Iveda Solutions, Inc. (Form: 10-Q/A, Received: 03/07/2012 06:10:43)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 1 TO FORM 10-Q

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

For the quarterly period ended September 30, 2011

¨ 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 SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

Nevada		20-2222203
(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 ¨

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 x 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 ¨ Accelerated filer ¨ Non-accelerated filer ¨

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 ¨ No x

Class		Outstanding as of September 30, 2011
Common stock, $0.00001 par value		17,009,229

Explanatory Note

This Amendment No. 1 to Form 10-Q for the quarter ended September 30, 2011 includes revised disclosure in Note 1 of Condensed Consolidated Financial Statements and in the Management’s Discussion and Analysis of Financial Condition and Results of Operations.

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION
ITEM 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	3
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	14
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	20
ITEM 4.	CONTROLS AND PROCEDURES	21
PART II - OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	21
ITEM 1A.	RISK FACTORS	22
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	22
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	22
ITEM 4.	[REMOVED AND RESERVED.]
ITEM 5.	OTHER INFORMATION	22
ITEM 6.	EXHIBITS	23
SIGNATURES		25

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

IVEDA SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2011 AND DECEMBER 31, 2010

	September 30, 2011 (Unaudited)			December 31, 2010
ASSETS

CURRENT ASSETS
Cash and Cash Equivalents	$	466,966		$	355,343
Accounts Receivable, net		959,457			361,686
Note Receivable		17,693			-
Advances to Suppliers		16,420			-
Deposits		220,512			-
Inventory		143,037			4,651
Prepaid Expenses and Other Current Assets		85,506			4,532
Total Current Assets		1,909,591			726,212

PROPERTY AND EQUIPMENT
Office Equipment		228,450			212,040
Furniture and Fixtures		56,291			27,805
Software		42,544			47,966
Leased Equipment		252,145			247,792
Leasehold Improvements		36,964			36,964
Total Property and Equipment		616,394			572,567
Less: Accumulated Depreciation		308,140			262,490
Property and Equipment, Net		308,254			310,077

OTHER ASSETS
Deposits		9,015			10,214
Restricted Cash		62,848			-
Trademarks		200,000			-
Other Intangible assets		130,000			-
Less: Accumulated Amortization		(19,167	)		-
Goodwill		1,796,710			-

Total Assets	$	4,397,251		$	1,046,503

	September 30, 2011 (Unaudited)			December 31, 2010
LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts Payable	$	212,148		$	180,352
Accrued Expenses		109,389			77,576
Current Portion of Capital Lease Obligations		11,411			48,395
Due to Related Parties, net of debt discount		28,091			197,000
Bank Loans –Short Term		334,597			-
Income Tax Payable		9,433			-
Notes Payable, net of debt discount		91,107			-
Deferred Tax Liability		47,475			-
Deferred Revenue		87,128			11,618
Total Current Liabilities		930,779			514,941

LONG-TERM LIABILITIES
Capital Lease Obligations, Net of Current Portion		9,946			13,609
Total Liabilities		940,725			528,550

STOCKHOLDERS’ EQUITY
Preferred Stock, $0.00001 par value; 100,000,000 shares authorized; no shares outstanding as of September 30, 2011 and December 31, 2010
Common Stock, $0.00001 par value; 100,000,000 shares authorized; 19,009,229 (includes 2,000,000 shares reserved for issuance) and 13,664,257 shares issued and outstanding, as of September 30, 2011 and December 31, 2010, respectively		190			137
Additional Paid-In Capital		12,492,433			7,212,914
Accumulated Comprehensive Income (Loss)		(50,837	)		-
Accumulated Deficit		(8,985,260	)		(6,695,098	)
Total Stockholders’ Equity		3,456,526			517,953

Total Liabilities and Stockholders’ Equity	$	4,397,251		$	1,046,503

See accompanying Notes to Condensed Consolidated Financial Statements

IVEDA SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

	Three Months			Three Months			Nine Months			Nine Months
	Ended September 30, 2011			Ended September 30, 2010			Ended September 30, 2011			Ended September 30, 2010
	(unaudited)			(unaudited)			(unaudited)			(unaudited)

REVENUE	$	588,339		$	182,416		$	1,447,410		$	488,600

COST OF REVENUE		472,211			115,817			1,110,875			337,425

GROSS PROFIT		116,128			66,599			336,535			151,175

OPERATING EXPENSES		778,287			604,597			2,611,916			1,630,024

LOSS FROM OPERATIONS		(662,159	)		(537,998	)		(2,275,381	)		(1,478,849	)

OTHER INCOME (EXPENSE)
Miscellaneous Income (Expense)		968			-			1,615			-
Interest Income		40			302			525			933
Interest Expense		(1,503	)		(1,760	)		(21,808	)		(13,003	)
Total Other Income (Expense)		(495	)		(1,458	)		(19,668	)		(12,070	)

LOSS BEFORE INCOME TAXES		(662,654	)		(539,456	)		(2,295,049	)		(1,490,919	)

BENEFIT FOR INCOME TAXES		-			-			4,887			-

NET LOSS	$	(662,654	)	$	(539,456	)	$	(2,290,162	)	$	(1,490,919	)

BASIC AND DILUTED LOSS PER SHARE	$	(0.04	)	$	(0.04	)	$	(0.15	)	$	(0.10	)

See accompanying Notes to Condensed Consolidated Financial Statements

IVEDA SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

	Nine Months Ended			Nine Months Ended
	September 30, 2011			September 30, 2010
	(Unaudited)			(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(2,290,162	)	$	(1,490,919	)
Adjustments to Reconcile Net Loss to Net Cash
Used by Operating Activities
Depreciation and Amortization		96,631			57,550
Stock Compensation		704,005			217,160
(Increase) Decrease in Operating Assets:
Accounts Receivable		(55,858	)		(46,508	)
Notes Receivable		(5,342	)		-
Prepaid Expense		(924	)		(18,260	)
Inventory		(24,496	)		(2,041	)
Deposit		6,131			-
Other Current Assets		(22,561	)		-
Accounts Payable		(145,945	)		(286,174	)
Notes Payable		21,672			-
Tax Payable		(219,627	)		-
Other Payable		9,486			-
Deferred Revenue		48,459			1,810
Net cash used in operating activities		(1,878,531	)		(1,566,932	)

CASH FLOWS FROM INVESTING ACTIVITIES
Cash Acquired in Acquisition		740,561			-
Purchase of Property and Equipment		(51,869	)		(91,583	)
Net cash provided by (used) in investing activities		688,692			(91,583	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from (Payments to) Related Parties		176,406			(134,000	)
Payments on Capital Lease Obligations		(45,000	)		(49,449	)
Common Stock Issued, net of Cost of Capital		1,239,750			2,208,577
Net cash provided by financing activities		1,371,156			2,025,128

EFFECT OF EXCHANGE RATE CHANGES ON CASH		(69,694	)		-

NET INCREASE IN CASH AND CASH EQUIVALENTS		111,623			366,613

Cash and Cash Equivalents - Beginning of Period		355,343			17,672

CASH AND CASH EQUIVALENTS - END OF PERIOD	$	466,966		$	384,285

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Taxes Paid	$	224,702		$	-
Debt Converted to Stock	$	-		$	50,000
Interest Paid	$	21,808		$	11,243
Property and Equipment Purchased via Capital Lease	$	4,353		$	5,300
Issuance of Common Stock for Acquisition	$	3,302,000			-

See accompanying Notes to Condensed Consolidated Financial Statements

IVEDA SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

NOTE 1

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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, 2010. 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, 2011, are not necessarily indicative of the results that will be achieved for the full fiscal year ending December 31, 2011 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 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 GAAP, have been condensed or omitted pursuant to such SEC rules and regulations.

The balance sheet at December 31, 2010 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.

Consolidation

Effective April 30, 2011, Iveda Solutions, Inc. (the “Company”) completed its acquisition of Sole Vision Technologies (dba “MegaSys”), a company based in Taiwan. The consolidated financial statements include the accounts of the Company and MegaSys (from May 1, 2011 through September 30, 2011). All intercompany balances and transactions have been eliminated in consolidation. See Note 8.

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 $9 million at September 30, 2011 and has used approximately $1.9 million in cash from operations through the current nine months ended September 30, 2011. As a result, a risk exists regarding 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.

The Company plans to 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.

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

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 two financial institutions, one in the United States and one in Taiwan. At times, amounts on deposit in the United States may be in excess of the FDIC insurance limit.

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 two customers represented approximately 42% (25% and 17%) of total revenues for the nine months ended September 30, 2011, and approximately 77% of total accounts receivable at September 30, 2011.

Intangible Assets and Goodwill

Intangible assets consist of trademarks and other intangible assets associated with the purchase price allocation of MegaSys. Such assets are being amortized over their estimated useful lives ranging from five to ten years. Future amortization of Intangible Assets is as follows:

Trademarks
2011	$	5,000
2012		20,000
2013		20,000
2014		20,000
2015		20,000
Thereafter		106,667

Other Intangibles
2011	$	6,500
2012		26,000
2013		26,000
2014		26,000
2015		26,000
Thereafter		8,667

Goodwill represents the excess of the purchase price of MegaSys over the net assets acquired. Goodwill is tested annually for impairment or more frequently if indicators of impairment exist.

Fair Value of Financial Instruments

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2011. The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, accounts receivable, accounts payable, accrued expenses, 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.

Segment Information

The Company conducts operations in various geographic regions outside the United States. The operations and the customer base conducted in the foreign countries are similar to the United States operations. The net revenues and net assets (liabilities) for other significant geographic regions outside the United States are as follows:

	Net Revenues		Net Assets

United States	$	475,850	$	2,505,296
Asia	$	682,106	$	951,230
Mexico	$	289,454		-

Furthermore, due to operations in various geographic locations, the Company is susceptible to changes in national, regional and local economic conditions, demographic trends, consumer confidence in the economy and discretionary spending priorities that may have a material adverse effect on the Company’s future operations and results.

The Company is required to collect certain taxes and fees from customers on behalf of government agencies and remit these back to the applicable governmental agencies on a periodic basis. These taxes and fees are legal assessments to the customer, for which the Company has a legal obligation to act as a collection agent. Because the Company does not retain these taxes and fees, the Company does not include such amounts in revenue. The Company records a liability when the amounts are collected and relieves the liability when payments are made to the applicable governmental agencies.

The Company operates as two reportable business segments in defined in ASC 280, "Segment Reporting." Each company has a chief operating decision maker and management personnel who review their company’s performance as it relates to revenue, operating profit and operating expenses.

	Three Months			Three Months
	Ending			Ending
Segment Reporting	Sept. 30, 2011			Sept. 30, 2011
		Iveda Solutions			Megasys
Revenue	$	287,296		$	301,043
Cost of Revenue		166,767			305,444
Gross Profit (Loss)		120,529			(4,401	)
Operating Expenses		644,360			134,422

Net Loss	$	(523,831	)	$	(138,823	)

Reclassification

Certain amounts in 2010 may have been reclassified to conform to the 2011 presentation.

NOTE 2 BANK LOANS—SHORT TERM

The Company has short term loans with two banks in Asia. The loans bear interest at 3.2% and 3.6% and are due in October and December 2011. The company has chosen not to use its excess cash to pay off these loans early since the interest rate is relatively low and they are due in the near future.

NOTE 3 NOTES PAYABLE

Promissory note payable, due in September 2012,	$	45,000
Interest payable in 45,000 warrants
Non-Interest-Bearing notes, maturity dates ranging from October 2011 to August 2012	$	63,016
Unamortized debt discount	$	(16,909	)
Notes payable, net of debt discount	$	91,107

On September 26, 2011, the Company entered into a $45,000 promissory note agreement. Interest on the note will be payable in 45,000 warrants at a $1.10 exercise price, exercisable within three years of issuance. On October 24, 2011, the Board of Directors approved the issuance of warrants. Accordingly, the Company recognized a discount of $16,909 on the principal value of the $45,000 note payable and is amortizing the discount over the twelve month life of the note.

NOTE 4 EQUITY

Preferred Stock

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

Common Stock

During the nine months ended September 30, 2011, the Company issued a total of 3,344,972 shares of Common Stock, 1,394,972 in private placement transactions and 1,950,000 related to the acquisition of MegaSys (including 250,000 issued to a consultant in connection with the transaction).

During the nine-month period ended September 30, 2011, the Company issued and had outstanding additional warrants to purchase 45,000 shares of Common Stock at $1.10. These warrants were issued as a cost of capital for shares sold during this period.

NOTE 5 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 an expense on the straight-line basis over the options’ vesting periods.

Stock option transactions during the nine months ended September 30, 2011 were as follows:

	Nine months ended Sept. 30, 2011
				Weighted -
				Average
				Exercise
	Shares			Price
Outstanding at Beginning of Year		1,959,979		$	0.73
Granted		1,733,200			0.98
Exercised		-			-
Forfeited or Canceled		(156,667	)		1.02
Outstanding at End of Period		3,536,512			0.80

Options Exercisable at Period-End		2,914,862			0.77

Weighted-Average Fair Value of Options Granted During the Period	$	0.49

Information with respect to stock options outstanding and exercisable as of September 30, 2011, 2011 is as follows:

Options Outstanding

Options Exercisable

Number

Weighted -

Number

Outstanding

Average

Weighted -

Exercisable

Weighted -

Range of

Remaining

Average

Exercise

Sept. 30,

Contractual

Exercise

Sept. 30,

Exercise

Prices

2011

Life

Price

2011

Price

$0.10 - $1.30

3,536,512

8.9 Years

0.80

2,914,862

0.77

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.

	2011
Expected Life		4.8 yr
Dividend Yield		0	%
Expected Volatility		40.00	%
Risk-Free Interest Rate		2.06	%

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 6 RELATED PARTY TRANSACTIONS

The Company has provided surveillance services since 2005 at a pre-established rate 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, 2011 was $50,704, and there was a trade accounts receivable balance of $5,670 at September 30, 2011.

On September 15, 2010, the Company entered into a Line of Credit Promissory Note with one of its Board of Directors that provides for borrowings of up to $350,000 to be used for the sole purpose of purchasing equipment, software and other infrastructure-related items for one of its contracts. The advances bear interest at a rate of 18% annually and are secured by receivables from the contract. The note balance of $197,000 plus accrued interest was repaid in full in April 2011. As of September 30, 2011, there was zero balance under the line of credit.

On September 26, 2011, the Company entered into a $45,000 promissory note agreement with one of its shareholders. Interest on the note will be payable in 45,000 warrants at a $1.10 exercise price, exercisable within three years of issuance. On October 24, 2011, the Board of Directors approved the issuance of the warrants. Accordingly, the Company recognized a discount of $16,909 on the principal value of the $45,000 note payable and is amortizing the discount over the 12 month life of the note.

NOTE 7 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.

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, 2011 and 2010, and the effect of including dilutive securities in the earnings per common share would have been anti-dilutive. Accordingly, all options and warrants to purchase common shares (totaling 4,631,291 potential shares at September 30, 2011) were excluded from the calculation of diluted earnings per share for the three months and nine months ended September 30, 2011 and 2010.

	Three Months			Three Months			Nine Months			Nine Months
	Ending			Ending			Ending			Ending
Basic EPS	Sept. 30, 2011			Sept. 30, 2010			Sept. 30, 2011			Sept. 30, 2010

Net Loss	$	(662,654	)	$	(539,456	)	$	(2,290,162	)	$	(1,490,919	)
Weighted Average Shares		16,804,610			14,071,937			15,383,548			14,269,205

Basic and Diluted Loss Per Share	$	(0.04	)	$	(0.04	)	$	(0.15	)	$	(0.10	)

NOTE 8 BUSINESS COMBINATION

On April 30, 2011, the Company completed its acquisition of MegaSys. The Company issued 1,700,000 shares of its common stock, which was valued at $0.98 per share (market value on the date of acquisition). In addition, the Company is committed to the issuance of an additional 2,000,000 shares of its common stock (valued at $1,636,000) if certain financial goals are obtained by MegaSys. MegaSys must achieve at least $300,000 post tax income for the year ended December 31, 2011. For 2012, MegaSys must achieve $300,000 post tax income and increase net revenues by $1,300,000 related to the SafeCiti project from July 1, 2010 to December 31, 2012. If these milestones are not achieved, the additional 2,000,000 shares will not be issued.

The preliminary purchase price allocation based on qualified independent valuation is as follows:

Cash	$	740,561
Accounts Receivable		588,726
Property and Equipment		20,678
Other Assets		458,523
Intangible Assets		330,000
Goodwill		1,796,710
Liabilities Assumed		(633,198	)
Total Purchase Price	$	3,302,000

In connection with the acquisition, the Company also issued 250,000 shares to a consultant who advised the Company on its acquisition. The value of the shares issued ($245,000) is reflected in the Statement of Operations for the periods ended September 30, 2011.

The following is the unaudited pro forma condensed consolidated financial statement of the combined entity as though the business combination had been as of the beginning of the comparable annual reporting period for the nine-month period ended September 30, 2010 and the nine-month period ended September 30, 2011 for comparability purposes.

	Nine Months Ended September 30,
	2011			2010
Total revenues	$	1,976,888		$	4,024,325
Total net expenses		4,233,502			4,810,598

Income (loss) before income taxes		(2,256,615	)		(786,273	)
Income tax provision		-			119,790

Net income (loss)	$	(2,256,615	)	$	(906,063	)

Net income (loss) per share — basic and diluted	$	(0.12	)	$	(0.05	)

NOTE 9 SUBSEQUENT EVENTS

In October 2011, the Company issued 847,500 shares of Common Stock under a private placement memorandum at $1.00 per share in thirteen private placement transactions with a mix of investors including eight individuals, three trusts and two corporations.

As of November, we have completed our private placement of $2.5 million.

On October 24, 2011, the Company authorized the issuance of warrants to purchase 47,500 of Common Stock at an exercise price of $1.10 per share, exercisable within three years of grant date, to one of its Board Members for his help in raising funds without compensation.

ITEM 2.

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

The following discussion should be read in conjunction with the Company’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. For a discussion of certain risks related to the statements, please see Part I, “Item IA, Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 (filed on March 30, 2011). 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,” “Iveda,” and “the Company” refer to the business of Iveda Solutions, Inc.

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, 2010. Such policies are unchanged.

Overview

Iveda Solutions, Inc. began operations on January 24, 2005, under the name IntelaSight, Inc., a Washington corporation doing business as Iveda Solutions (“IntelaSight”). On October 15, 2009, IntelaSight became a wholly-owned operating subsidiary of Iveda Corporation (formerly known as Charmed Homes, Inc.), a Nevada corporation, through a merger. All Company operations were conducted through IntelaSight until December 31, 2010, at which time IntelaSight merged with and into Iveda Corporation, which changed its name to Iveda Solutions, Inc. On April 30, 2011, the Company completed its acquisition of Sole-Vision Technologies, Inc. (doing business as MegaSys), a corporation organized under the laws of the Republic of China (“MegaSys”). As of April 30, 2011, MegaSys is a wholly owned subsidiary of the Company.

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, the Company 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 $9 million. For the nine months ended September 30, 2011, we used approximately $1.9 million in cash from operations, 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.

Acquisition of MegaSys

On April 30, 2011, the Company acquired Sole-Vision Technologies, Inc. (doing business as MegaSys), a corporation organized under the laws of the Republic of China (“ MegaSys ”), pursuant to the share exchange agreement (the “ Agreement ”) dated March 21, 2011 and a related side agreement of even date (the “ Side Agreement ”), by and among the Company, MegaSys, and the shareholders of MegaSys (the “ MegaSys Shareholders ”). Pursuant to the Agreement (i) the Company acquired 100% of the issued and outstanding shares of MegaSys Common Stock in exchange for the issuance to the MegaSys Shareholders of 1,700,000 shares of Common Stock of the Company (the “ Exchange ”), and (ii) MegaSys became a wholly owned subsidiary of Iveda. The Side Agreement provides that the MegaSys Shareholders are entitled to receive up to an additional 2,000,000 shares of Common Stock of the Company upon achievement by MegaSys of certain financial milestones set forth therein. The Agreement and Side Agreement replaced and superseded the share exchange agreement among the parties entered into on January 31, 2011. The Exchange was approved by Taiwan’s Foreign Investment Commission Agency.

MegaSys is a Taiwanese company specializing in deploying video surveillance systems for airports, commercial buildings, government customers, data centers, shopping centers, hotels, banks, and Safe City initiatives in Taiwan and other neighboring countries. MegaSys integrates security surveillance products, software and services to provide integrated security solutions to the end user. Most of MegaSys’s revenues are derived from one-time sales, which differs from Iveda’s business model of on-going monitoring revenues. MegaSys does not own any proprietary technology or intellectual property other than certain trademarks in China and Taiwan used in its business.

Management believes that the acquisition of MegaSys provides the following potential benefits to the Company’s business:

• MegaSys has an established presence and credibility in, and provides the Company with access to, the Asian market.

• Management believes that the Company will be able to leverage MegaSys’s relationships in Asia for cost-effective research and development of new product offerings and cost reduction of current product offerings.

• Management expects to be able to source products directly using MegaSys’s product sourcing expertise to enhance the Company’s custom integration capabilities.

• Management expects the Company will benefit from cost reductions for infrastructure equipment (servers, storage devices, network switches, and Super Wifi technologies) through a direct OEM relationship.

• Management believes that MegaSys enhances the global distribution potential for Iveda’s products and services.

• MegaSys is expected to benefit from the Company’s expertise in cloud-based video surveillance and access to the U.S. markets for its products.

At the time of the closing of the Exchange, MegaSys had customers in Taiwan and neighboring countries, including the Taiwan Stock Exchange, Taiwan’s International Airport, Shanghai Commercial and Savings Bank, Taipei County Police Bureau and Traffic Control, Beijing Capital Airport, Hong Kong HSBC ATM System, China HSBC Bank (Guangzhou), Malaysia – Prime Minister’s Residence, Hong Kong IBM Asia Headquarters, Regal Hong Kong Hotel, Shanghai China Bank, and Egypt – Pyramids of Giza. does not expect to derive significant revenues from prior MegaSys customer installations. However, the prior MegaSys customer base helps to establish credibility for the Company to market its products and services in the Taiwanese and other Asian marketplaces. There can be no assurance that the Company will generate material future revenue from MegaSys’s customers at the time of the Exchange.

Results of Operations

Revenue . We recorded revenue of $588,339 for the three months ended September 30, 2011, compared to $182,416 for the three months ended September 30, 2010, an increase of $405,923 or 222%. In the third fiscal quarter of 2011, our recurring service revenue was $219,333 or 37% of revenue, and our equipment sales and installation revenue was $369,006 or 63% of revenue, compared to recurring service revenue of $138,061 or 76% of revenue, and equipment sales and installation revenue of $44,355 or 24% of revenue for the same period in 2010. The increase in revenue was due to a $104,880 or 57% increase of U.S. revenue and the inclusion of revenue from MegaSys for a full quarter. MegaSys reported revenue of $301,043 for the three months ended September 30, 2011, compared to $1,147,525 for the three months ended September 30, 2010, a decrease of $846,482 or 74%. Management believes that the decrease in revenue is attributable primarily to the fact that 2011 was a presidential election year in Taiwan and the general business climate, particularly for Taiwanese governmental agencies, was to hold off on large purchases until the political landscape had been settled. In addition, management believes that the decrease in revenue is attributable to significant fluctuations caused by the fact that its sales are normally one-time sales and may involve a substantial amount of time to finalize installation and recognize revenue. Historical operating results of Megasys for the nine months ended September 30, 2010 were more favorable compared to the 2011 period due to revenue realized from a large, non-recurring contract realized by Megasys in 2010. The decrease in revenue is consistent with the assumptions made by management during the valuation of the purchase price allocation.

We recorded revenue of $1,447,410 for the nine months ended September 30, 2011, compared to $488,600 for the nine months ended September 30, 2010, an increase of $958,810 or 196%. In the first nine months of 2011, our recurring service revenue was $454,863 or 31% of revenue, and our equipment sales and installation revenue was $992,547 or 69% of revenue, compared to recurring service revenue of $348,652 or 71% of revenue, and equipment sales and installation revenue of $139,948 or 29% of revenue for the same fiscal period in 2010. The increase in revenue was due to a $276,704 or 57% increase of U.S. revenue and the inclusion of revenue from MegaSys for five months. MegaSys reported revenue of $1,211,584 for the nine months ended September 30, 2011, compared to $3,535,725 for the nine months ended September 30, 2010, a decrease of $2,324,141 or 66%. Management believes that the decrease in revenue is attributable primarily to the fact that 2011 was a presidential election year in Taiwan and the general business climate, particularly for Taiwanese governmental agencies, was to hold off on large purchases until the political landscape had been settled. In addition, Management believes that the decrease in revenue is attributable primarily to significant fluctuations caused by the fact that its sales are normally one-time sales and may involve a substantial amount of time to finalize installation and recognize revenue. Historical operating results of Megasys for the nine months ended September 30, 2010 were more favorable compared to the 2011 period due to revenue realized from a large, non-recurring contract realized by Megasys in 2010.

Cost of Revenue . Total cost of revenue was $472,211 (80% of revenues; gross margin of 20%) for the three months ended September 30, 2011, compared to $115,817 (63% of revenue; gross margin of 37%) for the three months ended September 30, 2010, an increase of $356,394 or 308%. The increase of cost of revenue and decrease of gross margin was primarily due to the increase of equipment sales and installation, which normally garner lower gross margin. Approximately $285,000 of MegaSys’ revenue with lower gross margin was derived from equipment sales and installation.

Total cost of revenue was $1,110,875 (77% of revenues; gross margin of 23%) for the nine months ended September 30, 2011, compared to $337,425 (69% of revenues; gross margin of 31%) for the nine months ended September 30, 2010, an increase of $773,449 or 229%. There was only a slight decrease in gross margin for the nine months ended September 30, 2011, because only five months of MegaSys’ equipment sales and installation revenue, with normally lower gross margin, were included in the consolidated revenue. Thus, it has very low impact on the gross margin for the nine-month period ended September 30, 2011.

Operating Expenses . Operating expenses were $778,287 for the three months ended September 30, 2011, compared to $604,597 for the three months ended September 30, 2010, an increase of $173,690 or 29%. The increase in operating expenses was primarily related to professional expenses incurred in the acquisition of MegaSys and the recording of non-cash stock compensation expense for options issued to employees.

Operating expenses were $2,611,916 for the nine months ended September 30, 2011, compared to $1,630,024 for the nine months ended September 30, 2010, an increase of $981,892 or 60%. The increase in operating expenses was primarily related to expenses incurred in the acquisition of MegaSys and the recording of non-cash stock compensation expense issued to employees.

Loss from Operations . As a result of the increases in revenues and related gross profit, but a greater increase in operating expenses, the loss from operations increased to $662,159 for the three months ended September 30, 2011, compared to $537,998 for the three months ended September 30, 2010, an increase in loss of $124,161 or 23%. The majority of the current period loss, $524,013, was from our U.S. operations and the remaining $138,146 from our operations in Taiwan. MegaSys’ operating loss was partially attributed to a post-acquisition increase in fixed costs such as audit fees, salaries and travel expense now that they are a wholly-owned subsidiary of a U.S. public company.

As a result of the overall increase in operating expenses, loss from operations increased to $2,275,381 for the nine months ended September 30, 2011, compared to $1,478,849 for the nine months ended September 30, 2010, an increase in loss of $796,532 or 54%.

Other Expense-Net . Other expense-net was $495 for the three months ended September 30, 2011, compared to $1,458 for the three months ended September 30, 2010, a decrease of $963 or 66%.

Other expense-net was $19,668 for the nine months ended September 30, 2011, compared to $12,070 for the nine months ended September 30, 2011, an increase of $7,598 or 63%.

Net Loss . The increase of $123,198 or 23% in the net loss to $662,654 for the three months ended September 30, 2011, from $539,456 for the three months ended September 30, 2010, was primarily the effect of reduced gross profit and increase in operating expenses.

The increase of $799,243 or 54% in the net loss to $2,290,162 for the nine months ended September 30, 2011, from $1,490,919 for the nine months ended September 30, 2010, was primarily the effect of reduced gross profit and increase in operating expenses.

Liquidity and Capital Resources

We had cash and cash equivalents of $207,170 on September 30, 2011 in our domestic business and $259,796 in our foreign business. The increase in cash from $355,343 as of December 31, 2010 was due to capital raised in the U.S. during the period and the inclusion of MegaSys. There are no legal or economic factors that materially impact our ability to transfer funds between our domestic and foreign businesses, although we do not anticipate transferring funds between our domestic and foreign operations in the next 12 months.

Net cash used in operating activities during the nine months ended September 30, 2011, and for the nine months ended September 30, 2010, was $1,878,531 and $1,566,932, respectively. Cash used in operating activities for those periods consisted primarily of the net loss from operations.

Net cash used (received) by investing activities for the nine months ended September 30, 2011, and the nine months ended September 30, 2010, was $(688,692) and $91,583, respectively. The large source of cash in investing activities in 2011 was due to cash acquired in the MegaSys acquisition.

We have experienced significant operating losses since our inception. At December 31, 2010, 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 2010 or through the first quarter of 2011. Our operating loss carry forwards expire starting in 2010 and continuing through 2028.

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, 2011 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.

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.

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 was used for the purpose of purchasing equipment, software, and other infrastructure-related items to fulfill commitments to a government agency in Mexico. The note balance of $197,000 plus accrued interest was repaid in full in April 2011. The Note is accessible to Iveda for future draws for large projects that require infrastructure funding up front. The unpaid principal of the line of credit bears simple interest at the rate of 1.5% per month or 18% per annum. Any principal balance of the line of credit is due and payable no later than six months after each disbursement. As of September 30, 2011, there was zero balance under the line of credit.

Two customers represented greater than 10% (25% and 17%) of total revenue for the nine months ended September 30, 2011. No other customers represented greater than 10% of total revenues in the nine months ended September 30, 2011.

Our U.S. operation does not have any receivables aged over 120 days at the quarter ended September 30, 2011. The terms for payment for our U.S. operations are “due upon receipt”. Therefore, we have not established an allowance for doubtful accounts to be recorded with respect to our U.S. operations.

Our Taiwan operations through MegaSys have 16% of gross accounts receivables aged over 180 days at September 30, 2011. The payment terms vary based on the timing of the completion of the project. In general, payment takes place within one year of commencing the project, except that 5% of the total payment is retained and released one year after the completion of the project. Excluding such retained amounts, MegaSys provides an allowance for doubtful accounts for any receivables that will not be paid within one year. Management has set up a 15%, or $135,839, allowance for doubtful accounts as of the quarter ended September 30, 2011. Management deems the rest to be collectible based on the nature of the customer contracts and past experience with similar customers.

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

Completion of $2.5 Million Private Placement . After the reporting period, in October 2011, the Company completed its private placement of $2.5 million pursuant to its private placement memorandum by issuing 847,500 shares of Common Stock at $1.00 per share in thirteen private placement transactions with a mix of investors including eight individuals, three trusts and two corporations.

These issuances were made pursuant to Section 4(2) of the Securities Act of 1933, as amended, Regulation D, and Rule 506 promulgated thereunder. The facts relied upon by the Company to use this exemption were the following: (a) the Company did not use general solicitation or advertising to market the securities; (b) the issuances were only made to accredited investors; and (c) the Company informed the investors that they would receive only “restricted” securities.

Agreement with Telmex, U.S.A., LLC . On October 28, 2011, the Company entered into a Non-Exclusive Strategic Collaboration Agreement (the “Agreement”) with Telmex, U.S.A. LLC (“Telmex”). Telmex will resell products and services by and on behalf of the Company, subject to the terms and conditions of the Agreement. The term of the Agreement is one year and will automatically renew for additional one-year increments. The Agreement will always be interpreted as a fixed-term agreement. Either party may terminate the Agreement at any time for any or no reason in such party’s sole discretion upon thirty days’ written notice to the other party. The Company will continue to provide services to end users, per the terms of the End-User Service Agreement, provided that the end users have the means to continuously pay Company for services rendered. The Agreement is attached hereto as Exhibit 10.12.

Promissory Note . On September 26, 2011, the Company entered into a $45,000 promissory note agreement with one of its shareholders. Interest on the note will be payable in 45,000 warrants at a $1.10 exercise price, exercisable within three years of issuance. On October 24, 2011, the Board of Directors approved the issuance of the warrants.

Warrants . On October 24, 2011 the Company authorized the issuance of warrants to purchase 47,500 shares of Common Stock at an exercise price of $1.10 per share, exercisable within three years of grant date, to one of its Board Members for his help in raising funds without compensation.

Off Balance Sheet Arrangements . During the reporting period, the Company had no off-balance sheet arrangements, as such term is defined in Item 303(a)(4) of Regulation S-K.

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) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of September 30, 2011. Based on our evaluation, our principal executive officer and our principal financial officer concluded that the design and operation of our disclosure controls and procedures were not effective as of September 30, 2011.

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of 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 for our U.S. operations. We are in the process of evaluating our internal controls over financial reporting for MegaSys.

Limitations on the Effectiveness of Controls

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Iveda have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or Board override of the control.

The design of any system of controls also 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; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Identified Material Weakness

As of September 30, 2011, the Company had only one employee knowledgeable in SEC accounting and reporting. As a result, there is a lack of proper segregation of duties necessary to insure that all transactions are accounted for accurately and in a timely manner.

Management’s Remediation Initiatives

As our resources allow, we plan to add financial personnel to our management team in order to properly segregate the duties necessary for accurate and timely financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

See Part II, Item 1 of the Company’s Quarterly Report on Form 10-Q filed on August 15, 2011, which is incorporated herein by reference.

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 on Form 8-K, during the reporting period, pursuant to a $2.5 million private placement memorandum, the Company received a total of $390,000 and issued 390,000 shares of Common Stock in thirteen private placement transactions with a mix of investors including six individuals, five trusts and two corporations. All issuances were at $1 per share.

ITEM 3. DEFAULT ON SENIOR SECURITIES.

None.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

Exhibit
Number		Description
2.1		Share Exchange Agreement, dated March 21, 2011, by and among Iveda Solutions, Inc., a Nevada corporation, Sole-Vision Technologies, Inc. (doing business as MegaSys), a corporation organized under the laws of the Republic of China, and the shareholders of MegaSys (Incorporated by reference to Form 10-K/A filed on 2/9/2012).
3.1		Articles of Incorporation of Charmed Homes Inc. (Incorporated by reference to Exhibit 3.1 to Form SB-2 filed on 4/20/2007).
3.2		Bylaws of Charmed Homes Inc. (Incorporated by reference to Exhibit 3.2 to Form SB-2 filed on 4/20/2007).
3.3		Amendment to Bylaws of Charmed Homes Inc. (Incorporated by reference Exhibit 3.1 to Form 8-K/A 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 Exhibit 3.4 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 4/20/2007).
4.2		Form of Stock Option Agreement under the IntelaSight, Inc. 2008 Stock Option Plan (Incorporated by reference to Exhibit 4.2 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 Exhibit 4.3 to Form S-4/A1 filed on 7/10/2009).
4.4		2009 Stock Option Plan, dated October 15, 2009 (Incorporated by reference to Exhibit 4.4 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 Exhibit 4.5 to Form 8-K filed on 10/21/2009).
4.6		Iveda Solutions, Inc. 2010 Stock Option Plan, as amended (Incorporated by reference to Appendix A to the Definitive Proxy Statement on Schedule 14A filed on 5/2/2011).
4.7		Form of Notice of Grant of Stock Option under the Iveda Solutions, Inc. 2010 Stock Option Plan, as amended (Incorporated by reference to Exhibit 4.2 to Form S-8 filed on 6/24/2011).
4.8		Form of Stock Option Agreement under the Iveda Solutions, Inc. 2010 Stock Option Plan, as amended (Incorporated by reference to Exhibit 4.3 to Form S-8 filed on 6/24/2011).
4.9		Form of Stock Option Exercise Notice under the Iveda Solutions, Inc. 2010 Stock Option Plan, as amended (Incorporated by reference to Exhibit 4.4 to Form S-8 filed on 6/24/2011).
10.1		Application Development Service Agreement dated July 14, 2006 by and between Axis Communications AB and IntelaSight, Inc. (Incorporated by reference to Exhibit 10.4 to Form S-4/A2 filed on 8/5/2009).
10.2		Partner Agreement dated January 30, 2007 by and between Milestone Systems, Inc. and IntelaSight, Inc. (Incorporated by reference to Exhibit 10.5 to Form S-4/A1 filed on 7/10/2009).
10.3		Solution Partner Agreement dated March 13, 2008 by and between Milestone Systems A/S and IntelaSight, Inc. (Incorporated by reference to Exhibit 10.6 to Form S-4/A1 filed on 7/10/2009).
10.4		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 Exhibit 10.9 to Form S-4/A1 filed on 7/10/2009).
10.5		Stock Purchase Agreement, dated October 15, 2009, by and among Iveda Corporation, IntelaSight, Inc., Ian Quinn and Kevin Liggins (Incorporated by reference to Exhibit 10.10 to Form 8-K filed on 10/21/2009).
10.6		Subscription Agreement, dated July 26, 2010 (Incorporated by reference to Exhibit 10.10 to Form 10-Q filed on 11/12/2010).
10.7		Line of Credit Promissory Note, dated September 15, 2010 (Incorporated by reference to Exhibit 10.11 to Form 10-Q filed on 11/12/2010).

10.8		Agreement for Services, dated October 20, 2010 (Incorporated by reference to Exhibit 10.12 to Form 10-Q filed on 11/12/2010).
10.9		Consulting Agreement, dated October 25, 2010 (Incorporated by reference to Exhibit 10.13 to Form 10-Q filed on 11/12/2010).
10.10		Operating Level Agreement, dated October 25, 2010 (Incorporated by reference to Exhibit 10.14 to Form 10-Q filed on 11/12/2010).
10.11		Side Letter, dated March 21, 2011, by and among Iveda Solutions, Inc., Sole-Vision Technologies, Inc. (doing business as MegaSys), and the shareholders of MegaSys (Incorporated by reference to Exhibit 10.15 to Form 10-K filed on 3/30/2011).
10.12		Non-Exclusive Strategic Collaboration Agreement between Iveda Solutions, Inc. and Telmex, U.S.A., LLC, dated October 28, 2011.*.
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*.
31.2		Certification of Principal 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 Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**.
101.1		The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets (Unaudited) as of September 30, 2011 and December 31, 2010, (ii) Condensed Consolidated Statements of Operations (Unaudited) for the three months and nine months ended September 30, 2011 and 2010, (iii) Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2011 and 2010, and (iv) the Notes to Condensed Consolidated Financial Statements (Unaudited).**

* 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 SOLUTIONS, INC.
	(Registrant)

Date: March 6, 2012	BY:	/s/ David Ly
		David Ly
		President, Chief Executive Officer, and Chairman (Principal Executive Officer)

	BY:	/s/ Lynne Phillis
		Lynne Phillis
		Controller (Principal Accounting Officer)

NON-EXCLUSIVE STRATEGIC COLLABORATION AGREEMENT

THIS NON-EXCLUSIVE STRATEGIC COLLABORATION AGREEMENT (the " Agreement ") is entered into this 28th day of October, 2011(" Effective Date ") by and between Iveda Solutions, Inc. (“Company”) a Nevada corporation., having its principal office at 1201 S. Alma School Road, Ste. 8500, Mesa AZ 85210 and Telmex USA, L.L.C. (" Reseller ") a Delaware corporation, having its principal office at 3350 SW 148 Avenue, Suite 400, Miramar, FL 33027. Company and Reseller may each be referred to herein as a " Party " and collectively as the " Parties ".

RECITALS

Company is a full-service surveillance company, specializing in IP video hosting, video data archival and real-time remote surveillance services (the “ Services ”) and integrated surveillance systems such as Express Surveillance System (ESS) and Streaming Video Converter (SVC) (the “Products” ).

Reseller desires to sell the Products and Services by and on behalf of Company, subject to the terms and conditions of this Agreement.

Reseller shall not represent their relationship with Company as anything other than a Reseller. As well, Company shall not refer to Reseller as anything other than a reseller or other designation as expressed by Reseller and agreed upon in writing by Company.

Except as expressly stated herein, no intellectual property is transferred or licensed by either Party under this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which the Parties hereby acknowledge the Parties hereto agree as follows:

SECTION 1: PURCHASING PRODUCTS & SERVICES

1.0

Subject to the terms and conditions of this Agreement, Company hereby grants the Reseller a non-exclusive, non-transferable and terminable right to resell Company’s Products and Services to Reseller’s customers (“End Users”) during the term of this Agreement, and Reseller accepts the same.

1.1

Reseller shall purchase Products from Company by submitting a purchase order or signing a quotation provided to Reseller by Company.

1.2

Company agrees to allow Reseller to white label integrated Products and Services. Reseller agrees to co-brand with the Company in a manner and to an extent to be defined by the Parties.

1.3

In conjunction with an executed End User Service Agreement (as defined herein), Reseller shall enter into a contract to purchase the corresponding Products and/or Services provided by Company. All End-User service agreements or similar documents (“End User Service Agreements”) are subject to approval and acceptance by the Company.

1.4

Notwithstanding anything to the contrary in this Agreement, Company agrees not to enter into resale agreements for the same Products and Services with Latin American-oriented telecommunications companies or telecommunications companies which are direct competitors of Reseller in the United States during the term of this Agreement.

SECTION 2: RIGHTS AND RESPONSIBLITIES.

2.0

In connection with the activities hereunder during the term, Reseller may use Company’s name, logos and trade names or trademarks on a non-exclusive basis on Reseller’s web site and in its advertisements, provided that Reseller must submit a copy of any such web pages or advertisements to Company for its written approval prior to publication. Company will review Reseller’s proposed use of its logo and notify Reseller of approval or disapproval as soon as reasonably practicable after submission. Company may not use Reseller’s name, logos, trade names and trademarks in any way unless it obtains the express prior written permission of Reseller. As may be mutually agreed, the Parties may engage in joint marketing efforts including but not limited to advertising, direct marketing, and tradeshows. The Parties agree and acknowledge that title to and ownership of each Party’s respective name, logos, trade names and trademarks shall remain with each such Party and shall not transfer under any conditions to the other Party. The Parties agree not to use the intellectual property of the other as may be authorized by this subsection in a manner that would defame, disparage or in any way criticize the personal or business reputation, practices, or conduct of the other Party.

2.1

Reseller will employ the means it deems appropriate to promote and market Company’s Products and Services in a professional manner using Reseller’s own resources to initiate and close sales. All such marketing must be truthful, accurate, and conducted in a manner that reinforces the integrity of the Company’s brand. Reseller shall not make any claims in its marketing materials which exceed or contradict claims made by the Company. Reseller may request the Company to provide sales and technical support in the sales process.

Reseller shall market and sell the Products and/or Services to end users under its or its affiliates’ service marks, trademarks or trade names; provided, however, that in all cases neither the trademarks and logos of Company may be used by Reseller or its affiliates, except with the express written consent of Company.

2.2

Reseller may install appropriate camera equipment and advice or assist prospective customers to obtain necessary Internet connectivity and bandwidth to enable the Company’s Services, including promotion and sale of Reseller’s own suite of telecommunications services.

2.3

If Reseller installs camera equipment and software, Reseller is responsible for equipment and related hardware maintenance and necessary software upgrades to enable the Company’s Services and billing for the same. Company agrees to work with Reseller to offer solutions for hardware maintenance and software upgrades.

2.4

Company is responsible to customers for upholding the quality of its Services as specified in the End-User Service Agreement(s) that will be signed by customer.

2.5

Reseller is responsible for billing customers for equipment and software they sell or install required to enable Company’s Services. Reseller is also responsible for recurring monthly billing of its customers for the Company’s Services.

2.6

Company reserves the right to change or discontinue any of its Services under this Agreement at its sole discretion. Notwithstanding the foregoing, Company shall be obligated to honor all existing agreements to End-Users.

2.7

Reseller shall maintain minimum quarterly revenues for designated partner levels as specified. Sales performance will be monitored quarterly and does not include activation fees. Reseller may be required periodically to provide the Company with business opportunity pipeline report as requested.

General Partner = $0 - $4,999

Certified Partner = $5,000 - $19,999

Premier Partner = $20,000+

2.8

Certified and Premier Partners must complete Sales Training program within 30 days of signing of Reseller Agreement. The Company will conduct “Train the Trainer” training sessions. The Parties will discuss and mutually agree on an appropriate time and place.

2.9

Program Benefits

Monthly recurring revenue

Discounts on Demo Services and Equipment

Log-in privileges to video hosting web portal(s) for customer demonstrations

Opportunity protection via approved customer registrations

Company’s’ representatives will be available for customer sales calls, presentations, site surveys and project development assistance for qualified opportunities

SECTION 3: PRICING

3.0

Company will provide suggested retail price for its Products and Services as outlined in Exhibits B and C of this Agreement.

3.1

Reseller may resell Company’s Products and Services at the suggested retail prices or above at its discretion.

3.2

Subject to the terms and conditions of this Agreement, Reseller acknowledges that prices, discount rates, and transaction fees for Products are subject to change. Any changes must be reviewed and approved by both Parties. Prices, discount rates and transaction fees for Services agreed upon on this Agreement will remain fixed for the term of the agreement.

3.3

BUSINESS PARTNER DISCOUNTS

3.3.1 Enterprise Services (Discount off Exhibit B Price List)

General Partner	Certified Partner	Premier Partner
15%	20%	25%

3.3.2 IvedaXpress Services (See Exhibit C for Discount Schedule)

No other consideration or other payments shall be due to Reseller.

Section 4: INVOICING; PAYMENTS

4.0

Fees . The parties agree that any fees in the applicable End-User Service Agreement are market based and shall apply as of the Effective Date to those Products and Services. Company’s current fees for Products and Services are in Exhibits B and C. The parties agree that Exhibits B and C represent current pricing and are subject to change, and shall be illustrative only of the parties’ intent to reflect current pricing mechanisms. Final fees will be reflected on each End-User Service Agreement signed by the End User and the Company.

4.1

Invoicing . Company shall invoice Reseller upon purchase of Products, payable within thirty-days (30) days of receipt of the invoice. Company will invoice Reseller for Services at the commencement of the Service purchased and thereafter at the beginning of each month for Services for that month. All invoices shall be paid within thirty-days (30) days of the date of receipt of invoice by Reseller, regardless of when the End-Users pay the Reseller.

SECTION 5: TERM & TERMINATION

5.0

The term of this Agreement is in effect for one (1) year from the Effective Date herein and will automatically renew for one (1) year increments. Notwithstanding any extension of this Agreement, this Agreement will always be interpreted as a fixed-term agreement. In no event will this agreement be interpreted and not as an indefinite term agreement. Either Party may terminate this Agreement at any time for any or no reason in such Party's sole discretion upon thirty (30) days’ written notice to the other Party. Company will continue to provide Services to end users, per the terms of the End-User Service Agreement, provided that the end users have the means to continuously pay Company for Services rendered.

5.1

If this Agreement is terminated mutually or by either party in good terms (i.e., not terminated by Company for Reseller’s breach), Reseller will receive in compliance with the terms of this Agreement the full commission rate for the entire term of the initial contract not to exceed 1 year from termination date or until such time as the End User is no longer receiving Products and/or Services under any respective End User Service agreement, whichever is later.

5.2

Upon written notice and subject to the provisions of this Section 5, either party may terminate this Agreement as applicable, in the event of a material breach of the other Party. For purposes of this Agreement “Material Breach” shall be defined as a significant breach of contract that goes to the foundation of the Agreement. The Party seeking termination will provide the other Party with reasonable written notice of such Material Breach, and the opportunity to cure the breach as follows:

at least ten (10) business days in the event of a failure to pay any amount due under this Agreement, unless such deficiency is cured within the notice period; and

at least forty-five (45) days in the event of any other Material Breach; provided that if such breach cannot be cured within forty-five (45) days, the non-breaching party may not terminate this Agreement if the other Party has made good faith efforts during such period to implement a reasonable and agreed upon plan by both parties that is designed to cure the breach and is continuing diligently to pursue the plan.

SECTION 6: LIMITATION OF LIABILITY: IN NO EVENT WILL EITHER PARTY, ITS AGENTS, EMPLOYEES, SUBSIDIARIES, AFFILIATES OR PARENT COMPANIES BE LIABLE TO THE OTHER PARTY FOR ANY CONSEQUENTIAL, INDIRECT, SPECIAL, PUNITIVE OR INCIDENTAL DAMAGES, REGARDLESS OF THE FORM OF ACTION OR WHETHER THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSSES OR DAMAGES.

EACH PARTY AND ITS AFFILIATES’ ENTIRE LIABILITY, AND THE OTHER PARTY’S AND ITS AFFILIATES’ EXCLUSIVE REMEDIES, FOR ANY CLAIMS, DEMANDS, SUITS, LOSSES, DAMAGES, LIABILITIES, INJURIES, PENALTIES, COSTS, INTEREST, AND EXPENSES; INCLUDING WITHOUT LIMITATION, REASONABLE ATTORNEY FEES ARISING IN CONNECTION WITH THIS AGREEMENT, SHALL BE: (A) FOR BODILY INJURY OR DEATH TO ANY PERSON NEGLIGENTLY CAUSED BY A PARTY OR ITS AFFILIATES, PROVEN DIRECT DAMAGES; OR (B) FOR ANY DAMAGES OTHER THAN THOSE SET FORTH ABOVE AND NOT OTHERWISE EXCLUDED UNDER THIS AGREEMENT, PROVEN DIRECT DAMAGES NOT TO EXCEED PER CLAIM (OR IN THE AGGREGATE DURING ANY TWELVE-MONTH PERIOD) THE TOTAL NET PAYMENTS MADE BY CUSTOMER FOR THE APPLICABLE SERVICE DURING THE TWELVE (12) MONTHS PRECEDING THE MONTH IN WHICH THE DAMAGE OCCURRED.

SECTION 7: INDEMNIFICATION:

COMPANY AGREES TO INDEMNIFY, DEFEND AND HOLD HARMLESS RESELLER, ITS RESPECTIVE AFFILIATES, AND ITS RESPECTIVE DIRECTORS, OFFICERS, SHAREHOLDERS, EMPLOYEES, REPRESENTATIVES, AGENTS AND ASSIGNS FROM AND AGAINST ANY AND ALL LIABILITY TO ANY OTHER THIRD PARTIES (INCLUDING, BUT NOT LIMITED TO, LIABILITIES, JUDGMENTS, DAMAGES, LOSSES, CLAIMS, COSTS AND EXPENSES, INCLUDING ATTORNEYS FEES AND EXPENSES) ARISING FROM OR RELATING TO (I) A BREACH BY COMPANY OF ITS OBLIGATIONS UNDER THIS AGREEMENT, (II) THE ACTS, ERRORS, REPRESENTATIONS, MISREPRESENTATIONS, WILLFUL MISCONDUCT OR NEGLIGENCE OF COMPANY, ITS SUBCONTRACTORS, EMPLOYEES, OR AGENTS, (III) VIOLATION BY COMPANY OF A THIRD PARTY'S INTELLECTUAL PROPERTY OR OTHER RIGHTS IN CONNECTION WITH ITS PERFORMANCE HEREUNDER OR, (IV) ANY CLAIM ARISING OUT OF OR RESULTING FROM COMPANY’S OR AN AFFILIATE OF COMPANY’S UNAUTHORIZED USE OF RESELLER’S INTELLECTUAL PROPERTY OR ADVERTISING CLAIMS MADE IN CONNECTION THEREWITH. RESELLER AGREES TO INDEMNIFY, DEFEND AND HOLD HARMLESS COMPANY, ITS AFFILIATES, AND THEIR RESPECTIVE DIRECTORS, OFFICERS, SHAREHOLDERS, EMPLOYEES, REPRESENTATIVES, AGENTS AND ASSIGNS FROM AND AGAINST ANY AND ALL LIABILITY TO END USERS OR ANY OTHER THIRD PARTIES (INCLUDING, BUT NOT LIMITED TO, LIABILITIES, JUDGMENTS, DAMAGES, LOSSES, CLAIMS, COSTS AND EXPENSES, INCLUDING ATTORNEYS FEES AND EXPENSES) ARISING FROM OR RELATING TO (I) A BREACH BY RESELLER OF ITS OBLIGATIONS UNDER THIS AGREEMENT, (II) THE ACTS, ERRORS, REPRESENTATIONS, MISREPRESENTATIONS, WILLFUL MISCONDUCT OR NEGLIGENCE OF RESELLER, ITS SUBCONTRACTORS, EMPLOYEES, OR AGENTS, (III) VIOLATION BY RESELLER OF A THIRD PARTY'S INTELLECTUAL PROPERTY OR OTHER RIGHTS IN CONNECTION WITH ITS PERFORMANCE HEREUNDER OR, (IV) ANY CLAIM ARISING OUT OF OR RESULTING FROM RESELLER'S OR AN AFFILIATE OF RESELLER’S UNAUTHORIZED USE OF COMPANY’S INTELLECTUAL PROPERTY OR ADVERTISING CLAIMS MADE IN CONNECTION THEREWITH.

SECTION 8: DISCLAIMER OF WARRANTIES: OTHER THAN MANUFACTURER WARRANTY ON PRODUCTS AND EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, COMPANY DISCLAIMS ALL WARRANTIES, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, INCLUDING WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE OR INTENDED USE.

SECTION 9: COMPLIANCE WITH LAWS: Each Party shall comply with all applicable laws in performing its obligations under this Agreement.

SECTION 10: NO JOINT VENTURE OR PARTNERSHIP: Nothing in this Agreement shall be construed or interpreted to create a joint venture, employment, franchise or partnership between the Parties. For all purposes, the Parties are independent contractors and no fiduciary or other similar obligation shall exist between them, other than the contractual obligations set forth herein. Neither Party shall have any authority to act for the other Party in any capacity nor to make commitments of any kind for the account of, or on behalf of, the other Party or execute any contract on behalf of the other Party or to otherwise bind the other Party except as may be expressly provided herein.

SECTION 11: NOTICES : Any notice, demand or other communication required or which may be given to the Parties shall be sent to the addresses set forth above.

SECTION 12: NO THIRD PARTY RIGHTS: Nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties or their respective successors and permitted assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement. Neither Party may assign or transfer this Agreement, in whole or in part, without the prior written approval of Company except to a successor-in-interest or by action of law.

SECTION 13: TAXES: Each Party shall be responsible for its own taxes, as such responsibility is allocated by law.

SECTION 14: CONFIDENTIALITY: All documentation, technical information, software, business information, proposals for Services or other materials that are disclosed by either Party in the course of performing this Agreement shall be considered confidential and proprietary information (“Confidential Information”) of the disclosing Party, provided such information is clearly marked as “proprietary” or “confidential”. The existence and terms of this Agreement shall be deemed to be both Parties’ Confidential Information. Each Party’s Confidential Information shall be held in confidence and used only for purposes of performing this Agreement and using the Services.

SECTION 15: GOVERNING LAW AND DISPUTE RESOLUTION: This Agreement shall be governed by, and construed in accordance with the laws of the State of Texas without giving effect to any conflict of laws principles to the contrary.

All disputes, controversies or claims, whether based in contract, tort, statute, fraud, misrepresentation or any other legal theory, arising out of or relating to this Agreement not resolved amicably between the Parties shall be settled by final and binding arbitration conducted in Texas, United States, in accordance with the then-current commercial arbitration rules of the American Arbitration Association.

Disputes relating to: (i) the lawfulness of rates, terms, conditions or practices concerning Services; (ii) non-compliance with Section 14 of this Agreement, a violation of which would cause irreparable harm for which Damages would be inadequate; or (iii) marks or other intellectual property claims; shall be exempt from the binding arbitration requirement described in the preceding paragraph. As to disputes described in this paragraph, the claimant reserves the right to seek relief from an administrative agency or court of competent jurisdiction in the county and state of its choosing.

The prevailing Party shall be entitled to recover its attorneys’ fees and costs in bringing a legal action pursuant to this Section 15 from the other Party, unless expressly provided otherwise by decision or order of the arbitrator, administrative agency or court of competent jurisdiction, as the case may be.

SECTION 16: SEVERANCE OF INVALID PROVISIONS: If any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future laws effective during the term hereof, such provision shall be fully severable. This Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part hereof and the remaining provisions shall remain in force and effect, unaffected by such severance.

SECTION 17: ENTIRE AGREEMENT: This Agreement contains the entire agreement, with respect to its subject matter, between the parties, and supersedes all prior agreements or understandings, oral or written, not contained herein. Any supplement, modification or waiver of any provision of this Agreement shall be in writing and signed by authorized representatives of both Parties.

The Parties have caused this Agreement to be duly executed by their duly authorized representatives as of the Effective Date written.

TELMEX USA, L.L.C.		IVEDA SOLUTIONS, INC.



Jorge Rodriguez, President		David Ly, President & CEO

Ex hibit 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/A of Iveda Solutions, Inc.;

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 that 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: March 6, 2012

/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, Lynne Phillis, Controller (principal financial officer) of Iveda Solutions, Inc. (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/A for the period ended September 30, 2011 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: March 6, 2012

/s/ Lynne Phillis
Lynne Phillis
Controller
(Principal Financial and Accounting 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, Lynne Phillis, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A of Iveda Solutions, Inc.;

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: March 6, 2012

/s/ Lynne Phillis
Lynne Phillis
Controller
(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 Solutions, Inc. (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/A for the period ended September 30, 2011 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: March 6, 2012

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