Exhibit 99.3
FINANCIAL STATEMENTS
GUARDFORCE AI CO., LIMITED AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2022 and 2021
F-1
Guardforce AI Co., Limited and Subsidiaries
Unaudited Interim Condensed Consolidated Statement of Financial Position
(Expressed in U.S. Dollars)
Note | As at June 30, 2022 | As at December 31, 2021 | ||||||||
(Unaudited) | ||||||||||
Assets | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | 4 | $ | $ | |||||||
Restricted cash | ||||||||||
Trade receivables | 6 | |||||||||
Other receivables | 8 | |||||||||
Other current assets | 9 | |||||||||
Inventories | 5 | |||||||||
Amount due from related parties | 23 | |||||||||
Total current assets | ||||||||||
Non-current assets: | ||||||||||
Restricted cash | 4 | |||||||||
Property, plant and equipment | 11 | |||||||||
Right-of-use assets | 12 | |||||||||
Intangible assets | 13 | |||||||||
Goodwill | 3 | |||||||||
Deposits paid for business acquisitions | 10 | - | ||||||||
Withholding taxes receivable | 7 | |||||||||
Deferred tax assets, net | 17 | |||||||||
Other non-current assets | 9 | |||||||||
Total non-current assets | ||||||||||
Total assets | $ | $ | ||||||||
Liabilities and Equity | ||||||||||
Current liabilities: | ||||||||||
Trade and other payables | 14 | $ | $ | |||||||
Borrowings | 15 | |||||||||
Borrowings from related parties | 23 | |||||||||
Current portion of operating lease liabilities | 12 | |||||||||
Current portion of finance lease liabilities | 16 | |||||||||
Other current liabilities | 14 | |||||||||
Amount due to related parties | 23 | |||||||||
Total current liabilities | ||||||||||
Non-current liabilities: | ||||||||||
Borrowings | 15 | |||||||||
Operating lease liabilities | 12 | - | ||||||||
Borrowings from related parties | 23 | |||||||||
Finance lease liabilities | 16 | |||||||||
Other non-current liabilities | ||||||||||
Provision for employee benefits | 18 | |||||||||
Total non-current liabilities | ||||||||||
Total liabilities | ||||||||||
Equity | ||||||||||
Ordinary shares – par value $ | ||||||||||
Subscription receivable | ( | ) | ( | ) | ||||||
Additional paid in capital | ||||||||||
Legal reserve | 22 | |||||||||
Warrants reserve | ||||||||||
Deficit | ( | ) | ( | ) | ||||||
Accumulated other comprehensive income | ||||||||||
Capital & reserves attributable to equity holders of the Company | ||||||||||
Non-controlling interests | ||||||||||
Total equity | ||||||||||
Total liabilities and equity | $ | $ |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-2
Guardforce AI Co., Limited and Subsidiaries
Unaudited Interim Condensed Consolidated Statement of Profit or Loss
(Expressed in U.S. Dollars)
Note | For the six months ended June 30, | |||||||||
2022 | 2021 | |||||||||
(Unaudited) | (Unaudited) | |||||||||
Revenue | 2.11 | $ | $ | |||||||
Cost of sales | 2.12 | ( | ) | ( | ) | |||||
Gross profit | ||||||||||
Provision for and write off of withholding taxes receivable | ( | ) | ( | ) | ||||||
Stock based compensation | 20 | ( | ) | |||||||
Selling, distribution and administrative expenses | 21 | ( | ) | ( | ) | |||||
Operating loss | ( | ) | ( | ) | ||||||
Other income | ||||||||||
Foreign exchange losses, net | ( | ) | ( | ) | ||||||
Finance costs | ( | ) | ( | ) | ||||||
Loss before income tax | ( | ) | ( | ) | ||||||
Provision for income tax benefit | 17 | |||||||||
Loss for the period | ( | ) | ( | ) | ||||||
Less: loss (profit) attributable to non-controlling interests | ( | ) | ||||||||
Loss attributable to equity holders of the Company | $ | ( | ) | $ | ( | ) | ||||
Loss per share attributable to equity holders of the Company | ||||||||||
Basic | $ | ( | ) | $ | ( | ) | ||||
Diluted | $ | ( | ) | $ | ( | ) | ||||
Weighted average number of shares used in computation: | ||||||||||
Basic | ||||||||||
Diluted |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-3
Guardforce AI Co., Limited and Subsidiaries
Unaudited Interim Condensed Consolidated Statement of Comprehensive Loss
(Expressed in U.S. Dollars)
Note | For the six months ended June 30, | |||||||||
2022 | 2021 | |||||||||
(Unaudited) | (Unaudited) | |||||||||
Loss for the period | $ | ( | ) | $ | ( | ) | ||||
Currency translation differences | 2.5 | ( | ) | ( | ) | |||||
Total comprehensive loss for the period | $ | ( | ) | $ | ( | ) | ||||
Attributable to: | ||||||||||
Equity holders of the Company | $ | ( | ) | $ | ( | ) | ||||
Non-controlling interests | ( | ) | ||||||||
$ | ( | ) | $ | ( | ) |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-4
Guardforce AI Co., Limited and Subsidiaries
Unaudited Interim Condensed Consolidated Statement of Changes in Equity (Deficit)
(Expressed in U.S. Dollars)
Accumulated | ||||||||||||||||||||||||||||||||||||||||
Number of Shares | Amount ($0.003 par) | Subscription Receivable | Additional Paid-in Capital | Legal Reserve | Warrants Reserves | Other Comprehensive Income | Retained earnings (Deficit) | Non- controlling Interests | Total Equity | |||||||||||||||||||||||||||||||
Balance as at December 31, 2020 | $ | $ | ( | ) | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||
Currency translation adjustments | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
Stock-based compensation expenses | ( | ) | ||||||||||||||||||||||||||||||||||||||
Remeasurements of defined benefit plan | - | |||||||||||||||||||||||||||||||||||||||
Issuance of ordinary shares for acquisition of Handshake | ||||||||||||||||||||||||||||||||||||||||
Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
Balance as at June 30, 2021 (Unaudited) | $ | $ | ( | ) | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||
Balance as at December 31, 2021 | $ | $ | ( | ) | $ | $ | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||||||
Currency translation adjustments | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
Stock-based compensation expenses (see Note 20) | ||||||||||||||||||||||||||||||||||||||||
Cancellation of shares | ( | ) | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
Issuance of ordinary shares through private placements (see Note 19) | ||||||||||||||||||||||||||||||||||||||||
Issuance of ordinary shares through exercise of warrants (see Note 19) | ||||||||||||||||||||||||||||||||||||||||
Issuance of ordinary shares for acquisition of subsidiaries (see Note 19) | ||||||||||||||||||||||||||||||||||||||||
Issuance of ordinary shares for deposit paid for acquisitions of subsidiaries (see Note 19) | ||||||||||||||||||||||||||||||||||||||||
Net loss for the period | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
Balance as at June 30, 2022 (Unaudited) | $ | $ | ( | ) | $ | $ | $ | $ | $ | ( | ) | $ | $ |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements
F-5
Guardforce AI Co., Limited and Subsidiaries
Unaudited Interim Condensed Consolidated Statement of Cash Flows
(Expressed in U.S. Dollars)
For the six months ended June 30, | ||||||||
2022 | 2021 | |||||||
Cash flows from operating activities | (Unaudited) | (Unaudited) | ||||||
Loss for the period | $ | ( | ) | $ | ( | ) | ||
Adjustments for: | ||||||||
Depreciation and Amortization of intangible assets | ||||||||
Stock-based compensation | ||||||||
Finance costs | ||||||||
Loss/(Gain) from fixed assets disposal | ( | ) | ||||||
Changes in operating assets and liabilities: | ||||||||
Increase in trade and other receivables | ( | ) | ( | ) | ||||
Increase in other current assets | ( | ) | ( | ) | ||||
Increase in inventories | ( | ) | ( | ) | ||||
(Increase)/Decrease in amount due from/to related parties | ( | ) | ||||||
Decrease/(Increase) in other non-current assets | ( | ) | ||||||
Increase in provision for and write off of withholding taxes receivable | ||||||||
Increase in deferred tax assets | ( | ) | ||||||
Increase in Trade and other payables and other current liabilities | ||||||||
Increase in withholding taxes receivable | ||||||||
(Decrease)/Increase in provision for employee benefits | ( | ) | ||||||
Net cash (used in) generated from operating activities | ( | ) | ||||||
Cash flows from investing activities | ||||||||
Acquisition of property and equipment | ( | ) | ( | ) | ||||
Proceeds from sale of property, plant and equipment | ||||||||
Acquisition of intangible assets | ( | ) | ||||||
Acquisition of subsidiary, net of cash acquired | ( | ) | ||||||
Deposits paid for business acquisitions | ( | ) | ||||||
Net cash used in investing activities | ( | ) | ( | ) | ||||
Cash flows from financing activities | ||||||||
Proceeds from issue of shares | ||||||||
Proceeds from exercise of warrants | ||||||||
Proceeds from borrowings | - | |||||||
Repayment of borrowings | ( | ) | ( | ) | ||||
Payment of lease liabilities | ( | ) | ( | ) | ||||
Net cash generated from (used in) financing activities | ( | ) | ||||||
Net decrease in cash and cash equivalents, and restricted cash | ( | ) | ( | ) | ||||
Effect of movements in exchange rates on cash held | ( | ) | ( | ) | ||||
Cash and cash equivalents, and restricted cash at January 1, | ||||||||
Cash and cash equivalents, and restricted cash at June 30, | $ | $ | ||||||
Non-cash investing and financing activities | ||||||||
Equity portion of purchase consideration paid for acquisition of subsidiaries |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-6
Guardforce AI Co., Limited and Subsidiaries
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(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 address of its registered office was 96 Vibhavadi Rangsit Road, Talad Bangkhen, Laksi, Bangkok 10210, Thailand, which has changed to 10 Anson Road, #28-01 International Plaza, Singapore 079903 since November 2021. Guardforce is controlled by Mr. Tu Jingyi (“Mr. Tu”) through Guardforce AI Technology Limited (“AI Technology”). 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
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
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
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
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
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,
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,
F-7
The reorganization of Guardforce and its subsidiaries (collectively referred to as the “Company) was completed on December 31, 2018. Pursuant to the reorganization, Guardforce became the holding company of the companies, which were under the common control of the controlling shareholder before and after the reorganization. Accordingly, the Company’s financial statements have been prepared on a consolidated basis by applying the predecessor value method as if the reorganization had been completed at the beginning of the earliest reporting period. The Company engages principally in providing cash management and handling services located in Thailand.
On March 25, 2021, the Company acquired
On November 1, 2021, the Company entered
into a Transfer Agreement (the “Singapore Agreement”) to acquire
On November 18, 2021, the Company entered
into a Transfer Agreement (the “Macau Agreement”) to acquire
On November 18, 2021, the Company entered
into another Transfer Agreement (the “Malaysia Agreement”) to acquire
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
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
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
GFAI Robotics Services LLC (“AI
US”) was incorporated in the State of Delaware on February 28, 2022. AI US commenced robotic AI solution business of selling and
leasing robots. AI US is a
GFAI Robot Service (Australia) Pty Ltd.
(“AI Australia”) was incorporated in Australia on February 28, 2022. AI Australia commenced robotic AI solution business of
selling and leasing robots. AI Australia is a
GFAI Robot & Smart Machines Trading
LLC (“AI Dubai”) was incorporated in the United Arab Emirates (UAE) on March 13, 2022. AI Dubai commenced robotic AI
solution business of selling and leasing robots. AI Dubai is a
F-8
GFAI Robotic and Innovation Solution
(Thailand) Company Limited (“AI R&I”) was incorporated in Thailand on March 30, 2022. AI R&I commenced robotic AI
solution business of selling and leasing robots. AI R&I is
GFAI Robot Service (UK) Limited (“AI
UK”) was incorporated in the United Kingdom on April 29, 2022. AI UK commenced robotic AI solution business of selling and leasing
robots. AI UK is a
GFAI Robot Service Limited (“AI
Canada”) was incorporated in the Canada on May 6, 2022. AI Canada commenced robotic AI solution business of selling and leasing
robots. AI Canada is a
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
GFAI Robot Service GK (“AI Japan”)
was incorporated in Japan on May 24, 2022. AI Japan commenced robotic AI solution business of selling and leasing robots. AI Japan is
a
GFAI Robot Service Co., Ltd. (“AI
Korea”) was incorporated in South Korea on June 17, 2022. AI Korea commenced robotic AI solution business of selling and leasing
robots. AI UK is a
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
On May 24, 2022, the Company entered into a Sale and Purchase Agreement
(the “Kewei Agreement”) with Shenzhen Yeantec Co., Limited (“Yeantec”) to acquire
The following diagram illustrates the Company’s legal entity ownership structure as of June 30, 2022:
F-9
2. | SIGNIFICANT ACCOUNTING POLICIES |
The accounting policies applied for the six months ended June 30, 2022 and 2021 are consistent with those of the audited consolidated financial statements for the years ended December 31, 2021 and 2020, as described in those audited consolidated financial statements, except for the adoption of new and amended International Financial Reporting Standards (“IFRS”) effective for the year ending December 31, 2021 which are relevant to the preparation of the June 30, 2022 and 2021 unaudited interim condensed consolidated financial statements.
On September 28, 2022, the unaudited interim condensed consolidated financial statements were approved by the board of directors and authorized for issuance.
2.1 | Basis of presentation |
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34, “Interim Financial Reporting”. These statements should be read in conjunction with the audited consolidated financial statements for the years ended December 31, 2021 and 2020, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The unaudited interim condensed consolidated financial statements have been prepared on a historical cost basis. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying unaudited condensed consolidated financial statements. The results of operations for the six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the full year ended December 31, 2022.
All amounts are presented in United States dollars (“USD”) and have been rounded to the nearest USD.
As of June 30, 2022, the Company’s operating losses raise substantial doubt on the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern will require the Company to obtain additional financing to fund their operations. The perception of the Company’s ability to continue as a going concern may make it more difficult to obtain financing or obtain financing on favorable terms for the continuation of the Company’s operations and could result in the loss of confidence by investors, suppliers and employees. If the Company is not successful in raising capital through equity offerings, debt financings, collaborations, licensing arrangements or any other means or are not successful in reducing our expenses, the Company may exhaust the cash resources and be unable to continue our operations. If the Company cannot continue as a viable entity, the shareholders would likely lose most or all of their investment in the Company.
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.
The Company has a loan outstanding in the principal amount of $
In assessing the going concern, management and the Board has considered:
- | The risk of default on Profit Raider loan is assessed as low. |
- | Based on the statistics of the industry, management expects to see a positive trend in the Company’s future results. Management expects the business to recover in the future when the countries in which the Company operates begin to further ease Covid pandemic control and lockdown measures. |
- | The Company has generated cash from financing activities including liquidity capital injections from fund-raising activities and the receipt of the $ |
F-10
- | The Company has conditional and unconditional obligations as disclosed in Note 22, these commitments and contingencies are in the normal and the course of business. Regarding legal proceedings, as of the date of this report, the Company is a defendant in various labor related lawsuits approximately $ |
- | On September 13, 2022, the Company signed a non-binding letter of intent with Shenzhen Intelligent Guardforce Robot Co., Ltd to acquire Shenzhen Kewei, a high-tech robotics company specializing in developing robotics software solutions and robotics management platforms, as well as robotics sales and technical services. Shenzhen Kewei’s RaaS platform currently operates approximately |
- | GF Cash (CIT), the Company’s major subsidiary, was recently awarded a 5-year contract by a government bank, namely Bank of Thailand to manage its Consolidated Cash Centers (CCCs) in the city of Ubonratchathani and the city of Phitsanulok in Thailand. This long-term contract expands the Company’s current secured logistics services provided to the Bank of Thailand. Management expects an increase in recurring revenue and further growth in the secured logistics segment to sustain the business. |
2.2 | Basis of consolidation |
The consolidated statements of profit or loss and other comprehensive loss, changes in equity and cash flows of the Company for the relevant periods include the results of operations, financial position, cash flows, of all companies now comprising the Company from the earliest date presented or since the date when the subsidiaries and/or businesses first came under the common control of the controlling shareholders, wherever the period is shorter.
The unaudited interim condensed consolidated statements of financial position of the Company as at June 30, 2022 and 2021 have 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 |
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 five segments in Note 24:
(i) | Secured logistics; |
(ii) | Information security; |
(iii) | Robotics AI solutions; |
(iv) | General security solutions; and |
(v) | Corporate and others |
The Company does not report geographical segmental data as over
F-11
2.4 | 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.
2.5 | 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.
IFRS 3 Business combination does not include specific measurement guidance for transfers of businesses or subsidiaries between entities under common control. Accordingly, the Company has accounted for such transactions taking into consideration other guidance in the IFRS framework and pronouncements of other standard-setting bodies. The Company recorded assets and liabilities recognized as a result of transactions between entities under common control at the carrying value on the transferor’s financial statements, and to have the consolidated balance sheet, consolidated statement of profit or loss, comprehensive income, changes in equity and cash flows reflect the results of combining entities’ financial position for all periods presented for which the entities were under the transferor’s common control, irrespective of when the combination takes place.
2.6 | Non-controlling interest |
The non-controlling interest represents the portion of the equity (net assets) in the subsidiary not directly or indirectly attributable to the Company. Non-controlling interests are presented as a separate component of equity on the consolidated statements of financial position, profit or loss, comprehensive income and changes in equity attributed to controlling and non-controlling interests.
2.7 | Critical accounting estimate and judgements |
The preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates and judgements 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 unaudited interim condensed consolidated financial statements, the significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended December 31, 2021.
2.8 | Foreign currency translation |
The presentational currency of the Company is the U.S. dollar (“USD”). The functional currency of Guardforce, AI Holdings, AI Robots, Horizon Dragon, Southern Ambition, AI Singapore, AI Robotics, AI Robots Service, AI Malaysia, AI Macau, AI US, AI Australia, AI Dubai, AI UK, AI Korea, AI Japan and AI Canada is the USD. The functional currency of AI Hong Kong and Handshake is the Hong Kong dollar (“HKD”). The functional currency of AI Thailand, GF Cash (CIT) and AI R&I is Thai Baht (“Baht” or “THB”). The functional currency of AI Shenzhen, AI Jian, Shenzhen GFAI, Guangzhou GFAI and Beijing Wanjia is Chinese Renminbi (“RMB”).
F-12
The currency exchange rates that impact our business are shown in the following table:
Period End Rate | Average Rate | |||||||||||||||
June 30, | December 31, | For the six months ended June 30, | ||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Thai Baht | ||||||||||||||||
Hong Kong Dollar | ||||||||||||||||
Chinese Renminbi |
2.9 | Financial risk management |
2.9.1 | Financial risk factors |
The Company’s activities expose it to a variety of financial risks: foreign exchange risk, interest rate risk and liquidity risk. The Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial performance.
The unaudited interim condensed consolidated financial statements do not include all financial risk management information and disclosures required in the audited financial statements, and should be read in conjunction with the Company’s audited consolidated financial statements as at December 31, 2021 and 2020.
2.9.2 | Liquidity risk |
Prudent liquidity management implies maintaining sufficient cash and cash equivalents and the availability of funding through an adequate amount of committed credit facilities.
The Company’s primary cash requirements are for operating expenses and purchases of fixed assets. The Company mainly finances its working capital requirements from cash generated from operation and proceeds from bank borrowings and finance leases.
The Company’s policy is to regularly monitor current and expected liquidity requirements to ensure it maintains sufficient cash and cash equivalents and an adequate amount of committed credit facilities to meet its liquidity requirements in the short and long term.
At the reporting date, the contractual undiscounted cash flows of the Company’s current financial liabilities approximate their respective carrying amounts due to their short maturities.
2.9.3 | 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.
F-13
2.9.4 | Impact of COVID-19 |
The Coronavirus Disease (COVID-19) outbreak and the measures taken
to contain the spread of the pandemic have created a high level of uncertainty to global economic prospects and this has impacted the
Company’s operations and its financial performance. As COVID-19 continues to evolve with significant levels of uncertainty, management
of the Company is unable to reasonably estimate the full financial impact of COVID-19 on the Company’s financial results in year
2022. The Company is monitoring the situation closely and to mitigate the financial impact, it is conscientiously managing its costs by
adopting an operating cost reduction strategy and conserving liquidity by working with major creditors to align repayment obligations
with receivable collections. Based on the Company’s most recent projections for year 2022 and 2023 for a period of 12 months and
with over $
2. 10 | Goodwill |
Following initial recognition, goodwill is stated at costs 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.
2.11 | Revenue from contracts with customers |
The Company generates its revenue primarily from four service lines: (1) Secure logistics; (2) Robotics AI resolutions; (3) Information security; and (4) General security solutions.
Each service line primarily renders the following services:
(1) | Secure logistics |
(i) | Cash-In-Transit – Non Dedicated Vehicle (CIT Non-DV); (ii) Cash-In-Transit – Dedicated Vehicle (CIT DV); (iii) ATM management; (iv) Cash Processing (CPC); (v) Cash Center Operations (CCT); (vi) Consolidate Cash Center (CCC); (vii) Cheque Center Service (CDC); (viii) Express Cash; (ix) Coin Processing Service; and (x) Cash Deposit Management Solutions |
(2) | Robotics AI solutions |
(i) | Sale of robots and (ii) Rental of robots |
(3) | Information security |
(i) | Penetration test; (ii) PCI ASV Scan and (iii) Rapid7 Sales |
(4) | General security solutions |
(i) | Installation of fire alarm security systems; (ii) Sale of security equipment |
F-14
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. |
● | 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. |
● | 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. |
● | To recognize revenue when the Company satisfies the performance obligation through the rendering of services engaged. |
All of the conditions mentioned above are accomplished normally when the services are rendered to the customer and this moment is considered a point in time. The reported revenue reflects services delivered at the contract or agreed-upon price.
Contract liabilities consist of deferred
revenue related to prepaid fees received from customers for future information security service over the term of the service agreement.
The Company expects to recognize as revenue of $
Revenue is recognized when the related performance obligation is satisfied.
Disaggregation information of revenue by service type which was recognition based on the nature of performance obligation disclosed above is as follows:
For the six months ended June 30, | ||||||||||||||||
2022 | Percentage of Total | 2021 | Percentage of Total | |||||||||||||
Service Type | $ | Revenue | $ | Revenue | ||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Cash-In-Transit – Non-Dedicated Vehicles (CIT Non-DV) | $ | % | $ | % | ||||||||||||
Cash-In-Transit – Dedicated Vehicle to Banks (CIT DV) | % | % | ||||||||||||||
ATM Management | % | % | ||||||||||||||
Cash Processing (CPC) | % | % | ||||||||||||||
Cash Center Operations (CCT) | % | % | ||||||||||||||
Consolidate Cash Center (CCC) | % | % | ||||||||||||||
Cheque Center Service (CDC) | % | % | ||||||||||||||
Others ** | % | % | ||||||||||||||
Cash Deposit Management Solutions (GDM) | % | % | ||||||||||||||
Robotics AI solutions | % | % | ||||||||||||||
Information security | % | % | ||||||||||||||
Total | $ | % | $ | % |
** |
F-15
During the six months ended June 30,
2022 and 2021, revenue amounting to $
2.12 | 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.
2.13 | New and amended accounting standards |
All new standards and amendments that are effective for annual reporting period commencing January 1, 2022 have been applied by the Company for the six months ended June 30, 2022. The adoption of these new and amended standards did not have material impact on the consolidated financial statements of the Company. A number of new standards and amendments to standards have not come into effect for the year beginning January 1, 2022, and they have not been early adopted by the Company in preparing these consolidated financial statements. None of these new standards and amendments to standards is expected to have a significant effect on the consolidated financial statements of the Company.
3. | BUSINESS COMBINATION |
During the six months ended June 30, 2022, the Company acquired five subsidiaries, these acquisitions have 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.
(i) | On March 22, 2022, the Company closed an acquisition of Shenzhen GFAI
and Guangzhou GFAI. A total of $ |
The following represents the purchase price allocation at the date of the acquisition:
March 22, 2022 | ||||
Cash and cash equivalents | $ | |||
Other current assets | ||||
Property, plant and equipment | ||||
Intangible assets | ||||
Other non-current assets | ||||
Current liabilities | ( | ) | ||
Other non-current liabilities | ( | ) | ||
Goodwill | ||||
Total purchase price | $ |
The total revenue included in the Consolidated Statement of Profit
or Loss since March 22, 2022 contributed by Shenzhen GFAI and Guandzhou GFAI was $
Had Shenzhen GFAI and Guangzhou GFAI been consolidated from January
1, 2022, the Consolidated Statement of Profit or Loss would show total revenue of $
(ii) | On June 22, 2022, the Company closed an acquisition of Beijing Wanjia. A total of $ |
F-16
The following represents the purchase price allocation at the date of the acquisition:
June 22, 2022 |
||||
Cash and cash equivalents | $ | |||
Other current assets | ||||
Property, plant and equipment | ||||
Intangible assets | ||||
Other non-current assets | ||||
Current liabilities | ( |
) | ||
Goodwill | ||||
Total purchase price | $ |
The revenue and net income included in the Consolidated Statement of Profit and Loss since June 22, 2022 contributed by Beijing Wanjia were $
.
Had Beijing Wanjia been consolidated from January 1, 2022, the
Consolidated Statement of Profit or Loss would show revenue of $
The following represents the purchase price allocation at the date of the acquisition:
January 20, 2022 | ||||
Cash and cash equivalents | $ | |||
Current liabilities | ( | ) | ||
Goodwill | ||||
Total purchase price | $ |
The revenue included in the Consolidated Statement of Profit and Loss since
January 20, 2022 contributed by AI Malaysia was $
Had AI Malaysia been consolidated from January 1, 2022, the Consolidated
Statement of Profit or Loss would show revenue of $
The following represents the purchase price allocation at the date of the acquisition:
February 9, 2022 |
||||
Cash and cash equivalents | $ | |||
Other current assets | ||||
Current liabilities | ( |
) | ||
Goodwill | ||||
Total purchase price | $ |
AI Macau acts as an agent-only subsidiary company, operating solely and for all purposes as the agent of AI Hong Kong for the deployment of robots and thus, AI Macau has no independent revenue of its own.
F-17
4. | CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
As at June 30, 2022 | As at December 31, 2021 | |||||||
(Unaudited) | ||||||||
Cash on hand | $ | $ | ||||||
Cash in bank | ||||||||
Subtotal | ||||||||
Restricted cash | ||||||||
Cash, cash equivalents, and restricted cash | $ | $ |
5. | INVENTORIES |
As at June 30, 2022 | As at December 31, 2021 | |||||||
(Unaudited) | ||||||||
Robots in warehouse | $ | $ | ||||||
Robots in transit | ||||||||
Security equipment | ||||||||
Impairment provision for inventories | ( | ) | ||||||
Inventories | $ | $ |
Impairment provision for inventories arose from the acquisitions through business combinations. No additional impairment provision for inventories was recorded for the six months ended June 30, 2022 and 2021.
6. | TRADE RECEIVABLES |
As at June 30, 2022 | As at December 31, 2021 | |||||||
(Unaudited) | ||||||||
Trade receivable | $ | $ | ||||||
Impairment provision for trade receivables | ( | ) | ||||||
Trade receivable, net | $ | $ |
Impairment provision for trade receivables arose from the acquisitions through business combinations. No additional impairment provision for trade receivables was recorded for the six months ended June 30, 2022 and 2021.
7. | WITHHOLDING TAXES RECEIVABLE |
As at June 30, 2022 | As at December 31, 2021 | |||||||
(Unaudited) | ||||||||
Balance at January 1, | $ | $ | ||||||
Addition | ||||||||
Collection | ( | ) | ( | ) | ||||
Write off/ Allowance for uncollectible | ( | ) | ( | ) | ||||
Exchange difference | ( | ) | ( | ) | ||||
Balance at end of period/year | $ | $ |
F-18
As at June 30, 2022 | As at December 31, 2021 | |||||||
(Unaudited) | ||||||||
Current portion | $ | $ | - | |||||
Non-current portion | ||||||||
Withholding taxes receivable | $ | $ |
During the six months ended June 30, 2022, the Company received a withholding tax refund of THB35,312,291 (approximately $1.0 million) in connection with the Company’s 2016 to 2017 withholding taxes refund applications (totaled THB56,107,574 or approximately $1.6 million). The Company wrote off approximately $0.6 million, representing the difference between the receivable recorded and amount of known refund from the Thai Revenue Department. The Company did not have any write offs during the six months ended June 30, 2021.
Out of prudence, based on amount written
off for the receivable related to year 2013 to 2017, the Company recorded an allowance of approximately $
8. | OTHER RECEIVABLES |
As at June 30, 2022 | As at December 31, 2021 | |||||||||||
(Unaudited) | ||||||||||||
Cash management systems | (a) | $ | $ | |||||||||
Cash advance to a third party vendor | (b) | |||||||||||
Cash advances to unrelated third parties | (c) | |||||||||||
Impairment provision for other receivables | (c) | ( | ) | |||||||||
$ | $ |
(a) |
(b) |
(c) |
F-19
9. | OTHER CURRENT AND OTHER NON-CURRENT ASSETS |
As at June 30, 2022 | As at December 31, 2021 | |||||||
(Unaudited) | ||||||||
VAT receivable | $ | $ | ||||||
Prepayments – office rental | ||||||||
Prepayments – insurance | ||||||||
Prepayments – others | ||||||||
Uniforms | ||||||||
Tools and supplies | ||||||||
Deferred costs | ||||||||
Staff advance | - | |||||||
Other current assets | $ | $ | ||||||
Deposits | $ | $ | ||||||
Deferred costs | ||||||||
Other non-current assets | $ | $ |
10. | DEPOSITS PAID FOR BUSINESS ACQUISITIONS |
As at June 30, 2022 | As at December 31, 2021 | ||||||||||
(Unaudited) | |||||||||||
Cash portion | (a) | $ | $ | ||||||||
Equity portion | |||||||||||
$ | $ |
On May 24, 2022, the Company entered
into a securities purchase agreement with Shenzhen Kewei Robot Technology Co., Limited (“Shenzhen Kewei”) to acquire
On September 13, 2022, the Company terminated the securities purchase agreement, the cash paid to Shenzhen Kewei will be refunded and the shares issued to Shenzhen Kewei will be cancelled within 90 days of the signing of the termination agreement.
F-20
11. | PROPERTY, PLANT and EQUIPMENT |
Leasehold improvements |
Machinery and equipment |
Office decoration and equipment |
Vehicles | Assets under construction |
GDM machines |
Robots | Total | |||||||||||||||||||||||||
Cost | ||||||||||||||||||||||||||||||||
At December 31, 2020 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Additions | ||||||||||||||||||||||||||||||||
Disposals | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Exchange differences | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
At June 30, 2021 (Unaudited) | ||||||||||||||||||||||||||||||||
At December 31, 2021 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Acquisitions through business combinations | ||||||||||||||||||||||||||||||||
Additions | ||||||||||||||||||||||||||||||||
Disposals | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
Exchange differences | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
At June 30, 2022 (Unaudited) | ||||||||||||||||||||||||||||||||
Accumulated Depreciation | ||||||||||||||||||||||||||||||||
At December 31, 2020 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Depreciation charged for the period | ||||||||||||||||||||||||||||||||
Disposals | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Exchange differences | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
As June 30, 2021 (Unaudited) | ||||||||||||||||||||||||||||||||
At December 31, 2021 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Acquisitions through business combinations | ||||||||||||||||||||||||||||||||
Depreciation charged for the period | ||||||||||||||||||||||||||||||||
Disposals | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
Exchange differences | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
As June 30, 2022 (Unaudited) | ||||||||||||||||||||||||||||||||
Net book value | ||||||||||||||||||||||||||||||||
At June 30, 2021 (Unaudited) | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
At June 30, 2022 (Unaudited) | $ | $ | $ | $ | $ | $ | $ | $ |
There was no impairment of property, plant and equipment recorded for the six months ended June 30, 2022 and 2021. No property, plant and equipment were pledged as security for bank borrowings.
12. | RIGHT-OF-USE ASSETS AND OPERATING LEASE LIABILITIES |
The carrying amounts of right-of-use assets are as below:
As at June 30, 2022 | As at December 31, 2021 | |||||||
(Unaudited) | ||||||||
As at January 1 | $ | $ | ||||||
New leases | ||||||||
New leases acquired through business combinations | - | |||||||
Depreciation expense | ( | ) | ( | ) | ||||
Exchange difference | ( | ) | ( | ) | ||||
Net book amount | $ | $ |
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, 2022 varies from
F-21
During the six months ended June 30,
2022 and 2021, interest expense of $
13. | INTANGIBLE ASSETS |
Assets under construction | ||||||||||||||||||||||||||||||||
Computer software | Right-of-use Platform | Customer base | Technical know-how | Security Surveillance system | Cash Management Systems | Intelligent Cloud Platform | Total | |||||||||||||||||||||||||
Cost | ||||||||||||||||||||||||||||||||
At December 31, 2020 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Additions | ||||||||||||||||||||||||||||||||
Exchange differences | ( | ) | ( | ) | ||||||||||||||||||||||||||||
At June 30, 2021 (Unaudited) | ||||||||||||||||||||||||||||||||
At December 31, 2021 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Acquisitions through business combinations | - | - | - | |||||||||||||||||||||||||||||
Additions | ||||||||||||||||||||||||||||||||
Exchange differences | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
At June 30, 2022 (Unaudited) | ||||||||||||||||||||||||||||||||
Accumulated amortization | ||||||||||||||||||||||||||||||||
At December 31, 2020 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Amortization charged for the period | ||||||||||||||||||||||||||||||||
Exchange differences | ( | ) | - | - | - | - | - | - | ( | ) | ||||||||||||||||||||||
As June 30, 2021 (Unaudited) | - | - | - | - | - | - | ||||||||||||||||||||||||||
At December 31, 2021 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Acquisitions through business combinations | - | - | - | - | - | - | ||||||||||||||||||||||||||
Amortization charged for the period | - | - | - | - | ||||||||||||||||||||||||||||
Exchange differences | ( | ) | - | - | - | - | - | ( | ) | |||||||||||||||||||||||
As June 30, 2022 (Unaudited) | - | - | - | |||||||||||||||||||||||||||||
Net book value | ||||||||||||||||||||||||||||||||
At June 30, 2021 (Unaudited) | $ | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | ||||||||||||||||||
At June 30, 2022 (Unaudited) | $ | $ | $ | $ | $ | $ | $ | $ |
14. | TRADE AND OTHER PAYABLES AND OTHER CURRENT LIABILITIES |
As at June 30, 2022 |
As at December 31, 2021 |
|||||||
(Unaudited) | ||||||||
Trade payables – third parties | $ | $ | ||||||
Accrued salaries and bonus | ||||||||
Accrued customer claims, cash loss and shortage ** | ||||||||
Trade and other payables | $ | $ | ||||||
Output VAT | $ | $ | ||||||
Accrued expenses | ||||||||
Payroll payable | ||||||||
Other payables | ||||||||
Deferred revenue | ||||||||
Other current liabilities | $ | $ |
** |
F-22
15. | BORROWINGS |
As at June 30, 2022 | As at December 31, 2021 | |||||||
(Unaudited) | ||||||||
Current portion of borrowings | $ | $ | ||||||
Non-current portion of borrowings | ||||||||
Borrowings | $ | $ |
As of June 30, 2022, the Company has
unused bank overdraft availability of approximately $
As of June 30, 2021, the Company has
unused bank overdraft availability of approximately $
16. | FINANCE LEASE LIABILITIES |
As at June 30, 2022 | As at December 31, 2021 | |||||||
(Unaudited) | ||||||||
Current portion | $ | $ | ||||||
Non-current portion | ||||||||
Finance lease liabilities | $ | $ |
For the six months ended June 30, 2022
and 2021, interest expense was $
The minimum lease payments under finance lease agreements are as follows:
As at June 30, 2022 | As at December 31, 2021 | |||||||
(Unaudited) | ||||||||
Within 1 year | $ | $ | ||||||
After 1 year but within 5 years | ||||||||
Less: Finance charges | ( | ) | ( | ) | ||||
Present value of finance lease liabilities, net | $ | $ |
F-23
Finance lease assets comprise primarily vehicles and office equipment as follow:
As at June 30, 2022 | As at December 31, 2021 | |||||||
(Unaudited) | ||||||||
Cost | $ | $ | ||||||
Less: Accumulated depreciation | ( | ) | ( | ) | ||||
Net book value | $ | $ |
17. | TAXATION |
Value added tax (“VAT”)
GF Cash (CIT) and AI R&I are the
subsidiaries operating in Thailand, which are subject to a statutory VAT of
Deferred taxes
Current income taxes are provided on the basis of net income for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. Deferred income taxes are accounted for using an asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The tax base of an asset or liability is the amount attributed to that asset or liability for tax purposes. The effect on deferred taxes of a change in tax rates is recognized in the consolidated statements of profit or loss in the period of change. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all of the deferred tax assets will not be realized.
The Company offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
18. | PROVISION FOR EMPLOYEE BENEFITS |
The Company has a defined benefit plan based on the requirement of the Thailand Labor Protection Act B.E.2541 (1988) to provide retirement benefits to employees based on pensionable remuneration and length of service which are considered as unfunded. There were no plan assets set up and the Company will pay benefits when needed.
F-24
Provision for employee benefits | ||||||||
2022 | 2021 | |||||||
(Unaudited) | ||||||||
Defined benefit obligations at January 1 | $ | $ | ||||||
Estimate for the six months period | ( | ) | ( | ) | ||||
Defined benefit obligations at June 30 (Unaudited) | $ | $ |
19. | SHAREHOLDERS’ EQUITY |
On January 20, 2022, the Company completed a private placement with
certain investors to issue (i)
A total of
On March 14, 2022, a total of
On June 16, 2022, a total of
On June 16, 2022, a total of
On May 24, 2022, a total of
20. | STOCK-BASED COMPENSATION |
On January 25, 2022, the Company granted
and issued
On October 25, 2021, the Company entered into an agreement with a third
party vendor to provide investors relations services for a term of one-year. The agreement was terminated on May 7, 2022. During the six
months ended June 30, 2022, the Company issued
F-25
21. | SELLING, DISTRIBUTION AND ADMINISTRATIVE EXPENSES |
For the six months ended June 30, | ||||||||
2022 | 2021 | |||||||
(Unaudited) | (Unaudited) | |||||||
Staff expense | $ | $ | ||||||
Rental expense | ||||||||
Depreciation and amortization expense | ||||||||
Utilities expense | ||||||||
Travelling and entertainment expense | ||||||||
Marketing expense | - | |||||||
Professional fees | ||||||||
Repairs and maintenance | ||||||||
Employee benefits | ||||||||
Other service fees | ||||||||
Other expenses** | ||||||||
$ | $ |
** |
22. | 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
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
23. | RELATED PARTY TRANSACTIONS |
The principal related party balances and transactions as of and for the period/year ended June 30, 2022 and December 31, 2021 are as follows:
Amounts due from related parties:
As at June 30, 2022 | As at December 31, 2021 | |||||||||
(Unaudited) | ||||||||||
Guardforce TH Group Company Limited | (a) | $ | $ | |||||||
Shenzhen Intelligent Guardforce Robot Technology Co., Limited | (b) | |||||||||
Shenzhen Kewei Robot Technology Co., Limited and its subsidiaries | (c) | |||||||||
CSF Mingda Technology Co., Ltd | (c) | |||||||||
Guardforce AI Service Limited | ||||||||||
Guardforce AI Technology Limited | ||||||||||
GF Robotics Malaysia Sdn. Bhd | ||||||||||
Macau GF Robotics Limited | ||||||||||
Quantum Infosec Inc | ||||||||||
$ | $ |
F-26
(a) |
(b) |
(c) |
Amounts due to related parties:
As at June 30, 2022 | As at December 31, 2021 | |||||||||
(Unaudited) | ||||||||||
Mr. Tu | (a) | $ | $ | |||||||
Guardforce Holdings (HK) Limited | (b) | |||||||||
Profit Raider Investment Limited | (a) | |||||||||
Richard Stagg | (c) | |||||||||
GF Technovation Company Limited | ||||||||||
Quantum Infosec Inc | ||||||||||
Shenzhen Kewei Robot Technology Co., Limited and its subsidiaries | (d) | |||||||||
Shenzhen Zhongzhi Yonghao Robot Co., Ltd. | (d) | |||||||||
Shenzhen Qianban Technology Co., Ltd. | (e) | |||||||||
Guardforce Security Service (Shanghai) Co., Ltd. | (e) | |||||||||
Shenzhen Intelligent Guardforce Robot Technology Co., Limited | ||||||||||
$ | $ |
(a) |
(b) |
(c) |
(d) |
(e) |
F-27
Short-term borrowings from related parties:
As at June 30, 2022 | As at December 31, 2021 | |||||||||
(Unaudited) | ||||||||||
Profit Raider Investment Limited | (a) | $ | $ | |||||||
Guardforce Holdings (HK) Limited | (b) | |||||||||
$ | $ |
Long-term borrowings from related parties:
As at June 30, 2022 | As at December 31, 2021 | |||||||||
(Unaudited) | ||||||||||
Guardforce Holdings (HK) Limited | (b) | $ | $ | |||||||
Mr. Tu | (c) | |||||||||
$ | $ |
(a) |
(b) |
On April 17, 2020, the Company borrowed $
On September 9, 2020, the Company borrowed $ |
(c) |
Related party transactions:
For the six months ended June 30, | ||||||||||
Nature | 2022 | 2021 | ||||||||
(Unaudited) | (Unaudited) | |||||||||
Service/ Products received from related parties: | ||||||||||
Guardforce Security (Thailand) Company Limited | (a) | $ | $ | |||||||
Shenzhen Intelligent Guardforce Robot Technology Co., Limited – Purchases | (b) | |||||||||
Shenzhen Kewei Robot Technology Co., Ltd. – Purchases | (b) | |||||||||
Shenzhen Kewei Robot Technology Co., Limited – ICP | (c) | |||||||||
$ | $ | |||||||||
Service/ Products delivered to related parties: | ||||||||||
GF Technovation Company Limited – Sales | (d) | $ | $ |
Nature of transactions:
(a) |
F-28
(b) | |
(c) | |
(d) |
24. | CONSOLIDATED SEGMENT DATA |
Selected information by segment is presented in the following tables for the six months ended June 30, 2022 and 2021:
For the six months ended June 30, | ||||||||
Revenues(1) | 2022 | 2021 | ||||||
(Unaudited) | (Unaudited) | |||||||
Secured logistics | $ | $ | ||||||
Information security | ||||||||
Robotics AI solutions | ||||||||
$ | $ |
(1) | Revenue excludes intercompany sales. |
For the six months ended June 30, | ||||||||
Loss from operations | 2022 | 2021 | ||||||
(Unaudited) | (Unaudited) | |||||||
Secured logistics | $ | ( | ) | $ | ( | ) | ||
Information security | ( | ) | ||||||
Robotics AI solutions | ( | ) | ( | ) | ||||
Corporate and others (2) | ( | ) | ( | ) | ||||
Loss from operations | ( | ) | ( | ) | ||||
Total other income from five segments | ||||||||
Foreign exchange losses, net: | ||||||||
- Secured logistics | ( | ) | ( | ) | ||||
- Information security | - | |||||||
- Robotics AI solutions | - | |||||||
- Corporate and others | ( | ) | ( | ) | ||||
Finance costs: | ||||||||
- Secured logistics | ( | ) | ( | ) | ||||
- Information security | ( | ) | ( | ) | ||||
- Robotics AI solutions | ( | ) | - | |||||
Loss before income taxes | ( | ) | ( | ) | ||||
Income tax benefit | - | |||||||
Net loss | ( | ) | ( | ) | ||||
Less: Loss (Profit) attributable to the non-controlling interest | ( | ) | ||||||
Net loss attributable to the Company | $ | ( | ) | $ | ( | ) |
(2) |
Non-cash compensation of $
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(3) | o the Segment of Corporate and others. |
Depreciation and amortization by segment for six months ended June 30, 2022 and 2021 are as follows:
For the six months ended June 30, | ||||||||
Depreciation and amortization: | 2022 | 2021 | ||||||
(Unaudited) | (Unaudited) | |||||||
Secured logistics | $ | $ | ||||||
Robotics AI solutions | ||||||||
$ | $ |
Total assets by segment as of June 30, 2022 and December 31, 2021 are as follows:
Total assets | As at June 30, 2022 |
As at December 31, 2021 |
||||||
(Unaudited) | (Unaudited) | |||||||
Secured logistics | $ | $ | ||||||
Information security | ||||||||
Robotics AI solutions | ||||||||
General security solutions | - | |||||||
Corporate and others | ||||||||
$ | $ |
25. | COMMITMENTS AND CONTINGENCIES |
Executives/directors agreements
Amount | ||||
Twelve months ending June 30: | ||||
2023 | $ | |||
2024 | ||||
2025 | ||||
2026 | ||||
Total minimum payment required | $ |
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Contracted expenditure commitments
The Company’s contracted expenditures commitments as of June 30, 2022 but not provided in the consolidated financial statements are as follows:
Payments Due by Period | ||||||||||||||||||||||
Less than | 1-3 | 4-5 | More than | |||||||||||||||||||
Contractual Obligations | Nature | Total | 1 year | years | years | 5 years | ||||||||||||||||
Service fee commitments | (a) | $ | $ | $ | $ | $ | ||||||||||||||||
Operating lease commitments | (b) | |||||||||||||||||||||
Purchase commitments | (c) | |||||||||||||||||||||
$ | $ | $ | $ | $ |
(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 comprised of a monthly fixed service fee and certain other fees as specified in the agreement, which will expire in August 2023. |
(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. |
(c) | AI Hong Kong entered into various purchase agreements with Shenzhen Intelligent Guardforce Robot Technology Co., Limited and Shenzhen Kewei Robot Technology Co., Ltd. to establish mutual contractual obligations for future purchases of robots. |
Bank guarantees
As of June 30, 2022, the Company had commitments with banks for bank
guarantees in favor of government agencies and others of approximately $
Litigation
As of the date of filing, the Company is a defendant in various labor
related lawsuits totaling approximately $
26. | SUBSEQUENT EVENTS |
Numerous subsequent events disclosures are being made elsewhere in this interim condensed consolidated financial statements. Subsequent events have been reviewed through the date the unaudited interim condensed consolidated financial statements were issued and required no adjustments or disclosures.
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