respectively. As of June 30, 2026 there were 716,584 options outstanding under the 2020 Option Plan. As of December 31, 2025 there were 720,959 options outstanding under the 2020 Option Plan.

As of June 30, 2026 and December 31, 2025, there were 730,892 and 735,737 options outstanding, respectively, under all the option plans.

Stock options may be granted as either incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or as options not qualified under Section 422 of the Code. All options are issued with an exercise price at or above the fair market value of the common stock on the date of the grant as determined by our Board of Directors. Incentive stock option plan awards of restricted stock are intended to qualify as deductible performance-based compensation under Section 162(m) of the Code. Incentive Stock Option awards of unrestricted stock are not designed to be deductible to us under Section 162(m). Under the plans, stock options will terminate on the tenth anniversary date of the grant or earlier if provided in the grant.

We have also granted non-qualified stock options to employees and contractors. All non-qualified options are generally issued with an exercise price no less than the fair value of the common stock on the date of the grant as determined by our Board of Directors. Options may be exercised up to ten years following the date of the grant, with vesting schedules determined by us upon grant. Vesting schedules vary by grant, with some fully vesting immediately upon grant to others that ratably vest over a period of time up to four years. Standard vested options may be exercised up to three months following date of termination of the relationship unless alternate terms are specified at grant. The fair values of options are determined using the Black-Scholes option-pricing model. The estimated fair value of options is recognized as expense on the straight-line basis over the options’ vesting periods.. During the six months ended June 30, 2026, the Company repriced 535,000 which resulted in an incremental compensation cost of $12,000 that was recorded during the period.

Stock option transactions during six months ended June 30, 2026 were as follows:

SCHEDULE OF STOCK OPTION TRANSACTIONS

	June 30, 2026
	Shares			Weighted-Average Exercise Price

Outstanding at Beginning of Period		735,737			5.50
Granted		-			-
Exercised		-			-
Forfeited or Cancelled		(4,845	)		6.90
Outstanding at End of Period		730,892			5.12
Options Exercisable at Period-End		730,892		$	5.12

During the six months ended June 30, 2026 and 2025 the Company recognized $12,000 and $0 of compensation cost relating to the vesting of options.

			Options Outstanding						Options Exercisable
Range of Exercise Prices			Number Outstanding at June 30, 2026		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price		Number Exercisable at June 30, 2026		Weighted- Average Exercise Price
	$	0.29-142.08		730,892		8.7	$	5.12		730,892	$	5.12

The Black-Scholes option pricing model, used to estimate fair value of the option awards, requires the use of the following assumptions:

● Fair value of common stock. The fair value of the common stock is the Company’s closing price per share on the NASDAQ listing at the grant date.

● Expected Term. The expected term of options granted represents the period of time that the options are expected to be outstanding. Due to the lack of historical exercise history, the expected term of the Company’s stock options has been determined by calculating the midpoint of the contractual term of the options and the weighted-average vesting period.

● Expected Volatility. The expected stock price volatility assumption was determined by examining the historical volatilities for industry peers, as the Company did not have any trading history for the common stock. The Company will continue to analyze the historical stock price volatility and expected term assumption as more historical data for the common stock becomes available.

● Risk-Free Interest Rate. The risk-free interest rate assumption is based on the U.S. Treasury instrument whose term was consistent with the expected term of the Company’s stock options.

● Dividends. The Company has not paid any cash dividends on common stock since inception and does not anticipate paying any dividends in the foreseeable future. Consequently, an expected dividend yield of zero was used.

The fair value of options granted was estimated using the Black-Scholes valuation model using the following assumptions for the six months ended June 30, 2026:

Six months ended

June 30, 2026

Expected volatility

136

Expected dividend yield

—