UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





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


For the
quarterly period ended September 30, 2009


or





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


For the
transition period from __________ to ____________





Commission
File No. 000-53285





IVEDA
CORPORATION


(Exact
name of registrant as specified in its charter)




Nevada
              (State
      or other jurisdiction of incorporation or
              organization)
            98-0611159
              (I.R.S.
      Employer
              Identification
      No.)1201 South Alma School
      Road, Suite 4450, Mesa, Arizona
              (Address
      of principal executive offices)
            85210
              (Zip
      Code)Registrant's
      telephone number, including area code: (480)
      307-8700
              
              Charmed Homes, Inc.,
      60 Mt. Kidd Point SE, Calgary, Alberta T2Z 3C5, Canada
              January
      31
              (Former
      Name, Former Address and Former Fiscal Year
End)




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





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or such shorter period that the
registrant was required to submit and post such files).


Yes 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 o
            Accelerated
      filer o
            Non-accelerated
      filer oSmaller
      reporting company x




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





Number of
shares outstanding of each of the issuer's classes of common equity as of the
latest practicable date:




Class
              Outstanding as of
      November 13, 2009Common
      stock, $0.00001 par value
              10,282,353
      (does not include the 2,500,000 shares held in escrow to be
      cancelled)









PART
I – FINANCIAL INFORMATION





ITEM
      1.
            FINANCIAL
      STATEMENTS




INTELASIGHT,
INC. DBA
 IVEDA
SOLUTIONS
 CONDENSED
FINANCIAL STATEMENTS
 (UNAUDITED)
 FOR
THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
  
  FINANCIAL
STATEMENTS
  CONDENSED
      BALANCE SHEETS
                1CONDENSED
      STATEMENTS OF OPERATIONS
                3CONDENSED
      STATEMENTS OF CASH FLOWS
                4CONDENSED
      NOTES TO FINANCIAL STATEMENTS
                5
  
  INTELASIGHT,
INC. DBA
 IVEDA
SOLUTIONS
 (A
WASHINGTON CORPORATION)
 CONDENSED
BALANCE SHEETS
  (Unaudited)
                  September
      30,
                
                
                December
      31,2009
                
                
                2008ASSETSCURRENT
      ASSETSCash
      and Cash Equivalents
                
                $
                1,933
                
                
                $
                335,189Accounts
      Receivable
                
                
                40,979
                
                
                
                26,971Inventory
                
                
                4,017
                
                
                
                13,530Prepaid
      Expenses
                
                
                3,030
                
                
                
                11,532Total
      Current Assets
                
                
                49,959
                
                
                
                387,222PROPERTY
      AND EQUIPMENTOffice
      Equipment
                
                
                89,227
                
                
                
                87,050Furniture
      and Fixtures
                
                
                27,416
                
                
                
                22,712Software
                
                
                36,800
                
                
                
                36,634Leased
      Equipment
                
                
                226,496
                
                
                
                213,460Leasehold
      Improvements
                
                
                37,007
                
                
                
                34,495Total
      Property and Equipment
                
                
                416,946
                
                
                
                394,351Less:
      Accumulated Depreciation
                
                
                158,354
                
                
                
                99,099Property
      and Equipment, Net
                
                
                258,592
                
                
                
                295,252OTHER
      ASSETSEscrow
      Deposits
                
                
                10,000
                
                
                
                50,000Deposits
                
                
                16,523
                
                
                
                16,523Total
      Assets
                
                $
                335,074
                
                
                $
                748,997
  See
accompanying Notes to Financial Statements.
  1
  INTELASIGHT,
INC. DBA
 IVEDA
SOLUTIONS
 (A
WASHINGTON CORPORATION)
 CONDENSED
BALANCE SHEETS
  (Unaudited)
                September
      30,
              
              
              December
      31,2009
              
              
              2008LIABILITIES
      AND STOCKHOLDERS' EQUITYCURRENT
      LIABILITIESAccounts
      Payable
              
              $
              125,034
              
              
              $
              48,465Accrued
      Expenses
              
              
              120,621
              
              
              
              70,285Deferred
      Revenue
              
              
              12,141
              
              
              
              21,964Current
      Portion of Capital Lease Obligations
              
              
              78,831
              
              
              
              65,916Short-Term
      Notes Payable
              
              
              424,900
              
              
              
              -Total
      Current Liabilities
              
              
              761,527
              
              
              
              206,630LONG-TERM
      LIABILITIESCapital
      Lease Obligations, Net of Current Portion
              
              
              70,462
              
              
              
              117,162Total
      Liabilities
              
              
              831,989
              
              
              
              323,792STOCKHOLDERS'
      EQUITY (DEFICIT)Preferred Stock,
      $0.001 par value; 10,000,000 shares authorized
              
              
              -
              
              
              
              -Common
      Stock, $0.001 par value; 40,000,000 sharesauthorized;
      9,026,804 and 8,774,304 sharesissued
      and outstanding, as of September 30, 2009 and December 31, 2008,
      respectively
              
              
              9,027
              
              
              
              8,774Additional
      Paid-In Capital
              
              
              3,638,757
              
              
              
              3,385,251Accumulated
      Deficit
              
              
              (4,144,699
              )
              
              
              (2,968,820
              )Total
      Stockholders' Equity (Deficit)
              
              
              (496,915
              )
              
              
              425,205Total
      Liabilities and Stockholders' Equity (Deficit)
              
              $
              335,074
              
              
              $
              748,997
 
 See
accompanying Notes to Financial Statements.
  2
 INTELASIGHT,
INC. DBA
 IVEDA
SOLUTIONS
 (A
WASHINGTON CORPORATION)
 CONDENSED
STATEMENTS OF OPERATIONS
 (UNAUDITED)
 3
      Months Ending
              
              
              3
      Months Ending
              
              
              9
      Months Ending
              
              
              9
      Months EndingSept
      30, 2009
              
              
              Sept
      30, 2008
              
              
              Sept
      30, 2009
              
              
              Sept
      30, 2008REVENUE
              
              $
              159,481
              
              
              $
              81,550
              
              
              $
              491,730
              
              
              $
              410,529COST
      OF REVENUE
              
              
              123,565
              
              
              
              79,609
              
              
              
              386,555
              
              
              
              256,856GROSS
      PROFIT
              
              
              35,916
              
              
              
              1,941
              
              
              
              105,175
              
              
              
              153,673OPERATING
      EXPENSES
              
              
              334,222
              
              
              
              406,172
              
              
              
              1,258,983
              
              
              
              1,113,825LOSS
      FROM OPERATIONS
              
              
              (298,306
              )
              
              
              (404,231
              )
              
              
              (1,153,808
              )
              
              
              (960,152
              )OTHER
      INCOME (EXPENSE)Interest
      Income
              
              
              -
              
              
              
              2,457
              
              
              
              1,184
              
              
              
              2,457Interest
      Expense
              
              
              (8,314
              )
              
              
              (6,188
              )
              
              
              (23,255
              )
              
              
              (22,712
              )Total
      Other Income (Expense)
              
              
              (8,314
              )
              
              
              (3,731
              )
              
              
              (22,071
              )
              
              
              (20,255
              )LOSS
      BEFORE INCOME TAXES
              
              
              (306,620
              )
              
              
              (407,962
              )
              
              
              (1,175,879
              )
              
              
              (980,407
              )BENEFIT
      (PROVISION) FOR INCOME TAXES
              
              
              -
              
              
              
              155,000
              
              
              
              -
              
              
              
              300,000NET
      LOSS
              
              $
              (306,620
              )
              
              $
              (252,962
              )
              
              $
              (1,175,879
              )
              
              $
              (680,407
              )BASIC
      AND DILUTED LOSS PER SHARE
              
              $
              (0.03
              )
              
              $
              (0.04
              )
              
              $
              (0.13
              )
              
              $
              (0.11
              )
  See
accompanying Notes to Financial Statements.
  3
  INTELASIGHT,
INC. DBA
 IVEDA
SOLUTIONS
 (A
WASHINGTON CORPORATION)
 CONDENSED
STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 9
      Months Ending
              
              
              9
      Months EndingSeptember
      30, 2009
              
              
              September
      30, 2008CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Loss
              
              $
              (1,175,879
              )
              
              $
              (680,407
              )Adjustments
      to Reconcile Net Loss to Net CashUsed
      by Operating ActivitiesDepreciation
              
              
              59,254
              
              
              
              16,786Stock
      Compensation
              
              
              30,000
              
              
              
              179,000Deferred
      Tax Benefit
              
              
              
              
              
              
              (300,000
              )(Increase)
      Decrease in Operating Assets:Accounts
      Receivable
              
              
              (14,008
              )
              
              
              (329
              )Inventory
              
              
              9,513
              
              
              
              -Prepaid
      Expense
              
              
              8,502
              
              
              
              (12,779
              )Deposits
              
              
              -
              
              
              
              (13,985
              )Increase
      (Decrease) in Operating Liabilities:Accounts
      Payable
              
              
              76,569
              
              
              
              1,442Accrued
      Expenses
              
              
              50,337
              
              
              
              56,878Deferred
      Revenue
              
              
              (9,823
              )
              
              
              -Billings
      in Excess of Costs and Estimated Earnings onUncompleted
      Contracts
              
              
              -
              
              
              
              (12,805
              )Net
      Cash Used by Operating Activities
              
              
              (965,535
              )
              
              
              (766,199
              )CASH
      FLOWS FROM INVESTING ACTIVITIESEscrow
      Deposit reduction
              
              
              40,000
              
              
              
              -Purchase
      of Property and Equipment
              
              
              (9,559
              )
              
              
              (33,081
              )Net
      Cash Provided (Used) by Investing Activities
              
              
              30,441
              
              
              
              (33,081
              )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from Short-Term Borrowings
              
              
              424,900
              
              
              
              175,916Payments
      on Capital Lease Obligations
              
              
              (46,822
              )
              
              
              (13,308
              )Common
      Stock Issued, net of Costs of Capital
              
              
              223,760
              
              
              
              1,544,298Net
      Cash Provided by Financing Activities
              
              
              601,838
              
              
              
              1,706,906NET
      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
              
              
              (333,256
              )
              
              
              907,626Cash
      and Cash Equivalents - Beginning of Year
              
              
              335,189
              
              
              
              41,344CASH
      AND CASH EQUIVALENTS - END OF PERIOD
              
              $
              1,933
              
              
              $
              948,970SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATIONInterest
      Paid
              
              $
              23,255
              
              
              $
              7,699Property
      and Equipment Purchased via Capital Lease
              
              $
              13,036
              
              
              $
              201,378
  See
accompanying Notes to Financial Statements.
  4
  INTELASIGHT,
INC. DBA
 IVEDA
SOLUTIONS
 CONDENSED
NOTES TO THE FINANCIAL STATEMENTS
 (UNAUDITED)
 NOTE 1: SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
  Nature of
Operations
  IntelaSight,
Inc. dba Iveda Solutions (“Iveda” or “the Company”) began
operations
 January
24, 2005. The Company installs video surveillance equipment, primarily for
security purposes, and provides video hosting, archiving and real-time remote
surveillance services to a variety of businesses and organizations throughout
the United States.
 
 The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. The Company generated accumulated losses of
$4,144,699 through September 30, 2009.  The company has a working
capital deficit as of September 30, 2009 of $711,568.  These
conditions raise substantial doubt about the company’s ability to continue as a
going concern.  The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the outcome of these uncertainties.
 
 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:
 
 ·
              Continue
      to raise addition equity capital to fund
  operations
 
 ·
              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.
 
 Management
has reviewed and evaluated material subsequent events from the balance sheet
date of September 30, 2009, through the financial statements issue date of
November 25, 2009.  All appropriate subsequent event disclosures have been
made in the notes to our unaudited condensed financial statements.
 
 Basis of Presentation and
Accounting
  As
disclosed in Note 6 Subsequent Events, the Company effected a recapitalization
with Charmed Homes, Inc., a publicly reporting company. The Company’s fiscal
year end of December will be used for reporting results of operations.
Accordingly, the financial statements reported in this filing represent the
current and historical results of operations of the Company.
 
 The
unaudited interim financial statements of the Company included herein have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission (“SEC”) for interim reporting including the instructions to
Form 10-Q and Rule 10-01 of Regulation S-X. These statements do not
include all disclosures required by accounting principles generally accepted in
the United States of America (“U.S. GAAP”) for annual audited financial
statements and should be read in conjunction with the Company’s audited
financial statements and related notes for the year ended December 31, 2008,
that were filed in the 8-K dated October 21, 2009 with the U.S. Securities and
Exchange Commission.
  5
  INTELASIGHT,
INC. DBA
 IVEDA
SOLUTIONS
 CONDENSED
NOTES TO THE FINANCIAL STATEMENTS
 (UNAUDITED)
  In the
opinion of management, the accompanying unaudited interim financial statements
reflect all adjustments, including normal recurring accruals, necessary to
present fairly the financial position of the Company at September 30, 2009, the
results of operations for the three and nine months ended September 30, 2009 and
2008, and the cash flows for the nine months ended September 30, 2009 and 2008.
The results of operations for the three and nine months ended September 30, 2009
are not necessarily indicative of the expected results of operations for the
full year or any future period. The balance sheet as of December 31, 2008 is
derived from the Company’s audited financial statements.
 
 Use of
Estimates
  The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from these
estimates.
 
 Revenue and Expense
Recognition
  Revenues
from monitoring services are recognized when the services are provided. Expenses
are recognized as incurred.
 
 Revenues
from fixed-price equipment installation contracts are recognized on the
percentage-of-completion method. The percentage completed is measured by the
percentage of costs incurred to date to estimated total costs for each contract.
This method is used because management considers expended costs to be the best
available measure of progress on these contracts. Because of inherent
uncertainties in estimating costs and revenues, it is at least reasonably
possible that the estimates used will change.
 
 Contract
costs include all direct material, subcontractors, labor costs, and equipment
costs and those indirect costs related to contract performance. General and
administrative costs are charged to expense as incurred. Provisions for
estimated losses on uncompleted contracts are made in the period in which such
losses are determined. Changes in job performance, job conditions, and estimated
profitability may result in revisions to costs and income and are recognized in
the period in which the revisions are determined. Changes in estimated job
profitability resulting from job performance, job conditions, contract penalty
provisions, claims, change orders, and settlements are accounted for as changes
in estimates in the current period. Profit incentives are included in revenues
when their realization is reasonably assured. Claims are included in revenues
when realization is probable and the amount can be reliably
estimated.
  Stock-Based
Compensation
  On
January 1, 2006, the Company adopted the fair value recognition provisions of
ASC 718, Share-Based
Payment, which requires the recognition of an expense related to the fair
value of stock-based compensation awards. The Company elected the modified
prospective transition method as permitted by ASC 718. Under this transition
method, stock-based compensation expense for the years ended December 31, 2008
and 2007 includes compensation expense for stock-based compensation granted on
or after the date ASC 718 was adopted based on the grant-date fair value
estimated in accordance with the provisions of ASC 718. The Company recognizes
compensation expense on a straight-line basis over the requisite service period
of the award. The fair value of stock-based compensation awards granted prior
to, but not yet vested as of December 31, 2008 and 2007, were estimated using
the “minimum value method” as prescribed by original provisions of ASC 718,
Accounting for Stock-Based
Compensation, therefore, no compensation expense is recognized for these
awards in accordance with SFAS 123R.  The Company has recognized
$30,000 and $179,000 of stock compensation for the nine months ended September
30, 2009 and 2008, respectively.
  6
  INTELASIGHT,
INC. DBA
 IVEDA
SOLUTIONS
 CONDENSED
NOTES TO THE FINANCIAL STATEMENTS
 (UNAUDITED)
 Fair Value of Financial
Instruments
  On
January 1, 2008, the Company adopted ASC 820, Fair Value Measurements. ASC 820
applies to reported balances that are required or permitted to be measured at
fair value under an existing accounting pronouncement. ASC 820 emphasizes that
fair value is a market-based measurement, not an entity-specific measurement.
Therefore, a fair value measurement should be determined based on the
assumptions that market participants would use in pricing the asset or liability
and establishes a fair value hierarchy. The fair value hierarchy consists of
three levels of inputs that may be used to measure fair value as
follows:
 
 Level 1 –
Inputs that utilize quoted prices (unadjusted) in active markets for identical
assets or liabilities that the Company has the ability to access.
 
 Level 2 –
Inputs that include quoted prices for similar assets and liabilities in active
markets and inputs that are observable for the asset or liability, either
directly or indirectly, for substantially the full term of the financial
instrument. Fair values for these instruments are estimated using pricing
models, quoted prices of securities with similar characteristics, or discounted
cash flows.
 
 Level 3 –
Inputs that are unobservable inputs for the asset or liability, which are
typically based on an entity’s own assumptions, as there is little, if any,
related market activity.
 
 In
instances where the determination of the fair value measurement is based on
inputs from different levels of the fair value hierarchy, the level in the fair
value hierarchy within which the entire fair value measurement falls is based on
the lowest level input that is significant to the fair value measurement in its
entirety.
 
 The
Company also adopted ASC 825, The Fair Value Option for Financial Assets and
Liabilities on January 1, 2008. ASC 825 allows entities the irrevocable option
to elect fair value for the initial and subsequent measurement for certain
financial assets and liabilities on an instrument-by-instrument basis. The
Company has not elected to measure any existing financial instruments at fair
value at January 1, 2008, as permitted under ASC 825. However, the Company may
elect to measure newly acquired financial instruments at fair value in the
future.
  New
Accounting Standards
  In May
2009, the FASB issued ASC 855 “Subsequent Events”. ASC 855 provides general
standards of accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued or are available
to be issued. The statement sets forth the period after the balance sheet date
during which management of a reporting entity should evaluate events or
transactions that may occur for potential recognition or disclosure in the
financial statements. The statement also sets forth the circumstances under
which an entity should recognize events or transactions occurring after the
balance sheet date in its financial statements.  Furthermore, this
statement identifies the disclosures that an entity should make about events or
transactions that occurred after the balance sheet date. It is effective for
interim or annual financial periods ending after September 15,
2009.   We adopted this statement as of the September 30, 2009
reporting period.
  7
  INTELASIGHT,
INC. DBA
 IVEDA
SOLUTIONS
 CONDENSED
NOTES TO THE FINANCIAL STATEMENTS
 (UNAUDITED)
 In April
2009, the FASB issued three related FASB Staff Positions: (i) ASC 320,
“Recognition of Presentation of Other-Than-Temporary Impairments” (“ASC 320”),
(ii) ASC 825 and ASC 270, “Interim Disclosures about Fair Value of Financial
Instruments”, and (iii) ASC 820, “Determining the Fair Value When the Volume and
Level of Activity for the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly”, which are effective for interim
and annual reporting periods ending after September 15, 2009. ASC 320 amend the
other-than-temporary impairment guidance in U.S. GAAP for debt securities to
modify the requirement for recognizing other-than-temporary impairments, change
the existing impairment model, and modify the presentation and frequency of
related disclosures. ASC 825 and ASC 270 require disclosures about fair value of
financial instruments for interim reporting periods as well as in annual
financial statements. ASC 820 provides additional guidance for estimating fair
value in accordance with ASC 820, “Fair Value Measurements”. We adopted these
Staff Positions, but they did not have a material impact on our consolidated
financial position, results of operations or cash flows.
 
 NOTE
2: FAIR VALUE OF FINANCIAL INSTRUMENTS
  Determination of Fair
Value
  At
September 30, 2009, the Company calculated the fair value of its assets and
liabilities for disclosure purposes only.
  Valuation
Hierarchy
  ASC 820
establishes a three-level valuation hierarchy for the use of fair value
measurements based upon the transparency of inputs to the valuation of an asset
or liability as of the measurement date:
  Level 1:     Inputs
to the valuation methodology are quoted prices (unadjusted) for identical assets
or liabilities in active markets. Level 1 assets and liabilities include
debt and equity securities and derivative financial instruments actively traded
on exchanges, as well as U.S. Treasury securities and U.S. Government and agency
mortgage-backed securities that are actively traded in highly liquid over the
counter markets.
 
 Level 2:     Observable
inputs other than Level 1 prices such as quoted prices for similar assets
and liabilities in active markets, quoted prices for identical or similar assets
or liabilities in markets that are not active, and inputs that are observable or
can be corroborated, either directly or indirectly, for substantially the full
term of the financial instrument. Level 2 assets and liabilities include
debt instruments that are traded less frequently than exchange traded securities
and derivative instruments whose model inputs are observable in the market or
can be corroborated by market observable data. Examples in this category are
certain variable and fixed rate non-agency mortgage-backed securities, corporate
debt securities and derivative contracts.
  Level 3:    Inputs
to the valuation methodology are unobservable but significant to the fair value
measurement. Examples in this category include interests in certain securitized
financial assets, certain private equity investments, and derivative contracts
that are highly structured or long-dated.
  8
  INTELASIGHT,
INC. DBA
 IVEDA
SOLUTIONS
 CONDENSED
NOTES TO THE FINANCIAL STATEMENTS
 (UNAUDITED)
 Application of Valuation
Hierarchy
  A
financial instrument's categorization within the valuation hierarchy is based
upon the lowest level of input that is significant to the fair value
measurement. The following is a description of the valuation methodology used to
measure fair value, as well as the general classification of such instruments
pursuant to the valuation hierarchy.
  Short-Term
Notes Payable:     Market prices are not available for
the Company's short term notes payable nor are market prices of similar notes
available. The Company assessed that the fair value of this asset approximates
its carrying value.
  The
method described above may produce a current fair value calculation that may not
be indicative of net realizable value or reflective of future fair values. If
readily determined market values became available or if actual performance were
to vary appreciably from assumptions used, assumptions may need to be adjusted,
which could result in material differences from the recorded carrying amounts.
The Company believes its method of determining fair value is appropriate and
consistent with other market participants. However, the use of different
methodologies or different assumptions to value certain financial instruments
could result in a different estimate of fair value.
  The
following tables present the fair value of financial instruments as of September
30, 2009, by caption on the condensed balance sheet and by ASC 820 valuation
hierarchy described above.
 
 Assets
      and liabilities measured at fairvalue
      on a recurring and nonrecurring
              
              
              
              
              
              
              
              
              
              
              Totalbasis at
      September 30, 2009:
              
              
              
              
              
              
              
              
              
              
              CarryingNonrecurring:
              
              Level 1
              
              
              Level 2
              
              
              Level 3
              
              
              ValueShort-Term
      Notes Payable
              
              
              -
              
              
              
              -
              
              
              $
              (424,900
              )
              
              $
              (424,900
              )Total
      assets and liabilities at fair value
              
              $
              -
              
              
              $
              -
              
              
              $
              (424,900
              )
              
              $
              (424,900
              )
  Level
      3 Reconciliation:
              
              Short-Term
      Notes PayableLevel
      3 assets and liabilities at December 31, 2008:
              
              $
              -Purchases,
      sales, issuances and settlements (net)
              
              
              (424,900
              )Total
      level 3 assets and liabilities at September 30, 2009
              
              $
              (424,900
              )
  9
  INTELASIGHT,
INC. DBA
 IVEDA
SOLUTIONS
 CONDENSED
NOTES TO THE FINANCIAL STATEMENTS
 (UNAUDITED)
 NOTE
3: RELATED PARTY TRANSACTIONS
  The
Company has provided surveillance services since 2005 to entities owned by Ross
Farnsworth, either through a family partnership or through his majority owned
LLC, and subsequently Ross Farnsworth became a shareholder of the Company in
2006.  Mr. Farnsworth’s holdings have always been less than 5% of the
Company’s outstanding stock but the revenue for the nine months ended September
30, 2009 and the year ending 2008 was $45,307 and $40,466, respectively, and
there was a trade accounts receivable balance of $0 and $3,021 at September 30,
2009 and December 31, 2008, respectively.
 
 The
Company has borrowed $157,000 through September 30, 2009 from various
shareholders at no interest and with a maturity date of December 31,
2009.
 
 NOTE
4: EARNINGS (LOSS) PER SHARE
  The
following table provides a reconciliation of the numerators and denominators
reflected in the basic and diluted earnings per share computations, as required
by ASC 260 “Earnings Per Share“(“EPS”).
 
 Basic EPS
is computed by dividing reported earnings available to stockholders by the
weighted average shares outstanding. Diluted EPS also includes the effect of
potentially dilutive common shares.  The Company had net losses for
the three and six months ended September 30, 2009 and 2008 and the effect of
including dilutive securities in the earnings per common share would have been
anti-dilutive.  Accordingly, all options to purchase common shares
were excluded from the calculation of diluted earnings per share for the three
and six months ended September 30, 2009 and 2008.
  For
      the three
              
              
              For
      the three
              
              
              For
      the nine
              
              
              For
      the ninemonths
      ended
              
              
              months
      ended
              
              
              months
      ended
              
              
              months
      ended9/30/2009
              
              
              9/30/2008
              
              
              9/30/2009
              
              
              9/30/2008Basic
      and Diluted EPSNet
      Loss
              
              $
              (306,620
              )
              
              $
              (252,962
              )
              
              $
              (1,175,879
              )
              
              $
              (680,407
              )Weighted
      Average Shares
              
              
              8,936,804
              
              
              
              6,691,567
              
              
              
              8,966,804
              
              
              
              6,124,292Basic
      and
                Diluted
      Loss Per Share
              
              $
              (0.03
              )
              
              $
              (0.04
              )
              
              $
              (0.13
              )
              
              $
              (0.11
              )
  NOTE
5: COMMON STOCK
  The
Company issued 85,000 shares of common stock for $1 per share in the quarter
ended March 31, 2009 and 155,000 shares for the quarter ended June 30, 2009 and
12,500 shares for the quarter ended September 30, 2009 under a private placement
memorandum and $28,740 cost of financing were incurred for the nine month period
ending September 30, 2009.
  NOTE
6: SUBSEQUENT EVENTS
  The
Company issued 403,539 shares of common stock for $1 per share in October 2009
under the default conversion features of debentures sold in 2009.
 
 On
October 15, 2009, Iveda Corporation, a Nevada corporation fka Charmed Homes Inc.
(the "Company" or "Iveda" or the "Registrant"), entered into a Stock Purchase
Agreement (the "Stock Purchase Agreement") with IntelaSight, Inc., a Washington
corporation ("IntelaSight"), Ian Quinn and Kevin Liggins.  Pursuant to
the Stock Purchase Agreement, Mr. Quinn and Mr. Liggins, the majority
shareholders of the Company, sold the 2.5 million post-reverse split shares of
common stock they owned to IntelaSight in exchange for cash consideration of
$200,000 of which  $50,000 was paid at or prior to the closing, and
the remaining $150,000 will be paid in equal $50,000 installments due three, six
and nine months post-closing.  These funds were and will be obtained
through a combination of revenues and capital raised from IntelaSight
investors.  Pending full payment, the shares sold by Mr. Quinn and Mr.
Liggins are being held in escrow by the Company's transfer agent, and if payment
is not made, a portion of the shares would be returned to Mr. Quinn and Mr.
Liggins.  IntelaSight intends to cancel the shares once they are
released from the escrow.
  10
 INTELASIGHT,
INC. DBA
 IVEDA
SOLUTIONS
 CONDENSED
NOTES TO THE FINANCIAL STATEMENTS
 (UNAUDITED)
 On
October 15, 2009, the merger (the "Merger") contemplated by the Merger Agreement
dated as of January 8, 2009 by and among the Company, IntelaSight, Charmed Homes
Subsidiary, Inc., a Nevada corporation (the "Merger Sub"), and certain
shareholders (the "Merger Agreement"), was completed as of the filing of
Articles of Merger with the Secretaries of State of the States of Nevada and
Washington, merging the Merger Sub into IntelaSight.
 
 As a
result of the Merger and pursuant to the Merger Agreement, IntelaSight has
become a wholly-owned subsidiary of the Company, and the Registrant is issuing
shares of its common stock to holders of common stock of IntelaSight at a rate
of one share of the Registrant's common stock for each share of IntelaSight
common stock.  Options and warrants to purchase common stock of
IntelaSight will also be converted at the same rate into options and warrants to
purchase common stock of the Registrant.  Immediately prior to the
Merger and following its recent 2:1 reverse stock split (which was completed
effective October 12, 2009), the Registrant had approximately 845,000 shares of
common stock outstanding (not including the 2.5 million shares of the Company's
common stock held by IntelaSight purchased from Mr. Quinn and Mr. Liggins
pursuant to the Stock Purchase Agreement, which shares will be cancelled
following their release from escrow).
 
 Following
the Merger, the Registrant has 9,881,800 shares of common stock outstanding
(not including the 2.5 million shares sold pursuant to the Stock Purchase
Agreement which will be cancelled following their release from escrow). The
total number of shares outstanding, on a fully-diluted basis, post merger will
be 11,628,807, which includes not only shares of common stock, but also warrants
and options that could be exercised for shares of common stock. Following the
Merger, on a fully diluted basis (but excluding the escrowed shares), the
shareholders of IntelaSight own 92.7% of the Registrant's outstanding
securities, and the Registrant's shareholders own 7.3% of the Registrant's
outstanding securities.
  The
following table sets forth selected financial data of Charmed Homes for the
period ended September 30, 2009.  The data for the fiscal period
ending September 30, 2009 has been derived from the financial statements of
Charmed Homes.
  We are
presenting the unaudited Condensed Balance Sheet at September 30, 2009 and
January 31, 2009 (prior fiscal year end).  The unaudited Condensed
Statements of Operations for the period ended September 30, 2009.
  11
  INTELASIGHT,
INC. DBA
 IVEDA
SOLUTIONS
 CONDENSED
NOTES TO THE FINANCIAL STATEMENTS
 (UNAUDITED)
  Unaudited
      Condensed Balance Sheets
              
              Charmed
      Homes
              
              
              Charmed
      HomesSeptember
      30,
              
              
              January
      31,2009
              
              
              2009ASSETSCURRENT
      ASSETSCash
              
              $
              64,047
              
              
              $
              86,957Total
      Assets
              
              
              64,047
              
              
              
              86,957LIABILITIES
      AND STOCKHOLDERS' EQUITYCURRENT
      LIABILITIESAccounts
      Payable
              
              
              4,720
              
              
              
              3,413Total
      Liabilities
              
              
              4,720
              
              
              
              3,413STOCKHOLDERS'
      EQUITYCommon
      Stock
              
              
              67
              
              
              
              67Additional
      Paid-In Capital
              
              
              173,933
              
              
              
              173,933Donated
      Capital
              
              
              20,500
              
              
              
              15,500Accumulated
      Deficit
              
              
              (135,173
              )
              
              
              (105,956
              )Total
      Stockholders' Equity
              
              
              59,327
              
              
              
              83,544Total
      Liabilities and Stockholders' Equity
              
              $
              64,047
              
              
              $
              86,957
  12
  INTELASIGHT,
INC. DBA
 IVEDA
SOLUTIONS
 CONDENSED
NOTES TO THE FINANCIAL STATEMENTS
 (UNAUDITED)
 Charmed
      Homes8
      Months endedUnaudited
      Condensed Statement of Operations
              
              September
      30,2009REVENUE
              
              $
              -COST
      OF REVENUE
              
              
              -GROSS
      PROFIT
              
              
              -OPERATING
      EXPENSES
              
              
              29,217NET
      LOSS
              
              $
              (29,217
              )BASIC
      AND DILUTED LOSS PER SHARE
              
              $
              -Weighted
      Average Shares Outstanding
              
              
              6,690,000


13




ITEM
      2.
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS.




Management's
Discussion and Analysis of Financial Condition and Results of Operations –
IntelaSight, Inc.




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





Caution
Regarding Forward-Looking Information





All
statements contained in this Form 10-Q, other than statements of historical
facts, that address future activities, events or developments are
forward-looking statements, including, but not limited to, statements containing
the words "believe," "expect," "anticipate," "intends," "estimate," "forecast,"
"project," and similar expressions . All statements other than statements of
historical fact are statements that could be deemed forward-looking statements,
including any statements of the plans, strategies and objectives of management
for future operations; any statements concerning proposed new products,
services, developments or industry rankings; any statements regarding future
economic conditions or performance; any statements of belief; and any statements
of assumptions underlying any of the foregoing.  These statements are
based on certain assumptions and analyses made by us in light of our experience
and our assessment of historical trends, current conditions and expected future
developments as well as other factors we believe are appropriate under the
circumstances. However, whether actual results will conform to the expectations
and predictions of management is subject to a number of risks and uncertainties
described under “Risk Factors” under Part II Item 1A below and in the “Risk
Factors” section of our Form 10-K for the fiscal year ended January 31, 2009
that may cause actual results to differ materially.





Consequently,
all of the forward-looking statements made in this Form 10-Q are qualified by
these cautionary statements and there can be no assurance that the actual
results anticipated by management will be realized or, even if substantially
realized, that they will have the expected consequences to or effects on our
business operations.  Readers are cautioned not to place undue
reliance on such forward-looking statements as they speak only of the Company's
views as of the date the statement was made. The Company undertakes no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.





Results
of Operations for the Three and Nine Months Ended September 30, 2009 Compared to
the Three and Nine Months Ended September 30, 2008





Net Revenue.We recorded net revenue of $159,481 for the three months ended September
30, 2009, compared to $81,550 for the three months ended September 30, 2008, an
increase of $77,931 or 96%. Revenues were primarily derived from our real-time
surveillance and equipment sales and installation. In Q3 2009, our recurring
service revenue was $97,981 or 61% of net revenue and our equipment sales and
installation revenue was $61,500 or 39% of net revenue, compared to $80,613 or
99% of recurring service revenue and our equipment sales and installation
revenue was $937 or 1% of net revenue in 2008.




14





We
recorded net revenue of $491,730 for the nine months ended September 30, 2009,
compared to $410,529 for the nine months ended September 30, 2008, an increase
of $81,201 or 20%. Revenues were primarily derived from our real-time
surveillance and equipment sales and installation. In the nine months ended
September 30, 2009, our recurring service revenue was $279,411 or 57% of net
revenue and our equipment sales and installation revenue was $212,319 or 43% of
net revenue, compared to $263,455 or 64% of recurring service revenue and our
equipment sales and installation revenue was $147,074 or 36% of net revenue in
2008.





Cost of
Revenue.Total cost of revenue
was $123,565 for the three months ended September 30, 2009, compared to $79,609
for the three months ended September 30, 2008, an increase of $43,956 or 55%.
The increase in cost of revenue was primarily due to the increase in
revenue.





Total
cost of revenue was $386,555 for the nine months ended September 30, 2009,
compared to $256,856 for the nine months ended September 30, 2008, an increase
of $129,699 or 50%. The increase in cost of revenue was primarily due to
increased net revenues and significant additional Internet protocol
infrastructure including a tier 4, state of the art, data center with redundant
power and abundance of relative bandwidth to support scalability of revenue and
customer base growth.





Operating
Expenses.Operating expenses were
$334,222 for the three months ended September 30, 2009, compared to $406,172 for
the three months ended September 30, 2008, a decrease of $71,950 or 18%. The
decrease in operating expenses was primarily related to a cut in marketing,
travel, and personnel costs.





Operating
expenses were $1,258,983 for the nine months ended September 30, 2009, compared
to $1,113,825 for the nine months ended September 30, 2008, an increase of
$145,158 or 13%. The increase in operating expenses was primarily related to
vesting of stock options, and professional fees associated with merger
activities.





Loss from
Operations.As a result of the
decreases in operating expenses, loss from operations decreased to $298,306 for
the three months ended September 30, 2009, compared to $404,231 for the three
months ended September 30, 2008, a decrease of $105,925  or
26%.





As a
result of the increases in operating expenses, loss from operations increased to
$1,153,808 for the nine months ended September 30, 2009, compared to $960,152
for the nine months ended September 30, 2008, an increase of $193,656 or
20%.





Other
Expense-Net.Other expense-net was
$8,314 for the three months ended September 30, 2009, compared to $3,731 for the
three months ended September 30, 2008, an increase of $4,583 or
123%.





Other
expense-net was $22,071 for the nine months ended September 30, 2009, compared
to $20,255 for the nine months ended September 30, 2008, a decrease of $1,816 or
9%.





Net
Loss.The
increase of $53,658 or 21% in the net loss to $306,620 for the three months
ended September 30, 2009 from $252,962 for the three months ended September 30,
2008 was primarily a net effect of a $155,000 tax benefit recorded in 2008
without a corresponding benefit recorded in 2009.  Without the tax
benefit the decreased operating expenses and increase in gross profit
contributed to a reduction in net loss before income taxes.




15





The
increase of $495,472 or 73% in the net loss to $1,175,879 for the nine months
ended September 30, 2009 from $680,407 for the nine months ended September 30,
2008 was primarily a result of increased operating expenses and cost of revenues
with a $300,000 tax benefit recorded in 2008 and no corresponding benefit
recorded in 2009.





Liquidity
and Capital Resources




We had
cash and cash equivalents of $1,933 on September 30, 2009 and $335,189 on
December 31, 2008. Since inception, we have experienced decreases in our cash
and cash equivalents primarily as a result of cash used in operations offset by
the proceeds from stock sales.





Net cash
used in operating activities during the nine months ended September 30, 2009 was
$965,536 and the year ended December 31, 2008 was $1,252,038. Cash used in
operating activities for the nine months ended September 30, 2009 consisted
primarily of the net loss.  Cash used in operating activities for the
year ended December 31, 2008 consisted primarily of the net loss, an increase in
inventory and deposits.  Net cash used by operating activities as
compared to net loss were substantially reduced related to the stock
compensation of $222,892 and provision for income taxes of $558,370 related to a
write-off of a deferred tax asset during fourth quarter 2008.





Net cash
provided by investing activities for the nine months ended September 30, 2009
was $30,441.  Net cash used by investing activities during the year
ended December 31, 2008 was $115,579. Our net cash used by investing activities
consisted for the year ended December 31, 2008 of the purchase of equipment and
funding of an escrow deposit related to the pending merger with Charmed
Homes.





Net cash
provided by financing activities for the nine months ended September 30, 2009
was $601,838 and during the year ended December 31, 2008 was
$1,661,462.  Net cash provided in both periods consisted primarily of
net proceeds from the sale of stock and proceeds from short-term borrowings
which were partially offset by principal payments on capital lease
obligations.





At
December 31, 2008, we had approximately $2.6 million in net operating loss
carryforwards available for federal and state income tax purposes. We did not
recognize any benefit from these operating loss carryforwards for the year ended
2008 or thus far in 2009, which expire in 2010 through 2025.





We have
experienced significant operating losses since our inception. During 2008 we
increased our personnel to 26 employees from 19 at December 31, 2007. We entered
into a new lease agreement in 2008 and increased our occupancy costs as we
increased our lease commitment from 1,411 square feet to 3,667 square feet. Our
capital expenditures and working capital requirements could increase depending
on our operating results and other adjustments to our operating plan as may be
needed to respond to competition or unexpected events.





We
believe that our cash on hand is not sufficient to meet our anticipated cash
needs for working capital and capital expenditures for at least 12 months. 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 could be
required to reduce the scope of or cease operations.




16





The most
recent economic events resulting in a downturn of spending and credit shortage
has severely curtailed our ability to raise financing in
2009.   Between September 2008 and October 2008, IntelaSight
raised approximately $1.5 million through its private offering. Since then
IntelaSight has raised a small amount of financing through short term loans and
sale of equity.  Investor interest in the Company remains high in
management's opinion but two main factors have increased its difficulty in
raising funds. The economic slump has affected our potential investors'
businesses and personal financial situations, resulting in potential investors
having less cash to invest overall, and due to the stock market downturn,
reticence to liquidate old investments and make new investments. This economic
condition could also affect the sales of IntelaSight's service as companies are
cutting back on spending across the board.  For instance, IntelaSight
has experienced much longer sales cycles, especially in the public sector, in
late 2008 and into 2009.  Issuance of purchase orders by customers is
also taking longer to occur following the closing of a sale by the sales team as
many customers are experiencing lower revenues due to the economic downturn,
which is reducing available funds for capital expenditures. However,
IntelaSight's management is cautiously optimistic because IntelaSight does not
need to sell camera equipment to provide our service. It can also target
customers with existing camera systems. IntelaSight realizes that in tough
economic times, companies avoid large capital expenditures. However, ultimately
because IntelaSight is a service provider in the security industry rather than a
seller of cameras and other products, management believes that companies still
need to secure their properties regardless of the economy. IntelaSight offers an
inexpensive, but effective alternative to security guards, with its real-time
video surveillance service using existing camera systems. And even if the
customer has to purchase cameras to enable IntelaSight's service, IntelaSight is
still able to provide up to 50% savings compared to traditional security guard
services. IntelaSight has fewer customers than was originally anticipated, and
as a result, IntelaSight must continue to raise capital to continue operations
and there is no assurance that it will be able to do so.





IntelaSight's
average monthly burn rate in the first quarter of 2009 was approximately
$175,000.  IntelaSight implemented 10% to 41% salary cuts across the
board in April 2009. IntelaSight's average monthly burn rate in the second
quarter of 2009 has been reduced to approximately $117,000 and then $102,000 in
third quarter of 2009.  Further drastic cuts were made starting in
June 2009.  Hours and salaries of non-essential employees were cut up
to 66% from salary levels before April 2009. Sales employees who are essential
in generating sales and IT employees who are essential in maintaining our
infrastructure retained full time status, but salaries were cut by up to 8%.
Executive salaries were reduced by 41%. Only the salaries of intervention
specialists (the employees monitoring our customers' properties) were not
reduced. We have reduced our travel and marketing expenses to almost zero. These
cuts have not dramatically reduced our ability to conduct sales activities
because conference calls and emails have reduced the necessity of most
face-to-face meetings. Our infrastructure allows us to do live demos of our
hosting and real-time surveillance services over the Internet during a
conference call. Results of sales and marketing campaigns in the last quarter
and beginning of this year have resulted in a healthy sales pipeline, which our
sales team is currently pursuing but there is no assurance we will close any of
these opportunities. If we are unable to raise funds and generate significant
revenues, we will be forced to further cut costs, keeping only a skeleton crew
to maintain our infrastructure and service our existing customers.  A
multi-step plan was adopted by management to enable IntelaSight to continue to
operate and begin to report operating profits. The highlights of that plan
include raising capital of approximately $750,000 and establishing distributor
networks with existing companies to create a reseller network to increase the
scope of IntelaSight's marketing activities at a relatively low cost to
IntelaSight. IntelaSight is also changing its messaging to align its offerings
to a more widely accepted industry protocols, which management believes will
provide a more mainstream understanding and acceptance of its unique service
offering.





Only the
following customers represented greater than 10% of total revenue for the three
months ended September 30, 2009: Insurance Auto Auctions N. Hollywood 11%, Delta
Mechanical 14%, and Low Mountain Construction 14%. Likewise, only the following
customers represented greater than 10% of total revenue for the nine months
ended September 30, 2009: Insurance Auto Auctions N. Hollywood 11% and American
Security and Investigations 16%. For the three months ended September 30, 2008,
the following customers represented greater than 10% of total revenue: Famsworth
Group 11%, Insurance Auto Auctions Colton 12%, and Insurance Auto Auctions N.
Hollywood 17%. For the nine months ended September 30, 2008, only Insurance Auto
Auctions N. Hollywood represented greater than 10% of total revenue, at
18%.




17





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





IntelaSight
leased its office facilities under a non-cancelable operating lease expiring
August 2011 and requires minimum monthly payments ranging from $8,098 to $9,015.
Rent expense was $77,008 for the year ended December 31, 2008. IntelaSight also
has non-cancellable data center services agreement for $6,110 per month,
expiring September 2011. Data center services expense was $18,330 for the year
ended December 31, 2008.





Future
minimum lease payments under this lease are as follows:




Year
      Ending December 31,2009
            
            $
            173,8622010
            
            $
            177,5232011
            
            $
            121,838Total
            
            $
            473,223





IntelaSight
also recorded deferred rent of $37,664 generated from its office lease agreement
executed in 2008.  The lease included nine months free rent and is
coupled with a rent escalation clause.





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
disclosure 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-14(c) and 15d-14(c)
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as of September 30, 2009.  Based on that evaluation, our
principal executive officer and our principal financial officer concluded that
the design and operation of our disclosure controls and procedures were
effective in timely alerting them to material information required to be
included in the Company's periodic reports filed with the SEC under the Exchange
Act.  The design of any system of controls is based in part upon
certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions, regardless of how remote.  However,
management believes that our system of disclosure controls and procedures is
designed to provide a reasonable level of assurance that the objectives of the
system will be met.





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(e) and 15d-15(e) under the Exchange Act)
during the most recent fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.




18




PART
II. OTHER INFORMATION





ITEM
1A.     RISK FACTORS.




Below are
risk factors that apply to the post-merger company.




Other than with respect to the
historical discussion of the financial statements of IntelaSight, Inc.,
references to "Iveda" throughout these Risk Factors refers
to the Company together with its wholly-owned subsidiary.




Risk
Factors Involving Our Business




The
Audit Report On IntelaSight's Financial Statements Contains A Going Concern
Opinion.




IntelaSight's
financial statements for the years ended December 31, 2008 and 2007 were
prepared on a "going concern basis" and the audit report contains a "going
concern qualification".  IntelaSight's financial statements assume it
will continue as a going concern, but its ability to do so will require
additional capital to fund operations until positive operating cash flow is
achieved.




Iveda
Is An Emerging Growth Company.




Iveda
began operations in 2005.  While Iveda has monthly revenues, there is
limited historical, operating or financial information about Iveda to evaluate
Iveda's performance.  As of November 13, 2009, Iveda had approximately
$11,303 cash on hand.  At Iveda's current estimated burn rate of
$60,000 per month, Iveda needs to continue to raise capital to continue its
operations.  Iveda intends to continue to seek to raise capital
predominantly to expand its sales and marketing capabilities and hire additional
employees to meet the demand for its services. If Iveda does not raise
sufficient capital, of which there can be no assurance, it will have a
significant impact on the ability of Iveda to expand
operations.  There can be no assurance that Iveda can be operated
profitably or, if profitability is achieved, that it can be
sustained.




Iveda's
Ability To Grow Is Dependent Upon The Success Of Iveda's Current And Future
Operations And Iveda's Ability To Obtain Additional Financing.




Iveda is
close to generating sufficient revenue to fund its ongoing operations, but needs
additional funding to implement its growth plan.  Iveda currently has
and will continue to have significant capital requirements to fund its
growth.  Iveda anticipates, based on its currently proposed intentions
and assumptions relating to its operations, that substantial additional capital
will be needed to satisfy Iveda's cash requirements to implement its growth
plan. While Iveda expects to continue raising capital, Iveda has no committed
sources of additional financing and Iveda's officers, directors and shareholders
are not required to provide any portion of Iveda's future financing
requirements.  Iveda cannot assure investors that additional financing
will be available on commercially reasonable terms, or at all.  Any
inability to obtain additional financing when needed could require Iveda to
significantly curtail its growth plans.




If
additional funds are raised through the issuance of equity or convertible debt
securities, the percentage ownership of Iveda's existing shareholders will be
reduced, and these newly issued securities may have rights, preferences or
privileges senior to those of existing shareholders.  Iveda cannot
assure investors that additional financing will be available on terms favorable
to Iveda, or at all.




Iveda
Depends On Certain Key Personnel.




Iveda's
future success will be dependent on the efforts of key management personnel,
particularly David Ly, Iveda's President and CEO, Luz Berg, Iveda's
COO  and CMO, Ray Palomaa, Iveda's Director of Sales, and Michael
Religioso, Iveda's Director of Systems Development, each of whom is employed at
will by Iveda.  Mr. Ly's relationships within Iveda's industry are
vital to Iveda's continued operations and if Mr. Ly was no longer actively
involved with Iveda, Iveda would likely be unable to continue its
operations.  Iveda does not have any key man insurance on Mr.
Ly.  The loss of one or more of Iveda's other key employees could also
have a material adverse effect on Iveda's business, results of operations and
financial condition.  Iveda also believes that Iveda's future success
will be largely dependent on Iveda's ability to attract and retain highly
qualified management, sales and marketing personnel.  Iveda cannot
assure investors that the Company will be able to attract and retain such
personnel.  Iveda's inability to retain such personnel or to train
them rapidly enough to meet Iveda's expanding needs could cause a decrease in
the overall quality and efficiency of Iveda's staff, which could have a material
adverse effect on Iveda's business, results of operations and financial
condition.




19




Rapid
Growth May Strain Iveda's Resources.




As Iveda
continues the commercialization of Iveda's security and surveillance products
and services, Iveda expects to experience significant and rapid growth in the
scope and complexity of its business, which may place a significant strain on
Iveda's senior management team and Iveda's financial and other resources. The
proposed acceleration will expose us to greater overhead, marketing and support
costs and other risks associated with growth and expansion.  Iveda
will need to add staff to monitor additional cameras, market its products and
services, manage operations, handle sales and marketing efforts and perform
finance and accounting functions. Iveda will be required to hire a broad range
of additional personnel in order to successfully advance its
operations.




Management
has implemented strategies to handle projected growth, including acquiring an
option on additional leased space within Iveda's existing
building.  Iveda's existing leased space can accommodate up to 15
monitoring stations, with four employees required to monitor each station around
the clock.  Iveda may also seek to relocate its existing data center,
located in Scottsdale, Arizona, to a less expensive part of the United
States.  Iveda's ability to manage its rapid growth effectively will
require Iveda to continue to improve its operations, to improve its financial
and management information systems and to train, motivate and manage its
employees.




This
growth may place a strain on Iveda's management and operational resources. The
failure to develop and implement effective systems, or to hire and retain
sufficient personnel for the performance of all of the functions necessary to
effectively service and manage Iveda's business, or the failure to manage growth
effectively, could have a materially adverse effect on Iveda's business and
financial condition.  In addition, difficulties in effectively
managing the budgeting, forecasting and other process control issues presented
by such a rapid expansion could harm Iveda's business, prospects, results of
operations and financial condition.




Demand
For Iveda's Security And Surveillance Products And Services May Be Lower Than
Iveda Anticipates.




Iveda has
commenced a public relations and marketing campaign.  Iveda has
limited resources to undertake extensive marketing activities, although Luz
Berg, Iveda's COO and CMO, has significant marketing experience from her past
positions at mid-cap public companies, and she will manage Iveda's future
marketing efforts.  In 2008, Iveda hired Ray Palomaa, who has
significant past experience in the high-technology security industry, as Iveda's
Director of Sales.  Mr. Palomaa is managing a small sales team to
develop Iveda's reseller distribution channel. Management anticipates that his
addition to Iveda's team will allow Iveda to tap into the industry contacts he
was able to build over his years of experience.  Iveda cannot predict
with certainty the potential consumer demand for its security and surveillance
products or services or the degree to which Iveda will meet that demand. If
demand for its security and surveillance products and services does not develop
to the extent or as quickly as expected, Iveda might not be able to generate
revenue to become profitable.




Iveda
plans to target the sale of its security and surveillance products and services
to the following primary customer groups: commercial users of other products
seeking cost savings or remote monitoring capabilities, remote monitoring of day
care and educational facilities, golf course monitoring, monitoring of
residential communities, automotive lot monitoring, warehouse access point
monitoring, small unattended business monitoring, nursing home monitoring,
recording and broadcasting of school or entertainment events, monitoring of
construction sites and auto dealerships, and government-related monitoring.
Iveda has based its strategy to target these consumers on a number of
assumptions, some or all of which could prove to be incorrect.




20




Even if
markets for its products and services develop, Iveda could achieve a smaller
share of these markets than Iveda currently anticipates.  Achieving
market share will require substantial marketing efforts and expenditure of
significant funds to inform customers of the distinctive characteristics and
benefits of using Iveda's products and services.  Iveda cannot assure
investors that its marketing efforts will result in the attainment of sufficient
market share to become profitable.




Iveda
Believes Industry Trends Support Its Open Source Systems, But If Trends Reverse,
Iveda May Experience Decreased Demand.




The
security and surveillance industry is characterized by rapid changes in
technology and customer demands. Management believes that the existing market
preference for open source systems (systems capable of integrating a wide range
of products and services through community and private based cooperation, such
as the Internet, Linux, and certain cameras used in Iveda's business) is strong
and will continue for the foreseeable future.  However, should the
market shift toward closed source, proprietary systems (private, closed systems
built to only support a specific manufacturer or developer's product or service,
such as CCTV cameras), demand for Iveda's services may decline as Iveda is
unable to monitor cameras that are part of a closed source
system.  Management believes that such a shift is
unlikely.  While Iveda is able to convert CCTV and analog systems for
use with Iveda's monitoring services, certain systems may not be convertible in
the future, and to the extent that customers prefer to install these systems, it
would be more difficult to sell Iveda's services since customers would be
required to spend additional funds to acquire new cameras that Iveda would be
able to monitor.




Future
Loan Agreements With Lenders May Hinder Iveda's Ability To Operate The Business
By Imposing Restrictive Loan Covenants.




Iveda
will likely need to incur debt to implement its business plan, and has and plans
to continue to obtain lease financing for certain equipment
acquisitions.  Any debt load necessary to implement Iveda's business
plan could result in substantial debt service requirements. These future debt
load and service requirements could have important consequences which could
hinder Iveda's ability to operate, including Iveda's ability to:




·           Incur
additional indebtedness;




·           Make
capital expenditures or enter into lease arrangements in excess of prescribed
thresholds;




·           Make
distributions to shareholders, or redeem or repurchase Iveda's
shares;




·           Make
certain types of investments;




·           Create
liens on Iveda's assets;




·           Utilize
the proceeds of asset sales; and




·           Merge
or consolidate or dispose of all, or substantially all, of Iveda's
assets.




In the
event that Iveda is unable to pay its debt service obligations, Iveda's
creditors could force it to (1) reduce or eliminate distributions to
shareholders; or (2) reduce or eliminate needed capital expenditures. It is
possible that Iveda could be forced to sell assets, seek to obtain additional
equity capital or refinance or restructure all or a portion of Iveda's debt. In
the event that Iveda would be unable to refinance Iveda's indebtedness or raise
funds through asset sales, sales of equity or otherwise, Iveda's ability to
operate would be greatly affected.




21




Risks
Associated with the Surveillance and Remote Security Industry




As a
result of providing its products and services, Iveda is exposed to risks
associated with participation in the security and surveillance
industry.  These risks are summarized below.




Iveda
Depends On Third Party Manufacturers And Suppliers For The Products It
Sells.




Iveda has
relationships with a number of third party manufacturers and suppliers,
including Axis Communications, Milestone, Scansource, Anixter, Dotworkz and
Ingram Micro for cameras and Dell for network computer equipment, for the supply
of all of the hardware components of Iveda's products. Iveda has a signed
reseller and development partner agreements with Axis Communications and
Milestone. Risks associated with Iveda's dependence upon third party
manufacturing relationships include: (i) reduced control over delivery
schedules; (ii) lack of control over quality assurance; (iii) poor manufacturing
yields and high costs; (iv) potential lack of adequate capacity during periods
of excess demand; and (v) potential misappropriation of Iveda's intellectual
property. Although Iveda depends on third party manufacturers and suppliers for
products it sells, risks are minimized because it does not depend on one
manufacturer and supplier. It utilizes an open platform, which means that in
order to deliver its services, it does not discriminate based on camera brand or
manufacturer and its services can be used with a wide array of
products.




Iveda
does not know if Iveda will be able to maintain third party manufacturing and
supply contracts on favorable terms, if at all, or that its current or future
third party manufacturers and suppliers will meet its requirements for quality,
quantity or timeliness.  Iveda's success depends in part on whether
its manufacturers are able to fill the orders it places with them in a timely
manner. If Iveda's manufacturers fail to satisfactorily perform their
contractual obligations or fill purchase orders Iveda places with them, Iveda
may be required to pursue replacement manufacturer relationships. If Iveda is
unable to find replacements on a timely basis, or at all, Iveda may be forced to
either temporarily or permanently discontinue the sale of certain products and
associated services, which could expose it to legal liability, loss of
reputation and risk of loss or reduced profit. Management believes that Iveda's
present suppliers offer products that are superior to comparable products
available from other suppliers.  Iveda's business, results of
operation and reputation would be adversely impacted if Iveda is unable to
provide quality products to its customers in a timely manner.




In
addition, Iveda has development partner relationships with many of its present
suppliers, which provides it with greater control over future enhancements to
the off-the-shelf products Iveda sells.




Iveda
could also be adversely affected by an increase in its manufacturers' prices for
its product components or a significant decline in Iveda's manufacturers'
financial condition. If Iveda's relationship with any one of its manufacturers
is terminated and Iveda is not successful in establishing a relationship with an
alternative manufacturer who offers similar services at similar prices, Iveda's
costs could increase, adversely affecting its operations.




Iveda
Operates In A Highly-Competitive Industry And its Failure To Compete Effectively
May Adversely Affect Its Ability To Generate Revenue.




Although
management believes that there is, at this time, no competitor that offers a
similar package of services to the package offered by Iveda, management is aware
of similar products and services which compete indirectly with Iveda's products
and services.  In management's opinion, companies providing indirect
competition include Westec Interactive, Smart Interactive Systems, Inc., and
Monitoring Partners.  Some companies may also be developing similar
products and services, including companies that may have significantly greater
financial, technical and marketing resources, larger distribution networks, and
generate greater revenue and have greater name recognition than Iveda. These
companies may develop security products and services that are superior to those
offered by Iveda.  Such competition may potentially affect Iveda's
chances of achieving profitability.




22




Some of
Iveda's current and future competitors may conduct more extensive promotional
activities and may offer lower prices to customers than Iveda does, which could
allow them to gain greater market share or prevent Iveda from increasing its
market share. In the future, Iveda may need to decrease its prices if Iveda's
competitors lower their prices. Iveda's competitors may be able to respond more
quickly to new or changing opportunities, technologies and customer
requirements. To be successful, Iveda must carry out its business plan,
establish and strengthen its brand awareness through marketing, effectively
differentiate its services from those of its competitors and build its reseller
network, while maintaining superior levels of service, which management believes
is what will ultimately differentiate Iveda's services from any similar services
its competitors may develop in the future. To achieve this Iveda may have to
substantially increase marketing and development activities in order to compete
effectively. Such competition will potentially affect Iveda's chances of
achieving profitability.




Future
Legislation Or Governmental Regulations Or Policies Could Have A Significant
Impact On Iveda's Operations.




While
Iveda is presently subject only to licensing requirements related to its
contracting activities, for which Iveda holds low voltage contractors' licenses
in California and Arizona, the security and surveillance industry as a whole is
subject to regulation. As Iveda continues operations, Iveda may be subject to
additional regulation in the future. Future changes in laws or regulations could
require Iveda to change the way Iveda operates, which could increase costs or
otherwise disrupt operations. In addition, failure to comply with any applicable
laws or regulations could result in substantial fines or revocation of any
required operating permits and licenses. If laws and regulations change or Iveda
fails to comply in the future, Iveda's financial condition, results of
operations and cash flows could be materially and adversely
affected.




Regulation
Of The Telecommunications Industry And The Internet May Impact Iveda's
Operations




Aspects
of Iveda's operations may be, or become, subject to regulations governing the
Internet.  There can be no assurance that government agencies will not
increasingly regulate Internet-related services.  Increased regulation
may slow Iveda's growth, and legislation could be enacted that would prohibit
certain forms of telecommunication critical to Iveda's
operations.  Such regulation may also negatively impact the cost of
doing business and materially adversely affect Iveda's business, financial
condition and results of operations.




The
Failure Of Iveda's Systems Could Result In A Material Adverse
Effect.




Iveda
utilizes a third party, fourth-tier data center in Scottsdale,
Arizona.  Tier 4 data centers meet the most stringent requirements
established by the Telecommunications Industry Association's Telecommunications
Infrastructure Standards for Data Centers, or TIA-942.  This data
center transmits data to Iveda's monitoring system via a dedicated fiber
connection, and offers the greatest reliability provided by the industry,
99.995% availability, due to a number of back-up measures.  Iveda's
operations are dependent upon its ability to support a complex network
infrastructure and avoid damage to both its monitoring center and the data
center from fires, earthquakes, floods, hurricanes, power losses, war, terrorist
acts, telecommunications failures and similar natural or manmade events. The
occurrence of a natural disaster, intentional or unintentional human error or
actions, or other unanticipated problem could cause interruptions in the
services provided by Iveda, and resulting losses by Iveda's customers. Any
damage or failure that causes interruptions in the service provided by Iveda
could have a material adverse effect on its business, operating results and
financial condition.




23




Iveda has
experienced individual camera failures or outages in the past, and will likely
experience future individual camera failures or outages that disrupt the
monitoring of those cameras. Iveda's revenue depends in large part on
maintaining the operability of its monitoring systems. Accordingly, the
performance, reliability and availability of Iveda's network, servers for
Iveda's corporate operations and infrastructure are critical to Iveda's
reputation and Iveda's ability to attract and retain customers.




Iveda is
continually expanding and enhancing its technology and network infrastructure
and other technologies to accommodate substantial increases in the volume of
traffic on its network and the overall size of its customer base. Iveda may be
unsuccessful in these efforts or Iveda may be unable to project accurately the
rate or timing of these increases. The data center that Iveda currently uses has
significant additional bandwidth available should Iveda need it for expanding
its operations. Approximately three to four weeks elapses between signing a new
customer and commencing monitoring of that customer's cameras, which provides
Iveda with what management believes to be sufficient time to acquire additional
bandwidth if needed. However, Iveda's failure, or Iveda's suppliers' failure, to
achieve or maintain high data transmission capacity could significantly reduce
consumer demand for Iveda's services.




Iveda's
computer hardware operations, data processing, storage and backup systems are
located in a single, third party, fourth-tier data center in Scottsdale,
Arizona. If this location experienced a significant system failure or
interruption, Iveda's business would be harmed. Iveda's systems can be
vulnerable to damage from fire, power loss, telecommunications failures,
computer viruses, physical and electronic break-ins and similar events. The
property and business interruption insurance Iveda carries may not have coverage
adequate to compensate it fully for losses that may occur.




If
Iveda's Security Measures Are Breached And Unauthorized Access Is Obtained,
Existing And Potential Customers Might Not Perceive Iveda's Services As Being
Secure And Might Terminate Or Fail To Purchase Iveda's Services.




Iveda's
business involves the monitoring of cameras that may be recording sensitive
areas of its customers' facilities, and as a result, Iveda utilizes security
measures that are comparable to those used by banks in providing online banking
services. No security measures are completely secure, however, and, for example,
hackers or individuals who attempt to breach its network security could, if
successful, cause interruptions in Iveda's services. If Iveda experiences any
breaches of its network security or sabotage, Iveda might be required to expend
significant capital and resources to protect against or alleviate these
problems. Iveda may not be able to remedy any problems caused by hackers or
saboteurs in a timely manner, or at all. Because techniques used to obtain
unauthorized access or to sabotage systems change frequently and generally are
not recognized until launched against a target, Iveda may be unable to
anticipate these techniques or to implement adequate preventative measures. If
an actual or perceived breach of Iveda's security occurs, the perception of the
effectiveness of Iveda's security measures and Iveda's reputation could be
harmed and Iveda could lose current and potential customers.




The
Timing Of Iveda's Revenues Can Vary Depending On How Long Customers Take To
Evaluate Iveda's Services.




It is
difficult to forecast the timing of revenues in the security industry because
the development period for a customized system or solution may be lengthy,
larger customers may need a significant amount of time to evaluate products
before purchasing them and, in the case of governmental customers, sales are
dependent on budgetary and other bureaucratic processes. The period between
initial customer contact and a purchase by a customer varies greatly depending
on the customer, and historically has ranged from days to weeks. During the
evaluation period, customers may defer or scale down proposed orders of products
or systems for various reasons, including: (i) changes in budgets and purchasing
priorities; (ii) a reduced need to upgrade existing systems; (iii) deferrals in
anticipation of enhancements or new products; (iv) introduction of products by
competitors; and (v) lower prices offered by competitors.




24




Iveda
Will Rely On Both Iveda's Internal Sales Force And Resellers To Distribute
Iveda's Security Products And Services To Customers.




Iveda
relies on both Iveda's internal sales force and resellers to distribute its
security products and services to its customers.As of the date of this
report, Iveda has signed fifteen resellers and six independent agents, and
anticipates adding more as Iveda implements its business plan. However, Iveda
plans to continue its internal sales activity for the foreseeable future to
market its products and services until its resellers are completely trained and
mobilized.  Iveda could be adversely affected by any significant
decline in the service provided by its resellers as any customers dissatisfied
with its resellers may cause damage to its reputation. If Iveda's relationship
with any of its larger resellers is terminated and Iveda is not successful in
establishing a relationship with an alternative reseller who offers similar
services at similar prices, Iveda's business could decline depending on the
level of revenue generated by that reseller.




Government
Contracts Generally Contain Rights And Remedies Which Could Reduce The Value Of
Such Contracts, Or Result In Losses.




Iveda
presently provides its products and services for certain state and local
government customers, and has recently obtained certification of SAFETY Act
Designation by the Department of Homeland Security under the Support
Anti-terrorism by Fostering Effective Technologies Act, or SAFETY
Act.  Although not significant sources of revenue at this time,
government contracts often contain provisions that give the governments that are
party to those contracts certain rights and remedies not typically found in
private commercial contracts, including provisions enabling the governments to:
(i) terminate or cancel existing contracts for convenience; (ii) in the case of
the U.S. government, suspend the contracting company from doing business with a
foreign government or prevent the company from selling its products in certain
countries; (iii) audit and object to the company's contract-related costs and
expenses, including allocated indirect costs; and (iv) change specific terms and
conditions in the company's contracts, including changes that would reduce the
value of its contracts. In addition, many jurisdictions have laws and
regulations that deem government contracts in those jurisdictions to include
these types of provisions, even if the contract itself does not contain them. If
a government terminates a contract with Iveda for convenience, Iveda may not be
able to recover its incurred or committed costs, any settlement expenses or
profit on work completed prior to the termination. If a government terminates a
contract for default, Iveda may not recover those amounts and, in addition,
Iveda may be liable for any costs incurred by a government in procuring
undelivered items and services from another source. Further, an agency within a
government may share information regarding Iveda's termination with other
government agencies. As a result, Iveda's on-going or prospective relationships
with such other government agencies could be impaired.




There
Is A Shortage Of Qualified Electricians. Since The Majority Of Iveda's Work Is
Performed By Electricians, This Shortage May Negatively Impact Iveda's Business,
Including Its Ability To Grow.




There is
a shortage of qualified electricians in the United States. In order to conduct
Iveda's business, it is necessary for Iveda or Iveda's resellers to employ
electricians and have those electricians qualified in the states where they do
business. Iveda's ability to increase productivity and profitability may be
limited by its and its resellers' ability to employ, train and retain skilled
electricians required to meet Iveda's customers' needs. Accordingly there can be
no assurance, among other things, that:




• Iveda
or Iveda's resellers will be able to maintain the skilled labor force necessary
to operate efficiently;




• Iveda's
or Iveda's resellers' labor expenses will not increase as a result of a shortage
in the skilled labor supply; and




• Iveda
or Iveda's resellers will be able to maintain the skilled labor force necessary
to implement Iveda's planned growth.




25




The
Estimates Iveda Uses In Placing Bids Could Be Materially Incorrect, Resulting In
Possible Losses.




Iveda
currently generates, and expect to continue to generate, a significant portion
of its revenues for product sales and installation under fixed price contracts.
The cost of gasoline, labor and materials, however, may vary significantly from
the costs Iveda originally estimates. Variations from estimated contract costs
along with other risks inherent in performing fixed price contracts may result
in actual revenue and gross profits for a project differing from those Iveda
originally estimated and could result in losses on projects. Depending upon the
size of a particular project, variations from estimated contract costs can have
a significant impact on Iveda's operating results.




Risks
Related to Iveda's Intellectual Property




Iveda
Depends On its Intellectual Property.




Iveda's
success and ability to compete depends in part on Iveda's proprietary database,
Cerebro, the security information and reporting web service developed and used
by Iveda internally, and on the process by which Iveda integrates existing third
party products into a monitoring solution. If any of Iveda's competitors copy or
otherwise gain access to Iveda's proprietary technology or develop similar
technologies independently, Iveda may not be able to compete as effectively.
Iveda considers its proprietary software invaluable to its ability to continue
to develop and maintain the goodwill and recognition associated with its brand.
The measures Iveda takes to protect its technologies, and other intellectual
property rights, which presently are based upon trade secrets, may not be
adequate to prevent their unauthorized use.




If Iveda
is unable to protect its intellectual property, Iveda's competitors could use
Iveda's intellectual property to market products, services and technologies
similar to Iveda's, which could reduce demand for Iveda's products, services and
technologies. Iveda may be unable to prevent unauthorized parties from
attempting to copy or otherwise obtain and use its products or
technology.  Policing unauthorized use of Iveda's technology is
difficult, and Iveda may not be able to prevent misappropriation of its
technology, particularly in foreign countries where the laws may not protect its
intellectual property as fully as those in the United States.  Others
may circumvent the trade secrets, trademarks and copyrights that Iveda currently
or in the future owns.  Iveda does not have patent protection with
respect to its software or systems, although management is considering seeking
such protection.




Iveda
seeks to protect its proprietary intellectual property, which includes
intellectual property that may only be protectable as a trade secret, in part by
confidentiality agreements with its employees, consultants and business
partners.  These agreements afford only limited protection and may not
provide us with adequate remedies for any breach or prevent other persons or
institutions from asserting rights to intellectual property arising out of these
relationships.




Iveda
Could Incur Substantial Costs Defending its Intellectual Property From
Infringement By Others.




Unauthorized
parties may attempt to copy aspects of Iveda's proprietary software product or
to obtain and use its other proprietary information.  Litigation may
be necessary to enforce Iveda's intellectual property rights, to protect its
trade secrets and to determine the validity and scope of the proprietary rights
of others. Iveda may not have the financial resources to prosecute any
infringement claims that it may have.  Any litigation could result in
substantial costs and diversion of resources with no assurance of
success.




26




Iveda
Could Incur Substantial Costs Defending Against Claims That Its Products
Infringe On The Proprietary Rights Of Others.




The scope
of any intellectual property rights that Iveda has is uncertain and may not be
sufficient to prevent infringement claims against Iveda or claims that Iveda has
violated the intellectual property rights of third parties. While Iveda knows of
no basis for any claims of this type, the existence of and ownership of
intellectual property can be difficult to verify and Iveda has not made an
exhaustive search of all patent filings.  Competitors may have filed
applications for or may have been issued patents and may obtain additional
patents and proprietary rights relating to products or processes that compete
with or are related to Iveda's products and services.  The scope and
viability of these patents, the extent to which Iveda may be required to obtain
licenses under these patents or under other proprietary rights and the cost and
availability of licenses are unknown, but these factors may limit Iveda's
ability to market its products and services.




Third
parties could claim infringement by us with respect to any patents or other
proprietary rights that they hold, and Iveda cannot assure investors that Iveda
would prevail in any such proceeding as the intellectual property status of its
current and future competitors' products and services is
uncertain.  Any infringement claim against Iveda, whether meritorious
or not, could be time-consuming, result in costly litigation or arbitration and
diversion of technical and management personnel, or require Iveda to develop
non-infringing technology or to enter into royalty or licensing
agreements.




Iveda
might not be successful in developing or otherwise acquiring rights to
non-infringing technologies. Royalty or licensing agreements, if required, may
not be available on terms acceptable to Iveda, or at all, and could
significantly harm Iveda's business and operating results.  A
successful claim of infringement against Iveda or Iveda's failure or inability
to license the infringed or similar technology could require it to pay
substantial damages and could harm its business because Iveda would not be able
to continue operating its surveillance products without incurring significant
additional expense.  In addition, to the extent Iveda agrees to
indemnify customers or other third parties against infringement of the
intellectual property rights of others, a claim of infringement could require
Iveda to incur substantial time, effort and expense to indemnify these customers
and third parties and could disrupt or terminate their ability to use, market or
sell Iveda's products.  Furthermore, Iveda's suppliers may not provide
it with indemnification in the event that their products are found to infringe
upon the intellectual property rights of any third parties, and if they do not,
Iveda would be forced to bear any resulting expense.




Risks
Related to our Stock




There Is Substantial Influence By
Existing Shareholders.




Our
management will be able to effectively control matters requiring the approval by
shareholders of the Company, including the election of
directors.  This concentration of ownership by management may also
have the effect of delaying or preventing a change in control of the
Company.




We Do Not Intend To Declare
Dividends.




We do not
anticipate paying any dividends to our shareholders for the foreseeable future
Any determination to pay dividends in the future will be made at the discretion
of our Board of Directors and will depend on our results of operations,
financial conditions, contractual restrictions imposed by applicable law and
other factors our Board deems relevant.




We
Have Agreed To Provide Indemnification To Our Officers And
Directors.




The
Company's Articles of Incorporation provide to directors and officers
indemnification to the full extent provided by law, and provide that, to the
extent permitted by Nevada law, a director will not be personally liable for
monetary damages to the Company or its shareholders for breach of his or her
fiduciary duty as a director, except for liability for certain actions that may
not be limited under Nevada law.  These indemnification provisions may
limit the ability of shareholders to seek recourse against our officers and
directors.




27




Risk
Factors Involved In Being a Public Company




Our  Shares
Are "Penny Stock".




In
general, "penny stock" includes securities of companies which are not listed on
the principal stock exchanges and have a bid price in the market of less than
$5.00; and companies with net tangible assets of less than $2 million ($5
million if the issuer has been in continuous operation for less than three
years), or which has recorded revenues of less than $6 million in the last three
years.  As "penny stock," Iveda's stock therefore is subject to Rule
15g-9, which imposes additional sales practice requirements on broker-dealers
which sell such securities to persons other than established customers and
"accredited investors" (generally, individuals with net worth in excess of $1
million or annual incomes exceeding $200,000, or $300,000 together with their
spouses, or individuals who are the officers or directors of the issuer of the
securities).  For transactions covered by Rule 15g-9, a broker-dealer
must make a special suitability determination for the purchaser and have
received the purchaser's written consent to the transaction prior to
sale.  Consequently, this rule may adversely affect the ability of
broker-dealers to sell Iveda's stock, and therefore may adversely affect Iveda
stockholders' ability to sell the stock in the public market.




There
Is A Limited Market For Our  Common Stock.




Only a
very limited trading market currently exists for Iveda’s common
stock.  As a result, any broker/dealer that makes a market in our
stock or other person that buys or sells our stock could have a significant
influence over its price at any given time.  The Company cannot assure
its shareholders that a market for its stock will be sustained.  There
is no assurance that our shares will have any greater liquidity than shares
which do not trade on a public market.




Our
Reporting Obligations as a Public Company Will Be Costly.




Operating
a public company involves substantial costs to comply with reporting obligations
under federal securities laws.  These reporting obligations will
increase Iveda's operating costs significantly from historical norms prior to
becoming a public company.  Iveda may not reach sufficient size to
justify its public reporting status.  If it were forced to become a
private company, then its shareholders may lose their ability to sell their
shares and there would be substantial costs associated with becoming a private
company.




ITEM
      6.
            EXHIBITS.





Exhibits:




31.1
            Rule
      13a-14(a)/15d-14(a) Certification of Principal Executive
      Officer




31.2
            Rule
      13a-14(a)/15d-14(a) Certification of Principal Financial
      Officer




32
            Section
      1350 Certifications




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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 on this 24th day of
November, 2009.





IVEDA
      CORPORATION(Registrant)BY:
            /s/ David LyDavid
      LyPresident,
      Chief Executive Officer, and a member of the Board of
      Directors/s/
      Robert J. BrilonRobert
      J. Brilon

              Principal
      Accounting Officer, Interim Chief Financial Officer,
    Treasurer




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