þ | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
¨ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Nevada
(State of incorporation)
|
20-2222203
(I.R.S. Employer Identification No.)
|
|
|
1201 S. Alma School, Suite 8500
Mesa
, Arizona
(Address of principal executive offices)
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85210
(Zip code)
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Page
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Part I
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ITEM 1 BUSINESS
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3
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ITEM 1A RISK FACTORS
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20
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ITEM 1B UNRESOLVED STAFF COMMENTS
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26
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ITEM 2 PROPERTIES
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27
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ITEM 3 LEGAL PROCEEDINGS
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27
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ITEM 4 MINE SAFETY DISCLOSURES
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27
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Part II
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ITEM 5 MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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28
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ITEM 6 SELECTED FINANCIAL DATA
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29
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ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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29
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ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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35
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ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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35
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ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
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35
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ITEM 9A CONTROLS AND PROCEDURES
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35
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ITEM 9B OTHER INFORMATION
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37
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Part III
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ITEM 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
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37
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ITEM 11 EXECUTIVE COMPENSATION
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41
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ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
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43
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ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
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44
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ITEM 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES
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45
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Part IV
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ITEM 15 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
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45
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2 | ||
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3 | ||
|
4 | ||
|
5 | ||
|
· | The recent wide-spread availability of high-bandwidth Internet connections (known as IP-based networks); |
· | Drastic reductions in digital camera component costs; and |
· | The introduction of innovative “smart scanning” software. |
· | Proactive versus after-the-fact With humans behind the cameras assessing situations in real-time, they can call the police when necessary to prevent a crime. Recorded video footage only helps to investigate after a crime has already been committed. |
· | Daily Monitoring Report Every morning, customers get an activity report in their email box, consisting of time-stamped video footage and a detailed description of events from the previous night. |
· | Cost Savings Savings of up to 75% are possible compared to traditional guard services. |
· | Secure Data Iveda utilizes a third party, highly secure datacenter to process, store, and protect its customers’ video footage |
· | Live Visual Verification Several cities nationwide have adopted ordinances that impose a substantial fine for every false alarm. An alarm system may be declared a nuisance for excessive false alarms. Live video verification can reduce or even eliminate false alarms. With live video verification, police departments of some cities escalate response priority, depending on the seriousness of the event. |
· | Redundancy Video data are stored in Iveda’s datacenter, remote monitoring facility, and its customers’ facilities. |
6 | ||
|
7 | ||
|
8 | ||
|
· | Internet Access - Allows customers 24/7 secure, remote access to video. |
· | Data Center - Iveda utilizes data centers equipped with emergency power and redundant bandwidth. |
· | VOIP - Iveda can utilize voice-over-IP to allow a 1-way or 2-way communication between its intervention specialists and suspicious individuals on its customers’ properties. |
· | Camera Manufacturer Agnostic - Iveda can monitor security cameras from the majority of manufacturers, whether analog (CCTV) or digital. |
· | Carrier/ISP Neutral - Iveda can work with customers’ current Internet providers as long as minimum bandwidth requirements are met. |
9 | ||
|
10 | ||
|
11 | ||
|
· | Less capital expenditure. Other than cameras, no hardware or software to install. |
· | Less operating expense, reduces overhead. No infrastructure to maintain and replace. |
· | Reduced false alarm costs that are historically high for alarm-based security solutions. |
· | No costly Virtual Private Network (VPN) required to link multiple cameras. |
· | Integrating the customer’s existing cameras into its solution, reducing the high cost of purchasing and installing new cameras |
12 | ||
|
• | Arcus Capital |
• | American Security & Investigations |
• | City of El Mirage |
• | City of Mesa |
• | Farnsworth Realty |
• | Glendale Police, CA |
• | Green Valley Agriculture and Turf |
• | Mexican Government |
• | Pacific Coast Producers |
• | Porsche Dealership |
• | San Diego Police Department |
• | San Joaquin County Public Works |
• | Sunland Storage |
• | Sunol Golf Course |
• | United Road Towing |
• | Watermark Community |
• | West Valley Child Crisis |
13 | ||
|
• | Consumers and small businesses through their current telecom and data center providers | |
• | Companies who wish to save on traditional security services, while maintaining live surveillance of their properties. |
• | Customers who wish to integrate or enable an existing video surveillance system for hosted video and remote surveillance. |
• | Real-time, in-vehicle streaming video accessibility for operational efficiency for transportation management and traffic safety. |
• | Educational institutions that want to integrate surveillance systems in their facilities. |
• | Security and remote surveillance of school playground areas, corridors, halls and classrooms. |
• | Municipalities for Safe City projects. |
• |
Reseller and Distribution Channel
:
|
o | Actively engage with telecommunications companies in Asia, Mexico, and Africa for fast go-to-market cloud-hosted services | |
o | Provide assistance to its growing reseller channel distribution to utilize resellers’ camera installed base and thereby seek to increase Iveda’s video surveillance subscribers. |
o | Provide co-op marketing funds to resellers to promote Iveda products and services |
• | Marketing: |
o | Expand online marketing and non-traditional viral marketing. |
o | Participate in vertical and technology tradeshows. |
o | Produce online and printed sales and marketing materials for end users and resellers. |
o | Implement and manage PR and marketing campaigns. |
o | Work with research firms on independent case studies, industry research, and white papers. |
o | Enhance search engine optimization (SEO) of the Company’s websites. |
o | Expand online marketing, specifically Google Adwords and banner ads on website of tradeshows Iveda will exhibit in. |
• | Infrastructure/Security/Operations/R&D : |
o | Develop new products with technology partners in India and Asia to enhance and enable Iveda’s video surveillance services. |
o | Incorporate another layer of security to Iveda’s edge devices to further enhance the value of Iveda’s products and services. |
o | Fund in-house development of software for Iveda’s backend that may be patentable. |
o | Fund backend equipment/hardware and software to demonstrate Iveda’s system capabilities to prospective enterprise clients (white label demos). |
o | Qualify Iveda on safety and cyber security compliance requirements for government standards and expectations as well as fulfill customer commitment to be as secure as possible to garner customer trust and loyalty. |
o | Provide a test lab environment which includes dedicated equipment and resources for further customer application testing, development and enhancements as well as new product and/or system evaluation. |
• | International Business Development: |
o | Form business alliances with overseas companies for revenue generation. |
o | Fund customer demo meetings and presentations abroad. |
o | Leverage MEGAsys relationships with developers and manufacturing companies in Asia for cost reductions. |
14 | ||
|
o | Leverage MEGAsys’ acquisition to establish presence and access to the Asian market to implement Iveda’s recurring revenue model. |
• | Mergers and Acquisition |
o | Identify companies in Asia with broad market reach. |
o | Explore companies with business and technologies that are complementary to ours. |
· | Derive monthly recurring revenue stream from offering a complimentary service for their line of security products, without having to build network infrastructure for video surveillance services. |
· | Camera deployments are normally a one-time sell, until it is time for a replacement. With Iveda, installers can offer a new service to their installed base to generate additional revenue from existing customers. |
· | Leverage Iveda’s SAFETY Act Designation |
· | Boost competitive edge & value proposition |
· | Expand technology offerings & integration services |
15 | ||
|
16 | ||
|
17 | ||
|
18 | ||
|
19 | ||
|
20 | ||
|
21 | ||
|
22 | ||
|
23 | ||
|
24 | ||
|
25 | ||
|
26 | ||
|
27 | ||
|
2014
|
|
High Bid
|
|
Low Bid
|
|
||
|
|
|
|
|
|
|
|
Quarter Ended March 31, 2014 (through March 14, 2014)
|
|
$
|
1.80
|
|
$
|
1.50
|
|
2013
|
|
High Bid
|
|
Low Bid
|
|
||
|
|
|
|
|
|
|
|
Quarter Ended December 31, 2013
|
|
$
|
2.30
|
|
$
|
1.50
|
|
Quarter Ended September 30, 2013
|
|
$
|
1.80
|
|
$
|
1.01
|
|
Quarter Ended June 30, 2013
|
|
$
|
2.25
|
|
$
|
1.01
|
|
Quarter Ended March 31, 2013
|
|
$
|
2.00
|
|
$
|
1.30
|
|
2012
|
|
High Bid
|
|
Low Bid
|
|
||
|
|
|
|
|
|
|
|
Quarter Ended December 31, 2012
|
|
$
|
1.25
|
|
$
|
1.00
|
|
Quarter Ended September 30, 2012
|
|
$
|
1.20
|
|
$
|
.95
|
|
Quarter Ended June 30, 2012
|
|
$
|
1.25
|
|
$
|
.99
|
|
Quarter Ended March 31, 2012
|
|
$
|
1.50
|
|
$
|
.97
|
|
28 | ||
|
|
|
Number of securities to be
|
|
Weighted-average
|
|
Number of securities
|
|
|||
|
|
issued upon exercise of
|
|
exercise price of
|
|
remaining available for future
|
|
|||
|
|
outstanding options,
|
|
outstanding options,
|
|
issuance under equity
|
|
|||
Plan Category
|
|
warrants and rights
|
|
warrants and rights
|
|
compensation plans
|
|
|||
Equity compensation plans approved by shareholders
|
|
|
5,693,322
|
|
$
|
1.07
|
|
|
8,234,217
|
|
Equity compensation plans not approved by shareholders
|
|
|
3,745,005
|
|
$
|
.97
|
|
|
-
|
|
Total
|
|
|
9,438,327
|
|
$
|
1.03
|
|
|
8,234,217
|
|
· | The Board of Directors approved the Company to engage with a financial capital markets advisor in connection with a potential capital financial transaction to raise up to $30 million in long-term financing. |
· | In December 2013, the Board of Directors also approved the Company to raise up to an aggregate amount of $3.6 million in bridge financing through the sale of Convertible Debentures in advance of the long-term financing. |
· | In the third quarter of 2013, the Company launched two new camera lines in collaboration with MegaSys, its Taiwan subsidiary and Industrial Technology Research Institute (ITRI), its nonprofit research and development partner in Taiwan. These products are enablers of the Company’s video hosting services. |
· |
The Company has recently developed two other standalone services:
o
IvedaMobilea cloud-hosting service that turns any smartphone or tablet into a mobile, cloud video
streaming device. This was developed with ITRI.
IvedaXchange In collaboration with a technology partner, the Company developed a real-time situational awareness dashboard to enable organizations instant access to vital and filtered information such as emergency situations, location of critical assets, video monitoring, and local IvedaXchange In collaboration with a technology partner, the Company developed a real-times situational awareness dashboard to enable organizations instant access to vital and filtered information such as emergency situations, location of critical assets, video monitoring, and local news. IvedaXchange is well-suited for law enforcement agencies and schools.
|
29 | ||
|
· | The Company launched a new website to highlight new products and services with corresponding applications. |
· | The Company launched a second website allowing for direct web-sales, geared toward the residential and small-to-medium sized businesses. |
· | The Company intends to continue to participate in industry and vertical tradeshows to launch new products, generate leads, solicit resellers and other sales channels, and identify potential technology partners. |
· | The Company intends to continue advertising on selected trade magazines and running Google Adwords to generate leads. |
· | The Company has evaluated its reseller distribution channel and eliminated non-performing components of the channel. |
· | In November 2013, Iveda hired Bob Brilon as our chief financial officer and executive vice president of business development. He has strong ties with the investment community and has extensive experience in mergers and acquisitions, strategic growth planning, and interacting with domestic and foreign institutional investors, which will be instrumental to our market expansion, global distribution of our cloud video hosting platform and services, and raising capital to fund our growth. In February 2014, he was also appointed as the Company’s president. |
· | The Company is in active collaboration with certain telecommunications companies in other countries to resell the Company’s products and services in their respective countries. |
30 | ||
|
31 | ||
|
• | 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 is able to source products directly using MegaSys’s product sourcing expertise to enhance the Company’s custom integration capabilities. |
• | The Company benefits 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 benefits from the Company’s expertise in cloud-based video surveillance and access to the U.S. markets for its products. |
32 | ||
|
33 | ||
|
2014
|
|
$
|
330,451
|
|
2015
|
|
$
|
144,563
|
|
2016
|
|
$
|
113,835
|
|
|
|
|
|
|
34 | ||
|
· | P resent (either on the face of the stateme n t wh e re net in c ome i s presen t e d or i n t he notes) the ef f ec t s on the l i ne it e ms of n et income of si g nificant amounts r eclass i fied out of accumulated other compre h e nsive income - but only if the item r e classified is required under U.S. GAAP to b e reclas s i fied to net income in its entirety in the same reporting period. |
35 | ||
|
36 | ||
|
37 | ||
|
Name
|
|
Age
|
|
Position
|
David Ly
|
|
38
|
|
Chairman of the Board, CEO
|
Robert Brilon
|
|
53
|
|
President, CFO, Treasurer
|
Luz Berg
|
|
51
|
|
Secretary, COO, CMO
|
Richard Gibson
|
|
61
|
|
Sr. Vice President of Global Sales & Support
|
Chen-Ho (Alex) Kuo
|
|
50
|
|
Director
|
Joseph Farnsworth
|
|
54
|
|
Director
|
Gregory Omi
|
|
52
|
|
Director
|
James D. Staudohar
|
|
76
|
|
Director
|
Robert D. Gillen
|
|
59
|
|
Director
|
Alejandro Franco
|
|
61
|
|
Director
|
38 | ||
|
39 | ||
|
40 | ||
|
41 | ||
|
Name and
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
|
|
|
|
Principal Position
|
|
Year
|
|
Salary
|
|
Bonus
|
|
|
Awards
|
|
|
Total
|
|
||||
David Ly Chairman, CEO
|
|
2013
|
|
$
|
188,965
|
|
$
|
0
|
|
|
$
|
19,335
|
(2)
|
|
$
|
208,300
|
|
|
|
2012
|
|
$
|
135,225
|
|
$
|
60,000
|
(1)
|
|
$
|
13,491
|
(2)
|
|
$
|
208,716
|
|
Luz Berg COO, CMO, Secretary
|
|
2013
|
|
$
|
164,427
|
|
$
|
0
|
|
|
$
|
9,667
|
(2)
|
|
$
|
174,094
|
|
|
|
2012
|
|
$
|
130,225
|
|
$
|
45,000
|
(1)
|
|
$
|
6,746
|
(2)
|
|
$
|
181,971
|
|
Robert Brilon CFO, Treasurer(4)
|
|
2013
|
|
$
|
9,087
|
|
$
|
0
|
|
|
$
|
116,790
|
(2)
|
|
$
|
125,877
|
|
Brian Duling, Former
CFO & Treasurer(3) |
|
2013
|
|
$
|
136,364
|
|
|
0
|
|
|
|
0
|
|
|
$
|
136,364
|
|
|
|
2012
|
|
$
|
38,827
|
|
$
|
15,000
|
(1)
|
|
$
|
52,560
|
(2)
|
|
$
|
106,387
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
Securities
|
|
Number of
|
|
|
|
|
|
|
|
|
Underlying
|
|
Underlying
|
|
Securities
|
|
|
|
|
|
|
|
|
Unexercised Options/
|
|
Unexercised
|
|
Underlying
|
|
Option
|
|
|
|
|
|
|
Warrants
|
|
Options
|
|
Unexercised
|
|
Exercise
|
|
Option
|
|
|
|
|
(#)
|
|
(#)
|
|
Unearned Options
|
|
Price
|
|
Expiration
|
|
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
(#)
|
|
($)
|
|
Date
|
|
|
David Ly, Chairman and CEO
|
|
300,000
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
(options)
|
|
-
|
|
-
|
|
$
|
1.00
|
|
6/20/21
|
|
|
|
50,000 (7)
|
|
|
|
|
|
|
|
|
|
|
|
|
(options)
|
|
-
|
|
-
|
|
$
|
1.10
|
|
12/18/22
|
|
|
|
50,000 (8)
|
|
|
|
|
|
|
|
|
|
|
|
|
(options)
|
|
-
|
|
-
|
|
$
|
1.75
|
|
12/31/23
|
|
Luz Berg, COO, CMO, & Secretary
|
|
256,140
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
(warrants)
|
|
-
|
|
-
|
|
$
|
0.10
|
|
12/30/16
|
|
|
|
240,331
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
(warrants)
|
|
-
|
|
-
|
|
$
|
0.10
|
|
9/10/17
|
|
|
|
425,712
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
(options)
|
|
-
|
|
-
|
|
$
|
0.10
|
|
4/01/18
|
|
|
|
500,000
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
(options)
|
|
-
|
|
-
|
|
$
|
1.00
|
|
6/20/21
|
|
|
|
25,000 (7)
|
|
|
|
|
|
|
|
|
|
|
|
|
(options)
|
|
-
|
|
-
|
|
$
|
1.10
|
|
12/18/22
|
|
|
|
25,000 (8)
|
|
|
|
|
|
|
|
|
|
|
|
|
(options)
|
|
-
|
|
-
|
|
$
|
1.75
|
|
12/31/23
|
|
Robert Brilon,
President,CFO & Treasurer |
|
300,000
(6)
|
|
-
|
|
-
|
|
$
|
1.80
|
|
11/30/23
|
|
|
|
6,818 (9)
|
|
-
|
|
-
|
|
$
|
1.65
|
|
12/20/18
|
|
42 | ||
|
|
|
|
Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
earned
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
or paid
|
|
|
Stock
|
|
|
|
|
|
Incentive
|
|
|
deferred
|
|
|
All Other
|
|
|
|
|
|
|
|
in cash
|
|
|
Awards
|
|
|
Options
|
|
|
Plan
|
|
|
compensation
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
|
($)
|
|
|
($)
|
|
|
Awards ($)
(7)
|
|
|
Compensation
|
|
|
earnings ($)
|
|
|
($)
|
|
|
($)
|
|
Joseph Farnsworth
|
|
|
-
|
|
|
-
|
|
$
|
19,335
|
(1)
|
|
-
|
|
|
-
|
|
|
-
|
|
$
|
19,335
|
|
James Staudohar
|
|
|
-
|
|
|
-
|
|
$
|
19,335
|
(2)
|
|
-
|
|
|
-
|
|
|
-
|
|
$
|
19,335
|
|
Gregory Omi
|
|
|
-
|
|
|
-
|
|
$
|
19,335
|
(3)
|
|
-
|
|
|
-
|
|
|
-
|
|
$
|
19,335
|
|
Alex Kuo
|
|
|
-
|
|
|
-
|
|
$
|
19,335
|
(4)
|
|
-
|
|
|
-
|
|
|
-
|
|
$
|
19,335
|
|
Robert Gillen
|
|
|
-
|
|
|
-
|
|
$
|
19,335
|
(5)
|
|
-
|
|
|
-
|
|
|
-
|
|
$
|
19,335
|
|
Alejandro Franco
|
|
|
-
|
|
|
-
|
|
$
|
19,335
|
(6)
|
|
-
|
|
|
-
|
|
|
-
|
|
$
|
19,335
|
|
43 | ||
|
|
|
|
|
|
|
Options or Warrants
|
|
|
|
|
|
|
|
|
|
Amount of Shares of
|
|
to Purchase Common
|
|
Total Beneficial
|
|
|
|
Name of Beneficial Owner
|
|
Position
|
|
Common Stock
|
|
Stock
|
|
Ownership
(1)
|
|
Percent of Class
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Ly
(2)
|
|
Chairman & CEO
|
|
3,185,181
|
|
400,000
|
|
3,585,181
|
|
7.9
|
%
|
Luz Berg
(2)
|
|
COO, CMO & Secretary
|
|
-
|
|
1,472,183
|
|
1,472,183
|
|
3.2
|
%
|
Robert Brilon
(2)
|
|
President, CFO & Treasurer
|
|
|
|
411,363
|
|
411,363
|
|
.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph Farnsworth
(2)
|
|
Director
|
|
104,958
|
|
327,500
|
|
432,458
|
|
1.0
|
%
|
Gregory Omi
(2)
|
|
Director
|
|
903,859
|
|
300,000
|
|
1,203,859
|
|
2.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
James D.Staudohar
(2)
|
|
Director
|
|
0
|
|
205,000
|
|
205,000
|
|
.4
|
%
|
Robert Gillen
(2)
|
|
Director
|
|
1,301,140
|
|
245,000
|
|
1,546,140
|
|
3.4
|
%
|
Chen-Ho (Alex) Kuo
(2)
|
|
Director
|
|
300,000
|
|
250,000
|
|
550,000
|
|
1.2
|
%
|
Alejandro Franco
(2)
|
|
Director
|
|
-
|
|
150,000
|
|
150,000
|
|
.3
|
%
|
All directors and officers as a group
|
|
|
|
5,995,138
|
|
3,761,046
|
|
9,556,184
|
|
20.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
William A. Walsh
(3)
|
|
|
|
2,100,000
|
|
0
|
|
2,100,000
|
|
4.6
|
%
|
44 | ||
|
|
|
Year ended
|
|
Year ended
|
|
||
|
|
December 31,
|
|
December 31,
|
|
||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Audit fees
|
|
$
|
113,000
|
|
$
|
66,000
|
|
Audit-related fees
|
|
$
|
3,860
|
|
$
|
15,448
|
|
Tax fees
|
|
$
|
0
|
|
$
|
0
|
|
All other fees
|
|
$
|
0
|
|
$
|
0
|
|
Exhibit
Number |
|
Description of Exhibits
|
|
|
|
2.1
|
|
Agreement and Plan of Merger, 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 the Form 10-K/A filed on 2/9/2012)
|
3.1
|
|
Articles of Incorporation of Charmed Homes Inc. (Incorporated by reference to the Form SB-2 filed on 4/27/2007)
|
3.2*
|
|
Bylaws of Iveda Solutions, Inc.
|
45 | ||
|
3.3
|
|
Amendment to Articles of Incorporation, filed with the Nevada Secretary of State on September 9, 2009 (Incorporated by reference to the Form 8-K filed on 10/21/2009)
|
3.4
|
|
Articles of Merger filed with the Secretary of State of Nevada on December 28, 2010, and dated effective December 31, 2010 (Incorporated by reference to the Form 8-K filed on January 4, 2010)
|
4.1
|
|
Specimen Stock Certificate (Incorporated by reference to the 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 the 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 the Form S-4/A1 filed on 7/10/2009)
|
4.4
|
|
2009 Stock Option Plan, dated October 15, 2009 (Incorporated by reference to the 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 the Form 8-K filed on 10/21/2009)
|
4.6
|
|
2010 Stock Option Plan, dated January 18, 2010 (Incorporated by reference to the Form S-8 filed on 2/4/2010)
|
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 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 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 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 the Form S-4/A2 filed on 8/2/2009)
|
10.2
|
|
Partner Agreement dated January 30, 2007 by and between Milestone Systems, Inc. and IntelaSight, Inc. (Incorporated by reference to the 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 the 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 the 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 the Form 8-K filed on 10/21/2009)
|
10.6
|
|
Subscription Agreement, dated July 26, 2010 (Incorporated by reference to Form 10-Q filed on November 12, 2010)
|
10.7
|
|
Line of Credit Promissory Note, dated September 15, 2010 (Incorporated by reference to Form 10-Q filed on November 12, 2010)
|
10.8
|
|
Agreement for Service, dated October 20, 2010 (Incorporated by reference to Form 10-Q filed on November 12, 2010)
|
10.9
|
|
Consulting Agreement, dated October 25, 2010 (Incorporated by reference to Form 10-Q filed on November 12, 2010)
|
10.10
|
|
Operating Level Agreement, dated October 25, 2010 (Incorporated by reference to Form 10-Q filed on November 12, 2010)
|
10.11
|
|
Side Letter, 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 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 (Incorporated by reference to Form 10-Q/A filed on 3/7/2012)
|
10.13
|
|
2010 Digital Video Remote Monitoring Recording System Procurement Contract between Sole-Vision Technology, Inc. and New Taipei City Police Department Purchasing Authority, dated January 9, 2012 (Incorporated by reference to Form 10-K filed on 3/30/2012).
|
10.14
|
|
Consulting Agreement between Iveda Solutions, Inc. and Amextel S.A. de C.V. dated November 2, 2011 (Incorporated by reference to Form 10-K/A filed on 5/11/2012).
|
46 | ||
|
14.1
|
|
Code of Conduct and Ethics (Incorporated by reference to the Form 10-K filed on 4/15/2010)
|
14.2
|
|
Code of Ethics for Chief Executive Officer and Senior Financial Officers (Incorporated by reference to the Form 10-K filed on 4/15/2010)
|
21
|
|
Subsidiaries of the Registrant (Incorporated by reference to Form 10-K filed on 3/30/2012).
|
31.1*
|
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Chief Executive Officer
|
31.2*
|
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Chief Financial Officer
|
32.1**
|
|
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Chief Executive Officer
|
32.2**
|
|
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Chief Financial Officer |
101.1**
|
|
The following financial information from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of December 31, 2012 and December 31, 2011, (ii) Condensed Consolidated Statements of Operations for the years ended December 31, 2012 and 2011, (iii) Condensed Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2012 and 2011, (iv) Condensed Consolidated Statements of Cash Flows for the years ended December 31, 2012 and 2011, and (iv) the Notes to Condensed Consolidated Financial Statements.
|
* | Filed herewith |
** | Furnished herewith |
47 | ||
|
F-1 | ||
|
INDEPENDENT AUDITORS’ REPORTS
|
|
F-3
|
|
|
|
CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
F-4
|
|
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
F-5
|
|
|
|
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
|
|
F-7
|
|
|
|
STATEMENTS OF CASH FLOWS
|
|
F-8
|
|
|
|
NOTES TO FINANCIAL STATEMENTS
|
|
F-9 F-32
|
F-2 | ||
|
Hong Kong
, China
|
Albert Wong & Co.
|
March 28, 2014
|
Certified Public Accountants
|
F-3 | ||
|
|
|
2013
|
|
2012
|
|
||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
559,729
|
|
$
|
114,462
|
|
Restricted Cash
|
|
|
1,160,688
|
|
|
447,206
|
|
Accounts Receivable, Net
|
|
|
372,587
|
|
|
1,958,799
|
|
Inventory
|
|
|
331,437
|
|
|
123,021
|
|
Other Current Assets
|
|
|
295,205
|
|
|
645,728
|
|
Total Current Assets
|
|
|
2,719,646
|
|
|
3,289,216
|
|
|
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT, Net
|
|
|
471,182
|
|
|
516,981
|
|
|
|
|
|
|
|
|
|
OTHER ASSETS
|
|
|
|
|
|
|
|
Intangible Assets, Net
|
|
|
146,666
|
|
|
166,666
|
|
Goodwill
|
|
|
-
|
|
|
841,000
|
|
Other Assets
|
|
|
341,752
|
|
|
105,621
|
|
Total Other Assets
|
|
|
488,418
|
|
|
1,113,287
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
3,679,246
|
|
$
|
4,919,484
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
Accounts and Other Payables
|
|
$
|
2,358,702
|
|
$
|
2,456,788
|
|
Due to Related Parties, net of debt discount
|
|
|
100,000
|
|
|
336,605
|
|
Short Term Debt
|
|
|
60,291
|
|
|
802,122
|
|
Derivative Liability
|
|
|
39,804
|
|
|
-
|
|
Current Portion of Long-Term Debt
|
|
|
164,156
|
|
|
75,707
|
|
Total Current Liabilities
|
|
|
2,722,953
|
|
|
3,671,222
|
|
|
|
|
|
|
|
|
|
LONG-TERM DEBT AND CONVERTIBLE DEBENTURES, Net of Discount
|
|
|
364,370
|
|
|
67,695
|
|
DUE TO RELATED PARTY, Net of discount
|
|
|
70,114
|
|
|
-
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
Preferred Stock, $0.00001 par value; 100,000,000 shares
|
|
|
-
|
|
|
-
|
|
Common Stock, $0.00001 par value; 200,000,000 shares Authorized; 26,722,012
and 20,458,048 shares issued and outstanding as of December 31, 2013 and 2012, respectively |
|
|
267
|
|
|
204
|
|
Additional Paid-In Capital
|
|
|
22,354,002
|
|
|
16,204,068
|
|
Accumulated Comprehensive Income (Loss)
|
|
|
(30,670)
|
|
|
(23,629)
|
|
Accumulated Deficit
|
|
|
(21,801,790)
|
|
|
(15,000,076)
|
|
Total Stockholders’ Equity
|
|
|
521,809
|
|
|
1,180,567
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Equity
|
|
$
|
3,679,246
|
|
$
|
4,919,484
|
|
F-4 | ||
|
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
REVENUE
|
|
|
|
|
|
|
|
Equipment Sales
|
|
$
|
2,691,916
|
|
$
|
2,815,150
|
|
Service Revenue
|
|
|
608,157
|
|
|
731,908
|
|
Other Revenue
|
|
|
45,144
|
|
|
61,940
|
|
|
|
|
|
|
|
|
|
Total Revenue
|
|
|
3,345,217
|
|
|
3,608,998
|
|
|
|
|
|
|
|
|
|
COST OF REVENUE
|
|
|
2,729,350
|
|
|
3,230,495
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
|
615,867
|
|
|
378,503
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
General & Administrative
|
|
|
6,574,682
|
|
|
4,223,455
|
|
Impairment of Goodwill
|
|
|
841,000
|
|
|
-
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS
|
|
|
(6,799,815)
|
|
|
(3,844,952)
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
Foreign Currency Gain (Loss)
|
|
|
10,496
|
|
|
(524)
|
|
Loss on derivatives
|
|
|
(241)
|
|
|
-
|
|
Interest Income
|
|
|
2,135
|
|
|
806
|
|
Interest Expense
|
|
|
(83,625)
|
|
|
(79,759)
|
|
|
|
|
|
|
|
|
|
Total Other Income (Expense)
|
|
|
(71,235)
|
|
|
(79,477)
|
|
|
|
|
|
|
|
|
|
LOSS BEFORE INCOME TAXES
|
|
|
(6,871,050)
|
|
|
(3,924,429)
|
|
|
|
|
|
|
|
|
|
BENEFIT (PROVISION) FOR INCOME TAXES
|
|
|
69,336
|
|
|
82,502
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
$
|
(6,801,714)
|
|
$
|
(3,841,927)
|
|
|
|
|
|
|
|
|
|
BASIC AND DILUTED LOSS PER SHARE
|
|
$
|
(0.27)
|
|
$
|
(0.20)
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES
|
|
|
24,735,921
|
|
|
19,077,341
|
|
F-5 | ||
|
|
|
Year Ended
|
|
Year Ended
|
|
||
|
|
December 31,
|
|
December 31,
|
|
||
|
|
2013
|
|
2012
|
|
||
Net loss
|
|
$
|
(6,801,714)
|
|
$
|
(3,841,927)
|
|
Change in equity adjustment from foreign currency translation, net of tax
|
|
|
(7,041)
|
|
|
22,978
|
|
Comprehensive loss
|
|
|
(6,808,755)
|
|
|
(3,819,649)
|
|
F-6 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
Total
|
|
|||
|
|
|
|
|
|
|
Additional
|
|
Accumulated
|
|
Comprehensive
|
|
Stockholder’s
|
|
||||
|
|
Shares
|
|
Amount
|
|
Paid-in-Capital
|
|
Deficit
|
|
Income (loss)
|
|
Equity (Deficit)
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AT DECEMBER 31,
2011 |
|
18,031,729
|
|
|
180
|
|
|
13,642,892
|
|
|
(11,158,149)
|
|
|
(45,907)
|
|
|
2,439,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock Issued for Cash
|
|
2,426,319
|
|
|
24
|
|
|
2,426,295
|
|
|
|
|
|
|
|
|
2,426,319
|
|
Costs of Capital
|
|
|
|
|
|
|
|
(317,465)
|
|
|
|
|
|
|
|
|
(317,465)
|
|
Stock Based Compensation
|
|
|
|
|
|
|
|
248,072
|
|
|
|
|
|
|
|
|
248,072
|
|
Debt Discount
|
|
|
|
|
|
|
|
40,200
|
|
|
|
|
|
|
|
|
40,200
|
|
Common Stock Issued for Services
|
|
-
|
|
|
-
|
|
|
164,074
|
|
|
|
|
|
|
|
|
164,074
|
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
(3,841,927)
|
|
|
|
|
|
(3,841,927)
|
|
Comprehensive Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,278
|
|
|
22,278
|
|
BALANCE AT DECEMBER 31,
2012 |
|
20,458,048
|
|
$
|
204
|
|
$
|
16,204,068
|
|
$
|
(15,000,076)
|
|
$
|
(23,629)
|
|
$
|
1,180,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock Issued for Cash
|
|
5,764,774
|
|
|
58
|
|
|
5,816,741
|
|
|
|
|
|
|
|
|
5,816,799
|
|
Costs of Capital
|
|
|
|
|
|
|
|
(606,320)
|
|
|
|
|
|
|
|
|
(606,320)
|
|
Stock Based Compensation
|
|
|
|
|
|
|
|
336,402
|
|
|
|
|
|
|
|
|
336,402
|
|
Conversion of Debt to Stock
|
|
167,000
|
|
|
2
|
|
|
175,698
|
|
|
|
|
|
|
|
|
175,700
|
|
Common Stock Issued for Services
|
|
80,000
|
|
|
-
|
|
|
182,072
|
|
|
|
|
|
|
|
|
182,072
|
|
Exercise of options
|
|
252,190
|
|
|
3
|
|
|
245,341
|
|
|
|
|
|
|
|
|
245,344
|
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
(6,801,714)
|
|
|
|
|
|
(6,801,714)
|
|
Comprehensive Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,041)
|
|
|
(7,041)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AT DECEMBER 31,
2013 |
|
26,722,012
|
|
$
|
267
|
|
$
|
22,354,002
|
|
$
|
(21,801,790)
|
|
$
|
(30,670)
|
|
$
|
521,809
|
|
F-7 | ||
|
|
|
2013
|
|
2012
|
|
||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(6,801,714)
|
|
$
|
(3,841,927)
|
|
Adjustments to Reconcile Net Loss to Net Cash
Used by Operating Activities |
|
|
|
|
|
|
|
Depreciation and Amortization
|
|
|
221,902
|
|
|
218,229
|
|
Amortization of Debt Discount
|
|
|
9,096
|
|
|
-
|
|
Stock Compensation
|
|
|
336,402
|
|
|
248,072
|
|
Bad Debt Expense
|
|
|
349,202
|
|
|
38,166
|
|
Common stock issued for services
|
|
|
222,206
|
|
|
123,940
|
|
Impairment of Goodwill
|
|
|
841,000
|
|
|
-
|
|
Provision for obsolete inventory
|
|
|
-
|
|
|
28,480
|
|
(Increase) Decrease in Operating Assets:
|
|
|
|
|
|
|
|
Accounts Receivable
|
|
|
1,183,456
|
|
|
(1,008,503)
|
|
Inventory
|
|
|
(212,921)
|
|
|
(68,375)
|
|
Other Current Assets
|
|
|
(126,551)
|
|
|
(516,905)
|
|
Accounts and Other Payables
|
|
|
366,506
|
|
|
1,451,120
|
|
Net cash used in operating activities
|
|
|
(3,611,416)
|
|
|
(3,327,703)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
Cash Acquired in Acquisition
|
|
|
-
|
|
|
-
|
|
Purchase of Property and Equipment
|
|
|
(157,230)
|
|
|
(338,825)
|
|
Net cash (used in) investing activities
|
|
|
(157,230)
|
|
|
(338,825)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
Changes in Restricted Cash
|
|
|
(736,970)
|
|
|
(385,112)
|
|
Proceeds from (Payments on) Short-term Notes Payable/Debt
|
|
|
(57,511)
|
|
|
604,856
|
|
Proceeds from (Payments to) Related Parties
|
|
|
(245,002)
|
|
|
456,989
|
|
Proceeds from (Payments on) Long-term Debt
|
|
|
(35,004)
|
|
|
52,680
|
|
Deferred Finance Costs, Net
|
|
|
(161,657)
|
|
|
-
|
|
Proceeds from Exercise of Stock Options
|
|
|
245,344
|
|
|
-
|
|
Common Stock Issued, net of Costs of Capital
|
|
|
5,210,479
|
|
|
2,189,189
|
|
Net cash provided by financing activities
|
|
|
4,219,679
|
|
|
2,918,602
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
|
|
(5,766)
|
|
|
12,024
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
|
445,267
|
|
|
(735,902)
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents - Beginning of Year
|
|
|
114,462
|
|
|
850,364
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - END OF YEAR
|
|
$
|
559,729
|
|
$
|
114,462
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock issued for convertible debt and interest
|
|
$
|
147,500
|
|
$
|
-
|
|
Interest Paid
|
|
$
|
80,863
|
|
$
|
79,758
|
|
Establishment of derivative liability
|
|
$
|
39,804
|
|
$
|
-
|
|
Discount on convertible debt
|
|
$
|
27,608
|
|
$
|
-
|
|
Issuance of common stock as consideration for payment of Loan payable
|
|
$
|
30,000
|
|
$
|
-
|
|
Common Stock warrants issued as deferred finance costs
|
|
$
|
11,955
|
|
$
|
-
|
|
F-8 | ||
|
|
·
|
In December 2013, the Board of Directors also approved the Company to raise up to an aggregate amount of $
3.6
million in bridge financing through the sale of Convertible Debentures in advance of the long-term financing.
|
|
·
|
The Board of Directors approved the Company to engage with a financial capital markets advisor in connection with a potential capital financial transaction to raise up to $
30
million (“Long Term Financing”).
|
|
·
|
In the third quarter of 2013, the Company launched two new camera lines in collaboration with MegaSys, its Taiwan subsidiary and Industrial Technology Research Institute (ITRI), its nonprofit research and development partner in Taiwan. These products are enablers of the Company’s video hosting services.
|
|
·
|
The Company has recently developed two other standalone services:
|
o |
IvedaMobilea cloud-hosting service that turns any smartphone or tablet into a mobile, cloud video streaming device. This was developed with ITRI.
|
|
·
|
The Company launched a new website to highlight new products and services with corresponding applications.
|
|
|
|
|
·
|
The Company launched a second website allowing for direct web-sales, geared toward the residential and small-to-medium sized businesses.
|
|
·
|
The Company intends to continue to participate in industry and vertical tradeshows to launch new products, generate leads, solicit resellers and other sales channels, and identify potential technology partners.
|
|
·
|
The Company intends to continue advertising on selected trade magazines and running Google Adwords to generate leads.
|
|
·
|
The Company has evaluated its reseller distribution channel and eliminated non-performing components of the channel.
|
|
·
|
In November 2013, Iveda hired Bob Brilon as our chief financial officer and executive vice president of business development.
He has strong ties with the investment community and has extensive experience in mergers and acquisitions, strategic growth planning, and interacting with domestic and foreign institutional investors, which will be instrumental to our market expansion, global distribution of our cloud video hosting platform and services, and raising capital to fund our growth.
In February 2014, he was also appointed as the Company’s president.
|
|
·
|
The Company is in active collaboration with certain telecommunications companies in other countries to resell the Company’s products and services in their respective countries.
|
F-9 | ||
|
F-10 | ||
|
F-11 | ||
|
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Trade receivables, gross
|
|
$
|
870,114
|
|
$
|
2,097,668
|
|
Allowance for doubtful accounts
|
|
|
(497,527)
|
|
|
(138,869)
|
|
|
|
|
|
|
|
|
|
Trade receivables, net
|
|
$
|
372,587
|
|
$
|
1,958,799
|
|
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Notes receivables
|
|
$
|
3,413
|
|
$
|
6,255
|
|
Restricted cash
|
|
|
1,160,688
|
|
|
447,206
|
|
Deposits-current
|
|
|
135,727
|
|
|
415,108
|
|
Prepaid expenses and other current assets
|
|
|
156,065
|
|
|
224,365
|
|
|
|
|
|
|
|
|
|
Other current assets
|
|
$
|
1,455,893
|
|
$
|
1,092,934
|
|
F-12 | ||
|
2014
|
|
$
|
20,000
|
|
2015
|
|
$
|
20,000
|
|
2016
|
|
$
|
20,000
|
|
2017
|
|
$
|
20,000
|
|
Thereafter
|
|
$
|
66,667
|
|
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Deposits- long-term
|
|
$
|
10,836
|
|
$
|
10,836
|
|
Deferred tax assets
|
|
|
160,198
|
|
|
94,785
|
|
Deferred Finance Costs (Net of Amortization)
|
|
|
170,718
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Other assets
|
|
$
|
341,752
|
|
$
|
105,621
|
|
F-13 | ||
|
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Accounts Payable
|
|
$
|
688,130
|
|
$
|
673,173
|
|
Accrued Expenses
|
|
|
1,651,419
|
|
|
1,674,258
|
|
Income Tax Payable
|
|
|
2,183
|
|
|
53,784
|
|
Deferred Revenue
|
|
|
16,970
|
|
|
55,573
|
|
|
|
|
|
|
|
|
|
Accounts and Other Payables
|
|
$
|
2,358,702
|
|
$
|
2,456,788
|
|
F-14 | ||
|
|
|
Net Revenues
|
|
Net Assets
|
|
||
|
|
|
|
|
|
|
|
United States
|
|
$
|
487,475
|
|
$
|
562,264
|
|
Asia
|
|
$
|
2,607,501
|
|
$
|
(40,455)
|
|
Mexico
|
|
$
|
250,241
|
|
$
|
-
|
|
F-15 | ||
|
|
|
Twelve Months
Ending Dec. 31, 2013 Iveda Solutions, Inc. |
|
Twelve Months
Ending Dec. 31, 2013 MegaSys |
|
Condensed
Consolidated Total |
|
|||
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
737,716
|
|
$
|
2,607,501
|
|
$
|
3,345,217
|
|
Cost of Revenue
|
|
|
731,770
|
|
|
1,997,580
|
|
|
2,729,350
|
|
Gross Profit
|
|
|
5,946
|
|
|
609,921
|
|
|
615,867
|
|
Depreciation and Amort.
|
|
|
210,787
|
|
|
11,115
|
|
|
221,902
|
|
General & Administrative
|
|
|
5,464,288
|
|
|
888,492
|
|
|
6,352,780
|
|
Impairment of Goodwill
|
|
|
841,000
|
|
|
-
|
|
|
841,000
|
|
(Loss) from Operations
|
|
|
(6,510,129)
|
|
|
(289,686)
|
|
|
(6,799,815)
|
|
Other Income (Expense)
|
|
|
(76,686)
|
|
|
5,451
|
|
|
(71,235)
|
|
(Loss) Before Income Taxes
|
|
|
(6,586,815)
|
|
|
(284,235)
|
|
|
(6,871,050)
|
|
Benefit For Income Taxes
|
|
|
-
|
|
|
69,336
|
|
|
69,336
|
|
Net Loss
|
|
$
|
(6,586,815)
|
|
$
|
(214,899)
|
|
$
|
(6,801,714)
|
|
F-16 | ||
|
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
737,715
|
|
$
|
767,841
|
|
Republic of China (Taiwan)
|
|
|
2,672,928
|
|
|
2,843,889
|
|
Elimination of intersegment revenues
|
|
|
(65,426)
|
|
|
(2,732)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,345,217
|
|
$
|
3,608,998
|
|
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Operating earnings (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
(6,510,129)
|
|
$
|
(3,348,419)
|
|
Republic of China (Taiwan)
|
|
|
(289,686)
|
|
|
(495,830)
|
|
Elimination of intersegment profit
|
|
|
-
|
|
|
(703)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(6,799,815)
|
|
$
|
(3,844,952)
|
|
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
Property and equipment
|
|
|
|
|
|
|
|
United States
|
|
$
|
437,410
|
|
$
|
488,648
|
|
Republic of China (Taiwan)
|
|
|
33,772
|
|
|
28,333
|
|
|
|
|
|
|
|
|
|
|
|
$
|
471,182
|
|
$
|
516,981
|
|
|
|
December 31,
|
|
|||
|
|
2013
|
|
2012
|
|
|
Additions to long-lived assets
|
|
|
|
|
|
|
United States
|
$
|
129,222
|
|
$
|
333,432
|
|
Republic of China (Taiwan)
|
|
28,008
|
|
|
5,393
|
|
|
|
|
|
|
|
|
|
$
|
157,230
|
|
$
|
338,825
|
|
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
Inventory
|
|
|
|
|
|
|
|
United States
|
|
$
|
126,403
|
|
$
|
26,794
|
|
Republic of China (Taiwan)
|
|
|
205,034
|
|
|
96,227
|
|
|
|
|
|
|
|
|
|
|
|
$
|
331,437
|
|
$
|
123,021
|
|
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
Total Assets
|
|
|
|
|
|
|
|
United States
|
|
$
|
1,175,874
|
|
$
|
1,727,017
|
|
Republic of China (Taiwan)
|
|
|
2,503,372
|
|
|
3,192,467
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,679,246
|
|
$
|
4,919,484
|
|
F-17 | ||
|
|
•
|
Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period.
|
|
•
|
Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S.
GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense.
|
F-18 | ||
|
F-19 | ||
|
|
|
|
2013
|
|
|
2012
|
|
On June 20, 2012, the Company entered into a convertible debenture agreement with a Board Member for $200,000. Interest is payable at 12% per annum, payable on the maturity date of June 20, 2013. The Company issued warrants to purchase 20,000 shares of the Company Stock, at an exercise price of $ 1.00. Accordingly, the Company recognized a discount of $16,789 on the principal value of the $200,000 and is amortizing the discount over the 12 month term of the debenture. The debenture is convertible into shares of Company Common Stock on or before the Maturity Date, at a conversion rate of $1.00 per share. On June 20, 2013, the Company paid off, in full, this debenture which totaled $200,000 plus $24,000 interest.
|
|
|
-
|
|
$
|
200,000
|
|
|
|
|
|
|
|
|
|
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. On September 25, 2012 a Promissory Note Extension Agreement was signed to extend the maturity date of one of the $45,000 notes to March 25, 2013. On May 14, 2013, the Company paid off, in full, this promissory note which totaled $45,000 plus $3,417.53 interest.
|
|
|
-
|
|
$
|
45,000
|
|
|
|
|
|
|
|
|
|
On November 19, 2012, the Company entered into a separate convertible debenture agreement with a different Board Member for $100,000. Interest is payable at 10% per annum, payable on the maturity date of May 19, 2013. The Company issued warrants to purchase 10,000 shares of the Company Stock, at an exercise price of $ 1.10. The debenture is convertible into shares of Company Common Stock on or before the Maturity Date, at a conversion rate of $1.10 per share.
|
|
|
100,000
|
|
$
|
100,000
|
|
|
|
|
|
|
|
|
|
On December 20, 2013, the Company entered into a Convertible Debenture with an officer for $75,000 which includes warrants to purchase 6,818 shares of the Company stock , at an exercise price of $1.65. Accordingly, the Company recognized a discount of $4,886 on the principal value of $75,000 and is amortizing the discount over the three year term of the debenture.
|
|
|
75,000
|
|
|
-
|
|
Total Due to Related Parties
|
|
|
175,000
|
|
|
345,000
|
|
Less Current Portion
|
|
|
(100,000)
|
|
|
(336,605)
|
|
Less: Debt Discount
|
|
|
(4,886)
|
|
|
(8,395)
|
|
Total Long-Term
|
|
$
|
70,114
|
|
$
|
-
|
|
F-20 | ||
|
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Loan from Shanghai Commercial & Savings at an interest rate at 5.5% per annum, due on November 26, 2014
|
|
$
|
60,291
|
|
$
|
132,097
|
|
Loan from Chailease Bank at various interest rates ranging from
1% per annum to 3.24%. Due on May 31, 2014 |
|
|
-
|
|
|
488,025
|
|
Notes Payable
|
|
|
-
|
|
|
182,839
|
|
|
|
|
|
|
|
|
|
Balance at end of year
|
|
$
|
60,291
|
|
$
|
802,122
|
|
NOTE 4
|
CONVERTIBLE DEBENTURES
|
F-21 | ||
|
NOTE 5
|
FAIR VALUE MEASUREMENTS
|
|
|
Level I
|
|
Level II
|
|
Level III
|
|
|
|
||||
|
|
Quoted
|
|
Observable
|
|
Unobservable
|
|
|
|
||||
|
|
Prices
|
|
Inputs
|
|
Inputs
|
|
Total
|
|
||||
Derivative liability
|
|
$
|
-
|
|
$
|
-
|
|
$
|
39,804
|
|
$
|
39,804
|
|
Beginning Balance
|
|
$
|
-
|
|
Issued
|
|
|
39,563
|
|
(Gains) losses during the period
|
|
|
241
|
|
Settlements
|
|
|
-
|
|
Ending Balance
|
|
$
|
39,804
|
|
NOTE 6
|
LONG-TERM DEBT
|
|
|
2013
|
|
2012
|
|
||
Loan from Chailease Finance Co., Ltd. with an interest rate at 5% per annum, due on May 30, 2015
|
|
$
|
135,208
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Loan from Taipei Fubon Bank with an interest rate at 5.5% per annum, due on November 26, 2014
|
|
|
62,942
|
|
$
|
140,764
|
|
|
|
|
|
|
|
|
|
Other loan
|
|
|
2,638
|
|
|
2,638
|
|
|
|
|
|
|
|
|
|
Convertible debenture
|
|
|
350,000
|
|
|
-
|
|
|
|
|
550,788
|
|
|
143,402
|
|
|
|
|
|
|
|
|
|
Less: Current portion
|
|
|
(164,156)
|
|
|
(75,707)
|
|
Less: Debt discount
|
|
|
(22,262)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
$
|
364,370
|
|
$
|
67,695
|
|
F-22 | ||
|
2014
|
|
$
|
330,451
|
|
2015
|
|
|
144,563
|
|
2016
|
|
|
113,835
|
|
Total
|
|
$
|
588,849
|
|
F-23 | ||
|
F-24 | ||
|
|
|
2013
|
|
2012
|
|
||||||||
|
|
|
|
|
Weighted -
|
|
|
|
|
Weighted -
|
|
||
|
|
|
|
|
Average
|
|
|
|
|
Average
|
|
||
|
|
|
|
|
Exercise
|
|
|
|
|
Exercise
|
|
||
|
|
Shares
|
|
Price
|
|
Shares
|
|
Price
|
|
||||
Outstanding at Beginning of Year
|
|
|
5,038,512
|
|
$
|
0.91
|
|
|
3,663,179
|
|
$
|
0.81
|
|
Granted
|
|
|
1,169,500
|
|
|
1.74
|
|
|
1,529,333
|
|
|
1.16
|
|
Exercised
|
|
|
(252,190)
|
|
|
.97
|
|
|
-
|
|
|
-
|
|
Forfeited or Canceled
|
|
|
(262,500)
|
|
|
1.08
|
|
|
(154,000)
|
|
|
1.01
|
|
Outstanding at End of Year
|
|
|
5,693,322
|
|
|
1.07
|
|
|
5,038,512
|
|
|
0.91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Exercisable at Year-End
|
|
|
4,449,986
|
|
|
1.37
|
|
|
3,748,003
|
|
|
1.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Fair Value of Options Granted
During the Year |
|
$
|
0.37
|
|
|
|
|
$
|
0.28
|
|
|
|
|
|
Options Outstanding
|
Options Exercisable
|
|
||||||||||||
|
Number
|
|
Weighted -
|
|
|
|
|
|
Number
|
|
|
|
|
||
|
Outstanding
|
|
Average
|
|
Weighted -
|
|
Exercisable
|
|
Weighted -
|
|
|||||
Range of
|
at
|
|
Remaining
|
|
Average
|
|
At
|
|
Average
|
|
|||||
Exercise
|
December 31,
|
|
Contractual
|
|
Exercise
|
|
December 31,
|
|
Exercise
|
|
|||||
Prices
|
2013
|
|
Life
|
|
Price
|
|
2013
|
|
Price
|
|
|||||
$0.10 - $1.80
|
|
|
5,693,322
|
|
7.5 Years
|
|
$
|
1.07
|
|
|
4,449,986
|
|
$
|
1.37
|
|
F-25 | ||
|
|
2013
|
|
2012
|
|
||
Expected Life
|
|
5 Years
|
|
|
5 Years
|
|
Dividend Yield
|
|
0
|
%
|
|
0
|
%
|
Expected Volatility
|
|
25
|
%
|
|
26
|
%
|
Risk-Free Interest Rate
|
|
1.36
|
%
|
|
.80
|
%
|
F-26 | ||
|
|
|
2013
|
|
2012
|
|
||||||||
|
|
Shares
|
|
Weighted -
Average Exercise Price |
|
Shares
|
|
Weighted -
Average Exercise Price |
|
||||
Outstanding at Beginning of year
|
|
|
2,797,219
|
|
$
|
1.33
|
|
|
1,612,778
|
|
$
|
0.77
|
|
Granted
|
|
|
1,086,422
|
|
|
1.24
|
|
|
1,434,441
|
|
|
1.07
|
|
Exercised
|
|
|
-
|
|
|
0.00
|
|
|
-
|
|
|
0.00
|
|
Forfeited or Canceled
|
|
|
-
|
|
|
0.00
|
|
|
(250,000)
|
|
|
1.00
|
|
Outstanding at end of Year
|
|
|
3,883,641
|
|
|
1.00
|
|
|
2,797,219
|
|
|
1.33
|
|
Warrants Redeemable at End of Year
|
|
|
3,883,641
|
|
|
1.00
|
|
|
2,797,219
|
|
|
1.33
|
|
Weighted-Average Fair Value of Warrants Issued During the Year
|
|
$
|
0.33
|
|
|
|
|
$
|
0.31
|
|
|
|
|
|
|
Warrants Outstanding
|
|
Warrants Redeemable
|
|
||||||||||
|
|
Number
|
|
Weighted -
|
|
|
|
|
Number
|
|
|
|
|
||
|
|
Outstanding
|
|
Average
|
|
Weighted -
|
|
Redeemable
|
|
Weighted -
|
|
||||
Range of
|
|
at
|
|
Remaining
|
|
Average
|
|
at
|
|
Average
|
|
||||
Exercise
|
|
December 31,
|
|
Contractual
|
|
Redemption
|
|
December 31,
|
|
Redemption
|
|
||||
Prices
|
|
2013
|
|
Life
|
|
Price
|
|
2013
|
|
Price
|
|
||||
$0.10 - $1.65
|
|
|
3,883,641
|
|
2.6 Years
|
|
$
|
1.00
|
|
|
3,883,641
|
|
$
|
1.00
|
|
|
|
2013
|
|
|
2012
|
|
||
Expected Life
|
|
|
3.8
|
|
|
|
3.8
|
|
Dividend Yield
|
|
|
0
|
%
|
|
|
0
|
%
|
Expected Volatility
|
|
|
21
|
%
|
|
|
24
|
%
|
Risk-Free Interest Rate
|
|
|
1.25
|
%
|
|
|
1.65
|
%
|
F-27 | ||
|
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Tax Operating Loss Carryforward - USA
|
|
$
|
6,830,000
|
|
$
|
4,665,000
|
|
Accelerated Depreciation USA
|
|
|
(61,300)
|
|
|
(57,900)
|
|
Valuation Allowance - USA
|
|
|
(6,768,700)
|
|
|
(4,607,100)
|
|
|
|
$
|
-
|
|
$
|
-
|
|
Year Ending
|
|
Net Operating
|
|
Year of
|
|
|
December 31,
|
|
Loss:
|
|
Expiration:
|
|
|
|
|
|
|
|
|
|
2013
|
|
$
|
5,600,000
|
|
2033
|
|
2012
|
|
|
2,850,000
|
|
2032
|
|
2011
|
|
|
2,427,000
|
|
2031
|
|
2010
|
|
|
1,799,000
|
|
2030
|
|
2009
|
|
|
1,750,000
|
|
2029
|
|
2008
|
|
|
1,308,000
|
|
2028
|
|
2007
|
|
|
429,000
|
|
2027
|
|
2006
|
|
|
476,000
|
|
2026
|
|
2005
|
|
|
414,000
|
|
2025
|
|
|
|
$
|
17,053,000
|
|
|
|
F-28 | ||
|
|
|
2013
|
|
2012
|
|
||
Tax Benefit of 34%
|
|
$
|
(2,300,000)
|
|
$
|
(1,148,400)
|
|
Increase (Decrease) in Income Taxes Resulting from:
|
|
|
|
|
|
|
|
State Income Tax Benefit, Net of Federal Tax
|
|
|
(245,631)
|
|
|
(134,458)
|
|
Nondeductible Expenses
|
|
|
1,126,943
|
|
|
175,851
|
|
Valuation Allowance
|
|
|
1,418,688
|
|
|
1,107,007
|
|
Total
|
|
$
|
-
|
|
$
|
-
|
|
F-29 | ||
|
|
|
December 31, 2013
|
|
|
US Dollar
|
Tax Operating Income Taiwan
|
$
|
(21,267)
|
Temporary Difference:
|
|
|
VAT reporting system Sales cut-off
|
|
(63,123)
|
VAT reporting system Cost & expenses cut-off
|
|
(87,192)
|
Provision of Bad Debt
|
|
(109,106)
|
Research & Development
|
|
(183,387)
|
Permanent Difference:
|
|
|
Non-deductible expenses
|
|
(4,397)
|
Adjusted Net Loss Before Tax Taiwan
|
$
|
(468,472)
|
|
|
2013
|
|
2012
|
|
|
Current:
|
|
|
|
|
|
|
Provision for Federal Income Tax (34%)
|
$
|
|
|
$
|
|
|
Provision for TCIT (17%)
|
|
|
|
|
6,007
|
|
Provision for Undistributed Earnings Tax (10%)
|
|
|
|
|
|
|
Increase (Decrease) in Income Taxes Resulting from:
|
|
|
|
|
|
|
Pre-acquisition TCIT
|
|
|
|
|
|
|
Temporary Difference
|
|
1,580
|
|
|
(88,509)
|
|
Income Tax Expenses (Benefit)
|
$
|
1,580
|
|
$
|
(82,502)
|
|
Deferred Tax Assets
|
|
2013
|
|
|
Balance at Beginning of Year
|
|
$
|
94,785
|
|
Temporary Difference
|
|
|
(1,580)
|
|
Foreign currency difference
|
|
|
66,993
|
|
Balance at End of Year
|
|
$
|
160,198
|
|
F-30 | ||
|
|
|
2013
|
|
2012
|
|
||
Basic EPS
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(6,801,714)
|
|
$
|
(3,841,927)
|
|
Weighted Average Shares
|
|
|
24,735,921
|
|
|
19,077,341
|
|
Basic Loss Per Share
|
|
$
|
(0.27)
|
|
$
|
(0.20)
|
|
F-31 | ||
|
F-32 | ||
|
|
IVEDA SOLUTIONS, INC.
|
|
||||
|
|
|
|
|||
|
By:
|
/s/ David Ly
|
|
|||
|
|
David Ly
|
|
|||
|
|
|
Chief Executive Officer,
|
|||
|
|
|
(Principal Executive Officer)
|
|||
/s/ David Ly
|
|
Chief Executive Officer and Director
|
David Ly
|
|
(Principal Executive Officer)
|
|
|
|
/s/ Robert Brilon
|
|
Chief Financial Officer, President and Treasurer
|
Robert Brilon
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
/s/ Joseph Farnsworth
|
|
Director
|
Joseph Farnsworth
|
|
|
|
|
|
/s/ Gregory Omi
|
|
Director
|
Gregory Omi
|
|
|
|
|
|
/s/ James D. Staudohar
|
|
Director
|
James D. Staudohar
|
|
|
|
|
|
/s/ Chen-Ho (Alex) Kuo
|
|
Director
|
Chen-Ho (Alex) Kuo
|
|
|
|
|
|
/s/ Robert Gillen
|
|
Director
|
Robert Gillen
|
|
|
|
|
|
/s/ Alejandro Franco
|
|
Director
|
Alejandro Franco
|
|
|
48 | ||
|
Exhibit 3.2
BYLAWS
OF
IVEDA SOLUTIONS, INC.
I. | SHAREHOLDER'S MEETING. |
.01 Annual Meetings.
The annual meeting of the shareholders of this Corporation, for the purposes of election of Directors and for such other business as may come before it, shall be held at the registered office of the Corporation, or such other places, either within or without the State of Nevada, on the date and at the time each year as determined by the Board of Directors of the Corporation.
.02 Special Meeting.
Special meetings of the shareholders of this Corporation may be called at any time by the holders of ten percent (10%) of the voting shares of the Corporation, or by the President, or by the Board of Directors or a majority thereof. No business shall be transacted at any special meeting of shareholders except as is specified in the notice calling for said meeting. The Board of Directors may designate any place, either within or without the State of Nevada, as the place of any special meeting called by the president or the Board of Directors, and special meetings called at the request of shareholders shall be held at such place in the State of Nevada, as may be determined by the Board of Directors and placed in the notice of such meeting.
.03 Notice of Meeting.
Written notice of annual or special meetings of shareholders stating the place, day and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given by the secretary or person(s) authorized to call the meeting to each shareholder of record entitled to vote at the meeting. Such notice shall be given not less than ten (10) nor more than sixty (60) days prior to the date of the meeting, and such notice shall be deemed to be delivered when deposited in the United States mail addressed to the shareholder at such shareholder’s address as it appears on the stock transfer books for the Corporation.
.04 Waiver of Notice.
Notice of the time, place, and purpose of any meeting may be waived in writing and will be waived by any shareholder by his/her attendance thereat in person or by proxy. Any shareholder so waiving shall be bound by the proceedings of any such meeting in all respects as if due notice thereof had been given.
.05 Quorum and Adjourned Meetings.
A majority of the outstanding shares of the Corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. A majority of the shares represented at a meeting, even if less than a quorum, may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum.
.06 Proxies.
At all meetings of shareholders, a shareholder may vote by proxy executed in writing by the shareholder or by his/her duly authorized attorney in fact. Such proxy shall be filed with the secretary of the Corporation before or at the time of the meeting. No proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy.
.07 Voting of Shares.
Except as otherwise provided in the Articles of Incorporation or in these Bylaws, every shareholder of record shall have the right at every shareholder's meeting to one (1) vote for every share standing in his/her name on the books of the Corporation, and the affirmative vote of a majority of the shares represented at a meeting and entitled to vote thereat shall be necessary for the adoption of a motion or for the determination of all questions and business which shall come before the meeting.
II. | DIRECTORS. |
.01 General Powers.
The business and affairs of the Corporation shall be managed by its Board of Directors.
.02 Number, Tenure and Qualifications.
The number of Directors of the Corporation shall be not less than one nor more than thirteen. Each Director shall hold office until the next annual meeting of shareholders and until his/her successor shall have been elected and qualified. Directors need not be residents of the State of Nevada or shareholders of the Corporation.
.03 Election.
The Directors shall be elected by the shareholders at their annual meeting each year; and if, for any cause the Directors shall not have been elected at an annual meeting, they may be elected at a special meeting of shareholders called for that purpose in the manner provided by these Bylaws.
.04 Vacancies.
In case of any vacancy in the Board of Directors, the remaining Directors, whether constituting a quorum or not, may elect a successor to hold office for the unexpired portion of the terms of the Directors whose place shall be vacant, and until his/her successor shall have been duly elected and qualified. Further, the remaining Directors may fill any empty seats on the Board of Directors even if the empty seats have never been occupied.
.05 Resignation.
Any Director may resign at any time by delivering written notice to the secretary of the Corporation.
.06 Meetings.
At any annual, special or regular meeting of the Board of Directors, any business may be transacted, and the Board may exercise all of its powers. Any such annual, special or regular meeting of the Board of Directors of the Corporation may be held outside of the State of Nevada, and any member or members of the Board of Directors of the Corporation may participate in any such meeting by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time; the participation by such means shall constitute presence in person at such meeting.
A. Annual Meeting of Directors.
Annual meetings of the Board of Directors shall be held immediately after the annual shareholders' meeting or at such time and place as may be determined by the Directors. No notice of the annual meeting of the Board of Directors shall be necessary.
B. Special Meetings.
Special meetings of the Directors shall be called at any time and place upon the call of the president or any Director. Notice of the time and place of each special meeting shall be given by the secretary, or the persons calling the meeting, by mail, radio, telegram, or by personal communication by telephone or otherwise at least one (1) day in advance of the time of the meeting. The purpose of the meeting need not be given in the notice. Notice of any special meeting may be waived in writing or by telegram (either before or after such meeting) and will be waived by any Director in attendance at such meeting.
C. Regular Meetings of Directors.
Regular meetings of the Board of Directors shall be held at such place and on such day and hour as shall from time to time be fixed by resolution of the Board of Directors. No notice of regular meetings of the Board of Directors shall be necessary.
.07 Quorum and Voting.
A majority of the Directors presently in office shall constitute a quorum for all purposes, but a lesser number may adjourn any meeting, and the meeting may be held as adjourned without further notice. At each meeting of the Board at which a quorum is present, the act of a majority of the Directors present at the meeting shall be the act of the Board of Directors. The Directors present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough Directors to leave less than a quorum.
.08 Compensation.
By resolution of the Board of Directors, the Directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as Director. No such payment shall preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor.
.09 Presumption of Assent.
A Director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his/her dissent shall be entered in the minutes of the meeting or unless he/she shall file his/her written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action.
.10 Executive and Other Committees.
The Board of Directors, by resolution adopted by a majority of the full Board of Directors, may designate from among its members an executive committee and one of more other committees, each of which, to the extent provided in such resolution, shall have and may exercise all the authority of the Board of Directors, but no such committee shall have the authority of the Board of Directors, in reference to amending the Articles of Incorporation, adoption a plan of merger or consolidation, recommending to the shareholders the sale, lease, exchange, or other disposition of all of substantially all the property and assets of the dissolution of the Corporation or a revocation thereof, designation of any such committee and the delegation thereto of authority shall not operate to relieve any member of the Board of Directors of any responsibility imposed by law.
.11 Chairman of Board of Directors.
The Board of Directors may, in its discretion, elect a chairman of the Board of Directors from its members; and, if a chairman has been elected, he/she shall, when present, preside at all meetings of the Board of Directors and the shareholders and shall have such other powers as the Board may prescribe.
.12 Removal.
Directors may be removed from office with or without cause by a vote of shareholders holding a majority of the shares entitled to vote at an election of Directors.
III. | ACTIONS BY WRITTEN CONSENT. |
An action which may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice, if a consent in writing, setting forth the actions so taken, is signed by the holders of outstanding shares having not less than the minimum number of votes which would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. All such consents shall be filed with the Secretary of the Corporation and shall be maintained in the corporate records.
Any action required or permitted to be taken at a Board of Directors meeting may be taken without a meeting if the action is taken by all of the directors then-serving and is evidenced by a written consent describing the action to be taken and signed by each director. Such written consent shall be included in the corporate records.
IV. | OFFICERS. |
.01 Officers Designated.
The Officers of the Corporation shall be a president, one or more vice presidents (the number thereof to be determined by the Board of Directors), a secretary and a treasurer, each of whom shall be elected by the Board of Directors. Such other Officers and assistant officers as may be deemed necessary may be elected or appointed by the Board of Directors. Any Officer may be held by the same person, except that in the event that the Corporation shall have more than one director, the offices of president and secretary shall be held by different persons.
.02 Election, Qualification and Term of Office.
Each of the Officers shall be elected by the Board of Directors. None of said Officers except the president need be a Director, but a vice president who is not a Director cannot succeed to or fill the office of president. The Officers shall be elected by the Board of Directors. Except as hereinafter provide, each of said Officers shall hold office from the date of his/her election until the next annual meeting of the Board of Directors and until his/her successor shall have been duly elected and qualified.
.03 Powers and Duties.
The powers and duties of the respective corporate Officers shall be as follows:
A. President.
The president shall be the chief executive Officer of the Corporation and, subject to the direction and control of the Board of Directors, shall have general charge and supervision over its property, business, and affairs. He/she shall, unless a Chairman of the Board of Directors has been elected and is present, preside at meetings of the shareholders and the Board of Directors.
B. Vice President.
In the absence of the president or his/her inability to act, the senior vice president shall act in his place and stead and shall have all the powers and authority of the president, except as limited by resolution of the Board of Directors.
C. Secretary.
The secretary shall:
1. | Keep the minutes of the shareholder's and of the Board of Directors meetings in one or more books provided for that purpose; |
2. | See that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; |
3. | Be custodian of the corporate records and of the seal of the Corporation and affix the seal of the Corporation to all documents as may be required; |
4. | Keep a register of the post office address of each shareholder which shall be furnished to the secretary by such shareholder; |
5. | Sign with the president, or a vice president, certificates for shares of the Corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; |
6. | Have general charge of the stock transfer books of the corporation; and, |
7. | In general perform all duties incident to the office of secretary and such other duties as from time to time may be assigned to him/her by the president or by the Board of Directors. |
D. Treasurer.
Subject to the direction and control of the Board of Directors, the treasurer shall have the custody, control and disposition of the funds and securities of the Corporation and shall account for the same; and, at the expiration of his/her term of office, he/she shall turn over to his/her successor all property of the Corporation in his/her possession.
E. Assistant Secretaries and Assistant Treasurers.
The assistant secretaries, when authorized by the Board of Directors, may sign with the president or a vice president certificates for shares of the Corporation the issuance of which shall have been authorized by a resolution of the Board of Directors. The assistant treasurers shall, respectively, if required by the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The assistant secretaries and assistant treasurers, in general, shall perform such duties as shall be assigned to them by the secretary or the treasurer, respectively, or by the president or the Board of Directors.
.04 Removal.
The Board of Directors shall have the right to remove any Officer whenever in its judgment the best interest of the Corporation will be served thereby.
.05 Vacancies.
The Board of Directors shall fill any office which becomes vacant with a successor who shall hold office for the unexpired term and until his/her successor shall have been duly elected and qualified.
.06 Salaries.
The salaries of all Officers of the Corporation shall be fixed by the Board of Directors.
V. | SHARE CERTIFICATES |
.01 Form and Execution of Certificates.
Certificates for shares of the Corporation shall be in such form as is consistent with the provisions of the Corporation laws of the State of Nevada. They shall be signed by the president and by the secretary, and the seal of the Corporation shall be affixed thereto. Certificates may be issued for fractional shares.
.02 Transfers.
Shares may be transferred by delivery of the certificates therefor, accompanied either by an assignment in writing on the back of the certificates or by a written power of attorney to assign and transfer the same signed by the record holder of the certificate. Except as otherwise specifically provided in these Bylaws, no shares shall be transferred on the books of the Corporation until the outstanding certificate therefor has been surrendered to the Corporation.
.03 Loss or Destruction of Certificates.
In case of loss or destruction of any certificate of shares, another may be issued in its place upon proof of such loss or destruction and upon the giving of a satisfactory bond of indemnity to the Corporation. A new certificate may be issued without requiring any bond, when in the judgment of the Board of Directors it is proper to do so.
VI. | BOOKS AND RECORDS. |
.01 Books of Accounts, Minutes and Share Register.
The Corporation shall keep complete books and records of accounts and minutes of the proceedings of the Board of Directors and shareholders and shall keep at its registered office, principal place of business, or at the office of its transfer agent or registrar a share register giving the names of the shareholders in alphabetical order and showing their respective addresses and the number of shares held by each.
.02 Copies of Resolutions.
Any person dealing with the Corporation may rely upon a copy of any of the records of the proceedings, resolutions, or votes of the Board of Directors or shareholders, when certified by the president or secretary.
VII. | CORPORATE SEAL. |
The following is an impression of the corporate seal of this Corporation:
VIII. | LOANS. |
No loans shall be made by the Corporation to its Officers or Directors
IX. | INDEMNIFICATION OF DIRECTORS AND OFFICERS. |
.01 Indemnification.
The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that such person is or was a Director, Trustee, Officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a Director, Trustee, Officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgment, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action proceeding, had reasonable cause to believe that such person's conduct was unlawful.
.02 Derivative Action
The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in the Corporation's favor by reason of the fact that such person is or was a Director, Trustee, Officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a Director, Trustee, Officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorney's fees) and amount paid in settlement actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to amounts paid in settlement, the settlement of the suit or action was in the best interests of the Corporation; provided, however, that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for gross negligence or willful misconduct in the performance of such person's duty to the Corporation unless and only to the extent that, the court in which such action or suit was brought shall determine upon application that, despite circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as such court shall deem proper. The termination of any action or suit by judgment or settlement shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation.
.03 Successful Defense.
To the extent that a Director, Trustee, Officer, employee or Agent of the Corporation has been successful on the merits or otherwise, in whole or in part in defense of any action, suit or proceeding referred to in Paragraphs .01 and .02 above, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith.
.04 Authorization.
Any indemnification under Paragraphs .01 and .02 above (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the Director, Trustee, Officer, employee or agent is proper in the circumstances because such person has met the applicable standard of conduct set forth in Paragraphs .01 and .02 above. Such determination shall be made (a) by the Board of Directors of the Corporation by a majority vote of a quorum consisting of Directors who were not parties to such action, suit or proceeding, or (b) is such a quorum is not obtainable, by a majority vote of the Directors who were not parties to such action, suit or proceeding, or (c) by independent legal counsel (selected by one or more of the Directors, whether or not a quorum and whether or not disinterested) in a written opinion, or (d) by the Shareholders. Anyone making such a determination under this Paragraph .04 may determine that a person has met the standards therein set forth as to some claims, issues or matters but not as to others, and may reasonably prorate amounts to be paid as indemnification.
.05 Advances.
Expenses incurred in defending civil or criminal action, suit or proceeding shall be paid by the Corporation, at any time or from time to time in advance of the final disposition of such action, suit or proceeding as authorized in the manner provided in Paragraph .04 above upon receipt of an undertaking by or on behalf of the Director, Trustee, Officer, employee or agent to repay such amount unless it shall ultimately be by the Corporation is authorized in this Section.
.06 Nonexclusivity.
The indemnification provided in this Section shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any law, bylaw, agreement, vote of shareholders or disinterested Directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a Director, Trustee, Officer, employee or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person.
.07 Insurance.
The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a Director, Trustee, Officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a Director, Trustee, Officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability assessed against such person in any such capacity or arising out of such person's status as such, whether or not the corporation would have the power to indemnify such person against such liability.
.08 "Corporation" Defined.
For purposes of this Section, references to the "Corporation" shall include, in addition to the Corporation, an constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had the power and authority to indemnify its Directors, Trustees, Officers, employees or agents, so that any person who is or was a Director, Trustee, Officer, employee or agent of such constituent corporation or of any entity a majority of the voting stock of which is owned by such constituent corporation or is or was serving at the request of such constituent corporation as a Director, Trustee, Officer, employee or agent of the corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Section with respect to the resulting or surviving Corporation as such person would have with respect to such constituent corporation if its separate existence ha d continued.
X. | AMENDMENT OF BYLAWS. |
.01 By the Shareholders.
These Bylaws may be amended, altered, or repealed at any regular or special meeting of the shareholders if notice of the proposed alteration or amendment is contained in the notice of the meeting.
.02 By the Board of Directors.
These Bylaws may be amended, altered, or repealed by the affirmative vote of a majority of the entire Board of Directors at any regular or special meeting of the Board.
XI. | FISCAL YEAR. |
The fiscal year of the Corporation shall be set by resolution of the Board of Directors.
XII. | RULES OF ORDER. |
The rules contained in the most recent edition of Robert's Rules or Order, Newly Revised, shall govern all meetings of shareholders and Directors where those rules are not inconsistent with the Articles of Incorporation, Bylaws, or special rules or order of the Corporation.
XIII. | REIMBURSEMENT OF DISALLOWED EXPENSES. |
If any salary, payment, reimbursement, employee fringe benefit, expense allowance payment, or other expense incurred by the Corporation for the benefit of an employee is disallowed in whole or in part as a deductible expense of the Corporation for Federal Income Tax purposes, the employee shall reimburse the Corporation, upon notice and demand, to the full extent of the disallowance. This legally enforceable obligation is in accordance with the provisions of Revenue Ruling 69-115, 1969-1 C.B. 50, and is for the purpose of entitling such employee to a business expense deduction for the taxable year in which the repayment is made to the Corporation. In this manner, the Corporation shall be protected from having to bear the entire burden of disallowed expense items.
/s/ David Ly
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David Ly
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Chief Executive Officer
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March
31, 2014
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/s/ Robert Brilon
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Robert Brilon
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Chief Financial Officer & Treasurer
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March 31, 2014
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/s/ David Ly
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David Ly
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Chief Executive Officer
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March 31, 2014
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/s/ Robert Brilon
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Robert Brilon
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Chief Financial Officer & Treasurer
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March 31, 2014
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