Iveda Solutions (IVDA) 8-K/A Financial Statements and Exhibits

Iveda and Megasys
Pro Forma Condensed Consolidated	Iveda Solution			Megasys					Consolidated
Balance Sheet	For the period			For the period		Pro Forma			For the period
For the Four Month Period 4/30/11	ended 4/30/2011			ended 4/30/2011		Adjustments			ended 4/30/2011
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents		262,999			740,561					1,003,560
Accounts Receivable		172,649			588,726					761,375
Prepaid Expenses		14,116			32,834					46,950
Note Receivables					13,435					13,435
Advances to Suppliers					17,435					17,435
Tender Deposits					239,573					239,573
Advances to Employees					19,468					19,468
Inventory		9,606			121,822					131,428
Total Current Assets		459,370			1,773,854					2,233,224
PROPERTY AND EQUIPMENT
Office Equipment		212,764			39,348					252,112
Furniture and Fixtures, moldings		27,805			5,649					33,454
Software		47,966			164,458					212,424
Leased Equipment		247,792								247,792
Vehicles					40,264					40,264
Leasehold Improvements		36,964			11,955					48,919
Total Property and Equipment		573,291			261,674					834,965
Less: Accumulated Depreciation		295,713			240,996					536,709
Property and Equipment, Net		277,578			20,678					298,256
OTHER ASSETS
Deposits		9,014								9,014
Restricted cash					13,956					13,956
Intangible assets							330,000	(a)		330,000
Investment in Megasys/Goodwill		1,666,000					130,710	(a)		1,796,710
Total Assets	$	2,411,962		$	1,808,488	$	460,710		$	4,681,160
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY CURRENT LIABILITIES
Accounts Payable		71,705			153,046					224,751
Accrued Expenses		61,221			57,487					118,708
Current Portion of Capital Lease		32,726								32,726
Bank Loans - Short Term					70,047					70,047
Income Tax Payable					230,183					230,183
Notes Payable					44,904					44,904
Deferred Tax Liability					50,410					50,410
Customer Deposits										-
Deferred Revenue		6,686			27,121					33,807
										-
Total Current Liabilities		172,338			633,198					805,536
LONG-TERM LIABILITIES
Capital Lease, Net Current Portion		6,248								6,248
Total Liabilities		178,586			633,198					811,784
STOCKHOLDERS' (DEFICIT) EQUITY
Common Stock, $0.00001 par value;		162			883,630		(883,630	) (b)		182
							20	(c)
Additional Paid-In Capital		9,732,130			23,490		1,635,980	(c)		11,368,110
Accumulated Comprehensive Income					116,455		(116,455	) (b)
Accumulated Deficit		(7,498,916	)		175,205		(175,205	) (b)		(7,498,916	)
Total Stockholders' Equity		2,233,376			1,175,290					3,869,376
Total Liabilities and Stockholders' Equity	$	2,411,962		$	1,808,488	$	460,710		$	4,681,160

Iveda and Megasys
Pro Forma Condensed Consolidated	Iveda Solutions			Megasys			Pro Forma			Pro Forma
Statement of Operations	For Year ended			For Year ended			Adjustments			Consolidated
For the Year Ended 12/31/10	12/31/2010			12/31/2010						12/31/2010
REVENUE		940,008			5,590,417						6,530,425
COST OF REVENUE		587,748			3,814,549						4,402,297
GROSS PROFIT		352,260			1,775,868						2,128,128
OPERATING EXPENSES		2,271,772			748,992			461,805	(d)		3,482,569
LOSS FROM OPERATIONS		(1,919,512	)		1,026,876			461,805	(d)		(1,354,411	)
OTHER INCOME (EXPENSE)
Interest Income		1,043			418						1,461
Interest Expense		(16,920	)		(23,732	)					(40,652	)
Total Other Income (Expense)		(15,877	)		(23,314	)					(39,191	)
INCOME (LOSS) BEFORE INCOME TAXES		(1,935,389	)		1,003,562			461,805	(d)		(1,393,632	)
BENEFIT (PROVISION) FOR INCOME TAXES		-			(223,136	)					(223,136	)
		(1,935,389	)		780,426			461,805	(d)		(1,616,768	)
Foreign Currency translation					94,978						94,978
NET LOSS		(1,935,389	)		875,404			461,805	(d)		(1,521,790	)
BASIC AND DILUTED LOSS PER SHARE	$	(0.14	)							$	(0.10	)
WEIGHTED AVERAGE SHARES		13,998,210									15,698,210

Iveda and Megasys
Pro Forma Condensed Consolidated	Iveda Solutions			Megasys			Pro Forma			Pro Forma
Statement of Operations	For Four months			For Four months			Adjustments			Consolidated
For the Four Months Ended 4/30/11	ended 4/30/2011			ended 4/30/2011						4/30/2011
REVENUE		375,914			530,274						906,188
COST OF REVENUE		203,715			364,546						568,261
GROSS PROFIT		172,199			165,728						337,927
OPERATING EXPENSES		960,659			136,687			(305,138	) (e)		792,208
INCOME (LOSS) FROM OPERATIONS		(788,460	)		29,041			305,138	(e)		(454,281	)
OTHER INCOME (EXPENSE)
Miscellaneous Income					295						295
Interest Income		264			23						287
Interest Expense		(15,622	)		(1,058	)					(16,680	)
Total Other Income (Expense)		(15,358	)		(740	)					(16,098	)
INCOME (LOSS) BEFORE INCOME TAXES		(803,818	)		28,301			305,138	(e)		(470,379	)
BENEFIT (PROVISION) FOR INCOME TAXES		-			(4,811	)					(4,811	)
		(803,818	)		23,490			305,138	(e)		(475,190	)
Foreign Currency translation					14,635						14,635
NET INCOME (LOSS)	$	(803,818	)	$	38,125			305,138	(e)	$	(460,555	)
BASIC AND DILUTED LOSS PER SHARE	$	(0.06	)							$	(0.03	)
WEIGHTED AVERAGE SHARES		13,715,549									15,415,549

NOTES TO THE UNAUDITED PRO FORMA CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

The unaudited pro forma condensed consolidated statement of income for the twelve months ended December 31, 2010 gives effect to the consolidated results of operations as if the merger occurred at January 1, 2010. The unaudited pro forma condensed consolidated statement of income for the four months ended April 30, 2011 gives effect to the consolidated results of operations as if the merger occurred at January 1, 2010. These results are not necessarily indicative of the consolidated results of operations of the Company as they may be in the future, or as they might have been had these events been effective at January 1, 2010 . The unaudited pro forma condensed consolidated balance sheet gives effect to the financial position at April 30, 2011 reflecting the merger  on April 30, 2011. The unaudited pro forma condensed consolidated financial information should be read in conjunction with the historical financial statements of the Company and Megasys and the related notes thereto.

PRO FORMA ADJUSTMENTS FOR THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AT APRIL 30, 2011:

(a) Gives effect to the preliminary allocation of the purchase price to intangible assets and goodwill in exchange for 1,7000,000 shares of Iveda Solutions common stock plus contingent consideration of 2,000,000 shares of Iveda Solutions common stock if certain financial goals are attained by MegaSys.

(b) Gives effect to the Equity of MegaSys not acquired in the acquisition.

(c)          Gives effect to the estimated value of the contingent consideration of 2,000,000 shares of Iveda Solutions common stock.

PRO FORMA ADJUSTMENTS FOR THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2010 AND THE FOUR MONTHS ENDED APRIL 30, 2011:

(d) Gives effect to the costs associated with the acquisition of MegaSys being incurred in the year ended December 31, 2010 plus the amortization of Intangible Assets allocated from the Purchase Price.

(e) Gives effect to allocating the costs associated with the acquisition of MegaSys to the year ended December 31, 2010 offset by the amortization of Intangible Assets allocated from the Purchase Price.

The preliminary purchase price allocation is as follows:

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

NOTE: The Company is still in the process of evaluating the fair value of the assets acquired and the liabilities assumed in order to make a final determination of the excess purchase price, including allocation to the intangibles other than goodwill. Accordingly, the purchase accounting information is preliminary and has been made solely for the purpose of developing such pro forma condensed consolidated financial information. Based on current information, the preliminary determination of the cost in excess of the net assets acquired and the allocation to goodwill and intangible assets should not materially differ from the final determination.