Exhibit 99.1
A2Z Cust2Mate Solutions Corp.
CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2026
(Unaudited)
(Expressed in US Dollars)
A2Z CUST2MATE SOLUTIONS CORP.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026
(Unaudited)
(Expressed in US Dollars)
INDEX
| 2 |
A2Z CUST2MATE SOLUTIONS CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(Unaudited)
(Expressed in Thousands of US Dollars, except per share data)
June 30, 2026 | December 31, 2025 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash (note 5) | ||||||||
| Financial assets at fair value (note 3) | ||||||||
| Inventories (note 4) | ||||||||
| Trade receivables, net | ||||||||
| Other accounts receivable | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Intangible asset | ||||||||
| Long term financial assets at fair value | ||||||||
| Long-term trade receivables (note 9) | ||||||||
| Property, equipment and right of use assets, net | ||||||||
| Total non-current assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Current portion of long-term loan (note 5) | $ | $ | ||||||
| Lease liability | ||||||||
| Trade payables | ||||||||
| Other accounts payable | ||||||||
| Warrant Liability (note 6) | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| Lease liability | ||||||||
| Long term loan (note 5) | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | ||||||||
| Equity | ||||||||
| Share capital and additional paid in capital (note 7) | ||||||||
| Warrant Reserve | ||||||||
| Accumulated other comprehensive income (loss) | ( | ) | ||||||
| Reserve with respect to transactions with non-controlling interests | ||||||||
| Treasury stock (note 7) | ( | ) | ||||||
| Accumulated losses | ( | ) | ( | ) | ||||
| Total equity attributable to Company shareholders | ||||||||
| Non-controlling interests | ( | ) | ( | ) | ||||
| Total equity | ||||||||
| Total liabilities and equity | $ | $ | ||||||
| August 12, 2026 | “Yonathan De Yonge” | “Gadi Graus” | ||
| Date of approval of the financial statements | Yonathan De Yonge - Director | Gadi Graus Chief Executive Officer |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
| 3 |
A2Z CUST2MATE SOLUTIONS CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Unaudited)
(Expressed in Thousands of US Dollars, except per share data)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues (note 9) | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Expenses: | ||||||||||||||||
| Research and development costs | $ | $ | $ | $ | ||||||||||||
| Sales and marketing costs | ||||||||||||||||
| General and administration expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on revaluation of warrant Liabilities (note 6) | ( | ) | ( | ) | ||||||||||||
| Financial income (expense), net | ( | ) | ||||||||||||||
| Net loss for the period from continuing operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss for the period from discontinued operations | ( | ) | ( | ) | ||||||||||||
| Net loss for the period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Less: Net loss attributable to non-controlling interests | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to controlling shareholders | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss for the period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive income | ||||||||||||||||
| Item that will not be reclassified to profit or loss: | ||||||||||||||||
| Adjustments arising from translating financial statements of foreign operations | ( | ) | ||||||||||||||
| Other comprehensive income | ( | ) | ||||||||||||||
| Total comprehensive loss for the period | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less: Comprehensive loss attributable to non-controlling interests | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Comprehensive loss attributable to the Company’s shareholders | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Basic and diluted loss per share from continuing operations | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Basic and diluted loss per share from discontinued operations | $ | $ | ) | $ | $ | ) | ||||||||||
| Weighted average number of shares outstanding | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
| 4 |
A2Z CUST2MATE SOLUTIONS CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
(Expressed in Thousands of US Dollars, except per share data)
| Ordinary share capital | Accumulated | Transactions | ||||||||||||||||||||||||||||||||||
Number of shares | Additional
paid in capital | Warrant reserve | Other Comprehensive Loss | with non-controlling interests | Accumulated deficit | Treasury stock | Non-controlling interest | Total Equity | ||||||||||||||||||||||||||||
| Balance – December 31, 2025 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Adjustments arising from translating financial statements of foreign operations | - | |||||||||||||||||||||||||||||||||||
| Net
comprehensive profit (loss) for the period | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Exercise of options (note 7(b)) | ||||||||||||||||||||||||||||||||||||
| Exercise of RSUs (note 7(a)) | ||||||||||||||||||||||||||||||||||||
| Exercise of warrants (note 7(c)) | ||||||||||||||||||||||||||||||||||||
Expiration of warrants | - | ( | ) | |||||||||||||||||||||||||||||||||
| Purchase of treasury stock (note 7(d)) | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Share based compensation (notes 8(b, c)) | - | |||||||||||||||||||||||||||||||||||
| Balance – June 30, 2026 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| 5 |
A2Z CUST2MATE SOLUTIONS CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
(Expressed in Thousands of US Dollars, except per share data)
| Ordinary share capital | Accumulated | Transactions | Total Equity of shareholder | |||||||||||||||||||||||||||||
| Number of shares | Additional paid in capital | Warrant reserve | Other Comprehensive Income | with non-controlling parties | Accumulated deficit | Non-
controlling interest | of
the Company (Deficit) | |||||||||||||||||||||||||
| Balance - January 1, 2025 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Adjustments arising from translating financial statements of foreign operations | - | |||||||||||||||||||||||||||||||
| Comprehensive loss for the period | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Issuance of shares in January 2025 private placement | ||||||||||||||||||||||||||||||||
| Transactions with non-controlling interests | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Exercise of RSUs | ||||||||||||||||||||||||||||||||
| Exercise of warrants | ( | ) | ||||||||||||||||||||||||||||||
| Exercise of options | ||||||||||||||||||||||||||||||||
| Share based compensation | ||||||||||||||||||||||||||||||||
| Balance – June 30, 2025 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
| 6 |
A2Z CUST2MATE SOLUTIONS CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(Unaudited)
(Expressed in Thousands of US Dollars, except per share data)
| For the period of six months ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss for the period | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Amortization and depreciation | ||||||||
| Amortization of intangible assets | ||||||||
| Share based compensation | ||||||||
| Loss on divestment of subsidiary | ||||||||
| Loss on revaluation of warrant liability | ||||||||
| Gain from revaluation of investment in associate | ( | ) | ||||||
| Proceeds from financial assets | ( | ) | ||||||
| Change in long-term trade receivables | ( | ) | ( | ) | ||||
| Change in severance liability | ||||||||
| Change in inventory | ( | ) | ( | ) | ||||
| Change in trade receivables | ( | ) | ( | ) | ||||
| Change in other accounts receivables | ( | ) | ( | ) | ||||
| Accrued interest on loans and leases | ||||||||
| Change in accounts payable | ||||||||
| Change in other accounts payable | ( | ) | ||||||
| ( | ) | ( | ) | |||||
| Cash flows from investing activities | ||||||||
| Investment in restricted cash | ( | ) | ( | ) | ||||
| Divestment of a subsidiary | ( | ) | ||||||
| Proceeds from disposal of financial assets | ||||||||
| Purchase of property, plant and equipment | ( | ) | ( | ) | ||||
| ( | ) | |||||||
| Cash flows from financing activities | ||||||||
| Proceeds from the issuance of shares and warrants, net | ||||||||
| Exercise of warrants | ||||||||
| Lease payments | ( | ) | ( | ) | ||||
| Proceeds from exercise of options | ||||||||
| Purchase of treasury stock | ( | ) | ||||||
| Repayment of loans | ( | ) | ( | ) | ||||
| Proceeds from receipt of loans | ||||||||
| Transactions with non-controlling interests | ( | ) | ||||||
| ( | ) | |||||||
| Increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Effect of changes in foreign exchange rates | ||||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Interest paid during the period | ||||||||
| APPENDIX A: NON-CASH ACTIVITIES | ||||||||
| Recognition of a lease liability and right-of-use asset | $ | $ | ||||||
| Fair value of warrants exercise during the period | ||||||||
| APPENDIX A: NON-CASH ACTIVITIES – DIVESTMENT OF SUBSIDIARY | ||||||||
| Working capital other than cash and cash equivalents | ||||||||
| Property, plant and equipment | ||||||||
| Lease liability | ( | ) | ||||||
| Loans | ( | ) | ||||||
| Severance liability | ( | ) | ||||||
| Loss on divestment of subsidiary | ( | ) | ||||||
| Total cash and cash equivalents from divestment of a subsidiary | ( | ) | ||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
| 7 |
A2Z CUST2MATE SOLUTIONS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026
(Unaudited)
(Expressed in Thousands of US Dollars, except per share data)
NOTE 1 – NATURE AND CONTINUANCE OF OPERATIONS
A2Z CUST2MATE SOLUTIONS CORP. (the “Company”) was incorporated on January 15, 2018 under the laws of British Columbia. The head office is located at 1600 – 609 Granville Street, Vancouver, British Columbia V7Y 1C3, and the Company records and registered office is located at 2200 HSBC Building 885 West Georgia Street, British Columbia, V6C 3E8.
The Company has been listed on the NASDAQ Stock Market LLC (“Nasdaq”) starting January 22, 2022, and traded under the symbol “AZ”. The Company has been listed on the TSX Venture Exchange (“TSX.V”) in Toronto until February 28, 2024. Following an approval for a voluntary delisting, the Company no longer trades on the TSX.V but has remained a reporting issuer in Canada and its common shares (the “Common Shares”) remain listed on Nasdaq under the symbol AZ.
As of the date of this report, the Company has two key subsidiaries (the “Subsidiaries”), all of which are companies incorporated under the laws of Israel: (1) Cust2mate Ltd. (“Cust2mate”); and (2) Isramat Ltd. (“A2Z Isramat”). On July 13, 2023, Cust2mate incorporated a wholly owned subsidiary, Cust2mate USA Inc. under the laws of Delaware.
The
Company owns
The Cust2Mate system offers various features for shoppers and retailers such as product information and location, an on-cart scale to weigh items and automatically calculate costs, bar-code scanner and on-board payment system to bypass checkout lines. Further, the Cust2Mate system creates a retail media platform to engage shoppers at the point of purchase and to provide customer targeted advertising. (“The Cust2Mate Platform”).
In addition, Cust2Mate has a dedicated Retail Media Division to advance a business model that combines smart cart subscriptions with retail media and digital commerce services. Through the Cust2Mate Platform, the Company monetizes its technology through two primary revenue streams: (i) recurring smart cart subscriptions and (ii) retail media and related digital services.
The Company’s activities through A2Z Isramat include the development of precision metal parts for the military and security markets, as well as for the civilian markets.
In October 2023, Israel was attacked by the Hamas terrorist organization and entered a state of war on several fronts. As of October 9, 2025, Israel and Hamas entered into a ceasefire agreement calling for a permanent end of the war. However, there are no assurances that such agreements will hold. In June 2025, following escalating threats and intelligence reports of imminent attacks, Israel conducted preemptive strikes on military and nuclear infrastructure in Iran. Iran responded with drones and missiles attacks, some of which caused civilian casualties and infrastructure damage. While a ceasefire was reached between Israel and Iran in June 2025 after 12 days of hostilities, on February 28, 2026, the United States and Israel launched coordinated military strikes against Iran, including attacks on strategic military infrastructure and leadership targets, with the stated aim of degrading Iran’s capacity to conduct or support hostile operations against them. In response, Iran has fired missiles and drones toward population centers and military installations in Israel, Europe and neighboring countries in the Gulf region, and also launched counter-strikes against U.S. forces and allied bases throughout the Gulf region. In March 2026, hostilities resumed along Israel’s northern border with Lebanon, when Hezbollah resumed its attacks as part of a broader regional escalation. In response, Israel resumed military operations against Hezbollah in southern Lebanon. As of the date of these consolidated financial statements, conflict continues in parts of the region.
The war has had no material effect on the Company’s financial situation and on the results of the Company’s activities. Also, the Company managed to maintain operational and functional continuity, including maintaining an effective staff volume and effective ongoing operations with its customers and suppliers.
These Condensed Consolidated Interim financial statements were authorized for issue by the Board of Directors on August 12, 2026.
| 8 |
A2Z CUST2MATE SOLUTIONS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026
(Unaudited)
(Expressed in Thousands of US Dollars, except per share data)
NOTE 2 – BASIS OF PREPARATION
| 1. | Significant accounting policy |
Statement of Compliance
These unaudited condensed consolidated interim financial statements of the Company are as of June 30, 2026, and presented in US dollars which is the Company’s reporting currency. The Company’s functional currency is the New Israeli Shekel. These unaudited condensed consolidated interim financial statements have been prepared in accordance with the requirements of International Accounting Standard IAS 34 “Interim Financial Reporting” as issued by the IASB. They do not include all the information required in annual financial statements in accordance with IFRS accounting standards and should be read in conjunction with the annual financial statements of the Company for the year ended December 31, 2025.
The policies applied in these condensed consolidated interim financial statements are based on IFRS accounting standards effective as of January 1, 2025, and are consistent with those included in the Company’s annual financial statements for the year ended December 31, 2025.
Basis of Consolidation
The financial results of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Intercompany balances and transactions and any unrealized income and expenses arising from such transactions are eliminated upon consolidation.
Basis of measurement
These condensed consolidated interim financial statements have been prepared on a going concern basis, under the historical cost basis, except for financial instruments which have been measured at fair value.
Financial assets
Financial assets are recognized when the Company becomes a party to the contractual provisions of the instrument and are initially measured at fair value. Transaction costs are added to or deducted from the fair value of financial assets that are not measured at FVTPL. Subsequent measurement depends on the Company’s business model and contractual cash flow characteristics. Investments in marketable equity securities are classified at FVTPL. Changes in fair value, including realized and unrealized gains and losses on disposal or remeasurement, are recognized in profit or loss. Purchases and sales are recognized on the trade date. Financial assets are derecognized when contractual rights expire or substantially all risks and rewards are transferred.
| 2. | Critical Estimates and Assumptions |
The preparation of the Company’s financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. The Company’s financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the Company’s financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and also in future periods when the revision affects both current and future periods.
The functional currency for each of the Company’s subsidiaries is the currency of the primary economic environment in which the respective entity operates; the Company has determined the functional currency of each entity to be the New Israeli Shekel. Such determination involves certain judgements to identify the primary economic environment. The Company reconsiders the functional currency of its subsidiaries if there is a change in events and/or conditions which determine the primary economic environment. During the six months ended June 30, 2026, there have been no such changes. The Company’s presentation currency is the US dollar.
| 9 |
A2Z CUST2MATE SOLUTIONS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026
(Unaudited)
(Expressed in Thousands of US Dollars, except per share data)
NOTE 2 – BASIS OF PREPARATION (CONTINUED)
| 3. | Standards-issued-but-not-yet-effective disclosure |
There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the Company has decided not to adopt early.
In April 2024, the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements. This standard aims to improve the consistency and clarity of financial statement presentation and disclosures by providing updated guidance on the structure and content of financial statements. Key changes include enhanced requirements for the presentation of financial performance, financial position, and cash flows, as well as additional disclosures to improve transparency and comparability. In addition, IFRS 18 requires entities to classify income and expenses into five categories, three of which are new – i.e. operating, investing and financing – and the income tax and discontinued operation categories. The new standard sets out detailed requirements for classifying income and expenses into each category. These amendments are effective for annual periods beginning on or after January 1, 2027. The Company is currently assessing the impact that the adoption of IFRS 18 will have on its consolidated financial statements.
The Company is currently assessing the impact of this new accounting standard since it has not adopted yet.
| 10 |
A2Z CUST2MATE SOLUTIONS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026
(Unaudited)
(Expressed in Thousands of US Dollars, except per share data)
NOTE 3 – FINANCIAL ASSETS AT FAIR VALUE
Financial assets not measured at fair value include cash and cash equivalents, loans to others, trade and other receivables and trade payables. Due to their short-term nature, the carrying value of cash and cash equivalents, loans to others and trade and other receivables approximates their fair value.
The reconciliation of the opening and closing fair value balance of financial instruments is provided below:
| Financial assets at fair value | Level 1 | |||
| December 31, 2024 | $ | |||
| Purchases | ||||
| Disposals | ||||
| Gain | ||||
| December 31, 2025 | $ | |||
| Purchases | ||||
| Disposals | ( | ) | ||
| Gain | ||||
| June 30, 2026 | $ | |||
General objectives, policies and processes
The
Company’s investment strategy regarding its financial assets is the preservation of capital; the Company does not invest for
trading or speculative purposes. The Company holds level 1 short-term investments (mutual funds and bonds) with yields ranging
between
NOTE 4 - INVENTORIES:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Raw materials | $ | $ | ||||||
| Smart cart parts | ||||||||
| Inventory in transit | ||||||||
| Finished goods | ||||||||
| $ | $ | |||||||
| 11 |
A2Z CUST2MATE SOLUTIONS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026
(Unaudited)
(Expressed in Thousands of US Dollars, except per share data)
NOTE 5 – LOAN FROM BANK
On
June 14, 2026, Cust2Mate signed a financing arrangement with a leading Israeli Bank Leumi le-Israel B.M (“Bank Leumi”),
pursuant to which the Bank Leumi has committed to provide aggregate facilities of up to NIS
65%
of the facility is available for 12 months and the balance for a 24-month period, subject to customary terms and conditions. Drawdowns will be repaid over periods of up to 36 months. Borrowings bear interest at a rate of prime +4% per annum. The Company
incurred a one-time arrangement fee of NIS
Cust2Mate
has a NIS
As
at June 30, 2026, Cust2Mate received a drawdown of NIS
The agreements contain customary affirmative and negative covenants, including requirements to provide periodic financial information, maintain legal existence and operating licenses, preserve insurance coverage, comply with applicable laws and regulations, and refrain from granting additional liens or encumbrances without prior approval. In addition, the Company has also granted a lien over certain customer agreements in favor of the Bank Leumi.
Management determined that the Company was in compliance with all applicable covenants as at June 30, 2026.
Management believes that the facilities provide significant additional liquidity and financial flexibility to support anticipated growth in customer inventory programs. The availability of the undrawn commitments is monitored as part of the Company’s overall liquidity risk management framework.
NOTE 6 – WARRANT LIABILITY
Certain warrants were issued on November 2, 2022 and January 4, 2024, with an exercise price denominated in Canadian dollars rather than the functional currency of the Company – New Israeli Shekels (NIS). During the six months ended June 30, 2026, the balance of these warrants was exercised (see note 7(c)) and as such, as of June 30, 2026, there are no outstanding warrants accounted for as a liability.
The fair value of the warrants is determined by using an option pricing model that incorporates assumptions including share price, exercise price, expected volatility, expected life, risk-free interest rate and foreign exchange rates.
The
Black-Scholes option pricing model was used to measure the warrant liability as of December 31, 2025 with the following assumptions (Level 3): volatility of
| Balance at December 31, 2025 | $ | |||
| Warrant exercise | ( | ) | ||
| Revaluation at June 30, 2026 | ||||
| Balance at June 30, 2026 | $ |
Level 3 for the period ended on June 30, 2026:
For
the three and six months ended June 30, 2026, the Company recorded a loss on revaluation of warrant liabilities in the amount of $
(for the three and six months ended June 30, 2025 - $
| 12 |
A2Z CUST2MATE SOLUTIONS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026
(Unaudited)
(Expressed in Thousands of US Dollars, except per share data)
| a) | During the period ended June 30, 2026, the Company issued Common Shares in respect of the exercise of vested RSUs (note 8 (c)). | |
| b) | During the period ended June 30, 2026, the Company issued Common Shares in respect of the exercise of share options for proceeds of $ (note 8 (b)). | |
| c) | During the period ended June 30, 2026, the Company issued Common Shares in respect of the exercise of warrants for proceeds of $ (note 8 (a)). | |
| d) | Share repurchase program
On
January 7, 2026, the Board of Directors of the Company approved a repurchase program allowing the Company to purchase through the
facilities of the NASDAQ, $
of Common Shares of the Company up to a value of $
but not to represent more than 20% of the “public float”, through to April 7, 2026, which was extended on March 27, 2026
to July 6, 2026 and on July 6, 2026 to December 31, 2026 (the “Buyback”). Oppenheimer & Co. Inc. will act as the
Company’s advisor and dealer manager in respect of the Buyback. As of June 30, 2026, the Company repurchased a total of
shares with a value of $ |
NOTE 8 - WARRANTS AND OPTIONS
a) Warrants
| (i) | Warrant transactions for the six months ended June 30, 2026, and for the year ended December 31, 2025, are as follows: |
| Number | Weighted Average Exercise Price | |||||||
| Balance, January 1, 2025 | $ | |||||||
| Expiry of warrants | ( | ) | ||||||
| Exercise of warrants | ( | ) | ||||||
| Warrants issued in the January 2025 Registered Direct Offering and September 2025 underwritten public offering | ||||||||
| Balance, December 31, 2025 | $ | |||||||
| Exercise of warrants (a) | ( | ) | ||||||
| Expiry of warrants | ( | ) | ||||||
| Balance, June 30, 2026 | $ | |||||||
| (a) |
| (ii) | As at June 30, 2026, the Company had outstanding warrants, enabling the holders to acquire Common Shares as follows: |
June 30, 2026 | Expiry date | Exercise price | Exercise price (USD) | |||||||||
| USD | $ | |||||||||||
| USD | $ | |||||||||||
| USD | $ | |||||||||||
| 13 |
A2Z CUST2MATE SOLUTIONS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026
(Unaudited)
(Expressed in Thousands of US Dollars, except per share data)
NOTE 8 - WARRANTS AND OPTIONS (CONTINUED)
b) Stock Options
| (i) | Stock option transactions for the six months ended June 30, 2026, and for the year ended December 31, 2025, are as follows: |
| Number | Weighted Average Exercise Price (CAD) | Weighted Average Exercise Price (USD) | ||||||||||
| Balance January 1, 2025 | $ | $ | ||||||||||
| Options cancelled | ( | ) | ||||||||||
| Options exercised | ( | ) | ||||||||||
| Options granted | ||||||||||||
| Balance December 31, 2025 | $ | $ | ||||||||||
| Options cancelled | ( | ) | ||||||||||
| Options exercised | ( | ) | ||||||||||
| Options granted | ||||||||||||
| Balance June 30, 2026 | $ | $ | ||||||||||
| (ii) | As at June 30, 2026, the Company had outstanding stock options, enabling the holders to acquire Common Shares as follows: |
Outstanding as of June 30, 2026 | Exercisable as of June 30, 2026 | Expiry date | Exercise price (CAD) | Exercise price (USD) | ||||||||||||
| CAD | $ | |||||||||||||||
| CAD | $ | |||||||||||||||
| CAD | $ | |||||||||||||||
| CAD | $ | |||||||||||||||
| CAD | $ | |||||||||||||||
| CAD | $ | |||||||||||||||
| CAD | $ | |||||||||||||||
| CAD | $ | |||||||||||||||
| CAD | $ | |||||||||||||||
| CAD | $ | |||||||||||||||
| CAD | $ | |||||||||||||||
| CAD | $ | |||||||||||||||
| CAD | $ | |||||||||||||||
| CAD | $ | |||||||||||||||
| CAD | $ | |||||||||||||||
| CAD | $ | |||||||||||||||
Share-based compensation expense is recognized over the vesting period of options. During the three and six months ended June 30, 2026, share-based compensation of $ and $, respectively, were recognized and charged to the Consolidated Statement of Comprehensive Loss (three and six months ended June 30, 2025, share-based compensation of $ and $, respectively).
| 14 |
A2Z CUST2MATE SOLUTIONS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026
(Unaudited)
(Expressed in Thousands of US Dollars, except per share data)
NOTE 8 - WARRANTS AND OPTIONS (CONTINUED)
c) RSUs
| Number | ||||
| Balance, January 1, 2025 | ||||
| RSUs granted | ||||
| Expiry of RSUs | ( | ) | ||
| Exercise of RSUs | ( | ) | ||
| Balance, December 31, 2025 | ||||
| Exercise of RSUs | ( | ) | ||
| Balance, June 30, 2026 | ||||
As of June 30, 2026, RSU’s are milestone based RSU’s for which the milestones have not yet been achieved. During the three and six months ended June 30, 2026, share-based compensation of $ and $, respectively, were recognized and charged to the Consolidated Statement of Comprehensive Loss (during the three and six months ended June 30, 2025, share-based compensation of $ and $, respectively).
| 15 |
A2Z CUST2MATE SOLUTIONS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026
(Unaudited)
(Expressed in Thousands of US Dollars, except per share data)
NOTE 9 - REVENUES:
Revenue streams:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues from sales of precision metal parts | $ | $ | $ | $ | ||||||||||||
| Smart Carts: | ||||||||||||||||
| Products | | | ||||||||||||||
| Services | | | | | ||||||||||||
| Revenues from the Cust2Mate Platform (*) | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
For
the three and six months ended June 30, 2026, the Company recognized revenues of $ and $
| (*) | When consideration is received over a period exceeding 12 months, the Company adjusts the
transaction price to reflect the time value of money. Revenue is recognized at the discounted present value, and the unwinding of
the discount is recognized as interest income over the payment period. As of June 30, 2026, long-term trade receivables amounted to
$ |
NOTE 10 – COMMITMENTS
Cust2Mate
leases office space with the lease expiring on
NOTE 11 – DISCONTINUED OPERATIONS
On June 30, 2025, the Company entered into a share purchase agreement (the “A2ZMS Agreement”) pursuant to which it sold its wholly-owned subsidiary A2ZMS Advanced Military Solutions Ltd., a company organized under the laws of Israel (“A2ZMS”), to a purchaser residing in Israel for a purchase price of ILS. The purchaser is related to a director of the Company at the time of sale. The A2ZMS Agreement was approved by all of the independent directors of the Company. The Company received an independent valuation of A2ZMS in connection with this transaction.
The results of operations of A2ZMS were classified as discontinued operations in the condensed consolidated interim financial statements of the Company in the prior period.
| 16 |
A2Z CUST2MATE SOLUTIONS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026
(Unaudited)
(Expressed in Thousands of US Dollars, except per share data)
NOTE 11 – DISCONTINUED OPERATIONS (CONTINUED)
The below are the data of operating results attributed to the discontinued operations:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Expenses: | ||||||||||||||||
| Research and development costs | $ | $ | $ | $ | ||||||||||||
| General and administration expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ||||||||||||
| Financial (income) expense | ( | ) | ||||||||||||||
| Loss before taxes on income | ( | ) | ( | ) | ||||||||||||
| Loss on disposal of discontinued operations* | ( | ) | ( | ) | ||||||||||||
| Net loss for the period from discontinued operations | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| (*) |
Six months ended June 30 | ||||||||
| 2026 | 2025 | |||||||
| Consideration received on disposal of discontinued operations | $ | $ | ||||||
| Cash disposed of | ( | ) | ||||||
| Net cash outflow on disposal of discontinued operations | ( | ) | ||||||
| Net assets disposed (other than cash): | ||||||||
| Property, equipment and right of use assets, net | ( | ) | ||||||
| Trade and other receivables | ( | ) | ||||||
| Trade and other payables | ||||||||
| Loans | ||||||||
| Severance payments, net | ||||||||
| $ | $ | ( | ) | |||||
| Six months ended | ||||||||
| June 30 | ||||||||
| 2026 | 2025 | |||||||
| Net cash flows provided by (used by) discontinued operations | ||||||||
| From operating activities | $ | $ | ||||||
| From investing activities | ( | ) | ||||||
| From financing activities | ( | ) | ||||||
| $ | $ | |||||||
| 17 |
A2Z CUST2MATE SOLUTIONS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026
(Unaudited)
(Expressed in Thousands of US Dollars, except per share data)
NOTE 12 – OPERATING SEGMENTS AND MAJOR CUSTOMERS:
| a) | Operating segments |
The Company and its subsidiaries are engaged in the following two segments, currently in one geographical location (Israel):
| 1. | Retail automation solutions – Smart Carts (“Smart Carts”) | |
| 2. | Manufacturing and selling of precision metal parts – “Precision Metal Parts” |
| Six Months Ended June 30, 2026 | ||||||||||||
| Precision Metal Parts | Smart Carts | Total | ||||||||||
| Revenues | ||||||||||||
| External | $ | $ | $ | |||||||||
| Total | ||||||||||||
| Cost of revenues | ||||||||||||
| External | ||||||||||||
| Total | ||||||||||||
| Segment operational loss (gain) | ( | ) | ||||||||||
| Loss on revaluation of warrant liability | ||||||||||||
| Financial expenses (income), net | ||||||||||||
| Tax expenses | ||||||||||||
| Net loss | $ | |||||||||||
| 18 |
A2Z CUST2MATE SOLUTIONS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026
(Unaudited)
(Expressed in Thousands of US Dollars, except per share data)
NOTE 12 – OPERATING SEGMENTS AND MAJOR CUSTOMERS (CONTINUED)
| Six Months Ended June 30, 2025 | ||||||||||||
| Precision Metal Parts | Smart Carts | Total | ||||||||||
| Revenues | ||||||||||||
| External | $ | $ | $ | |||||||||
| Total | ||||||||||||
| Cost of revenues | ||||||||||||
| External | ||||||||||||
| Total | ||||||||||||
| Segment operational loss | ||||||||||||
| Loss on revaluation of warrant liability | ||||||||||||
| Financial expenses (income), net | ( | ) | ||||||||||
| Tax expenses | ||||||||||||
| Net loss | $ | |||||||||||
| Three Months Ended June 30, 2026 | ||||||||||||
| Precision Metal Parts | Smart Carts | Total | ||||||||||
| Revenues | ||||||||||||
| External | $ | $ | $ | |||||||||
| Total | ||||||||||||
| Cost of revenues | ||||||||||||
| External | ||||||||||||
| Total | ||||||||||||
| Segment operational loss | ( | ) | ||||||||||
| Loss on revaluation of warrant liability | ||||||||||||
| Financial expenses (income), net | ( | ) | ||||||||||
| Tax expenses | ||||||||||||
| Net loss | $ | |||||||||||
| Three Months Ended June 30, 2025 | ||||||||||||
| Precision Metal Parts | Smart Carts | Total | ||||||||||
| Revenues | ||||||||||||
| External | $ | $ | $ | |||||||||
| Total | ||||||||||||
| Cost of revenues | ||||||||||||
| External | ||||||||||||
| Total | ||||||||||||
| Segment operational loss | ||||||||||||
| Loss on revaluation of warrant liability | ||||||||||||
| Financial expenses, net | ||||||||||||
| Tax expenses | ||||||||||||
| Net loss | $ | |||||||||||
| 19 |
A2Z CUST2MATE SOLUTIONS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026
(Unaudited)
(Expressed in Thousands of US Dollars, except per share data)
NOTE 12 - OPERATING SEGMENTS AND MAJOR CUSTOMERS (CONTINUED)
| As at June 30, 2026 | ||||||||||||
| Precision Metal Parts | Smart Carts | Total | ||||||||||
| Segment assets | $ | $ | $ | |||||||||
| Segment liabilities | $ | $ | $ | |||||||||
| As at December 31, 2025 | ||||||||||||
Precision Metal Parts | Smart Carts | Total | ||||||||||
| Segment assets | $ | $ | $ | |||||||||
| Segment liabilities | $ | $ | $ | |||||||||
| b) | Major customer data as a percentage of total revenues: |
The following table sets forth the customers that represented 10% or more of the Company’s total revenues in each of the periods set forth below:
| Six months ended | ||||||||
| June 30 | ||||||||
| 2026 | 2025 | |||||||
| Customer A | % | % | ||||||
| Customer B | 46 | % | - | |||||
NOTE 13 - FINANCIAL INSTRUMENTS AND RISK MANAGEMENT:
The Company is exposed to a variety of financial risks, which results from its financing, operating and investing activities. The objective of financial risk management is to contain, where appropriate, exposures in these financial risks to limit any negative impact on the Company’s financial performance and position.
The Company’s financial instruments are its cash, trade and other receivables, payables, other payables and loans in different currencies (NIS, CAD and USD). The main purpose of these financial instruments is to raise finance for the Company’s operation. The Company actively measures, monitors and manages its financial risk exposures by various functions pursuant to the segregation of duties and principals. The risks arising from the Company’s financial instruments are mainly credit risk and currency risk. The risk rate on loans is fixed. The risk management policies employed by the Company to manage these risks are discussed below.
| A. | Credit risk: |
Credit risk arises when a failure by counterparties to discharge their obligations could reduce the amount of future cash inflows from financial assets on hand at the balance sheet date. The Company closely monitors the activities of its counterparties and controls access to its intellectual property, which enables it to ensure the prompt collection of customers’ balances.
The Company’s main financial assets are cash and cash equivalents and trade accounts receivable and represent the Company’s maximum exposure to credit risk in connection with its financial assets. Wherever possible and commercially practical the Company holds cash with major financial institutions In Israel.
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Cash and Cash Equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Investment in financial assets | ||||||||
| Short term and long term trade receivables | ||||||||
| Long term financial assets at fair value | ||||||||
| Other accounts receivable | ||||||||
| Total | $ | $ | ||||||
| 20 |
A2Z CUST2MATE SOLUTIONS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Thousands of US Dollars, except per share data)
NOTE 13 - FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED):
| B. | Liquidity risks: |
Liquidity risk is the risk that arises when the maturity of assets and the maturity of liabilities do not match. An unmatched position potentially enhances profitability but can also increase the risk of loss. The Company has procedures with the object of minimizing such loss by maintaining sufficient cash and other highly liquid current assets and by having an available adequate amount of committed credit facilities. The following tables detail the Company’s remaining contractual maturity for its financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay.
| Contractual | ||||||||||||
| Carrying amounts | Within 1 year | over 1 year | ||||||||||
| Trade payables | $ | $ | $ | |||||||||
| Other accounts payable | $ | $ | $ | |||||||||
| Loans | $ | $ | $ | |||||||||
| Lease liability | $ | $ | $ | |||||||||
| C. | Market risks: |
The Company’s’ business of maintenance services of various electronic systems is highly competitive and involves a certain degree of risk. The Company’s business operations will depend largely upon the outcome of continued sales and services to security establishments and the initiation of sales of their products to the civilian markets.
The Company’s Cust2Mate business is new, and the Company is aware of competitors in the market. In addition to the regular management oversight and skills required, success in this segment will require the Company to penetrate the market as rapidly as possible.
Foreign exchange risk arises when the Company enters into transactions denominated in a currency other than its functional currency. The Company buys its inventories mostly in USD and sells its products in NIS.
As
of June 30, 2026, if the Company’s functional currency (ILS) had strengthened/ weakened by 5% against the USD, with all other variables
held constant, the loss for the six month period would decrease /increase by approximately $
| D. | Interest rate risks: |
The Company’s exposure to cash flow interest rate risk from long-term borrowings at variable rate, which is immaterial.
| E. | Capital management |
The
Company has incurred recurring losses and negative cash flows from operating activities since inception, such that as of June 30, 2026,
the Company had accumulated losses of $
The Company’s main use for liquidity is to fund the development of its programs and working capital purposes. These activities include research and development, product development, sales and marketing and administrative costs. The primary source of liquidity has been from financing activities to date. The ability to fund operations, to make planned capital expenditures and execute the growth/acquisition strategy depends on the future operating performance and cash flows, which are subject to prevailing economic conditions, regulatory and financial, business and other factors, some of which are beyond the Company’s control.
The Company intends to grow rapidly and expand its operations within the next 12 to 24 months. This growth, along with the expectation of operating at a loss for at minimum the next 12 months, will diminish the Company’s working capital. To the extent that the Company raises further capital, any additional equity financing may be dilutive to investors and debt financing, if available, may involve restrictions on financing and operating activities. There is no assurance that additional financing will be available on terms acceptable to the Company, if at all. If the Company is unable to obtain additional financing as needed, it may be required to and has the ability to reduce the scope of its operations or anticipated expansion.
NOTE 14 – EVENTS SUBSEQUENT TO THE REPORTING PERIOD
| a) | From July 1, 2026 through the date of the report, the Company repurchased an additional shares with a value of $
As of August 12, 2026, issued and outstanding shares were reduced from to . | |
| b) | From July 1, 2026 through the date of the report, the Company issued RSU’s to an officer. |
| 21 |