Iveda Corp (Form: 10-Q, Received: 11/12/2010 16:39:38)

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15( d ) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2010

¨ 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. 000-53285

IVEDA CORPORATION

(Exact name of registrant as specified in its charter)

Nevada	98-0611159
(State or other jurisdiction of incorporation or	(I.R.S. Employer
organization)	Identification No.)

1201 South Alma School Road, Suite 4450, Mesa,
Arizona	85210
(Address of principal executive offices)	(Zip Code)

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

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

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 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.

Large accelerated filer o		Accelerated filer o		Non-accelerated filer o
Smaller reporting company x

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

As of November 1, 2010, 12,945,508 shares of the registrant’s common stock, par value $0.00001 per share, were outstanding.

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	12
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	16
ITEM 4.	CONTROLS AND PROCEDURES	16
	PART II - OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	17
ITEM 1A.	RISK FACTORS	17
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	17
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	17
ITEM 4.	[REMOVED AND RESERVED.]
ITEM 5.	OTHER INFORMATION	18
ITEM 6.	EXHIBITS	18
SIGNATURES		20

PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

IVEDA CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts expressed in US Dollars)

	September 30, 2010
	(Unaudited)		December 31, 2009
ASSETS

CURRENT ASSETS
Cash and Cash Equivalents	$	384,285	$	17,672
Accounts Receivable		82,797		36,739
Prepaid Expenses		22,322		4,062
Inventory		2,041		-
Total Current Assets		491,445		58,473

PROPERTY AND EQUIPMENT
Office Equipment		161,051		88,299
Furniture and Fixtures		27,805		27,805
Software		41,508		36,634
Leased Equipment		245,752		226,496
Leasehold Improvements		36,964		36,964

Total Property and Equipment		513,080		416,198

Less: Accumulated Depreciation		237,199		179,648

Property and Equipment, Net		275,881		236,550

OTHER ASSETS
Deposits		14,230		14,230

Total Assets	$	781,556	$	309,253

	September 30, 2010
	(Unaudited)			December 31, 2009
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY

CURRENT LIABILITIES
Accounts Payable	$	133,455		$	197,535
Accrued Expenses		93,770			315,864
Current Portion of Capital Lease Obligations		76,210			80,505
Due to Related Parties		-			134,000
Convertible Debt		-			50,000
Deferred Revenue		16,469			14,659

Total Current Liabilities		319,904			792,563

LONG-TERM LIABILITIES
Capital Lease Obligations, Net of Current Portion		10,183			50,037
Total Liabilities		330,087			842,600

STOCKHOLDERS' (DEFICIT) EQUITY
Preferred Stock, $0.00001 par value; 100,000,000 shares authorized; no shares outstanding as of September 30, 2010 and December 31, 2009

Common Stock, $0.00001 par value; 100,000,000 shares authorized; 12,945,508 and 12,865,353 shares issued and outstanding, as of September 30, 2010 and December 31, 2009 , respectively		129			129
Additional Paid-In Capital		6,689,095			4,213,359
Accumulated Deficit		(6,237,755	)		(4,746,835	)
Total Stockholders' (Deficit) Equity		451,469			(533,347	)

Total Liabilities and Stockholders' (Deficit) Equity	$	781,556		$	309,253

See accompanying Notes to Condensed Consolidated Financial Statements

IVEDA CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Amounts expressed in US Dollars)

	3 Months			3 Months			9 Months			9 Months
	Ending			Ending			Ending			Ending
	September 30, 2010			September 30, 2009			September 30, 2010			September 30, 2009
	(unaudited)			(unaudited)			(unaudited)			(unaudited)

REVENUE	$	182,416		$	156,448		$	488,600		$	489,436

COST OF REVENUE		115,817			123,565			337,425			386,554

GROSS PROFIT		66,599			32,883			151,175			102,882

OPERATING EXPENSES		604,597			335,830			1,630,024			1,258,983

LOSS FROM OPERATIONS		(537,998	)		(302,947	)		(1,478,849	)		(1,156,101	)

OTHER INCOME (EXPENSE)

Interest Income		302			3,033			933			3,478

Interest Expense		(1,760	)		(6,706	)		(13,003	)		(23,255	)

Total Other Income (Expense)		(1,458	)		(3,673	)		(12,070	)		(19,777	)

LOSS BEFORE INCOME TAXES		(539,456	)		(306,620	)		(1,490,919	)		(1,175,878	)

BENEFIT FOR INCOME TAXES		-			-			-			-

NET LOSS	$	(539,456	)	$	(306,620	)	$	(1,490,919	)	$	(1,175,878	)

BASIC AND DILUTED LOSS PER SHARE	$	(0.04	)	$	(0.03	)	$	(0.10	)	$	(0.10	)

See accompanying Notes to Condensed Consolidated Financial Statements

IVEDA CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Amounts expressed in US Dollars)

	9 months ending			9 months ending
	September 30, 2010			September 30, 2009
	(Unaudited)			(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(1,490,919	)	$	(1,175,878	)
Adjustments to Reconcile Net Loss to Net Cash
Used by Operating Activities
Depreciation		57,550			59,254
Stock Compensation		217,160			29,999
(Increase) Decrease in Operating Assets:
Accounts Receivable		(46,058	)		(14,008	)
Prepaid Expense		(18,260	)		8,502
Inventory		(2,041	)		9,513
Accounts Payable		(64,080	)		76,569
Accrued Expenses		(222,094	)		50,337
Deferred Revenue		1,810			(9,823	)
Net cash used in operating activities		(1,566,932	)		(965,535	)

CASH FLOWS FROM INVESTING ACTIVITIES
Escrow Deposit Reduction		-			40,000
Purchase of Property and Equipment		(91,583	)		(9,559	)
Net cash provided by (used in) investing activities		(91,583	)		30,441

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from (Payments to) Related Parties		(134,000	)		424,900
Payments on Capital Lease Obligations		(49,449	)		(46,822	)
Common Stock Issued, net of Cost of Capital		2,208,577			223,760
Net cash provided by financing activities		2,025,128			601,838
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		366,613			(333,256	)

Cash and Cash Equivalents - Beginning of Period		17,672			335,189

CASH AND CASH EQUIVALENTS - END OF PERIOD	$	384,285		$	1,933

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Taxes Paid	$	-		$	-
Debt Converted to Stock	$	50,000		$	-
Common Stock Subscription Receivable	$	-		$
Interest Paid	$	11,243		$	23,255
Property and Equipment Purchased via Capital Lease	$	5,300		$	13,036

See accompanying Notes to Condensed Consolidated Financial Statements

IVEDA CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Amounts expressed in US Dollars)

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

These statements should be read in conjunction with our consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2009. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted. The operating results and cash flows for the nine-month period ended September 30, 2010, are not necessarily indicative of the results that will be achieved for the full fiscal year ending December 31, 2010 or for future periods.

The accompanying condensed consolidated financial statements have been prepared without audit and reflect all adjustments, consisting of normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of financial position and the results of operations for the interim periods. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Estimates are used for, but not limited to, the accounting for the allowance for doubtful accounts, impairment costs, depreciation and amortization, sales returns and discounts, warranty costs, uncertain tax positions and the recoverability of deferred tax assets, stock compensation, contingencies and the fair value of assets and liabilities disclosed. Actual results and outcomes may differ from management's estimates and assumptions. The statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures, normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted pursuant to such SEC rules and regulations.

The balance sheet at December 31, 2009 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. The Company has generated an accumulated deficit from operations of approximately $6.2 million at September 30, 2010 and has used approximately $1.6 million in cash from operations through the current nine months ended September 30, 2010. As a result, a risk exists about our ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from this uncertainty.

A multi-step plan was adopted by management to enable the company to continue to operate and begin to report operating profits. The highlights of that plan are:

The Company plans to seek additional equity and/or debt financing.

Establish distributor networks with existing companies to create a reseller network to increase the scope of the Company’s marketing activities with low cost to the Company.

Launch public relations and marketing campaigns.

The Company may evaluate and consider merger and/or acquisition activities.

Principles of Consolidation

The consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiary. All significant inter-company balances and transactions have been eliminated in consolidation.

Concentrations

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

Substantially all cash is deposited in one financial institution. At times, amounts on deposit may be in excess of the FDIC insurance limit.

Accounts receivable are unsecured and the Company is at risk to the extent such amount becomes uncollectible. The Company performs periodic credit evaluations of its customers’ financial condition and generally does not require collateral. Revenue from three customers represented approximately 55% (34%, 11%, and 10%) of total revenues for the nine months ended September 30, 2010 and approximately 29% of total accounts receivable at September 30, 2010. No other customers represented greater than 10% of total revenues or receivables in the nine months ended September 30, 2010.

Fair Value of Financial Instruments

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2009. The respective carrying value of certain on-balance-sheet financial instruments, approximate their fair values. These financial instruments include cash, accounts receivable, accounts payable, accrued expenses, convertible notes 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 fair values or they are receivable or payable on demand.

Reclassification

Certain amounts in 2009 have been reclassified to conform to the 2010 presentation.

NOTE 2

CONVERTIBLE DEBT

The Company issued $50,000 of unsecured convertible debt in December 2009 that matured February 28, 2010 bearing an annual interest rate of 8%. The note and accrued interest were converted into 67,155 shares of Company common stock (“Common Stock”) in January 2010.

NOTE 3

EQUITY

Preferred Stock

The Company has 100,000,000 shares of $0.00001 par value preferred stock authorized to issue. No shares have been issued and the rights and privileges of this class of stock have not been defined.

Common Stock

In July 2010, the Company paid the last installment payment of $50,000 to Mr. Quinn and Mr. Liggins, the majority shareholders of Charmed Homes, for the purchase of 2.5 million shares of Common Stock as part of the reverse merger consummated on October 15, 2009. The payment marked the cancellation of 2.5 million shares from the Company’s total shares outstanding.

During the nine month period ended September 30, 2010 the Company issued 2,580,155 shares of Common Stock. 2,445,000 shares were related to the private placement memorandum, 67,155 shares were from convertible debentures, 67,000 shares were from the exercise of warrants issued during the period and 1,000 shares were from the exercise of employee stock options.

During the nine month period ended September 30, 2010 the Company issued and had outstanding additional warrants to purchase 250,000 shares of Common Stock at $1.00 and 255,500 shares of Common Stock at $1.10. These warrants were issued as a cost of capital.

NOTE 4

STOCK OPTION PLAN

The Company has also granted non-qualified stock options to employees and contractors. All non-qualified options are generally issued with an exercise price that may be less than 100 percent of the fair value of the Common Stock on the date of the grant as determined by the Company's Board of Directors. Options may be exercised up to ten years following the date of the grant, with vesting schedules determined by the Company upon grant. Vesting periods range from 100% fully vested upon grant to a range of four to five years. Vested options may be exercised up to three months following date of termination of the relationship. 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.

Stock option transactions during nine months ended September 30, 2010 were as follows:

	Nine months ended September 30,
	2010
				Weighted -
				Average
				Exercise
	Shares			Price
Outstanding at Beginning of Year		1,182,729		$	0.37
Granted		686,500			1.12
Exercised		(1,000	)		-
Forfeited or Canceled		(7,250	)		1.10
Outstanding at End of Period		1,860,979			0.64

Options Exercisable at Period-End		1,583,749			0.53

Weighted-Average Fair Value of Options Granted During the Period	$	0.39

Information with respect to stock options outstanding and exercisable at September 30, 2010 is as follows:

Options Outstanding

Options Exercisable

Number

Weighted -

Number

Outstanding

Average

Weighted -

Exercisable

Weighted -

Range of

Remaining

Average

Exercise

September 30,

Contractual

Exercise

September 30,

Exercise

Prices

2010

Life

Price

2010

Price

$0.10 - $1.30

1,860,979

8 Years

0.64

1,583,749

0.53

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for options granted.

	2010
Expected Life	5 yr
Dividend Yield		0	%
Expected Volatility		39.33	%
Risk-Free Interest Rate		2.50	%

Expected volatility was estimated by using the average volatility of three public companies offering services similar to the Company. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the grant date. The expected life of options is based on the average of three public companies offering services similar to the Company.

NOTE 5

RELATED PARTY TRANSACTIONS

In 2009, the Company borrowed $134,000 from certain shareholders for use in operations. The balance at December 31, 2009 was $134,000. The advances bore no interest and were repaid in January 2010.

The Company has provided surveillance services since 2005 to entities owned by Ross Farnsworth, either through a family partnership or through his majority-owned LLC, and subsequently Ross Farnsworth became a shareholder of the Company in 2006. Mr. Farnsworth’s holdings are less than 5% of the Company, but the revenue for the period ending September 30, 2010 was $52,406 and no trade accounts receivable balance at September 30, 2010.

On September 15, 2010, the Company, as borrower, issued a Line of Credit Promissory Note (the “Note”) to Gregory Omi, a director of the Company, as lender, in the principal sum of up to Three Hundred Fifty Thousand Dollars ($350,000). The line of credit will be used for the sole purpose of purchasing equipment, software, and other infrastructure-related items to fulfill commitments to SAT Mexico. The unpaid principal of the line of credit shall bear simple interest at the rate of 1.5% per month or 18% per annum. The principal balance of the Note shall be due and payable no later than six months after each disbursement. The Note will be secured by receivables from SAT Mexico. As of October 31, 2010, the balance of the Note is $0.

NOTE 6

EARNINGS (LOSS) PER SHARE

The following table provides a reconciliation of the numerators and denominators reflected in the basic and diluted earnings per share computations, as required by SFAS No. 128, “Earnings Per Share” (“EPS”).

Basic EPS is computed by dividing reported earnings available to stockholders by the weighted average shares outstanding. The Company had net losses for the three months and nine months ended September 30, 2010 and 2009 and the effect of including dilutive securities in the earnings per common share would have been anti-dilutive. Accordingly, all options to purchase common shares were excluded from the calculation of diluted earnings per share for the three months and nine months ended September 30, 2010 and 2009.

	3 Months			3 Months			9 Months			9 Months
	Ending			Ending			Ending			Ending
	September 30, 2010			September 30, 2009			September 30, 2010			September 30, 2009
Basic EPS
Net Loss	$	(539,456	)	$	(306,620	)	$	(1,490,919	)	$	(1,175,878	)
Weighted Average Shares		14,071,937			12,254,908			14,269,205			12,186,416
Basic and Diluted Loss Per Share	$	(0.04	)	$	(0.03	)	$	(0.10	)	$	(0.10	)

NOTE 7

SUBSEQUENT EVENTS

On October 25, 2010, the Company entered into an Operating Level Agreement (the “Agreement”) with Digital Ally and Tecnologia y Diagnosticos Del Norte S.A. de C.V. (“TDN”) pursuant to which the Company agreed to provide a streaming video converter to Digital Ally’s in-vehicle surveillance system and video hosting and video archiving services to a Federal Government Agency in Mexico. The Company serves as a sub-contractor to TDN pursuant to a separate agreement signed by TDN and the government agency in Mexico. Gross revenues are $280,000 for upfront fees and $142,000 for the streaming video converter, plus monthly fees for remote video hosting, storage, and maintenance for the first phase of the project, and an additional $100,000 for a second shipment of streaming video converters and monthly fees for the second phase of the project for a total of 164 vehicles. A more detailed description of this Agreement was reported on a Current Report on Form 8-K, filed on October 27, 2010.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion should be read in conjunction with Iveda Corporation's unaudited financial statements and associated notes appearing elsewhere in this Form 10-Q.

Note Regarding Forward-Looking Information

This Quarterly Report on Form 10-Q, including the following “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements, which involve risks and uncertainties, including statements regarding our capital needs, business strategy, and expectations. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “will,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “forecast,” “project” or “continue,” the negative of such terms or other comparable terminology.

You should not rely on forward-looking statements as predictions of future events or results. Any or all of our forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions, risks and uncertainties, and other factors, which could cause actual events or results to be materially different from those expressed or implied in the forward-looking statements. These factors may cause our actual results to differ materially from any forward-looking statement. In addition, new factors emerge from time to time and it is not possible for us to predict all factors that may cause actual results to differ materially from those contained in any forward-looking statements. We disclaim any obligation to publicly update any forward-looking statements to reflect events or circumstances after the date of this report, except as required by applicable law.

Except as otherwise indicated by the context, references in this Quarterly Report on Form 10-Q to “we,” “our,” “us,” and “Iveda” refer to the combined business of Iveda Corporation (the “Company”) and its wholly-owned operating subsidiary, IntelaSight, Inc. (“IntelaSight”), d/b/a Iveda Solutions (“Iveda Solutions”). References to Iveda Solutions refer to IntelaSight.

Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of Financial Conditions and Results of Operations is based upon our financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires the Company’s management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. A description of our critical accounting policies and related judgments and estimates that affect the preparation of our financial statements is set forth in Item 7, “Management’s Discussion and Analysis of Financial Conditions and Results of Operations,” of our Annual Report on Form 10-K for the year ended December 31, 2009. Such policies are unchanged.

Overview

IntelaSight, Inc. a Washington corporation d/b/a Iveda Solutions, began operations on January 24, 2005, and became a wholly-owned operating subsidiary of Iveda Corporation (formerly known as Charmed Homes, Inc.), a Nevada corporation, on October 15, 2009, through a merger. All Company operations are conducted through Iveda Solutions.

The Company installs video surveillance equipment, primarily for security purposes, and provides video hosting, archiving, and real-time remote surveillance services with a proprietary reporting system, DSR™ (Daily Surveillance Report), to a variety of businesses and organizations. By consolidating computer power into a single location at the server level, Iveda Solutions creates efficiencies due to economies of scale leveraging cloud computing, which offers more features and flexibility compared to traditional box systems. The Company has a SAFETY Act Designation by the Department of Homeland Security as an anti-terrorism technology provider. The Company’s principal sources of revenue are derived from our video hosting real-time surveillance and equipment sales and installation.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Since our inception, we have accumulated net losses in the approximate amount of $6.2 million. As of September 30, 2010, we had shareholder equity of approximately $451,000, which significantly limits our ability to absorb continuing operating losses in the future. As a result, our ability to continue as a going concern is uncertain.

Results of Operations

Revenue. We recorded revenue of $182,416 for the three months ended September 30, 2010, compared to $156,448 for the three months ended September 30, 2009, an increase of $25,968 or 17%. In the third fiscal quarter of 2010, our recurring revenue was $138,061 or 76% of revenue and our equipment sales and installation revenue was $44,355 or 24% of revenue, compared to recurring service revenue of $97,981 or 63% of revenue, and equipment sales and installation revenue of $58,466 or 37% of revenue for the same period in 2009. The increase in revenue was due to an increase in recurring revenue derived from video hosting and real-time surveillance services over the past year.

We recorded revenue of $488,600 for the nine months ended September 30, 2010, compared to $489,436 for the nine months ended September 30, 2009, a decrease of $836 or 0.17%. In the first nine months of 2010, our recurring service revenue was $348,652 or 71% of revenue and our equipment sales and installation revenue was $139,948 or 29% of revenue, compared to recurring service revenue of $279,411 or 57% of revenue, and equipment sales and installation revenue of $210,025 or 43% of revenue for the same fiscal period in 2009. The change in revenue was due to an increase in recurring revenue derived from video hosting and real-time surveillance services over the past year and a decrease in equipment sales in the first nine months of 2010 compared to the first nine months of 2009.

Cost of Revenue. Total cost of revenue was $115,817 (63% of revenues; gross margin of 37%) for the three months ended September 30, 2010, compared to $123,565 (79% of revenues; gross margin of 21%) for the three months ended September 30, 2009, a decrease of $7,748 or 6%. The increase in gross margin for the third fiscal quarter of 2010 to 37% from 21% in the third fiscal quarter of 2009 was primarily due to the increase in recurring revenue with higher gross margin. In addition, the increase of revenue resulted in better utilization of our infrastructure fixed costs.

Total cost of revenue was $337,425 (69% of revenues; gross margin of 31%) for the nine months ended September 30, 2010, compared to $386,554 (79% of revenues; gross margin of 21%) for the nine months ended September 30, 2009, a decrease of $49,129 or 13%. The increase in gross margin for the nine months ended September 30, 2010, to 31% from 21% for the nine months ended September 30, 2009, was primarily due to the increase in recurring revenue with higher gross margin in the third fiscal quarter of 2010. In addition, the increase of revenue resulted in better utilization of our infrastructure fixed costs.

Operating Expenses. Operating expenses were $604,597 for the three months ended September 30, 2010, compared to $335,830 for the three months ended September 30, 2009, an increase of $268,767 or 80%. The increase in operating expenses was primarily related to an increase in stock compensation expense of approximately $110,000 over 2009 and increased marketing, travel, and personnel costs incurred to promote our services internationally.

Operating expenses were $1,630,024 for the nine months ended September 30, 2010, compared to $1,258,983 for the nine months ended September 30, 2009, an increase of $371,041 or 29%. The increase in operating expenses was primarily related to an increase in stock compensation expense of approximately $187,000 over 2009 and increased marketing, travel, and personnel costs incurred to promote our services internationally.

Loss from Operations. Notwithstanding the increases in revenues and related gross profit, there was a greater increase in operating expenses. As a result, the loss from operations increased to $537,998 for the three months ended September 30, 2010, compared to $302,947 for the three months ended September 30, 2009, an increase in loss of $235,051 or 78%.

As a result of the increased operating expenses, loss from operations increased to $1,478,849 for the nine months ended September 30, 2010, compared to $1,156,101 for the nine months ended September 30, 2009, an increase in loss of $322,748 or 28%.

Other Expense-Net. Other expense-net was $1,458 for the three months ended September 30, 2010, compared to $3,673 for the three months ended September 30, 2009, a decrease of $2,215 or 60%. This was due to the capital raise in January and July 2010, which allowed us to reduce our debt and, accordingly, reduce our interest expense and increase our interest income.

Other expense-net was $12,070 for the nine months ended September 30, 2010, compared to $19,777 for the nine months ended September 30, 2009, a decrease of $7,707 or 39%. This was due to the capital raise in January and July 2010, which allowed us to reduce our debt and, accordingly, reduce our interest expense and increase our interest income.

Net Loss. The increase of $232,836 or 76% in the net loss to $539,456 for the three months ended September 30, 2010, from $306,620 for the three months ended September 30, 2009, was primarily due to an increase in operating expenses related to selling and marketing and a non-cash charge of approximately $122,000 for stock compensation for the three months ended September 30, 2010, compared to $10,000 for the three months ended September 30, 2009.

The increase of $315,041 or 27% in the net loss to $1,490,919 for the nine months ended September 30, 2010 from $1,175,878 for the nine months ended September 30, 2009, was primarily due to an increase in operating expenses related to selling and marketing as well as non-cash increase in stock compensation of approximately $217,000 for the nine months ended September 30, 2010 compared to $30,000 for the nine months ended September 30, 2009.

Liquidity and Capital Resources

We had cash and cash equivalents of $384,285 on September 30, 2010. The improvement in cash on hand from $17,672 as of December 31, 2009 resulted from cash raised through stock sales made during January and July 2010.

Net cash used in operating activities during the nine months ended September 30, 2010 and for the nine months ended September 30, 2009 was $1,566,932 and $965,535, respectively. Cash used in operating activities for those periods consisted primarily of funding operations and reducing accounts payable and accrued expenses.

Net cash used by investing activities for the nine months ended September 30, 2010, and the nine months ended September 30, 2009 was $91,583 and $9,558, respectively, for the purchase of property and equipment. There was $40,000 of net cash provided by investing activities for the nine months ended September 30, 2009, related to an escrow deposit reduction.

Net cash provided by financing activities for the nine months ended September 30, 2010, was $2,025,128, related primarily to the sale of common stock. Net cash provided by financing activities for the nine months ended September 30, 2009, was $601,838, related primarily to the sale of common stock and proceeds from the issuance of convertible notes.

At December 31, 2009, we had approximately $4.4 million in net operating loss carry forwards available for federal and state income tax purposes. We did not recognize any benefit from these operating loss carry forwards for the year ended 2009 or through the third fiscal quarter of 2010. Our operating loss carry forwards expire starting in 2010 and continuing through 2026.

We have experienced significant operating losses since our inception. We entered into a new lease agreement in 2008 and increased our occupancy costs as we increased our lease commitment from 1,411 square feet to 3,667 square feet. Our capital expenditures and working capital requirements could increase depending on our operating results and other adjustments to our operating plan as may be needed to respond to competition or unexpected events.

We believe that our cash on hand as of September 30, 2010 is insufficient to meet our anticipated cash needs for working capital and capital expenditures for the short term. We continually evaluate our working capital needs, and we are seeking to obtain additional working capital through debt and equity offerings. There can be no assurance that additional funds will be available on acceptable terms. In the event that additional funds are not available on acceptable terms, we may be required to reduce the scope of, or cease, operations.

The economic crisis of 2009 resulted in a downturn of spending and a shortage of credit, which severely curtailed our ability to obtain financing in 2009. As a result, we raised $1.5 million in equity financing in January 2010.

If we are unable to quickly increase our sales, we will need to raise additional capital during the year and may be required to reduce labor expenses to maintain our existing operations.

Three customers each represented greater than 10% of total revenue for the three months ended September 30, 2010. These customers were: Insurance Auto Auctions (34% of total revenue), Glendale California Police Department (11% of total revenue), and Farnsworth (10% of total revenue). Insurance Auto Auctions and Farnsworth have been customers since 2005 and are no longer under long-term service contracts. As a result, Insurance Auto Auctions and Farnsworth could terminate their service with the Company without penalty. No other customers represented greater than 10% of total revenues in the nine months ended September 30, 2010.

Substantially all cash is deposited in one financial institution. At times, amounts on deposit may be in excess of the FDIC insurance limit.

Recent Developments

On October 25, 2010, the Company entered into an Operating Level Agreement (the “Agreement”) with Digital Ally and Tecnologia y Diagnosticos Del Norte S.A. de C.V. (“TDN”) pursuant to which the Company agreed to provide a streaming video converter to Digital Ally’s in-vehicle surveillance system, and video hosting and video archiving services to a Federal Government Agency in Mexico. The Company serves as a sub-contractor to TDN pursuant to a separate agreement signed by TDN and the government agency in Mexico. Gross revenues are $280,000 for upfront fees and $142,000 for the streaming video converter, plus monthly fees for remote video hosting, storage, and maintenance for the first phase of the project, and an additional $100,000 for a second shipment of streaming video converters and monthly fees for the second phase of the project for a total of 164 vehicles. A more detailed description of this Agreement was reported on a Current Report on Form 8-K, filed on October 27, 2010.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a smaller reporting company, the Company is not required to provide Part I, Item 3 disclosures in this Quarterly Report.

ITEM 4.

CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the design and operation of our disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act as of September 30, 2010. Based on that evaluation, our principal executive officer and our principal financial officer concluded that the design and operation of our disclosure controls and procedures were effective in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

Other than hiring a full-time Chief Financial Officer on July 22, 2010, there have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(d) and 15d-15(d) under the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. However, management believes that our system of disclosure controls and procedures is designed to provide a reasonable level of assurance that the objectives of the system will be met.

PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

None.

ITEM 1A.

RISK FACTORS.

As a smaller reporting company, the Company is not required to provide Part II, Item 1A disclosures in this Quarterly Report.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

In addition to issuances of equity securities previously reported in Form 8-K, the Company made the following additional issuances of equity securities during the reporting period:

On September 14, 2010, the Company issued 50,000 shares of the Company’s restricted common stock to Sysan LP for cash consideration of $50,000. The proceeds of the sale are being used for working capital and general corporate purposes.

On September 29, 2010, the Company issued 17,000 shares of the Company’s common stock to John Boesel III upon the exercise of warrants granted to Mr. Boesel in exchange for placement services.

These issuances were made pursuant to Section 4(2) of the Securities Act of 1933, as amended, Regulation D, and Rule 506 promulgated thereunder.

ITEM 3.

DEFAULT ON SENIOR SECURITIES.

None.

ITEM 5.

OTHER INFORMATION.

On September 7, 2010, the Company held its Annual Meeting of Shareholders (the “Annual Meeting”) at the Company’s offices located at 1201 S. Alma School Rd., Suite 4450, Mesa, Arizona 85210, at 1:00 p.m. Mountain Time.

At the Annual Meeting, the shareholders unanimously elected Mr. David Ly, Mr. James D. Staudohar, Mr. Gregory Omi, and Mr. Joseph Farnsworth to serve as directors for terms expiring on the date of the Company’s 2011 Annual Meeting of Shareholders. In addition, the shareholders ratified the appointment of Farber Hass Hurley LLP as the Company’s independent auditors for the fiscal year ending December 31, 2010.

The following tables show the voting results of the Annual Meeting:

Election of Directors:	For		Withhold
Mr. David Ly		7,925,947		0
Mr. James D. Staudohar		7,925,947		0
Mr. Gregory Omi		7,925,947		0
Mr. Joseph Farnsworth		7,925,947		0

Ratification of Farber Hass Hurley LLP as the

Company’s independent auditor for the fiscal

Broker

year ending December 31, 2010:

For

Against

Abstain

Non-Votes

7,925,947

On September 15, 2010, the Company, as borrower, issued a Line of Credit Promissory Note (the “Note”) to Gregory Omi, a director of the Company, as lender, in the principal sum of up to Three Hundred Fifty Thousand Dollars ($350,000). The description of the Note included in Note 5 to the Condensed Consolidated Financial Statements and in the “Liquidity and Capital Resources” section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Quarterly Report on Form 10-Q is incorporated herein by reference.

ITEM 6.

EXHIBITS.

Exhibit Number		Description
3.1		Articles of Incorporation of Charmed Homes Inc. (Incorporated by reference to Exhibit 3.1 to Form SB-2 filed on 4/27/2007)
3.2		Bylaws of Charmed Homes Inc. (Incorporated by reference to Exhibit 3.2 to Form SB-2 filed on 4/27/2007)
3.3		Amendment to Bylaws of Charmed Homes Inc. (Incorporated by reference Exhibit 3.1 to Form 8-K filed on 12/15/2008)
3.4		Amendment to Articles of Incorporation, filed with the Nevada Secretary of State on September 9, 2009 (Incorporated by reference to Form 8-K filed on 10/21/2009)
4.1		Specimen Stock Certificate (Incorporated by reference to Exhibit 4.1 to Form SB-2 filed on 4/27/2007)
4.2		Form of Stock Option Agreement under the IntelaSight, Inc. 2008 Stock Option Plan (Incorporated by reference to Form S-4/A1 filed on 7/10/2009)

4.3		Form of Common Stock Purchase Warrant issued by IntelaSight, Inc. (Incorporated by reference to Form S-4/A1 filed on 7/10/2009)
4.4		2009 Stock Option Plan, dated October 15, 2009 (Incorporated by reference to Form 8-K filed on 10/21/2009)
4.5		Form of Common Stock Purchase Warrant issued by Iveda Corporation in conjunction with the Merger (Incorporated by reference to Form 8-K filed on 10/21/2009)
4.6		2010 Stock Option Plan, dated January 18, 2010 (Incorporated by reference to Form S-8 filed on 2/4/2010)
10.1		Channel Partner Program Membership Agreement dated April 1, 2005 by and between Axis Communications Inc. and IntelaSight, Inc. (Incorporated by reference to Form S-4/A1 filed on 7/10/2009)
10.2		Application Development Service Agreement dated July 14, 2006 by and between Axis Communications AB and IntelaSight, Inc. (Incorporated by reference to Form S-4/A2 filed on 8/22/2009)
10.3		Partner Agreement dated January 30, 2007 by and between Milestone Systems, Inc. and IntelaSight, Inc. (Incorporated by reference to Form S-4/A1 filed on 7/10/2009)
10.4		Solution Partner Agreement dated March 13, 2008 by and between Milestone Systems A/S and IntelaSight, Inc. (Incorporated by reference to Form S-4/A1 filed on 7/10/2009)
10.5		Customer Agreement dated March 25, 2008 by and between IAAI — North Hollywood and IntelaSight, Inc. (Incorporated by reference to Form S-4/A1 filed on 7/10/2009)
10.6		Channel Partner Program Membership Agreement — Gold Solution Partner Level — dated June 23, 2009 by and between Axis Communications Inc. and IntelaSight, Inc. (Incorporated by reference to Form S-4/A1 filed on 7/10/2009)
10.7		Stock Purchase Agreement, dated October 15, 2009, by and among Iveda Corporation, IntelaSight, Inc., Ian Quinn and Kevin Liggins (Incorporated by reference to Form 8-K filed on 10/21/2009)
10.8		Consulting Agreement, dated January 4, 2010, by and between Iveda Corporation and IEP Services, Inc. (Incorporated by reference to Form S-8 filed on 2/4/2010)
10.9		Consulting Agreement, dated January 18, 2010, by and between Iveda Corporation and Clemens Titzck (Incorporated by reference to Form S-8 filed on 2/4/2010)
10.10		Subscription Agreement, dated July 26, 2010*
10.11		Line of Credit Promissory Note, dated September 15, 2010*
10.12		Agreement for Service, dated October 20, 2010*
10.13		Consulting Agreement, dated October 25, 2010*
10.14		Operating Level Agreement, dated October 25, 2010*
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

* Filed herewith

** Furnished herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	IVEDA CORPORATION
	(Registrant)

Date: November 12, 2010	BY:	/s/ David Ly
		David Ly
		President, Chief Executive Officer, and Chairman

Date: November 12, 2010		/s/ Steven G. Wollach
		Steven G. Wollach
		Principal Accounting Officer, Chief Financial Officer, Treasurer

Iveda Corporation

Subscription Agreement

Iveda Corporation

1201 S. Alma School Rd., Suite 4450

Mesa, Arizona 85210

Attention: David Ly, CEO

Re:

Purchase of Iveda Corporation Common Stock

Gentlemen:

The undersigned (the "Purchaser") hereby subscribes to purchase the number of shares of common stock of Iveda Corporation, a Nevada corporation (the "Company"), set forth on the signature page hereof at a purchase price of $1.00 per share. The shares of the Company’s common stock being purchased pursuant to this Agreement are referred to herein as the "Shares" or "Share" when used in the singular. This subscription may be rejected by the Company in its sole discretion. Such purchase of Shares is subject to the following paragraphs.

1. Purchase . Subject to the terms and conditions hereof, Purchaser hereby irrevocably agrees to purchase the number of Shares set forth on the signature page hereof and tenders herewith the cash consideration set forth on the signature page hereof (with a minimum purchase of $20,000 for 20,000 Shares unless waived by the Company). Payment in full by cash or check for the Shares purchased accompanies the delivery of this Subscription Agreement.

2. Representations and Warranties . Purchaser hereby makes the following representations and warranties to the Company and Purchaser agrees to indemnify, hold harmless, and pay all judgments and claims against the Company from any liability or injury, including, but not limited to, that arising under Federal or state securities laws, incurred as a result of any misrepresentation herein or any warranties not performed by Purchaser.

(a) Purchaser is the sole and true party in interest and is not purchasing for the benefit of any other person.

(b) Purchaser has read, analyzed, and is familiar with the Company’s public securities filings, this Subscription Agreement, and the Investor Suitability Questionnaire.

(c) Purchaser hereby warrants that Purchaser is an "accredited investor," as defined in Rule 501 promulgated under the Securities Act of 1933, as amended (the "Act").

(d) Purchaser is aware that an investment in the Shares is highly speculative and subject to substantial risks. Purchaser is capable of bearing the high degree of economic risk and burdens of this venture, including, but not limited to, the possibility of the complete loss of all funds invested, the loss of any anticipated tax benefits, the lack of a public market, and limited transferability of the Shares which may make the liquidation of this investment impossible for the indefinite future.

(e) At no time was Purchaser presented with or solicited by or through any article, notice or other communication published in any newspaper or other leaflet, public promotional meeting, television, radio or other broadcast or transmittal advertisement or any other form of general advertising.

Subscription Agreement

2/15/10

(f) Purchaser, if a corporation, partnership, trust or other entity, is authorized and duly empowered to purchase and hold the Shares, has its principal place of business at the address set forth on the signature page and has not been formed for the specific purpose of purchasing the Shares.

(g) The Shares are being purchased solely for Purchaser's own account, for investment, and are not being purchased with a view to the resale, distribution, subdivision or fractionalization thereof.

(h) Purchaser understands that the Shares have not been registered under the Act, or any state securities laws, in reliance upon exemptions from registration for non-public offerings. Purchaser understands that the Shares or any interest therein may not be, and agrees that the Shares or any interest therein will not be, resold or otherwise disposed of by Purchaser unless the Shares are subsequently registered under the Act and under appropriate state securities laws or unless the Company receives an opinion of counsel satisfactory to it that an exemption from registration is available.

(i) Purchaser has been informed of and understands the following:

(1) The Company acquired its operating subsidiary, IntelaSight, Inc. (which was formed in 2005), on October 15, 2009;

(2) There are substantial restrictions on the transferability of the Shares under the Act; and

(3) No federal or state agency has made any finding or determination as to the fairness of the Shares for public investment nor any recommendation or endorsement of the Shares.

(j) The information set forth in the Investor Suitability Questionnaire and executed by Purchaser is true, correct and complete.

(k) Purchaser hereby agrees to indemnify the Company, its officers and directors, and any person participating in the offering and hold them harmless from and against any and all liability, damage, cost (including legal fees and court costs) and expense incurred on account of or arising out of:

(1) Any inaccuracy in the declarations, representations, and warranties herein above set forth;

(2) The disposition of any of the Shares by Purchaser contrary to the foregoing declarations, representations and warranties; and

(3) Any action, suit or proceeding based upon (i) the claim that said declarations, representations, or warranties were inaccurate or misleading or otherwise cause for obtaining damages or redress from the Company; (ii) the disposition of any of the Shares; or (iii) the breach by Purchaser of any part of this Subscription Agreement.

3. Setoff . Notwithstanding the provisions of the last preceding section or the enforceability thereof, the undersigned hereby grants to the Company the right to setoff against any amounts payable by the Company to the undersigned, for whatever reason, of any and all damages, costs, and expenses (including, but not limited to, reasonable attorneys' fees) which are incurred on account of or arising out of any of the items referred to in clauses (1) through (3) of Section 2(k).

4. Restrictions on Transferability of Shares; Compliance with Securities Act .

4.1 Restrictions on Transferability . Purchaser acknowledges that the Shares have not been registered under the Act or any state blue sky laws and that the transferability of an interest in the Shares is restricted by applicable federal and state securities laws.

4.2 Restrictive Legend . Each certificate representing the Shares and any other securities issued in respect thereto upon any stock dividend, recapitalization, merger, consolidation or similar event, are expected (unless otherwise permitted by the provisions of this Section or by applicable law) to be stamped or otherwise imprinted with a legend in substantially the following form (in addition to any legend required under applicable state securities laws):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SHARES MAY BE SOLD OR TRANSFERRED ONLY IF THE SHARES ARE REGISTERED UNDER THE ACT OR THE COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO IT THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

5. Transferability of Subscription Agreement . Purchaser agrees not to transfer or assign the obligations or duties contained in this Subscription Agreement, or any of Purchaser's interest herein.

6. Regulation D . Notwithstanding anything herein to the contrary, every person or entity who, in addition to or in lieu of Purchaser, is deemed to be a purchaser pursuant to Regulation D promulgated under the Act, or otherwise, does hereby make and join in the making of all the covenants, representations and warranties made by Purchaser.

7. Acceptance . Execution and delivery of this Subscription Agreement and tender of the payment referenced in Section 1 above shall constitute Purchaser's irrevocable offer to purchase the Shares indicated, which offer may be accepted or rejected by the Company in its sole discretion for any cause or for no cause. Acceptance of this offer by the Company shall be indicated by the execution hereof by an authorized officer of the Company.

8. Binding Agreement . Purchaser agrees that Purchaser may not cancel, terminate or revoke this Subscription Agreement or any agreement Purchaser makes hereunder, and that this Subscription Agreement shall survive upon the death or disability of Purchaser and shall be binding upon and inure to the benefit of the heirs, successors, assigns, executors, administrators, guardians, conservators, or personal representatives of Purchaser.

9. Incorporation by Reference . The statement of the number of Shares subscribed and related information set forth on the signature page are incorporated as integral terms of this Subscription Agreement.

10. Notices . Notices and other communications under this Subscription Agreement shall be in writing and shall be deemed delivered when received or, if by U.S. mail, when deposited in a regularly maintained receptacle, by Certified First Class Mail, postage prepaid, addressed:

(a) if to Purchaser, at the address shown on the signature page hereof unless the Purchaser has advised the Company, in writing, of a different address as to which notices shall be sent under this Subscription Agreement; and

(b) if to the Company, at the address first above stated, to the attention of the CEO or to such other address or to the attention of other such officer, as the Company shall have furnished to Purchaser.

11. Legal Counsel . Purchaser has had the opportunity to consider the terms of this Subscription Agreement with Purchaser's legal counsel and has either obtained the advice of legal counsel in connection with Purchaser's execution hereof or does hereby expressly waive its right to seek such legal counsel in connection with this transaction.

12. Miscellaneous . This Subscription Agreement and the documents and agreements referenced therein embody the entire agreement and understanding between the Company and the other parties hereto and supersede all prior agreements and understandings relating to the subject matter hereof. This Subscription Agreement does not entitle the undersigned to any rights as a holder of Shares or as a shareholder of the Company with respect to the Shares purchasable hereunder for which payment hereunder has not been received and accepted by the Company. It is the intent of the parties hereto that all questions with respect to the construction and interpretation of this Subscription Agreement and the rights and liabilities of the parties hereto shall be determined in accordance with the laws of the State of Arizona, without regard to principles of conflicts of laws thereof that would call for the application of the substantive law of any jurisdiction other than the State of Arizona. Each of the parties hereto irrevocably and unconditionally agrees (i) to be subject to the jurisdiction of the courts of the State of Arizona, (ii) that service of process may be made on such party by prepaid certified mail with a validated proof of mailing receipt constituting evidence of valid service, and (iii) that service made pursuant to clause (ii) above shall have the same legal force and effect as if serviced upon such party personally within the State of Arizona. The headings in this Subscription Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. This Subscription Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

13. Subscription Payment . All subscription payments should be made payable to "Iveda Corporation." Your funds will be immediately available to the Company.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, Purchaser has executed this Subscription Agreement on the date set forth on the signature page.

Purchaser desires to take title in the Shares as follows (check one):

Individual (one signature required on page 7);

(b)

Husband and Wife as community property (one signature is required on page 7 if interest is held in one name, i.e., managing spouse; two signatures are required on page 6 if interest is held in both names);

(c)

Joint Tenants with rights of survivorship

(both parties must sign on page 7);

(d)

Tenants in Common (both parties must sign on page 7);

Trust (trustee(s) must sign on page 8);

(f)

Partnership or Limited Liability Company (general partner(s), manager(s), or authorized member(s) must sign on page 9);

(g)

Corporation (authorized officer must sign on page 11);

(h)

Employee Benefit Plan (authorized officer must sign on page 12);

(i)

Individual Retirement Account (authorized party must sign on page 12);

(j)

Keogh Plan (authorized party must sign on page 12);

(k)

Other Tax-Exempt Entities (authorized parties must sign on page 12).

The exact name(s) under which title to the Shares is to be taken and as it is to appear on the certificate representing the Shares as follows:

William M. Walsh and Patricia Walsh

Please print

SUBSCRIPTION AGREEMENT

SIGNATURE PAGE

FOR INDIVIDUAL PURCHASERS,

JOINT TENANTS, AND TENANTS IN COMMON

Number of Shares Purchased:			700,000

Total Dollar Amount of Shares Subscribed:			$700,000.00
Investor #1			Investor #2

/s/ William M. Walsh			/s/ Patricia Walsh
Signature			Signature

Social Security Number			Social Security Number

William M. Walsh			Patricia Walsh
Print or Type Name			Print or Type Name

Residence Address			Residence Address

ACKNOWLEDGMENT FORM

STATE OF ________________________)

)ss.

COUNTY OF )

On the ____ day of __________, ____, personally appeared before me, __________________ ________________________ and _____________________, the signer(s) of the above instrument, who duly acknowledged to me that he/she/they executed the same.

SEAL
	Notary Public in and for Said County and State

Subscription accepted:

Iveda Corporation

By:	/s/ DAVID LY
	David Ly, CEO

LINE OF CREDIT PROMISSORY NOTE

LINE OF CREDIT $350,000

Date: September 15, 2010

FOR VALUE RECEIVED, Iveda Solutions , ("Borrower") promises to pay to the order of Gregory Omi ("Lender"), the principal sum of up to Three Hundred Fifty Thousand Dollars ($350,000), or so much thereof as may be disbursed to, or for the benefit of the Borrower by Lender. It is the intent of the Borrower and Lender hereunder to create a line of credit agreement between Borrower and Lender whereby Borrower may borrow up to $350,000 from Lender. The Borrower agrees that available line of credit is for the sole purpose of purchasing equipment, software, and other infrastructure-related items to fulfill commitment to SAT Mexico (“Customer’).

SECURITY: This Note shall be secured by receivables from the Customer.

INTEREST & PRINCIPAL: The unpaid principal of this line of credit shall bear simple interest at the rate of 1.5 % per month or 18% per annum. Interest shall be calculated based on the principal balance as may be adjusted from time to time to reflect additional advances made hereunder. Interest on the unpaid balance of this Note shall accrue monthly but shall not be due and payable until such time as when the principal balance of this Note becomes due and payable, predicated by payment from Customer, but no later than six months after each disbursement. There shall be no penalty for early repayment of all or any part of the principal.

DEFAULT: The Borrower shall be in default of this Note on the occurrence of any of the following events: (i) the Borrower shall fail to meet its obligation to make the required principal or interest payments hereunder. (ii) the Borrower shall be dissolved or liquidated; (iii) the Borrower shall make an assignment for the benefit of creditors or shall be unable to, or shall admit in writing their inability to pay their debts as they become due; (iv) the Borrower shall commence any case, proceeding, or other action under any existing or future law of any jurisdiction relating to bankruptcy, insolvency, reorganization or relief of debtors, or any such action shall be commenced against the undersigned; (v) the Borrower shall suffer a receiver to be appointed for it or for any of its property or shall suffer a garnishment, attachment, levy or execution.

REMEDIES: Upon default of this Note, Lender may declare the entire amount due and owing hereunder to be immediately due and payable. Lender may also use all remedies in law and in equity to enforce and collect the amount owed under this Note. This Note shall be governed by the laws of Arizona, USA.

Borrower hereby waives demand, presentment, notice of dishonor, diligence in collecting, grace and notice of protest.

BORROWER:		LENDER:

David Ly		Gregory Omi

AGREEMENT FOR SERVICE

THIS AGREEMENT FOR SERVICE (this "Agreement") dated this _20th___ of _October________, 2010

BETWEEN

__David Ly____________, for the benefit of Iveda Solutions, Inc.

(OTC:IVDA)

(the "Customer")

OF THE FIRST PART

- AND -

RKH Capital Group (RKH CAPITAL) of 3411 Preston Road, #C13-226 Frisco, TX 75034

(the "Service Provider")

OF THE SECOND PART

BACKGROUND:

The Customer is of the opinion that the Service Provider has the necessary qualifications, experience and abilities to provide services to the Customer.

The Service Provider is agreeable to providing such services to the Customer on the terms and conditions set out in this Agreement.

IN CONSIDERATION OF the matters described above and of the mutual benefits and obligations set forth in this Agreement, the receipt and sufficiency of which consideration is hereby acknowledged, the parties to this Agreement agree as follows:

Services Provided

The Customer hereby agrees to engage the Service Provider to provide the Customer with services (the "Services") consisting of the following activities:

Writing a one-time company Advertisement (“the AD”) to be hosted online as a landing page, describing the Customer’s business as its self-defined.

Creating a email (“the Email”) to create awareness and understanding of the Customer’s business. The Email will direct interested readers to the Service Provider’s and/or Company's web site, where a copy of the AD can be viewed or downloaded

Once the Customer has approved both the content of the AD and the Email, the Service Provider will make the AD available on its website and will embark on an email campaign, sending the Email to its opt in email list. The email campaign shall be conducted for a period of 6 months and will be targeted to addresses within the United States of America. Service Provider also agrees to drive traffic to the Company's web site through the use of Banner Advertising and Pay Per Click (PPC) advertising.

The Service Provider hereby agrees to provide such Services to the Customer.

Initials: _________

Assisting on the creating or updating of Customer's Web Page to include a landing section for interested readers.

Social Awareness Campaign using popular social networking sites including Facebook, MySpace, Twitter, etc.

Monitor internet blogs and forums to help eradicate negative comments and misinformation about Customer

Term of Agreement

The term of this Agreement will begin on the date of this Agreement (or on an otherwise mutually-agreed commencement date) and will remain in full force and effect for ONE month from that date, or at the completion of the maximum number of mailings as stipulated in this agreement, whichever is the sooner.

Agreement Date: ___October 20, 2010___________

Requested Commencement Date: ____October 20, 2010_________

Performance

The parties agree to do everything necessary to ensure that the terms of this Agreement take effect. This will include any actions required as a pre-requisite by the Customer. (For example, possible changes required in the Customer’s processes, procedures, web site, etc., to re-direct investor communications to the Service Provider; spending time with the Service Provider to provide information needed to produce the initial “Customer AD”; and the like.)

Compensation

For the services rendered by the Service Provider as required by this Agreement, the Customer will pay to the Service Provider compensation as follows:

A total payment of US$36,358 (Thirty-six Thousand Three Hundred Fifty Eight US dollars) in cash and 318,750 shares of restricted stock.

This compensation will be payable at the commencement of the agreement per the following Schedule of Payment. Payment may be by wire transfer (preferred), credit card, cashier's check or company check. No services will be provided until the payment amount has been fully realized and/or the check has cleared. In an effort to expedite the process Stock Transfer should be made by way of Deposit/Withdrawal at Custodian (DWAC)

Schedule of Payment

Month 1

$10,157 Cash, 68,750 shares of Restricted Stock

Month 2

$8,657 Cash, 50,000 shares of Restricted Stock

Initials: _________

Month 3

$8,657 Cash, 50,000 shares of Restricted Stock

Month 4

$4,067 Cash, 50,000 shares of Restricted Stock

Month 5

$2,410 Cash, 50,000 shares of Restricted Stock

Month 6

$2,410 Cash, 50,000 shares of Restricted Stock

$10,157 in Cash (first payment) due at the signing of this agreement. The remaining payments will be due on the 15th of each following month until completion. Sixty Eight Thousand Seven Hundred Fifty Shares (68,750) in Restricted stock to be paid upon commencement of this agreement the remaining stock certificates should be issued on the 15th of each following month. Should the cumulative value of the shares paid in Stock have a value less than $50,000, the Customer agrees to pay additional restricted shares to remedy the shortfall.

Additional Compensation

The Service Provider understands that the Service Provider's compensation as provided in this Agreement will constitute the full and exclusive monetary consideration and compensation for all services performed by the Service Provider and for the performance of all the Service Provider's promises and obligations under this Agreement.

Provision of Extras

The Customer agrees to provide, for the use of the Service Provider in providing the Services, the following extras: Appropriate allotment of time, and any and all accurate and timely information that will be necessary for Service Provider to carry out its obligations under the terms of this agreement.

Reimbursement of Expenses

The Service Provider’s expenses for providing the services described in this agreement are included in the compensation amount. Any services to be provided by the Service Provider to the Customer that are outside of the scope of this agreement will be subject to a separate agreement.

Performance Penalties

10.

No performance penalties are associated with this agreement. It is agreed and understood by both parties that, whilst the objective of the Customer may be to generate awareness and understanding of its company, the Service Provider makes no guarantees of generating such awareness and shall be held completely free from any liability in this regard.

11.

It is agreed and understood that the Service Provider makes no representations on behalf of the Customer. The content, claims and liabilities connected with the AD and the Email are the sole responsibility of the Customer.

Initials: _________

Confidentiality

12.

The Service Provider agrees that they will not disclose, divulge, reveal, report or use, for any purpose, any confidential information with respect to the business of the Customer, which the Service Provider has obtained, except as may be necessary or desirable to further the business interests of the Customer. The Customer agrees that they will not disclose, divulge, reveal, report or use, for any purpose, any confidential information with respect to the business of the Service Provider including this service agreement, which the Customer has obtained, except as may be necessary or desirable to further the business interests of the Service Provider or as may be necessary in order for Customer to comply with applicable securities laws. This obligation will survive 1 year upon termination of this Agreement.

13.

Ownership of Materials

14.

All materials developed, produced (or in the process of being so) by the Service Provider under this Agreement, will be the property of the Customer. The use of the mentioned materials by the Customer will not be restricted in any manner.

15.

The Service Provider may retain use of the said materials and will not be responsible for damages resulting from their use for work other than services contracted for in this Agreement.

Return of Property

16.

Upon the expiry or termination of this Agreement, at the request of the Customer, the Service Provider will return to the Customer any property, documentation, records, or confidential information which is the property of the Customer. Otherwise, after one month from the termination of this agreement, said property, documentation, records, or confidential information will be disposed of by the Service Provider in a manner deemed appropriate by the Service Provider.

Assignment

17.

The Service Provider will not voluntarily or by operation of law assign or otherwise transfer its obligations under this Agreement without the prior written consent of the Customer.

Capacity / Independent Contractor

18.

It is expressly agreed that the Service Provider is acting as an independent contractor and not as an employee in providing the Services under this Agreement. The Service Provider and the Customer acknowledge that this Agreement does not create a partnership or joint venture between them, and is exclusively a contract for service.

Modification of Agreement

19.

Any amendment or modification of this Agreement or additional obligation assumed by either party in connection with this Agreement will only be binding if evidenced in writing signed by each party or an authorized representative of each party.

Notice

20.

All notices, requests, demands or other communications required or permitted by the terms of this Agreement will be given in writing and delivered to the parties of this Agreement as follows:

Initials: _________

__David Ly________, FBO, Iveda Solutions, Inc. (IVDA)

__________________________________

Attn: ___Steve Wollach______________

Phone: ___480 307-8700_____________

RKH Capital Group (RKH CAPITAL)

3411 Preston Rd #C13-226. Frisco, TX 75034

Fax Number: 214 755 4207

Email: cjensen@rkhcapital.com

or to such other address as to which any Party may from time to time notify the other in writing.

Costs and Legal Expenses

21.

In the event that legal action is brought to enforce or interpret any term of this Agreement, the prevailing party will be entitled to recover, in addition to any other damages or award, all reasonable legal costs and fees associated with the action, subject to negotiations via the 3 rd party arbitration process.

Time of the Essence

22.

Time is of the essence in this Agreement. No extension or variation of this Agreement will operate as a waiver of this provision.

Entire Agreement

23.

It is agreed that there is no representation, warranty, collateral agreement or condition affecting this Agreement except as expressly provided in this Agreement.

Limitation of Liability

24.

It is understood and agreed that the Service Provider will have no liability to the Customer or any other party for any loss or damage (whether direct, indirect, or consequential) which may arise from the provision of the Services.

Indemnification

25.

The Service Provider will indemnify and hold the Customer harmless from any claims against the Customer by any other party, arising directly or indirectly out of the provision of the Services by the Service Provider.

Inurnment

26.

This Agreement will inure to the benefit of and be binding on the parties and their respective heirs, executors, administrators, successors and permitted assigns.

Currency

27.

Except as otherwise provided in this Agreement, all monetary amounts referred to in this Agreement are in United States dollars.

Titles/Headings

28.

Headings are inserted for the convenience of the parties only and are not to be considered when interpreting this Agreement.

Initials: _________

Gender

29.

Words in the singular mean and include the plural and vice versa. Words in the masculine mean and include the feminine and vice versa.

Governing Law

30.

It is the intention of the parties to this Agreement that this Agreement and the performance under this Agreement, and all suits and special proceedings under this Agreement, be construed in accordance with and governed, to the exclusion of the law of any other forum, by the laws of the State of Texas, without regard to the jurisdiction in which any action or special proceeding may be instituted.

Dispute Resolution

31.

In the event a dispute arises out of or in connection with this Agreement the parties will attempt to resolve the dispute through friendly consultation.

32.

If the dispute is not resolved within a reasonable period then any or all outstanding issues may be submitted to mediation in accordance with any statutory rules of mediation. If mediation is not successful in resolving the entire dispute or is unavailable, any outstanding issues will be submitted to final and binding arbitration in accordance with the laws of the State of Texas. The arbitrator's award will be final, and judgment may be entered upon it by any court having jurisdiction within the State of Texas.

Severability

33.

In the event that any of the provisions of this Agreement are held to be invalid or unenforceable in whole or in part, all other provisions will nevertheless continue to be valid and enforceable with the invalid or unenforceable parts severed from the remainder of this Agreement.

Waiver

34.

The waiver by either party of a breach, default, delay or omission of any of the provisions of this Agreement by the other party will not be construed as a waiver of any subsequent breach of the same or other provisions.

IN WITNESS WHEREOF the parties have duly executed this Service Agreement this

	RKH Capital Group (RKH CAPITAL)

	Name:	/s/ CASEY JENSEN
	(Signed / Corp seal)

	Customer: IVEDA SOLUTIONS

	Title: President & CEO

	Name:	/s/DAVID LY
	(Signed / Corp seal)
	Date: October 20, 2010

Initials: _________

CONSULTING AGREEMENT

This Consulting Agreement (“the agreement “), effective as of Monday, October 25, 2010 which is entered into and by and between Iveda Corp , a Nevada Corporation (herein referred to as the company) and A.S. Austin company a (“herein referred to as the consultant ”)

RECITALS

WHEREAS, company is a publicly- held corporation with its stock trading on the OTC Bulletin Board Markets under the symbol: IVDA and

WHEREAS , Company desires to engage the services of consultant to represent the company in the area of investor’s communications and public relations with existing shareholders, brokers, dealers, and other investment professionals as to the company’s current and proposed activities, and to consult with management concerning such Company activities .

NOW THEREFORE, In Consideration of the promises and the mutual covenant and agreements hereinafter set forth, the parties hereto covenant and agree as follows:

Term f Consultancy , Company hereby agrees to retain the consultant to act in a consulting capacity to the company and the consultant hereby agrees has been proving services to the company commencing on Monday, October 25, 2010.

Duties of Consultant , The consultant agrees that it will generally provide the following services through its officers and employees during the term specified in section 1:

consult and assist the company in developing and implementing appropriate plans and means for presenting the company and its business plans, strategy and personal to the financial community, and creating the foundation for subsequent financial public relations efforts:

Introduce the company to the financial community.

With the cooperation of the company, maintain an awareness during the term of this Agreement of the company’s plans, strategy and personal, as they may evolve during such a period, and consult and assist the company in communicating appropriate information regarding such plans, strategy and personnel to the financial community;

Assist and consult the company with respect to its (i) relations with stockholders (ii) relations with brokers, dealers, analysts and other investment professional, and (iii) financial public generally;

Perform the functions generally assigned to stockholder relations and public relations departments in major corporations, including responding to telephone and written inquiries (which may be referred to the consultant by the company); assisting in the preparation of press releases for the company with the company’s involvement and approval of all press releases, reports and communications with or to shareholders, the investment community and the general public; consulting with respect to the timing, form, distribution and other matters related to such releases, reports and communications; and at the company’s request and subject to the company’s securing its own rights to the use of its names, marks, and logos, consulting with respect to corporate symbols, logos, names, the presentation of such symbols, logos and other matters relating to corporate image.

Upon the company’s direction and approval, disseminate information regarding the company to shareholders, brokers, dealers, and other investment community professional and the general investing public.

Upon the company’s approval conduct meetings, in person or by the telephone, with , brokers, dealers, analyst and other investment professionals to communicate with them regarding the company’s plans, goals and activities the company in preparing for press conferences and other forums involving the media, investment professionals and the general investment public.

At the company’s request , review business plans, strategies, mission statements budgets, proposed transactions and other plans for the purpose of advising the company of the public relations implications thereof; and

Otherwise perform as the company’s consultant for public relations with the financial professionals.

Allocation of Time and Energies . The consultant herby promises to perform and discharge faithfully the responsibilities which may be assigned to the consultant from time to time by the officers and dully authorized representatives of the company in connection with the conduct of its financial and public relations and communication activities, so long as such activities are in compliance with the applicable securities laws and regulations. Consultant and staff shall diligently and thoroughly provide the consulting services required hereunder. Although no specific hours-per day requirement will be required, consultant and the company agree that consultant will perform the duties set forth herein above in a diligent and professional manner. The parties acknowledge and agree that a disproportionately large amount of the effort to be expended and the cost to be incurred by the consultant and the benefits to be received by the company are expected to occur within or shortly after the first two months of the effectiveness of this Agreement. It is explicitly understood that consultant’s performance of it duties hereunder will in no way be measured by the price of the company’s common stock nor the trading volume of the company’s common stock. It is also understood that the company is entering into this agreement with A.S. Austin Company or Andrew S. Austin (ASA ) a Nevada Corporation and not any individual member of ASA and as such , consultant will not be deemed to have breached this Agreement if any member, officer or director of ASA leaves the firm or dies or becomes physically unable to perform any meaningful activities during the term of this agreement, provided the consultant otherwise performs its obligation under this Agreement.

Remuneration . As full and complete compensation for services in this agreement, the company shall compensate ASA as follows:

4.1 For undertaking this engagement and for other good and valuable consideration, the company agrees to Issue to the consultant a “Commencement Bonus” of 150,000 shares of the company’s common stock (Common Stock) to be delivered to consultant within five (5) days business days of 10/25/2010 . This commencement bonus shall be issued to the consultant immediately following the execution of this agreement and shall, when issued and delivered to consultant, be fully paid and non-assessable. The company understands and agrees that consultant has foregone significant opportunities to accept this engagement and that the company derives substantial benefits from the execution of this agreement and the ability to announce its relationship with consultant. The 150,000 shares of common stock issued as a Commencement Bonus, therefore, constitute payments for consultant’s agreement to consult to the company and are nonrefundable, non-apportionable, and non-ratable retainer, such shares of common stock are not a prepayment for future services. If the company decides to terminate this Agreement prior to 02/01/2011 for any reason whatsoever, it is agreed and understood that consultant will not be requested or demanded by the company to return any of the shares of common stock paid to it as Commencement Bonus hereunder. Further if and in the event the company is acquired in whole or in part, during the term of this agreement, it is agreed and understood consultant will not be requested or demanded by the Company to return any of the 150,000 shares of common stock paid to it hereunder. It is further agreed that if at any time during the term of this agreement, the company or substantially all of the assets are merged with or acquired by another entity, or some other change occurs in the legal entity that constitutes the company, the consultant shall retain and will not be requested by the company to return any of the 150,000 shares, (Commencement Bonus)

4.2 The Commencement Bonus shares issued pursuant to this agreement shall be issued in the names of A. S. Austin Company TAX ID# 20-4970311.

4.3 With each transfer of shares of the common stock to be issued pursuant to this agreement ( Collectively, the “shares”), company shall cause to be issued a certificate representing the common stock and a written Opinion of counsel for the company stating that said shares are validly issued fully paid and non assessable and that the issuance and eventual transfer of them to consultant has been dully authorized by the company. Company that all shares issued to consultant pursuant to this agreement shall have been validly issued, fully paid and non-assessable and that the issuance and any transfer of them to consultant shall have been duly authorized by the company’s board of directors.

4.4 Consultant acknowledges that the shares of common stock to be issued pursuant to this Agreement (Collectively the “Shares”) have not been registered under the securities Act of 1933, and accordingly are “restricted securities” within the meaning of Rule 144 of the act. As such, the shares may not be resold or transferred unless the company has received an opinion of counsel reasonably satisfactory to the company that such resale or transfer is exempt from the registration requirements of the Act.

4.5 Grant of Warrants. The company shall grant and deliver to A. S. Austin Company warrants (the Warrants) to purchase up to 100,000 shares of the common stock (the Common Stock). The warrants shall be exercisable at any time or from time to time commencing on The grant date ( The signing of this agreement) at an exercise price of $ 1.00 ( One Dollar) per share, subject to customary stock splits and the like and payable in cash (including check, bank draft or money order). The warrants shall carry a 3 year term from the signing of this agreement.

4.6 In connection with the acquisition of the shares, hereunder, the consultant represents and warrants to the company, to the best of its/his knowledge, as follows.

Consultant acknowledges that the consultant has been afforded the opportunity to ask questions of and receive answers from duly authorized officers and other representatives of the company concerning an investment in the shares and any additional information which the consultant has requested.

Consultant’s investment in restricted securities is reasonable in relation to the consultant’s net worth, which is in excess of ten (10) times the consultant’s cost basis in shares. Consultant has had experience in investments in restricted and publicly traded securities, and consultant has had experience in investments in speculative securities and other investments which involve the risk of loss of investments. Consultant acknowledges that an investment in the shares is speculative and involves the risk of loss. Consultant has the request knowledge to assess the relative merits and risk of this investment without the necessity of relying upon other advisors, and consultant can afford the risk of loss of his entire investment in the shares. Consultant is (i) an accredited investor as that term is defined in Regulation D promulgated under the Securities Act of 1933, and (ii) a purchaser described in section 25102(f) (2) of the California Corporate Securities Law of 1968, as amended.

Consultant is acquiring the shares for the consultants own account for long –term investment and not with a view toward resale or distribution thereof except in accordance with applicable laws.

4.7 Additionally, for a period of two years after the effective date hereof, should the company make any public offering of its securities pursuant to an effective registration statement under the securities act of 1933 or 1934 as amended? Consultant shall be entitled, and the company agrees to include in such registration any or all of the common stock given to consultant by the company as consideration hereunder (commonly referred to as “Piggyback Registration Rights”). Such piggyback registration rights include, at the consultants option registration on Form S-1. All such registration rights shall be subject to customary market stand – off and underwriter cutback provisions.

Non-Assignably of services ; Consultant’s services under this contract are offered to company only and may not be assigned by company to any entity with which company merges or which acquires the company or substantially all or its assets. In the event of such merger or acquisition, all compensation to consultant herein under the schedules set forth herein remain due and payable, and any compensation received by the consultant may be retained in the entirely by consultant, all without any reduction or pro-rating and shall be considered and remain fully paid and non-assessable.

Not withstanding the non-assignability of consultants services, company shall assure that in the event of any merger, acquisition or similar change in form of entity, that its successor entity shall agree to complete all obligation to consultant, including the provision and transfer of all compensation herein, and the perseveration of the value thereof consistent with the rights granted to consultant by the company herein, and to shareholders.

6. Expenses: Consultant agrees to pay for all its expenses (phone, mailing, labor, etc.) other than extraordinary items (travel required bi/or specifically requested by the company, luncheons or Dinners to large groups of investments professionals, mass faxing to a sizable percentage of the company’s constituents, investor conference calls, print advertisements in publications, etc.) approved by the company prior to its incurring an obligation for reimbursement.

7. Indemnification The Company warrants and represents that all oral communications written documents or material furnished to consultant by the company with respect to financial affairs operations profitability and strategic planning of the company are accurate and consultant may rely upon the accuracy thereof without independent investigation. The company will protect, indemnify and hold harmless consultant against any claims or litigation including any damages, liability, cost, and reasonable attorneys fees as incurred with respect thereto resulting from consultants communication or dissemination of any said information, documents or materials excluding any such claims or litigation resulting from consultants communication or dissemination of information not provided or authorized by the company.

8. Representations Consultant represents that it is not required to maintain any licenses and registrations under federal or any state regulations necessary to perform the services set forth herein. Consultant acknowledges that to the best of its knowledge the performance of services set forth under this agreement will not violate any rule or provision of any regulatory agency having jurisdiction over consultant. Consultant acknowledges that to the best of its knowledge, consultant and its officers and directors are not subject to any investigation, claim, decree or judgment involving and violation of the SEC or securities laws. Consultant further acknowledges that it is not a security Broker Dealer or a registered investment advisor. Company acknowledges that to the best of its knowledge that it has not violated any rule or provision of any regulatory agency having jurisdiction over the company. Company acknowledges that to the best of its knowledge company is not the subject of any investigation, claim, degree or judgment involving any violation of the SEC or securities laws.

9. Legal Representations The Company acknowledges that it has been represented by independent legal counsel in the preparation of the agreement. Consultant represents that it has consulted with independent legal counsel and /or tax, financial and business advisors to the extent the consultant deemed necessary.

10. Status as Independent Contractor Consultant’s engagement pursuant to this agreement shall be as independent contractor, and not as an employee, officer or other agent of the company. Neither party to this agreement shall represent or hold itself out to be the employer of the other. Consultant further acknowledges the consideration provided hereinabove is a gross amount of consideration and that the company will not withhold from such consideration any amounts as to income taxes, social security payments or any other payroll taxes. All such income taxes and other such payment shall be made or provided for by Consultant and the Company shall have no responsibility or duties regarding such matters. Neither the company or the Consultant possess the authority to bind each other in any agreements without the express written consent of the entity to be bound.

11. Attorney’s Fee If any legal action or any arbitration or other proceeding is brought for the enforcement of interpretation of this Agreement or because of an alleged dispute, breach, default or misrepresentation in connection with or related to this agreement the successful or prevailing party shall be entitled to recover reasonable attorneys fees and other cost in connection with that action or proceeding in addition to any other relief to which it or they may be entitled.

12. Waiver : The waiver by either of a breach or any provision of this Agreement by the other party shall not operate or be construed as a waiver of any subsequent breach by such other party.

13. Notices: All notices, requests and other communications hereunder shall be deemed to be duly given if sent by U.S. postage prepaid, addressed to the other party at the address set forth herein below.

Company: Iveda Corp

Contact Person: Steven G. Wollach, CFO

Address: 1201 South Alma School Road

City: Mesa

State: AZ

Zip: 85210

Consultant:

A.S. Austin Company/ Andrew S. Austin

1265 Avocado Blvd# 104-402

El Cajon, Ca 92020

It is understood that either party may change the address to which notices for it shall be addressed by providing notice of such a change to the other party in the manner set forth in this paragraph.

14. Choice of Jurisdiction and Venue: This agreement shall be governed by, construed and enforced in accordance with the laws of California. The parties agree that San Diego County, Ca will be the venue of any dispute and will have jurisdiction over all parties.

15. Arbitration: Any controversy or claim arising out of or relating to this agreement, or the alleged breach thereof or relating to consultants activities or remuneration under this agreement shall be binding arbitration in California. In accordance with the applicable rules of the American Arbitration Association, and judgment on the award rendered by the arbitrator(s) shall be binding on the parties and may be entered in any court having jurisdiction as provided by paragraph 14 herein. The provisions of Title 9 of part 3 of the California Code of Civil procedure, including section 1283.05 and successor statutes, permitting expanded discovery proceedings shall be applicable to all disputes that are arbitrated under this paragraph.

16. Complete Agreement : This Agreement contains the entire agreement of the parties relating to the subject matter hereof. This Agreement and its terms may not be changed orally but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought.

AGREED TO:

“COMPANY “	Iveda Corp

Date: 10/25/2010	By	/s/DAVID LY
		President & CEO

“CONSULTANT”	A.S. AUSTIN COMPANY

Date: 10/25/2010	By :	/s/ANDREW S. AUSTIN
	Andrew S. Austin, President

Operating Level Agreement (OLA) for

Iveda Solutions, Digital Ally and Tecnología y
Diagnósticos del Norte S.A. de C.V. (TDN) in
Support of Servicio de Administracion Tributaria

( SAT)

Version 1.0

Contents

General Overview		2
Terms and Conditions		3
Supported Services and Replacement Units		4
Party Responsibilities		5
Service Measures and Reporting		7
Signatures of Approval		7
Version History		8
Appendix A: Incidents and Escalations		9
Appendix B: Procedure Flowchart		10
Appendix C: Service Enhancements and Change Management		12

Rev. 11/11/2010

Service Life Cycle Management

General Overview

This Operating Level Agreement (OLA) documents the support services provided by Iveda Solutions, Digital Ally and Tecnología y Diagnósticos del Norte S.A. de C.V. (TDN) for support of Servicio de Administracion Tributaria (SAT) . The ultimate objective of this Agreement is to document internal support-group services and processes to ensure high-quality and timely delivery of Video Hosting, Video Archive and Remote Data Retrieval Services to customers in the SAT community. This OLA directly addresses the Video Hosting, Video Archive, In-Car Video Recordings, Software for Computer Viewing, and Remote Data Retrieval Services structure required to support Customer SAT requirements. For details on Customer requirements, see related Service Level Agreement (SLA).

Iveda Solutions, Digital Ally and Tecnología y Diagnósticos del Norte S.A. de C.V. (TDN) will provide SAT a single point of reporting problems with products and services covered in this OLA, using an online trouble ticketing system.

Parties

The parties affected by this OLA are:

Iveda Solutions

Digital Ally, Inc.

Tecnología y Diagnósticos del Norte S.A. de C.V. (TDN)

Servicio de Administración Tributaria (SAT )

Environment

The support environment consists of the mobile video device located on a vehicle owned and operated by SAT and the video hosting and archiving environment owned and operated by Iveda Solutions. The monitoring stations owned and operated by SAT are not covered in this agreement.

The video device consists of a DVM unit containing an internal backward facing camera and an external forward facing camera, In-Car Video Recordings, supplied and supported by Digital Ally and the video convertor and mobile router (SVC-1002) and Software for Computer Viewing, supplied and supported by Iveda Solutions.

The video hosting and archiving infrastructure consists of video servers and video storage devices.

Rev. 11/11/2010

Service Life Cycle Management

Contact Information

Iveda Solutions	Digital Ally	TDN

Contact	Contact	Contact
Jim Berglund Operations Manager jberglund@ivedasolutions.com 480-307-8723	Marlon Jinks Sales Support Engineer Marlon.jinks@digitalallyinc.com 913-814-7774	Armando Canseco Primary Contact for Device Maintenance armandocanseco@yahoo.com 210-681-6262 011525553514957

Terms and Conditions

Agreement Period

This Agreement is valid from the effective date below and remains in effect throughout the life span of the services supported.

Effective date: September 10, 2010

Agreement Review

A representative of any of the parties (see Parties ) may submit a written request for review of the Agreement to the designated review process owner at any time. The Agreement should be reviewed annually. In the absence of the completion of a review, the current Agreement will remain in effect. The review process owner will incorporate revisions into the Agreement if all parties mutually agree to the proposed changes.

Last review:

Next review: March 10, 2011

Hours of Coverage

The procedures in this Agreement are followed from 8:00 A.M. to 5:00 P.M. Monday through Friday Arizona Time (except on holidays).

Holidays:

New Year’s Day

Memorial Day

Independence Day

Labor Day

Thanksgiving Day

Christmas Day

Rev. 11/11/2010

Service Life Cycle Management

Service Goals

Iveda Solutions, Digital Ally, or TDN will respond via email message to each SAT issue submitted through the online trouble ticketing system within:

30 minutes for issues classified as critical.

Four hours (during business hours) for issues classified as high priority.

Eight hours (during business hours) for issues classified as medium priority.

Eight hours (during business hours) for issues classified as low priority.

Priority	Response time	Resolution Time
Low (4)	8 hours	7 Calendar Days
Medium (3)	8 hours	2 Business Days
High (2)	4 hours	1 Business Day
Critical (1)	30 minutes	ASAP/24 hours maximum
Response times listed are in business hours.

A resolution may not be available at the time SAT contacts Iveda Solutions, Digital Ally, or TDN in which case Iveda Solutions, Digital Ally or TDN will attempt to estimate the “time to resolution.”

All groups involved will mutually determine an issue’s priority classification. See Appendix A for specific escalation response goals.

Sample issues are documented in Appendix A: Incidents .

Mobile Video Units will be installed at a minimum rate of 7 vehicles per week. The maximum (up to 130) installations must be completed within 4 months from September 10, 2010.

Repairs or replacements for malfunctioning video components (care maintenance) in the vehicles must be completed within 48 hours from the time of the request. Completion of repairs or replacements must be completed within 72 hours of the request for vehicles located in foreign locations. All requests requiring a device replacement for resolution will spawn a change request to complete the replacement process. The formal change process allows SAT to schedule the replacement of the device and formalizes the process to update the SAT asset database with the updated serial numbers of the new devices associated with each SAT vehicle.

Supported Services and Replacement Units

Hardware/Services Provided

One DVM unit with internal backward facing camera and external forward facing camera.

A video converter and mobile router (SVC-1002)

24x7 video hosting

Access to 3 months of video archiving

Rev. 11/11/2010

Service Life Cycle Management

Remote Data Retrieval

Video Manager 2 Back Office Software

In-Car Video Recordings

Iveda Solutions agrees to provide technical support to users in SAT experiencing technical problems or questions with:

SVC-1002 units

Access to video hosting

Access to video archives

Remote Data Retrieval

Digital Ally agrees to provide technical support to users in SAT experiencing technical problems or questions with:

DVM units and external camera

In-Car Video Recordings

Video Manager 2 Back Office Software

TDN agrees to install replacements for any malfunctioning devices listed below:

SVC-1002 units

DVM units and external camera

In-Car Video Recordings

Video Manager 2 Back Office Software

Replacement Units

SAT will be charged the full replacement cost for DVM and SVC-1002 units if outside of warranty period or if lost or stolen. No charge for replacement of damaged units inside warranty period. No charge for repairing supported services consisting of video hosting, video archive, In-Car Video recordings, and remote data retrieval.

Party Responsibilities

Iveda Solutions

Iveda Solutions agrees to:

Meet response times associated with the priority assigned to issues.

Generate and share with SAT periodic reports to monitor compliance with service goals (see Service Goals ).

Maintain appropriately trained staff.

Rev. 11/11/2010

Service Life Cycle Management

Schedule maintenance (downtime) between 1:00 A.M. and 4:00 A.M. MST unless circumstances warrant performing maintenance at another time which must be pre-approved by SAT .

Communicate in writing (e-mail) with SAT regarding issues involving change management (see Change Management) .

Digital Ally

Digital Ally agrees to:

Meet response times associated with the priority assigned to issues.

Generate and share with SAT periodic reports to monitor compliance with service goals (see Service Goals ).

Maintain appropriately trained staff.

Communicate in writing (e-mail) with SAT regarding issues involving change management (see Change Management) .

Tecnología y Diagnósticos del Norte S.A. de C.V. (TDN)

TDN agrees to:

Meet response times associated with the installation and replacement schedule agreed to with SAT .

Generate and share with SAT periodic reports to monitor compliance with service goals (see Service Goals ).

Maintain appropriately trained staff.

Schedule installation (downtime) as pre-approved by SAT for installations or as approved by SAT in a formal change request for maintenance (repairs).

Communicate in writing (e-mail) with SAT regarding issues involving change management (see Change Management) .

Be willing and available to provide critical information within 15 minutes of receiving a request for information from Iveda Solutions or Digital Ally seeking to resolve an SAT issue.

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Responsibility Assignment Matrix

Activities / Role

Business

DVM

SVC-1002

Hosting

Access

Retrieval

OS Maintenance

SAT

I,S

R,A

R,A,I

R,A

TDN

R,A

Key:	Business:	Role:
	SAT	R – Responsible
	IS – Iveda Solutions	A – Accountable
	DA – Digital Ally	I – Input Required
	TDN	S – Sign-off Required

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Service Measures and Reporting

On behalf of Iveda Solutions, Digital Ally, and TDN, Jim Berglund will provide SAT with the following reports in the intervals indicated.

Report name	Reporting interval	Delivery method	Responsible party
Service Availability	monthly	email	Iveda Solutions/Digital Ally
Service Delivery	monthly	email	Iveda Solutions/Digital Ally/TDN
Number of customer incidents reported	monthly	email	Iveda Solutions/Digital Ally/TDN
Number of incidents resolved	monthly	email	Iveda Solutions/Digital Ally/TDN
Number of incidents open	monthly	email	Iveda Solutions/Digital Ally/TDN
Time to resolve tickets by severity	monthly	email	Iveda Solutions/Digital Ally/TDN
Accounts created	Daily/monthly	email	Iveda Solutions
Customer Satisfaction	Monthly	email	Iveda Solutions/Digital Ally/TDN

Signatures of Approval

By signing below, all parties agree to the terms and conditions described in this Agreement.

Review Process Owner

Name		Title		Signature		Date
Jim Berglund		Iveda Solutions Operations Manager

Iveda Solutions

Name		Title		Signature		Date
Luz Berg		Iveda Solutions Chief Operating Officer

Digital Ally

Name		Title		Signature		Date
Ken McCoy		Vice President, Sales & Marketing

Tecnología y Diagnósticos del Norte S.A. de C.V.

Name		Title		Signature		Date
Armando Canseco		Primary Contact for Device Maintenance

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Version History

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Appendix A: Incidents and Escalations

Reporting Incidents

SAT first consults the troubleshooting guide and knowledge base within SysAid. If the troubleshooting guide or the knowledgebase do not resolve the issue SAT contacts either their internet service provider or submits an incident ticket to the trouble ticketing system. SAT uses the troubleshooting guide and SysAid training document to select the appropriate device or service for the incident ticket. Iveda Solutions or Digital Ally either solve the issue remotely, or contact TDN with instructions on how to resolve the issue.

Escalation Path

Iveda Solutions

If the problem is not resolved to the satisfaction of the customer

Jim Berglund – Operations Manager to be contacted – 001480-307-8723

jberglund@ivedasolutions.com

Still not resolved

Luz Berg – Chief Operations Officer to be contacted – 001480-307-8700

lberg@ivedasolutions.com

Still not resolved

David Ly – Chief Executive Officer to be contacted – 001480-307-8700

dly@ivedasolutions.com

Digital Ally

If the problem is not resolved to the satisfaction of the customer

Mark Gordon or Marlon Jinks to be contacted – 001913-814-7774

Mark.gordon@digitalallyinc.com ; marlon.jinks@digitalallyinc.com

Still not resolved

Larry Dado or Jeff Oost to be contacted – 001913-814-7774

Larry.dado@digitalallyinc.com ; jeff.oost@digitalallyinc.com

Still not resolved

Darrin McCoy to be contacted – 001913-814-7774

Darrin.mccoy@digitalallyinc.com

Still not resolved

Ken McCoy to be contacted – 001913-814-7774

Ken.mccoy@digitalallyinc.com

Still not resolved

Steve Phillips to be contacted – 00913-814-7774

Steve.phillips@digitalallyinc.com

Still not resolved

Stan Ross to be contacted – 00913-814-7774

Stan.ross@digitalallyinc.com

TDN

If the problem is not resolved to the satisfaction of the customer

Armando Canseco to be contacted – 210-681-6262 (TX) or 011525553514957

armandocanseco@yahoo.com

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Appendix B: Procedure Flowchart

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Appendix C: Service Enhancements and Change Management

Service Enhancements (initiated by SAT )

Services (as opposed to incidents; see Reporting Incidents ) are planned activities that SAT knows will be required at some time in the future. SAT should request services by sending an e-mail message to satsupport@ivedasolutions.com or support@digitalallyinc.com at minimum 14 days in advance.

Iveda Solutions or Digital Ally will respond to requests for service received with appropriate advance notice within 1 business day.

Change Management (initiated by Iveda Solutions or Digital Ally)

Change management refers to any event that alters the existing state of a Customer’s production services, including software, hardware, networks and facilities. Iveda Solutions and Digital Ally seek to minimize disruption of services by using a standard process to communicate and implement changes.

Service Provider Change Management	Business impact	Customer notification and confirmation	Examples
Planned
Standard	Minor or repetitive changes considered part of the normal workflow with no affect on Customer’s business	None.	Password resets

Minor	Small changes that have a documented and proven implementation process with little impact to the Customer’s business.	Service Providers will advise Customer daily. Also in a monthly report. Unconfirmed notification to Customer is acceptable.	New account requests. New installations of video units. Replacement of failed devices in vehicles.

Moderate	Changes that may have a broad business impact.	Service Providers will advise Customer five working days in advance. Customer must confirm notification.	Installing patches on server.

Major	Changes that may have a significant impact to Customer business.	Service Providers will advise Customer ten working days in advance. Customer must confirm notification.	New OS or version upgrade, local upgrade in network infrastructure.

Unplanned
Critical (After-hours)	Changes that must be performed in order to correct a faulty service having some impact on Customer’s business. Impact to business does not warrant immediate correction.	Service Providers will advise Customer as soon as possible after knowing such a change is required. Confirmed notification is preferred.	Hung process on a server – needs to be corrected before next backup is scheduled.

Emergency (Immediate)	Changes that must be performed in order to correct a faulty service having a major impact on Customer’s business. Impact to business requires immediate resolution.	Service Providers will advise Customer after change implementation. Confirmed notification is preferred.	Virus attack on network. Disk drive failure.

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Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO

EXCHANGE ACT RULE 13a-1(a) or RULE 15d-14(a)

(AUTHORIZED BY SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002)

I, David Ly, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Iveda Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 12, 2010

	/s/ David Ly
	David Ly
	Chief Executive Officer
	(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO

EXCHANGE ACT RULE 13a-1(a) or RULE 15d-14(a)

(AUTHORIZED BY SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002)

I, Steven G. Wollach, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Iveda Corporation;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 12, 2010

	/s/ Steven G. Wollach
	Steven G. Wollach
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. § 1350

(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

I, David Ly, Chief Executive Officer (principal executive officer) of Iveda Corporation (the “Registrant”), certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based upon a review of the Quarterly Report on Form 10-Q for the period ended September 30, 2010 of the Registrant (the “Report”):

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Registrant.

Date: November 12, 2010

	/s/ David Ly
	David Ly
	Chief Executive Officer
	(Principal Executive Officer)

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. §1350

(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

I, Steven G. Wollach, Chief Financial Officer (principal financial officer) of Iveda Corporation (the “Registrant”), certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based upon a review of the Quarterly Report on Form 10-Q for the period ended September 30, 2010 of the Registrant (the “Report”):

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Registrant.

Date: November 12, 2010

	/s/ Steven G. Wollach
	Steven G. Wollach
	Chief Financial Officer
	(Principal Financial and Accounting Officer)