SecProbe.io

April 16, 2020
Lei Wang
Chief Executive Officer
Guardforce AI Co., Limited
96 Vibhavadi Rangsit Road, Talad Bangkhen, Laksi,
Bangkok 10210, Thailand
Re:Guardforce AI Co., Limited
Registration Statement on Form 20-F
Filed March 20, 2020
File No. 000-56154
Dear Ms. Wang:
            We have reviewed your filing and have the following comments.  In some of our
comments, we may ask you to provide us with information so we may better understand your
disclosure.
            Please respond to these comments within ten business days by providing the requested
information or advise us as soon as possible when you will respond.  If you do not believe our
comments apply to your facts and circumstances, please tell us why in your response.
            After reviewing your response and any amendment you may file in response to these
comments, we may have additional comments.
Registration Statement on Form 20-F
Item 3. Key Information
D. Risk Factors, page 3
1.We note your disclosure on page 14 that 71% of your revenue in 2018 and the first 6
months of 2019 was derived from your top five customers.  Please revise your next
amendment to include a risk factor discussing this concentration.
Corporate History and Structure, page 8
2.Please describe the material terms of the agreements related to the 51,000 shares that are
owned by two citizens of Thailand on behalf of Guardforce AI Technology Limited and
file an such agreements as exhibits to your registration statement.  In your description,
please address more specifically how these arrangements allow the company to maintain
control of the operating business while complying with foreign ownership restrictions.  In

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addition, please address what impact the 51,000 shares being owned by two citizens of
Thailand has on both the voting and economic rights associated with the underlying
businesses.  Finally, please update your risk factor disclosure to address the specific risks
associated with any reliance on the two citizens of Thailand or Guardforce AI Technology
Limited in controlling and operating your business.
3.Please describe in greater detail how Bangkok Bank Public Company Limited came to
hold a minority interest in your operating company and discuss any risks or limitations on
your ability to manage the business as a result of this ownership interest.  Please also
disclose who own or controls Bangkok Bank.
4.Please update the diagram on page 9 to include the shares that you have issued or will
issue in connection with the VCAB merger.
Merger of VCAB Eight Corporation into Guardforce AI Co., Limited , page 9
5.We note your disclosure on page 9 that you entered into the Merger Agreement and
consummated the Merger in order to increase your shareholder base to assist you
in satisfying the listing standards of a national securities exchange.  We further note your
disclosure on page 33 that you intend to engage a market maker to apply for quotation on
an OTC market.  Please expand the disclosure on page 9 to further explain the company's
plans for the quotation of its securities, including your expected timing and what role you
expect the Merger to play in these plans. Please also clarify any plans you have to seek a
listing on a national securities exchange and reconcile with your plans to seek an OTC
market quotation.
6.Please add a section here to disclosure the material terms of your advisory agreement with
HFG Capital Investments.  To the extent HFG helped identify VCAB as a merger target,
please disclose that here and describe any compensation you have paid or will pay in
connection with that transaction.
Competition, page 14
7.Please identify the source of the market share information in the chart on page 14.  To the
extent more recent market share information is available, please update accordingly.
Government Regulation, page 15
8.Please revise this section to describe the material laws and regulations related to foreign
ownership of and investment in your business and summarize the arrangements you have
in place to comply with these laws and regulations.
Growth Strategy, page 15
9.Please quantify the capital necessary to execute the growth strategy that you describe on
page 15, the company's timetable for executing these goals, and explain whether the
company currently has sufficient funds to complete its plans.  If the company does not

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currently have adequate liquidity to fund its growth strategy, explain what additional
sources of liquidity are available to you.
Intellectual Property, page 15
10.Please disclose whether there are any other companies that use the the Guardforce
trademark as part of their business.  To the extent that you are limited in your ability to
use the trademark only in specific jurisdictions, please disclose the limitations on your
ability to expand the business.  In addition, please discuss the risks to and impact on your
business if the agreement with Guardforce Security Thailand Company Limited is
terminated or not renewed.
Item 5. Operating and Financial Review and Prospects
A. Operating Results
Results of Operations, page 20
11.In the revenue discussion of your annual comparison on page 20 you indicate that there
were 113 orders in 2018.  On page 22 you indicate in your interim comparison that there
were 122 orders for the first six months of 2018.  Please revise your disclosure to present
your order information and discussion on a consistent basis given that the annual period
should have more orders than the interim period.  In addition, revise your disclosure to
define an "order" and how you count them.  In this regard, for example, it is unclear
whether an order is an individual annual contract and/or whether any individual customer
can have multiple orders in any given period.
12.We noted that administrative expenses increased 32% in 2018 compared to 2017 and 19%
in the six months ended June 30, 2019 compared to the 6 months ended June 30, 2018.
Please revise your next amendment to discuss the specific categories (i.e., staff expense,
loan penalty charge, professional fees, etc.) contributing to these increases and any
material trends in the periods presented in your discussion of Results of Operations.
Comparison of Six Months Ended June 30, 2019 and 2018 (Unaudited)
Other income, page 22
13.Given the significance of your 2019 other income in comparison to your net loss, please
revise your disclosure to describe its significant components and the reason for the
increase in 2019.
Liquidity and Capital Resources, page 24
14.You state here that you expect to have sufficient financial resources to meet your financial
obligations as and when they fall due in the coming twelve months.  Please revise this
section to specifically address your outstanding borrowing from Profit Raider Investment
Limited, which is due December 31, 2020, and how you expect that obligation to impact
your liquidity and ability to meet your financial obligations in the short and long term.

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Item 6. Directors, Senior Management and Employees
E. Share Ownership, page 29
15.Please tell us whether the shares held by Mr. Yap and Ms. Wang were transferred from
Guardforce AI Service Ltd.  If so, please tell us:
•When the shares were transferred;
•Why the shares were transferred; and
•Your consideration for accounting for the transfer under the guidance in paragraph
3A of IFRS 2.
If not, tell us how these individuals acquired their shares and why the holdings of
Guardforce AI Service Ltd. fell from 32% at June 30, 2019 as disclosed in the chart on
page F-8 to its current holdings of 22%.
Major Shareholders and Related Party Transactions, page 30
16.We note that Jingyi Tu is listed as a controlling shareholder of the company in the table on
page 30.  We note from the table on page 29 that Mr. Tu has voting or dispositive power
over 49% of the stock.  Please explain the reasons that you believe Mr. Tu is a controlling
shareholder.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
Note 2: Significant Accounting Policies
2.7 Leases, page F-10
17.Please revise your filing to provide the following disclosures required by IFRS 16:
•If you applied any of the practical expedients in paragraph C3, disclose that fact as
required by paragraph C4;
•If you applied any of the practical expedients in paragraph C10, disclose that fact as
required by paragraph C13;
•The information about depreciation of the right-of-use asset, interest expense on lease
liabilities and the other information required by paragraph 53; and
•The maturity analysis of the lease liability required by paragraph 58.
Note 22: Subsequent Events, page F-22
18.Please tell us why Guardforce AI Technology Limited transferred five million of your
ordinary shares to Profit Raider Investments Limited.  In your response, tell us whether
this transfer is related in any way to the extension of the loan from Profit Raider as
disclosed in Note 12 or if it, or any of its owners, provided you any goods or services that
were ultimately paid for by the transfer of these shares.
Consolidated Financial Statements
For the Years Ended December 31, 2018 and 2017, page F-23
19.Please revise your filing to provide audited financial statements for the year ended
December 31, 2019.  When you update your filing, include financial statements for 2017

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and 2018.  In this regard, although you are an emerging growth company, the
accommodation to provide audited financial statements for only two fiscal years relates
only to initial public offerings.  As you are not conducting an offering, you must include
three fiscal years in your filing.  See Instruction 4 to Item 8A2 of Form 20-F.
Notes to Consolidated Financial Statements
Note 2: Significant Accounting Policies
2.10 Accounts receivable and other receivables, net, page F-36
20.Please revise your next amendment to include the following regarding accounts
receivable, net:
•A more detailed charge-off policy for accounts receivable specifying how you
determine that, "all means of collection have been exhausted and the potential for
recovery is considered remote," as disclosed on page F-36.  In this regard, we note
that accounts receivable 91-180 days past due increased from $1,576 at 12/31/17 to
$68,980 at 12/31/18 and it is unclear if any receivables were charged off based on the
information presented;
•Include an aging schedule for all periods presented, annual or interim; and
•Include a rollforward of the allowance for accounts receivable.
2.16 Impairment of long-lived assets, page F-37
21.Your disclosed policy to assess the undiscounted cash flows against the carrying value of
the asset appears to comply with US GAAP.  Please tell us how your policy complies with
the guidance in IAS 36.  To the extent that your disclosed policy does not comply with
IFRS, please revise your policy disclosure to be consistent with the guidance in IAS 36
and tell us whether there were any impairments in the historical periods presented in your
filing under the IFRS-compliant policy.
2.19 Revenue from contracts with customers, page F-37
22.Please tell us how you determined it is appropriate to recognize your revenue at a point in
time instead of over time.  Refer to paragraphs 31-45 of IFRS 15. In your response,
describe your performance obligations and how they meet the criteria in paragraph 38 of
IFRS 15.  Reference for us the authoritative literature you rely upon to support your
accounting.
23.Please revise your filing to provide the following disclosures required by IFRS 15 or tell
us either how your current disclosure addresses the requirement or why they are not
required:
•Disaggregation of revenue under paragraph 114;
•An explanation of how the timing of satisfaction of your performance obligations
relates to the typical timing of payment under paragraph 117;
•An explanation of significant changes in contract assets and contract liabilities during
the reporting period under paragraph 118;

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•Your significant payment terms under paragraph 119(b);
•The aggregate amount of transaction price allocated to remaining performance
obligations under paragraph 120(a);
•An explanation as to whether you are applying the expedient in paragraph 121 as
required by paragraph 122;
•The judgments and changes in judgments in applying the standard under paragraph
123;
•The significant judgments made in evaluating when a customer obtains control of
promised services under paragraph 125;
•Information about the various methods, inputs and assumptions identified in
paragraph 126; and
•The use of any of the practical expedients identified in paragraph 129.
2.21 Income tax, page F-38
24.Please revise your policy statement and disclosure in Note 14 to remove reference to the
use of valuation allowances.  Valuation allowance are a construct of US GAAP
accounting.  Otherwise tell us how your policy complies with the guidance in paragraphs
24 and 34 of IAS 12 to only record deferred tax assets to the extent that they are probable
of realization.
2.23 Employee benefits, page F-39
25.Please revise your accounting and your policy disclosure for your defined retirement
benefit plan to record actuarial gains and losses under this plan to other comprehensive
income as required by paragraphs 57(d) and 120(c) of IAS 19.  Otherwise tell us why such
an adjustment should not be made and reference for us the authoritative literature you rely
upon to support your accounting.
Note 4: Acquisition of Subsidiaries Under Common Control, page F-40
26.Please tell us why it is appropriate to reflect the apparent $4.0 million write-off of loans
receivable from entities not included in your reorganization transaction as a capital
distribution.  Reference for us the authoritative literature you relied upon to support your
accounting.  In your response:
•Tell us the names of the debtors underlying these loans;
•Tell us whether Mr. Tu controlled these entities;
•If Mr. Tu controlled these entities, explain why you could not determine the
collectibility of these loans; and
•If Mr. Tu did not control these entities, explain why these loans were not written off
with a charge to your statements of profit or loss.

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Note 14: Taxation
(d) Withholding tax, page F-45
27.You reflect withholding taxes receivables from the Thai Revenue Department on the
services you provided as long-term assets on your balance sheet.  Please address the
following comments:
•Tell us when and how these withholding taxes are recovered.  In your response tell us
whether these withholding taxes can be credit to your income taxes;
•At the disclosed 3% withholding rate, it appears that the receivable balances at June
30, 2019 and December 31, 2018 represent approximately $206.6 million and $180.2
million of service revenues, respectively.  Given your current levels of revenues,
these amounts appear to represent multiple years of revenue.  Tell us how these
amounts are collectible;
•Tell us why you apparently have no current portion of withholding taxes receivab