SecProbe.io

CORRESP
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filename1.htm

Quinn P. Williams

Tel 602.445.8344

Fax 602.445.8647

WilliamsQ@gtlaw.com

April 17, 2015

VIA UPS AND THE EDGAR SYSTEM

        United States Securities Exchange Commission

        Division of Corporate Finance

        Mail Stop 3561

        100 F Street, N.E.

        Washington, D.C. 20549

        Attention: Matthew Crispino

        Re:    Iveda Solutions, Inc.

           Registration
        Statement on Form S-1

           Filed
        March 16, 2015

           File
        No. 333-202787

        Dear Mr. Crispino:

        On behalf of Iveda Solutions, Inc., a Nevada corporation (the
        “Company”), we express our appreciation for your prompt review of the Company’s Registration Statement on Form
        S-1 (File No. 333-202787) (the “Registration Statement”) originally filed with the Securities and Exchange Commission
        (the “Commission”) on March 16, 2015, in connection with the registration for resale of up to 17,949,841 shares of
        the Company’s common stock (“Common Stock”) by the selling stockholders named in the Registration Statement (collectively,
        the “Selling Stockholders”).  We are responding to comments on the Registration Statement provided by the
        staff (the “Staff”) of the Commission by letter dated April 9, 2015.  In connection with these responses,
        the Company is filing an Amendment No. 1 to the Registration Statement on Form S-1 (“Amendment No. 1”) via EDGAR.

        The Company’s responses to the Staff’s comments
        are indicated below, directly following a restatement of each comment in bold, italicized type.  To further facilitate
        the Staff’s review, the enclosed courtesy copies of Amendment No. 1 are marked to show the revisions against the Registration
        Statement filed via EDGAR on March 16, 2015.

Greenberg
Traurig, LLP n Attorneys
at Law n WWW.GTLAW.COM

2375 East Camelback Road, Suite 700 n
Phoenix, Arizona 85016 n
Tel 602.445.8000 n
Fax 602.445.8100

General

 1. Staff Comment: We note that you are registering the offer and resale of 17,949,841 shares of common stock to be
issued upon conversion of outstanding preferred stock and warrants. Non-affiliates of the company appear to hold 11,735,205 shares
of your common stock. Based on the number of shares being registered relative to the number of shares of common stock held by non-affiliates
it appears that the purported secondary offering by these persons may be a primary offering under Rule 415(a)(1)(x) of the Securities
Act and that they are distributing the securities on the company’s behalf. As such, please revise to clearly identify these
persons as underwriters in the prospectus. In addition since you are not eligible to rely on Rule 415(a)(1)(x) of Regulation C,
the offering by the underwriters must be conducted at a fixed price for the duration of the offering. See Rule 415(a)(4). Please
revise accordingly. Alternatively, provide a detailed analysis as to why the offering of these shareholders’ shares should
not be characterized as a primary offering with them acting as underwriters. Refer to Securities Act Rules Compliance and Disclosure
Interpretation 612.09, available on our website.

Company Response: For the reasons set
forth below, the Company respectfully submits that the offering to be registered pursuant to the Registration Statement is a valid
secondary offering and not an indirect primary offering in which the Selling Stockholders would be deemed “underwriters”
within the meaning of Section 2(a)(11) of the Securities Act of 1933, as amended (the “Securities Act”).

Background

2013 Debenture Private Placement, Amendment, and
Subsequent Conversion

Pursuant to a Subscription Agreement
(the “Subscription Agreement”), between December 12, 2013 and June 30, 2014, the Company completed a private offering
with a group of accredited investors (the “2013 Investors”) in which it sold debentures (the “2013 Debentures”)
together with warrants (the “2013 Warrants”) for total net proceeds of $3,600,000 (the “2013 Debenture Private
Placement”).

Each 2013 Debenture bore interest
at 9.5% per annum, accruing monthly, and could be converted at the option of the holder, at any time, into shares of Common Stock
at a conversion price of $1.50 per share, subject to certain adjustments. Each 2013 Debenture was exercisable for a period of three
years from the original issuance date. The first interest payment became due six months from the original issuance date and continued
to be payable monthly, unless the Company elected to roll the accrued interest into the principal amount. On the maturity date,
the Company was required to pay to the holders of the 2013 Debentures the outstanding principal amount together with any accrued
but unpaid interest owed on the 2013 Debenture, either in cash or by converting the amount owed into shares of Common Stock using
a conversion price of $1.50 per share.

Each 2013 Investor also received
a 2013 Warrant to purchase the number of shares of Common Stock equal to 15% of the face value of such investor’s 2013 Debenture
divided by the exercise price of $1.65 per share, which is subject to adjustment upon certain events, such as stock splits, combinations,
dividends, distributions, reclassifications, mergers, or other corporate change. The 2013 Warrants are exercisable for a period
of five years from the original issuance date. The Company issued 2013 Warrants having the right to acquire, in the aggregate,
327,273 shares of Common Stock, which, if exercised, will provide the Company with gross proceeds of approximately $245,455, based
on the adjusted exercise price of $0.75 per share.

Greenberg Traurig,
LLP
n  Attorneys
at Law  n
 WWW.GTLAW.COM

PHX 331443228v1

In connection with the 2013 Debenture
Private Placement, the Company also issued warrants to purchase 199,243 shares of Common Stock to Source Capital, Inc., the placement
agent, as compensation for its services (the “2013 Debenture Placement Warrants”). The 2013 Debenture Placement Warrants
are exercisable for a period of four years at an exercise price of $1.65 per share of Common Stock. If exercised, the 2013 Debenture
Placement Warrants will provide the Company with gross proceeds of approximately $149,432, based on the adjusted exercise price
of $0.75 per share.

Effective December 1, 2014, the
Company entered into a Debenture and Warrant Amendment (the “Debenture and Warrant Amendment”) with all of the 2013
Investors. As a result of the Debenture and Warrant Amendment, on December 9, 2014, each 2013 Debenture automatically converted
into shares of the Company’s Series A Preferred Stock at a conversion price of $1.00 per share, and any accrued but unpaid
interest on the 2013 Debentures was carried forward as an accrued dividend on the Series A Preferred Stock. The Company also amended
the terms of the 2013 Warrants to reduce the exercise price from $1.65 per share of Common Stock to $1.00 per share of Common Stock.
The exercise price of the 2013 Warrants was adjusted again to $0.75 per share as a function of the anti-dilution provisions applied
to the sale of Series B Preferred Stock as described below. As inducement to enter into the Debenture and Warrant Amendment, the
Company issued to the 2013 Investors additional warrants (the “Inducement Warrants”) to purchase an aggregate of 218,165
shares of Common Stock at an exercise price of $1.00 per share, which exercise price has been adjusted to $0.75 per share as a
function of the anti-dilution provisions applied to the sale of Series B Preferred Stock. If exercised, the Inducement Warrants
will provide the Company with gross proceeds of approximately $163,623. Each 2013 Investor received an Inducement Warrant to acquire
the number of shares of Common Stock equal to 66.67% of the number of shares issuable under such investor’s 2013 Warrant,
which is exercisable for a period of five years. Pursuant to the Debenture and Warrant Amendment, the Company issued an aggregate
of 3,600,000 shares of Series A Preferred Stock in exchange for the cancellation of the 2013 Debentures, based on the conversion
rate of $1.00 per share. The conversion price adjusted to $0.97 per share as of January 23, 2015, as a function of the anti-dilution
provisions applied to the sale of the Series B Preferred Stock. The Company did not receive any proceeds from the conversion.

In October and November 2014,
the Company sold additional debentures having the same terms as those in the 2013 Debenture Private Placement. In connection with
the Debenture and Warrant Amendment, the Company entered into a Debenture Conversion Agreement with the additional debenture holders,
pursuant to which the debentures were converted into shares of the Company’s Series A Preferred Stock having the same rights
granted in the Debenture and Warrant Amendment.

Greenberg Traurig,
LLP
n  Attorneys
at Law  n
 WWW.GTLAW.COM

PHX 331443228v1

2015 Private Placement

On January 23, 2015, the Company
completed the initial closing of a private placement of 265 shares of its Series B Preferred Stock at a purchase price of $10,000
per share (the “Original Issue Price”), together with Tranche A Warrants to acquire 1,766,665 shares of Common
Stock at an initial exercise price of $1.00 per share and Tranche B Warrants to acquire 1,766,665 shares of Common Stock
at an initial exercise price of $1.10 per share, and as of March 12, 2015, the Company had sold an additional 42.5 shares of its
Series B Preferred Stock for the Original Issue Price, together with Tranche A Warrants to acquire 283,333 shares of Common Stock
at an initial exercise price of $1.00 per share and Tranche B Warrants to acquire 283,333 shares of Common Stock at an initial
exercise price of $1.10 per share (collectively, the “Private Placement”), with a number of new and existing institutional
investors (collectively, the “Investors”). The Private Placement was made pursuant to a Securities Purchase Agreement,
dated January 16, 2015, as amended (the “Purchase Agreement”), between the Company and the Investors. The Series B
Preferred Stock is convertible into shares of Common Stock (the “Conversion Shares”) at an initial conversion rate
equal to the Original Issue Price divided by $0.75 (the “Conversion Price”). The Conversion Price is subject to certain
adjustments as set forth in the Certificate of Amendment to the Company’s Articles of Incorporation filed with the Secretary
of State of the state of Nevada on January 15, 2015. The Tranche A Warrants have an 18 month term and the Tranche B Warrants have
a five year term.

Each Tranche A Warrant is convertible
at the option of the holder, at any time, into shares of Common Stock equal to one half of the number of Conversion Shares. Each
Tranche B Warrant is convertible at the option of the holder, at any time, into shares of Common Stock equal to one half of the
number of Conversion Shares. Both the Tranche A and Tranche B Warrants have a cashless exercise feature.

As a result of the 2015 Private
Placement, the Company issued (i) 312.5 shares of Series B Preferred Stock, which are convertible into 4,166,663 shares of Common
Stock, (ii) Tranche A Warrants to acquire a total of 2,165,831 shares of Common Stock at an exercise price of $1.00 per share,
and (iii) Tranche B Warrants to acquire a total of 2,165,831 shares of Common Stock at an exercise price of $1.10 per share.

The Company also issued Tranche
A Warrants to acquire 82,500 shares of Common Stock and Tranche B Warrants to acquire 82,500 shares of Common Stock (collectively,
the “Northland Warrants”) to Northland Securities, Inc. (“Northland”), the placement agent, and certain
affiliates of Northland, as compensation for their services. The terms of Northland Securities’ engagement require that the
Company treat the shares of Common Stock issuable upon the exercise of the Northland Warrants as Registrable Securities under the
Registration Rights Agreement.

Greenberg Traurig,
LLP
n  Attorneys
at Law  n
 WWW.GTLAW.COM

PHX 331443228v1

In connection with the Purchase
Agreement, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the
Investors. The terms of the Registration Rights Agreement require the Company to file a registration statement with the Commission
covering at least 135% of the Registrable Securities (as defined in the Registration Rights Agreement) not already covered by an
existing and effective registration statement within 20 days of the closing date of the Private Placement (the “Filing Deadline”).
On February 12, 2015, the Company entered into an Amendment to the Registration Rights Agreement (the “Amendment”)
with the Investors to extend the Filing Deadline to March 16, 2015 (the “Extended Filing Deadline”). The Registration
Rights Agreement, as amended, requires the Company to use its commercially reasonable efforts to cause each registration statement
to be declared effective as soon as practicable and no later than 90 days following the Extended Filing Deadline (120 days following
the Extended Filing Deadline if the Company receives comments from the Commission about its registration statement) (the “Effectiveness
Deadline”). If the Company fails to file a registration statement by the Filing Deadline or Extended Filing Deadline, as
applicable, or a registration statement fails to be declared effective by the Effectiveness Deadline, among other events (each
an “Event”), the Company is required to pay to each Investor, on the business day immediately following the Filing
Deadline or the Extended Filing Deadline, as applicable, and on each monthly anniversary of the Filing Deadline or the Extended
Filing Deadline, as applicable, thereafter, liquidated damages equal to 1.5% of the aggregate purchase price paid by such Investor
until the Event is cured or until the Registrable Securities are eligible for resale pursuant Rule 144 without manner or volume
restrictions. The Registration Rights Agreement does not grant piggyback registration rights to any other stockholders, except
as set forth in the Purchase Agreement, which incorporates piggyback registration rights granted to holders of shares of Series
A Preferred Stock and certain warrantholders.

Rule 415

Rule 415 permits the registration
of offerings to be made on a delayed or continuous basis subject to certain conditions. An at-the-market offering “by or
on behalf of the registrant” may be made under Rule 415 only if the registrant is eligible to register primary offerings
on Form S-3 or F-3. The Company agrees with the Staff’s analysis that the Company is currently not eligible to use Form S-3
and is therefore unable to rely on Rule 415 to conduct a primary offering. In the event that the offering registered by the Registration
Statement is characterized as a primary offering by or on behalf of the Company, (i) the offering would have to be made on a fixed
price basis (i.e., the Selling Stockholders would not be able to sell their securities at prevailing market prices), (ii)
the Selling Stockholders would be deemed to be “underwriters,” and (iii) in accordance with the Staff’s longstanding
interpretive position, the Selling Stockholders would be unable to rely on Rule 144 to effect resales of their securities.

Greenberg Traurig,
LLP
n  Attorneys
at Law  n
 WWW.GTLAW.COM

PHX 331443228v1

The Company has reviewed the
Staff’s historical guidance regarding the distinction between secondary offerings and indirect primary offerings,
including Securities Act Rules Compliance and Disclosure Interpretation (“CD&I”) 612.09, which articulates
the factors to be considered in determining whether a purported secondary offering is really an indirect primary
offering:

It is important to identify
whether a purported secondary offering is really a primary offering, i.e., the selling shareholders are actually underwriters selling
on behalf of an issuer. Und