Equibles

6-K

Guardforce AI Co., Ltd. (GFAI)

6-K 2024-09-25 For: 2024-06-30
View Original
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, September 2024

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 ☐

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, 2024 and 2023 and incorporate such financial statements into the Company’s registration statements referenced below.

Additionally, the Company reports further details on the At-The-Market (ATM) sales conducted from July 2, 2024, to the date of this report, under the 2024 ATM equity program.

On July 2, 2024, the Company entered into an At the Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (the “Sales Agent”), pursuant to which the Company may offer and sell, from time to time, its ordinary shares, par value $0.12 per share (the “Ordinary Shares”), through the Sales Agent in an “at the market offering” (the “ATM Offering”), as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended, for an aggregate offering price of up to $10,862,168.

For the period from July 2, 2024, to the date of this report, the Company issued 1,628,368 Ordinary Shares pursuant to the 2024 ATM equity program for gross proceeds of $2,593,842. The Ordinary Shares were sold at prevailing market prices, for an average price per share of $1.59. Pursuant to the ATM Agreement, a cash commission of $64,846 on the aggregate gross proceeds raised was paid to the Sales Agent in connection with its services under the AMT Agreement.

The Company is using the net proceeds raised from the ATM Offering between July 2, 2024, and the date of this report for research and development to further advance its AI and robotic business and technology capabilities, business development, corporate management, talent recruitment, and general working capital.

This report on Form 6-K and the attached Exhibits 99.1, 99.2 and 99.3 are incorporated by reference into (i) the prospectus contained in the Company’s registration statement on Form F-3 (SEC File No. 333-261881) declared effective by the Securities and Exchange Commission on January 5, 2022, (ii) the prospectus dated February 9, 2022 contained in the Company’s registration statement on Form F-3 (SEC File No. 333-262441) declared effective by the Securities and Exchange Commission on February 9, 2022, and (iii) the prospectus dated June 14, 2022 contained in the Company’s post-effective Amendment No. 1 to the Form F-1 registration statement on Form F-3 (SEC File No. 333-258054) declared effective by the Securities and Exchange Commission on June 14, 2022.

1

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, 2024 (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.

2

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: September 25, 2024 Guardforce AI Co., Limited
By: /s/ Lei Wang
Lei Wang
Chief Executive Officer

3

EXHIBIT INDEX

Exhibit Number Description
99.1 Unaudited Interim Consolidated Financial Statements as of June 30, 2024 and for the six months ended June 30, 2024 and 2023
99.2 Operating and Financial Review and Prospects in Connection with the Interim Consolidated Financial Statements for the six months ended June 30, 2024
99.3 Press Release titled “Guardforce AI Reports Positive Adjusted Net Income for the First Half of 2024” dated September 24, 2024
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

4

Exhibit 99.1

GUARDFORCE AI CO., LIMITED AND SUBSIDIARIES

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIALSTATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2024 and 2023

Contents Page(s)
Unaudited Interim Condensed Consolidated Balance Sheets F-2
Unaudited Interim Condensed Consolidated Statements of Profit or Loss F-3
Unaudited Interim Condensed Consolidated Statements of Comprehensive Loss F-4
Unaudited Interim Condensed Consolidated Statement of Changes in Equity F-5
Unaudited Interim Condensed Consolidated Statements of Cash Flows F-6
Notes to the Unaudited Interim Condensed Consolidated Financial Statements F-7 – F-28

F-1

Guardforce AI Co., Limited and Subsidiaries

Unaudited Interim Condensed Consolidated BalanceSheets

(Expressed in U.S. Dollars)

As of<br> June 30,<br> 2024 As of<br> December 31,<br> 2023
(Unaudited)
Assets
Current assets:
Cash and cash equivalents 4 $ 13,979,217 $ 20,235,227
Restricted cash 4 26,319 100,764
Trade receivables 6 5,316,983 5,630,805
Other current assets 8 2,633,799 1,665,571
Withholding tax receivable, net 7 366,884 607,221
Inventories 5 381,155 506,403
Amounts due from related parties 21 13,086 2,172,638
Assets held for sale - 201,963
Total current assets 22,717,443 31,120,592
Non-current assets:
Restricted cash 4 1,496,236 1,608,762
Property, plant and equipment 9 3,280,470 4,043,725
Right-of-use assets 10 2,588,540 2,688,208
Intangible assets, net 11 2,684,655 2,836,250
Goodwill 411,862 411,862
Withholding tax receivable, net 7 1,504,543 1,617,625
Deferred tax assets, net 16 1,110,164 1,085,477
Other non-current assets 8 390,065 402,447
Total non-current assets 13,466,535 14,694,356
Total assets $ 36,183,978 $ 45,814,948
Liabilities and Equity
Current liabilities:
Trade and other payables 12 $ 3,047,534 $ 3,016,850
Borrowings 13 187,288 337,241
Borrowing from a related party 21 - 3,104,149
Current portion of operating lease liabilities 10 1,457,783 1,239,066
Current portion of finance lease liabilities 15 53,055 108,597
Other current liabilities 12 1,764,636 3,171,643
Amounts due to related parties 21 139,557 2,898,506
Liabilities directly associated with the assets held for sale - 130,876
Total current liabilities 6,649,853 14,006,928
Non-current liabilities:
Borrowings 13 - 44,410
Operating lease liabilities 10 1,124,195 1,455,857
Finance lease liabilities 15 203,127 218,996
Provision for employee benefits 17 4,591,555 4,935,982
Total non-current liabilities 5,918,877 6,655,245
Total liabilities 12,568,730 20,662,173
Equity
Ordinary shares – par value 0.12 authorized 300,000,000 shares, issued and outstanding 10,237,282 shares at June 30, 2024; issued and outstanding 9,830,373 shares at December 31, 2023 1,228,509 1,179,680
Subscription receivable (50,000 ) (50,000 )
Additional paid in capital 82,011,907 80,983,164
Legal reserve 20 223,500 223,500
Warrants reserve 251,036 251,036
Accumulated deficit (60,188,269 ) (58,340,675 )
Accumulated other comprehensive income 209,422 985,120
Capital & reserves attributable to equity holders of the Company 23,686,105 25,231,825
Non-controlling interests (70,857 ) (79,050 )
Total equity 23,615,248 25,152,775
Total liabilities and equity $ 36,183,978 $ 45,814,948

All values are in US Dollars.

The accompanying notesare an integral part of these unaudited condensed consolidated financial statements.

F-2

Guardforce AI Co., Limited and Subsidiaries

Unaudited Interim Condensed Consolidated Statementsof Profit or Loss

(Expressed in U.S. Dollars)

Note For the six months ended<br> June 30,
2024 2023
(Unaudited) (Unaudited)
Revenue $ 17,566,844 $ 18,005,603
Cost of sales (14,327,094 ) (15,846,807 )
Gross profit 3,239,750 2,158,796
Stock-based compensation (172,655 ) -
Recovery (Provision for and write off) of withholding tax receivable 32,980 (561,277 )
Provision for expected credit loss on trade and other receivables (184,180 ) (870,408 )
Provision for obsolete inventories - (3,090,283 )
Impairment loss on fixed assets - (1,591,766 )
Impairment on goodwill (30,467 ) (1,263,040 )
Selling, distribution and administrative expenses 19 (4,967,290 ) (6,683,850 )
Operating loss from continuing operations (2,081,862 ) (11,901,828 )
Other income, net 312,342 77,665
Foreign exchange losses, net (49,041 ) (584,093 )
Finance costs (81,534 ) (578,308 )
Loss before income tax from continuing operations (1,900,095 ) (12,986,564 )
Provision for income tax benefit (expense) 16 22,949 (874,431 )
Net loss for the period from continuing operations (1,877,146 ) (13,860,995 )
Discontinued operations:
Net gain for the period from discontinued operations 38,719 11,562
Net loss for the period (1,838,427 ) (13,849,433 )
Less: net profit (loss) attributable to non-controlling interests 9,167 (30,214 )
Net loss attributable to equity holders of the Company $ (1,847,594 ) $ (13,819,219 )
Loss per share
Basic and diluted loss attributable to the equity holders of the Company $ (0.18 ) $ (4.35 )
Loss per share from continuing operations
Basic and diluted loss attributable to the equity holders of the Company $ (0.19 ) $ (4.36 )
Weighted average number of shares used in computation:
Basic and diluted 9,991,600 3,174,282

The accompanying notes are an integral partof these unaudited interim condensed consolidated financial statements.

F-3

Guardforce AI Co., Limited and Subsidiaries

Unaudited Interim Condensed Consolidated Statementsof Comprehensive Loss

(Expressed in U.S. Dollars)

Note For the six months ended<br> June 30,
2024 2023
(Unaudited) (Unaudited)
Net loss for the period $ (1,838,427 ) $ (13,849,433 )
Currency translation differences (775,698 ) 169,410
Total comprehensive (loss) for the period $ (2,614,125 ) $ (13,680,023 )
Attributable to:
Equity holders of the Company $ (2,631,861 ) $ (13,651,390 )
Non-controlling interests 17,736 (28,633 )
$ (2,614,125 ) $ (13,680,023 )

The accompanying notes are an integral partof these unaudited interim condensed consolidated financial statements.

F-4

Guardforce AI Co., Limited and Subsidiaries

Unaudited Interim Condensed Consolidated Statementof Changes in Equity

(Expressed in U.S. Dollars)

Accumulated
Number<br> <br><br> of Shares Amount<br> <br> (0.12 par) Subscription<br><br> Receivable Additional<br><br> Paid-in<br> Capital Legal<br><br> Reserve Warrants<br> <br> Reserves Other<br><br> Comprehensive<br> Income Accumulated<br> <br> Deficit Non-<br><br> controlling Interests Total<br><br> Equity
Balance as of<br> December 31, 2022 1,618,977 $ (50,000 ) $ 46,231,302 $ 223,500 $ 251,036 $ 1,112,494 $ (28,769,014 ) $ (61,329 ) $ 19,132,302
Currency translation adjustments - - - - - 169,410 - - 169,410
Cancellation of shares (Note 18) (245,339 ) ) - (4,880,223 ) - - - - - (4,909,664 )
Issuance of ordinary shares<br> through CMPOs (Note 18) 4,946,184 - 20,273,844 - - - - - 20,867,386
Issuance of ordinary shares through exercise<br> of warrants (Note 18) 128,901 - 491,224 - - - - - 506,692
Issuance of ordinary shares<br> for acquisition of assets (Note 18) 262,500 - 1,816,500 - - - - - 1,848,000
Issuance of ordinary shares<br> for a convertible note conversion (Note 18) 172,000 1,217,760 1,238,400
Net<br> loss for the period - - - - - - (13,819,219 ) (30,214 ) (13,849,433 )
Balance<br> as of June 30, 2023 (Unaudited) 6,883,223 $ (50,000 ) $ 65,150,407 $ 223,500 $ 251,036 $ 1,281,904 $ (42,588,233 ) $ (91,543 ) $ 25,003,093
Balance as of December 31,<br> 2023 9,830,373 $ (50,000 ) $ 80,983,164 $ 223,500 $ 251,036 $ 985,120 $ (58,340,675 ) $ (79,050 ) $ 25,152,775
Currency translation adjustments - - - - - (775,698 ) - - (775,698 )
Disposal of a subsidiary<br> (Note 18) (1,091 ) ) - (2,651 ) - - - - (974 ) (3,756 )
Issuance of ordinary shares<br> for stock-based compensation (Note 18) 408,000 - 1,031,394 - - - - - 1,080,354
Net<br> loss for the period - - - - - - (1,847,594 ) 9,167 (1,838,427 )
Balance<br> as of June 30, 2024 (Unaudited) 10,237,282 $ (50,000 ) $ 82,011,907 $ 223,500 $ 251,036 $ 209,422 $ (60,188,269 ) $ (70,857 ) $ 23,615,248

All values are in US Dollars.

The accompanying notes are an integralpart of these unaudited interim condensed consolidated financial statements

F-5

Guardforce AI Co., Limited and Subsidiaries

Unaudited Interim Condensed Consolidated Statementsof Cash Flows

(Expressed in U.S. Dollars)

For the six months ended <br> June 30,
2024 2023
(Unaudited) (Unaudited)
Cash flows from operating activities
Net (loss) from continuing operations $ (1,877,146 ) $ (13,860,995 )
Net gain from discontinued operations 38,719 11,562
Net loss (1,838,427 ) (13,849,433 )
Adjustments for:
Depreciation and Amortization of fixed and intangible assets 1,556,922 2,619,001
Stock-based compensation 172,655 -
(Recovery) Provision for and write off of withholding tax receivable (32,980 ) 561,277
Provision for expected credit loss on trade and other receivables 184,180 869,519
Provision for obsolete inventories - 3,090,282
Impairment loss on fixed assets - 1,591,766
Impairment on goodwill 30,467 1,263,040
Finance costs 81,778 584,897
Interest income (261,041 ) -
Deferred income taxes (101,998 ) 874,431
(Gain) Loss from assets disposal (31,577 ) 41,965
Gain on disposal of a subsidiary (3,607 ) -
Changes in operating assets and liabilities:
(Increase) Decrease in trade and other receivables (90,891 ) 157,279
Increase in other assets (1,005,338 ) (719,595 )
Decrease in inventories 114,223 296,824
(Decrease) Increase in amounts due to related parties (386,720 ) 639,807
(Decrease) Increase in Trade and other payables and other current liabilities (437,966 ) 1,285,317
Decrease (Increase) in withholding tax receivable 227,903 (374,013 )
Increase in provision for employee benefits 13,428 20,774
Net cash used in operating activities (1,808,989 ) (1,046,862 )
Cash flows from investing activities
Acquisition of property, plant and equipment (34,442 ) (829,231 )
Proceeds from sale of property, plant and equipment 27,805 -
Acquisition of intangible assets (114,224 ) (217,077 )
Disposal of a subsidiary, net of cash disposed (28,186 ) -
Interest received 283,750 -
Net cash provided by (used in) investing activities 134,703 (1,046,308 )
Cash flows from financing activities
Proceeds from issue of shares - 20,867,386
Proceeds from exercise of warrants - 506,693
Cash paid for the cancellation of fractional shares - (49,664 )
Proceeds from bank borrowings - 1,756,738
Repayment of bank borrowings (252,717 ) (1,937,096 )
Repayment of related party borrowings (3,304,787 ) -
Payment of lease liabilities (877,553 ) (1,267,979 )
Net cash (used in) generated from financing activities (4,435,057 ) 19,876,078
Net (decrease)/increase in cash and cash equivalents, and restricted cash (6,109,343 ) 17,782,908
Effect of movements in exchange rates on cash held (362,280 ) 16,840
Cash and cash equivalents, and restricted cash at January 1, 21,973,395 8,230,644
Cash and cash equivalents, and restricted cash at June 30, $ 15,501,772 $ 26,030,392
Non-cash investing and financing activities
Equity portion of purchase consideration paid for acquisition of subsidiaries - 1,848,000

The accompanying notes are an integralpart of these unaudited interim condensed consolidated financial statements.

F-6

Guardforce AI Co., Limited and Subsidiaries

Notes to the Unaudited Interim Condensed ConsolidatedFinancial Statements

(Expressed in U.S. Dollars)

1. NATURE OF OPERATIONS

Guardforce AI Co., Limited (“Guardforce”) is a company incorporated and domiciled in the Cayman Islands under the Cayman Islands Companies Act on April 20, 2018. The Company’s ordinary shares and warrants are listed under the symbol “GFAI” and “GFAIW”, respectively, on the Nasdaq Capital Market upon the completion of an initial public offering on September 28, 2021.

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 is an investment holding company.

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. AI Robots is an investment holding company.

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 AI&Robotics solution business of selling and leasing 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. Southern Ambition is an investment holding company.

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. Horizon Dragon is an investment holding company.

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 two individuals owned in aggregate 49,000 ordinary shares with a value of approximately $16,000. The cumulative preferred shares are entitled to dividends of USD$0.03 per share when declared. The cumulative unpaid dividends of the preferred shares as of June 30, 2024 and December 31, 2023 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 for the six months ended June 30, 2024 and 2023.

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 preferred 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 association 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. No dividends were declared for the six months ended June 30, 2024 and 2023. The Company engages principally in providing cash management and handling services located in Thailand.

On March 25, 2021, the Company acquired 51% majority stake in information security consultants Handshake Networking Ltd (“Handshake”), a Hong Kong-based company specializing in penetration testing and forensics analysis in Hong Kong and the Asia Pacific region since 2004. On February 6, 2024, the Company separated with Handshake. On February 6, 2024, the Company transferred 510 shares of Handshake back to its original shareholders in exchange for returning 1,091 restricted ordinary shares issued by the Company. The cancellation of the returned 1,091 shares was effective on March 4, 2024.

On November 1, 2021, the Company entered into a Transfer Agreement (the “Singapore Agreement”) to acquire 100% of the equity interests in Guardforce AI Singapore Pte. Ltd. (“AI Singapore”), a company incorporated in Singapore. Pursuant to the Agreement, AI Singapore became a wholly owned subsidiary of the Company. AI Singapore commenced AI&Robotics solution business of selling and leasing robots.

On November 18, 2021, the Company entered

into a Transfer Agreement (the “Macau Agreement”) to acquire 100% of the equity interests in Macau GF Robotics Limited, a company incorporated in Macau (“AI Macau”). The consideration is approximately $3,205 (MOP25,000). AI Macau commenced AI&Robotics solution business of selling and leasing robots. The acquisition was closed on February 9, 2022. AI Macau is a 100% owned subsidiary of AI Robotics.

F-7

On November 18, 2021, the Company entered

into another Transfer Agreement (the “Malaysia Agreement”) to acquire 100% of the equity interests in GF Robotics Malaysia Sdn. Bhd., a company incorporated in Malaysia (“AI Malaysia”). The consideration is approximately $1 (RM1). AI Malaysia commenced AI&Robotics solution business of selling and leasing robots. The acquisition was closed on January 20, 2022. AI Malaysia is a 100% owned subsidiary of AI Robotics.

GFAI Robotics Group Co., Limited (“AI Robotics”) was incorporated in the British Virgin Islands under the BVI Business Companies Act, 2004, on December 6, 2021. AI Robotics is a 100% owned subsidiary of Guardforce. AI Robotics is an investment holding company.

GFAI Robot Service (Hong Kong) Limited (“AI Robot Service”) was incorporated in Hong Kong under the Hong Kong Companies’ Ordinance (Chapter 622), on January 18, 2022. AI Robot Service is an investment holding company. AI Robot Service is a 100% owned subsidiary of AI Robotics.

Guardforce AI Robot Service (Shenzhen) Co., Limited (“AI Shenzhen”) was incorporated in the People’s Republic of China (“PRC”) on February 23, 2022. AI Shenzhen is an investment holding company. AI Shenzhen is a 100% owned subsidiary of AI Robot Service.

GFAI Robotics Services LLC (“AI US”) was incorporated in the State of Delaware on February 28, 2022. AI US commenced AI&Robotics solution business of selling and leasing robots. AI US is a 100% owned subsidiary of AI Robotics.

GFAI Robot Service (Australia) Pty Ltd. (“AI Australia”) was incorporated in Australia on February 28, 2022. AI Australia commenced AI&Robotics solution business of selling and leasing robots. AI Australia is a 100% owned subsidiary of AI Robot Service. On September 25, 2023, AI Australia was deregistered.

GFAI Robot & Smart Machines Trading LLC (“AI Dubai”) was incorporated in the United Arab Emirates (UAE) on March 13, 2022. AI Dubai commenced AI&Robotics solution business of selling and leasing robots. AI Dubai is a 100% owned subsidiary of AI Robot Service.

GFAI Robotic and Innovation Solution (Thailand) Company Limited (“AI R&I”) was incorporated in Thailand on March 30, 2022. AI R&I commenced AI&Robotics solution business of selling and leasing robots. AI R&I is 98% owned by AI Thailand, 1% owned by Horizon Dragon and 1% owned by Southern Ambition.

GFAI Robot Service (UK) Limited (“AI UK”) was incorporated in the United Kingdom on April 29, 2022. AI UK commenced AI&Robotics solution business of selling and leasing robots. AI UK is a 100% owned subsidiary of AI Robot Service. On February 6, 2024, AI UK was deregistered.

GFAI Robot Service Limited (“AI Canada”) was incorporated in Canada on May 6, 2022. AI Canada commenced AI&Robotics solution business of selling and leasing robots. AI Canada is a 100% owned subsidiary of AI Robot Service. On January 5, 2024, AI Canada was deregistered.

Guardforce AI Robot (Jian) Co., Limited (“AI Jian”) was incorporated in the People’s Republic of China (“PRC”) on May 16, 2022. AI Jian is an investment holding company. AI Jian is a 100% owned subsidiary of AI Robot Service. On November 22, 2023, AI Jian was deregistered.

GFAI Robot Service GK (“AI Japan”) was incorporated in Japan on May 24, 2022. AI Japan commenced AI&Robotics solution business of selling and leasing robots. AI Japan is a 100% owned subsidiary of AI Hong Kong.

GFAI Robot Service Co., Ltd. (“AI Korea”) was incorporated in South Korea on June 17, 2022. AI Korea commenced AI&Robotics solution business of selling and leasing robots. AI Korea is a 100% owned subsidiary of AI Hong Kong.

On March 11, 2022, the Company entered into a Sale and Purchase Agreement (the “Kewei Agreement”) with Shenzhen Kewei Robot Technology Co., Limited (“Shenzhen Kewei”) to acquire 100% of the equity interests in Shenzhen Keweien Robot Service Co., Ltd. (“Shenzhen GFAI”) and Guangzhou Kewei Robot Technology Co., Ltd. (“Guangzhou GFAI”) from Shenzhen Kewei. Both acquirees are PRC-based companies. The acquisition serves an integral role in the growth of the Company’s AI&Robotics solution business as a service (RaaS) business initiative. The acquisition was closed on March 22, 2022. The acquisition purchase price of $10,000,000 was paid in a mix of cash (10%) and restricted ordinary shares of the Company (90%). On March 14, 2022, the Company issued 53,571 restricted Ordinary Shares to the sellers’ designated parties.

On May 24, 2022, the Company entered into a Sale and Purchase Agreement (the “Yeantec Agreement”) with Shenzhen Yeantec Co., Limited (“Yeantec”) to acquire 100% of the equity interests in Beijing Wanjia Security System Co., Ltd. (“Beijing Wanjia”) from Yeantec. Beijing Wanjia is a PRC-based company with more than 25 years of experience in providing integrated security solution, focusing on fire alarm security systems, and a well-established customer base among retail businesses. The acquisition serves the growth of the Company’s other security business. The acquisition was closed on June 22, 2022. The acquisition purchase price of $8,400,000 was paid in a mix of cash (10%) and restricted ordinary shares of the Company (90%). On June 16, 2022, the Company issued 94,500 restricted Ordinary Shares to the sellers’ designated parties.

F-8

GFAI Robot Service (Vietnam) Co., Ltd (“AI Vietnam”) was incorporated in Vietnam on July 8, 2022. AI Vietnam is a dormant company and is a 100% owned subsidiary of AI Hong Kong. On March 22, 2023, AI Vietnam was deregistered.

On December 21, 2022, the Company entered into an asset purchase agreement (“Agreement”) with Shenzhen Kewei Robot Technology Co., Limited (“Shenzhen Kewei”) to purchase certain of Shenzhen Kewei’s robot-related business assets in China. The Company will acquire, and Yeantec will transfer to the Company, select robotic equipment assets and Kewei’s technology platform. The purchase price for these assets is $2,100,000, which will be fully paid in the form of 262,500 restricted ordinary shares of the Company based on a price of $8.0 per share. The Company issued 262,500 shares to Shenzhen Kewei on March 1, 2023.

GFAI Technology Limited (“GFAI Technology”) was incorporated in the British Virgin Islands under the BVI Business Companies Act, 2004, on December 7, 2023. GFAI Technology is a 100% owned subsidiary of Guardforce. GFAI Technology is an investment holding company.

GFAI Technology (Hong Kong) was incorporated in Hong Kong on January 8, 2024. GFAI Technology (Hong Kong) is a 100% owned subsidiary of GFAI Technology.

InnoAI Technology (Shenzhen) Co., Ltd. (“InnoAI”) was incorporated in China on December 13, 2023. On May 13, 2024, the Company acquired 100% of the interest in InnoAI with RMB1 and InnoAI became a 100% owned subsidiary of AI Shenzhen. InnoAI is a company dedicated to the research and development of artificial intelligence projects.

The following diagram illustrates the Company’s legal entity ownership structure as of June 30, 2024:

2. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies applied for the six months ended June 30, 2024 and 2023 are consistent with those of the audited consolidated financial statements for the years ended December 31, 2023 and 2022, 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, 2023 which are relevant to the preparation of the June 30, 2024 and 2023 interim condensed consolidated financial statements.

On September 25, 2024, the interim condensed consolidated financial statements were approved by the board of directors and authorized for issuance.

2.1 Basis of presentation

The accompanying 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, 2023, 2022 and 2021, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The 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. The results of operations for the six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the full year ended December 31, 2024.

F-9

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

In addition, the accompanying condensed consolidated interim financial statements are presented on the basis that the Company is a going concern. The going concern assumption contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

2.2 Basis of consolidation

The consolidated statements of profit or loss and other comprehensive loss, statements of changes in equity and statements of 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 interim condensed consolidated balance sheet of the Company as of June 30, 2024 has been prepared to present the assets and liabilities of the subsidiaries under the historical cost convention.

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 Segment reporting

IAS 14 Segment Reporting requires reporting of financial information by business or geographical area. It requires disclosures for ‘primary’ and ‘secondary’ segment reporting formats, with the primary format based on whether the entity’s risks and returns are affected predominantly by the products and services it produces or by the fact that it operates in different geographical areas.

The entity’s reportable segments are its business and geographical segments for which a majority of their revenue is earned from sales to external customers and for which:

● revenue from sales to external customers and from transactions with other segments is 10% or more of the total revenue, external and internal, of all segments; or
● segment result, whether profit or loss, is 10% or more the combined result of all segments in profit or the combined result of all segments in loss, whichever is greater in absolute amount; or
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● assets are 10% or more of the total assets of all segments.
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Segments deemed too small for separate reporting may be combined with each other, if related, but they may not be combined with other significant segments for which information is reported internally. Alternatively, they may be separately reported. If neither combined nor separately reported, they must be included as an unallocated reconciling item.

Segment information is consistent with how management reviews the businesses, makes investing and resource allocation decisions and assesses operating performance. Transfers and sales between reportable segments, if any, are recorded at cost.

The Company reports financial and operating information in the following four segments and geographical segmental data as shown in Note 22:

(i) Secured logistics;
(ii) AI&Robotics solution business;
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(iii) General security solutions; and
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(iv) Corporate and others
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F-10

The Corporate and others segment covers the non-operating activities supporting the Company. It comprises the Company’s holdings and treasury organization, including its headquarter and central functions. All listing related expenses are included in the Corporate and others segment. This segment is an administrative-operating segment rather than a revenue-generating operating segment.

The Company completed the divestiture with Handshake on February 6, 2024. The business of Handshake represented the entirety of the Company’s information security operating segment through February 6, 2024, which is excluded from the Company’s segment reporting.

2.4 Business combinations

The Company accounts for business combinations using the acquisition method when control is transferred to the Company, other than those between and among entities under common control. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on the bargain purchase is recognized in the statement of profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.

2.5 Critical accounting estimate and judgements

The preparation of the consolidated financial statements.in conformity with IFRS requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates.

In preparing the 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, 2023.

2.6 Foreign currency translation

The presentational currency of the Company is the USD. The functional currency of Guardforce, AI Holdings, AI Robots, Horizon Dragon, Southern Ambition, AI Robotics, AI US, AI Macau, AI Singapore, AI Malaysia, AI Hong Kong, AI Thailand, GF Cash (CIT), AI R&I, InnoAI, AI Shenzhen, Shenzhen GFAI, Guangzhou GFAI and Beijing Wanjia is the local currency where these companies operate. The functional currency of AI Korea, AI Australia, AI Canada, AI Vietnam, AI Japan, and AI Dubai is USD.

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

Period End Rate Average Rate
June 30, December 31, For the six months ended<br> June 30,
2024 2023 2024 2023
Thai Baht (GF Cash (CIT), AI R&I) 0.0271 0.0292 0.0275 0.0293
Hong Kong Dollar (AI Hong Kong) 0.1281 0.1282 0.1279 0.1282
Chinese Renminbi (Beijing Wanjia) 0.1376 0.1409 0.1386 0.1444
2.7 Financial risk management
2.7.1 Financial risk factors
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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 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 of December 31, 2023 and 2022.

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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. The Company mainly finances its working capital requirements from cash generated from funds raised from the public offerings, operations, proceeds from the exercise of warrants, 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.

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.

2.7.4 Impact of COVID-19

The COVID-19 pandemic has developed since 2020, causing severe impact to the Company’s financial performance. Until the beginning of 2023, when governments of the countries where the Company is operating lifted most of the social distancing measures and other restrictions, the Company’s business has gradually recovered and the Company has resumed normal business operations in 2024.

2.8 Inventories

Inventories solely consist of security equipment and are stated at the lower of cost, determined on a weighted average basis, or net realizable value (Note 5). Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated costs necessary to make the sale. When inventory is sold, their carrying amount is charged to expense in the period in which the revenue is recognized. Write-downs for declines in net realizable value or for losses of inventories are recognized as an expense in the period the impairment or loss occurs. The Company recorded an allowance for slow-moving or obsolete robots’ inventories of $nil and $3,090,283 for the six months ended June 30, 2024 and 2023, respectively.

During the six months ended June 30, 2024, no inventories were purchased from related parties. And during the six months ended June 30, 2023, all inventories were purchased from the related parties (Note 21).

2.9 Related parties

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or significant influence, such as a family member or relative, shareholder, or a related corporation.

The Company recognizes the contractual right to receive money or products from related parties as amounts due from related parties. For those that the contractual maturity date is less than one year, the Company records as current assets.

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2.10 Assets under construction

Assets under construction are stated at cost less impairment losses, if any. Cost comprises direct costs of construction as well as interest expense and exchange differences capitalized during the periods of construction and installation. Capitalization of these costs ceases and the construction in progress is transferred to property, plant and equipment when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided for assets under construction until they are completed and ready for intended use.

2. 11 Goodwill

Following initial recognition, goodwill is stated at cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

At the acquisition date, any goodwill acquired is allocated to the cash-generating units (CGU) which are expected to benefit from the combination’s synergies. Impairment is determined by assessing the recoverable amount of the CGU to which the goodwill related. Where the recoverable amount of the CGU is less than the carrying amount, an impairment loss is recognized. Where goodwill forms part of a CGU and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of In these circumstances is measured on the basis of the relative values of the operation disposed of and the portion of the CGU retained.

The Company recorded impairment loss of $30,467 and $1,263,040 for the six months ended June 30, 2024 and 2023, respectively.

2.12 Impairment of long-lived assets

At the end of each reporting period, the Company reviews the carrying amounts of its long-lived assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. For the six months ended June 30, 2024 and 2023, an impairment loss on the robots’ assets of $ nil and $1,591,766 was recognized, respectively when the carrying amount was greater than the value in use. Management estimated the value in use by estimating the expected cash flows from the cash-generating unit as well as a suitable discount rate in order to calculate the present value of those cash flows. The basis of impairment is determined based on the result of assessment.

2.13 Offsetting Assets and Liabilities

During the six months ended June 30, 2024, the Company engages in offsetting arrangements for certain financial assets and financial liabilities. These arrangements primarily involve the offsetting of related party receivables and related party payables. The Company has established legally enforceable rights to offset financial assets and financial liabilities subject to offsetting arrangements. These rights may arise from agreements, netting arrangements, or a combination of legal and contractual rights.

2.14 Revenue from contracts with customers

The Company generates its revenue primarily from four service lines: (1) Secured logistics; (2) AI&Robotics solution business; (3) Information security; and (4) General security solutions.

Each service line primarily renders the following services:

(1) Secure<br>logistics
(i) Cash-In-Transit<br>– Non Dedicated Vehicle (CIT Non-DV); (ii) Cash-In-Transit – Dedicated Vehicle (CIT DV); (iii) ATM management; (iv) Cash<br>Processing (CPC); (v) Cash Center Operations (CCT); (vi) Consolidate Cash Center (CCC); (vii) Express Cash; (viii) Coin Processing Service;<br>and (ix) Cash Deposit Management Solutions
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(2) AI&Robotics solution business
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(i) Sale of robots and (ii) Rental of robots
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F-13

(3) Information security – the Company generates this revenue<br>from Handshake. After the completion of the decoupling with Handshake on February 6, 2024, the Company was no longer generating any revenues<br>from this service line. For the six months ended June 30, 2024 and 2023, revenue and results of operations derived from this service<br>line were presented as discontinued operations on the consolidated statements of profit or loss.
(i) Penetration test; (ii) PCI ASVScan and (iii) Rapid7 Sales
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(4) General security solutions
--- ---
(i) Installation<br>of fire alarm security systems; (ii) Sale of security equipment
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The Company recognizes revenue at a point in time as products are delivered and services are performed. Consultancy fees typically covers a period of time, the revenue is recognized on a ratable basis over the contract term. The Company applies the following five-step model in order to determine the amount:

● To identify the contract or quotation with the agreed service price.
● To evaluate the services engaged in the customer’s contract and identify the related performance obligations.
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● To consider the contract terms and commonly accepted practices in the business to determine the transaction price. The transaction price is the consideration that the Company expects to be entitled for delivering the services engaged with the customer. The consideration engaged in a customer’s contract is generally a fixed amount.
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● To allocate the transaction price, if necessary, to each performance obligation (to each good or service that is different) for an amount that represents the part of the benefit that the Company expects to receive in exchange for the right of delivering the services engaged with the customer.
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● To recognize revenue when the Company satisfies the performance obligation through the rendering of services engaged.
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All of the conditions mentioned above are accomplished normally when the services are rendered to the customer and this moment is considered a point in time. The reported revenue reflects services delivered at the contract or agreed-upon price.

Revenue is recognized when the related performance obligation is satisfied.

Disaggregation information of revenue by service type which was recognized based on the nature of performance obligation disclosed above is as follows:

For the six months ended June 30,
2024 Percentage of <br> Total 2023 Percentage of <br> Total
Service Type Revenue Revenue
(Unaudited) (Unaudited)
Cash-In-Transit – Non-Dedicated Vehicles (CIT Non-DV) 34.2 % 33.3 %
Cash-In-Transit – Dedicated Vehicle to Banks (CIT DV) 10.1 % 10.9 %
ATM Management 18.7 % 21.6 %
Cash Processing (CPC) 9.7 % 9.0 %
Cash Center Operations (CCT) 4.9 % 5.3 %
Consolidate Cash Center (CCC) 1.6 % 2.2 %
Others ** - % 0.0 %
Cash Deposit Management Solutions (GDM) 10.5 % 6.3 %
AI&Robotics solution 0.8 % 2.4 %
General security solutions 9.5 % 9.0 %
Total 100.0 % 100.0 %

All values are in US Dollars.

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

F-14

During the six months ended June 30, 2023, all revenue were generated from third parties.

During the six months ended June 30, 2024, revenue amounting to $17,562,192 were generated from third parties; and $4,652 were generated from a related party (Note 21).

2.15 Cost of sales

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

2.16 New and amended accounting standards

All new standards and amendments that are effective for annual reporting period commencing January 1, 2024 have been applied by the Company for the six months ended June 30, 2024. The adoption of these new and amended standards did not have material impact on the interim condensed 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, 2024, and they have not been early adopted by the Company in preparing these interim condensed consolidated financial statements. None of these new standards and amendments to standards is expected to have a significant effect on the interim condensed consolidated financial statements of the Company.

3. BUSINESS COMBINATION

On May 13, 2024, the Company closed an acquisition of InnoAI Technology (Shenzhen) Co., Ltd. (“InnoAI”). Approximately $0.1 (RMB1) was paid in consideration of 100% of the equity interest in InnoAI. This acquisition has been accounted for in accordance with IFRS 3 guidelines under acquisition accounting, whereby the Company recognized the assets and liabilities transferred at their carrying amounts with carry-over basis.

A Purchase Price Allocation exercise has been undertaken to establish the constituent parts of the acquired companies’ balance sheet at fair value on acquisition. As is customary in these circumstances, this will remain under review and subject to change during the twelve-month hindsight period. At the date of the acquisition, the total assets, total liabilities and goodwill represent $4,720, $(35,187) and $30,467, respectively.

The total revenue included in the Consolidated Statement of Profit or Loss for the six months ended June 30, 2024 since the acquisition date contributed by InnoAI was $99. Total net loss for the six months ended June 30, 2024 incurred by InnoAI since the acquisition date was $95,290.

Had InnoAI been consolidated from January 1, 2024, the Consolidated Statement of Profit or Loss for the six months ended June 30, 2024 would show revenue from InnoAI of $831 and net loss from InnoAI of $99,550.

During the six months ended June 30, 2024, the Company recorded a full goodwill impairment loss on InnoAI of $30,467.

4. CASH, CASH EQUIVALENTS AND RESTRICTED CASH
As of<br> June 30,<br> 2024 As of<br> December 31, <br> 2023
--- --- --- --- ---
(Unaudited)
Cash on hand $ 514,080 $ 472,641
Cash in bank 13,465,137 19,762,586
Subtotal 13,979,217 20,235,227
Restricted cash – current (a) 26,319 100,764
Restricted cash – non-current (b) 1,496,236 1,608,762
Cash, cash equivalents, and restricted cash 15,501,772 21,944,753
Cash at banks attributable to discontinued operations - 28,642
Cash, cash equivalents, and restricted cash $ 15,501,772 $ 21,973,395
(a) During the six months ended June 30, 2024, with regards to various labor-related lawsuits in the PRC,<br>the PRC Court issued an order to freeze one of the Company’s bank accounts which restricted or prohibited the transfer and use of<br>deposited funds by the Company. The sum will be released upon the Company has paid to satisfy the claims.
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(b) The non-current restricted cash represents cash pledged with a local bank in Thailand as collateral for<br>bank guarantees issued by those banks in respect of the Company’s Cash-In-Transit projects.
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F-15

5. INVENTORIES
As of<br> June 30,<br> 2024 As of<br> December 31,<br> 2023
--- --- --- --- --- --- ---
(Unaudited)
Robots in warehouse $ 4,584,078 $ 4,743,645
Security equipment* 381,155 506,403
Impairment provision for inventories (4,584,078 ) (4,743,645 )
Inventories $ 381,155 $ 506,403
* As of December 31, 2023, and June 30, 2024, the Company only had Security equipment in inventory balance.

The Company recorded an allowance for slow-moving or obsolete robots’ inventories of $nil and $3,090,283 for the six months ended June 30, 2024 and 2023, respectively.

6. TRADE RECEIVABLES, NET
As of<br> June 30,<br> 2024 As of<br> December 31,<br> 2023
--- --- --- --- --- --- ---
(Unaudited)
Trade receivable $ 5,636,167 $ 5,780,144
Provision for doubtful accounts (319,184 ) (149,339 )
Trade receivable, net $ 5,316,983 $ 5,630,805

The Company recorded an allowance for doubtful accounts of $184,180 and $45,932 for the six months ended June 30, 2024 and 2023, respectively.

7. WITHHOLDING TAX RECEIVABLE

Withholding tax receivable movement for the six months ended June 30, 2024 and 2023:

2024 2023
(Unaudited) (Unaudited)
Balance at January 1, $ 2,224,846 $ 2,691,096
Addition 376,265 401,941
Collection (604,168 ) -
Recovery of (Write off)/Allowance for uncollectible 32,980 (561,277 )
Exchange difference (158,496 ) (73,713 )
Balance at June 30, $ 1,871,427 $ 2,458,047

Withholding tax receivable balance as of June 30, 2024 and December 31, 2023:

As of<br> June 30,<br> 2024 As of<br> December 31,<br> 2023
(Unaudited)
Current portion $ 366,884 $ 607,221
Non-current portion 1,504,543 1,617,625
Withholding tax receivable $ 1,871,427 $ 2,224,846

During the six months ended June 30, 2024, the Company received a withholding tax refund of approximately THB22.0 million (approximately $0.6 million) in connection with the Company’s 2019 withholding tax refund. The Company recorded a recovery of uncollectible of $0.03 million, representing the difference between the receivable recorded and the amount of refund received from the Thai Revenue Department.

Based on amounts refunded and written off for the receivable related to years 2013 to 2019, the Company recorded an allowance of approximately $nil million and $0.3 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024 and December 31, 2023, an allowance balance of $1.0 million and $1.2 million, respectively were maintained against its withholding tax receivable.

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8. OTHER CURRENT AND OTHER NON-CURRENT ASSETS
As of<br> June 30,<br> 2024 As of<br> December 31,<br> 2023
--- --- --- --- ---
(Unaudited)
Input VAT and other taxes receivable $ 244,025 $ 219,232
Prepayments – office and warehouse rental 1,284,395 818,997
Prepayments - insurance 383,101 91,022
Prepayments - others 393,910 187,759
Uniforms 12,876 17,417
Prepayments – independent directors’ fee 77,700 -
Tools and supplies 120,355 143,760
Cash advances to employees 48,386 79,169
Interest receivable on bank deposits 69,051 108,215
Other current assets $ 2,633,799 $ 1,665,571
Deposits $ 390,065 $ 402,447
Other non-current assets $ 390,065 $ 402,447
9. PROPERTY, PLANT AND EQUIPMENT
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Leasehold<br> improvements Machinery<br> and<br> equipment Office<br> decoration<br> and<br> equipment Vehicles Assets<br> under<br> construction GDM<br> machines Robots Total
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Cost
At December 31, 2022 $ 3,146,864 $ 4,868,015 $ 5,354,351 $ 15,518,987 $ 33,222 $ 1,948,698 $ 7,194,815 $ 38,064,952
Additions - 1,750 6,964 - - 624,126 273,779 906,619
Disposals (104,773 ) (105,939 ) (48,955 ) (47,155 ) - - (56,389 ) (363,211 )
Impairment of fixed assets - - - - - - (1,591,766 ) (1,591,766 )
Exchange differences (60,518 ) (95,521 ) (106,807 ) (353,552 ) (652 ) (38,238 ) (141,241 ) (796,529 )
At June 30, 2023 (Unaudited) 2,981,573 4,668,305 5,205,553 15,118,280 32,570 2,534,586 5,679,198 36,220,065
At December 31, 2023 $ 3,073,809 $ 4,829,343 $ 5,335,825 $ 15,505,385 $ 108,909 $ 3,133,883 $ 3,954,153 $ 35,941,307
Additions - 24,171 14,640 - - - - 38,811
Transfer in (out) - - - 70,842 (70,842 ) - - -
Disposals (955,753 ) - (1,073,690 ) (278,087 ) - - (9,900 ) (2,317,430 )
Exchange differences (204,895 ) (350,278 ) (359,132 ) (1,107,555 ) (6,902 ) (227,085 ) (126,900 ) (2,382,747 )
At June 30, 2024 (Unaudited) 1,913,161 4,503,236 3,917,643 14,190,585 31,165 2,906,798 3,817,353 31,279,941
Accumulated Depreciation
At December 31, 2022 $ 2,577,341 $ 4,748,031 $ 4,889,742 $ 13,493,656 $ - $ 1,230,247 $ 3,059,174 $ 29,998,191
Depreciation charged for the period 48,922 34,180 87,164 263,962 - 202,983 516,626 1,153,837
Disposals (108,213 ) (109,514 ) (44,542 ) (48,748 ) - - (14,847 ) (325,864 )
Exchange differences (48,443 ) (90,705 ) (101,287 ) (275,519 ) - (30,774 ) (77,779 ) (624,507 )
As June 30, 2023 (Unaudited) 2,469,607 4,581,992 4,831,077 13,433,351 - 1,402,456 3,483,174 30,201,657
At December 31, 2023 $ 2,605,039 $ 4,761,599 $ 5,015,520 $ 13,880,678 $ - $ 1,680,593 $ 3,954,153 $ 31,897,582
Depreciation charged for the period 48,918 28,323 64,202 175,152 - 209,611 - 526,206
Disposals (955,747 ) - (1,072,429 ) (276,081 ) - - (9,900 ) (2,314,157 )
Exchange differences (174,655 ) (345,427 ) (340,421 ) (998,055 ) - (124,702 ) (126,900 ) (2,110,160 )
As June 30, 2024 (Unaudited) 1,523,555 4,444,495 3,666,872 12,781,694 - 1,765,502 3,817,353 27,999,471
Net book value
At June 30, 2023 (Unaudited) $ 511,966 $ 86,313 $ 374,476 $ 1,684,929 $ 32,570 $ 1,132,130 $ 2,196,024 $ 6,018,408
At June 30, 2024 (Unaudited) $ 389,606 $ 58,741 $ 250,771 $ 1,408,891 $ 31,165 $ 1,141,296 $ - $ 3,280,470

Depreciation expense related to property, plant and equipment was $526,206 and $1,057,117, respectively for the six months ended June 30, 2024 and 2023.

For the six months ended June 30, 2024 and 2023, the Company recorded an impairment loss on robots’ assets of $nil and $1,591,766, respectively.

As of June 30, 2024 and 2023, net book value of robot assets was approximately $nil and $695,000, respectively and these robots were leased out to third parties and the robots’ assets were held and used by the lessee.

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

The right-of-use assets movement for the six months ended June 30, 2024 and 2023 and the carrying amounts are as below:

2024 2023
(Unaudited) (Unaudited)
Balance at January 1, $ 2,688,208 $ 4,171,409
New leases 1,003,988 271,004
Termination of a lease (112,912 ) -
Depreciation expense (816,084 ) (1,042,981 )
Exchange difference (174,660 ) (75,562 )
Net book amount $ 2,588,540 $ 3,323,870

The total operating lease liabilities are as below:

As of <br><br>June 30,<br><br> 2024 As of<br><br> December 31,<br><br> 2023
Current portion $ 1,457,783 $ 1,239,066
Non-current portion 1,124,195 1,455,857
Operating lease liabilities $ 2,581,978 $ 2,694,923

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 the six months ended June 30, 2024 was 5.37%. The weighted average incremental borrowing rate applied to new leases during the six months ended June 30, 2023 was 3.52%.

For the six months ended June 30, 2024 and 2023, interest expense of $58,248 and $58,602 arising from lease liabilities was included in finance costs, respectively. Depreciation expense related to right-of-use assets was $816,084 and $1,026,316, respectively for the six months ended June 30, 2024 and 2023.

F-18

11. INTANGIBLE ASSETS
Computer<br> software Right-of-use<br> Platform Customer<br> base Technical<br> know-how Security<br> Surveillance<br> system Intelligent<br> Cloud<br> Platforms Assets under<br><br> construction -Cash<br> Management<br> Systems Total
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Cost
At December 31, 2022 $ 887,745 $ 673,029 $ 1,042,110 $ 499,344 $ 1,360,898 $ 3,000,000 $ 194,495 $ 7,657,621
Additions - - - - 195,087 1,597,754 - 1,792,841
Exchange differences (17,419 ) (31,974 ) (49,509 ) (23,723 ) (306,604 ) - (3,816 ) (433,045 )
At June 30, 2023 (Unaudited) 870,326 641,055 992,601 475,621 1,249,381 4,597,754 190,679 9,017,417
At December 31, 2023 $ 919,222 $ 114,659 $ 829,560 $ 486,112 $ 1,524,224 $ 1,604,580 $ 194,082 $ 5,672,439
Additions 115,164 - - - - - - 115,164
Exchange differences (67,805 ) (2,687 ) (19,440 ) (11,392 ) (35,720 ) (3,095 ) (14,063 ) (154,202 )
At June 30, 2024 (Unaudited) 966,581 111,972 810,120 474,720 1,488,504 1,601,485 180,019 5,633,401
Accumulated amortization
At December 31, 2022 $ 767,168 $ 50,477 $ 405,868 $ 28,405 $ 612,560 $ - $ - $ 1,864,478
Amortization charged for the period 26,139 33,582 201,013 28,346 63,817 182,671 - 535,568
Exchange differences (15,908 ) (3,927 ) (28,438 ) (2,641 ) (286,182 ) - - (337,096 )
As June 30, 2023 (Unaudited) 777,399 80,132 578,443 54,110 390,195 182,671 - 2,062,950
At December 31, 2023 $ 830,600 $ 114,659 $ 706,271 $ 82,956 $ 699,123 $ 402,580 $ - $ 2,836,189
Amortization charged for the period 28,236 - 40,430 27,204 52,152 66,610 - 214,632
Exchange differences (60,535 ) (2,687 ) (16,848 ) (2,144 ) (16,766 ) (3,095 ) - (102,075 )
As June 30, 2024 (Unaudited) 798,301 111,972 729,853 108,016 734,509 466,095 - 2,948,746
Net book value
At June 30, 2023 (Unaudited) $ 92,927 $ 560,923 $ 414,158 $ 421,511 $ 859,186 $ 4,415,083 $ 190,679 $ 6,954,467
At June 30, 2024 (Unaudited) $ 168,280 $ - $ 80,267 $ 366,704 $ 753,995 $ 1,135,390 $ 180,019 $ 2,684,655

Amortization expense related to intangible assets was $214,632 and $535,568, respectively for the six months ended June 30, 2024 and 2023.

12. TRADE AND OTHER PAYABLES AND OTHER CURRENT LIABILITIES
As of<br> June 30,<br> 2024 As of<br> December 31,<br> 2023
--- --- --- --- ---
(Unaudited)
Trade payables – third parties $ 2,553,826 $ 2,113,401
Accrued salaries and bonus 369,275 603,112
Other payables, accrued customer claims, cash loss and shortage* 124,433 300,337
Trade and other payables $ 3,047,534 $ 3,016,850
Output VAT and other taxes payable $ - $ 100,166
Accrued expenses 525,467 639,556
Payroll payable 715,467 925,142
Provision for stock-based compensation expense** - 830,000
Other payables 487,172 419,964
Deferred revenue 36,530 256,815
Other current liabilities $ 1,764,636 $ 3,171,643
* Includes a provision for penalty for failure<br>to meet certain performance indicators as stipulated in certain customer contracts for approximately $5,462 and $7,108 as of June 30,<br>2024 and 2023, respectively.
** During the year ended December 31, 2023, provision was made upon the management decision to grant restricted shares to officers and certain employees based on their performance in 2023 under the Company’s 2022 Equity Incentive Plan. 288,000 shares were granted to officers and certain employees on May 7, 2024 to settle such provision balance (Note 18).

F-19

13. BORROWINGS
As of<br> June 30,<br> 2024 As of<br> December 31,<br> 2023
--- --- --- --- ---
(Unaudited)
Short-term bank borrowing $ 55,040 $ 140,902
Current portion of long-term bank borrowings 132,248 196,339
Long-term bank borrowings - 44,410
Total borrowings $ 187,288 $ 381,651

The Company maintains two borrowings with two financial institutions. The borrowings are used for working capital purposes to support its business operations in China and Thailand. Those borrowings carry interest at the rates of 4.69% and 3.77% per annum with maturity dates of April 7, 2025 and September 25, 2024. For the six months ended June 30, 2024 and 2023, the interest expense recorded for bank borrowings was $10,002 and $33,394, respectively.

As of June 30, 2024, the Company has no unused bank overdraft availability and no unused trust receipts availability.

Prior to entering into a loan conversion agreement with WK Venture on September 28, 2023 to discharge the entire loan amount and accrued unpaid interest, as of June 30, 2023, the Company maintained a loan in the principal amount of $13.42 million with WK Venture which bears interest at 4% and is due on December 31, 2024. For the six months ended June 30, 2024 and 2023, interest expense recorded for this third-party borrowing was $nil and $411,270.

14. CONVERTIBLE NOTE PAYABLE

On October 25, 2022, the Company issued Streeterville Capital, LLC (“CVP”) an unsecured convertible promissory note in the principal amount of $1,707,500 (the “Note”). Prior to the Company’s full settlement on the outstanding convertible note payable with CVP on October 25, 2023, on April 17, 2023, CVP delivered to the Company a conversion notice informing the Company that CVP has elected to convert a portion of the balances $1,238,400 at the conversion price pf $7.20. Upon this conversion, the Company issued 172,000 restricted ordinary shares to CVP on April 19, 2023. On October 25, 2023, the Company paid $554,238 to CVP to fully settle the remaining Note balance.

For the six months ended June 30, 2024 and 2023, the interest expense recorded for the Note was $nil and $65,644.

F-20

15. FINANCE LEASE LIABILITIES
As of<br> June 30,<br> 2024 As of<br> December 31,<br> 2023
--- --- --- --- ---
(Unaudited)
Current portion $ 53,055 $ 108,597
Non-current portion 203,127 218,996
Finance lease liabilities $ 256,182 $ 327,593

For the six months ended June 30, 2024 and 2023, interest expense was $8,954 and $15,987, respectively.

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

As of<br> June 30,<br> 2024 As of<br> December 31,<br> 2023
(Unaudited)
Within 1 year $ 60,407 $ 126,042
After 1 year but within 5 years 219,171 236,293
Less: Finance charges (23,396 ) (34,742 )
Present value of finance lease liabilities, net $ 256,182 $ 327,593

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

As of <br> June 30,<br> 2024 As of<br> December 31, <br> 2023
(Unaudited)
Cost $ 673,722 $ 655,371
Less: Accumulated depreciation (227,152 ) (215,038 )
Net book value $ 446,570 $ 440,333
16. TAXATION
--- ---

Value added tax (“VAT”)

GF Cash (CIT) and AI R&I are subsidiaries operating in Thailand, which are subject to a statutory VAT of 7% for services in Thailand. Shenzhen GFAI, Guangzhou GFAI, InnoAI and Beijing Wanjia are the subsidiaries operating in the PRC, which are subject to a statutory VAT of 13% for goods delivered and rental provided, 6% for services provided and 9% for construction projects in the PRC. 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 balance sheets when input VAT is less than the output VAT. A recoverable balance is presented on the balance sheets when input VAT is larger than the output VAT.

Income tax

Current income tax is 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 tax is accounted for using an asset and liability method. Under this method, deferred income tax is 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 tax 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 tax 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. During the six months ended June 30, 2024 and 2023, the Company made a valuation allowance of $22,949 and $874,431 on the portion of deferred tax assets not expected to be realized.

F-21

17. PROVISION FOR EMPLOYEE BENEFITS

The Company maintains two retired benefit plans. Both plans are based on the requirements 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. The plan asset is unfunded and the Company will pay benefits when needed.

Movement for the defined benefit obligations for the six months ended June 30, 2024 and 2023:

Provision<br> for employee<br> benefits
2024 2023
(Unaudited) (Unaudited)
Defined benefit obligations at January 1, $ 4,935,982 $ 4,849,614
Estimate for the six months period* (344,427 ) (74,552 )
Defined benefit obligations at June 30, $ 4,591,555 $ 4,775,062
* The estimate represents the difference between the Company’s<br>estimated defined benefit obligations based on employees’ past service and expected future salary at the beginning of the fiscal<br>year and the end of the six-month period.
--- ---
18. SHAREHOLDERS’ EQUITY
--- ---

Equity transactions during the six months ended June 30, 2023:

On January 31, 2023, the Company completed a 1 for 40 share consolidation of its authorized and issued ordinary shares whereby every forty shares were consolidated into one share. In addition, the par value of each ordinary share increased from $0.003 to $0.12. Immediately following the completion of the share consolidation, the Company increased its authorized ordinary shares from 7,500,000 ordinary shares to 300,000,000 ordinary shares. All shares disclosed in these condensed consolidated financial statement represent post-consolidation number of shares.

On February 17, 2023, a total of 2,339 fractional shares were canceled as a result of the share consolidation.

In connection with the restricted ordinary shares issued on June 16, 2022 as a deposit to acquire 100% of the equity interests in seven Kewei Group companies and such acquisition was terminated on September 13, 2022 , on February 13, 2023, a total of 243,000 shares were returned and cancelled.

In connection with an asset purchase agreement entered between the Company and Shenzhen Kewei Robot Technology Co., Limited (“Shenzhen Kewei”) on December 21, 2022 to purchase certain of Shenzhen Kewei’s robot-related business assets in China (Note 1), on March 1, 2023, a total of 262,500 restricted ordinary shares were issued to the shareholders of Shenzhen Kewei.

In connection with the conversion of the convertible note with Streeterville Capital, LLC (“CVP”) (Note 14), the Company issued 172,000 restricted ordinary shares to CVP on April 19, 2023.

A total of 128,901 warrants were exercised during the six months ended June 30, 2023. As of June 30, 2023, we have an aggregate of 2,013,759 warrants issued and outstanding. On March 8, 2023, the Company issued a Notice regarding Adjustment of Exercise Price (for Public Warrants) after share consolidation to the Company’s public warrant holders. As a result of the share consolidation, the exercise price under the public warrant was proportionately increased from $0.16 to $6.40, the exercise price under the private warrant was proportionately increased from $0.18 to $7.20. If any holder exercises one warrant, one-40th (1/40) ordinary share will be received in cash (by Cash in Lieu), holders must exercise at least 40 warrants to receive 1 ordinary share.

On May 5, 2023, the Company completed an underwritten public offering (“CMPO 1”) to issue 1,720,430 ordinary shares and an additional 258,064 ordinary shares for the exercise of an over-allotment option at the time of the closing at a public offering price of $4.65 per share for aggregate gross proceeds of approximately $9.2 million. On May 12, 2023, the Company completed another underwritten public offering (“CMPO 2”) to issue 2,580,600 ordinary shares and an additional 387,090 ordinary shares for the exercise of an over-allotment option at the time of the closing at a public offering price of $4.65 per share for aggregate gross proceeds of approximately $13.8 million.

Equity transactions during the six months ended June 30, 2024:

F-22

The Company completed the separation with Handshake that the returning 1,091 restricted ordinary shares which were canceled on March 4, 2024 (Note 23).

On March 6, 2024, the Company issued an aggregate number of 120,000 restricted ordinary shares to three independent directors on the Board of Directors, representing 60,000 restricted ordinary shares for their service performed in 2023 and 60,000 restricted ordinary shares for their service to be performed in 2024. The fair value for the 60,000 restricted ordinary shares for 2024 full-year service was $155,400. The Company recorded stock-based compensation expense of $77,700 for the six months ended June 30, 2024 and a prepayments for independent directors’ fee of $77,700 as of June 30, 2024 (Note 12).

On May 7, 2024, the Company issued an aggregate number of 288,000 restricted ordinary shares to officers and certain employees for their service performed in 2023. Fair value for the 288,000 restricted ordinary shares for 2023 full-year service was $924,955. As of December 31, 2023, the Company made a provision for the stock-based compensation of $830,000. For the six months ended June 30, 2024, the Company recorded the under-provided amount of $94,955.

Equity transactions subsequent to June 30, 2024:

From July 1, 2024 through the date of the release of these condensed consolidated financial statements, the Company issued a total of 1,628,368 ordinary shares to various investors through an “At the Market Offering” (“the ATM Offering”) for aggregate gross proceeds of $2,593,842.

19. SELLING, DISTRIBUTION AND ADMINISTRATIVE EXPENSES
For the six months ended<br> June 30,
--- --- --- --- ---
2024 2023
(Unaudited) (Unaudited)
Staff expense $ 3,141,756 $ 3,602,127
Rental expense 173,246 345,026
Depreciation and amortization expense 452,299 1,251,359
Utilities expense 34,783 53,015
Travelling and entertainment expense 170,596 135,186
Marketing expense 187,858 150,203
Professional fees 582,489 774,553
Repairs and maintenance 26,280 35,298
Employee benefits 38,741 29,316
Research and development expense 106,835 95,322
Other expenses** 52,407 212,445
$ 4,967,290 $ 6,683,850
** Other<br>expenses mainly comprised of office expenses, stamp duties, training costs, transportation costs for robots, etc.
--- ---
20. LEGAL RESERVE
--- ---

Thailand

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’s reserve has met the legal reserve requirement of $223,500 as of June 30, 2024 and December 31, 2023.

The PRC

Pursuant to the laws applicable to the PRC’s Foreign Investment Enterprises, the Company must make appropriations from after-tax profit to non-distributable reserve funds. Subject to certain cumulative limits, the general reserve requires annual appropriations of 10% of after-tax profits as determined under the PRC laws and regulations at each year-end until the balance reaches 50% of the PRC entity registered capital; the other reserve appropriations are at the Company’s discretion. These reserves can only be used for specific purposes of enterprise expansion and are not distributable as cash dividends. For the six months ended June 30, 2024 and 2023, the Company did not accrue any legal reserve.

F-23

21. RELATED PARTY TRANSACTIONS

The principal related party balances as of June 30, 2024 and December 31, 2023 are as follows:

Amounts due from related parties:

As of<br> June 30,<br> 2024 As of<br> December 31, <br> 2023
(Unaudited)
Guardforce TH Group Company Limited (a) $ 2,506 $ 1,804
Shareholders’ of Shenzhen Kewei Robot Technology Co., Limited and its subsidiaries (b) - 2,160,000
CSF Mingda Technology Co., Ltd. (a) 10,580 10,834
$ 13,086 $ 2,172,638
(a) Amounts due from these related parties represent business advances for operational purposes.
(b) Amount due from shareholders’ of Shenzhen Kewei Robot Technology Co., Limited and its subsidiaries was settled upon offsetting certain amounts due to related parties pursuant to a settlement plan with Tu Jingyi (“Mr. Tu”) dated March 22, 2024.

Amounts due to related parties:

As of<br> June 30,<br> 2024 As of<br> December 31,<br> 2023
(Unaudited)
Tu Jingyi (a) $ - $ 152,725
Guardforce Holdings (HK) Limited (a) - 43,337
Guardforce Security (Thailand) Company Limited (b) 139,287 74,429
Shenzhen Kewei Robot Technology Co., Limited and its subsidiaries (c) - 2,528,916
Shenzhen Zhongzhi Yonghao Robot Co., Ltd. (c) - 63,718
Guardforce Security Service (Shanghai) Co., Ltd. (c) - 35,225
Guardforce Aviation Security Company Limited (b) 270 156
$ 139,557 $ 2,898,506
(a) Amounts due to Tu Jingyi and Guardforce Holdings (HK) Limited represents accrued interest on loans. Pursuant to a settlement plan with Tu Jingyi (“Mr. Tu”) dated March 22, 2024, the Company had fully paid off these balances in cash on May 3, 2024.
(b) Amounts due to related parties represent business advances for operational purposes.
(c) Amounts due to these related parties were settled upon offsetting the amount due from shareholders’ of Shenzhen Kewei Robot Technology Co., Limited and its subsidiaries pursuant to a settlement plan with Tu Jingyi (“Mr. Tu”) dated March 22, 2024.

F-24

Short-term borrowings from related parties:

As of<br> June 30,<br> 2024 As of<br> December 31,<br> 2023
(Unaudited)
Guardforce Holdings (HK) Limited (a) $ - $ 1,666,846
Tu Jingyi (b) - 1,437,303
$ - $ 3,104,149
(a) On<br>April 17, 2020, the Company borrowed $2,735,000 from Guardforce Holdings (HK) Limited. As of December 31, 2023, the outstanding principal<br>amount of this loan was $1,666,846. The loan is unsecured with an interest rate at 2%. Pursuant to a settlement plan with Tu Jingyi (“Mr.<br>Tu”) dated March 22, 2024, the Company had fully paid off this balance in cash on May 3, 2024.
--- ---
(b) On<br>September 1, 2018, the Company entered into an agreement with Tu Jingyi whereby Tu Jingyi loaned $1,437,303 (RMB10 million) to the Company.<br>The loan is unsecured with an interest rate at 1.5%. Pursuant to a settlement plan with Tu Jingyi (“Mr. Tu”) dated March<br>22, 2024, the Company had fully paid off this balance in cash on May 3, 2024.<br> <br><br> <br>For the six months ended June 30, 2024 and 2023, interest expense recorded for borrowings from related parties was $4,575 and $39,949, respectively.

The principal related party transactions for the six months ended June 30, 2024 and 2023 are as follows:

Related party transactions:

For the six months ended<br> June 30,
Nature 2024 2023
(Unaudited) (Unaudited)
Service/ Products received from related parties:
Guardforce Security (Thailand) Company Limited (a) $ 431,193 $ 68,897
Guardforce Aviation Security Company Limited (b) 925 600
Shenzhen Kewei Robot Technology Co., Limited (c) - 141,569
$ 432,118 $ 211,066
Service/ Products delivered to related parties:
Shenzhen Kewei Robot Technology Co., Limited (d) $ 4,652 $ -

Nature of transactions:

(a) Guardforce<br>Security (Thailand) Company Limited provided security guard services to the Company;
(b) Guardforce<br>Aviation Security Company Limited provided escort services to the Company;
--- ---
(c) During<br>the six months ended June 30, 2023, the Company purchased 207 robots amounting to $229,162 through an asset purchase agreement and $50,927<br>through placing standard purchase orders. 124 robots amounting to $138,520 were returned by the Company. During the six months ended<br>June 30, 2024, the Company did not make purchases from Shenzhen Kewei Robot Technology Co., Ltd.
--- ---
(d) The<br>Company rented robots to Shenzhen Kewei Robot Technology Co., Limited.
--- ---

F-25

22. CONSOLIDATED SEGMENT DATA

Selected information by segment is presented in the following tables for the six months ended June 30, 2024 and 2023:

For the six months ended<br> June 30,
Revenues^(1)^ 2024 2023
(Unaudited) (Unaudited)
Secured logistics $ 15,761,944 $ 15,943,156
AI&Robotics solution 131,142 440,229
General security solutions 1,673,758 1,622,218
$ 17,566,844 $ 18,005,603
(1) Revenue excludes intercompany sales.
For the six months ended<br> June 30,
--- --- --- --- --- --- ---
Operating loss 2024 2023
(Unaudited) (Unaudited)
Secured logistics $ 770,737 $ (1,101,369 )
AI&Robotics solution (894,556 ) (8,320,982 )
General security solutions (109,979 ) (542,569 )
Corporate and others ^(1)^ (1,848,064 ) (1,936,908 )
Operating profit (loss) from continuing operations (2,081,862 ) (11,901,828 )
Total other income from four segments 312,342 77,665
Foreign exchange losses (gain), net:
- Secured logistics (1,544 ) (598,053 )
- AI&Robotics solution (30,030 ) 13,150
- Corporate and others (17,467 ) 810
Finance costs:
- Secured logistics (56,727 ) (423,440 )
- AI&Robotics solution (17,427 ) -
- General security solutions (2,430 ) -
- Corporate and others (4,950 ) (154,868 )
Loss before income tax from continuing operations (1,900,095 ) (12,986,564 )
Provision for income tax benefit (expense) 22,949 (874,431 )
Net loss for the period from continuing operations (1,877,146 ) (13,860,995 )
Net loss for the period from discontinued operations – Information security segment 38,719 11,562
Net loss for the period (1,838,427 ) (13,849,433 )
Less: net profit (loss) attributable to the non-controlling interest 9,167 (30,214 )
Net loss attributable to equity holders of the Company $ (1,847,594 ) $ (13,819,219 )
(1) Includes impairment of goodwill on acquired subsidiaries, non-cash compensation, legal and professional fees and consultancy fees for the Company.

F-26

Depreciation and amortization by segment for six months ended June 30, 2024 and 2023 are as follows:

For the six months ended<br> June 30,
Depreciation and amortization: 2024 2023
(Unaudited) (Unaudited)
Secured logistics $ 1,258,825 $ 1,570,069
AI&Robotics solution 173,368 924,219
General security solutions 124,729 124,713
$ 1,556,922 $ 2,619,001

Total assets by segment as of June 30, 2024 and December 31, 2023 are as follows:

Total assets As of<br> June 30,<br> 2024 As of<br> December 31,<br> 2023
(Unaudited)
Secured logistics $ 20,897,829 $ 21,613,383
Information security - 201,963 *
AI&Robotics solution 2,296,023 3,127,857
General security solutions 3,697,691 2,836,403
Corporate and others 9,292,435 18,035,342
$ 36,183,978 $ 45,814,948
* As of December 31, 2023, the total assets for information security segment were presented as assets held for sale on the consolidated balance sheets.

Total non-current assets by geographical segment as of June 30, 2024 and December 31, 2023 are as follows:

Total non-current assets As of<br> June 30,<br> 2024 As of<br> December 31,<br> 2023
(Unaudited)
The PRC (including Hong Kong and Macau) $ 3,471,387 $ 3,289,170
Thailand 9,979,287 10,472,012
Other countries 15,861 933,174
$ 13,466,535 $ 14,694,356
23. DISPOSAL OF A SUBSIDIARY
--- ---

On February 6, 2024, the Company completed the disposal of its 51% equity interest in Handshake. The Company recorded a gain on disposal of $3,607 for the six months ended June 30, 2024. This disposal was classified as a discontinued operation. The business of Handshake represented the entirety of the Company’s information security segment through the disposal date, which is excluded from the Company’s segment reporting.

24. COMMITMENTS AND CONTINGENCIES

Executives/directors agreements

The Company has several employment agreements with executives and directors with the latest expiring in May 2027. 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, 2024, are as follows:

Amount
Twelve months ending June 30:
2025 $ 1,135,957
2026 254,167
2027 183,333
Total minimum payment required $ 1,573,457

F-27

Contracted expenditure commitments

The Company’s contracted expenditures commitments as of June 30, 2024 but not provided in the interim condensed consolidated financial statements are as follows:

Payments Due by Period
Less than 1-3 4-5
Contractual Obligations Nature Total 1 year years years
Service fee commitments (a) $ 250,946 $ 215,716 $ 35,230 $ -
Operating lease commitments (b) 2,690,062 1,671,619 946,402 72,041
$ 2,941,008 $ 1,887,335 $ 981,632 $ 72,041
(a) The Company has engaged Stander Information Company Limited (“Stander”) to provide technical services relating to the cash management systems for the Company’s secure logistics business. The service agreement with Stander is comprised of a monthly fixed service fee and certain other fees as specified in the agreement, which will expire in August 2025.
(b) From time to time, the Company entered into various short-term lease agreements to rent warehouses and offices. In addition, the Company has various low value items with various lease terms that the Company is committed to pay in the future.

Bank guarantees

As of June 30, 2024, the Company had no commitments with banks for bank guarantees in favor of government agencies and others.

25. SUBSEQUENT EVENTS

Numerous subsequent events disclosures are being made elsewhere in these condensed consolidated financial statements. Subsequent events have been reviewed through the date of filing and required no adjustments or disclosures.

F-28

Exhibit 99.2

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

IN CONNECTION WITH THE INTERIM CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS FOR THE

SIX MONTHS ENDED JUNE 30, 2024

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 “RMB” are to the legal currency of the People’s Republic of China. 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, 2023 filed with the Securities and Exchange Commission on April 29, 2024 (the “2023 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 2023 Form 20-F under “Item 3. Key Information-D. Risk Factors” or in other parts of the 2023 Form 20-F.

Overview

Our businesses are categorized into four main units:

[i] Secured Logistics Business.
[ii] AI&Robotics Solution Business.
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[iii] General Security Solutions Business; and
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[iv] Corporate and others.
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Secured Logistics Business

We conduct business mainly through Guardforce Cash Solutions Security Thailand Co., Limited, or GF Cash (CIT), our subsidiary, 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, among other things.

(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) Consolidated Cash Center (CCC)

Consolidate Cash Center (CCC) is a new business commencing in 2021 to provide an outsourced cash center management service. We operate the cash center which includes note counting, sorting, storage, inventory management and secured transportation of the notes and coins on behalf of for Bank of Thailand (BOT). As of the date of this report, we operate four Consolidate Cash Centers in Khon Kean, Hadyai, Phitsanulok and Ubon Ratchathani. The newly won contract to operate Consolidate Cash Center in Chiang Mai will commence at the end of 2024.

(vii) Cash Deposit Management Solutions (GDM):

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.

(viii) Others

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.

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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.

AI&Robotics Solution Business

Our AI&Robotics Solutions business was established in 2020 as part of our revenue diversification efforts. We do not manufacture the robots, but we operate on a Robots-as-a-Service (RaaS) business model and purchase the robots from equipment manufacturers. We integrate various value-add applications into the robots for leasing to generate recurring revenue. As part of our market penetration strategy, we have adopted a mass adoption strategy by providing the robots on a trial basis with an option to purchase or rent.

As the robot deployment expanded, we upgraded our Guardforce AI Intelligent Cloud Platform (“GFAI ICP”) to enhance robot management and AI functionalities. By 2022, we’ve launched GFAI ICP 2.0, incorporating advertising features, and launched the AIoT Robot Advertising business. Starting from 2024, we began upgrading GFAI ICP to version 3.0, with the plan to develop it into a “Unified AI Platform”. This upgrade will enable more AI integration, such as the access and management of multiple large language models (LLMs), prompt engineering management, LLMs fine-tuning management, LLMs Agent generation, and LLM recommendation engines. These enhancements, combined with our existing RaaS services and scenario applications, will provide customers with more intelligent solutions.

General Security Business

We began operating our general security solutions service through the acquisition of the 100% equity interest in Beijing Wanjia on June 22, 2022. Our services include the provision of Smart Retail Operation Management, CCTV and Security Alarm Operation, Security Engineering and Maintenance.

Corporate and others

Discontinued Operations

We acquired a majority stake in Handshake Networking (Handshake) on March 25, 2021. The purpose of this acquisition was to provide us with the experience, expertise, and creditability to capitalize on the growing information security market.

After taking various factors into consideration, including the goodwill impairment, unsustainable revenue, and client synergy with other business sectors, combined with our strategic growth in AI and robotics, we have completed the separation with Handshake on February 6, 2024. For the six months ended June 30, 2024 and 2023, revenue and results of operations derived from this service line were presented as discontinued operations on the consolidated statements of profit or loss.

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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,
2024 2023
% of<br> Revenue % of<br> Revenue
Revenue 100.0 % 100.0 %
Cost of sales ) (81.6 )% ) (88.0 )%
Gross profit 18.4 % 12.0 %
Stock-based compensation ) (1.0 )% - %
Recovery (Provision for and write off) of withholding tax receivable 0.2 % ) (3.1 )%
Provision for expected credit loss on trade and other receivables ) (1.0 )% ) (4.8 )%
Provision for obsolete inventories - % ) (17.2 )%
Impairment loss on fixed assets - % ) (8.8 )%
Impairment on goodwill ) (0.2 )% ) (7.0 )%
Selling, distribution and administrative expenses ) (28.3 )% ) (37.1 )%
Operating loss from continuing operations ) (11.9 )% ) (66.1 )%
Other income, net 1.8 % 0.4 %
Foreign exchange losses, net ) (0.3 )% ) (3.2 )%
Finance costs ) (0.5 )% ) (3.2 )%
Loss before income tax from continuing operations ) (10.8 )% ) (72.1 )%
Provision for income tax benefit (expense) 0.1 % ) (4.9 )%
Net loss for the period from continuing operations ) (10.7 )% ) (77.0 )%
Discontinued operations:
Net gain for the period from discontinued operations
Net loss for the period ) )
Net loss attributable to:
Equity holders of the Company ) )
Non-controlling interests )
) )

All values are in US Dollars.

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Comparison of six months ended June 30,2024, and 2023

Revenue.

For the six months ended June 30, 2024, our revenue was $17,566,844, a decrease of $438,759, or 2.4%, compared to $18,005,603 for the six months ended June 30, 2023. This decrease was mainly driven by the following factors:

Secured logistics:

Revenue from the secured logistics segment decreased by $181,212, or 1.1%, compared to the interim period 2023. The fluctuations on the currency exchange rates had impacted our business. Our presentational currency is USD, where the functional currency of GF Cash (CIT) is THB. GF Cash (CIT) operates our entire secured logistics business in Thailand, contributing 89.7% and 88.5% of our total revenues for the interim period 2024 and 2023, respectively. For the six months ended June 30, 2024 and 2023, the average rate to convert 1 THB to 1 USD decreased from 0.0293 for the interim period 2023 to 0.0275 for the interim period 2024, representing a THB depreciation of 6.1%. Despite the impact of such foreign currency translation, our secured logistics business revenue increased by approximately THB28.4 million, or 5.2%, compared to the interim period 2023.

The increase of THB28.4 million in secured logistics revenues was mainly due to the following reasons:

(i) We experienced continued increase in the demand for our Guardforce Digital Machine or GDM products. For the interim period 2024, the revenue contribution from our GDM product increased by approximately THB28.6 million, or 74.3%.
(ii) Apart from our GDM business, we also experienced continuing increase from our Cash-In-Transit business (Non-dedicated vehicles) with our retail customers by THB14.4 million, or 7.0%, compared to the interim period 2023, due to the increased frequency of services in the retail sector after Thailand began easing its strict Covid pandemic control and lockdown measures in 2023. However, this positive impact on revenue was offset by the decline in revenues mainly in our Cash-In-Transit (Dedicated vehicle) by THB2.7 million, or 4.1%, compared to the interim period 2023 and in our ATM business with our bank customers, by THB13.2 million, or 9.9% compared to the same period last year. This decline was primarily due to a lower demand for cash in the marketplace as well as decreased need for physical bank branches and ATM services.

AI&Robotics:

Our AI&Robotics solutions revenue decreased due to the continuing decline in demand on certain models of our robots promoted for temperature reading and social distancing during the Covid-19 period. Revenue from the AI & Robotics segment decreased by $309,087, or 70.2%, compared to the interim period 2023. In early 2024, we started evolving our robots with changing consumer preferences to provide more advanced AI solutions by investing in R&D projects.

Cost of sales.

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

For the six months ended June 30, 2024, our cost of revenue was $14,327,094, a decrease of $1,519,713, or 9.6%, compared to $15,846,807 for the six months ended June 30, 2023. Cost of revenue as a percentage of our revenues decreased from 88.0% for the six months ended June 30, 2023, to 81.6% for the six months ended June 30, 2024. The improved cost of revenue ratio was mainly due to (1) the effective manpower streamline project which has significantly reduced our direct labor cost and (2) the decrease in fuel consumption costs by approximately 7.7% from THB33.70 ($0.99) average per liter for the interim period 2023 to THB31.12 ($0.86) average per liter for the interim period 2024. Despite a decrease in fuel price, labor cost and other overhead costs continue to rise due to inflation as we continue our effective cost controls and savings measures to control our direct labor and overhead cost.

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Gross profit.

As a percentage of revenue, our gross profit margin increased from 12.0% for the six months ended June 30, 2023 to 18.4% for the six months ended June 30, 2024, primarily due to our cost control initiatives recently implemented, and an increase in revenues, higher profit margin business segments including our continued growing GDM business and Cash-In-Transit business with our retail customers.

Recovery (Provision for and write off) of withholdingtax receivable.

For the six months ended June 30, 2024, we recorded a recovery of withholding tax receivable of $32,980, which represents the difference between the receivable recorded and the amount of refund received from the Thai Revenue Department, in connection with the Company’s 2019 withholding tax receivable. Out of prudence, at each reporting period, we estimate and record the provision for withholding tax receivable based on the amount historically refunded and written off.

Provision for expected credit loss on tradeand other receivables.

For the six months ended June 30, 2024, we made a provision for expected credit loss on trade and other receivables amounting to $184,180. As each reporting period, we estimated the potential credit losses through a comprehensive assessment of credit risk, probability of default and scenario analysis and recorded a provision to reflect the true value of our receivables on the financial statements.

Impairment on goodwill.

For the six months ended June 30, 2024, we recognized impairment losses of $30,467 on InnoAI Technology (Shenzhen) Co., Ltd. The amount of the impairment losses recognized reflects the excess of the carrying value of goodwill over its estimated recoverable amount.

Stock-based compensation expense.

For the six months ended June 30, 2024, we recorded stock-based compensation expense of $172,655, which represents (1) $77,700 for the fair value of the restricted ordinary shares issued and fully vested for the independent directors’ half-year service in 2024. On March 6, 2024, 60,000 restricted ordinary shares were issued for their full-year service in 2024, in which 30,000 was fully vested for the interim period 2024, and (2) $94,955 for the under-provision of the estimated provided amount for the stock-based compensation made at December 31, 2023 for the service performed by the officers and certain employees performed in fiscal year 2023. On May 7, 2024, an aggregate number of 288,000 restricted ordinary shares to officers and certain employees for their service performed in 2023.

Selling, distribution and administrative expenses.

The Company’s total selling, distribution and administrative expenses are comprised of the following:

● Selling and distribution 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 offices in different regions.
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For the six months ended June 30, 2024, our total selling, distribution, and administrative expenses were $4,967,290, a meaningful decrease of $1,716,560, or 25.7%, compared to $6,683,850 for the six months ended June 30, 2023. Our three most significant selling, distribution and administrative (“SGA”) expenses for the six months ended June 30, 2024, were (1) staff expense of $3,141,756, representing 63.2% of our total SGA expenses, (2) professional fees of $582,489, representing 11.7% of our total SGA expenses, and (3) depreciation and amortization expense of $452,299, representing 9.1% of our total SGA expenses. The decrease was mainly driven by the following reasons:

(1) Our staff expense mainly represent wages, overtime expense and welfare and benefits expense to our head quarter management team, sales and administrative employees. A decrease of $460,371, or 12.8% compared to $3,602,127 for the interim period 2023 was mainly due to the reduction of existing sales headcount as a result of the Company’s transition into AI&Robotics solution business for the interim period 2024. 
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(2) Our professional fees mainly represent legal fees for the legal advice related to SEC compliance matters and the annual audit fees, interim review fees and audit-related fees. A decrease of $192,064 or 24.8% compared to $774,553 for the interim period 2023, was mainly due to the legal fees for the two underwritten public offerings (“CMPOs”) completed in May 2023, and we did not have such expenses in the interim period 2024.
(3) Our depreciation and amortization expense decreased by $799,060 or 63.9% compared to $1,251,359 for the interim period 2023, was mainly due to all of our robotics related fixed assets and intangible assets was fully impaired as of December 31, 2023, and we did not have any depreciation and amortization expense related to these assets in the interim period 2024.
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Overall, we have successfully reduced our operating expenses which resulted from our successful cost reduction strategies including streamlining processes and allocating resources effectively to optimize our operational efficiency. Although we maintain 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, 2024, other income was $312,342 as compared to $77,665 for the six months ended June 30, 2023. The increase was mainly due to the interest income of $244,465 derived from short-term fixed deposits with banks in Hong Kong.

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.

For the six months ended June 30, 2024, finance costs were $81,534, a decrease of $496,774 or 85.9%, as compared to $578,308 for the six months ended June 30, 2023. The decrease was mainly due to the settlement of a convertible note payable and a third party borrowing in fiscal year 2023.

Provision for income tax benefit (expense).

For the six months ended June 30, 2024, our income tax benefit was $22,949, as compared to income tax expense of $874,431 for the six months ended June 30, 2023. We operate in different countries that we file separate tax returns in. The tax returns in these countries that are subject to examination by the foreign tax authorities.

No provision for income tax expense has been made as we did not have taxable profits for the six months ended June 30, 2024.

Net loss for the period from continuing operations.

For the six months ended June 30, 2024, our net loss for the period from continuing operations was $1,877,146, a decrease of $11,983,849, as compared to net loss for the period from continuing operations of $13,860,995 for the six months ended June 30, 2023. This was mainly due to provisions and impairments made during the first half-year of 2023.

Although we still incurred a net loss for the interim period 2024, we expect to see a positive trend in our future results.

Net gain from discontinued operations

For the six months ended June 30, 2024 and 2023, revenue derived from our discontinued operations was $38,719 and $11,562 prior to the disposal of Handshake.

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Net profit (loss) attributable to non-controllingInterests.

Net profit attributable to non-controlling interests was $9,167 for the six months ended June 30, 2024 and net loss attributable to non-controlling interests was $30,214 for the six months ended June 30, 2023.

Net loss attributable to equity holders ofthe Company.

For the six months ended June 30, 2024, and 2023, our net losses attributable to equity holders of the Company were $1,847,594 and $13,819,219, respectively.

Inflation.

Our operating results for the six months ended June 30, 2024, were negatively affected by the recent inflationary cost pressures. The higher overhead costs and higher wage rates impact the profitability of our business. We will develop operational strategies to mitigate the inflation which involve a combination of cost-cutting measures and adjustments to pricing.

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.

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 loss from operations and net 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 loss before (i) finance costs, provision for income tax (benefit) expense, depreciation expense of fixed assets and amortization expense of intangible assets, which we do not believe are reflective of our core operating performance during the periods presented.

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Non-IFRS adjusted net income (loss) represents EBITDA before certain non-cash expenses, consisting of (i) stock-based compensation expense, (ii) (recovery) provision for and write off of withholding tax receivable, (iii) impairment of assets including trade and other receivables, obsolete inventories, fixed assets and goodwill and (iv) foreign exchange losses.

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

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

For the six months ended <br> June 30,
2024 2023
Net loss from continuing operations - IFRS $ (1,877,146 ) $ (13,860,995 )
Finance costs 81,534 578,308
Provision for income tax (benefit) expense (22,949 ) 874,431
Depreciation and amortization expense 1,556,922 2,619,001
EBITDA (261,639 ) (9,789,255 )
Stock-based compensation 172,655 -
(Recovery) provision for and write off of withholding taxes receivable (32,980 ) 561,277
Provision for expected credit loss on trade and other receivables 184,180 870,408
Provision for obsolete inventories - 3,090,283
Impairment loss on fixed assets - 1,591,766
Impairment on goodwill 30,467 1,263,040
Foreign exchange losses, net 49,041 584,093
Adjusted net income (loss) (Non-IFRS) $ 141,724 $ (1,828,388 )
Non-IFRS earnings (loss) per share
Earnings (Loss) per share attributable to equity holders of the Company
Basic and diluted $ 0.01 $ (0.58 )
Weighted average number of shares used in computation:
Basic and diluted 9,991,600 3,174,282

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, bank borrowings and issuances of ordinary shares. 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.

As of June 30, 2024 and 2023, we had cash and cash equivalents and restricted cash of approximately $15.5 million and $26.0 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,
2024 2023
Net cash used in operating activities $ (1,808,989 ) $ (1,046,862 )
Net cash provided by (used in) investing activities 134,703 (1,046,308 )
Net cash (used in) generated from financing activities (4,435,057 ) 19,876,078
Effect of exchange rate changes on cash (362,280 ) 16,840
Net (decrease)/increase in cash and cash equivalents, and restricted cash (6,471,623 ) 17,799,748
Cash and cash equivalents, and restricted cash at January 1, 21,973,395 8,230,644
Cash and cash equivalents, and restricted cash at June 30, $ 15,501,772 $ 26,030,392 
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Operating Activities.

Net cash used in operating activities was $1,808,989 for the six months ended June 30, 2024. The difference between our net loss of $(1,838,427) and net cash used in operating activities was due to (a) the adjustment of non-cash items mainly comprised of (i) depreciation and amortization of $1,556,922 primarily comprised of depreciation of fixed assets, depreciation of right-of-use assets and amortization of intangible assets; (ii) stock-based compensation of $172,655; (iii) provision for expected credit loss on trade and other receivable of $184,180; (iv) interest income of $(261,041) mainly derived from fixed bank deposits; (v) deferred income taxes of $(101,998); and (b) the cash changing in operating assets and liabilities in a net amount of $(1,565,361) which was generally due to (i) the increase in other assets of $(1,005,338) primarily represents the prepayments made for office and warehouse rental, insurance and others; (ii) the decrease in inventories of $114,223 related to the sale of security equipment or installation of security equipment for customers; (iii) the change in amounts due with related parties of $(386,720) due to the offsetting of receivables and payable balance with Mr. Tu pursuant to a settlement agreement; (iv) the decrease in trade and other payables and other current liabilities of $(437,966) related to the payroll payable, including accrued salaries and bonus; and (v) the decrease in withholding tax receivable of $227,903.

Investing Activities.

Net cash provided by investing activities was $134,703 for the six months ended June 30, 2024, which was due the interest received from fixed bank deposits of $283,750, offset with the purchase of fixed assets and intangible assets of $(148,666).

Financing Activities.

Net cash used in financing activities was $(4,435,057) for the six months ended June 30, 2024, which was attributable to (i) repayment of the borrowings from related parties, including the principal and accrued interest of $(3,304,787); (ii) repayment of bank borrowings and interests of $(252,717); and (iii) payment of finance lease liabilities of $(877,553).

Research and Development, Patents and Licenses,Etc.

We have outlined our research and development plans to foster innovation and drive technology advancements within our robotics AI solutions business. We plan to collaborate with business partners and develop our internal R&D team’s capabilities. We have budgeted approximately $2.0 million for research and development expenditures in fiscal year 2024.

We incurred $140,756 research and development expense during the six months ended June 30, 2024. 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.

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Tabular Disclosure of Contractual Obligations

Executives/directors agreements

The Company has several employment agreements with executives and directors with the latest expiring in May 2027. 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, 2024, are as follows:

Amount
Twelve months ending June 30:
2025 $ 1,135,957
2026 254,167
2027 183,333
Total minimum payment required $ 1,573,457

Contracted expenditure commitments

The Company’s contracted expenditures commitments as of June 30, 2024 but not provided in the interim condensed 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) $ 250,946 $ 215,716 $ 35,230 $ - $ -
Operating lease commitments (b) 2,690,062 1,671,619 946,402 72,041 -
$ 2,941,008 $ 1,887,335 $ 981,632 $ 72,041 $ -
(a) The<br>Company has engaged Stander Information Company Limited (“Stander”) to provide technical services relating to the cash management<br>systems for the Company’s secure logistics business. The service agreement with Stander comprised of a monthly fixed service fee<br>and certain other fees as specified in the agreement, which will expire in August 2025.
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(b) From<br>time to time, the Company enters into various short-term lease agreements to rent warehouses and offices. In addition, the Company has<br>various low value items with various lease terms that the Company is committed to pay in the future.
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Exhibit99.3

GuardforceAI Reports Positive Adjusted Net Income for the First Half of 2024

Grossprofit increased 50% in H1 2024 compared to H1 2023

Establishinga strong AI technology foundation for solution development in travel and retail

NEWYORK, NY / September 23, 2024 / Guardforce AI Co., Limited (“Guardforce AI” or the “Company”) (NASDAQ: GFAI,GFAIW), an integrated security, AI and Robot-as-a-Service (RaaS) provider, today announced financial results and provided a business update for the first half of 2024 (H1 2024) ended June 30, 2024.

H1Financial Highlights

● Gross<br> profit increased by approximately 50.0% in H1 2024 compared to H1 2023, driven in part by an<br> improvement in gross profit margin, which increased to approximately 18.4% in H1 2024, compared<br> to approximately 12.0% in H1 2023
● Adjusted<br> net income (Non-IFRS) was approximately $0.1 million in H1 2024 compared to an adjusted net<br> loss of approximately $1.8 million in H1 2023
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● Selling,<br> distribution, and administrative expenses was approximately $5.0 million for H1 2024, a 25.7%<br> decrease, compared to approximately $6.7 million for H1 2023
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● Operating<br> loss improved by approximately $9.8 million, or 82.5%, to approximately $2.1 million in H1<br> 2024, compared to approximately $11.9 million in H1 2023.
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● As<br> of June 30, 2024, the Company had cash and cash equivalents and restricted cash of approximately<br> $15.5 million
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Lei (Olivia) Wang, Chairwoman and Chief Executive Officer of Guardforce AI, stated, “2024 marks a pivotal year for us as we improved financial performance and drove business from our established core technological foundation for our AI initiatives. Our primary focus is developing GFAI Agents, which serve as the key technological backbone for our AI-driven travel and purchase solutions. By concentrating on high-margin services within the retail and travel sectors, alongside implementing cost-control initiatives, we’ve achieved notable results. We expanded services to over 25,000 retail stores, turned adjusted net income positive (reconciliation below), and achieved an approximately 50.0% increase in gross profit in H1 2024 compared to H1 2023. These efforts have propelled us further on our transformative journey toward becoming a leading AI solution provider, while reinforcing a solid and sustainable business model.”

H12024 Business Highlights

● Consolidated<br> legacy business by securing long-term contracts with key clients, expanded retail client<br> base, and drove growth in higher-margin solutions:
o Guardforce<br> Cash Solutions Security (Thailand) Company (GFCS) won a 5-year contract to operate a Consolidate<br> Cash Center (CCC) in Chiang Mai, Thailand, to become the largest CCC operator on behalf of<br> the Bank of Thailand, operating 50% of its CCC operations. This operation allows GFCS to<br> upgrade facility capabilities without additional investment, enhancing the overall operation<br> with higher profit margins.
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o Guardforce<br> Digital Machine (GDM) revenue increased by approximately $0.8 million, or 74.3%, in H1 2024<br> compared to H1 2023. GDM is a higher profit-margin solution which provides clients, particularly<br> retail clients, with digital cash processing solutions.
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o Beijing<br> Wanjia Security System Limited secured two long-term contracts with existing key clients,<br> expanding security alarm solutions to approximately an additional 3,900 stores, representing<br> a more than 50% increase compared to 2023, and bringing the total stores serviced to approximately<br> 12,000 stores across Mainland China.
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o The<br> total number of retail stores served in the security sector surpassed 25,000, marking a transformative<br> milestone in the client base. This strategy helps the Company better understand clients’<br> needs, standard procedures, and industry pain points, allowing the development of customized<br> AI solutions.
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● Developed<br> GFAI Agents as the core technology foundation for AI Purchase and AI Travel Solutions:
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o Upgraded<br> Guardforce AI Intelligent Cloud Platform as a unified cloud platform to integrate various<br> large language models and third-party APIs for GFAI Agents development.
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o Leveraged<br> client insights and service experience to develop GFAI Agents that address the challenge<br> of matching the right products to end-users in the travel and retail industries.
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o Developed<br> the proof of concept for the AI Travel Assistant to optimize travel routes, resources, and<br> real-time agenda adjustments for end-users in the travel industry, as well as AI Purchase<br> solutions to provide tailored product recommendations for end-users in retail.
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● Diversified<br> existing RaaS solutions by:
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o Partnering<br> with iApp Technology Co., Ltd, a Thailand-based technology company specializing in AI and<br> data processing management, to launch “LinguaBot,” which integrates generative<br> AI features to enhance the robots’ chatbot capabilities for concierge services.
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2
o Launching<br> RoboTravel Agent (RTA), an upgraded AIoT Robot Advertising solution for the travel industry<br> that includes a smart ticketing system and coupon promotion features for scenic sites.
o Continuing<br> partnership with China International Travel Service Shenzhen Co., Ltd (Nice Tour), and rolling<br> out approximately 1,000 RTAs in Asia Pacific.
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o Expanding<br> AIoT Robot Advertising to the U.S., with more than 200 robots deployed.
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o Launching<br> a decentralized spatial computing solution that utilizes robots’ unused computing power<br> to process complex tasks beyond advertising. This initiative will not only generate additional<br> revenue for Guardforce AI but also offers the potential for revenue-sharing with businesses<br> where the robots are deployed, creating a mutually beneficial business model.
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“In 2024, we continue to focus on consolidating our legacy business, strengthening our client base in the travel and retail sectors, and accelerating R&D in AI solutions, particularly the development of GFAI Agents tailored for these industries. Our achievements in the first half of the year have laid a strong foundation for continued growth, as we remain committed to creating products and services that help our customers optimize their sales and marketing operations. Additionally, we continue to carefully manage our expenses and have implemented successful cost reduction strategies that have effectively lowered operating expenses overall,” concluded Ms. Wang.

FinancialOverview

Net revenue decreased by approximately $0.4 million, or 2.4%, to approximately $17.6 million, for H1 2024, compared to approximately $18.0 million for H1 2023. The decrease is mainly due to the decrease of foreign currency exchange rates between Thai Baht and U.S. Dollars. Despite the impact of foreign currency exchange rates, revenue for the secured logistics business increased by approximately $0.8 million, or 5.2%, compared to the H1 2023. Gross profit increased to approximately $3.2 million for H1 2024, compared to approximately $2.2 million for H1 2023. Gross profit margin increased to 18.4% for H1 2024, from 12.0% for H1 2023, primarily due to cost control initiatives and a higher profit margin from our continued growing GDM business and Cash-In-Transit business with our retail customers.

For H1 2024, selling, distribution, and administrative expenses decreased significantly to approximately $5.0 million, compared to approximately $6.7 million for H1 2023, representing a 25.7% decrease. Operating loss was approximately $2.1 million in H1 2024, compared to approximately $11.9 million in H1 2023, mainly due to the reduction in fixed asset depreciation and inventory provisions. Adjusted net income (Non-IFRS) was approximately $0.1 million in H1 2024 compared to an adjusted net loss of approximately $1.8 million in H1 2023. As of June 30, 2024, and 2023, the Company had cash and cash equivalents and restricted cash of approximately $15.5 million and $26.0 million, respectively.

3

AboutGuardforce AI Co., Ltd.

Guardforce AI Co., Limited (NASDAQ: GFAI/GFAIW) is an integrated solution provider, specializing in security solutions, and focusing on implementing AI and robotics solutions to improve business operational efficiency and sales and marketing process, especially for the retail and travel industry in the Asia Pacific. Drawing upon 42 years’ operational experience, established premiere long-term customer base, and sales channels, Guardforce AI has built a robust foundation towards the next level of elevating tailored AI solutions and expanding globally. For more information, visit www.guardforceai.com Twitter: @Guardforceai.

SafeHarbor Statement

Thispress release contains statements that do not relate to historical facts but are “forward-looking statements” within the meaningof the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements can generally (althoughnot always) be identified by their use of terms and phrases such as anticipate, appear, believe, continue, could, estimate, expect, indicate,intend, may, plan, possible, predict, project, pursue, will, would and other similar terms and phrases, as well as the use of the futuretense. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only oncurrent beliefs, expectations and assumptions regarding the future of the business of the Company, future plans and strategies, projections,anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, theyare subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outsideof our control, including the risks described in our registration statements and annual reports under the heading “Risk Factors”as filed with the Securities and Exchange Commission. Actual results and financial condition may differ materially from those indicatedin the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Forward-looking statementsin this press release speak only as of the date hereof. Unless otherwise required by law, we undertake no obligation to publicly updateor revise these forward-looking statements, whether because of new information, future events or otherwise.

InvestorRelations:

David Waldman or Natalya Rudman

Crescendo Communications, LLC

Email: gfai@crescendo-ir.com

Tel: 212-671-1020

GuardforceAI Corporate Communications

Hu Yu

Email: yu.hu@guardforceai.com

(tables follow)

4

GuardforceAI Co., Limited and Subsidiaries

ConsolidatedStatements of Profit and Loss

(Expressedin U.S. Dollars)

For the six months ended<br> June 30,
2024 2023
(Unaudited) (Unaudited)
Revenue $ 17,566,844 $ 18,005,603
Cost of sales (14,327,094 ) (15,846,807 )
Gross profit 3,239,750 2,158,796
Stock-based compensation (172,655 ) -
Recovery (Provision for and write off) of withholding tax receivable 32,980 (561,277 )
Provision for expected credit loss on trade and other receivables (184,180 ) (870,408 )
Provision for obsolete inventories - (3,090,283 )
Impairment loss on fixed assets - (1,591,766 )
Impairment on goodwill (30,467 ) (1,263,040 )
Selling, distribution and administrative expenses (4,967,290 ) (6,683,850 )
Operating loss from continuing operations (2,081,862 ) (11,901,828 )
Other income, net 312,342 77,665
Foreign exchange losses, net (49,041 ) (584,093 )
Finance costs (81,534 ) (578,308 )
Loss before income tax from continuing operations (1,900,095 ) (12,986,564 )
Provision for income tax benefit (expense) 22,949 (874,431 )
Net loss for the period from continuing operations (1,877,146 ) (13,860,995 )
Discontinued operations:
Net gain for the period from discontinued operations 38,719 11,562
Net loss for the period (1,838,427 ) (13,849,433 )
Less: net profit (loss) attributable to non-controlling interests 9,167 (30,214 )
Net loss attributable to equity holders of the Company $ (1,847,594 ) $ (13,819,219 )
Loss per share
Basic and diluted loss attributable to the equity holders of the Company $ (0.18 ) $ (4.35 )
Loss per share from continuing operations
Basic and diluted loss attributable to the equity holders of the Company $ (0.19 ) $ (4.36 )
Weighted average number of shares used in computation:
Basic and diluted 9,991,600 3,174,282 
5

GuardforceAI Co., Limited and Subsidiaries

ConsolidatedBalance Sheets

(Expressedin U.S. Dollars)

As of<br> December 31,<br> 2023
Assets
Current assets:
Cash and cash equivalents 13,979,217 $ 20,235,227
Restricted cash 26,319 100,764
Trade receivables 5,316,983 5,630,805
Other current assets 2,633,799 1,665,571
Withholding tax receivable, net 366,884 607,221
Inventories 381,155 506,403
Amounts due from related parties 13,086 2,172,638
Assets held for sale - 201,963
Total current assets 22,717,443 31,120,592
Non-current assets:
Restricted cash 1,496,236 1,608,762
Property, plant and equipment 3,280,470 4,043,725
Right-of-use assets 2,588,540 2,688,208
Intangible assets, net 2,684,655 2,836,250
Goodwill 411,862 411,862
Withholding tax receivable, net 1,504,543 1,617,625
Deferred tax assets, net 1,110,164 1,085,477
Other non-current assets 390,065 402,447
Total non-current assets 13,466,535 14,694,356
Total assets 36,183,978 $ 45,814,948
Liabilities and Equity
Current liabilities:
Trade and other payables 3,047,534 $ 3,016,850
Borrowings 187,288 337,241
Borrowing from a related party - 3,104,149
Current portion of operating lease liabilities 1,457,783 1,239,066
Current portion of finance lease liabilities 53,055 108,597
Other current liabilities 1,764,636 3,171,643
Amounts due to related parties 139,557 2,898,506
Liabilities directly associated with the assets held for sale - 130,876
Total current liabilities 6,649,853 14,006,928
Non-current liabilities:
Borrowings - 44,410
Operating lease liabilities 1,124,195 1,455,857
Finance lease liabilities 203,127 218,996
Provision for employee benefits 4,591,555 4,935,982
Total non-current liabilities 5,918,877 6,655,245
Total liabilities 12,568,730 20,662,173
Equity
Ordinary shares – par value 0.12 authorized 300,000,000 shares, issued and outstanding 10,237,282 shares at June 30, 2024; issued and outstanding 9,830,373 shares at December 31, 2023 1,228,509 1,179,680
Subscription receivable (50,000 ) (50,000 )
Additional paid in capital 82,011,907 80,983,164
Legal reserve 223,500 223,500
Warrants reserve 251,036 251,036
Accumulated deficit (60,188,269 ) (58,340,675 )
Accumulated other comprehensive income 209,422 985,120
Capital & reserves attributable to equity holders of the Company 23,686,105 25,231,825
Non-controlling interests (70,857 ) (79,050 )
Total equity 23,615,248 25,152,775
Total liabilities and equity 36,183,978 $ 45,814,948

All values are in US Dollars.

6

GuardforceAI Co., Limited and Subsidiaries

ConsolidatedStatements of Cash Flows

(Expressedin U.S. Dollars)

For the six months ended <br> June 30,
2024 2023
Cash flows from operating activities (Unaudited) (Unaudited)
Net (loss) from continuing operations $ (1,877,146 ) $ (13,860,995 )
Net gain from discontinued operations 38,719 11,562
Net loss (1,838,427 ) (13,849,433 )
Adjustments for:
Depreciation and Amortization of fixed and intangible assets 1,556,922 2,619,001
Stock-based compensation 172,655 -
(Recovery) Provision for and write off of withholding tax receivable (32,980 ) 561,277
Provision for expected credit loss on trade and other receivables 184,180 869,519
Provision for obsolete inventories - 3,090,282
Impairment loss on fixed assets - 1,591,766
Impairment on goodwill 30,467 1,263,040
Finance costs 81,778 584,897
Interest income (261,041 ) -
Deferred income taxes (101,998 ) 874,431
(Gain) Loss from assets disposal (31,577 ) 41,965
Gain on disposal of a subsidiary (3,607 ) -
Changes in operating assets and liabilities:
(Increase) Decrease in trade and other receivables (90,891 ) 157,279
Increase in other assets (1,005,338 ) (719,595 )
Decrease in inventories 114,223 296,824
(Decrease) Increase in amounts due to related parties (386,720 ) 639,807
(Decrease) Increase in Trade and other payables and other current liabilities (437,966 ) 1,285,317
Decrease (Increase) in withholding tax receivable 227,903 (374,013 )
Increase in provision for employee benefits 13,428 20,774
Net cash used in operating activities (1,808,989 ) (1,046,862 )
Cash flows from investing activities
Acquisition of property, plant and equipment (34,442 ) (829,231 )
Proceeds from sale of property, plant and equipment 27,805 -
Acquisition of intangible assets (114,224 ) (217,077 )
Disposal of a subsidiary, net of cash disposed (28,186 ) -
Interest received 283,750 -
Net cash provided by (used in) investing activities 134,703 (1,046,308 )
Cash flows from financing activities
Proceeds from issue of shares - 20,867,386
Proceeds from exercise of warrants - 506,693
Cash paid for the cancellation of fractional shares - (49,664 )
Proceeds from bank borrowings - 1,756,738
Repayment of bank borrowings (252,717 ) (1,937,096 )
Repayment of related party borrowings (3,304,787 ) -
Payment of lease liabilities (877,553 ) (1,267,979 )
Net cash (used in) generated from financing activities (4,435,057 ) 19,876,078
Net (decrease)/increase in cash and cash equivalents, and restricted cash (6,109,343 ) 17,782,908
Effect of movements in exchange rates on cash held (362,280 ) 16,840
Cash and cash equivalents, and restricted cash at January 1, 21,973,395 8,230,644
Cash and cash equivalents, and restricted cash at June 30, $ 15,501,772 $ 26,030,392
Non-cash investing and financing activities
Equity portion of purchase consideration paid for acquisition of subsidiaries - 1,848,000 
7

Non-IFRSFinancial 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 (loss) income before (i) finance costs, income tax benefit 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 (loss) incomerepresents net (loss) income before (i) finance costs, income tax benefit and depreciation of fixed assets and amortization of intangible assets, (ii) certain non-cash expenses, consisting of stock-based compensation expense, allowance for and write off of withholding tax receivables, provision for obsolete inventory and impairment loss on fixed assets.

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

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

For the six months ended <br> June 30,
2024 2023
Net loss from continuing operations - IFRS $ (1,877,146 ) $ (13,860,995 )
Finance costs 81,534 578,308
Provision for income tax (benefit) expense (22,949 ) 874,431
Depreciation and amortization expense 1,556,922 2,619,001
EBITDA (261,639 ) (9,789,255 )
Stock-based compensation 172,655 -
(Recovery) provision for and write off of withholding taxes receivable (32,980 ) 561,277
Provision for expected credit loss on trade and other receivables 184,180 870,408
Provision for obsolete inventories - 3,090,283
Impairment loss on fixed assets - 1,591,766
Impairment on goodwill 30,467 1,263,040
Foreign exchange losses, net 49,041 584,093
Adjusted net income (loss) (Non-IFRS) $ 141,724 $ (1,828,388 )
Non-IFRS earnings (loss) per share
Earnings (Loss) per share attributable to equity holders of the Company
Basic and diluted $ 0.01 $ (0.58 )
Weighted average number of shares used in computation:
Basic and diluted 9,991,600 3,174,282

8

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