SecProbe.io

January 23, 2012
Via E-mail
Lynne Phillis, Controller
Iveda Solutions, Inc.
1201 South Alma School Road
Suite 8500 Mesa, Arizona  85210

Re: Iveda Solutions, Inc.   File No. 0-53285
April 30, 2011 Form 8-K/A Filed July 15, 2011 June 30, 2011 Form 10-Q Filed August 15, 2011
September 30, 2011 Form 10-Q Filed November 14, 2011

Dear Ms. Phillis:
 We have reviewed your filings and your November 3, 2011 and December 29, 2011
response letters and have the following comments.  In some of our comments, we may ask you to
provide us with information so we may better understand your disclosure . Please respond to this
letter within ten business days by providing th e requested information and amendments or by
advising us when you will provide the requested  response.  If you do not believe our comments
apply to your facts and circumstan ces, please tell us why in your  response. After reviewing the
information you provide in response to these comments, we may have additional comments.
  Prior Comment 3

1. In an 8-K filed January 24, 2011, you announced the Megasys acquisition and stated that
“MEGAsys has established relationships with  key customers in Taiwan and neighboring
countries including the Taiwan Stock Exch ange, Taiwan’s International Airport,
Shanghai Commercial and Sa vings Bank, Taipei County Po lice Bureau and Traffic
Control, Beijing Capital Airport, Ho ng Kong HSBC ATM System , China HSBC Bank
(Guangzhou), Malaysia – Prime Ministe r’s Residence, Hong Kong IBM Asia
Headquarters, Regal Hong Kong Hotel, Shangha i China Bank, and Egypt – Pyramids of
Giza.” ASC 805-20-55 -25 contains  specific guidance regarding the need to recognize the
fair value of such acquired identified inta ngibles. However, we understand that only
$20,000 out of the $2.1 million preliminary aggreg ate intangible allocation was allocated
to customer relationships. If the value of acquired customer relationships was estimated
by forecasting the cash flows to be derived from  this asset, then it remains unclear why
the assigned value is only $20,000. It would not appear appropriate to value this asset
based exclusively on projected maintenan ce fees with a 33% customer turnover
assumption while ignoring other cash flows exp ected to be generated from this group of
acquired key customers. Given that you purpos efully identified and touted these key
customers as a benefit of the merger, inve stors may reasonably assume that you pursued
the merger expecting this acquired customer ba se to be a material source of future cash
flows. Your July 7, 2011 and January 11, 2012 pr ess releases are cons istent with this

Ms. Lynne Phillis
January 23, 2012 Page 2 of 4
 understanding and clearly indicate that subs tantial immediate non-maintenance related
cash flows will be generated.  Further, the revenue projections in Exhibit 7.A of your
valuation report presumably in corporate assumed future non-maintenance sales from the
acquired customer relationships. If you exp ect that your final pur chase price allocation
for this asset will be materially revised, then please provide us with relevant details.

2. If you do not expect a material revision in your customer relationship asset allocation,
then please quantify for us the portion of each  projected revenue amount in Exhibit 7.A.
that you assumed would be generated from th e acquired Megasys customer relationships.
Provide a detailed explanation supporting this  assumption. File amendments to your June
30, 2011 and September 30, 2011 Forms 10-Q alerti ng investors that the key customers
touted in your January 24, 2011 Form 8-K ar e not actually expected to generate any
material future revenue and r econcile that assumption, if possi ble, with the key customer
contract information that you reported in  your July 7, 2011 and January 11, 2012 press
releases. This MD&A disclosure would be required given that investors (including
participants in your post-merger private placements) may not understand that the key
customers you highlighted are not expected to provide a material future benefit and that
the historical Megasys operating results are not expected to be indicative of future
operating results. See Section 501.02 of the Financial Reporting Codification.

3. In the Exhibit 2.5 that yo u filed on March 30, 2011, the following terms were fully
described, highlighted in boldface type, a nd assigned specific definitions: Megasys
Products; Megasys Proprietary Rights; a nd Megasys Components. ASC 805-20-55-38
contains specific guidance regarding the need to recognize the fair va lue of such acquired
identified intangibles. However, it is not clea r whether this issue was even addressed in
your valuation report. Your December 29, 2011 letter now suggests that these assets
never existed. In order for us to more fully understand your response, please clarify for us
why both the January 7, 2011 and the March 21, 2011 merger contacts were specifically
drafted to incorporate detail ed definitions for non-existent  technology-based assets. Fully
explain how this conclusion is consistent with the technology and software imbedded in
the Megasys Software System as described on the Megasys website. Disclose the absence
of any Megasys Products, Proprietary Rights or  Components in amendments to your June
30, 2011 and September 30, 2011 Forms 10-Q. This MD&A disclosure would be required given that investor s (including participants in your post-merger private
placements) may not understand that the acq uired technology described in your prior
filings does not actually exist. File the MegaSy s Disclosure Schedule th at is referenced in
the merger contract and reconcile the information therein with your accounting
conclusions. Alternatively, if you now expect that your final purchase price allocation for
this asset will be materially revised, th en provide us with relevant details.

4. We understand that $1.6 million of purchase price was allocated to the 2 million shares of
contingent consideration presumably ba sed on an expectati on that all of the
corresponding financial milestones will be sa tisfied. If you assume that Megasys will
collect at least $1.3 million in net revenue relate d to the SafeCity project, then the fair
value of the underlying customer relationship, contract, and/or technology-based asset
must be recognized pursuant to ASC 805-20-55. Please provide us with your expected

Ms. Lynne Phillis
January 23, 2012 Page 3 of 4
 valuation of this asset. Also, identify the costs that are deducted in calculating “net
revenue” as it applies to the applicat ion of that contractual provision.

5. Please tell us whether any audit procedur es have been applied to the July 14, 2011
valuation report. If so, then please tell us whic h audit firm audited the valuation report. In
this regard, we note the guidance in AU S ection 328 of the Codification of Auditing
Standards.

6. If you are seeking confidential treatment for the valuation report, then please submit a
request that is clearly complia nt with either Rule 83 or 12b24.
 Prior Comment 7

7. Your November 3, 2011 letter stated you woul d provide responsive disclosures however
the required information was not disclosed in your September 30, 2011 Form 10Q. Please
expand MD&A in the amended Form 10Q and in future filings to quantify and explain changes in your Days Sales Outstanding or receivables turnover. E xplain how the age of
your receivables compares with the standa rd payment terms granted to customers.
Disclose whether the paymen t terms of your U.S. and foreign businesses materially
differ. Since the aging of your receivables por tfolio has materially increased, discuss the
extent to which this imp acted your allowance for doubtful accounts and quantify the
allowance amount at each Balance Sheet date . Quantify the amount of receivables over
120 days old and identify the specific fact ors you evaluated in concluding that such
amounts are collectible. Your September 30, 2011 receivables balance comprises 82% of
your reported revenue for the 6 months then -ended. Consequently, it appears that you
have not been able to collect a substantia l amount of your reported sales. Please read
Section 501.13.b.1 of the Financ ial Reporting Codification.
 Prior Comment 6

8. Your November 3, 2011 letter stated you woul d provide responsive disclosures however
the required information was not disclo sed in your September 30, 2011 Form 10Q.
Please expand Note 1 in the amended Form 10Q to provide the reportable segment disclosures for your Iveda and your Me gaSys segments pursuant to ASC 280-10.
 Prior Comment 8

9. Your November 3, 2011 letter stated you woul d provide responsive disclosures; however,
the required information was not disclo sed in your September 30, 2011 Form 10Q.
Please expand MD&A in the amended Form 10Q to disclose whether there are any legal
or economic factors that materially impact your ability to transf er funds between your
domestic and foreign businesses. If ther e are any circumstances under which such
transfers may be restricted or  otherwise infeasible, then your liquidity disclosure in
MD&A should be disaggregated to separately analyze the liquidity of your domestic and
foreign businesses. Please read Section 501.09.b of the Financial Reporting Codification.

Ms. Lynne Phillis
January 23, 2012 Page 4 of 4
 June 30 and September 30, 2011 Forms 10-Q

10. Based on our December 15, 2011 conference call a nd the data in Exhibit 7.A of the July
14, 2011 valuation report, we understand that you expected a subs tantial decline in
Megasys revenue and cash flow commenci ng immediately after the merger and
throughout the forecast period. There is a concern that investors (including participants in
your post-merger private placements) may ha ve been surprised by the post-merger
Megasys losses reported in your 2011 Form s 10Q given that the Megasys operating
results filed in your July 15, 2011 form 8-K re flected profitable operations. Pursuant to
Sections 501.02 and 501.13 of the Financial Repo rting Codification, MD&A disclosure is
required for known events and circumstances that you reasonably expect will have a
material unfavorable impact on future operati ng results, or that indi cate that historical
operating results are expected to materially  differ from future operating results. The
projections in the valuation repor t differ materially from histor ical results, so presumably
there were known adverse fact ors which materially impacted the projections. Please file
amendments to the MD&A sections of your Forms 10-Q and disclose the basis for your
adverse projections and clearly explai n why Megasys ceased being profitable
immediately after the merger. If the decline in future Megasys sales and income is attributable to a strategic shift from a hardware-based business model to a cloud-based
business model, then explai n your rationale for changing the Megasys business model
given that the projected financial impact appears to be negative.

11. Please amend the filings to include a signa ture from Lynne Phyllis, the Principal
Financial and Accounting Officer. See Part G of the Form Instructions.

You may contact Al Pavot, St aff Accountant, at (202) 551- 3738 or me at (202) 551-3355
if you have any questions.
Sincerely,
   /s/ Terence O’Brien
Terence O’Brien Accounting Branch Chief