Guardforce AI Co., Limited Q4 FY2021 earnings call

• 2021 achieved revenue of $35.2 million, within the expected range of $33 million to $35 million. - In 2021 Q4, uplifted onto NASDAQ capital market with IPO gross proceeds ~$15 million. Followed by private placement gross proceeds ~$10.3 million. Cash position at end of Dec 31 was ~$15.9 million. - In 2021 Q1, acquired majority stake in Handshake Networking. Announced plans to enter Malaysian, Macau markets and relocate corporate HQ to Singapore. - In 2022 Q1, announced entry into China with acquisitions and entry into US market with strategic partnership. - Secured Logistics business in Thailand was dominant but saw slight revenue decrease in 2021 due to COVID-19 impact. - Robotic Solutions business deployed over 1,400 robots in Asia Pacific, developed Intelligent Cloud Platform (ICP) for remote management, etc. - Information Security business is new, contributed ~$0.5 million in 2021

1. Secured Logistics business: Revenues for the full year of 2021 totaled US$34.3 million, a slight decrease of approximately 8.3% compared to 2020's US$37.4 million. It represents the majority of the group revenues. 2. Robotic Solutions business: Revenue increased by 67% in 2021 to US$0.4 million, which is approximately 1.4% of the total group revenues. 3. Information Security business: Revenues for the year ended December 31, 2021 were approximately US$0.5 million, accounting for about 1.4% of the total group revenues

• Reaffirmed 2022 net revenues expectation of approximately $55 million to $60 million, representing over 66% growth from 2021. - Expect inorganic revenues from companies acquired in 2022 to be approximately $21 million, representing 36% of total revenues. - Expect non-cash revenues including robotics, information security and other non-cash related services to expand to approximately $25.5 million, representing approximately 44% of total revenues

Potential risks include those discussed under the heading Risk Factors in Guardforce AI’s Annual Report on Form 20-F to be filed with the Securities and Exchange Commission on March 31, 2022, and then any subsequent filings with the SEC

Q: As we look out to fiscal year 2022, with roughly half year revenues expected to come from the Robotics segment, any insight on margins? Is the margin profile of robotics better than the cash management business?

A: The cash-in-transit business has thin margins in the teens, while robotics and cybersecurity have definitely higher margins. Some comparable cybersecurity companies in US have margins as high as 60%-70%. As we scale up robotics and cybersecurity business, we will definitely have better gross margins than the secured logistics business Q: You’ve been expanding distribution channels across multiple geographies, rolled out 1,400 robots in Asia Pacific. Any insight on how that unfolds in terms of revenue streams or leveraging ICP?

A: Robotics is like a sensor. ICP plays an integral part in remotely managing, controlling and collecting data. We want to push out robots as many as possible like security cameras. It presents new revenue opportunities through RaaS model and data analytics, predictions, etc.

Q: What do you view is the biggest misconception in the marketplace when it comes to GFAI?

A: A lot of people still don't know about us, and there's a misconception that we are just a cash and transit business. We are going beyond that to robotics, AI, information security. We need to communicate better to let the market understand our transformation Q: What makes an ideal acquisition for GFAI, and is there anything that you won’t consider?

A: Ideally, acquisitions should have existing sales distribution network and customer base that we can match. We prefer companies not at startup phase, and interested in traditional security space. Focus is on expanding distribution network. Companies with existing network, good clientele base, great client relationships are worthwhile to consider Q: Can you talk a little more about the competitive market for robotics as a service and why you feel your company’s products are best-in-class?

A: Competition in Asia Pacific mainly from robotics manufacturers. We are robotics agnostic, prefer RaaS model. We charge monthly fee for robotic service, which is similar to manned guarding business. We provide service including technology, maintenance, helping clients improve operational efficiency. We are not selling robots but a service, which gives us an advantage