A2Z CUST2MATE SOLUTIONS CORP.

A2Z Cust2Mate Solutions Corp. (AZ) is an innovative technology company operating primarily through two key subsidiaries in Israel: Cust2Mate Ltd., focused on retail "smart cart" solutions, and Isramat Ltd., which manufactures precision metal parts. The company has recently shifted its strategic focus, divesting its A2ZMS Advanced Military Solutions Ltd. subsidiary on June 30, 2025, for 500,000 ILS ¹⁰¹, to concentrate on its core smart cart business. AZ aims to become a leading mobile checkout system provider in the international market, leveraging its Cust2Mate products for shoppers and supermarket retailers. The company's operational offices and a significant number of customers are located in Israel, exposing it to geopolitical risks in the Middle East, including recent conflicts ¹⁰².

The core business model revolves around the development and commercialization of Cust2Mate smart carts, which offer mobile self-checkout, real-time shopping information, and value-added digital services. The company is transitioning from an outright purchase model to a subscription-based model for its smart carts, which includes a minimal upfront fee and recurring monthly per-cart subscriptions under multiyear agreements ¹⁰³. Additionally, Cust2Mate is developing a Retail Media Division to monetize its smart cart technology through advertising and big data analytics, aiming to generate new revenue streams from both smart cart and non-smart cart customers ¹⁰⁴.

For the fiscal year ended December 31, 2025, A2Z Cust2Mate Solutions Corp. reported total revenues of $7,901 thousand ⁴. This represents a significant increase from $5,376 thousand in 2024 ⁴, primarily driven by the smart cart segment. The company recorded a gross profit of $1,094 thousand ⁴, down from $1,889 thousand in 2024 ⁴. Operating loss for 2025 was $36,456 thousand ⁴, widening from $12,855 thousand in 2024 ⁴. The net loss for the year was $38,484 thousand ⁴, compared to $19,263 thousand in 2024 ⁴. Basic and diluted loss per share from continuing operations was $(0.96) ⁴, and from discontinued operations was $(0.07) ⁴. As of December 31, 2025, the company had cash and cash equivalents of $13,525 thousand ⁵, total current liabilities of $6,952 thousand ⁵, and total non-current financial liabilities of $1,787 thousand ⁶. The accumulated deficit stood at $138,187 thousand ⁵.

Year-over-year, total revenues increased by 46.97% from $5,376 thousand in 2024 to $7,901 thousand in 2025 ⁴. This growth was primarily fueled by a substantial increase in smart cart revenues, which rose from $532 thousand in 2024 to $3,208 thousand in 2025 ⁷, representing a 503% increase. Conversely, precision metal parts revenue slightly decreased from $4,844 thousand in 2024 to $4,693 thousand in 2025 ⁷. Gross profit decreased by 42.09% from $1,889 thousand in 2024 to $1,094 thousand in 2025 ⁴. Operating loss widened significantly from $12,855 thousand in 2024 to $36,456 thousand in 2025 ⁴, largely due to increased research and development expenses and general and administrative costs. Research and development expenses surged from $3,853 thousand in 2024 to $9,944 thousand in 2025 ⁸, and general and administrative expenses increased from $7,948 thousand in 2024 to $23,749 thousand in 2025 ⁹.

During the reported period, A2Z Cust2Mate Solutions Corp. made several significant operational developments. On February 12, 2025, the company acquired an additional 66,194 ordinary shares of Cust2Mate, increasing its ownership to 96.58% of Cust2Mate's issued and outstanding share capital for an aggregate purchase price of $1.85 million ¹⁰. On June 30, 2025, the company sold its wholly-owned subsidiary A2ZMS Advanced Military Solutions Ltd. for 500,000 ILS ¹⁰¹. In September 2025, a new Retail Media Division was launched within Cust2mate to focus on smart-cart subscriptions combined with retail media and advertising revenue ¹⁰⁴. The company secured a $55 million purchase order from Yochananof on September 3, 2025, for the deployment of 5,000 Cust2Mate 3.0 smart shopping carts ¹⁰⁵. This was followed by a landmark advertising agreement with Toys "R" Us Israel and The Red Pirate in September 2025, guaranteeing a minimum of $1.2 million in revenue starting January 2026 over the initial term ¹⁰⁶. An agreement to advertise Lego products in Israel was announced on October 1, 2025 ¹⁰⁷. A purchase order from Super Sapir for 3,000 Cust2Mate smart shopping carts, valued at $30 million, was announced on November 25, 2025, with deployment beginning in the first half of 2026 ¹⁰⁸.

Management explicitly states its objective to continue generating significant additional orders of Cust2Mate smart carts in 2026 ¹⁰⁹. The company is transitioning its business model for smart carts from outright purchases to a subscription-based model, which includes a minimal upfront fee and recurring monthly fees for hardware, software maintenance, service, and version updates under multiyear agreements ¹⁰³. This model is expected to facilitate consistent revenue growth in conjunction with the increasing installed base of smart carts ¹⁰³.

A major growth vector for the company is the expansion of its smart cart solutions into new markets and through strategic partnerships. The company has established local distribution and service partners in the United States, Mexico and Central America, Australia, France, Canada, and Chile ¹¹⁰. A strategic partnership with Nayax Ltd., a global commerce enablement payments and loyalty platform, was announced on September 10, 2024, to integrate Nayax's mobile payment system with Cust2Mate smart carts, with initial deployment in France ¹¹¹. Furthermore, Nayax Capital will enable financing for the sale or lease of these smart carts ¹¹². On October 10, 2024, a framework agreement was signed with Trixo, a retail technology integrator in Mexico and Central America, for installation, deployment, support, and maintenance of Cust2Mate smart cart solutions ¹¹³. An initial order for 3,000 next-generation Cust2Mate 3.0 Smart Carts from Trixo, valued at over $25 million, was secured on June 17, 2025, with rollout starting in the first quarter of 2026 under the recurring revenue model for at least 36 months ¹¹⁴. The company also announced an agreement on December 4, 2025, with a premium grocery retailer in Central America to deploy the smart cart platform, with initial rollout planned for early 2026 in two flagship locations, aiming for chain-wide deployment ¹¹⁵. On January 5, 2026, it was announced that smart carts would be available at select Migros Ticaret A.S. stores in Turkiye in Q3 2026 ¹¹⁶. A five-year strategic agreement valued at approximately $50 million was announced on March 31, 2026, with Global Retail (Carrefour Israel) to deploy 4,000 smart carts across Carrefour Israel stores, with rollout beginning in the third quarter of 2026 ¹¹⁷.

Another significant growth area is the development of digital services and AI-empowered big data analytics through the Smart Cart Marketplace. The Cust2Mate touch screen will display advertisements, promotions, and other digital services, providing additional revenue sources to retailers and value to shoppers ¹⁰³. The company intends to enter into revenue-sharing agreements with stakeholders, expecting digital revenues from the Smart Cart Marketplace to become considerable ¹⁰³. An advertising agreement with Toys "R" Us Israel and The Red Pirate, effective until December 2028 with an optional two-year extension, guarantees Cust2Mate a minimum of $1.2 million in revenue starting January 2026 ¹⁰⁶. This agreement includes commissions on every completed transaction driven by QR codes and shoppable links ¹⁰⁶. An agreement to advertise Lego products in Israel, also providing commissions on completed transactions, was announced on October 1, 2025 ¹⁰⁷. The company is also developing software for its smart carts to generate data on shopping behavior, which will be accessible to its advanced AI service for insight generation and raw data access for clients ¹⁰³.

The company expects to operate at a loss for at least the next 12 months due to rapid growth and expansion of operations ¹¹⁸. This growth will diminish the company's working capital ¹¹⁸. However, financings completed in the first quarter of 2025 have provided sufficient funds to continue for at least the next 12 months ¹¹⁸. The company is also in the process of implementing a new enterprise resource planning (ERP) system, which became effective January 1, 2026, to strengthen its overall control environment ¹¹⁹.

The company's main use for liquidity is to fund the development of its programs and for working capital purposes, including staffing, preclinical studies, clinical trials, and administrative costs ¹¹⁸. The primary source of liquidity has been from financing activities to date ¹¹⁸. The company's ability to fund operations, planned capital expenditures, and its growth/acquisition strategy depends on future operating performance and cash flows, which are subject to economic, regulatory, financial, business, and other factors beyond its control ¹¹⁸. The company had an estimated working capital of $72.5 million, including a cash balance of $13.5 million, as of December 31, 2025 ¹²⁰.

The company faces significant risks, including its history of incurring substantial losses, with a comprehensive loss of $39.8 million for the year ended December 31, 2025 ¹¹, and an accumulated deficit of $138 million as of December 31, 2025 ¹². There is no assurance of achieving or maintaining profitability, and the company expects to need additional capital in the future, which could be dilutive to current shareholders ¹³. Operations are heavily concentrated in Israel, making the business vulnerable to political, economic, and military instability in the Middle East, as evidenced by the October 2023 conflict and subsequent escalations in 2025 and 2026 involving Iran and Hezbollah ¹⁰². The company's commercial insurance does not cover war and terrorism losses, and while the Israeli government currently covers direct damages, there is no guarantee this coverage will be maintained or sufficient ¹⁴. The sales cycle for smart carts is long and unpredictable, requiring considerable time and expense before customer agreements are executed and revenue is generated ¹⁵. The company relies on a few customers for a significant portion of its smart-cart sales, with one customer accounting for 41% of total revenues in 2025 ¹⁶, making it vulnerable to the loss of these key customers. Dependence on third-party subcontractors and suppliers for components and services poses risks of disruptions, performance problems, and increased costs ¹⁷. The company has identified material weaknesses in internal control over financial reporting related to inventory, payroll, and accounts payable as of December 31, 2025 ¹⁸, which could lead to material misstatements in financial statements if not remediated.

Management's message to shareholders emphasizes the company's transition and strategic focus on the Cust2Mate smart cart business, aiming to become a leading mobile checkout system in the international market. The company is actively pursuing a subscription-based revenue model for its smart carts and developing a Retail Media Division to monetize digital services and AI-powered big data analytics. Management has provided specific forward-looking guidance through significant purchase orders and agreements, such as the $55 million order from Yochananof for 5,000 smart carts ¹⁰⁵ and the $30 million order from Super Sapir for 3,000 smart carts ¹⁰⁸, with deployments planned for early 2026. The strategic priorities include expanding market share in the smart cart industry, leveraging strategic partnerships for global deployment, and developing new revenue streams from digital services and data analytics. Despite incurring significant losses, management believes recent financings provide sufficient funds for at least the next 12 months ¹¹⁸ and is actively addressing internal control weaknesses.