Document_And_Entity_Informatio
Document And Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Mar. 14, 2014 | Sep. 30, 2013 | |
Document Information [Line Items] | ' | ' | ' |
Entity Registrant Name | 'Iveda Solutions, Inc. | ' | ' |
Entity Central Index Key | '0001397183 | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Trading Symbol | 'IVDA | ' | ' |
Entity Common Stock, Shares Outstanding | ' | 26,757,012 | ' |
Document Type | '10-K | ' | ' |
Amendment Flag | 'false | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Entity Well-known Seasoned Issuer | 'No | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Public Float | ' | ' | $32,377,404 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
CURRENT ASSETS | ' | ' |
Cash and Cash Equivalents | $559,729 | $114,462 |
Restricted Cash | 1,160,688 | 447,206 |
Accounts Receivable, Net | 372,587 | 1,958,799 |
Inventory | 331,437 | 123,021 |
Other Current Assets | 295,205 | 645,728 |
Total Current Assets | 2,719,646 | 3,289,216 |
PROPERTY AND EQUIPMENT, Net | 471,182 | 516,981 |
OTHER ASSETS | ' | ' |
Intangible Assets, Net | 146,666 | 166,666 |
Goodwill | 0 | 841,000 |
Other Assets | 341,752 | 105,621 |
Total Other Assets | 488,418 | 1,113,287 |
Total Assets | 3,679,246 | 4,919,484 |
CURRENT LIABILITIES | ' | ' |
Accounts and Other Payables | 2,358,702 | 2,456,788 |
Due to Related Parties, net of debt discount | 100,000 | 336,605 |
Short Term Debt | 60,291 | 802,122 |
Derivative Liability | 39,804 | 0 |
Current Portion of Long-Term Debt | 164,156 | 75,707 |
Total Current Liabilities | 2,722,953 | 3,671,222 |
LONG-TERM DEBT AND CONVERTIBLE DEBENTURES, Net of Discount | 364,370 | 67,695 |
DUE TO RELATED PARTY, Net of discount | 70,114 | 0 |
STOCKHOLDERS’ EQUITY | ' | ' |
Preferred Stock, $0.00001 par value; 100,000,000 shares | 0 | 0 |
Common Stock, $0.00001 par value; 200,000,000 shares Authorized; 26,722,012 and 20,458,048 shares issued and outstanding as of December 31, 2013 and 2012, respectively | 267 | 204 |
Additional Paid-In Capital | 22,354,002 | 16,204,068 |
Accumulated Comprehensive Income (Loss) | -30,670 | -23,629 |
Accumulated Deficit | -21,801,790 | -15,000,076 |
Total Stockholders’ Equity | 521,809 | 1,180,567 |
Total Liabilities and Stockholders’ Equity | $3,679,246 | $4,919,484 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 26,722,012 | 20,458,048 |
Common stock, shares outstanding | 26,722,012 | 20,458,048 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
REVENUE | ' | ' |
Equipment Sales | $2,691,916 | $2,815,150 |
Service Revenue | 608,157 | 731,908 |
Other Revenue | 45,144 | 61,940 |
Total Revenue | 3,345,217 | 3,608,998 |
COST OF REVENUE | 2,729,350 | 3,230,495 |
GROSS PROFIT | 615,867 | 378,503 |
OPERATING EXPENSES: | ' | ' |
General & Administrative | 6,574,682 | 4,223,455 |
Impairment of Goodwill | 841,000 | 0 |
LOSS FROM OPERATIONS | -6,799,815 | -3,844,952 |
OTHER INCOME (EXPENSE) | ' | ' |
Foreign Currency Gain (Loss) | 10,496 | -524 |
Loss on derivatives | -241 | 0 |
Interest Income | 2,135 | 806 |
Interest Expense | -83,625 | -79,759 |
Total Other Income (Expense) | -71,235 | -79,477 |
LOSS BEFORE INCOME TAXES | -6,871,050 | -3,924,429 |
BENEFIT (PROVISION) FOR INCOME TAXES | 69,336 | 82,502 |
NET LOSS | ($6,801,714) | ($3,841,927) |
BASIC AND DILUTED LOSS PER SHARE (in dollars per share) | ($0.27) | ($0.20) |
WEIGHTED AVERAGE SHARES (in shares) | 24,735,921 | 19,077,341 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Net loss | ($6,801,714) | ($3,841,927) |
Change in equity adjustment from foreign currency translation, net of tax | -7,041 | 22,978 |
Comprehensive loss | ($6,808,755) | ($3,819,649) |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) | Total | Cash [Member] | Services [Member] | Common Stock [Member] | Common Stock Cash [Member] | Common Stock Services [Member] | Additional Paid-in Capital [Member] | Additional Paid In Capital Cash [Member] | Additional Paid In Capital Services [Member] | Accumulated Deficit during Development Stage [Member] | Accumulated Other Comprehensive Income (Loss) [Member] |
Beginning Balance at Dec. 31, 2011 | $2,439,016 | ' | ' | $180 | ' | ' | $13,642,892 | ' | ' | ($11,158,149) | ($45,907) |
Beginning Balance (in shares) at Dec. 31, 2011 | ' | ' | ' | 18,031,729 | ' | ' | ' | ' | ' | ' | ' |
Common Stock Issued | ' | 2,426,319 | 164,074 | ' | 24 | 0 | ' | 2,426,295 | 164,074 | ' | ' |
Common Stock Issued (in shares) | ' | ' | ' | ' | 2,426,319 | 0 | ' | ' | ' | ' | ' |
Costs of Capital | -317,465 | ' | ' | ' | ' | ' | -317,465 | ' | ' | ' | ' |
Stock Based Compensation | 248,072 | ' | ' | ' | ' | ' | 248,072 | ' | ' | ' | ' |
Debt Discount | 40,200 | ' | ' | ' | ' | ' | 40,200 | ' | ' | ' | ' |
Exercise of options (in shares) | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net Loss | -3,841,927 | ' | ' | ' | ' | ' | ' | ' | ' | -3,841,927 | ' |
Comprehensive Loss | 22,278 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 22,278 |
Ending Balance at Dec. 31, 2012 | 1,180,567 | ' | ' | 204 | ' | ' | 16,204,068 | ' | ' | -15,000,076 | -23,629 |
Beginning Balance (in shares) at Dec. 31, 2012 | ' | ' | ' | 20,458,048 | ' | ' | ' | ' | ' | ' | ' |
Common Stock Issued | ' | 5,816,799 | 182,072 | ' | 58 | 0 | ' | 5,816,741 | 182,072 | ' | ' |
Common Stock Issued (in shares) | ' | ' | ' | ' | 5,764,774 | 80,000 | ' | ' | ' | ' | ' |
Costs of Capital | -606,320 | ' | ' | ' | ' | ' | -606,320 | ' | ' | ' | ' |
Stock Based Compensation | 336,402 | ' | ' | ' | ' | ' | 336,402 | ' | ' | ' | ' |
Conversion of Debt to Stock | 175,700 | ' | ' | 2 | ' | ' | 175,698 | ' | ' | ' | ' |
Conversion of Debt to Stock(in shares) | ' | ' | ' | 167,000 | ' | ' | ' | ' | ' | ' | ' |
Exercise of options | 245,344 | ' | ' | 3 | ' | ' | 245,341 | ' | ' | ' | ' |
Exercise of options (in shares) | 252,190 | ' | ' | 252,190 | ' | ' | ' | ' | ' | ' | ' |
Net Loss | -6,801,714 | ' | ' | ' | ' | ' | ' | ' | ' | -6,801,714 | ' |
Comprehensive Loss | -7,041 | ' | ' | ' | ' | ' | ' | ' | ' | ' | -7,041 |
Ending Balance at Dec. 31, 2013 | $521,809 | ' | ' | $267 | ' | ' | $22,354,002 | ' | ' | ($21,801,790) | ($30,670) |
Ending Balance (in shares) at Dec. 31, 2013 | ' | ' | ' | 26,722,012 | ' | ' | ' | ' | ' | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ' | ' |
Net Loss | ($6,801,714) | ($3,841,927) |
Adjustments to Reconcile Net Loss to Net Cash Used by Operating Activities | ' | ' |
Depreciation and Amortization | 221,902 | 218,229 |
Amortization of Debt Discount | 9,096 | 0 |
Stock Compensation | 336,402 | 248,072 |
Bad Debt Expense | 349,202 | 38,166 |
Common stock issued for services | 222,206 | 123,940 |
Impairment of Goodwill | 841,000 | 0 |
Provision for obsolete inventory | 0 | 28,480 |
(Increase) Decrease in Operating Assets: | ' | ' |
Accounts Receivable | 1,183,456 | -1,008,503 |
Inventory | -212,921 | -68,375 |
Other Current Assets | -126,551 | -516,905 |
Accounts and Other Payables | 366,506 | 1,451,120 |
Net cash used in operating activities | -3,611,416 | -3,327,703 |
CASH FLOWS FROM INVESTING ACTIVITIES | ' | ' |
Cash Acquired in Acquisition | 0 | 0 |
Purchase of Property and Equipment | -157,230 | -338,825 |
Net cash (used in) investing activities | -157,230 | -338,825 |
CASH FLOWS FROM FINANCING ACTIVITIES | ' | ' |
Changes in Restricted Cash | -736,970 | -385,112 |
Proceeds from (Payments on) Short-term Notes Payable/Debt | -57,511 | 604,856 |
Proceeds from (Payments to) Related Parties | -245,002 | 456,989 |
Proceeds from (Payments on) Long-term Debt | -35,004 | 52,680 |
Deferred Finance Costs, Net | -161,657 | 0 |
Proceeds from Exercise of Stock Options | 245,344 | 0 |
Common Stock Issued, net of Costs of Capital | 5,210,479 | 2,189,189 |
Net cash provided by financing activities | 4,219,679 | 2,918,602 |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | -5,766 | 12,024 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 445,267 | -735,902 |
Cash and Cash Equivalents - Beginning of Year | 114,462 | 850,364 |
CASH AND CASH EQUIVALENTS - END OF YEAR | 559,729 | 114,462 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ' | ' |
Common Stock issued for convertible debt and interest | 147,500 | 0 |
Interest Paid | 80,863 | 79,758 |
Establishment of derivative liability | 39,804 | 0 |
Discount on convertible debt | 27,608 | 0 |
Issuance of common stock as consideration for payment of Loan payable | 30,000 | 0 |
Common Stock warrants issued as deferred finance costs | $11,955 | $0 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Accounting Policies [Abstract] | ' | ||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block] | ' | ||||||||||
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||
Nature of Operations | |||||||||||
Iveda Solutions, Inc. (formerly Iveda Corporation) (the “Company”) began operations on January 24, 2005, under the name IntelaSight, Inc., a Washington corporation doing business as Iveda Solutions (“IntelaSight”). On October 15, 2009, IntelaSight completed a reverse merger with Charmed Homes, Inc., a Nevada corporation (“Charmed”) pursuant to which IntelaSight became a wholly-owned subsidiary of Charmed and Charmed changed its name to Iveda Corporation. Prior to the reverse merger, Charmed was a shell company and did not have any operations. | |||||||||||
All Company operations were conducted through IntelaSight until December 31, 2010, at which time IntelaSight merged with and into Iveda Corporation and Iveda Corporation changed its name to Iveda Solutions, Inc. | |||||||||||
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. | |||||||||||
On April 30, 2011, the Company completed its acquisition of Sole-Vision Technologies, Inc (doing business as MegaSys) (“MegaSys”). MegaSys was incorporated in the Republic of China (Taiwan) on July 5, 1999. MegaSys designs and integrates electronic security and surveillance products, software, and services. | |||||||||||
Consolidation | |||||||||||
The consolidated financial statements include the accounts of the Company and MegaSys through December 31, 2013. All intercompany balances and transactions have been eliminated in consolidation. | |||||||||||
Going Concern | |||||||||||
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. The Company generated accumulated losses of approximately $21.8 million from January 2005 through December 31, 2013 and has insufficient working capital and cash flows to support operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from this uncertainty. | |||||||||||
A multi-step plan was adopted by management to enable the Company to continue to operate and begin to report operating profits. The highlights of that plan are: | |||||||||||
⋅ | In December 2013, the Board of Directors also approved the Company to raise up to an aggregate amount of $3.6 million in bridge financing through the sale of Convertible Debentures in advance of the long-term financing. | ||||||||||
⋅ The Company successfully raised $1,735,000 through March 14, 2014 in convertible debentures and warrants in a private placement memorandum offering and will continue efforts of this nature during 2014 as deemed necessary. | |||||||||||
⋅ | The Board of Directors approved the Company to engage with a financial capital markets advisor in connection with a potential capital financial transaction to raise up to $30 million (“Long Term Financing”). | ||||||||||
⋅ | In the third quarter of 2013, the Company launched two new camera lines in collaboration with MegaSys, its Taiwan subsidiary and Industrial Technology Research Institute (ITRI), its nonprofit research and development partner in Taiwan. These products are enablers of the Company’s video hosting services. | ||||||||||
⋅ | The Company has recently developed two other standalone services: | ||||||||||
o | IvedaMobile–a cloud-hosting service that turns any smartphone or tablet into a mobile, cloud video streaming device. This was developed with ITRI. | ||||||||||
IvedaXchange – In collaboration with a technology partner, the Company developed a real-time situational awareness dashboard to enable organizations instant access to vital and filtered information such as emergency situations, location of critical assets, video monitoring, and local IvedaXchange – In collaboration with a technology partner, the Company developed a real-times situational awareness dashboard to enable organizations instant access to vital and filtered information such as emergency situations, location of critical assets, video monitoring, and local news. IvedaXchange is well-suited for law enforcement agencies and schools. | |||||||||||
⋅ | The Company launched a new website to highlight new products and services with corresponding applications. | ||||||||||
⋅ | The Company launched a second website allowing for direct web-sales, geared toward the residential and small-to-medium sized businesses. | ||||||||||
⋅ | The Company intends to continue to participate in industry and vertical tradeshows to launch new products, generate leads, solicit resellers and other sales channels, and identify potential technology partners. | ||||||||||
⋅ | The Company intends to continue advertising on selected trade magazines and running Google Adwords to generate leads. | ||||||||||
⋅ | The Company has evaluated its reseller distribution channel and eliminated non-performing components of the channel. | ||||||||||
⋅ | In November 2013, Iveda hired Bob Brilon as our chief financial officer and executive vice president of business development. He has strong ties with the investment community and has extensive experience in mergers and acquisitions, strategic growth planning, and interacting with domestic and foreign institutional investors, which will be instrumental to our market expansion, global distribution of our cloud video hosting platform and services, and raising capital to fund our growth. In February 2014, he was also appointed as the Company’s president. | ||||||||||
⋅ | The Company is in active collaboration with certain telecommunications companies in other countries to resell the Company’s products and services in their respective countries. | ||||||||||
Impairment of Long-Lived Assets | |||||||||||
The Company has a significant amount of property and equipment primarily consisting of leased equipment. The Company reviews the recoverability of the carrying value of long-lived assets using the methodology prescribed in ASC 360 "Property, Plant and Equipment." The Company reviews our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future net operating cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying value of the assets exceeds their fair value. The Company did not make any impairment for the years ended December 31, 2013 and 2012. | |||||||||||
Basis of Accounting | |||||||||||
The Company’s financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America. | |||||||||||
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 | |||||||||||
Company recognizes revenue when persuasive evidence of an arrangement exists, title transfer has occurred, the price is fixed or readily determinable, and collectability is reasonably assured. The Company recognizes revenue in accordance with ASC 605, "Revenue Recognition." Sales are recorded net of sales returns and discounts, which are estimated at the time of shipment based upon historical data. | |||||||||||
Revenues from 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. | |||||||||||
Comprehensive loss | |||||||||||
Comprehensive loss is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. The Company’s current component of other comprehensive income is the foreign currency translation adjustment. | |||||||||||
Concentrations | |||||||||||
Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and cash equivalents and trade accounts receivable. | |||||||||||
Substantially all cash is deposited in two financial institutions, one in the United States and one in Taiwan. At times, amounts on deposit in the United States may be in excess of the FDIC insurance limit. Deposits in Taiwan financial institutions are insured by CDIC (Central Deposit Insurance Corporation) with maximum coverage of NTD 3 million. At times, amounts on deposit in Taiwan may be in excess of the CDIC Insurance limit. | |||||||||||
Accounts receivable are unsecured and the Company is at risk to the extent such amount becomes uncollectible. The Company performs periodic credit evaluations of its customers’ financial condition and generally does not require collateral. Two customers in 2013 represented approximately 54% of total revenues and one customer in 2012 represented approximately 69% of total revenues. The net accounts receivable from this customer was approximately 0% of total accounts receivable as of December 31, 2013. No other customers represented greater than 10% of total revenues in 2013 and 2012. | |||||||||||
Cash and Cash Equivalents | |||||||||||
For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. | |||||||||||
Accounts Receivable | |||||||||||
The Company provides an allowance for doubtful collections which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. For our US operation, receivables past due more than 120 days are considered delinquent. For our Taiwan operation, receivables over one year are considered delinquent. Delinquent receivables are written off based on individual credit valuation and specific circumstances of the customer. As of December 31, 2013 and 2012 respectively, an allowance for uncollectible accounts of $31,594 and $22,554 was deemed necessary for our US Operation. As of December 31, 2013 and 2012, respectively, an allowance of $465,933 and $116,315 was established against the receivables in our foreign corporation. The Company does not generally charge interest on past due receivables. | |||||||||||
Trade receivables, net are comprised of the following: | |||||||||||
2013 | 2012 | ||||||||||
Trade receivables, gross | $ | 870,114 | $ | 2,097,668 | |||||||
Allowance for doubtful accounts | -497,527 | -138,869 | |||||||||
Trade receivables, net | $ | 372,587 | $ | 1,958,799 | |||||||
Other Current Assets | |||||||||||
Other current assets are comprised of the following: | |||||||||||
2013 | 2012 | ||||||||||
Notes receivables | $ | 3,413 | $ | 6,255 | |||||||
Restricted cash | 1,160,688 | 447,206 | |||||||||
Deposits-current | 135,727 | 415,108 | |||||||||
Prepaid expenses and other current assets | 156,065 | 224,365 | |||||||||
Other current assets | $ | 1,455,893 | $ | 1,092,934 | |||||||
Notes Receivable | |||||||||||
Notes receivable represents post-dated checks collected from customers in Taiwan. The Company provides an allowance for doubtful accounts which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. For our Taiwan operation, notes receivables over 90 days are considered delinquent. Delinquent receivables are written off based on individual credit valuation and specific circumstances of the customer. As of December 31, 2013 and 2012, no allowance for doubtful accounts was deemed necessary for our Taiwan operation. The company does not generally charge interest on notes receivable. | |||||||||||
Deposits – Current | |||||||||||
The Company’s current deposits represent tender deposits placed with local governments and major customers in Taiwan during the bidding process for new proposed projects. | |||||||||||
Prepaid Expenses and Other Current Assets | |||||||||||
Prepaid expenses and other current assets represent cash paid in advance to insurance companies and vendors for service coverage extending into 2014. It also includes some other receivables as the result of travel advances due from employees. | |||||||||||
Inventories | |||||||||||
Inventories consists of equipment purchased for installation projects and is recorded at the lower of cost (first-in, first-out) or market. | |||||||||||
Property and Equipment | |||||||||||
Property and equipment are stated at cost. Depreciation is computed primarily using the straight-line method over the estimated useful lives of three to seven years. Expenditures for routine maintenance and repairs are charged to expense as incurred. Depreciation expense for the years ended December 31, 2013 and 2012 was $201,298 and $197,557, respectively. | |||||||||||
Intangible Assets and Goodwill | |||||||||||
Intangible assets consist of trademarks and other intangible assets associated with the purchase price allocation of MegaSys. Such assets are being amortized over their estimated useful lives of six months to ten years. Other intangible assets are fully amortized at December 31, 2013. Future amortization of Trademarks is as follows: | |||||||||||
Trademarks | |||||||||||
2014 | $ | 20,000 | |||||||||
2015 | $ | 20,000 | |||||||||
2016 | $ | 20,000 | |||||||||
2017 | $ | 20,000 | |||||||||
Thereafter | $ | 66,667 | |||||||||
Goodwill represents the excess of the purchase price of MegaSys over the net assets acquired. | |||||||||||
We allocate goodwill to reporting units based on the reporting unit expected to benefit from the business combination. We evaluate our reporting units on an annual basis and, if necessary, reassign goodwill using a relative fair value allocation approach. Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. | |||||||||||
Application of the goodwill impairment test requires judgment. We first assess qualitative factors to determine whether it is more likely than not that goodwill is impaired. If the more likely than not threshold is met, we perform a quantitative impairment test. At December 31, 2013, the Company determined that goodwill was impaired and has recorded an impairment of $841,000. | |||||||||||
Other Assets | |||||||||||
Other assets are comprised of the following: | |||||||||||
2013 | 2012 | ||||||||||
Deposits- long-term | $ | 10,836 | $ | 10,836 | |||||||
Deferred tax assets | 160,198 | 94,785 | |||||||||
Deferred Finance Costs (Net of Amortization) | 170,718 | - | |||||||||
Other assets | $ | 341,752 | $ | 105,621 | |||||||
Deposits- long-term | |||||||||||
Long-term deposits consists of our security deposit held by Landlord under the First Amendment to Lease effective July 1, 2011 for our domestic office space. | |||||||||||
Income Taxes | |||||||||||
Deferred income taxes are recognized in the financial statements for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates. Temporary differences arise from sales cut-off, depreciation, deferred rent expense, and net operating losses. Valuation allowances are established when necessary to reduce deferred tax assets to the amount that represents the Company's best estimate of such deferred tax assets that, more likely than not, will be realized. Income tax expense is the tax payable for the year and the change during the year in deferred tax assets and liabilities. During 2013, the Company reevaluated the valuation allowance for deferred tax assets and determined that no current benefits should be recognized for the year ended December 31, 2013 for our U.S. operation. However, a benefit of $160,198 is recorded on the balance sheet for our Taiwan business. See Note 9 for more information. | |||||||||||
The Company is subject to U.S. federal income tax as well as state income tax. | |||||||||||
The Company’s U.S. income tax returns are subject to review and examination by federal, state, and local authorities. The U.S. tax returns for the years 2010 to 2012 are open to examination by federal, local, and state authorities. | |||||||||||
The Company’s Taiwan tax returns are subject to review and examination by Taiwan Ministry of Finance. The Taiwan tax return for the years 2008 to 2012 are open to examination of Ministry of Finance. | |||||||||||
Restricted cash | |||||||||||
Restricted cash represents time deposits on account to secure short-term bank loans in our foreign operation. | |||||||||||
Accounts and Other Payables | |||||||||||
Accounts and other payables are comprised of the following: | |||||||||||
2013 | 2012 | ||||||||||
Accounts Payable | $ | 688,130 | $ | 673,173 | |||||||
Accrued Expenses | 1,651,419 | 1,674,258 | |||||||||
Income Tax Payable | 2,183 | 53,784 | |||||||||
Deferred Revenue | 16,970 | 55,573 | |||||||||
Accounts and Other Payables | $ | 2,358,702 | $ | 2,456,788 | |||||||
Deferred Revenue | |||||||||||
Deposits received from customers on future installation projects are recorded as deferred revenue. | |||||||||||
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, 2012 and 2011 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, 2013 and 2012, 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 ASC 718. The Company recognized $336,402 and $248,072 of stock-based compensation expense for the years ended December 31, 2013 and 2012, respectively. | |||||||||||
Fair Value of Financial Instruments | |||||||||||
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2013 and 2012. The respective carrying value of certain on-balance-sheet financial instruments, approximate their fair values. These financial instruments include cash, accounts receivable, accounts payable, accrued expenses, and amounts due to related parties. Fair values were assumed to approximate carrying values for these financial instruments because they are short term in nature and their carrying amounts approximate fair values or they are receivable or payable on demand. | |||||||||||
Segment Information | |||||||||||
The Company conducts operations in various geographic regions outside the United States. The operations and the customer base conducted in the foreign countries are similar to the United States operations. The net revenues and net assets (liabilities) for other significant geographic regions outside the United States are as follows: | |||||||||||
Net Revenues | Net Assets | ||||||||||
United States | $ | 487,475 | $ | 562,264 | |||||||
Asia | $ | 2,607,501 | $ | -40,455 | |||||||
Mexico | $ | 250,241 | $ | - | |||||||
Furthermore, due to operations in various geographic locations, the Company is susceptible to changes in national, regional and local economic conditions, demographic trends, consumer confidence in the economy and discretionary spending priorities that may have a material adverse effect on the Company’s future operations and results. | |||||||||||
The Company is required to collect certain taxes and fees from customers on behalf of government agencies and remit these back to the applicable governmental agencies on a periodic basis. These taxes and fees are legal assessments to the customer, for which the Company has a legal obligation to act as a collection agent. Because the Company does not retain these taxes and fees, the Company does not include such amounts in revenue. The Company records a liability when the amounts are collected and relieves the liability when payments are made to the applicable governmental agencies. | |||||||||||
The company operates as two reportable business segments as defined in ASC 280. “Segment Reporting.” Each company has a chief operating decision maker and management personnel which review their company’s performance as it relates to revenue, operating profit and operating expenses. | |||||||||||
Twelve Months | Twelve Months | Condensed | |||||||||
Ending Dec. 31, | Ending Dec. 31, | Consolidated | |||||||||
2013 | 2013 | Total | |||||||||
Iveda Solutions, | MegaSys | ||||||||||
Inc. | |||||||||||
Revenue | $ | 737,716 | $ | 2,607,501 | $ | 3,345,217 | |||||
Cost of Revenue | 731,770 | 1,997,580 | 2,729,350 | ||||||||
Gross Profit | 5,946 | 609,921 | 615,867 | ||||||||
Depreciation and Amort. | 210,787 | 11,115 | 221,902 | ||||||||
General & Administrative | 5,464,288 | 888,492 | 6,352,780 | ||||||||
Impairment of Goodwill | 841,000 | - | 841,000 | ||||||||
(Loss) from Operations | -6,510,129 | -289,686 | -6,799,815 | ||||||||
Other Income (Expense) | -76,686 | 5,451 | -71,235 | ||||||||
(Loss) Before Income Taxes | -6,586,815 | -284,235 | -6,871,050 | ||||||||
Benefit For Income Taxes | - | 69,336 | 69,336 | ||||||||
Net Loss | $ | -6,586,815 | $ | -214,899 | $ | -6,801,714 | |||||
Revenues as shown below represent sales to external customers for each segment. Intercompany revenues have been eliminated and are immaterial for separate disclosure. | |||||||||||
Additions to long-lived assets as presented in the following table represent capital expenditures. | |||||||||||
Inventories, property and equipment for operating segments are regularly reviewed by management and are therefore provided below. | |||||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
Revenues | |||||||||||
United States | $ | 737,715 | $ | 767,841 | |||||||
Republic of China (Taiwan) | 2,672,928 | 2,843,889 | |||||||||
Elimination of intersegment revenues | -65,426 | -2,732 | |||||||||
$ | 3,345,217 | $ | 3,608,998 | ||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
Operating earnings (loss) | |||||||||||
United States | $ | -6,510,129 | $ | -3,348,419 | |||||||
Republic of China (Taiwan) | -289,686 | -495,830 | |||||||||
Elimination of intersegment profit | - | -703 | |||||||||
$ | -6,799,815 | $ | -3,844,952 | ||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
Property and equipment | |||||||||||
United States | $ | 437,410 | $ | 488,648 | |||||||
Republic of China (Taiwan) | 33,772 | 28,333 | |||||||||
$ | 471,182 | $ | 516,981 | ||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
Additions to long-lived assets | |||||||||||
United States | $ | 129,222 | $ | 333,432 | |||||||
Republic of China (Taiwan) | 28,008 | 5,393 | |||||||||
$ | 157,230 | $ | 338,825 | ||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
Inventory | |||||||||||
United States | $ | 126,403 | $ | 26,794 | |||||||
Republic of China (Taiwan) | 205,034 | 96,227 | |||||||||
$ | 331,437 | $ | 123,021 | ||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
Total Assets | |||||||||||
United States | $ | 1,175,874 | $ | 1,727,017 | |||||||
Republic of China (Taiwan) | 2,503,372 | 3,192,467 | |||||||||
$ | 3,679,246 | $ | 4,919,484 | ||||||||
Reclassification | |||||||||||
Certain amounts in 2012 have been reclassified to conform to the 2013 presentation. | |||||||||||
New Accounting Standards | |||||||||||
In March 2013, FASB has issued Accounting Standards Update (ASU) No. 2013-05, Foreign Currency Matters (Topic 830). This ASU resolve the diversity in practice about whether Subtopic 810-10, Consolidation—Overall, or Subtopic 830-30, Foreign Currency Matters—Translation of Financial Statements, applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights)within a foreign entity. In addition, the amendments in this Update resolve the diversity in practice for the treatment of business combinations achieved in stages (sometimes also referred to as step acquisitions) involving a foreign entity. This ASU is the final version of Proposed Accounting Standards Update EITF11Ar—Foreign Currency Matters (Topic 830), which has been deleted. The amendments in this Update are effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. For nonpublic entities the amendments in this Update are effective prospectively for the first annual period beginning after December 15, 2014, and interim and annual periods thereafter. The amendments should be applied prospectively to derecognition events occurring after the effective date. Prior periods should not be adjusted. Early adoption is permitted. If an entity elects to early adopt the amendments, it should apply them as of the beginning of the entity’s fiscal year of adoption. | |||||||||||
In February 2013, FASB issued Accounting Standards Update (ASU) No. 2013-03, Financial Instruments (Topic 825). This ASU clarifies the scope and applicability of a disclosure exemption that resulted from the issuance of Accounting Standards Update No. 2011-04,Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The amendment clarifies that the requirement to disclose "the level of the fair value hierarchy within which the fair value measurements are categorized in their entirety (Level 1, 2, or 3)" does not apply to nonpublic entities for items that are not measured at fair value in the statement of financial position, but for which fair value is disclosed. This ASU is the final version of Proposed Accounting Standards Update 2013-200—Financial Instruments (Topic 825) which has been deleted. The amendments are effective upon issuance. | |||||||||||
In February 2013, FASB has issued Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This ASU improves the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in this ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. | |||||||||||
The new amendments will require an organization to: | |||||||||||
• | Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. | ||||||||||
• | Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. | ||||||||||
GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense. | |||||||||||
The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). A private company is required to meet the reporting requirements of the amended paragraphs about the roll forward of accumulated other comprehensive income for both interim and annual reporting periods. However, private companies are only required to provide the information about the effect of reclassifications on line items of net income for annual reporting periods, not for interim reporting periods. The amendments are effective for reporting periods beginning after December 15, 2012, for public companies and are effective for reporting periods beginning after December 15, 2013, for private companies. Early adoption is permitted. | |||||||||||
In January 2013, FASB has issued Accounting Standards Update (ASU) No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. This ASU clarifies that ordinary trade receivables and receivables are not in the scope of ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. Specifically, ASU 2011-11 applies only to derivatives, repurchase agreements and reverse purchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with specific criteria contained in the FASB Accounting Standards Codification(TM) (Codification) or subject to a master netting arrangement or similar agreement. The FASB undertook this clarification project in response to concerns expressed by U.S. stakeholders about the standard’s broad definition of financial instruments. After the standard was finalized, companies realized that many contracts have standard commercial provisions that would equate to a master netting arrangement, significantly increasing the cost of compliance at minimal value to financial statement users. An entity is required to apply the amendments in ASU 2013-01 for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the required disclosures retrospectively for all comparative periods presented. The effective date is the same as the effective date of ASU 2011-11. | |||||||||||
In October 2012, FASB has issued Accounting Standards Update (ASU) No. 2012-04, Technical Corrections and Improvements. This ASU make technical corrections, clarifications, and limited-scope improvements to various Topics throughout the Codification. The amendments in this ASU that will not have transition guidance will be effective upon issuance for both public entities and nonpublic entities. For public entities, the amendments that are subject to the transition guidance will be effective for fiscal periods beginning after December 15, 2012. For nonpublic entities, the amendments that are subject to the transition guidance will be effective for fiscal periods beginning after December 15, 2013. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements. | |||||||||||
In August 2012, FASB has issued Accounting Standards Update (ASU) No. 2012-03, Technical Amendments and Corrections to SEC Sections. This ASU amends various SEC paragraphs pursuant to SAB 114, SEC Release No. 33-9250, and ASU 2010-22, which amend or rescind portions of certain SAB Topics. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements. | |||||||||||
In July 2012, the FASB issued ASU 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. The objective of the measure is to reduce the cost and complexity associated with performing an impairment test for indefinite-lived intangible assets and to make the impairment test similar to the recent changes for testing goodwill for impairment (ASU 2011-08). ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012 and early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements. | |||||||||||
RELATED_PARTIES
RELATED PARTIES | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Related Party Transactions [Abstract] | ' | |||||||
Related Party Transactions Disclosure [Text Block] | ' | |||||||
NOTE 2 RELATED PARTIES | ||||||||
2013 | 2012 | |||||||
On June 20, 2012, the Company entered into a convertible debenture agreement with a Board Member for $200,000. Interest is payable at 12% per annum, payable on the maturity date of June 20, 2013. The Company issued warrants to purchase 20,000 shares of the Company Stock, at an exercise price of $ 1.00. Accordingly, the Company recognized a discount of $16,789 on the principal value of the $200,000 and is amortizing the discount over the 12 month term of the debenture. The debenture is convertible into shares of Company Common Stock on or before the Maturity Date, at a conversion rate of $1.00 per share. On June 20, 2013, the Company paid off, in full, this debenture which totaled $200,000 plus $24,000 interest. | - | $ | 200,000 | |||||
On September 26, 2011, the Company entered into a $45,000 promissory note agreement with one of its shareholders. Interest on the note will be payable in 45,000 warrants at a $1.10 exercise price, exercisable within three years of issuance. On October 24, 2011, the Board of Directors approved the issuance of the warrants. Accordingly, the Company recognized a discount of $16,909 on the principal value of the $45,000 note payable and is amortizing the discount over the 12 month life of the note. On September 25, 2012 a Promissory Note Extension Agreement was signed to extend the maturity date of one of the $45,000 notes to March 25, 2013. On May 14, 2013, the Company paid off, in full, this promissory note which totaled $45,000 plus $3,417.53 interest. | - | $ | 45,000 | |||||
On November 19, 2012, the Company entered into a separate convertible debenture agreement with a different Board Member for $100,000. Interest is payable at 10% per annum, payable on the maturity date of May 19, 2013. The Company issued warrants to purchase 10,000 shares of the Company Stock, at an exercise price of $ 1.10. The debenture is convertible into shares of Company Common Stock on or before the Maturity Date, at a conversion rate of $1.10 per share. | 100,000 | $ | 100,000 | |||||
On December 20, 2013, the Company entered into a Convertible Debenture with an officer for $75,000 which includes warrants to purchase 6,818 shares of the Company stock , at an exercise price of $1.65. Accordingly, the Company recognized a discount of $4,886 on the principal value of $75,000 and is amortizing the discount over the three year term of the debenture. | 75,000 | - | ||||||
Total Due to Related Parties | 175,000 | 345,000 | ||||||
Less Current Portion | -100,000 | -336,605 | ||||||
Less: Debt Discount | -4,886 | -8,395 | ||||||
Total Long-Term | $ | 70,114 | $ | - | ||||
SHORTTERM_DEBT
SHORT-TERM DEBT | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Debt Disclosure [Abstract] | ' | |||||||
Bank Loans Short-term [Text Block] | ' | |||||||
NOTE 3 SHORT-TERM DEBT | ||||||||
Two short-term bank loans were initiated on September 28, 2012 and November 26, 2012, due and payable on May 31, 2014 and November 26, 2014 respectively. The short-term debt balances were as follows: | ||||||||
2013 | 2012 | |||||||
Loan from Shanghai Commercial & Savings at an interest rate at 5.5% per annum, due on November 26, 2014 | $ | 60,291 | $ | 132,097 | ||||
Loan from Chailease Bank at various interest rates ranging from | - | 488,025 | ||||||
1% per annum to 3.24%. Due on May 31, 2014 | ||||||||
Notes Payable | - | 182,839 | ||||||
Balance at end of year | $ | 60,291 | $ | 802,122 | ||||
CONVERTIBLE_DEBENTURES
CONVERTIBLE DEBENTURES | 12 Months Ended | |
Dec. 31, 2013 | ||
Convertible Debentures [Abstract] | ' | |
Convertible Debentures [Text Block] | ' | |
NOTE 4 | CONVERTIBLE DEBENTURES | |
In December 2013, the Company sold $425,000 5 year debentures, convertible at any time into common stock at $1.50 per share. The debentures bear interest at 9.5% interest payable in cash or stock, at maturity. The debentures included 38,636, 5-year warrants exercisable at $1.65. The Company paid $111,657 in cash and issued 38,636 warrants (equal to $3,313 on the issue date) for financing costs; these deferred costs have been capitalized to Other assets in the accompanying balance sheets, and are being amortized to interest expense using the effective interest method over the 5 year life of the debt. The fair value of the conversion option and warrants on the date issued to the debenture holders totaled $27,608, is discounted from the carrying value of the debenture and amortized into interest expense over the 5 year life of the debt using the effective interest method. At December 31, 2013, the carrying value of the Convertible debentures totaled $397,852, net of the $27,148 debt discount, and accrued interest totaled $2,096. The company expects to amoritize approximately $49,500 into interest expense in each of the next 5 years reducing the related deferred costs and debt discount. Principal and all accrued interest is due at maturity, but can be repaid at any time with no penalty. | ||
The fair value of the conversion option and detachable warrants is carried on the face of of the accompanying Balance Sheet as Derivative Liability and totaled $39,804 as of December 31, 2013. Any change in fair value of the derivative liability is reported as a gain or loss on derivative liability in the accompanying statement of operations. The company recognized a loss on the derivative of $241 during the year ended December 31. 2013. | ||
In conjuntion with the debenture offering, the Company accrued contingent payments due to third parties totaling $50,000 in cash and 100,000 warrants (with a fair value of $8,642 at December 31, 2013) due if certain funding levels are achieved. | ||
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||
Fair Value Disclosures [Text Block] | ' | |||||||||||||
NOTE 5 | FAIR VALUE MEASUREMENTS | |||||||||||||
We apply fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Fair value is estimated by applying the following hierachy, which prioritizes the inputs used to measure the fair value into three levels and bases the categorization within the hierarchy upon the lowest l evel of input that is available and significant to the fair value measurements. | ||||||||||||||
Level I - Quoted prices in an active market for identical assets or liabilities | ||||||||||||||
Level II - Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets and liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities | ||||||||||||||
Level III - Inputs that are generally unobservable and typically reflect management's estimate of assumptions that market participants would use in pricing the asset or liability. | ||||||||||||||
The carrying amounts for cash, accounts payable, accrued expenses, short term debt, approximate their fair values due to the short period of time until maturity. | ||||||||||||||
The fair value of the convertible option and debenture warrants are measured by using the Black-Scholes option-pricing model. As of December 31, 2013, the assumptions used to measure fair value of the liability embedded in our debenture included a conversion price of $1.50, and our freestanding debenture warrants included a warrant exercise price of $1.65 per share, a common share price of $1.10, a discount rate of 1.75%, December 2018 maturity, and a volatility of 20.76%. | ||||||||||||||
The following table sets forth, by level within the fair value hierarchy, our financial instrument liabilities as of December 31, 2013: | ||||||||||||||
Level I | Level II | Level III | ||||||||||||
Quoted | Observable | Unobservable | ||||||||||||
Prices | Inputs | Inputs | Total | |||||||||||
Derivative liability | $ | - | $ | - | $ | 39,804 | $ | 39,804 | ||||||
No financial instrument liabilities were present as of December 31, 2012. | ||||||||||||||
The following table sets forth a summary of changes in the fair value of our Level 3 financial instrument liability for the year ended December 31, 2013. | ||||||||||||||
Beginning Balance | $ | - | ||||||||||||
Issued | 39,563 | |||||||||||||
(Gains) losses during the period | 241 | |||||||||||||
Settlements | - | |||||||||||||
Ending Balance | $ | 39,804 | ||||||||||||
LONGTERM_DEBT
LONG-TERM DEBT | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Debt Disclosure [Abstract] | ' | |||||||
Debt Disclosure [Text Block] | ' | |||||||
NOTE 6 | LONG-TERM DEBT | |||||||
Long-term debt consists of the following: | ||||||||
2013 | 2012 | |||||||
Loan from Chailease Finance Co., Ltd. with an interest rate at 5% per annum, due on May 30, 2015 | $ | 135,208 | - | |||||
Loan from Taipei Fubon Bank with an interest rate at 5.5% per annum, due on November 26, 2014 | 62,942 | $ | 140,764 | |||||
Other loan | 2,638 | 2,638 | ||||||
Convertible debenture | 350,000 | - | ||||||
550,788 | 143,402 | |||||||
Less: Current portion | -164,156 | -75,707 | ||||||
Less: Debt discount | -22,262 | - | ||||||
$ | 364,370 | $ | 67,695 | |||||
The future principal payments under the bank loans are as follows: | ||||||||
For the year ended December 31, | ||||||||
2014 | $ | 164,156 | ||||||
2015 | 36,632 | |||||||
2016 | 350,000 | |||||||
Total | $ | 550,788 | ||||||
OPERATING_LEASES
OPERATING LEASES | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Leases, Operating [Abstract] | ' | ||||
Leases of Lessee Disclosure [Text Block] | ' | ||||
NOTE 7 OPERATING LEASES | |||||
The Company leases its office facilities under a non-cancelable operating lease expiring October 2016 that requires minimum monthly payments ranging from $8,669 to $10,836. Rent expense was $107,885 and $95,635 for the years ended December 31, 2012 and 2011, respectively. The Company also has two non-cancellable data center service agreements for approximately $7,298 and $2,575 per month, expiring September 2014. The company has a third non-cancellable data center service agreement for approximately $5,826, expiring March 2015. Data center services expense was $192,181 and $170,776 for the years ended December 31, 2013 and 2012, respectively, and is included as a component of Cost of Revenue in the Statement of Operations. | |||||
Future minimum lease payments under these leases are as follows: | |||||
2014 | $ | 330,451 | |||
2015 | 144,563 | ||||
2016 | 113,835 | ||||
Total | $ | 588,849 | |||
PREFERRED_STOCK
PREFERRED STOCK | 12 Months Ended |
Dec. 31, 2013 | |
Preferred Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | ' |
Preferred Stock [Text Block] | ' |
NOTE8 PREFERRED STOCK | |
The Company has the authority to issue 100 million shares of preferred stock with a par value of $0.00001 per share and may be divided into and issued in series. The Board of Directors is authorized, within any limitations prescribed by law and the Company’s Article of Incorporation to fix and determine the designations, rights, qualifications, preferences, limitations and terms of the shares of any series of Preferred Stock. | |
EQUITY
EQUITY | 12 Months Ended |
Dec. 31, 2013 | |
Stockholders' Equity Note [Abstract] | ' |
Stockholders' Equity Note Disclosure [Text Block] | ' |
NOTE 9 EQUITY | |
Common Stock | |
During 2012, the Company raised $2,426,319 in a private placement of shares at $1.00 per share. Costs associated with this raise totaled $317,465. The mix of investors include 21 individuals, 3 trusts and 4 corporations. | |
During 2013, the Company raised $5,093,799 in a private placement of shares at $1.00 per share and $723,000 at $1.10 per share. Costs associated with this raise totaled $606,320. The mix of investors includes 51 individuals, 12 trusts and 24 corporations. | |
STOCK_OPTION_PLAN_AND_WARRANTS
STOCK OPTION PLAN AND WARRANTS | 12 Months Ended | |||||||||||||||
Dec. 31, 2013 | ||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | ' | |||||||||||||||
NOTE 10 STOCK OPTION PLAN AND WARRANTS | ||||||||||||||||
Stock Options | ||||||||||||||||
On October 15, 2009, the Company adopted the 2009 Stock Option Plan (the “2009 Option Plan”), pursuant to which it may grant equity awards to eligible persons. The 2009 Option Plan allows the Company’s Board of Directors (the “Board”) to grant options to purchase up to 1,500,000 shares of common stock to directors, officers, key employees, and service providers of the Company. As of December 31, 2013, options to purchase 938,039 shares were outstanding under the 2009 Option Plan. | ||||||||||||||||
On January 18, 2010, the Company adopted the 2010 Stock Option Plan (the “2010 Option Plan”), which allows the Board to grant options to purchase up to 1,000,000 shares of common stock to directors, officers, key employees, and service providers of the Company. In 2011, the 2010 Option Plan was amended to increase the number of shares issuable under the 2010 Option Plan to 3,000,000 shares. The shares under the 2010 Option Plan are registered with the SEC under Forms S-8 filed on February 2, 2010 and June 24, 2011. As of December 31, 2013, options to purchase 4,755,283 shares were outstanding under the 2010 Option Plan. | ||||||||||||||||
Stock options may be granted as either incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or as options not qualified under Section 422 of the Code. All options are issued with an exercise price at or above the fair market value of the common stock on the date of the grant as determined by the Company's Board of Directors. Incentive stock option plan awards of restricted stock are intended to qualify as deductible performance-based compensation under Section 162(m) of the Code. Incentive Stock Option awards of unrestricted stock are not designed to be deductible to the Company under Section 162(m). Under the Plan, stock options will terminate on the tenth anniversary date of the grant or earlier if provided in the grant. | ||||||||||||||||
The Company has also granted non-qualified stock options to employees and contractors. All non-qualified options are generally issued with an exercise price that may not be less than the fair value of the common stock on the date of the grant as determined by the Company's Board of Directors. Options may be exercised up to ten years following the date of the grant, with vesting schedules determined by the Company upon grant. Vesting periods range from 100% fully vested upon grant to a range of up to four years. Vested options may be exercised up to three months following date of termination of the relationship. The fair values of options are determined using the Black-Scholes option-pricing model. The estimated fair value of options is recognized as expense on the straight-line basis over the options’ vesting periods. The Company has unrecognized stock-based compensation with a weighted-average term of approximately 3 years of $486,750 at December 31, 2013. | ||||||||||||||||
Stock option transactions during 2013 and 2012 were as follows: | ||||||||||||||||
2013 | 2012 | |||||||||||||||
Weighted - | Weighted - | |||||||||||||||
Average | Average | |||||||||||||||
Exercise | Exercise | |||||||||||||||
Shares | Price | Shares | Price | |||||||||||||
Outstanding at Beginning of Year | 5,038,512 | $ | 0.91 | 3,663,179 | $ | 0.81 | ||||||||||
Granted | 1,169,500 | 1.74 | 1,529,333 | 1.16 | ||||||||||||
Exercised | -252,190 | 0.97 | - | - | ||||||||||||
Forfeited or Canceled | -262,500 | 1.08 | -154,000 | 1.01 | ||||||||||||
Outstanding at End of Year | 5,693,322 | 1.07 | 5,038,512 | 0.91 | ||||||||||||
Options Exercisable at Year-End | 4,449,986 | 1.37 | 3,748,003 | 1.22 | ||||||||||||
Weighted-Average Fair Value of Options Granted | $ | 0.37 | $ | 0.28 | ||||||||||||
During the Year | ||||||||||||||||
Information with respect to stock options outstanding and exercisable at December 31, 2013 is as follows: | ||||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||
Number | Weighted - | Number | ||||||||||||||
Outstanding | Average | Weighted - | Exercisable | Weighted - | ||||||||||||
Range of | at | Remaining | Average | At | Average | |||||||||||
Exercise | December 31, | Contractual | Exercise | December 31, | Exercise | |||||||||||
Prices | 2013 | Life | Price | 2013 | Price | |||||||||||
$0.10 - $1.80 | 5,693,322 | 7.5 Years | $ | 1.07 | 4,449,986 | $ | 1.37 | |||||||||
The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for options granted. | ||||||||||||||||
2013 | 2012 | |||||||||||||||
Expected Life | 5 Years | 5 Years | ||||||||||||||
Dividend Yield | 0 | % | 0 | % | ||||||||||||
Expected Volatility | 25 | % | 26 | % | ||||||||||||
Risk-Free Interest Rate | 1.36 | % | 0.8 | % | ||||||||||||
Expected volatility for 2013 and 2012 was estimated by using the Dow Jones U.S. Industry indexes sector classification methodology for industries similar to the Company. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the grant date. The expected life of the options is based on the actual expiration date of the grant. | ||||||||||||||||
Warrants | ||||||||||||||||
The Company has also periodically issued warrants to purchase shares of common stock as equity compensation to officers, directors, employees, and consultants. | ||||||||||||||||
As of December 31, 2013, warrants to purchase 3,883,641 shares of common stock were outstanding, all of which were issued either as equity compensation or in connection with financing transactions. Warrants may be exercised between a range of two to ten years following the date of the grant, with vesting schedules determined by the Company upon issue. Vesting periods range from 100% fully vested upon grant to four years. The fair value of warrants is determined using the Black-Scholes option-pricing model. The estimated fair value of warrants is recognized as expense on the straight-line basis over the warrants’ vesting periods. | ||||||||||||||||
Stock warrant transactions for 2013 and 2012 were as follows: | ||||||||||||||||
2013 | 2012 | |||||||||||||||
Shares | Weighted - | Shares | Weighted - | |||||||||||||
Average | Average | |||||||||||||||
Exercise Price | Exercise Price | |||||||||||||||
Outstanding at Beginning of year | 2,797,219 | $ | 1.33 | 1,612,778 | $ | 0.77 | ||||||||||
Granted | 1,086,422 | 1.24 | 1,434,441 | 1.07 | ||||||||||||
Exercised | - | 0 | - | 0 | ||||||||||||
Forfeited or Canceled | - | 0 | -250,000 | 1 | ||||||||||||
Outstanding at end of Year | 3,883,641 | 1 | 2,797,219 | 1.33 | ||||||||||||
Warrants Redeemable at End of Year | 3,883,641 | 1 | 2,797,219 | 1.33 | ||||||||||||
Weighted-Average Fair Value of Warrants Issued During the Year | $ | 0.33 | $ | 0.31 | ||||||||||||
Information with respect to warrants outstanding and exercisable at December 31, 2013 is as follows: | ||||||||||||||||
Warrants Outstanding | Warrants Redeemable | |||||||||||||||
Number | Weighted - | Number | ||||||||||||||
Outstanding | Average | Weighted - | Redeemable | Weighted - | ||||||||||||
Range of | at | Remaining | Average | at | Average | |||||||||||
Exercise | December 31, | Contractual | Redemption | December 31, | Redemption | |||||||||||
Prices | 2013 | Life | Price | 2013 | Price | |||||||||||
$0.10 - $1.65 | 3,883,641 | 2.6 Years | $ | 1 | 3,883,641 | $ | 1 | |||||||||
The fair value of each warrant issued is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for warrants issued. | ||||||||||||||||
2013 | 2012 | |||||||||||||||
Expected Life | 3.8 | 3.8 | ||||||||||||||
Dividend Yield | 0 | % | 0 | % | ||||||||||||
Expected Volatility | 21 | % | 24 | % | ||||||||||||
Risk-Free Interest Rate | 1.25 | % | 1.65 | % | ||||||||||||
Expected volatility was estimated by using the Dow Jones U.S. Industry indexes sector classification methodology for industries similar to the Company. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the grant date. The expected life of warrants is based on the average of three public companies offering services similar to the Company. | ||||||||||||||||
INCOME_TAXES
INCOME TAXES | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Income Tax Disclosure [Abstract] | ' | |||||||
Income Tax Disclosure [Text Block] | ' | |||||||
NOTE 11 INCOME TAXES | ||||||||
U.S.FEDERAL CORPORATE INCOME TAX | ||||||||
Temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities and tax credit and operating loss carryforwards that create deferred tax assets and liabilities are as follows: | ||||||||
2013 | 2012 | |||||||
Tax Operating Loss Carryforward - USA | $ | 6,830,000 | $ | 4,665,000 | ||||
Accelerated Depreciation – USA | -61,300 | -57,900 | ||||||
Valuation Allowance - USA | -6,768,700 | -4,607,100 | ||||||
$ | - | $ | - | |||||
The valuation allowance increased approximately $2,100,000, primarily as a result of the increased net operating losses of the operation in the USA. | ||||||||
As of December 31, 2013, the Company has federal net operating loss carryforwards for income tax purposes of approximately $17,000,000 which will begin to expire in 2025. The Company also has Arizona, California and Minnesota net operating loss carryforwards for income tax purposes of approximately $9,624,000, $1,890,000 and $105,000 which will begin to expire in 2013. These carryforwards have been utilized in the determination of the deferred income taxes for financial statement purposes. The following table accounts for federal net operating loss carryforwards only. | ||||||||
Year Ending | Net Operating | Year of | ||||||
December 31, | Loss: | Expiration: | ||||||
2013 | $ | 5,600,000 | 2033 | |||||
2012 | 2,850,000 | 2032 | ||||||
2011 | 2,427,000 | 2031 | ||||||
2010 | 1,799,000 | 2030 | ||||||
2009 | 1,750,000 | 2029 | ||||||
2008 | 1,308,000 | 2028 | ||||||
2007 | 429,000 | 2027 | ||||||
2006 | 476,000 | 2026 | ||||||
2005 | 414,000 | 2025 | ||||||
$ | 17,053,000 | |||||||
The tax provision differs from the expense that would result from applying Federal statutory rates to income before income taxes due to the effect of state income taxes and because certain expenses are deducted for financial reporting that are not deductible for tax purposes. | ||||||||
2013 | 2012 | |||||||
Tax Benefit of 34% | $ | -2,300,000 | $ | -1,148,400 | ||||
Increase (Decrease) in Income Taxes Resulting from: | ||||||||
State Income Tax Benefit, Net of Federal Tax | -245,631 | -134,458 | ||||||
Nondeductible Expenses | 1,126,943 | 175,851 | ||||||
Valuation Allowance | 1,418,688 | 1,107,007 | ||||||
Total | $ | - | $ | - | ||||
TAIWAN (REPUBLIC OF CHINA) CORPORATE TAX | ||||||||
Sole-Vision Technologies, Inc. is a subsidiary of the Company which is operating in Taiwan as a profit-seeking enterprise. Its applicable corporate income tax rate is 17%. In addition, Taiwan’s corporate tax system allows the government to levy a 10% profit retention tax on undistributed earnings for the prior year. This tax will not be provided if the company distributed the earnings before the ended of the fiscal year. | ||||||||
According to the Taiwan corporate income tax (“TCIT”) reporting system, the TCIT sales cut-off base is concurrent with the business tax classified as value-added type (“VAT”) which will be reported to the Ministry of Finance (“MOF”) on a bi-monthly basis. Since the VAT and TCIT are accounted for on a VAT tax basis that recorded all sales on business tax on a VAT tax reporting system, the Company is bound to report the TCIT according to the MOF prescribed tax reporting rules. Under the VAT tax reporting system, sales cut-off did not take the accrual base but rather on a VAT taxable reporting basis. Therefore, when the company adopted US GAAP on accrual basis, the sales cut-off TCIT timing difference which derived from the VAT reporting system will create a temporary sales cut-off timing difference and this difference is reflected in the deferred tax assets or liabilities calculations on the income tax estimation reported in the Form 10-K. | ||||||||
Temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities and VAT tax reporting system and operating loss carryforwards that create deferred tax assets and liabilities are as follows: | ||||||||
December 31, 2013 | ||||||||
US Dollar | ||||||||
Tax Operating Income – Taiwan | $ | -21,267 | ||||||
Temporary Difference: | ||||||||
VAT reporting system – Sales cut-off | -63,123 | |||||||
VAT reporting system – Cost & expenses cut-off | -87,192 | |||||||
Provision of Bad Debt | -109,106 | |||||||
Research & Development | -183,387 | |||||||
Permanent Difference: | ||||||||
Non-deductible expenses | -4,397 | |||||||
Adjusted Net Loss Before Tax – Taiwan | $ | -468,472 | ||||||
Income tax expense (benefits) for the years ended December 31, 2013 and 2012 is summarized as followings: | ||||||||
2013 | 2012 | |||||||
Current: | ||||||||
Provision for Federal Income Tax (34%) | $ | $ | — | |||||
Provision for TCIT (17%) | 6,007 | |||||||
Provision for Undistributed Earnings Tax (10%) | — | |||||||
Increase (Decrease) in Income Taxes Resulting from: | ||||||||
Pre-acquisition TCIT | — | |||||||
Temporary Difference | 1,580 | -88,509 | ||||||
Income Tax Expenses (Benefit) | $ | 1,580 | $ | -82,502 | ||||
RECONCILIATION OF DEFERRED TAX ASSET/(LIABILITIES) | ||||||||
Deferred Tax Assets | 2013 | |||||||
Balance at Beginning of Year | $ | 94,785 | ||||||
Temporary Difference | -1,580 | |||||||
Foreign currency difference | 66,993 | |||||||
Balance at End of Year | $ | 160,198 | ||||||
EARNINGS_LOSS_PER_SHARE
EARNINGS (LOSS) PER SHARE | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Earnings Per Share [Abstract] | ' | |||||||
Earnings Per Share [Text Block] | ' | |||||||
NOTE 12 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 No. 260, “Earnings Per Share“ (“EPS”). | ||||||||
Basic EPS is computed by dividing reported earnings available to stockholders by the weighted average shares outstanding. The Company had net losses for the years ended December 31, 2013 and 2012 and the effect of including dilutive securities in the earnings per common share would have been anti-dilutive. Accordingly, all options, warrants and shares potentially convertible into common shares were excluded from the calculation of diluted earnings per share for the years ended December 31, 2013 and 2012. Total common stock equivalents that could be convertible into common stock were 9,860,296 and 7,835,731 for 2013 and 2012 , respectively. | ||||||||
2013 | 2012 | |||||||
Basic EPS | ||||||||
Net Loss | $ | -6,801,714 | $ | -3,841,927 | ||||
Weighted Average Shares | 24,735,921 | 19,077,341 | ||||||
Basic Loss Per Share | $ | -0.27 | $ | -0.2 | ||||
CONTINGENT_LIABILITIES
CONTINGENT LIABILITIES | 12 Months Ended |
Dec. 31, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Contingencies Disclosure [Text Block] | ' |
NOTE 13 CONTINGENT LIABILITIES | |
As part of the terms of contracts with New Taipei City for projects performed during 2013, MegaSys is required to provide after-project services in accordance with the contract terms. If MegaSys were to fail provide these after-project services in the future, other parties of the related contract would have recourse. The financial exposure to MegaSys in the event of failure to provide after-project services in the future total $2,041,571. | |
SUBSEQUENT_EVENTS_UNAUDITED
SUBSEQUENT EVENTS (UNAUDITED) | 12 Months Ended |
Dec. 31, 2013 | |
Subsequent Events [Abstract] | ' |
Subsequent Events [Text Block] | ' |
NOTE 14 SUBSEQUENT EVENTS (UNAUDITED) | |
Since January 1, 2014 through March 14, 2014 the Company has raised $1,310,000 through a private placement memorandum of Convertible Debentures with warrants that began in December 2013. | |
The Company has evaluated subsequent events from the balance sheet date through the date the financial statements were issued and determined that there are no additional items to disclose. | |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Accounting Policies [Abstract] | ' | ||||||||||
Nature Of Operations [Policy Text Block] | ' | ||||||||||
Nature of Operations | |||||||||||
Iveda Solutions, Inc. (formerly Iveda Corporation) (the “Company”) began operations on January 24, 2005, under the name IntelaSight, Inc., a Washington corporation doing business as Iveda Solutions (“IntelaSight”). On October 15, 2009, IntelaSight completed a reverse merger with Charmed Homes, Inc., a Nevada corporation (“Charmed”) pursuant to which IntelaSight became a wholly-owned subsidiary of Charmed and Charmed changed its name to Iveda Corporation. Prior to the reverse merger, Charmed was a shell company and did not have any operations. | |||||||||||
All Company operations were conducted through IntelaSight until December 31, 2010, at which time IntelaSight merged with and into Iveda Corporation and Iveda Corporation changed its name to Iveda Solutions, Inc. | |||||||||||
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. | |||||||||||
On April 30, 2011, the Company completed its acquisition of Sole-Vision Technologies, Inc (doing business as MegaSys) (“MegaSys”). MegaSys was incorporated in the Republic of China (Taiwan) on July 5, 1999. MegaSys designs and integrates electronic security and surveillance products, software, and services. | |||||||||||
Consolidation, Policy [Policy Text Block] | ' | ||||||||||
Consolidation | |||||||||||
The consolidated financial statements include the accounts of the Company and MegaSys through December 31, 2013. All intercompany balances and transactions have been eliminated in consolidation. | |||||||||||
Liquidity Disclosure [Policy Text Block] | ' | ||||||||||
Going Concern | |||||||||||
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. The Company generated accumulated losses of approximately $21.8 million from January 2005 through December 31, 2013 and has insufficient working capital and cash flows to support operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from this uncertainty. | |||||||||||
A multi-step plan was adopted by management to enable the Company to continue to operate and begin to report operating profits. The highlights of that plan are: | |||||||||||
⋅ | In December 2013, the Board of Directors also approved the Company to raise up to an aggregate amount of $3.6 million in bridge financing through the sale of Convertible Debentures in advance of the long-term financing. | ||||||||||
⋅ The Company successfully raised $1,735,000 through March 14, 2014 in convertible debentures and warrants in a private placement memorandum offering and will continue efforts of this nature during 2014 as deemed necessary. | |||||||||||
⋅ | The Board of Directors approved the Company to engage with a financial capital markets advisor in connection with a potential capital financial transaction to raise up to $30 million (“Long Term Financing”). | ||||||||||
⋅ | In the third quarter of 2013, the Company launched two new camera lines in collaboration with MegaSys, its Taiwan subsidiary and Industrial Technology Research Institute (ITRI), its nonprofit research and development partner in Taiwan. These products are enablers of the Company’s video hosting services. | ||||||||||
⋅ | The Company has recently developed two other standalone services: | ||||||||||
o | IvedaMobile–a cloud-hosting service that turns any smartphone or tablet into a mobile, cloud video streaming device. This was developed with ITRI. | ||||||||||
IvedaXchange – In collaboration with a technology partner, the Company developed a real-time situational awareness dashboard to enable organizations instant access to vital and filtered information such as emergency situations, location of critical assets, video monitoring, and local IvedaXchange – In collaboration with a technology partner, the Company developed a real-times situational awareness dashboard to enable organizations instant access to vital and filtered information such as emergency situations, location of critical assets, video monitoring, and local news. IvedaXchange is well-suited for law enforcement agencies and schools. | |||||||||||
⋅ | The Company launched a new website to highlight new products and services with corresponding applications. | ||||||||||
⋅ | The Company launched a second website allowing for direct web-sales, geared toward the residential and small-to-medium sized businesses. | ||||||||||
⋅ | The Company intends to continue to participate in industry and vertical tradeshows to launch new products, generate leads, solicit resellers and other sales channels, and identify potential technology partners. | ||||||||||
⋅ | The Company intends to continue advertising on selected trade magazines and running Google Adwords to generate leads. | ||||||||||
⋅ | The Company has evaluated its reseller distribution channel and eliminated non-performing components of the channel. | ||||||||||
⋅ | In November 2013, Iveda hired Bob Brilon as our chief financial officer and executive vice president of business development. He has strong ties with the investment community and has extensive experience in mergers and acquisitions, strategic growth planning, and interacting with domestic and foreign institutional investors, which will be instrumental to our market expansion, global distribution of our cloud video hosting platform and services, and raising capital to fund our growth. In February 2014, he was also appointed as the Company’s president. | ||||||||||
⋅ | The Company is in active collaboration with certain telecommunications companies in other countries to resell the Company’s products and services in their respective countries. | ||||||||||
Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block] | ' | ||||||||||
Impairment of Long-Lived Assets | |||||||||||
The Company has a significant amount of property and equipment primarily consisting of leased equipment. The Company reviews the recoverability of the carrying value of long-lived assets using the methodology prescribed in ASC 360 "Property, Plant and Equipment." The Company reviews our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future net operating cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying value of the assets exceeds their fair value. The Company did not make any impairment for the years ended December 31, 2013 and 2012. | |||||||||||
Basis of Accounting, Policy [Policy Text Block] | ' | ||||||||||
Basis of Accounting | |||||||||||
The Company’s financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America. | |||||||||||
Use of Estimates, Policy [Policy Text Block] | ' | ||||||||||
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. | |||||||||||
Utility, Revenue and Expense Recognition, Policy [Policy Text Block] | ' | ||||||||||
Revenue and Expense Recognition | |||||||||||
Company recognizes revenue when persuasive evidence of an arrangement exists, title transfer has occurred, the price is fixed or readily determinable, and collectability is reasonably assured. The Company recognizes revenue in accordance with ASC 605, "Revenue Recognition." Sales are recorded net of sales returns and discounts, which are estimated at the time of shipment based upon historical data. | |||||||||||
Revenues from 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. | |||||||||||
Comprehensive Income, Policy [Policy Text Block] | ' | ||||||||||
Comprehensive loss | |||||||||||
Comprehensive loss is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. The Company’s current component of other comprehensive income is the foreign currency translation adjustment. | |||||||||||
Concentration Risk, Credit Risk, Policy [Policy Text Block] | ' | ||||||||||
Concentrations | |||||||||||
Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and cash equivalents and trade accounts receivable. | |||||||||||
Substantially all cash is deposited in two financial institutions, one in the United States and one in Taiwan. At times, amounts on deposit in the United States may be in excess of the FDIC insurance limit. Deposits in Taiwan financial institutions are insured by CDIC (Central Deposit Insurance Corporation) with maximum coverage of NTD 3 million. At times, amounts on deposit in Taiwan may be in excess of the CDIC Insurance limit. | |||||||||||
Accounts receivable are unsecured and the Company is at risk to the extent such amount becomes uncollectible. The Company performs periodic credit evaluations of its customers’ financial condition and generally does not require collateral. Two customers in 2013 represented approximately 54% of total revenues and one customer in 2012 represented approximately 69% of total revenues. The net accounts receivable from this customer was approximately 0% of total accounts receivable as of December 31, 2013. No other customers represented greater than 10% of total revenues in 2013 and 2012. | |||||||||||
Cash and Cash Equivalents | |||||||||||
For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. | |||||||||||
Trade and Other Accounts Receivable, Policy [Policy Text Block] | ' | ||||||||||
Accounts Receivable | |||||||||||
The Company provides an allowance for doubtful collections which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. For our US operation, receivables past due more than 120 days are considered delinquent. For our Taiwan operation, receivables over one year are considered delinquent. Delinquent receivables are written off based on individual credit valuation and specific circumstances of the customer. As of December 31, 2013 and 2012 respectively, an allowance for uncollectible accounts of $31,594 and $22,554 was deemed necessary for our US Operation. As of December 31, 2013 and 2012, respectively, an allowance of $465,933 and $116,315 was established against the receivables in our foreign corporation. The Company does not generally charge interest on past due receivables. | |||||||||||
Trade receivables, net are comprised of the following: | |||||||||||
2013 | 2012 | ||||||||||
Trade receivables, gross | $ | 870,114 | $ | 2,097,668 | |||||||
Allowance for doubtful accounts | -497,527 | -138,869 | |||||||||
Trade receivables, net | $ | 372,587 | $ | 1,958,799 | |||||||
Schedule Of Other Current Assets [Policy Text Block] | ' | ||||||||||
Other Current Assets | |||||||||||
Other current assets are comprised of the following: | |||||||||||
2013 | 2012 | ||||||||||
Notes receivables | $ | 3,413 | $ | 6,255 | |||||||
Restricted cash | 1,160,688 | 447,206 | |||||||||
Deposits-current | 135,727 | 415,108 | |||||||||
Prepaid expenses and other current assets | 156,065 | 224,365 | |||||||||
Other current assets | $ | 1,455,893 | $ | 1,092,934 | |||||||
Notes Receivable [Policy Text Block] | ' | ||||||||||
Notes Receivable | |||||||||||
Notes receivable represents post-dated checks collected from customers in Taiwan. The Company provides an allowance for doubtful accounts which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. For our Taiwan operation, notes receivables over 90 days are considered delinquent. Delinquent receivables are written off based on individual credit valuation and specific circumstances of the customer. As of December 31, 2013 and 2012, no allowance for doubtful accounts was deemed necessary for our Taiwan operation. The company does not generally charge interest on notes receivable. | |||||||||||
Current Deposits [Policy Text Block] | ' | ||||||||||
Deposits – Current | |||||||||||
The Company’s current deposits represent tender deposits placed with local governments and major customers in Taiwan during the bidding process for new proposed projects. | |||||||||||
Prepaid Expenses And Other Current Assets [Policy Text Block] | ' | ||||||||||
Prepaid Expenses and Other Current Assets | |||||||||||
Prepaid expenses and other current assets represent cash paid in advance to insurance companies and vendors for service coverage extending into 2014. It also includes some other receivables as the result of travel advances due from employees. | |||||||||||
Inventory, Policy [Policy Text Block] | ' | ||||||||||
Inventories | |||||||||||
Inventories consists of equipment purchased for installation projects and is recorded at the lower of cost (first-in, first-out) or market. | |||||||||||
Property, Plant and Equipment, Policy [Policy Text Block] | ' | ||||||||||
Property and Equipment | |||||||||||
Property and equipment are stated at cost. Depreciation is computed primarily using the straight-line method over the estimated useful lives of three to seven years. Expenditures for routine maintenance and repairs are charged to expense as incurred. Depreciation expense for the years ended December 31, 2013 and 2012 was $201,298 and $197,557, respectively. | |||||||||||
Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block] | ' | ||||||||||
Intangible Assets and Goodwill | |||||||||||
Intangible assets consist of trademarks and other intangible assets associated with the purchase price allocation of MegaSys. Such assets are being amortized over their estimated useful lives of six months to ten years. Other intangible assets are fully amortized at December 31, 2013. Future amortization of Trademarks is as follows: | |||||||||||
Trademarks | |||||||||||
2014 | $ | 20,000 | |||||||||
2015 | $ | 20,000 | |||||||||
2016 | $ | 20,000 | |||||||||
2017 | $ | 20,000 | |||||||||
Thereafter | $ | 66,667 | |||||||||
Goodwill represents the excess of the purchase price of MegaSys over the net assets acquired. | |||||||||||
We allocate goodwill to reporting units based on the reporting unit expected to benefit from the business combination. We evaluate our reporting units on an annual basis and, if necessary, reassign goodwill using a relative fair value allocation approach. Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. | |||||||||||
Application of the goodwill impairment test requires judgment. We first assess qualitative factors to determine whether it is more likely than not that goodwill is impaired. If the more likely than not threshold is met, we perform a quantitative impairment test. At December 31, 2013, the Company determined that goodwill was impaired and has recorded an impairment of $841,000. | |||||||||||
Other Assets [Policy Text Block] | ' | ||||||||||
Other Assets | |||||||||||
Other assets are comprised of the following: | |||||||||||
2013 | 2012 | ||||||||||
Deposits- long-term | $ | 10,836 | $ | 10,836 | |||||||
Deferred tax assets | 160,198 | 94,785 | |||||||||
Deferred Finance Costs (Net of Amortization) | 170,718 | - | |||||||||
Other assets | $ | 341,752 | $ | 105,621 | |||||||
Long Term Deposits [Policy Text Block] | ' | ||||||||||
Deposits- long-term | |||||||||||
Long-term deposits consists of our security deposit held by Landlord under the First Amendment to Lease effective July 1, 2011 for our domestic office space. | |||||||||||
Income Tax, Policy [Policy Text Block] | ' | ||||||||||
Income Taxes | |||||||||||
Deferred income taxes are recognized in the financial statements for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates. Temporary differences arise from sales cut-off, depreciation, deferred rent expense, and net operating losses. Valuation allowances are established when necessary to reduce deferred tax assets to the amount that represents the Company's best estimate of such deferred tax assets that, more likely than not, will be realized. Income tax expense is the tax payable for the year and the change during the year in deferred tax assets and liabilities. During 2013, the Company reevaluated the valuation allowance for deferred tax assets and determined that no current benefits should be recognized for the year ended December 31, 2013 for our U.S. operation. However, a benefit of $160,198 is recorded on the balance sheet for our Taiwan business. See Note 9 for more information. | |||||||||||
The Company is subject to U.S. federal income tax as well as state income tax. | |||||||||||
The Company’s U.S. income tax returns are subject to review and examination by federal, state, and local authorities. The U.S. tax returns for the years 2010 to 2012 are open to examination by federal, local, and state authorities. | |||||||||||
The Company’s Taiwan tax returns are subject to review and examination by Taiwan Ministry of Finance. The Taiwan tax return for the years 2008 to 2012 are open to examination of Ministry of Finance. | |||||||||||
Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block] | ' | ||||||||||
Restricted cash | |||||||||||
Restricted cash represents time deposits on account to secure short-term bank loans in our foreign operation. | |||||||||||
Accounts And Other Payables [Policy Text Block] | ' | ||||||||||
Accounts and Other Payables | |||||||||||
Accounts and other payables are comprised of the following: | |||||||||||
2013 | 2012 | ||||||||||
Accounts Payable | $ | 688,130 | $ | 673,173 | |||||||
Accrued Expenses | 1,651,419 | 1,674,258 | |||||||||
Income Tax Payable | 2,183 | 53,784 | |||||||||
Deferred Revenue | 16,970 | 55,573 | |||||||||
Accounts and Other Payables | $ | 2,358,702 | $ | 2,456,788 | |||||||
Revenue Recognition, Deferred Revenue [Policy Text Block] | ' | ||||||||||
Deferred Revenue | |||||||||||
Deposits received from customers on future installation projects are recorded as deferred revenue. | |||||||||||
Compensation Related Costs, Policy [Policy Text Block] | ' | ||||||||||
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, 2012 and 2011 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, 2013 and 2012, 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 ASC 718. The Company recognized $336,402 and $248,072 of stock-based compensation expense for the years ended December 31, 2013 and 2012, respectively. | |||||||||||
Fair Value of Financial Instruments, Policy [Policy Text Block] | ' | ||||||||||
Fair Value of Financial Instruments | |||||||||||
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2013 and 2012. The respective carrying value of certain on-balance-sheet financial instruments, approximate their fair values. These financial instruments include cash, accounts receivable, accounts payable, accrued expenses, and amounts due to related parties. Fair values were assumed to approximate carrying values for these financial instruments because they are short term in nature and their carrying amounts approximate fair values or they are receivable or payable on demand. | |||||||||||
Segment Reporting, Policy [Policy Text Block] | ' | ||||||||||
Segment Information | |||||||||||
The Company conducts operations in various geographic regions outside the United States. The operations and the customer base conducted in the foreign countries are similar to the United States operations. The net revenues and net assets (liabilities) for other significant geographic regions outside the United States are as follows: | |||||||||||
Net Revenues | Net Assets | ||||||||||
United States | $ | 487,475 | $ | 562,264 | |||||||
Asia | $ | 2,607,501 | $ | -40,455 | |||||||
Mexico | $ | 250,241 | $ | - | |||||||
Furthermore, due to operations in various geographic locations, the Company is susceptible to changes in national, regional and local economic conditions, demographic trends, consumer confidence in the economy and discretionary spending priorities that may have a material adverse effect on the Company’s future operations and results. | |||||||||||
The Company is required to collect certain taxes and fees from customers on behalf of government agencies and remit these back to the applicable governmental agencies on a periodic basis. These taxes and fees are legal assessments to the customer, for which the Company has a legal obligation to act as a collection agent. Because the Company does not retain these taxes and fees, the Company does not include such amounts in revenue. The Company records a liability when the amounts are collected and relieves the liability when payments are made to the applicable governmental agencies. | |||||||||||
The company operates as two reportable business segments as defined in ASC 280. “Segment Reporting.” Each company has a chief operating decision maker and management personnel which review their company’s performance as it relates to revenue, operating profit and operating expenses. | |||||||||||
Twelve Months | Twelve Months | Condensed | |||||||||
Ending Dec. 31, | Ending Dec. 31, | Consolidated | |||||||||
2013 | 2013 | Total | |||||||||
Iveda Solutions, | MegaSys | ||||||||||
Inc. | |||||||||||
Revenue | $ | 737,716 | $ | 2,607,501 | $ | 3,345,217 | |||||
Cost of Revenue | 731,770 | 1,997,580 | 2,729,350 | ||||||||
Gross Profit | 5,946 | 609,921 | 615,867 | ||||||||
Depreciation and Amort. | 210,787 | 11,115 | 221,902 | ||||||||
General & Administrative | 5,464,288 | 888,492 | 6,352,780 | ||||||||
Impairment of Goodwill | 841,000 | - | 841,000 | ||||||||
(Loss) from Operations | -6,510,129 | -289,686 | -6,799,815 | ||||||||
Other Income (Expense) | -76,686 | 5,451 | -71,235 | ||||||||
(Loss) Before Income Taxes | -6,586,815 | -284,235 | -6,871,050 | ||||||||
Benefit For Income Taxes | - | 69,336 | 69,336 | ||||||||
Net Loss | $ | -6,586,815 | $ | -214,899 | $ | -6,801,714 | |||||
Revenues as shown below represent sales to external customers for each segment. Intercompany revenues have been eliminated and are immaterial for separate disclosure. | |||||||||||
Additions to long-lived assets as presented in the following table represent capital expenditures. | |||||||||||
Inventories, property and equipment for operating segments are regularly reviewed by management and are therefore provided below. | |||||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
Revenues | |||||||||||
United States | $ | 737,715 | $ | 767,841 | |||||||
Republic of China (Taiwan) | 2,672,928 | 2,843,889 | |||||||||
Elimination of intersegment revenues | -65,426 | -2,732 | |||||||||
$ | 3,345,217 | $ | 3,608,998 | ||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
Operating earnings (loss) | |||||||||||
United States | $ | -6,510,129 | $ | -3,348,419 | |||||||
Republic of China (Taiwan) | -289,686 | -495,830 | |||||||||
Elimination of intersegment profit | - | -703 | |||||||||
$ | -6,799,815 | $ | -3,844,952 | ||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
Property and equipment | |||||||||||
United States | $ | 437,410 | $ | 488,648 | |||||||
Republic of China (Taiwan) | 33,772 | 28,333 | |||||||||
$ | 471,182 | $ | 516,981 | ||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
Additions to long-lived assets | |||||||||||
United States | $ | 129,222 | $ | 333,432 | |||||||
Republic of China (Taiwan) | 28,008 | 5,393 | |||||||||
$ | 157,230 | $ | 338,825 | ||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
Inventory | |||||||||||
United States | $ | 126,403 | $ | 26,794 | |||||||
Republic of China (Taiwan) | 205,034 | 96,227 | |||||||||
$ | 331,437 | $ | 123,021 | ||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
Total Assets | |||||||||||
United States | $ | 1,175,874 | $ | 1,727,017 | |||||||
Republic of China (Taiwan) | 2,503,372 | 3,192,467 | |||||||||
$ | 3,679,246 | $ | 4,919,484 | ||||||||
Reclassification, Policy [Policy Text Block] | ' | ||||||||||
Reclassification | |||||||||||
Certain amounts in 2012 have been reclassified to conform to the 2013 presentation. | |||||||||||
New Accounting Pronouncements, Policy [Policy Text Block] | ' | ||||||||||
New Accounting Standards | |||||||||||
In March 2013, FASB has issued Accounting Standards Update (ASU) No. 2013-05, Foreign Currency Matters (Topic 830). This ASU resolve the diversity in practice about whether Subtopic 810-10, Consolidation—Overall, or Subtopic 830-30, Foreign Currency Matters—Translation of Financial Statements, applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights)within a foreign entity. In addition, the amendments in this Update resolve the diversity in practice for the treatment of business combinations achieved in stages (sometimes also referred to as step acquisitions) involving a foreign entity. This ASU is the final version of Proposed Accounting Standards Update EITF11Ar—Foreign Currency Matters (Topic 830), which has been deleted. The amendments in this Update are effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. For nonpublic entities the amendments in this Update are effective prospectively for the first annual period beginning after December 15, 2014, and interim and annual periods thereafter. The amendments should be applied prospectively to derecognition events occurring after the effective date. Prior periods should not be adjusted. Early adoption is permitted. If an entity elects to early adopt the amendments, it should apply them as of the beginning of the entity’s fiscal year of adoption. | |||||||||||
In February 2013, FASB issued Accounting Standards Update (ASU) No. 2013-03, Financial Instruments (Topic 825). This ASU clarifies the scope and applicability of a disclosure exemption that resulted from the issuance of Accounting Standards Update No. 2011-04,Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The amendment clarifies that the requirement to disclose "the level of the fair value hierarchy within which the fair value measurements are categorized in their entirety (Level 1, 2, or 3)" does not apply to nonpublic entities for items that are not measured at fair value in the statement of financial position, but for which fair value is disclosed. This ASU is the final version of Proposed Accounting Standards Update 2013-200—Financial Instruments (Topic 825) which has been deleted. The amendments are effective upon issuance. | |||||||||||
In February 2013, FASB has issued Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This ASU improves the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in this ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. | |||||||||||
The new amendments will require an organization to: | |||||||||||
• | Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. | ||||||||||
• | Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. | ||||||||||
GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense. | |||||||||||
The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). A private company is required to meet the reporting requirements of the amended paragraphs about the roll forward of accumulated other comprehensive income for both interim and annual reporting periods. However, private companies are only required to provide the information about the effect of reclassifications on line items of net income for annual reporting periods, not for interim reporting periods. The amendments are effective for reporting periods beginning after December 15, 2012, for public companies and are effective for reporting periods beginning after December 15, 2013, for private companies. Early adoption is permitted. | |||||||||||
In January 2013, FASB has issued Accounting Standards Update (ASU) No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. This ASU clarifies that ordinary trade receivables and receivables are not in the scope of ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. Specifically, ASU 2011-11 applies only to derivatives, repurchase agreements and reverse purchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with specific criteria contained in the FASB Accounting Standards Codification(TM) (Codification) or subject to a master netting arrangement or similar agreement. The FASB undertook this clarification project in response to concerns expressed by U.S. stakeholders about the standard’s broad definition of financial instruments. After the standard was finalized, companies realized that many contracts have standard commercial provisions that would equate to a master netting arrangement, significantly increasing the cost of compliance at minimal value to financial statement users. An entity is required to apply the amendments in ASU 2013-01 for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the required disclosures retrospectively for all comparative periods presented. The effective date is the same as the effective date of ASU 2011-11. | |||||||||||
In October 2012, FASB has issued Accounting Standards Update (ASU) No. 2012-04, Technical Corrections and Improvements. This ASU make technical corrections, clarifications, and limited-scope improvements to various Topics throughout the Codification. The amendments in this ASU that will not have transition guidance will be effective upon issuance for both public entities and nonpublic entities. For public entities, the amendments that are subject to the transition guidance will be effective for fiscal periods beginning after December 15, 2012. For nonpublic entities, the amendments that are subject to the transition guidance will be effective for fiscal periods beginning after December 15, 2013. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements. | |||||||||||
In August 2012, FASB has issued Accounting Standards Update (ASU) No. 2012-03, Technical Amendments and Corrections to SEC Sections. This ASU amends various SEC paragraphs pursuant to SAB 114, SEC Release No. 33-9250, and ASU 2010-22, which amend or rescind portions of certain SAB Topics. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements. | |||||||||||
In July 2012, the FASB issued ASU 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. The objective of the measure is to reduce the cost and complexity associated with performing an impairment test for indefinite-lived intangible assets and to make the impairment test similar to the recent changes for testing goodwill for impairment (ASU 2011-08). ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012 and early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements. | |||||||||||
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Accounting Policies [Abstract] | ' | ||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] | ' | ||||||||||
Trade receivables, net are comprised of the following: | |||||||||||
2013 | 2012 | ||||||||||
Trade receivables, gross | $ | 870,114 | $ | 2,097,668 | |||||||
Allowance for doubtful accounts | -497,527 | -138,869 | |||||||||
Trade receivables, net | $ | 372,587 | $ | 1,958,799 | |||||||
Schedule of Other Current Assets [Table Text Block] | ' | ||||||||||
Other current assets are comprised of the following: | |||||||||||
2013 | 2012 | ||||||||||
Notes receivables | $ | 3,413 | $ | 6,255 | |||||||
Restricted cash | 1,160,688 | 447,206 | |||||||||
Deposits-current | 135,727 | 415,108 | |||||||||
Prepaid expenses and other current assets | 156,065 | 224,365 | |||||||||
Other current assets | $ | 1,455,893 | $ | 1,092,934 | |||||||
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | ' | ||||||||||
Future amortization of Trademarks is as follows: | |||||||||||
Trademarks | |||||||||||
2014 | $ | 20,000 | |||||||||
2015 | $ | 20,000 | |||||||||
2016 | $ | 20,000 | |||||||||
2017 | $ | 20,000 | |||||||||
Thereafter | $ | 66,667 | |||||||||
Schedule of Other Assets [Table Text Block] | ' | ||||||||||
Other assets are comprised of the following: | |||||||||||
2013 | 2012 | ||||||||||
Deposits- long-term | $ | 10,836 | $ | 10,836 | |||||||
Deferred tax assets | 160,198 | 94,785 | |||||||||
Deferred Finance Costs (Net of Amortization) | 170,718 | - | |||||||||
Other assets | $ | 341,752 | $ | 105,621 | |||||||
Schedule of Accounts Payable and Accrued Liabilities [Table Text Block] | ' | ||||||||||
Accounts and other payables are comprised of the following: | |||||||||||
2013 | 2012 | ||||||||||
Accounts Payable | $ | 688,130 | $ | 673,173 | |||||||
Accrued Expenses | 1,651,419 | 1,674,258 | |||||||||
Income Tax Payable | 2,183 | 53,784 | |||||||||
Deferred Revenue | 16,970 | 55,573 | |||||||||
Accounts and Other Payables | $ | 2,358,702 | $ | 2,456,788 | |||||||
Schedule of Segment Reporting Information, by Segment [Table Text Block] | ' | ||||||||||
The net revenues and net assets (liabilities) for other significant geographic regions outside the United States are as follows: | |||||||||||
Net Revenues | Net Assets | ||||||||||
United States | $ | 487,475 | $ | 562,264 | |||||||
Asia | $ | 2,607,501 | $ | -40,455 | |||||||
Mexico | $ | 250,241 | $ | - | |||||||
Schedule of Revenue by Major Customers by Reporting Segments [Table Text Block] | ' | ||||||||||
The company operates as two reportable business segments as defined in ASC 280. “Segment Reporting.” Each company has a chief operating decision maker and management personnel which review their company’s performance as it relates to revenue, operating profit and operating expenses. | |||||||||||
Twelve Months | Twelve Months | Condensed | |||||||||
Ending Dec. 31, | Ending Dec. 31, | Consolidated | |||||||||
2013 | 2013 | Total | |||||||||
Iveda Solutions, | MegaSys | ||||||||||
Inc. | |||||||||||
Revenue | $ | 737,716 | $ | 2,607,501 | $ | 3,345,217 | |||||
Cost of Revenue | 731,770 | 1,997,580 | 2,729,350 | ||||||||
Gross Profit | 5,946 | 609,921 | 615,867 | ||||||||
Depreciation and Amort. | 210,787 | 11,115 | 221,902 | ||||||||
General & Administrative | 5,464,288 | 888,492 | 6,352,780 | ||||||||
Impairment of Goodwill | 841,000 | - | 841,000 | ||||||||
(Loss) from Operations | -6,510,129 | -289,686 | -6,799,815 | ||||||||
Other Income (Expense) | -76,686 | 5,451 | -71,235 | ||||||||
(Loss) Before Income Taxes | -6,586,815 | -284,235 | -6,871,050 | ||||||||
Benefit For Income Taxes | - | 69,336 | 69,336 | ||||||||
Net Loss | $ | -6,586,815 | $ | -214,899 | $ | -6,801,714 | |||||
Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block] | ' | ||||||||||
Inventories, property and equipment for operating segments are regularly reviewed by management and are therefore provided below. | |||||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
Revenues | |||||||||||
United States | $ | 737,715 | $ | 767,841 | |||||||
Republic of China (Taiwan) | 2,672,928 | 2,843,889 | |||||||||
Elimination of intersegment revenues | -65,426 | -2,732 | |||||||||
$ | 3,345,217 | $ | 3,608,998 | ||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
Operating earnings (loss) | |||||||||||
United States | $ | -6,510,129 | $ | -3,348,419 | |||||||
Republic of China (Taiwan) | -289,686 | -495,830 | |||||||||
Elimination of intersegment profit | - | -703 | |||||||||
$ | -6,799,815 | $ | -3,844,952 | ||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
Property and equipment | |||||||||||
United States | $ | 437,410 | $ | 488,648 | |||||||
Republic of China (Taiwan) | 33,772 | 28,333 | |||||||||
$ | 471,182 | $ | 516,981 | ||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
Additions to long-lived assets | |||||||||||
United States | $ | 129,222 | $ | 333,432 | |||||||
Republic of China (Taiwan) | 28,008 | 5,393 | |||||||||
$ | 157,230 | $ | 338,825 | ||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
Inventory | |||||||||||
United States | $ | 126,403 | $ | 26,794 | |||||||
Republic of China (Taiwan) | 205,034 | 96,227 | |||||||||
$ | 331,437 | $ | 123,021 | ||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
Total Assets | |||||||||||
United States | $ | 1,175,874 | $ | 1,727,017 | |||||||
Republic of China (Taiwan) | 2,503,372 | 3,192,467 | |||||||||
$ | 3,679,246 | $ | 4,919,484 | ||||||||
RELATED_PARTIES_Tables
RELATED PARTIES (Tables) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Related Party Transactions [Abstract] | ' | |||||||
Schedule of Related Party Transactions [Table Text Block] | ' | |||||||
2013 | 2012 | |||||||
On June 20, 2012, the Company entered into a convertible debenture agreement with a Board Member for $200,000. Interest is payable at 12% per annum, payable on the maturity date of June 20, 2013. The Company issued warrants to purchase 20,000 shares of the Company Stock, at an exercise price of $ 1.00. Accordingly, the Company recognized a discount of $16,789 on the principal value of the $200,000 and is amortizing the discount over the 12 month term of the debenture. The debenture is convertible into shares of Company Common Stock on or before the Maturity Date, at a conversion rate of $1.00 per share. On June 20, 2013, the Company paid off, in full, this debenture which totaled $200,000 plus $24,000 interest. | - | $ | 200,000 | |||||
On September 26, 2011, the Company entered into a $45,000 promissory note agreement with one of its shareholders. Interest on the note will be payable in 45,000 warrants at a $1.10 exercise price, exercisable within three years of issuance. On October 24, 2011, the Board of Directors approved the issuance of the warrants. Accordingly, the Company recognized a discount of $16,909 on the principal value of the $45,000 note payable and is amortizing the discount over the 12 month life of the note. On September 25, 2012 a Promissory Note Extension Agreement was signed to extend the maturity date of one of the $45,000 notes to March 25, 2013. On May 14, 2013, the Company paid off, in full, this promissory note which totaled $45,000 plus $3,417.53 interest. | - | $ | 45,000 | |||||
On November 19, 2012, the Company entered into a separate convertible debenture agreement with a different Board Member for $100,000. Interest is payable at 10% per annum, payable on the maturity date of May 19, 2013. The Company issued warrants to purchase 10,000 shares of the Company Stock, at an exercise price of $ 1.10. The debenture is convertible into shares of Company Common Stock on or before the Maturity Date, at a conversion rate of $1.10 per share. | 100,000 | $ | 100,000 | |||||
On December 20, 2013, the Company entered into a Convertible Debenture with an officer for $75,000 which includes warrants to purchase 6,818 shares of the Company stock , at an exercise price of $1.65. Accordingly, the Company recognized a discount of $4,886 on the principal value of $75,000 and is amortizing the discount over the three year term of the debenture. | 75,000 | - | ||||||
Total Due to Related Parties | 175,000 | 345,000 | ||||||
Less Current Portion | -100,000 | -336,605 | ||||||
Less: Debt Discount | -4,886 | -8,395 | ||||||
Total Long-Term | $ | 70,114 | $ | - | ||||
SHORTTERM_DEBT_Tables
SHORT-TERM DEBT (Tables) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Debt Disclosure [Abstract] | ' | |||||||
Schedule of Short-term Debt [Table Text Block] | ' | |||||||
Two short-term bank loans were initiated on September 28, 2012 and November 26, 2012, due and payable on May 31, 2014 and November 26, 2014 respectively. The short-term debt balances were as follows: | ||||||||
2013 | 2012 | |||||||
Loan from Shanghai Commercial & Savings at an interest rate at 5.5% per annum, due on November 26, 2014 | $ | 60,291 | $ | 132,097 | ||||
Loan from Chailease Bank at various interest rates ranging from | - | 488,025 | ||||||
1% per annum to 3.24%. Due on May 31, 2014 | ||||||||
Notes Payable | - | 182,839 | ||||||
Balance at end of year | $ | 60,291 | $ | 802,122 | ||||
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||
Fair Value Inputs, Liabilities, Quantitative Information [Table Text Block] | ' | |||||||||||||
The following table sets forth, by level within the fair value hierarchy, our financial instrument liabilities as of December 31, 2013: | ||||||||||||||
Level I | Level II | Level III | ||||||||||||
Quoted | Observable | Unobservable | ||||||||||||
Prices | Inputs | Inputs | Total | |||||||||||
Derivative liability | $ | - | $ | - | $ | 39,804 | $ | 39,804 | ||||||
Fair Value, Option, Qualitative Disclosures Related to Election [Table Text Block] | ' | |||||||||||||
The following table sets forth a summary of changes in the fair value of our Level 3 financial instrument liability for the year ended December 31, 2013. | ||||||||||||||
Beginning Balance | $ | - | ||||||||||||
Issued | 39,563 | |||||||||||||
(Gains) losses during the period | 241 | |||||||||||||
Settlements | - | |||||||||||||
Ending Balance | $ | 39,804 | ||||||||||||
LONGTERM_DEBT_Tables
LONG-TERM DEBT (Tables) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Debt Disclosure [Abstract] | ' | |||||||
Schedule Of Long Term Bank Balance [Table Text Block] | ' | |||||||
Long-term debt consists of the following: | ||||||||
2013 | 2012 | |||||||
Loan from Chailease Finance Co., Ltd. with an interest rate at 5% per annum, due on May 30, 2015 | $ | 135,208 | - | |||||
Loan from Taipei Fubon Bank with an interest rate at 5.5% per annum, due on November 26, 2014 | 62,942 | $ | 140,764 | |||||
Other loan | 2,638 | 2,638 | ||||||
Convertible debenture | 350,000 | - | ||||||
550,788 | 143,402 | |||||||
Less: Current portion | -164,156 | -75,707 | ||||||
Less: Debt discount | -22,262 | - | ||||||
$ | 364,370 | $ | 67,695 | |||||
Contractual Obligation, Fiscal Year Maturity Schedule [Table Text Block] | ' | |||||||
The future principal payments under the bank loans are as follows: | ||||||||
For the year ended December 31, | ||||||||
2014 | $ | 164,156 | ||||||
2015 | 36,632 | |||||||
2016 | 350,000 | |||||||
Total | $ | 550,788 | ||||||
OPERATING_LEASES_Tables
OPERATING LEASES (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Leases, Operating [Abstract] | ' | ||||
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | ' | ||||
Future minimum lease payments under these leases are as follows: | |||||
2014 | $ | 330,451 | |||
2015 | 144,563 | ||||
2016 | 113,835 | ||||
Total | $ | 588,849 | |||
STOCK_OPTION_PLAN_AND_WARRANTS1
STOCK OPTION PLAN AND WARRANTS (Tables) | 12 Months Ended | |||||||||||||||
Dec. 31, 2013 | ||||||||||||||||
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block] | ' | |||||||||||||||
Stock option transactions during 2013 and 2012 were as follows: | ||||||||||||||||
2013 | 2012 | |||||||||||||||
Weighted - | Weighted - | |||||||||||||||
Average | Average | |||||||||||||||
Exercise | Exercise | |||||||||||||||
Shares | Price | Shares | Price | |||||||||||||
Outstanding at Beginning of Year | 5,038,512 | $ | 0.91 | 3,663,179 | $ | 0.81 | ||||||||||
Granted | 1,169,500 | 1.74 | 1,529,333 | 1.16 | ||||||||||||
Exercised | -252,190 | 0.97 | - | - | ||||||||||||
Forfeited or Canceled | -262,500 | 1.08 | -154,000 | 1.01 | ||||||||||||
Outstanding at End of Year | 5,693,322 | 1.07 | 5,038,512 | 0.91 | ||||||||||||
Options Exercisable at Year-End | 4,449,986 | 1.37 | 3,748,003 | 1.22 | ||||||||||||
Weighted-Average Fair Value of Options Granted | $ | 0.37 | $ | 0.28 | ||||||||||||
During the Year | ||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding and Exercisable [Table Text Block] | ' | |||||||||||||||
Information with respect to stock options outstanding and exercisable at December 31, 2013 is as follows: | ||||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||
Number | Weighted - | Number | ||||||||||||||
Outstanding | Average | Weighted - | Exercisable | Weighted - | ||||||||||||
Range of | at | Remaining | Average | At | Average | |||||||||||
Exercise | December 31, | Contractual | Exercise | December 31, | Exercise | |||||||||||
Prices | 2013 | Life | Price | 2013 | Price | |||||||||||
$0.10 - $1.80 | 5,693,322 | 7.5 Years | $ | 1.07 | 4,449,986 | $ | 1.37 | |||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | ' | |||||||||||||||
The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for options granted. | ||||||||||||||||
2013 | 2012 | |||||||||||||||
Expected Life | 5 Years | 5 Years | ||||||||||||||
Dividend Yield | 0 | % | 0 | % | ||||||||||||
Expected Volatility | 25 | % | 26 | % | ||||||||||||
Risk-Free Interest Rate | 1.36 | % | 0.8 | % | ||||||||||||
Warrant [Member] | ' | |||||||||||||||
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block] | ' | |||||||||||||||
Stock warrant transactions for 2013 and 2012 were as follows: | ||||||||||||||||
2013 | 2012 | |||||||||||||||
Shares | Weighted - | Shares | Weighted - | |||||||||||||
Average | Average | |||||||||||||||
Exercise Price | Exercise Price | |||||||||||||||
Outstanding at Beginning of year | 2,797,219 | $ | 1.33 | 1,612,778 | $ | 0.77 | ||||||||||
Granted | 1,086,422 | 1.24 | 1,434,441 | 1.07 | ||||||||||||
Exercised | - | 0 | - | 0 | ||||||||||||
Forfeited or Canceled | - | 0 | -250,000 | 1 | ||||||||||||
Outstanding at end of Year | 3,883,641 | 1 | 2,797,219 | 1.33 | ||||||||||||
Warrants Redeemable at End of Year | 3,883,641 | 1 | 2,797,219 | 1.33 | ||||||||||||
Weighted-Average Fair Value of Warrants Issued During the Year | $ | 0.33 | $ | 0.31 | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding and Exercisable [Table Text Block] | ' | |||||||||||||||
Information with respect to warrants outstanding and exercisable at December 31, 2013 is as follows: | ||||||||||||||||
Warrants Outstanding | Warrants Redeemable | |||||||||||||||
Number | Weighted - | Number | ||||||||||||||
Outstanding | Average | Weighted - | Redeemable | Weighted - | ||||||||||||
Range of | at | Remaining | Average | at | Average | |||||||||||
Exercise | December 31, | Contractual | Redemption | December 31, | Redemption | |||||||||||
Prices | 2013 | Life | Price | 2013 | Price | |||||||||||
$0.10 - $1.65 | 3,883,641 | 2.6 Years | $ | 1 | 3,883,641 | $ | 1 | |||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | ' | |||||||||||||||
The fair value of each warrant issued is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for warrants issued. | ||||||||||||||||
2013 | 2012 | |||||||||||||||
Expected Life | 3.8 | 3.8 | ||||||||||||||
Dividend Yield | 0 | % | 0 | % | ||||||||||||
Expected Volatility | 21 | % | 24 | % | ||||||||||||
Risk-Free Interest Rate | 1.25 | % | 1.65 | % | ||||||||||||
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Income Tax Disclosure [Abstract] | ' | |||||||
Schedule of Deferred Tax Assets and Liabilities [Table Text Block] | ' | |||||||
Temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities and tax credit and operating loss carryforwards that create deferred tax assets and liabilities are as follows: | ||||||||
2013 | 2012 | |||||||
Tax Operating Loss Carryforward - USA | $ | 6,830,000 | $ | 4,665,000 | ||||
Accelerated Depreciation – USA | -61,300 | -57,900 | ||||||
Valuation Allowance - USA | -6,768,700 | -4,607,100 | ||||||
$ | - | $ | - | |||||
Summary of Operating Loss Carryforwards [Table Text Block] | ' | |||||||
The following table accounts for federal net operating loss carryforwards only. | ||||||||
Year Ending | Net Operating | Year of | ||||||
December 31, | Loss: | Expiration: | ||||||
2013 | $ | 5,600,000 | 2033 | |||||
2012 | 2,850,000 | 2032 | ||||||
2011 | 2,427,000 | 2031 | ||||||
2010 | 1,799,000 | 2030 | ||||||
2009 | 1,750,000 | 2029 | ||||||
2008 | 1,308,000 | 2028 | ||||||
2007 | 429,000 | 2027 | ||||||
2006 | 476,000 | 2026 | ||||||
2005 | 414,000 | 2025 | ||||||
$ | 17,053,000 | |||||||
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] | ' | |||||||
The tax provision differs from the expense that would result from applying Federal statutory rates to income before income taxes due to the effect of state income taxes and because certain expenses are deducted for financial reporting that are not deductible for tax purposes. | ||||||||
2013 | 2012 | |||||||
Tax Benefit of 34% | $ | -2,300,000 | $ | -1,148,400 | ||||
Increase (Decrease) in Income Taxes Resulting from: | ||||||||
State Income Tax Benefit, Net of Federal Tax | -245,631 | -134,458 | ||||||
Nondeductible Expenses | 1,126,943 | 175,851 | ||||||
Valuation Allowance | 1,418,688 | 1,107,007 | ||||||
Total | $ | - | $ | - | ||||
Taiwan [Member] | ' | |||||||
Income Tax Disclosure [Abstract] | ' | |||||||
Schedule of Deferred Tax Assets and Liabilities [Table Text Block] | ' | |||||||
RECONCILIATION OF DEFERRED TAX ASSET/(LIABILITIES) | ||||||||
Deferred Tax Assets | 2013 | |||||||
Balance at Beginning of Year | $ | 94,785 | ||||||
Temporary Difference | -1,580 | |||||||
Foreign currency difference | 66,993 | |||||||
Balance at End of Year | $ | 160,198 | ||||||
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] | ' | |||||||
Temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities and VAT tax reporting system and operating loss carryforwards that create deferred tax assets and liabilities are as follows: | ||||||||
December 31, 2013 | ||||||||
US Dollar | ||||||||
Tax Operating Income – Taiwan | $ | -21,267 | ||||||
Temporary Difference: | ||||||||
VAT reporting system – Sales cut-off | -63,123 | |||||||
VAT reporting system – Cost & expenses cut-off | -87,192 | |||||||
Provision of Bad Debt | -109,106 | |||||||
Research & Development | -183,387 | |||||||
Permanent Difference: | ||||||||
Non-deductible expenses | -4,397 | |||||||
Adjusted Net Loss Before Tax – Taiwan | $ | -468,472 | ||||||
Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] | ' | |||||||
Income tax expense (benefits) for the years ended December 31, 2013 and 2012 is summarized as followings: | ||||||||
2013 | 2012 | |||||||
Current: | ||||||||
Provision for Federal Income Tax (34%) | $ | $ | — | |||||
Provision for TCIT (17%) | 6,007 | |||||||
Provision for Undistributed Earnings Tax (10%) | — | |||||||
Increase (Decrease) in Income Taxes Resulting from: | ||||||||
Pre-acquisition TCIT | — | |||||||
Temporary Difference | 1,580 | -88,509 | ||||||
Income Tax Expenses (Benefit) | $ | 1,580 | $ | -82,502 | ||||
EARNINGS_LOSS_PER_SHARE_Tables
EARNINGS (LOSS) PER SHARE (Tables) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Earnings Per Share [Abstract] | ' | |||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | ' | |||||||
Total common stock equivalents that could be convertible into common stock were 9,860,296 and 7,835,731 for 2013 and 2012 , respectively. | ||||||||
2013 | 2012 | |||||||
Basic EPS | ||||||||
Net Loss | $ | -6,801,714 | $ | -3,841,927 | ||||
Weighted Average Shares | 24,735,921 | 19,077,341 | ||||||
Basic Loss Per Share | $ | -0.27 | $ | -0.2 | ||||
SUMMARY_OF_SIGNIFICANT_ACCOUNT3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Accounting Policies [Line Items] | ' | ' |
Trade receivables, gross | $870,114 | $2,097,668 |
Allowance for doubtful accounts | -497,527 | -138,869 |
Trade receivables, net | $372,587 | $1,958,799 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Accounting Policies [Line Items] | ' | ' |
Notes receivables | $3,413 | $6,255 |
Restricted cash | 1,160,688 | 447,206 |
Deposits-current | 135,727 | 415,108 |
Prepaid expenses and other current assets | 156,065 | 224,365 |
Other current assets | $295,205 | $645,728 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) (Trademarks [Member], USD $) | Dec. 31, 2013 |
Trademarks [Member] | ' |
Accounting Policies [Line Items] | ' |
2014 | $20,000 |
2015 | 20,000 |
2016 | 20,000 |
2017 | 20,000 |
Thereafter | $66,667 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Accounting Policies [Line Items] | ' | ' |
Deposits- long-term | $10,836 | $10,836 |
Deferred tax assets | 160,198 | 94,785 |
Deferred Finance Costs (Net of Amortization) | 170,718 | 0 |
Other assets | $341,752 | $105,621 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Accounting Policies [Line Items] | ' | ' |
Accounts Payable | $688,130 | $673,173 |
Accrued Expenses | 1,651,419 | 1,674,258 |
Income Tax Payable | 2,183 | 53,784 |
Deferred Revenue | 16,970 | 55,573 |
Accounts and Other Payables | $2,358,702 | $2,456,788 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 5) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Accounting Policies [Line Items] | ' | ' |
Net Revenues | $608,157 | $731,908 |
United States [Member] | ' | ' |
Accounting Policies [Line Items] | ' | ' |
Net Revenues | 487,475 | ' |
Net Assets | 562,264 | ' |
Asia [Member] | ' | ' |
Accounting Policies [Line Items] | ' | ' |
Net Revenues | 2,607,501 | ' |
Net Assets | -40,455 | ' |
Mexico [Member] | ' | ' |
Accounting Policies [Line Items] | ' | ' |
Net Revenues | 250,241 | ' |
Net Assets | $0 | ' |
SUMMARY_OF_SIGNIFICANT_ACCOUNT9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 6) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Accounting Policies [Line Items] | ' | ' |
Revenue | $3,345,217 | $3,608,998 |
Cost of Revenue | 2,729,350 | 3,230,495 |
Gross Profit | 615,867 | 378,503 |
Depreciation and Amort. | 221,902 | 218,229 |
General & Administrative | 6,574,682 | 4,223,455 |
(Loss) from Operations | -6,799,815 | -3,844,952 |
(Loss) Before Income Taxes | -6,871,050 | -3,924,429 |
Benefit For Income Taxes | 69,336 | 82,502 |
Net Loss | -6,801,714 | -3,841,927 |
Iveda Solutions Inc [Member] | ' | ' |
Accounting Policies [Line Items] | ' | ' |
Revenue | 737,716 | ' |
Cost of Revenue | 731,770 | ' |
Gross Profit | 5,946 | ' |
Depreciation and Amort. | 210,787 | ' |
General & Administrative | 5,464,288 | ' |
Impairment of Goodwill | 841,000 | ' |
(Loss) from Operations | -6,510,129 | ' |
Other Income (Expense) | -76,686 | ' |
(Loss) Before Income Taxes | -6,586,815 | ' |
Benefit For Income Taxes | 0 | ' |
Net Loss | -6,586,815 | ' |
Megasys [Member] | ' | ' |
Accounting Policies [Line Items] | ' | ' |
Revenue | 2,607,501 | ' |
Cost of Revenue | 1,997,580 | ' |
Gross Profit | 609,921 | ' |
Depreciation and Amort. | 11,115 | ' |
General & Administrative | 888,492 | ' |
Impairment of Goodwill | 0 | ' |
(Loss) from Operations | -289,686 | ' |
Other Income (Expense) | 5,451 | ' |
(Loss) Before Income Taxes | -284,235 | ' |
Benefit For Income Taxes | 69,336 | ' |
Net Loss | -214,899 | ' |
Condensed Consolidated [Member] | ' | ' |
Accounting Policies [Line Items] | ' | ' |
Revenue | 3,345,217 | ' |
Cost of Revenue | 2,729,350 | ' |
Gross Profit | 615,867 | ' |
Depreciation and Amort. | 221,902 | ' |
General & Administrative | 6,352,780 | ' |
Impairment of Goodwill | 841,000 | ' |
(Loss) from Operations | -6,799,815 | ' |
Other Income (Expense) | -71,235 | ' |
(Loss) Before Income Taxes | -6,871,050 | ' |
Benefit For Income Taxes | 69,336 | ' |
Net Loss | ($6,801,714) | ' |
Recovered_Sheet1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 7) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Accounting Policies [Line Items] | ' | ' |
Revenues | $3,345,217 | $3,608,998 |
Operating earnings (loss) | -6,799,815 | -3,844,952 |
Property and equipment | 471,182 | 516,981 |
Additions to long-lived assets | 157,230 | 338,825 |
Inventory | 331,437 | 123,021 |
Total Assets | 3,679,246 | 4,919,484 |
United States [Member] | ' | ' |
Accounting Policies [Line Items] | ' | ' |
Revenues | 737,715 | 767,841 |
Operating earnings (loss) | -6,510,129 | -3,348,419 |
Property and equipment | 437,410 | 488,648 |
Additions to long-lived assets | 129,222 | 333,432 |
Inventory | 126,403 | 26,794 |
Total Assets | 1,175,874 | 1,727,017 |
Republic of China (Taiwan) [Member] | ' | ' |
Accounting Policies [Line Items] | ' | ' |
Revenues | 2,672,928 | 2,843,889 |
Operating earnings (loss) | -289,686 | -495,830 |
Property and equipment | 33,772 | 28,333 |
Additions to long-lived assets | 28,008 | 5,393 |
Inventory | 205,034 | 96,227 |
Total Assets | 2,503,372 | 3,192,467 |
Elimination of intersegment revenues [Member] | ' | ' |
Accounting Policies [Line Items] | ' | ' |
Revenues | -65,426 | -2,732 |
Operating earnings (loss) | $0 | ($703) |
Recovered_Sheet2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) | 12 Months Ended | 12 Months Ended | |||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | |
USD ($) | USD ($) | Long-term Debt [Member] | Private Placement [Member] | Accounts Receivable [Member] | Customer One [Member] | Customer Two [Member] | Minimum [Member] | Maximum [Member] | |
USD ($) | USD ($) | TWD | |||||||
Accounting Policies [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accumulated Deficit | $21,801,790 | $15,000,076 | ' | ' | ' | ' | ' | ' | ' |
Cash CDIC Insured Amount | ' | ' | ' | ' | ' | ' | ' | ' | 3,000,000 |
Concentration Risk Customer Percentage | 10.00% | 10.00% | ' | ' | 0.00% | 69.00% | 54.00% | ' | ' |
Finite-Lived Intangible Asset, Useful Life | ' | ' | ' | ' | ' | ' | ' | '6 months | '10 years |
Goodwill, Impairment Loss | 841,000 | 0 | ' | ' | ' | ' | ' | ' | ' |
Allocated Share-based Compensation Expense | 336,402 | 248,072 | ' | ' | ' | ' | ' | ' | ' |
Proceeds From Issuance Of Common Stock | 5,210,479 | 2,189,189 | ' | 1,735,000 | ' | ' | ' | ' | ' |
Long-term Debt, Gross | 425,000 | ' | 30,000,000 | ' | ' | ' | ' | ' | ' |
Bridge Loan | ' | ' | 3,600,000 | ' | ' | ' | ' | ' | ' |
Time Sharing Transactions, Allowance for Uncollectible Accounts | 31,594 | 22,554 | ' | ' | ' | ' | ' | ' | ' |
Allowance For Collectable Accounts Receivable | 465,933 | 116,315 | ' | ' | ' | ' | ' | ' | ' |
Depreciation | 201,298 | 197,557 | ' | ' | ' | ' | ' | ' | ' |
Property, Plant and Equipment, Useful Life | ' | ' | ' | ' | ' | ' | ' | '3 years | '7 years |
Deferred Tax Assets, Gross, Total | $160,198 | ' | ' | ' | ' | ' | ' | ' | ' |
RELATED_PARTIES_Details
RELATED PARTIES (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Related Party Transaction [Line Items] | ' | ' |
Due to Related Parties | $175,000 | $345,000 |
Less Current Portion | -100,000 | -336,605 |
Less: Debt Discount | -4,886 | -8,395 |
Total Long-Term | 70,114 | 0 |
June 20, 2012 [Member] | ' | ' |
Related Party Transaction [Line Items] | ' | ' |
Due to Related Parties | 0 | 200,000 |
September 26, 2011 [Member] | ' | ' |
Related Party Transaction [Line Items] | ' | ' |
Due to Related Parties | 0 | 45,000 |
November 19, 2012 [Member] | ' | ' |
Related Party Transaction [Line Items] | ' | ' |
Due to Related Parties | 100,000 | 100,000 |
December 20, 2013 [Member] | ' | ' |
Related Party Transaction [Line Items] | ' | ' |
Due to Related Parties | $75,000 | $0 |
RELATED_PARTIES_Details_Textua
RELATED PARTIES (Details Textual) (USD $) | 12 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | ||||
Dec. 31, 2013 | Sep. 26, 2011 | Dec. 31, 2013 | Jun. 20, 2012 | Dec. 31, 2013 | Jun. 20, 2012 | Nov. 19, 2012 | Nov. 19, 2012 | Dec. 20, 2013 | Dec. 20, 2013 | |
Shareholders [Member] | Shareholders [Member] | Debt Agreement 1 [Member] | Debt Agreement 1 [Member] | Debt Agreement 1 [Member] | Debt Agreement 2 [Member] | Debt Agreement 2 [Member] | Debt Agreement 3 [Member] | Debt Agreement 3 [Member] | ||
Other Board of Directors [Member] | Different Board of Directors [Member] | Officers [Member] | ||||||||
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Face Amount | ' | ' | ' | $200,000 | ' | $200,000 | ' | $100,000 | $75,000 | $75,000 |
Debt Instrument, Interest Rate at Period End | ' | ' | ' | ' | ' | 12.00% | ' | 10.00% | ' | ' |
Debt Instrument, Maturity Date | ' | 25-Mar-13 | ' | ' | ' | 20-Jun-13 | ' | 19-May-13 | ' | ' |
Issuance of Warrants to Purchase Common Stock | ' | ' | ' | 20,000 | ' | ' | 10,000 | ' | 6,818 | ' |
Warrants Exercise Price | ' | $1.10 | ' | $1 | ' | ' | $1.10 | ' | $1.65 | ' |
Amortization of Debt Discount (Premium) | 27,148 | 16,909 | ' | 16,789 | ' | ' | ' | ' | 4,886 | ' |
Debt Instrument, Convertible, Conversion Price | $1.50 | ' | ' | $1 | ' | ' | $1.10 | ' | ' | ' |
Debt Instrument, Convertible, Remaining Discount Amortization Period | '5 years | ' | ' | '12 months | ' | ' | ' | ' | ' | ' |
Promissory Note Agreement | ' | 45,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Interest Payable For Warrants | ' | 45,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Long-term Debt, Maturities, Repayment Terms | ' | '12 month | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Conversion, Description | ' | 'Promissory Note Extension Agreement was signed to extend the maturity date of one of the $45,000 notes to March 25, 2013. | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Periodic Payment, Principal | ' | ' | 45,000 | ' | 200,000 | ' | ' | ' | ' | ' |
Debt Instrument, Periodic Payment, Interest | ' | ' | $3,417.53 | ' | $24,000 | ' | ' | ' | ' | ' |
SHORTTERM_DEBT_Details
SHORT-TERM DEBT (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Short-term Debt [Line Items] | ' | ' |
Notes Payable | $0 | $182,839 |
Short-term Debt, Total | 60,291 | 802,122 |
Bank of Shanghai [Member] | ' | ' |
Short-term Debt [Line Items] | ' | ' |
Short Term Bank Loans | 60,291 | 132,097 |
Chailease Bank [Member] | ' | ' |
Short-term Debt [Line Items] | ' | ' |
Short Term Bank Loans | $0 | $488,025 |
SHORTTERM_DEBT_Details_Textual
SHORT-TERM DEBT (Details Textual) | 12 Months Ended |
Dec. 31, 2013 | |
Short-term Debt [Line Items] | ' |
Debt Instrument, Interest Rate, Stated Percentage | 9.50% |
Bank of Shanghai [Member] | ' |
Short-term Debt [Line Items] | ' |
Debt Instrument, Maturity Date | 26-Nov-14 |
Debt Instrument, Interest Rate, Stated Percentage | 5.50% |
Chailease Bank [Member] | ' |
Short-term Debt [Line Items] | ' |
Debt Instrument, Maturity Date | 31-May-14 |
Maximum [Member] | Chailease Bank [Member] | ' |
Short-term Debt [Line Items] | ' |
Debt Instrument, Interest Rate, Stated Percentage | 3.24% |
Minimum [Member] | Chailease Bank [Member] | ' |
Short-term Debt [Line Items] | ' |
Debt Instrument, Interest Rate, Stated Percentage | 1.00% |
CONVERTIBLE_DEBENTURES_Details
CONVERTIBLE DEBENTURES (Details Textual) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Debt Instrument, Term | '5 years | ' |
Debt Instrument, Convertible, Conversion Price | $1.50 | ' |
Debt Instrument, Interest Rate, Stated Percentage | 9.50% | ' |
Warrant share Issued | 38,636 | ' |
Investment Warrants, Exercise Price | $1.65 | ' |
Warrant share Issued For Financing Cost | 38,636 | ' |
Warrant Value Issued For Financing Cost | $3,313 | ' |
Long-term Debt, Gross | 425,000 | ' |
Amortization of Debt Discount (Premium) | 27,148 | ' |
Debt Instrument, Increase, Accrued Interest | 2,096 | ' |
Debt Instrument, Unamortized Discount | 4,886 | 8,395 |
Debt Instrument, Convertible, Remaining Discount Amortization Period | '5 years | ' |
Derivative Liability, Current | 39,804 | 0 |
Derivative, Loss on Derivative | 241 | 0 |
Accrued Contingent Payable In Cash | 50,000 | ' |
Accrued Contingent Payable In Warrants | 100,000 | ' |
Fair Value Of Warrants Due | 8,642 | ' |
Convertible Debt, Total | 350,000 | 0 |
Payment of Financing and Stock Issuance Costs, Total | 111,657 | ' |
Warrant [Member] | ' | ' |
Debt Instrument, Term | '5 years | ' |
Convertible Debt, Fair Value Disclosures | 27,608 | ' |
Interest Expense [Member] | ' | ' |
Debt Instrument, Unamortized Discount | $49,500 | ' |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) (USD $) | Dec. 31, 2013 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' |
Derivative liability | $39,804 |
Fair Value, Inputs, Level 1 [Member] | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' |
Derivative liability | 0 |
Fair Value, Inputs, Level 2 [Member] | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' |
Derivative liability | 0 |
Fair Value, Inputs, Level 3 [Member] | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' |
Derivative liability | $39,804 |
FAIR_VALUE_MEASUREMENTS_Detail1
FAIR VALUE MEASUREMENTS (Details 1) (Fair Value, Inputs, Level 3 [Member], USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Fair Value, Inputs, Level 3 [Member] | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' |
Beginning Balance | $0 |
Issued | 39,563 |
(Gains) losses during the period | 241 |
Settlements | 0 |
Ending Balance | $39,804 |
FAIR_VALUE_MEASUREMENTS_Detail2
FAIR VALUE MEASUREMENTS (Details Textual) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' |
Debt Instrument, Convertible, Conversion Price | $1.50 |
Investment Warrants, Exercise Price | $1.65 |
Share Price | $1.10 |
Fair Value Inputs, Discount Rate | 1.75% |
Fair Value Assumptions, Expected Volatility Rate | 20.76% |
Fair value Assumption Maturity Date | 'December 2018 |
LONGTERM_DEBT_Details
LONG-TERM DEBT (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Debt Instrument [Line Items] | ' | ' |
Loan from Chailease Finance Co., Ltd. with an interest rate at 5% per annum, due on May 30, 2015 | $135,208 | $0 |
Loan from Taipei Fubon Bank with an interest rate at 5.5% per annum, due on November 26, 2014 | 62,942 | 140,764 |
Other loan | 2,638 | 2,638 |
Convertible debenture | 350,000 | 0 |
Long-term Debt, Total | 550,788 | 143,402 |
Less: Current portion | -164,156 | -75,707 |
Less: Debt discount | -22,262 | 0 |
Long-term Debt, Excluding Current Maturities | $364,370 | $67,695 |
LONGTERM_DEBT_Details_1
LONG-TERM DEBT (Details 1) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Debt Instrument [Line Items] | ' | ' |
2014 | $164,156 | ' |
2015 | 36,632 | ' |
2016 | 350,000 | ' |
Long-term Debt, Total | $550,788 | $143,402 |
OPERATING_LEASES_Details
OPERATING LEASES (Details) (USD $) | Dec. 31, 2013 |
Operating Leased Assets [Line Items] | ' |
2014 | $330,451 |
2015 | 144,563 |
2016 | 113,835 |
Total | $588,849 |
OPERATING_LEASES_Details_Textu
OPERATING LEASES (Details Textual) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Operating Leased Assets [Line Items] | ' | ' | ' |
Lease Expiration Date | 31-Oct-16 | ' | ' |
Operating Leases, Rent Expense | ' | $107,885 | $95,635 |
Non-Cancellable Data Center [Member] | ' | ' | ' |
Operating Leased Assets [Line Items] | ' | ' | ' |
Operating Leases, Rent Expense | 192,181 | 170,776 | ' |
Non-Cancellable Data Center One [Member] | ' | ' | ' |
Operating Leased Assets [Line Items] | ' | ' | ' |
Lease Expiration Date | 30-Sep-14 | ' | ' |
Operating Leases, Rent Expense, Minimum Rentals | 7,298 | ' | ' |
Non-Cancellable Data Center Two [Member] | ' | ' | ' |
Operating Leased Assets [Line Items] | ' | ' | ' |
Lease Expiration Date | 30-Sep-14 | ' | ' |
Operating Leases, Rent Expense, Minimum Rentals | 2,575 | ' | ' |
Non-Cancellable Data Center Three [Member] | ' | ' | ' |
Operating Leased Assets [Line Items] | ' | ' | ' |
Lease Expiration Date | 31-Mar-15 | ' | ' |
Operating Leases, Rent Expense, Minimum Rentals | 5,826 | ' | ' |
Maximum [Member] | ' | ' | ' |
Operating Leased Assets [Line Items] | ' | ' | ' |
Operating Leases, Rent Expense, Minimum Rentals | 10,836 | ' | ' |
Minimum [Member] | ' | ' | ' |
Operating Leased Assets [Line Items] | ' | ' | ' |
Operating Leases, Rent Expense, Minimum Rentals | 8,669 | ' | ' |
PREFERRED_STOCK_Details_Textua
PREFERRED STOCK (Details Textual) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Preferred Stock [Line Items] | ' | ' |
Preferred Stock, Shares Authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred Stock, Par or Stated Value Per Share (in dollars per share) | $0.00 | $0.00 |
EQUITY_Details_Textual
EQUITY (Details Textual) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Equity [Line Items] | ' | ' |
Stock Issued During Period Shares Private Placement | 5,093,799 | 2,426,319 |
Stock Issued During Period, Price Per Share (in dollars per share) | $1 | $1 |
Adjustments to Additional Paid in Capital, Stock Issued, Issuance Costs (in dollars) | $606,320 | $317,465 |
Private Placement [Member] | ' | ' |
Equity [Line Items] | ' | ' |
Proceeds from Issuance of Private Placement | $723,000 | ' |
Stock Issued During Period, Price Per Share (in dollars per share) | $1.10 | ' |
STOCK_OPTION_PLAN_AND_WARRANTS2
STOCK OPTION PLAN AND WARRANTS (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ' | ' |
Shares, Outstanding at Beginning of Year | 5,038,512 | 3,663,179 |
Shares, Granted | 1,169,500 | 1,529,333 |
Shares, Exercised | -252,190 | 0 |
Shares, Forfeited or Canceled | -262,500 | -154,000 |
Shares, Outstanding at End of Year | 5,693,322 | 5,038,512 |
Shares, Options Exercisable at Year-End | 4,449,986 | 3,748,003 |
Weighted-Average Fair Value of Options Granted During the Year | $0.37 | $0.28 |
Weighted - Average Exercise Price, Outstanding at Beginning of Year | $0.91 | $0.81 |
Weighted - Average Exercise Price, Granted | $1.74 | $1.16 |
Weighted - Average Exercise Price, Exercised | $0.97 | $0 |
Weighted - Average Exercise Price, Forfeited or Canceled | $1.08 | $1.01 |
Weighted - Average Exercise Price, Outstanding at End of Year | $1.07 | $0.91 |
Weighted - Average Exercise Price, Options Exercisable at Year-End | $1.37 | $1.22 |
STOCK_OPTION_PLAN_AND_WARRANTS3
STOCK OPTION PLAN AND WARRANTS (Details 1) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ' |
Range of Exercise Prices (Minimum) (in dollars per share) | $0.10 |
Range of Exercise Prices (Maximum) (in dollars per share) | $1.80 |
Number of Options, Outstanding at December 31, 2013 (in shares) | 5,693,322 |
Weighted - Average Remaining Contractual Life (in years) | '7 years 6 months |
Options Outstanding, Weighted -Average Exercise Price (in dollars per share) | $1.07 |
Number of Options, Exercisable at December 30, 2013 (in shares) | 4,449,986 |
Options Exercisable, Weighted - Average Exercise Price (in dollars per share) | $1.37 |
STOCK_OPTION_PLAN_AND_WARRANTS4
STOCK OPTION PLAN AND WARRANTS (Details 2) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ' | ' |
Expected Life | '5 years | '5 years |
Dividend Yield | 0.00% | 0.00% |
Expected Volatility | 25.00% | 26.00% |
Risk-Free Interest Rate | 1.36% | 0.80% |
STOCK_OPTION_PLAN_AND_WARRANTS5
STOCK OPTION PLAN AND WARRANTS (Details 3) (Warrant [Member], USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Warrant [Member] | ' | ' |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ' | ' |
Shares, Outstanding at Beginning of year (in shares) | 2,797,219 | 1,612,778 |
Shares, Granted (in shares) | 1,086,422 | 1,434,441 |
Shares, Excercised (in shares) | 0 | 0 |
Shares, Forfeited or Canceled (in shares) | 0 | -250,000 |
Shares, Outstanding at end of Year (in shares) | 3,883,641 | 2,797,219 |
Warrants Redeemable at End of Year December 31, 2013 (in shares) | 3,883,641 | 2,797,219 |
Weighted-Average Fair Value of Warrants Issued During the Year (in dollars per share) | $0.33 | $0.31 |
Weighted - Average Exercise Price, Outstanding at Beginning of year (in dollars per share) | $1.33 | $0.77 |
Weighted - Average Exercise Price, Granted (in dollars per share) | $1.24 | $1.07 |
Weighted - Average Exercise Price, Exercised (in dollars per share) | $0 | $0 |
Weighted - Average Exercise Price, Forfeited or Canceled (in dollars per share) | $0 | $1 |
Weighted - Average Exercise Price, Outstanding at end of Year (in dollars per share) | $1 | $1.33 |
Warrants Redeemable, Weighted - Average Redemption Price (in dollar per share) | $1 | $1.33 |
STOCK_OPTION_PLAN_AND_WARRANTS6
STOCK OPTION PLAN AND WARRANTS (Details 4) (Warrant [Member], USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Warrant [Member] | ' |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ' |
Range of Exercise Prices (Minimum) (in dollar per share) | $0.10 |
Range of Exercise Prices (Maximum) (in dollar per share) | $1.65 |
Number of Warrants, Outstanding at December 31, 2013 (in shares) | 3,883,641 |
Warrants Outstanding, Weighted - Average Remaining Contractual Life (in years) | '2 years 7 months 6 days |
Warrants Outstanding, Weighted - Average Redemption Price (in dollar per share) | $1 |
Warrants Redeemable at End of Year December 31, 2013 (in shares) | 3,883,641 |
Warrants Redeemable, Weighted - Average Redemption Price (in dollar per share) | $1 |
STOCK_OPTION_PLAN_AND_WARRANTS7
STOCK OPTION PLAN AND WARRANTS (Details 5) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ' | ' |
Expected Volatility | 20.76% | ' |
Warrant [Member] | ' | ' |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ' | ' |
Expected Life | '3 years 9 months 18 days | '3 years 9 months 18 days |
Dividend Yield | 0.00% | 0.00% |
Expected Volatility | 21.00% | 24.00% |
Risk-Free Interest Rate | 1.25% | 1.65% |
STOCK_OPTION_PLAN_AND_WARRANTS8
STOCK OPTION PLAN AND WARRANTS (Details Textual) (USD $) | 12 Months Ended | 0 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | |||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Oct. 15, 2009 | Dec. 31, 2013 | Jan. 18, 2010 | Dec. 31, 2011 | Dec. 31, 2013 | |
2009 Option Plan [Member] | 2009 Option Plan [Member] | 2010 Option Plan [Member] | 2010 Option Plan [Member] | 2010 Option Plan [Member] | ||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period | ' | ' | ' | 1,500,000 | 938,039 | 1,000,000 | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized | ' | ' | ' | ' | ' | ' | 3,000,000 | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance | 5,693,322 | 5,038,512 | 3,663,179 | ' | ' | ' | ' | 4,755,283 |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Total | $486,750 | ' | ' | ' | ' | ' | ' | ' |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | '3 years | ' | ' | ' | ' | ' | ' | ' |
Class of Warrant or Right, Outstanding | 3,883,641 | ' | ' | ' | ' | ' | ' | ' |
Defined Contribution Plan, Employers Matching Contribution, Annual Vesting Percentage | 100.00% | ' | ' | ' | ' | ' | ' | ' |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Income Tax Disclosure [Line Items] | ' | ' |
Tax Operating Loss Carryforward - USA | $6,830,000 | $4,665,000 |
Accelerated Depreciation - USA | -61,300 | -57,900 |
Valuation Allowance - USA | -6,768,700 | -4,607,100 |
Deferred Tax Assets, Net | $0 | $0 |
INCOME_TAXES_Details_1
INCOME TAXES (Details 1) (USD $) | 12 Months Ended | ||||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 | Dec. 31, 2007 | Dec. 31, 2006 | Dec. 31, 2005 | |
Income Tax Disclosure [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net Operating Loss | $5,600,000 | $2,850,000 | $2,427,000 | $1,799,000 | $1,750,000 | $1,308,000 | $429,000 | $476,000 | $414,000 |
Year of Expiration | '2033 | '2032 | '2031 | '2030 | '2029 | '2028 | '2027 | '2026 | '2025 |
Total | $17,053,000 | ' | ' | ' | ' | ' | ' | ' | ' |
INCOME_TAXES_Details_2
INCOME TAXES (Details 2) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Tax Disclosure [Line Items] | ' | ' |
Tax Benefit of 34% | ($2,300,000) | ($1,148,400) |
Increase (Decrease) in Income Taxes Resulting from: | ' | ' |
State Income Tax Benefit, Net of Federal Tax | -245,631 | -134,458 |
Nondeductible Expenses | 1,126,943 | 175,851 |
Valuation Allowance | 1,418,688 | 1,107,007 |
Total | ($69,336) | ($82,502) |
INCOME_TAXES_Details_3
INCOME TAXES (Details 3) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Tax Disclosure [Line Items] | ' | ' |
Tax Operating Income - Taiwan | ($245,631) | ($134,458) |
Permanent Difference: | ' | ' |
Non-deductible expenses | 1,126,943 | 175,851 |
Adjusted Net Loss Before Tax - Taiwan | -6,871,050 | -3,924,429 |
Taiwan [Member] | ' | ' |
Income Tax Disclosure [Line Items] | ' | ' |
Tax Operating Income - Taiwan | -21,267 | ' |
Temporary Difference: | ' | ' |
VAT reporting system - Sales cut-off | -63,123 | ' |
VAT reporting system - Cost & expenses cut-off | -87,192 | ' |
Provision of Bad Debt | -109,106 | ' |
Research & Development | -183,387 | ' |
Permanent Difference: | ' | ' |
Non-deductible expenses | -4,397 | ' |
Adjusted Net Loss Before Tax - Taiwan | ($468,472) | ' |
INCOME_TAXES_Details_4
INCOME TAXES (Details 4) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Increase (Decrease) in Income Taxes Resulting from: | ' | ' |
Income Tax Expenses (Benefit) | ($69,336) | ($82,502) |
Taiwan [Member] | ' | ' |
Income Tax [Line Items] | ' | ' |
Provision for Federal Income Tax (34%) | 0 | 0 |
Provision for TCIT (17%) | 0 | 6,007 |
Provision for Undistributed Earnings Tax (10%) | 0 | 0 |
Increase (Decrease) in Income Taxes Resulting from: | ' | ' |
Pre-acquisition TCIT | 0 | 0 |
Temporary Difference | 1,580 | -88,509 |
Income Tax Expenses (Benefit) | $1,580 | ($82,502) |
INCOME_TAXES_Details_5
INCOME TAXES (Details 5) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Income Tax [Line Items] | ' | ' |
Balance at Beginning of Year | $160,198 | ' |
Balance at End of Year | 160,198 | ' |
Taiwan [Member] | ' | ' |
Income Tax [Line Items] | ' | ' |
Balance at Beginning of Year | 160,198 | 94,785 |
Temporary Difference | -1,580 | ' |
Foreign currency difference | 66,993 | ' |
Balance at End of Year | $160,198 | $94,785 |
INCOME_TAXES_Details_Textual
INCOME TAXES (Details Textual) (USD $) | 12 Months Ended | ||||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 | Dec. 31, 2007 | Dec. 31, 2006 | Dec. 31, 2005 | |
Income Tax Disclosure [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Operating Loss Carryforwards, Valuation Allowance, Total | $2,100,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Operating Loss Carryforwards | 5,600,000 | 2,850,000 | 2,427,000 | 1,799,000 | 1,750,000 | 1,308,000 | 429,000 | 476,000 | 414,000 |
Corporate Income Tax Rate | 17.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Profit Retention Tax On Undistributed Earnings | 10.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Tax Benefit Percentage | 34.00% | ' | ' | ' | ' | ' | ' | ' | ' |
State and Local Jurisdiction [Member] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Income Tax Disclosure [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Operating Loss Carryforwards | 17,000,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Operating Loss Carryforwards Expire Date | 'expire in 2025 | ' | ' | ' | ' | ' | ' | ' | ' |
Arizona [Member] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Income Tax Disclosure [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Operating Loss Carryforwards | 9,624,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Operating Loss Carryforwards Expire Date | 'expire in 2013 | ' | ' | ' | ' | ' | ' | ' | ' |
California [Member] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Income Tax Disclosure [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Operating Loss Carryforwards | 1,890,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Operating Loss Carryforwards Expire Date | 'expire in 2013 | ' | ' | ' | ' | ' | ' | ' | ' |
Minnesota [Member] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Income Tax Disclosure [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Operating Loss Carryforwards | $105,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Operating Loss Carryforwards Expire Date | 'expire in 2013 | ' | ' | ' | ' | ' | ' | ' | ' |
EARNINGS_LOSS_PER_SHARE_Detail
EARNINGS (LOSS) PER SHARE (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Basic EPS | ' | ' |
Net Loss | ($6,801,714) | ($3,841,927) |
Weighted Average Shares (in shares) | 24,735,921 | 19,077,341 |
Basic Loss Per Share (in dollars per share) | ($0.27) | ($0.20) |
EARNINGS_LOSS_PER_SHARE_Detail1
EARNINGS (LOSS) PER SHARE (Details Textual) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 9,860,296 | 7,835,731 |
CONTINGENT_LIABILITIES_Details
CONTINGENT LIABILITIES (Details Textual) (Megasys [Member], USD $) | Dec. 31, 2013 |
Megasys [Member] | ' |
Purchase Commitment, Excluding Long-term Commitment [Line Items] | ' |
Contingent Liabilities | $2,041,571 |
SUBSEQUENT_EVENTS_UNAUDITED_De
SUBSEQUENT EVENTS (UNAUDITED) (Details Textual) (Subsequent Event [Member], USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Subsequent Event [Member] | ' |
Subsequent Event [Line Items] | ' |
Proceeds From Issuance Of Private Placement | $1,310,000 |