Equibles

6-K

Guardforce AI Co., Ltd. (GFAI)

6-K 2021-12-17 For: 2021-06-30
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Added on April 08, 2026

UNITED

STATES

SECURITIES

AND EXCHANGE COMMISSION

WASHINGTON,

D.C. 20549

FORM

6-K

REPORT

OF FOREIGN PRIVATE ISSUER

PURSUANT

TO RULE 13a-16 OR 15d-16 OF THE

SECURITIES

EXCHANGE ACT OF 1934

For the month of, December 2021

Commission

File Number 001-40848

GUARDFORCE

AI CO., LIMITED

(Translation of registrant’s name into English)

10

Anson Road, #28-01 International Plaza

Singapore

079903

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

EXPLANATORY

NOTE

Guardforce AI Co., Limited (the “Company”) is furnishing this Form 6-K to provide the unaudited consolidated financial statements for the six months ended June 30, 2021 and 2020.

FORWARD-LOOKING

INFORMATION

This Report on Form 6-K contains forward-looking statements and information relating to us that are based on the current beliefs, expectations, assumptions, estimates and projections of our management regarding our company and industry. When used in this report, the words “may”, “will”, “anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan” and similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. These statements reflect management’s current view of us concerning future events and are subject to certain risks, uncertainties and assumptions, including among many others: our negative operating profits may raise substantial doubt regarding our ability to continue as a going concern, our substantial customer concentration, with a limited number of customers accounting for a substantial portion of our recent revenues, our subsidiaries’ ability to distribute dividends to us may be subject to restrictions under the laws of their respective jurisdictions, the emergence of additional competing technologies, changes in domestic and foreign laws, regulations and taxes, political and social events in Thailand, the volatility of the securities markets, and other risks and uncertainties which are generally set forth under the heading, “Key information - Risk Factors” and elsewhere in our Annual Report on Form 20-F filed on April 29, 2021 (the “Annual Report”). Should any of these risks or uncertainties materialize, or should the underlying assumptions about our business and the commercial markets in which we operate prove incorrect, actual results may vary materially from those described as anticipated, estimated or expected in the Annual Report.

All forward-looking statements included herein attributable to us or other parties or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable laws and regulations, we undertake no obligations to update these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.

1

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: December 17, 2021 Guardforce AI Co., Limited
By: /s/ Lei Wang
Lei Wang
Chief Executive Officer

2

EXHIBIT

INDEX

Exhibit Number Description
99.1 Unaudited Interim Consolidated Financial Statements as of June 30, 2021 and for the six months ended June 30, 2021 and 2020
99.2 Operating and Financial Review and Prospects in Connection with the Interim Consolidated Financial Statements for the six months ended June 30, 2021
99.3 Press Release dated December<br> 17, 2021
101.INS Inline XBRL Instance<br> Document
101.SCH Inline XBRL Taxonomy Extension<br> Schema Document
101.CAL Inline XBRL Taxonomy Extension<br> Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension<br> Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension<br> Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension<br> Presentation Linkbase Document
104 Cover Page Interactive Data<br> File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded<br> within the Inline XBRL document

3

Exhibit 99.1

FINANCIAL

STATEMENTS

GUARDFORCE

AI CO., LIMITED AND SUBSIDIARIES

UNAUDITED

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR

THE SIX MONTHS ENDED JUNE 30, 2021 and 2020

Contents Page(s)
Unaudited Interim Condensed Consolidated Statements of Financial Position F-2
Unaudited Interim Condensed Consolidated Statements of Profit or Loss F-3
Unaudited Interim Condensed Consolidated Statements of Comprehensive Income Loss F-4
Unaudited Interim Condensed Consolidated Statements of Changes in Equity (Deficit) F-5
Unaudited Interim Condensed Consolidated Statements of Cash Flows F-6
Notes to the Unaudited Interim Condensed Consolidated Financial Statements F-7 – F-21

F-1

Guardforce

AI Co., Limited and Subsidiaries

Unaudited

Interim Condensed Consolidated Statements of Financial Position

(Expressedin U.S. Dollars)

As at<br><br> June 30,<br><br> 2021 As at<br><br> December 31,<br><br> 2020
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 7,725,129 $ 8,414,044
Accounts receivable, net 5,790,229 5,468,911
Withholding taxes receivables - 690,487
Other current assets 2,462,654 1,584,884
Deferred costs 38,880 -
Inventory 2,553,957 495,081
Amount due from related parties 7,422 373,268
Total current assets 18,578,271 17,026,675
Restricted cash 1,667,081 1,715,866
Fixed assets, net 9,075,078 7,884,354
Right-of-use assets 2,868,604 4,190,351
Intangible assets, net 189,438 223,408
Goodwill 329,534 -
Withholding taxes receivable, net 3,359,752 3,534,552
Deferred costs 68,040 -
Deferred tax assets, net 972,384 1,038,346
Other non-current assets 330,416 361,275
Total Assets $ 37,438,598 $ 35,974,827
Liabilities and (Deficit) Equity
Current liabilities:
Trade and other payables $ 3,050,006 $ 1,540,411
Short-term borrowings from financial institutions 1,700,473 494,994
Current portion of operating lease liabilities 1,556,425 2,211,984
Current portion of finance lease liabilities, net 790,704 632,105
Other current liabilities 1,349,427 1,249,106
Deferred revenue 43,200 -
Income tax payables - 284,627
Amount due to related parties 4,396,317 1,670,469
Total current liabilities 12,886,552 8,083,696
Long-term borrowings from financial institutions 986,584 993,869
Operating lease liabilities 1,482,152 2,106,429
Long-term borrowings from related parties 18,127,706 19,085,812
Finance lease liabilities, net 825,841 1,023,366
Deferred revenue 75,600 -
Provision for employee benefits 6,547,498 6,841,673
Total liabilities 40,931,933 38,134,845
Commitments and Contingencies
(Deficit) Equity
Ordinary shares* – par value 0.003 authorized 100,000,000 shares, issued and outstanding 17,587,388 shares at June 30, 2021; par value 0.003 authorized 100,000,000 shares, issued and outstanding 17,356,090 shares at December 31, 2020 52,763 52,069
Subscription receivable (50,000 ) (50,000 )
Additional paid in capital 2,409,864 2,082,795
Legal reserve 223,500 223,500
Deficit (6,277,568 ) (4,722,294 )
Accumulated other comprehensive income 98,352 204,249
Total deficit attributable to equity holders of the Company (3,543,089 ) (2,209,681 )
Total equity attributable to non-controlling interests 49,754 49,663
Total deficit (3,493,335 ) (2,160,018 )
Total Liabilities and Equity $ 37,438,598 $ 35,974,827

All values are in US Dollars.

* Giving<br>retroactive effect to the reverse split on August 20, 2021.

The

accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

F-2

Guardforce

AI Co., Limited and Subsidiaries

Unaudited

Interim Condensed Consolidated Statements of Profit or Loss

(Expressedin U.S. Dollars)

****<br><br>Note For the six months ended June 30,
2021 2020
Revenue 2.8 $ 18,405,025 $ 18,728,786
Cost of revenue 2.9 (16,346,463 ) (15,441,180 )
Gross margin 2,058,562 3,287,606
Provision for withholding taxes receivable (98,226 ) -
Administrative expenses 19 (3,271,608 ) (4,094,532 )
Loss from operations (1,311,272 ) (806,926 )
Other income, net 237,178 32,452
Foreign exchange loss, net (40,137 ) (310,207 )
Finance costs (440,952 ) (435,713 )
Loss before provision for income taxes (1,555,183 ) (1,520,394 )
Provision for income taxes 15 - (58,368 )
Net loss for the period (1,555,183 ) (1,578,762 )
Less: net loss (profit) attributable to non-controlling interests (91 ) 5,420
Net loss attributable to equity holders of the Company $ (1,555,274 ) $ (1,573,342 )
Loss per share
Basic and diluted (loss) profit for the period attributable to ordinary equity holders of the Company* $ (0.09 ) $ (0.09 )
Weighted average number of shares used in computation:
Basic and diluted* 17,486,264 17,090,926
* Giving<br>retroactive effect to the reverse split on August 20, 2021.
--- ---

The

accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

F-3

Guardforce

AI Co., Limited and Subsidiaries

Unaudited

Interim Condensed Consolidated Statements of Comprehensive Loss

(Expressedin U.S. Dollars)

For the six months ended June 30,
Note 2021 2020
Net loss for the period $ (1,555,183 ) $ (1,578,762 )
Currency translation differences 2.5 (105,897 ) (414,098 )
Total comprehensive income (loss) for the period $ (1,661,080 ) $ (1,992,860 )
Attributable to:
Equity holders of the Company $ (1,661,171 ) $ (1,987,440 )
Non-controlling interests 91 (5,420 )
$ (1,661,080 ) $ (1,992,860 )

The

accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

F-4

Guardforce

AI Co., Limited and Subsidiaries

Unaudited

Interim Condensed Consolidated Statements of Changes in Equity (Deficit)

(Expressedin U.S. Dollars)

Number of<br> Shares* Amount (0.003 par*) Subscription <br> Receivable Addition <br> Paid-in<br> Capital Legal<br> Reserve Accumulated<br> Other <br> Comprehensive<br> Income Deficit Non-<br> controlling Interests Total
Balance as at December 31, 2019 (Note 17) 16,666,663 $ (50,000 ) $ 2,360,204 $ 223,500 $ 273,579 $ (1,596,270 ) $ 65,894 $ 1,326,907
Currency translation adjustments - - - - (414,098 ) - - (414,098 )
Stock-based compensation expenses 689,427 16,757 18,826
Net loss for the period - - - - - (1,573,342 ) (5,420 ) (1,578,762 )
Balance as at June 30, 2020 (Unaudited) 17,356,090 $ (50,000 ) $ 2,376,961 $ 223,500 $ (140,519 ) $ (3,169,612 ) $ 60,474 $ (647,127 )
Balance as at December 31, 2020 (Note 17) 17,356,090 $ (50,000 ) $ 2,082,795 $ 223,500 $ 204,249 $ (4,722,294 ) $ 49,663 $ (2,160,018 )
Currency translation adjustments (105,897 ) (105,897 )
Stock-based compensation expenses 187,598 (563 ) -
Issued shares for acquisition of a subsidiary 43,700 327,632 327,763
Net loss for the period (1,555,274 ) 91 (1,555,183 )
Balance as at June 30, 2021 (Unaudited) 17,587,388 $ (50,000 ) $ 2,409,864 $ 223,500 $ 98,352 $ (6,277,568 ) $ 49,754 $ (3,493,335 )

All values are in US Dollars.

* Giving<br>retroactive effect to the reverse split on August 20, 2021.

The

accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements

F-5

Guardforce

AI Co., Limited and Subsidiaries

Unaudited

Interim Condensed Consolidated Statements of Cash Flows

(Expressedin U.S. Dollars)

For the six months ended <br> June 30,
2021 2020
Operating activities
Net loss $ (1,555,183 ) $ (1,578,762 )
Adjustments to reconcile net (loss) profit to net cash provided by operating activities:
Depreciation and Amortization of intangible assets 2,542,432 2,486,283
Stock-based compensation - 18,826
Interest expense 341,123 220,992
Deferred tax - 11,269
Recovery of doubtful accounts, net - (2,842 )
Provision for withholding taxes receivable 98,226 -
(Gain) Loss from fixed assets disposal (2,189 ) 43
Changes in operating assets and liabilities:
Accounts and other receivables (673,605 ) (148,074 )
Other current assets (1,005,395 ) 88,282
Inventory (2,105,633 ) (70,808 )
Amount due from related parties 365,594 129,256
Other non-current assets (98,693 ) 186,250
Trade and other payables 872,339 (592,783 )
Other current liabilities 28,428 (5,404 )
Income tax payables - (47,099 )
Amount due to related parties 2,566,716 422,211
Withholding taxes receivable 522,688 (356,170 )
Provision for employee benefits 146,100 107,961
Net cash provided by operating activities 2,042,948 869,431
Investing activities
Purchase of property and equipment (2,251,341 ) (188,890 )
Proceeds from fixed assets disposal 2,598 165
Purchase of intangible assets - (5,524 )
Cash acquired from acquisition of a subsidiary 24,276 -
Net cash used in investing activities (2,224,467 ) (194,249 )
Financing activities
Proceeds from borrowings 1,622,855 3,516,143
Repayment of borrowings (378,046 ) (1,207,112 )
Interest paid (269,389 ) (72,823 )
Lease payments (977,073 ) (1,401,490 )
Net cash (used in) provided by financing activities (1,653 ) 834,718
Effect of exchange rate changes on cash (554,528 ) (178,352 )
Net (decrease) increase in cash and cash equivalents, and restricted cash (737,700 ) 1,331,548
Cash and cash equivalents, and restricted cash at beginning of year 10,129,910 7,687,721
Cash and cash equivalents, and restricted cash at end of period $ 9,392,210 $ 9,019,269

The accompanying

notes are an integral part of these unaudited interim condensed consolidated financial statements.

F-6

Guardforce

AI Co., Limited and Subsidiaries

Notes

to the Unaudited Interim Condensed Consolidated Financial Statements

(Expressedin U.S. Dollars)

1. NATURE OF OPERATIONS

Guardforce AI Co., Limited (“Guardforce”) is a company incorporated and domiciled in the Cayman Islands under the Companies Act on April 20, 2018. The address of its registered office is 10 Anson Road, #28-01 International Plaza, Singapore 079903. Guardforce is controlled by Guardforce AI Technology Limited (“AI Technology”).

Guardforce AI Holding Limited (“AI Holdings”) was incorporated in the British Virgin Islands under the BVI Business Companies Act, 2004, on May 22, 2018. AI Holdings is a 100% owned subsidiary of Guardforce. AI Holdings’ registered office is located in British Virgin Islands.

Guardforce AI Robots Limited (“AI Robots”) was incorporated in the British Virgin Islands under the BVI Business Companies Act, 2004, on May 22, 2018. AI Robots is a 100% owned subsidiary of Guardforce.

Guardforce AI (Hong Kong) Co., Limited (“AI Hong Kong”) was incorporated in Hong Kong under the Hong Kong Companies’ Ordinance (Chapter 622), on May 30, 2018. AI Hong Kong is a 100% owned subsidiary of Guardforce. Beginning March 2020, AI Hong Kong commenced robotic AI solution business of selling robots.

Southern Ambition Limited (“Southern Ambition”) was incorporated in the British Virgin Islands under the BVI Business Companies Act, 2004, on August 3, 2018. Southern Ambition is a 100% owned subsidiary of AI Robots.

Horizon Dragon Limited (“Horizon Dragon”) was incorporated in the British Virgin Islands under the BVI Business Companies Act, 2004, on July 3, 2018. Horizon Dragon is a 100% owned subsidiary of AI Holdings.

Guardforce AI Group Co., Limited (“AI Thailand”) was incorporated in Thailand under the Civil and Commercial Code at the Registry of partnerships and Companies, Bangkok Metropolis, Thailand, on September 21, 2018 and has 100,000 ordinary plus preferred shares outstanding. 48,999 of the shares in AI Thailand are owned by Southern Ambition Limited, with one share being held by Horizon Dragon Limited, for an aggregate of 49,000 ordinary shares, or 49%, and 51,000 cumulative preferred shares are owned by two individuals of Thailand. The 49,000 ordinary shares with a value of approximately $16,000 and the value of the cumulative preferred shares of approximately $17,000 has not been received as of December 31, 2018. The cumulative preferred shares are entitled to dividends of $0.03 per share when declared. The cumulative unpaid dividends of the preferred shares as of December 31, 2020 is approximately $1,700. Pursuant to article of associates of AI Thailand, the holder of an ordinary share may cast one vote per share at a general meeting of shareholders, the holder of preferred shares may cast one vote for every 20 preferred shares held at a general meeting of shareholders. Southern Ambition is entitled to cast more than 95% of the votes at a general meeting of shareholders. No dividends were declared during the six months ended June 30, 2021 and 2020.

Guardforce Cash Solutions Security Thailand Co., Limited (“GF Cash (CIT)”) was incorporated in Thailand under the Civil and Commercial Code at the Registry of partnerships and Companies, Bangkok Metropolis, Thailand, on July 27, 1982 and has 3,857,144 outstanding shares. 3,799,544 ordinary shares and 21,599 preferred shares of the outstanding shares in GF Cash (CIT) (approximately 99.07% of the shares in GF Cash (CIT)) are owned by AI Thailand with one share being held by Southern Ambition and 33,600 ordinary shares and 2,400 preferred shares (approximately 0.933% of the shares in GF Cash (CIT)) being held by Bangkok Bank Public Company Limited. Pursuant to the articles of associates a shareholder may cast one vote per one share at a general meeting of shareholders. AI Thailand is entitled to cast 99.07% of the votes at a general meeting of shareholders. GF Cash (CIT)’s head office is located at No. 96 Vibhavadi-Rangsit Road, Talad Bang Khen Sub-District, Laksi District, Bangkok, Thailand. Beginning March 2020, GF Cash (CIT) commenced robotic AI solution business of selling and leasing of robots. No dividends were declared during the six months ended June 30, 2021 and 2020.

F-7

97% of the shares of GF Cash (CIT) are owned by AI Thailand and Southern Ambition, which were previously held by Guardforce TH Group Co., Ltd and Guardforce 3 Limited, with the same majority shareholder.

The reorganization of Guardforce and its subsidiaries (collectively referred to as the “Company) was completed on December 31, 2018. Pursuant to the reorganization, Guardforce became the holding company of the companies, which were under the common control of the controlling shareholder before and after the reorganization. Accordingly, the Company’s financial statements have been prepared on a consolidated basis by applying the predecessor value method as if the reorganization had been completed at the beginning of the earliest reporting period. The Company engages principally in providing cash management and handling services located in Thailand.

The following diagram illustrates the Company’s legal entity ownership structure as of June 30, 2021:

2. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies applied are consistent with those of the audited consolidated financial statements for the years ended December 31, 2020 and 2019, as described in those audited consolidated financial statements, except for the adoption of new and amended International Financial Reporting Standards (“IFRS”) effective for the year ending December 31, 2021 which are relevant to the preparation of the unaudited interim condensed consolidated financial statements.

The financial statements were approved by the board of directors and authorized for issuance on December 15, 2021.

F-8

2.1 Basis of presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34, “Interim Financial Reporting”. These statements should be read in conjunction with the audited consolidated financial statements for the years ended December 31, 2020 and 2019, which have been prepared in accordance with IFRS. The unaudited interim condensed consolidated financial statements have been prepared on a historical cost basis. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying unaudited condensed consolidated financial statements and consist of only normal recurring adjustments, except as disclosed herein. The results of operations for the six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the full year ended December 31, 2021.

All amounts are presented in United States dollars (“US $” or “USD”) and have been rounded to the nearest US $.

2.2 Basis of consolidation

The consolidated statements of profit or loss and other comprehensive loss, changes in equity (deficit) and cash flows of the Company for the relevant periods include the results and cash flows of all companies now comprising the Company from the earliest date presented or since the date when the subsidiaries and/or businesses first came under the common control of the controlling shareholders, wherever the period is shorter.

The unaudited interim condensed consolidated statements of financial position of the Company as at June 30, 2021 and 2020 have been prepared to present the assets and liabilities of the subsidiaries using the existing book values from the controlling shareholders’ perspective.

Equity interests in subsidiaries held by parties other than the controlling shareholders are presented as non-controlling interests in equity.

All intra-group and inter-company transactions and balances have been eliminated on consolidation.

2.3 Business combinations under common control

IFRS 3 Business combinations does not include specific measurement guidance for transfers of businesses or subsidiaries between entities under common control. Accordingly, the Company has accounted for such transactions taking into consideration other guidance in the IFRS framework and pronouncements of other standard-setting bodies. The Company recorded assets and liabilities recognized as a result of transactions between entities under common control at the carrying value on the transferor’s financial statements, and to have the consolidated statements of financial position, profit or loss, comprehensive income, changes in equity and cash flows reflect the results of combining entities for all periods presented for which the entities were under the transferor’s common control, irrespective of when the combination takes place.

2.4 Non-controlling interest

The non-controlling interest represents the portion of the equity (net assets) in the subsidiary not directly or indirectly attributable to the Company. Non-controlling interests are presented as a separate component of equity on the consolidated statements of financial position, profit or loss, comprehensive income and changes in equity attributed to controlling and non-controlling interests.

2.5 Foreign currency translation

The reporting currency of the Company is the U.S. dollar (“USD”). The functional currency of Guardforce, AI Holdings, AI Robots, Horizon Dragon, Southern Ambition, is the USD. The functional currency of AI Hong Kong and Handshake is the Hong Kong dollar. The functional currency of AI Thailand and GF Cash (CIT) is the Thai Baht (“Baht” or “THB”).

F-9

The currency exchange rates that impact our business are shown in the following table:

Period End Rate Average Rate
June 30, December 31, For the six months ended June 30,
2021 2020 2021 2020
Thai Baht 0.0312 0.0324 0.0325 0.0316
Hong Kong Dollar 0.1282 0.1282 0.1282 0.1282
2.6 Use of estimates

The preparation of consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing the unaudited interim condensed consolidated financial statements, the significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended December 31, 2020.

2.7 Financial risk management
2.7.1 Financial risk factors
--- ---

The Company’s activities expose it to a variety of financial risks: foreign exchange risk, interest rate risk and liquidity risk. The Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial performance.

The unaudited interim condensed consolidated financial statements do not include all financial risk management information and disclosures required in the audited financial statements, and should be read in conjunction with the Company’s audited consolidated financial statements as at December 31, 2020 and 2019.

2.7.2 Liquidity risk

Prudent liquidity management implies maintaining sufficient cash and cash equivalents and the availability of funding through an adequate amount of committed credit facilities.

The Company’s primary cash requirements are for operating expenses and purchases of fixed assets. The Company mainly finances its working capital requirements from cash generated from operation and proceeds from bank borrowings and finance leases.

The Company’s policy is to regularly monitor current and expected liquidity requirements to ensure it maintains sufficient cash and cash equivalents and an adequate amount of committed credit facilities to meet its liquidity requirements in the short and long term.

At the reporting date, the contractual undiscounted cash flows of the Company’s current financial liabilities approximate their respective carrying amounts due to their short maturities.

2.7.3 Capital risk management

The Company’s objectives on managing capital are to safeguard the Company’s ability to continue as a going concern and support the sustainable growth of the Company in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to enhance shareholders’ value in the long term.

F-10

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return of capital to shareholders, issue new shares or sell assets to reduce debt.

In the opinion of the directors of the Company, the Company’s capital risk is low.

2.7.4 Impact of COVID-19

The Coronavirus Disease (COVID-19) outbreak and the measures taken to contain the spread of the pandemic have created a high level of uncertainty to global economic prospects and this has impacted the Company’s operations and its financial performance in year 2021 and 2020. As COVID-19 continues to evolve with significant level of uncertainty, management of the Company is unable to reasonably estimate the full financial impact of COVID-19 on the Company’s financial results in year 2021. The Company is monitoring the situation closely and to mitigate the financial impact, it is conscientiously managing its cost by adopting an operating cost reduction strategy and conserving liquidity by working with major creditors to align repayment obligations with receivable collections. Based on the Company’s most recent projections for year 2021 and with over $9 million in cash and cash equivalents, management of the Company believes that the Company will be able to continue to operate as a going concern in the foreseeable future for at least the next 12 months.

2.8 Revenue from contracts with customers

The Company generates its revenue primarily from rendering the following services: (i) Cash-In-Transit - Non Dedicated Vehicle (Non-DV); (ii) Cash-In-Transit - Dedicated Vehicle (DV); (iii) ATM management; (iv) Cash Processing (CPC); (v) Cash Center Operations (CCT); (vi) Cheque Center Service (CDC); (vii) Express Cash; (viii) Coin Processing Service; (ix) Cash Deposit Management Solutions and (x) Robotics AI Solutions.

The Company recognizes revenue when it has transferred to its customer control over the service rendered. Control refers to the ability of the customer to direct and obtain substantially all the transferred service’s benefits. Also, it implies that the customer has the ability to prevent a third-party from directing the use and obtaining substantially all the benefits of the transferred service. The Company’s management applies the following considerations to analyze the moment in which the control of the service is transferred to the customer.

● Identify the contract or<br> quotation with the agreed service price.
● Evaluate the services engaged<br> in the customer’s contract and identify the related performance obligations.
--- ---
● Consider the contract terms<br> and commonly accepted practices in the business to determine the transaction price. The transaction price is the consideration that<br> the Company expects to be entitled for delivering the services engaged with the customer. The consideration engaged in a customer’s<br> contract is generally a fixed amount.
--- ---
● Allocate the transaction<br> price, if necessary, to each performance obligation (to each good or service that is different) for an amount that represents the<br> part of the benefit that the Company expects to receive in exchange for the right of delivering the services engaged with the customer.
--- ---
● Recognize revenue when<br> the Company satisfied the performance obligation through the rendering of services engaged.
--- ---

All of the conditions mentioned above are accomplished normally when the services are rendered to the customer and revenue is recognized when the Company satisfied the performance obligation over time or point in time depending on the service type. The reported revenue reflects services delivered at the contract or agreed-upon price.

F-11

Revenue is recognized when the related performance obligation is satisfied.

Disaggregation information of revenue by service type is as follows:

For the six months ended June 30,
2021 Percentage of <br><br>Total 2020 Percentage of <br><br>Total
Service Type Revenue Revenue
Cash-In-Transit – Non-Dedicated Vehicles (CIT Non-DV) 32.3 % 31.8 %
Cash-In-Transit - Dedicated Vehicle to Banks (CIT DV) 12.9 % 13.0 %
ATM Management 31.5 % 33.5 %
Cash Processing (CPC) 7.6 % 7.7 %
Cash Center Operations (CCT) 8.4 % 8.5 %
Cheque Center Service (CDC) 0.2 % 0.2 %
Others  ** 1.4 % 1.2 %
Cash Deposit Management Solutions (GDM) 4.6 % 3.4 %
Robotics AI solutions 1.1 % 0.7 %
Total 100.0 % 100.0 %

All values are in US Dollars.

** Others include primarily revenue from express cash and coin processing services.
2.9 Cost of revenue

Cost of revenue consists primarily of internal labor costs and related benefits, and other overhead costs that are directly attributable to services provided.

2.10 Recent Accounting Pronouncements

All new standards and amendments that are effective for annual reporting period commencing January 1, 2021 have been applied by the Company for the six months ended June 30, 2021. The adoption of these new and amended standards did not have material impact on the consolidated financial statements of the Company. A number of new standards and amendments to standards have not come into effect for the year beginning January 1, 2021, and they have not been early adopted by the Company in preparing these consolidated financial statements. None of these new standards and amendments to standards is expected to have a significant effect on the consolidated financial statements of the Company.

3. BUSINESS COMBINATION

On the February 4, 2021, the Company announced the acquisition of a majority stake in information security consultants Handshake Networking Ltd (“Handshake”), a Hong Kong-based company specializing in penetration testing. A total of 43,700 shares were issued and valued at $7.50 per share in consideration for 51% of Handshake.

Accordingly, the acquisition has been accounted for in accordance with IFRS 3 guidelines, whereby the Company recognized the assets and liabilities of Handshake transferred at their carrying amounts with a carry-over basis.

The following represents the purchase price allocation at the dates of the acquisition:

March 25,<br> 2021
Cash and cash equivalents $ 24,276
Other current assets 32,250
Current liabilities (58,297 )
Goodwill 329,534
Total purchase price $ 327,763
4. CASH, CASH EQUIVALENTS AND RESTRICTED CASH
--- ---
As at<br> June 30, 2021 As at<br> December 31, 2020
--- --- --- --- ---
Cash on hand $ 368,117 $ 392,803
Cash in bank 7,357,012 8,021,241
Subtotal 7,725,129 8,414,044
Restricted cash 1,667,081 1,715,866
Cash, cash equivalents, and restricted cash $ 9,392,210 $ 10,129,910

F-12

5. INVENTORY
As at<br><br> June 30, 2021 As at<br><br> December 31, 2020
--- --- --- --- ---
Robots at warehouse $ 2,553,957 $ 252,411
Robots in transit - 242,670
Inventory $ 2,553,957 $ 495,081

No allowance for slow moving or obsolete inventory was recorded for the six months ended June 30, 2021 and 2020.

6. ACCOUNTS RECEIVABLE, NET
As at<br><br> June 30, 2021 As at<br><br> December 31, 2020
--- --- --- --- ---
Accounts receivable $ 5,790,229 $ 5,468,911
Allowance for doubtful accounts - -
Accounts receivable, net $ 5,790,229 $ 5,468,911
7. WITHHOLDING TAX RECEIVABLES, NET
--- ---
As at<br><br> June 30, 2021 As at<br><br> December 31, 2020
Current portion $ - $ 690,487
Non-current portion 3,359,752 3,534,552
Withholding tax receivables, net $ 3,359,752 $ 4,225,039

During the second half of year 2020, the Company received a withholding taxes refund in connection with the Company’s 2013 to 2015 withholding taxes refund applications. The Company wrote off the difference between the receivable recorded and amount of known refund from the Thai Revenue Department. The Company did not have any write offs during the six months ended June 30, 2021 and 2020.

Out of prudence, based on amount written off for the receivable related to year 2013 to 2015, the Company recorded an allowance of $98,226 against its withholding taxes receivable for the six months ended June 30, 2021.

8. OTHER CURRENT AND OTHER NON-CURRENT ASSETS
As at<br><br> June 30, 2021 As at<br><br> December 31, 2020
--- --- --- --- ---
Input VAT receivable $ 325,208 $ 134,746
Prepayments - office rental 1,515,585 952,616
Prepayments - insurance 503,978 292,095
Prepayments - others 17,709 51,920
Uniforms 15,450 17,954
Tools and supplies 84,724 135,553
Other current assets $ 2,462,654 $ 1,584,884
Deposits $ 330,416 $ 361,275
Other non-current assets $ 330,416 $ 361,275

F-13

9. FIXED ASSETS, NET
Leasehold<br> improvements Machinery and<br> equipment Office decoration<br> and equipment Vehicles Assets under<br> construction GDM machines Robots Total
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Cost
At December 31, 2020 $ 3,649,107 $ 5,713,840 $ 5,951,808 $ 17,885,762 $ - $ 1,883,116 $ 884,950 $ 35,968,583
Additions 4,284 47,695 54,330 399,639 23,027 - 2,385,878 2,914,853
Disposals - (33,571 ) (3,136 ) (115,471 ) - (7,443 ) (159,621 )
Exchange differences (231,811 ) (362,976 ) (378,093 ) (1,136,207 ) - (119,627 ) (26,570 ) (2,255,284 )
At June 30, 2021 (Unaudited) 3,421,580 5,364,988 5,624,909 17,033,723 23,027 1,763,489 3,236,815 36,468,531
Accumulated Depreciation
At December 31, 2020 2,923,013 5,390,966 5,124,622 14,004,064 - 616,280 25,284 28,084,229
Depreciation charged for the year 78,674 89,833 111,429 611,225 - 174,897 178,999 1,245,057
Disposals - (33,568 ) (3,091 ) (115,471 ) - (248 ) (152,378 )
Exchange differences (185,685 ) (342,465 ) (325,546 ) (889,619 ) - (39,150 ) (990 ) (1,783,455 )
As June 30, 2021 (Unaudited) 2,816,002 5,104,766 4,907,414 13,610,199 - 752,027 203,045 27,393,453
Net book value
At June 30, 2021 (Unaudited) $ 605,578 $ 260,222 $ 717,495 $ 3,423,524 $ 23,027 $ 1,011,462 $ 3,033,770 $ 9,075,078

There was no impairment of fixed assets recorded for the six months ended June 30, 2021 and 2020. No fixed assets were pledged as security for bank borrowings.

10. RIGHT-OF-USE ASSETS AND OPERATING LEASE LIABILITIES

The carrying amounts of right-of-use assets are as below:

As at<br> June 30, 2021 As at<br> December 31, 2020
As at January 1 $ 4,190,351 $ 6,173,590
New leases 120,399 532,978
Depreciation expense (1,223,282 ) (2,506,446 )
Exchange difference (218,864 ) (9,771 )
Net book amount $ 2,868,604 $ 4,190,351

Lease liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate. The weighted average incremental borrowing rate applied to new leases during six months ended June 30, 2021 was 3.25%.

During the six months ended June 30, 2021, interest expense of $125,245 arising from lease liabilities was included in finance costs. Depreciation expense related to right-of-use assets was $1,223,282 during the six months ended June 30, 2021.

11. INTANGIBLE ASSETS, NET

Intangible assets represent computer software. The intangible assets are recorded at historic acquisition costs, and amortized on a straight-line basis over their estimated useful lives.

Costs associated with maintaining computer software programs are recognized as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Company will be recognized as intangible assets when the criteria of intangible assets are met.

F-14

Intangible assets are not amortized where their useful lives are assessed to be indefinite. The useful life of an intangible asset that is not being amortized is reviewed annually to determine whether events and circumstances continue to support the indefinite useful life assessment for that asset. Otherwise, the change in useful life assessment from indefinite to finite is accounted for prospectively from the date of change and in accordance with the policy for amortization of intangible assets with finite lives as set out above. As of June 30, 2021 and December 31, 2020, the Company had no indefinite lived intangible assets.

Computer software
Cost
At December 31, 2020 $ 995,045
Additions 4,782
Exchange difference (63,211 )
At June 30, 2021 (Unaudited) 936,616
Accumulated amortization
At December 31, 2020 771,637
Amortization charged for the year 24,559
Exchange difference (49,018 )
As June 30, 2021 (Unaudited) 747,178
Net book value
At June 30, 2021 (Unaudited) $ 189,438
12. TRADE AND OTHER PAYABLES AND OTHER CURRENT LIABILITIES
--- ---
As at<br><br> June 30, 2021 As at<br><br> December 31, 2020
--- --- --- --- ---
Trade accounts payable – third parties $ 2,396,957 $ 1,366,482
Accrued salaries and bonus 547,114 140,321
Accrued customer claims, cash loss and shortage, others** 105,935 33,608
Trade and other payables $ 3,050,006 $ 1,540,411
Output VAT $ 134,296 $ 114,877
Accrued Expenses 575,935 375,815
Payroll Payable 359,222 560,051
Other Payables 279,974 198,363
Other current liabilities $ 1,349,427 $ 1,249,106
** Includes<br>a provision for penalty for failure to meet certain performance indicators as stipulated in certain customer contracts for approximately<br>$45,700 and $14,600 respectively.
--- ---
13. BORROWINGS FROM FINANCIAL INSTITUTIONS
--- ---
As at<br><br> June 30, 2021 As at<br><br> December 31, 2020
--- --- --- --- ---
Current portion of long-term borrowings $ 1,700,473 $ 494,994
Long-term borrowings 986,584 993,869
Borrowings from financial institutions $ 2,687,057 $ 1,488,863

F-15

The Company’s borrowings are mainly used to support its business in Thailand. Those borrowings carry interest at the rate varies from 2% to MLR minus 1% per annum. Maturity date of borrowings is made and repayable on various dates from November 5, 2021 to April 7, 2025. For the six months ended June 30, 2021 and 2020, the interest expense was $22,212 and $47,918, respectively.

As of June 30, 2021, the Company has unused bank overdraft availability of approximately $312,000 (THB10 million) and unused trust receipts availability of approximately $1,560,000 (THB50 million).

14. FINANCE LEASE LIABILITIES
As at<br><br> June 30, 2021 As at<br><br> December 31, 2020
--- --- --- --- ---
Current portion $ 790,704 $ 632,105
Non-current portion 825,841 1,023,366
Finance lease liabilities $ 1,616,545 $ 1,655,471

For the six months ended June 30, 2021 and 2020, interest expense was $46,102 and $52,499, respectively.

The minimum lease payments under finance lease agreements are as follows:

As at<br><br> June 30, 2021 As at<br><br> December 31, 2020
Within 1 year $ 320,700 $ 701,796
After 1 year but within 5 years 1,440,400 1,074,047
Less: Finance charges (144,555 ) (120,372 )
Present value of finance lease liabilities, net $ 1,616,545 $ 1,655,471

Finance leased assets comprise primarily vehicles and office equipment as follow:

As at <br><br>June 30,<br><br> 2021 As at<br><br> December 31, <br><br>2020
Cost $ 3,370,741 $ 8,459,215
Less: Accumulated depreciation (1,029,460 ) (4,226,875 )
Net book value $ 2,341,282 $ 4,232,340
15. TAXATION
--- ---

Valueadded tax (“VAT”)

The Company is subject to a statutory VAT of 7% for services in Thailand. The output VAT is charged to customers who receive services from the Company and the input VAT is paid when the Company purchases goods and services from its vendors. The input VAT can be offset against the output VAT.  The VAT payable is presented on the statements of financial position when input VAT is less than the output VAT.  A recoverable balance is presented on the statements of financial position when input VAT is larger than the output VAT.

F-16

Deferredtaxes

Current income taxes are provided on the basis of net income for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. Deferred income taxes are accounted for using an asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The tax base of an asset or liability is the amount attributed to that asset or liability for tax purposes. The effect on deferred taxes of a change in tax rates is recognized in the consolidated statements of profit or loss in the period of change. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all of the deferred tax assets will not be realized.

The Company offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

16. PROVISION FOR EMPLOYEE BENEFITS

The Company has a defined benefit plan based on the requirement of the Thailand Labor Protection Act B.E.2541 (1988) to provide retirement benefits to employees based on pensionable remuneration and length of service which are considered as unfunded. There were no plan assets set up and the Company will pay benefits when needed.

Provision<br><br> for employee<br><br> benefits
Defined benefit obligations at December 31, 2020 $ 6,841,673
Estimate for the six months period $ (294,175 )
Defined benefit obligations at June 30, 2021 (Unaudited) $ 6,547,498
17. SHAREHOLDERS’ EQUITY
--- ---

On August 20, 2021, the shareholders of the Company approved a 1 for 3 reverse split of the Company’s authorized and issued ordinary shares whereby every three shares were consolidated into one share (the “Reverse Split”). In addition, the par value of each ordinary share increased from $0.001 to $0.003. The interim financial statements and all share and per share amounts have been retroactively restated to reflect the Reverse Split.

In addition to the Reverse Split, the shareholders of the Company also approved a proposal to resolve fractional entitlements to the Company’s issued ordinary shares resulting from the Reserve Split – under the proposal, fractional shares will be disregarded and will not be issued to the shareholders of the Company but all such fractional shares shall be redeemed in cash for the fair value of such fractional share, with fair value being defined as the closing price of the ordinary shares on a post-reverse split basis on the applicable trading market on the first trading date of the Company’s ordinary shares following the effectiveness of the Reverse Split; and an increase in the Company’s authorized ordinary shares from 100,000,000 to 300,000,000.

As of December 31, 2020, 17,356,090 ordinary shares were issued at par value of $0.003, equivalent to share capital of $52,069. In March 2021, the Company issued 187,598 ordinary shares (see Note 18) and 43,700 ordinary shares (see Note 3) at par value. Total ordinary shares issued as of June 30, 2021 was 17,587,388, equivalent to share capital of approximately $52,763. As of June 30, 2021 and December 31, 2020, subscription receivable for these shares was $50,000.

F-17

18. STOCK-BASED COMPENSATION

On December 16, 2019, the Company entered into an agreement and plan of merger (the “Merger Agreement”) with VCAB Eight Corporation, a Texas corporation (“VCAB”). As consideration for the Merger, the Company agreed to issue an aggregate of 877,025 shares of capital stock (“Plan Shares’) to VCAB’s claim holders. As of December 31, 2020, the Company has issued, 689,427 of the Plan Shares to approximately 670 designated and Bankruptcy Court approved claim holders. In March 2021, the Company issued 187,598 of the Plan Shares to additional claim holders upon their approval by the Bankruptcy Court. Following the completion of this process, the Company has approximately 1,300 holders of its outstanding ordinary shares. During the year ended December 31, 2020, the Company recorded the fair value of the shares in connection to the 877,025 shares issued in the merger transaction of $18,826 as stock-based compensation expense.

19. ADMINISTRATIVE EXPENSES
For the six months ended<br> June 30,
--- --- --- --- ---
2021 2020
Staff expense $ 1,248,056 $ 1,193,864
Rental expense 340,752 703,011
Depreciation and amortization expense 235,604 84,288
Utilities expense 81,255 85,467
Travelling and entertainment expense 77,747 45,436
Professional fees 331,522 488,504
Repairs and maintenance 26,226 40,774
Employee benefits 353,358 566,561
Other service fees 153,906 368,397
Other expenses** 423,182 518,230
$ 3,271,608 $ 4,094,532
** Other<br>expenses mainly comprised of stock-based compensation, office expenses, stamp duties, training costs, etc.
--- ---
20. LEGAL RESERVE
--- ---

Under the provisions of the Civil and Commercial Code, GF Cash (CIT) is required to set aside as a legal reserve at least 5% of the profits arising from the business of the Company at each dividend distribution until the reserve is at least 10% of the registered share capital. The legal reserve is non-distributable. The Company reserve has met the legal reserve requirement of $223,500 as of June 30, 2021 and December 31, 2020.

F-18

21. RELATED PARTY TRANSACTIONS

The principal related party balances and transactions as at and for the six months ended June 30, 2021 and 2020 are as follows:

The principal related party balances and transactions as of and for the years ended December 31, 2020 and 2019 are as follows:

Amountsdue from related parties:

As at<br><br> June 30, 2021 As at<br><br> December 31, 2020
Quantum Infosec Inc (“Quantum”) (a, b) $ 357 $ -
Guardforce TH Group Company Limited (b) 6,593 6,026
Guardforce AI Technology Limited (b) 236 -
Guardforce AI Service Limited (b) 236 -
Bangkok Bank Public Company Limited (c) - 443
Guardforce Limited (d) - 20,647
Shenzhen Intelligent Guardforce Robot Technology Co., Limited (e) - 346,152
$ 7,422 $ 373,268
(a) Quantum<br>Infosec Inc is related with the Company since March 2021 when the Company acquired Handshake. Quantum owns 49% of Handshake and the shareholders<br>of Quantum are the directors of Handshake.
--- ---
(b) Amounts<br>due from Quantum Infosec Inc, Guardforce TH Group Company Limited, Guardforce AI Technology Limited, Guardforce AI Service Limited were<br>business advances for operational purposes.
--- ---
(c) Amounts<br>due from Bangkok Bank Public Company Limited represents trade receivables for service provided by the Company.
--- ---
(d) Amounts<br>due from Guardforce Limited represents primarily trade receivables for the sale of robots. The balance was fully settled in January 2021.
--- ---
(e) Amounts<br>due from Shenzhen Intelligent Guardforce Robot Technology Co., Limited comprised of $187,665 advance to suppliers for the purchase of<br>robots and $158,487 commission receivable.
--- ---

Amountsdue to related parties:

As at<br><br> June 30, 2021 As at<br><br> December 31, 2020
Tu Jingyi (b) $ 88,047 $ 88,047
Profit Raider Investment Limited (b) 1,253,814 1,136,664
Shenzhen Intelligent Guardforce Robot Technology Co., Limited (d) 2,881,698 -
Guardforce Holdings (HK) Limited (c) 156,782 156,782
Richard Hall (e) 15,976 -
Shenzhen Junwei Investment Development Company Limited (“Junwei”) (a) - 225,085
Guardforce Aviation Security Company Limited (d) - 1,224
Guardforce Security (Thailand) Company Limited (d) - 62,667
$ 4,396,317 $ 1,670,469
(a) Amounts<br>due to Shenzhen Junwei Investment Development Company Limited represent non-interest bearing advances from related parties. In January<br>2021, the amount due to Junwei was forgiven.
--- ---
(b) Amounts<br>due to Tu Jingyi and Profit Raider Investment Limited represented interest accrued on the respective loans.
--- ---
(c) Amounts<br>due to Guardforce Holdings (HK) Limited comprised of $99,998 advances made and $56,784 accrued interests on the loans.
--- ---
(d) Amounts<br>due to Shenzhen Intelligent Guardforce Robot Technology Co., Limited , Guardforce Aviation Security Company Limited and Guardforce Security<br>(Thailand) Company Limited represent accounts payable for the products or services provided by related parties.
--- ---
(e) Richard<br>Hall is related to the Company since March 2021 when the Company acquired Handshake. Richard is one of the shareholders of Quantum<br>which owns 49% of Handshake and Richard is the director of Handshake.  Amount due to Richard represent advances made to Handshake.
--- ---

F-19

Long-termborrowings from related parties:

As at<br><br> June 30, 2021 As at<br><br> December 31, 2020
Guardforce Holdings (HK) Limited (a) $ 4,040,500 $ 4,140,500
Tu Jingyi (b) 1,437,303 1,437,303
Profit Raider Investment Limited (c) 12,649,903 13,508,009
$ 18,127,706 $ 19,085,812
(a) From<br>time to time, the Company borrowed from Guardforce Holdings (HK) Limited whereby as of June 30, 2021, total loan amount from Guardforce<br>Holdings (HK) Limited was $4,648,498. These loans bear interest rate of 2% and are due on various dates from December 22, 2022 to September<br>8, 2023.
--- ---
(b) On<br>September 1, 2018, the Company entered into an agreement with Mr. Tu Jingyi whereby he lent $1,437,303 (RMB10 million) to the Company.<br>The loan is due on August 31, 2022 with an interest rate at 1.5%.
--- ---
(c) The<br>loan with Profit Raider Investment Limited is due on December 31, 2022. As of June 30, 2021, the outstanding principal amount due was<br>$12,649,903 and the amount of interest accrued on the loan, calculated up to June 31, 2021 was $1,253,814.
--- ---

Relatedparty transactions:

For the six months ended<br> June 30,
Nature 2021 2020
Service/ Products received from related parties:
Shenzhen Intelligent Guardforce Robot Technology Co., Limited – Purchases (a) $ 4,652,125 $ 150,185
Service/ Products delivered to related parties:
Guardforce Limited – Sales (b) $ 111,564 $ 128,410

Nature of transactions:

(a) The Company<br> purchased robots from Shenzhen Intelligent Guardforce Robot Technology Co., Limited;
(b) The Company sold robots<br> to Guardforce Limited.
22. COMMITMENTS AND CONTINGENCIES
--- ---

Executives/directorsagreements

The Company has several employment agreements with executives and directors with the latest expiring in 2024. All agreements provide for automatic renewal options with varying terms of one year or three years unless terminated by either party. Future payments for employment agreements as of June 30, 2021, are as follows:

Amount
Twelve months ending June 30:
2022 $ 1,048,214
2023 740,372
2024 110,000
Total minimum payment required $ 1,898,586

F-20

Contractedexpenditure commitments

The Company’s contracted expenditures commitments as of June 30, 2021 but not provided in the consolidated financial statements are as follows:

Payments Due by Period
Less than 1-3 4-5 More<br> than
Contractual Obligations Nature Total 1 year years years 5 years
Service fee commitments (a) $ 804,992 $ 368,175 $ 436,817 $ - $ -
Operating lease commitments (b) 403,656 362,233 41,423 - -
$ 1,208,648 $ 730,408 $ 478,240 $ - $ -
(a) The Company has commitments<br> to pay certain service fees to Stander Information Company Limited, as its service provider to provide technical services for operating<br> systems, that comprise a monthly fixed amount and certain other fees as specified in the agreement.
--- ---
(b) The Company has leased<br> offices and various low value items with various lease terms.

Bankguarantees

As of June 30, 2021, the Company had commitments with banks for bank guarantees in favor of government agencies and others of approximately $7,000,000.

23. SUBSEQUENT EVENTS

Subsequent events have been reviewed through the date the consolidated financial statements were issued and required no adjustments or disclosures.

F-21

Exhibit 99.2

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

IN CONNECTION WITH THE INTERIM CONSOLIDATEDFINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2021

In this report, as used herein, and unless the context suggests otherwise, the terms “GFAI,” “Company,” “we,” “us” or “ours” refer to the combined business of Guardforce AI Co., Limited, its subsidiaries and other consolidated entities. References to “dollar” and “$” are to U.S. dollars, the lawful currency of the United States. References to “THB” are to the legal currency of Thailand. References to “SEC” are to the Securities and Exchange Commission.

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited consolidated financial statements and the related notes included elsewhere in this Report on Form 6-K and with the discussion and analysis of our financial condition and results of operations contained in our Annual Report on Form 20-F for the fiscal year ended December 31, 2020 filed with the Securities and Exchange Commission on April 29, 2021 (the “2020 Form 20- F”). This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those identified elsewhere in this report on Form 6-K, and those listed in the 2020 Form 20-F under “Item 3. Key Information-D. Risk Factors” or in other parts of the 2020 Form 20-F.

Overview

We conduct business through Guardforce Cash Solutions Security Thailand Co., Limited, or GF Cash (CIT), our subsidiary, in one segment which provides secured logistics solutions in Thailand. This includes the following services:

(i) Cash-In-Transit – Non-Dedicated Vehicle (Non-DV):

CIT (Non-DV) includes the secure transportation of cash and other valuables between commercial banks and the Bank of Thailand, Thailand’s central bank. CIT (Non-DV) also includes the transportation of coins between the commercial banks, the Thai Royal Mints and the Bank of Thailand. As such, the main customers for this service are the local commercial banks. Charges to the customers are dependent on the value of the consignment; condition of the cash being collected (for example, seal bag collection, piece count collection, bulk count collection, or loose cash collection); and the volume of the transaction. Vehicles used for the delivery of this service are not dedicated to the specific customers.

(ii) Cash-In-Transit – Dedicated Vehicle (DV):

CIT (DV) includes the secure transportation of cash and other valuables between commercial banks. As part of this service, dedicated vehicles are assigned specifically to the contracted customer for their dedicated use between the contracted designated bank branches. As this is a dedicated vehicle service, customers will submit direct schedules to our CIT teams for the daily operational arrangements and planning. Charges to the customers are on a per vehicle per month basis.

(iii) ATM Management Services:

ATM management includes cash replenishment services and first and second line of maintenance services for the ATM machines. First line of maintenance services (FLM) includes rectification of issues related to jammed notes, dispenser failures and transaction record print-out issues. Second line of maintenance services (SLM) includes all other issues that cannot be rectified under the FLM. SLM includes, for example, complete machine failure, and damage to hardware and software.

(iv) Cash Processing (CPC):

Cash processing (CPC) services include counting, sorting, counterfeit detection and vaulting services. We provide these services to commercial banks in Thailand.

(v) Cash Center Operations (CCT):

Cash Center Operations (CCT) is an outsourced cash center management service. We operate the cash center on behalf of the customer, which includes note counting, sorting, storage, inventory management and secured transportation of the notes and coins to the various commercial banks in Thailand.

(vi) Cheque Center Service (CDC):

Cheque Center Service (CDC) includes secured cheque pickup and delivery service.

(vii) Express Cash:

The express cash service is an expansion of our Guardforce Digital Machine, or GDM, solution. We work with commercial banks to have a mobile GDM installed in our CIT vehicles to collect cash from retail customers at the retailers’ sites. The cash is immediately processed inside the CIT vehicle and the cash counting results are immediately transmitted to GF Cash (CIT) headquarters and to a commercial bank. The bank will then credit the counted amount to its customers’ bank accounts. We launched the Express Cash service in 2019.

(viii) Coin Processing Service:

The Coin Processing Service includes the secure collection of coins from retail businesses and banks. The coins are stored and then delivered to the Royal Thai Mint, a sub-division of the Thai Treasury Department, Ministry of Finance. We deploy manpower to work at the Royal Thai Mint as cashier services. Additionally, we use our existing vehicle fleet to deliver coins from the Royal Thai Mint to bank branches, and vice versa.

(ix) Cash Deposit Management Solutions:

Cash Deposit Management Solutions are currently delivered by our Guardforce Digital Machine solution. Our GDM product is deployed at customer sites to provide secured retail cash deposit services. Customers use our GDM product to deposit daily cash receipts. We then collect the daily receipts from our GDM in accordance with agreed schedules. All cash receipts are then securely collected and delivered to our cash processing center for further handling and processing.

The business environment in which we operate can change quickly. We must quickly adapt to changes in the competitive landscape and local market conditions. To be successful, we must be able to balance, on a market-by market basis, the effects of changing demand on the utilization of our resources. We operate on a centralized basis but allow enough flexibility so local field management can adjust operations to the particular circumstances of their markets.

We measure financial performance on a long-term basis. We create value by focusing on yielding solid returns on capital, growing our revenues and earnings, and generating cash flows sufficient to fund our growth.

Results of Operations

The following table sets forth a summary of our unaudited interim condensed consolidated results of operations and the amounts as a percentage of total revenues for the periods indicated. This information should be read together with our unaudited interim condensed consolidated financial statements and related notes included elsewhere in this prospectus. Our historical results presented below are not necessarily indicative of the results that may be expected for any future period.

For the six months ended June 30,
2021 2020
% of<br><br> <br>Revenue % of<br> Revenue
Revenue 100.0 % 100.0 %
Cost of revenue ) (88.2 )% ) (82.5 )%
Gross margin 11.8 % 17.5 %
Provision for withholding tax receivables ) (0.5 )% -
Administrative expenses ) (17.8 )% ) (21.9 )%
Loss from operations ) (6.5 )% ) (4.4 )%
Other income 1.3 % 0.2 %
Foreign exchange loss, net ) 0.2 % ) (0.9 )%
Finance costs ) (2.4 )% ) (2.3 )%
Loss before income tax expense ) (7.8 )% ) (7.4 )%
Provision for income taxes - ) (0.3 )%
Net loss for the year ) (7.8 )% ) (7.7 )%
Net loss attributable to:
Equity holders of the Company ) )
Non-controlling interests )
) )

All values are in US Dollars.

2

Comparison of six months ended June 30,2021 and 2020

Revenue

For the six months ended June 30, 2021, our revenue was $18,405,025, a decrease of $323,761, or 1.7%, compared to $18,728,786 for the six months ended June 30, 2020. There was severe spread of COVID-19 in Thailand from March to May 2020 which led to the reduced number of customer orders. Thailand was relatively successful in containing the pandemic after May 2020 throughout most of 2020, but has been experiencing an uncontrolled resurgent outbreak since April 2021. The continuous spread of COVID-19 in 2021 led to the decrease in our revenue in 2021. The frequency of services delivered for our CIT and ATM management services business was affected as certain customers’ facilities were closed to curtail the spread of the coronavirus, especially during April 2021 to September 2021. In addition, as a result of two of our bank customers completing a merger in late 2020, our number of service activities were reduced compared to the six months ended June 30, 2020. Although there was a drop in revenue for CIT related business, we benefited from an increase and stronger demand for our GDM products and Robotics AI Solutions business by our customers. For the six months ended June 30, 2021, the revenue contribution from our Guardforce Digital Machine, or GDM product increased by $212,078 or 33.2%, which represents approximately 4.6% of our total revenue as compared to 3.4% for the six months ended June 30, 2020. For the six months ended June 30, 2021, the revenue contribution from our Robotics AI Solutions increased by $75,348 or 58.6%, which represents approximately 1.1% of our total revenue as compared to 0.7% for the six months ended June 30, 2020.

Cost of revenue and gross margin

Cost of revenue:

Cost of revenue consists primarily of internal labour cost and related benefits, and other overhead costs that are directly attributable to services provided.

For the six months ended June 30, 2021, our cost of revenue was $16,346,463, an increase of $905,283, or 5.9%, compared to $15,441,180 for the six months ended June 30, 2020. Cost of revenue as a percentage of our revenues increased from 82.4% for the six months ended June 30, 2020 to 88.8% for the six months ended June 30, 2021. This increase was mainly due to the increase in fuel consumption costs in 2021 by approximately 35.8% from THB18.97 ($0.6) average per litre as of June 2020 to THB25.76 ($0.8) average per litre as of June 2021. Despite the effective manpower streamline project to reduce our direct labor cost, the cost of overtime during the six months ended June 30, 2021 increased due to more services being performed during public holidays in 2021. Additionally, rental expense for our Thailand office increased by $336,487 for the six months ended June 30, 2021 due to the reallocation of a portion of the office rental from administrative expense to cost of revenue in 2021.

Gross margin:

As a percentage of revenue, our gross margin decreased from 17.6% for the six months ended June 30, 2020 to 11.2% for the six months ended June 30, 2021, primarily due to increase in labour costs of overtime, fuel consumption costs and reallocation of rental expense in 2021.

Administrative expenses

The Company’s total administrative expenses are comprised of selling expenses and administrative expenses.

● Selling expenses are mainly comprised of compensation and benefits for our sales and marketing personnel, travel and entertainment expenses, exhibitions, advertising and marketing promotion expenses, depreciation of motor vehicles, rental expenses, utility expenses and transportation charges.
● Administrative expenses are mainly comprised of compensation and related expenses for our management and administrative personnel, depreciation of leasehold improvements and motor vehicles and rental expenses of our administrative offices in Bangkok, Thailand.
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3

For the six months ended June 30, 2021, our total administrative expenses were $3,271,608, an decrease of $822,924, or 20.1%, compared to $4,097,532 for the six months ended June 30, 2020. The net decrease was mainly due to:

● Absence of severance payment due to no employees being laid off in 2021;
● Decrease in employee compensation and related expenses due to the reduction of manpower in 2021; and
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● Decrease in rental expense for our Thailand office due to the<br> reallocation of a portion of the office rental from administrative expense to cost of revenue in 2021.
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Although we have effectively implemented our cost reduction measures, we expect our administrative expenses will increase over time as we continue to expand our business. Our selling expenses are expected to increase as we continue to expand our business and promote our Guardforce brand. Our administrative expenses are expected to increase, reflecting the hiring of additional personnel and other costs related to the anticipated growth of our business, as well as the higher costs of operating as a public company.

Other income

Other income is comprised mainly of miscellaneous income, interest income and gain (loss) from disposal of fixed assets.

For the six months ended June 30, 2021, other income was $237,178, an increase of $204,726 or 630.9%, as compared to $32,452 for the six months ended June 30, 2020. The increase was mainly due to amount due to a related party of $224,766 was forgiven in May 2021.

Finance costs

Finance costs are comprised of finance charges for leases, interest expense on interest-bearing bank borrowings and related party borrowings utilized for working capital purposes.

Income tax expense

For the six months ended June 30, 2021, our income tax expense was $nil, a decrease of $58,368, as compared to the six months ended June 30, 2020. We are subject to various rates of income tax under different jurisdictions. No income tax expense was due in the six months ended June 30, 2021 as there was no taxable profit reported earned in 2021.

Net loss

For the six months ended June 30, 2021, our net loss was $1,555,183, a slight increase of $23,579, as compared to net loss $1,520,394 for the six months ended June 30, 2020. This was mainly due to an increase in cost of revenues and an allowance on withholding tax receivables was made in 2021.

Net loss (profit) attributable to non-controlling Interests:

For the six months ended June 30, 2021 and 2020, net loss (profits) attributable to non-controlling interests were $(91) and $5,420 respectively.

Net loss attributable to equity holders of the Company:

For the six months ended June 30, 2021 and 2020, our net loss attributable to equity holders of the Company were $1,555,183 and $1,578,762, respectively.

4

Inflation.

Inflation is not expected to materially affect our business or the results of our operations.

Foreign Currency Fluctuations.

Our activities expose it to a variety of financial risks: foreign exchange risk, interest rate risk and liquidity risk. Our overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on our financial performance.

Critical Accounting Policies.

IFRS 15 Revenue from Contracts with Customers supersedes IAS 11 Construction Contracts, IAS 18 Revenue and related Interpretations and it applies, with limited exceptions, to all revenue arising from contracts with customers. IFRS 15 establishes a five-step model to account for revenue arising from contracts with customers and requires that revenue be recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring services or goods to a customer. IFRS 15 requires entities to exercise judgment, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with our customers. The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the standard requires extensive disclosures.

IFRS 9 Financial Instruments replaces IAS 39 Financial Instruments: Recognition and Measurement for annual periods beginning on or after January 1, 2018, bringing together all three aspects of the accounting for financial instruments: classification and measurement; impairment: and hedge accounting.

The IASB issued a new standard IFRS 16 for leases. This standard replaced IAS 17. The main impact on lessees is that almost all leases are reflected on the balance sheet. This is because the balance sheet distinction between operating and finance leases is removed for lessees. Instead, under the new standard an asset (the right to use the leased item) and a financial liability to pay rentals are recognized. The only exemptions are short-term and low-value leases. The Company has adopted IFRS 16 from January 1, 2019 and has not restated comparatives for the prior reporting periods, as permitted under the specific transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognized in the opening consolidated balance sheet on January 1, 2019.

Non-IFRS Financial Measures

To supplement our unaudited interim condensed consolidated financial statements, which are prepared and presented in accordance with IFRS, we use the non-IFRS adjusted EBITDA as financial measures for our consolidated results.

We believe that adjusted EBITDA helps identify underlying trends in our business that could otherwise be distorted by the effect of certain income or expenses that we include in income (loss) from operations and net income (loss). We believe that these non-IFRS measures provide useful information about our core operating results, enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making. We present the non-IFRS financial measures in order to provide more information and greater transparency to investors about our operating results.

EBITDArepresents net income before (i) finance costs, income taxes and depreciation of fixed assets and amortization of intangible assets, which we do not believe are reflective of our core operating performance during the periods presented.

Non-IFRS adjusted net incomerepresents net income before (i) finance costs, income taxes and depreciation of fixed assets and amortization of intangible assets, (ii) certain non-cash expenses, consisting of stock-based compensation expense and allowance for withholding tax receivables.

Non-IFRS earnings per sharerepresents non-IFRS net income attributable to ordinary shareholders divided by the weighted average number of shares outstanding during the periods. Non-IFRSdiluted earnings per sharerepresents non-IFRS net income attributable to ordinary shareholders divided by the weighted average number of shares outstanding during the periods on a diluted basis.

5

The table below is a reconciliation of our net income to EBITDA and non-IFRS net income for the periods indicated:

For the six months ended <br> June 30,
2021 2020
Net loss - IFRS $ (1,555,183 ) $ (1,578,762 )
Finance costs 440,952 435,713
Income taxes - 58,368
Depreciation and amortization expense 2,542,432 2,486,283
EBITDA 1,428,201 1,401,602
Allowance for withholding tax receivables 98,226 -
Stock-based compensation expenses - 18,826
Adjusted net income (Non-IFRS) $ 1,526,427 $ 1,420,428
Non-IFRS earnings per share
--- --- --- --- ---
Basic and diluted profit for the year attributable to ordinary equity holders of the Company* $ 0.09 $ 0.08
Weighted average number of shares used in computation:
Basic and diluted* 17,486,264 17,090,926
* Giving retroactive effect to the reverse split on August 20, 2021.
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Liquidity and Capital Resources

Our principal sources of liquidity and capital resources have been, and are expected to continue to be, cash flow from operations and bank borrowings. Our principal uses of cash have been, and we expect will continue to be, for working capital to support a reasonable increase in our scale of operations as well as for business expansion investments.

On September 28, 2021, the Securities and Exchange Commission (“SEC”) declared effective a registration statement on Form F-1, as amended (File No. 333-258054) (the “Registration Statement”) for an initial public offering of 3,614,458 units of Guardforce AI, at a public offering price of $4.15 per unit, with each unit consisting of one ordinary share of the Company, par value $0.003 per share (the “Ordinary Share”), and one warrant to purchase one Ordinary Share, for aggregate gross proceeds of approximately $15 million, before underwriting discounts and other offering expenses.

As of June 30, 2021 and 2020, we had cash and cash equivalents and restricted cash of approximately $9.4 million and $9.0 million, respectively.

The following table summarizes the key cash flow components from our unaudited interim condensed consolidated statements of cash flows for the periods indicated.

For the six months ended <br> June 30,
2021 2020
Net cash provided by operating activities $ 2,042,948 $ 869,431
Net cash used in investing activities (2,224,467 ) (194,249 )
Net cash (used in) provided by financing activities (1,653 ) 834,718
Effect of exchange rate changes on cash (554,528 ) (178,352 )
Net increase in cash and cash equivalents, and restricted cash (737,700 ) 1,331,548
Cash and cash equivalents, and restricted cash, beginning 10,129,910 7,687,721
Cash and cash equivalents, and restricted cash, ending $ 9,392,210 $ 9,019,269

Operating Activities

Net cash provided by operating activities was $2,042,948 for the six months ended June 30, 2021. The difference between our net loss of $1,555,183 and net cash provided by operating activities was mainly due to (i) depreciation and amortization of $2,542,432 mainly comprised of depreciation of fixed assets and depreciation for right-of-use assets; (ii) interest expense of $341,123 for the bank loans and loans from related parties; and (iii) the increase in other operating assets and liabilities of $618,539 which was generally due to the increase in amount due to related parties and withholding tax receivables, offset with the decrease in inventory.

6

Investing Activities

Net cash used in investing activities was $2,224,467 for the six months ended June 30, 2021, which was reflecting the net effect of (i) the purchase of property and equipment of $2,251,341; (ii) proceeds from fixed assets disposal of $2,598; and (iii) cash acquired from acquisition of Handshake of $24,276.

Financing Activities

Net cash used financing activities was $1,653 for the six months ended June 30, 2021, which was attributable to (i) repayment of borrowing of $378,046; (ii) proceeds from borrowings of $1,622,855; (iii) interest paid of $269,389; and (iv) repayment of principal for finance lease of $977,073.

Research and Development, Patents and Licenses,Etc.

The Company has no research and development plans at present and there is no intellectual property owned by the Company at this moment.

Trend Information

Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demand, commitments or events that are reasonably likely to have a material effect on our net revenues and income from operations, profitability, liquidity, capital resources, or would cause reported financial information not to be indicative of future operation results or financial condition.

Off-Balance Sheet Arrangements

We do not have off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial position, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material.

Tabular Disclosure of Contractual Obligations

Payments Due by Period
Less than 1-3 4-5 More than
Contractual Obligations Nature Total 1 year years years 5 years
Service fee commitments (a) $ 804,992 $ 368,175 $ 436,817 - $ -
Operating lease commitments (b) 403,656 362,233 41,423 - -
1,208,648 $ 730,408 $ 478,240 - -
(a) The Company has commitments to pay certain service fees to Stander Information Company Limited, as its service provider to provide technical services for operating systems, that comprise a monthly fixed amount and certain other fees as specified in the agreement.
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(b) The Company has leased various low value items with various lease terms.

7

Exhibit99.3

GuardforceAI Announces Interim Results for the Period Ended June 30, 2021

NewYork, December 17, 2021 – Guardforce AI Co., Limited (“Guardforce AI” or the “Company”) (NASDAQ: GFAI, GFAIW) today announced its unaudited interim financial results for the six months ended June 30, 2021.

RecentCompany Highlights

● On<br> December 9, 2021, the Company announced its planned U.S. expansion with the proposed acquisition<br> of SBC Global Holdings Inc. with a purchase price of $2 million, paid in a mix of cash (10%)<br> and Company’s ordinary shares (90%), with expected value of the equity portion based<br> upon a price of $4.20 per Company share.
● On<br> November 30, 2021, Guardforce AI announced that its subsidiary, Guardforce Cash Solutions<br> Security (Thailand) Co., Ltd., or GF Cash (CIT), has been selected as the authorized operator<br> of a Consolidated Cash Center (CCC) for Hadyai CCC for a period of five years starting January<br> 17, 2022.
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● Entered<br> into a Transfer Agreement, on November 18, 2021, to acquire 100% of the equity interests<br> in Macau GF Robotics Limited, a company incorporated in Macau.
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● On<br> November 18, 2021, entered into a Transfer Agreement to acquire 100% of the equity interests<br> in GF Robotics Malaysia Sdn. Bhd., a company incorporated in Malaysia.
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● Entered<br> into a Transfer Agreement, on November 1, 2021, to acquire 100% of the equity interests in<br> Guardforce AI Singapore Pte. Ltd., a company incorporated in Singapore.
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● Relocated<br> our principal executive offices from Thailand to Singapore.
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● On<br> October 1, 2021, Guardforce AI closed its initial public offering of 3,614,458 units of the<br> Company, at a public offering price of $4.15 per unit, with each unit consisting of one ordinary<br> share of the Company, par value $0.003 per share (the “Ordinary Share”), and<br> one warrant to purchase one Ordinary Share, for aggregate gross proceeds of approximately<br> $15 million, before underwriting discounts and other offering expenses.
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● On<br> September 29, 2021, the Company’s Ordinary Shares started trading under the symbol<br> “GFAI” and its warrants started trading under the symbol “GFAIW”,<br> both on the Nasdaq Capital Market. Each Ordinary Share<br> is being sold together with one warrant to purchase one Ordinary Share.
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● On<br> September 28, 2021, the Company’s registration statement on Form F-1 was declared effective<br> by the SEC.
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● On<br> August 20, 2021, the shareholders of the Company approved a 1 for 3 reverse split of the<br> Company’s authorized and issued ordinary shares whereby every three shares were consolidated<br> into one share. The shareholders of the Company also approved a proposal to resolve fractional<br> entitlements to the Company’s issued ordinary shares resulting from the Reserve Split<br> and an increase in the Company’s authorized ordinary shares from 100,000,000 to 300,000,000.
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● In<br> March 2021, the Company completed its majority acquisition of Handshake Networking Limited,<br> acquiring a 51% interest in Handshake in exchange for 43,700 ordinary shares valued at $327,763.
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● On<br> January 26, 2021, the Bank of Thailand announced that Guardforce AI subsidiary, GF Cash (CIT),<br> had been selected as the authorized operator of the Consolidated Cash Center (CCC) in the<br> Khon Kaen province of Thailand for a period of five years starting April 19,<br> 2021.
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ManagementCommentary

Terence Yap, Chairman of Guardforce AI, commented, “As a cash logistics business historically based in Thailand, 2021 was as a year of strategic change within our business, positioning the Company for continued growth. Currently, nearly all of our revenues are derived from our secure logistics business. In 2020, at the onset of the COVID-19 pandemic, we began to develop other non-cash related solutions and services. During this time, robotic solutions for our customers were rolled out in Thailand and the Asia Pacific region. For the six months ended June 30, 2021 and 2020, we had generated approximately $0.2 million and $0.1 million, respectively in revenue from our robotic solutions business, demonstrating our progress towards our goal of diversifying our service offerings, and more importantly revenue streams as we believe trends in the security industry over the next decade will be characterized by rapid technological change, continual convergence between physical security and cybersecurity and increased competition. Against the backdrop of these industry trends, we aim to enhance shareholder value by maintaining and consolidating our leading position in the Thailand secured logistics services market as well as leveraging our competitive strengths to exploit new opportunities arising from the increasing physical and cyber convergence and the growth in regional security demand.

“Our goal of expanding our Robots as a Service (RaaS) platform to efficiently offer more AI value-added services for our customers is most evident in our recently announced U.S. expansion through the proposed acquisition of SBC Global Holdings Inc. This strategic expansion is in-line with our goal of increasing the speed of transformation and enhancing our technological capabilities by acquiring or establishing partnerships with technology innovators in the cybersecurity, artificial intelligence, robotics and related fields. Lastly, this acquisition allows us to expand and gain access to our target markets, increasing our international presence,” Terence Yap concluded.

FinancialSummary for Six Months Ended June 30, 2021

● Loss<br> from operations was $1.3 million compared to $0.8 million in the same period of 2020. EBITDA<br> was $1.4 million on non-IFRS measurement, compared to $1.4 million in the same period of<br> 2020, an increase of 2%.
● Net<br> loss remained consistent at $1.6 million compared the same period of 2020. Non-IFRS<br> net income was $1.5 million, an increase of 7.5% compared to $1.4 million in the same<br> period of 2020. This was mainly due to an increase in cost of revenues and allowance on withholding<br> tax receivables.
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● Loss<br> per share was $0.09. Non-IFRS earnings per share was $0.09, an increase of 12.5%<br> compared to $0.08 in the same period of 2020.
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● Net<br> cash provided by operating activities was $2 million, an increase of 74.9% compared<br> to $1.2 million in the same period of 2020 was mainly due to the collection of the withholding<br> tax refund of approximately $0.7 million in January 2021.
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● Revenue was<br> approximately $18.4 million, compared to $18.7 million in the same period of 2020 primarily<br> due to the severe spread of COVID-19 in Thailand from March to May 2020 significantly reducing<br> the number of customer orders.
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● For<br> the six months ended June 30, 2021, the Company generated approximately $0.1 million in revenue<br> from our cyber security business.
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● For<br> the six months ended June 30, 2021, our cost of revenue was $16.3 million, an increase of<br> $905,283, or 5.9%, compared to $15,441,180 for the six months ended June 30, 2020. Cost of<br> revenue as a percentage of our revenues increased from 82.4% for the six months ended June<br> 30, 2020 to 88.8% for the six months ended June 30, 2021. This increase was mainly due to<br> the increase in fuel consumption costs in 2021 by approximately 35.8%.
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● As<br> a percentage of revenue, our gross margin was 11.2% for the six months ended June 30, 2021,<br> compared to 17.6% for the six months ended June 30, 2020, primarily due to increase in labor<br> costs of overtime, fuel consumption costs and reallocation of rental expense in 2021.
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● For<br> the six months ended June 30, 2021, our total administrative expenses were $3.3 million,<br> a decrease of $822,924, or 20.1%, compared to $4.1 million for the six months ended June<br> 30, 2020. The decrease was mainly due to absence of severance payment due to no employee<br> layoffs, a decrease in employee compensation and related expenses due to the reduction in<br> necessary manpower in 2021, and a decrease in rental expense for our Thailand office.
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● For<br> the six months ended June 30, 2021, our income tax expense was $nil, a decrease of $58,368,<br> as compared to the six months ended June 30, 2020. We are subject to various rates of income<br> tax under different jurisdictions. No income tax expense was due as there was no taxable<br> profit reported in 2020.
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Reconciliationsof IFRS measures to non-IFRS measures presented above are included at the end of this document.

2

JUNEINTERIM OPERATIONAL AND FINANCIAL RESULTS

For the six months ended June 30,
2021 2020
% of<br> <br>Revenue % of<br> Revenue
Revenue 100.0 % 100.0 %
Cost of revenue ) (88.2 )% ) (82.5 )%
Gross margin 11.8 % 17.5 %
Provision for withholding tax receivables ) (0.5 )% -
Administrative expenses ) (17.8 )% ) (21.9 )%
Loss from operations ) (6.5 )% ) (4.4 )%
Other income 1.3 % 0.2 %
Foreign exchange loss, net ) 0.2 % ) (0.9 )%
Finance costs ) (2.4 )% ) (2.3 )%
Loss before income tax expense ) (7.8 )% ) (7.4 )%
Provision for income taxes - ) (0.3 )%
Net loss for the year ) (7.8 )% ) (7.7 )%
Net loss attributable to:
Equity holders of the Company ) )
Non-controlling interests )
) )

All values are in US Dollars.

3

GuardforceAI Co., Limited and Subsidiaries

UnauditedConsolidated Statements of Profit or Loss

(Expressedin U.S. Dollars)

For the six months ended <br> June 30,
2021 2020
Revenue $ 18,405,025 $ 18,728,786
Cost of revenue (16,346,463 ) (15,441,180 )
Gross margin 2,058,562 3,287,606
Provision for withholding taxes receivable (98,226 ) -
Administrative expenses (3,271,608 ) (4,097,532 )
Loss from operations (1,311,272 ) (806,926 )
Other income, net 237,178 32,452
Foreign exchange loss, net (40,137 ) (310,207 )
Finance costs (440,952 ) (435,713 )
Loss before provision for income taxes (1,555,183 ) (1,520,394 )
Provision for income taxes - (58,368 )
Loss for the year (1,555,183 ) (1,578,762 )
Less: net loss (profit) attributable to non-controlling interests (91 ) 5,420
Loss attributable to equity holders of the Company $ (1,555,274 ) $ (1,573,342 )
Loss per share
Basic and diluted (loss) profit for the year attributable to ordinary equity holders of the Company* $ (0.09 ) $ (0.09 )
Weighted average number of shares used in computation:
Basic and diluted* 17,486,264 17,090,926
* Giving<br>retroactive effect to the reverse split on August 20, 2021.
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REVENUE

Disaggregation information of revenue by service type is as follows:

For the six months ended June 30,
2021 Percentage of Total 2020 Percentage of Total
Service Type Revenue Revenue
Cash-In-Transit – Non-Dedicated Vehicles (CIT Non-DV) 32.3 % 31.8 %
Cash-In-Transit - Dedicated Vehicle to Banks (CIT DV) 12.9 % 13.0 %
ATM Management 31.5 % 33.5 %
Cash Processing (CPC) 7.6 % 7.7 %
Cash Center Operations (CCT) 8.4 % 8.5 %
Cheque Center Service (CDC) 0.2 % 0.2 %
Others  ** 1.4 % 1.2 %
Cash Deposit Management Solutions (GDM) 4.6 % 3.4 %
Robotics AI solutions 1.1 % 0.7 %
Total 100.0 % 100.0 %

All values are in US Dollars.

** Others include primarily<br> revenue from express cash and coin processing services. 
4

GuardforceAI Co., Limited and Subsidiaries

UnauditedConsolidated Statements of Financial Position

(Expressedin U.S. Dollars)

December 31, 2020
Assets
Current assets:
Cash and cash equivalents 7,725,129 $ 8,414,044
Accounts receivable, net 5,790,229 5,468,911
Withholding taxes receivables - 690,487
Other current assets 2,462,654 1,584,884
Deferred costs 38,880 -
Inventory 2,553,957 495,081
Amount due from related parties 7,422 373,268
Total current assets 18,578,271 17,026,675
Restricted cash 1,667,081 1,715,866
Fixed assets, net 9,075,078 7,884,354
Right-of-use assets 2,868,604 4,190,351
Intangible assets, net 189,438 223,408
Goodwill 329,534 -
Withholding taxes receivable, net 3,359,752 3,534,552
Deferred costs 68,040 -
Deferred tax assets, net 972,384 1,038,346
Other non-current assets 330,416 361,275
Total Assets 37,438,598 $ 35,974,827
Liabilities and (Deficit) Equity
Current liabilities:
Trade and other payables 3,050,006 $ 1,540,411
Short-term borrowings from financial institutions 2,687,057 494,994
Current portion of operating lease liabilities 1,556,425 2,211,984
Current portion of finance lease liabilities, net 790,704 632,105
Other current liabilities 1,349,427 1,249,106
Deferred revenue 43,200 -
Income tax payables - 284,627
Amount due to related parties 3,142,503 1,670,469
Total current liabilities 12,619,322 8,083,696
Long-term borrowings from financial institutions - 993,869
Operating lease liabilities 1,482,152 2,106,429
Long-term borrowings from related parties 19,381,520 19,085,812
Finance lease liabilities, net 825,841 1,023,366
75,600 -
Provision for employee benefits 6,547,498 6,841,673
Total liabilities 40,931,933 38,134,845
Commitments and Contingencies
(Deficit) Equity
Ordinary shares* – par value 0.003 authorized 100,000,000 shares, issued and outstanding 17,587,388 shares at June 30, 2021; par value 0.003 authorized 100,000,000 shares, issued and outstanding 17,356,090 shares at December 31, 2020 52,763 52,069
Subscription receivable (50,000 ) (50,000 )
Additional paid in capital 2,409,864 2,082,795
Legal reserve 223,500 223,500
Deficit (6,277,569 ) (4,722,294 )
Accumulated other comprehensive income 98,353 204,249
Total deficit attributable to equity holders of the Company (3,543,089 ) (2,209,681 )
Total equity attributable to non-controlling interests 49,754 49,663
Total deficit (3,493,335 ) (2,160,018 )
Total Liabilities and Equity 37,438,598 $ 35,974,827

All values are in US Dollars.

* Giving retroactive effect<br> to the reverse split on August 20, 2021. 
5

GuardforceAI Co., Limited and Subsidiaries

UnauditedCondensed Consolidated Statements of Cash Flows

(Expressedin U.S. Dollars)

For the six months ended <br> June 30,
2021 2020
Net cash provided by operating activities $ 2,042,948 $ 1,168,130
Net cash used in investing activities (2,224,468 ) (194,249 )
Net cash (used in) provided by financing activities (1,653 ) 536,019
Effect of exchange rate changes on cash (554,527 ) (178,354 )
Net increase in cash and cash equivalents, and restricted cash (737,700 ) 1,331,546
Cash and cash equivalents, and restricted cash at beginning of year 10,129,910 7,687,721
Cash and cash equivalents, and restricted cash at end of year $ 9,392,210 $ 9,019,269

NON-IFRSFINANCIAL MEASURES

To supplement our consolidated financial statements, which are prepared and presented in accordance with IFRS, we use the non-IFRS adjusted EBITDA as financial measures for our consolidated results.

We believe that adjusted EBITDA help identify underlying trends in our business that could otherwise be distorted by the effect of certain income or expenses that we include in income from operations and net income. We believe that these non-IFRS measures provide useful information about our core operating results, enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making. We present the non-IFRS financial measures in order to provide more information and greater transparency to investors about our operating results.

EBITDArepresents net income before (i) finance costs, income taxes and depreciation of fixed assets and amortization of intangible assets, which we do not believe are reflective of our core operating performance during the periods presented.

Non-IFRSadjusted net incomerepresents net income before (i) finance costs, income taxes and depreciation of fixed assets and amortization of intangible assets, (ii) certain non-cash expenses, consisting of stock-based compensation expense and allowance for withholding tax receivables.

Non-IFRSearnings per sharerepresents non-IFRS net income attributable to ordinary shareholders divided by the weighted average number of shares outstanding during the periods. Non-IFRS diluted earnings per sharerepresents non-IFRS net income attributable to ordinary shareholders divided by the weighted average number of shares outstanding during the periods on a diluted basis.

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The table below is a reconciliation of our net income to EBITDA and non-IFRS net income for the periods indicated:

For the six months ended <br> June 30,
2021 2020
Net loss - IFRS $ (1,555,183 ) $ (1,578,762 )
Finance costs 440,952 435,713
Income taxes - 58,368
Depreciation and amortization expense 2,542,432 2,486,283
EBITDA 1,428,201 1,401,602
Allowance for withholding tax receivables 98,226 -
Stock-based compensation expenses - 18,826
Adjusted net income (Non-IFRS) $ 1,526,427 $ 1,420,428
Non-IFRS earnings per share
Basic and diluted profit for the year attributable to ordinary equity holders of the Company* $ 0.09 $ 0.08
Weighted average number of shares used in computation:
Basic and diluted* 17,486,264 17,090,926
* Giving retroactive effect<br> to the reverse split on August 20, 2021.
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ABOUTGuardforce AI

Guardforce AI Co. Ltd. (Nasdaq: GFAI, GFAIW) is a leading integrated security solutions provider that is trusted to protect and transport the high-value assets of public and private sector organizations. Developing and introducing innovative technologies that enhance safety and protection, Guardforce AI helps clients adopt new technologies and operate safely as the Asia Pacific business landscape evolves.

For more information, visit www.guardforce.ai.

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forward-lookingstatements

This press release contains forward-looking statements within the meaning of U.S. federal securities laws. We make such forward-looking statements pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act, Section 21E of the Securities Exchange Act of 1934, as amended, and other federal securities laws. Forward-looking statements provide our current expectations or forecasts of future events. Forward-looking statements include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as "anticipate," "believe," "continue," "estimate," "expect," "intend," "may," "ongoing," "plan," "potential," "predict," "project," "will" or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. The forward-looking statements contained in this press release are based on reasonable assumptions we have made in light of our industry experience, perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this press release you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (many of which are beyond our control) and assumptions, including the risks described in the reports and other documents we file with the Securities and Exchange Commission. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual operating and financial performance and cause our performance to differ materially from the performance anticipated in the forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove incorrect or change, our actual operating and financial performance may vary in material respects from the performance projected in these forward-looking statements. Any forward-looking statement made by us in this press release speaks only as of the date of this press release. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

CONTACTS

CorporateContact:

Yu Hu

Email: yu.hu@guardforceai.com

Phone: (+852) 2838-3500

MediaRelations:

Patrick Yu

Email: patrick.yu@fleishman.com

Phone: (+852) 2586-7877

InvestorRelations:

Shannon Devine

Email: GFAI@mzgroup.us

Phone: +1 203-741-8811

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