SecProbe.io

March 22, 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 response letter filed March 7, 2012 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 disclosu re. Please respond to this letter  within ten business days by
providing the requested information and amendm ents or by advising us when you will provide
the requested response.  If you do not beli eve our comments apply to your facts and
circumstances, please tell us why in your res ponse. After reviewing the information you provide
in response to these comments, we  may have additional comments.
 Megasys Acquisition

1. In explaining why only $20,000 was alloca ted to acquired Megasys customer
relationships, you assert that only a minimal am ount of future revenue  was expected from
this asset because “Megasys, on its own, does not share the same capabilities or recurring
revenue business model” and that the “Meg asys contract installation model does not
imply a capability of receiving recurring cas h flows from previous customers.” These
representations are not consistent with  your other disclosures and assumptions.
Specifically, in your July 7, 2011 press releas e, your President and CEO attributed
Megasys Taiwan’s $800,000 contract with the Ta ipei Police Department as the result of
“years of experience of the Megasys team de ploying safe city projects in Asia.” The
Megasys Chairman is also quoted therein emphasizing the value of this customer
relationship. In your January 11, 2012 press release, aside from emphasizing “Megasys’
dominance in SafeCiti deployments in the region,” the Megasys general manager specifically attributes the $2.2 million SafeC iti contract to the performance by Megasys
on other similar projects for this customer. Th e pattern of recurring revenue from existing
customer relationships is also reflected in your  disclosure of major customer A in Note 3
to the audited Megasys financial statem ents. We also understand your fair value
assumption that the significant impact of pers onal relationships with customers mitigated
the value assigned to acquired Megasys trad emarks. Consequently, there does not appear
to be a factually supportable basis for the dete rmination that Megasys lacked an ability to

Ms. Lynne Phillis
March 22, 2012 Page 2 of 2
 generate future sales from existing customer  relationships. If you e xpect that your final
purchase price allocation for this asset will be materially revised, then please provide us
with relevant details. Alternatively, pleas e provide us with a schedule showing the
revenue recognized in each of the prior 5 years from each of the key customers touted in
your January 24, 2011 press release and identify the customers referenced as A and B in
the Megasys financial statements.

2. We understand that the contingent consid eration includes the issuance of $800,000 of
stock in December 2012 if Megasys generates a $1.3 million increase in SafeCity project
net revenue. We also understand that you assu med that all contingent consideration
would be paid and have recognized $1.6 million as  the fair value of the total contingent
consideration (91% of your goodwill balance). In your resp onse, you state that “The
SafeCity project is the primary component of  Megasys’s contractual backlog.” However,
it does not appear that the $1.3 million assumed increase in SafeCity project revenue has been included in your acquired backlog asset ca lculation given that such calculation only
assumes $952,000 of revenue. Further, we note that your backlog a sset calculation does
not include any contracts ex tending beyond October 31, 2011 (six months from Valuation
Date). Also, your response is not consiste nt with the SafeCity expected revenue
assumptions outlined in Exhibit 1.B to th e Valuation Report. Moreover, we understand
that in assuming at the valuation date that  the $1.3 million milestone would be reached,
you projected that a material amount of the SafeCity revenue would be generated from
the Taipei Police Department given your histor ical, current and expected future business
with this customer. As previously observed, 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 e xpected valuation of this asset.

3. We understand that the $600,000 of purchase  price contingent on Megasys 2011 net
income will not be paid since Megasys did not generate the earnings milestone. Please tell us how this impacted your December 31, 2011 goodwill impairment analysis.

4. Given that Megasys only generated $23,490 net in come in the first four months of 2011,
please clearly explain of a ll the factors you considered in determining that the 2011
$300,000 net income milestone would be met. Sp ecifically address the data in Exhibit
7.A of the valuation report which plainly indi cates that this milest one would not be met.
In addition, clearly explain how you determin ed that the $1.3 milli on revenue increase
milestone would be met given the substantial decline in projected revenue assumed in the
valuation report. Compliance with ASC 805-30-25-5 should be clearly evident.
        You may contact Al Pavot, Staff Account ant, 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