Business Context and Reporting Period
A2Z Cust2Mate Solutions Corp. (formerly A2Z Smart Technologies Corp.) is a Canadian corporation incorporated in British Columbia, operating primarily through Israeli subsidiaries. The company focuses on two main segments: Smart Carts (retail automation solutions) and Precision Metal Parts. This Form 20-F covers the fiscal year ended December 31, 2025. The company is listed on the Nasdaq Capital Market under the symbol "AZ" and is classified as an Emerging Growth Company and a Foreign Private Issuer.
Key Financial Metrics (Year Ended Dec 31, 2025)
| Metric | 2025 (USD '000) | 2024 (USD '000) |
|---|---|---|
| Total Revenue | $7,901 | $5,376 |
| Gross Profit | $1,094 | $1,889 |
| Operating Loss | $(36,456) | $(12,855) |
| Net Loss (Continuing Ops) | $(36,059) | $(17,422) |
| Net Loss (Discontinued Ops) | $(2,425) | $(1,841) |
| Total Net Loss | $(38,484) | $(19,263) |
| Cash and Cash Equivalents | $13,525 | $13,526 |
| Working Capital | $72,461 | $5,595 |
| Accumulated Deficit | $(138,187) | $(100,452) |
Revenue Breakdown (2025): Precision Metal Parts ($4,693k) and Smart Carts ($3,208k). Smart Cart revenue is heavily concentrated, with one customer (Yochananof) accounting for 41% of total revenue.
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 47% to $7.9 million, driven primarily by a 501% increase in Smart Cart revenue ($3.2M vs $0.5M in 2024) due to deliveries to Yochananof.
- Expense Surge: Operating expenses increased significantly. General and Administrative (G&A) expenses jumped to $23.7 million (from $7.9M), largely due to a $13.5 million increase in share-based compensation. R&D expenses rose to $9.9 million (from $3.9M) due to hiring and development of the Model 3.0 cart.
- Discontinued Operations: The company sold its subsidiary, A2ZMS Advanced Military Solutions Ltd., in June 2025. Results are now reported as discontinued operations, contributing a loss of $2.4 million for the year.
- Capital Position: Working capital improved dramatically to $72.5 million (from $5.6M) following significant equity financings in 2025, including a $30M public offering in January and a $45M offering in September.
Guidance, Outlook, Risks, and Unusual Items
Outlook and Strategy: Management expects to continue generating significant orders for Smart Carts in 2026. The company is transitioning from an outright purchase model to a subscription-based model with recurring revenue. Recent major contracts include a $55M order from Yochananof, a $25M+ order from Trixo (Mexico/Central America), and a $30M order from Super Sapir.
Material Risks:
- Geopolitical Instability: Operations are concentrated in Israel. Ongoing conflicts involving Hamas, Hezbollah, and Iran pose significant risks to operations, supply chains, and personnel availability (military reserve call-ups).
- Liquidity and Profitability: The company has incurred significant losses since inception and expects to continue operating at a loss. It relies on future capital raises to fund operations.
- Customer Concentration: Reliance on a single major customer for Smart Cart revenue creates vulnerability.
- Internal Controls: Management identified material weaknesses in internal controls over financial reporting regarding inventory, payroll, and accounts payable as of December 31, 2025. Remediation is underway with a new ERP system effective January 1, 2026.
- Nasdaq Compliance: The company received notice of non-compliance regarding the timing of its annual shareholder meeting but has a plan to regain compliance by June 29, 2026.
Investor Verification Checklist
- Internal Control Remediation: Verify the implementation and testing status of the new ERP system and the remediation of material weaknesses in inventory and payroll controls.
- Revenue Recognition: Scrutinize the shift from outright sales to subscription models and the specific terms of the "bill-and-hold" revenue recognition ($2.2M recognized in 2025).
- Share-Based Compensation: Assess the sustainability of the $20.3M share-based compensation expense and its impact on future dilution.
- Geopolitical Exposure: Evaluate the specific impact of the Israel-Iran/Hezbollah conflict on the company's ability to manufacture and deploy carts in Israel and the Middle East.
- Customer Concentration: Monitor the execution of the Yochananof contract and the diversification of the customer base to reduce reliance on a single client.