Exhibit 99.1
A2Z Cust2Mate Solutions Corp.
(formerly A2Z Smart Technologies Corp.)
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED
(Unaudited)
(Expressed in US Dollars)
A2Z CUST2MATE SOLUTIONS CORP. (formerly A2Z Smart Technologies Corp.)
A2Z CUST2MATE SOLUTIONS CORP.
(formerly A2Z Smart Technologies Corp.)
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024
(Unaudited)
(Expressed in US Dollars)
INDEX
| 2 |
A2Z CUST2MATE SOLUTIONS CORP. (formerly A2Z Smart Technologies Corp.)
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited)
(Expressed in Thousands of US Dollars)
As at September 30, 2024 |
As at December 31, 2023 |
|||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | ||||||||
| Deposits | ||||||||
| Inventories | ||||||||
| Trade receivables, net | ||||||||
| Other accounts receivable | ||||||||
| Total current assets | ||||||||
| Intangible asset - patent, net | ||||||||
| Long term financial asset at fair value | ||||||||
| Property, plant and equipment, net | ||||||||
| Total non-current assets | ||||||||
| Total Assets | ||||||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Short term loan and current portion of long-term loans | ||||||||
| Bank overdraft | ||||||||
| Lease liability | ||||||||
| Trade payables | ||||||||
| Other accounts payable | ||||||||
| Total current liabilities | ||||||||
| Lease liability | ||||||||
| Long term loans | ||||||||
| Provisions | ||||||||
| Warrant Liability (note 3) | ||||||||
| Severance payment, net | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | ||||||||
| Shareholders’ deficit (note 4) | ||||||||
| Share capital and additional paid in capital | ||||||||
| Warrant Reserve | ||||||||
| Accumulated other comprehensive income | ( |
) | ( |
) | ||||
| Transactions with non-controlling interests | ||||||||
| Accumulated deficit | ( |
) | ( |
) | ||||
| Non-controlling interest | ( |
) | ( |
) | ||||
| Total shareholders’ deficit | ( |
) | ( |
) | ||||
| Total liabilities and shareholders’ deficit | ||||||||
| November 13, 2024 | “Yonatan De Jongh” | “Gadi Graus” | ||
| Date of approval of the financial statements | Yonatan De Jongh - Director | Gadi Graus Chief Executive Officer |
The accompanying notes are an integral part of these Condensed Interim Consolidated financial statements.
| 3 |
A2Z CUST2MATE SOLUTIONS CORP. (formerly A2Z Smart Technologies Corp.)
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Unaudited)
(Expressed in Thousands of US Dollars, except per share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenues (note 6) | ||||||||||||||||
| Cost of revenues | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Expenses: | ||||||||||||||||
| Research and development costs | ||||||||||||||||
| Sales and marketing costs | ||||||||||||||||
| General and administration expenses | ||||||||||||||||
| Operating loss | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Loss (gain) on revaluation of warrant Liability (note 3) | ( |
) | ( |
) | ||||||||||||
| Financial (income) expense | ( |
) | ||||||||||||||
| Loss before taxes on income | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Income tax expense | ||||||||||||||||
| Net loss for the period | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Less: Net loss attributable to non-controlling interests | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net loss attributable to controlling shareholders | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| ( |
) | ( |
) | ( |
) | ( |
) | |||||||||
| Other comprehensive income (loss) | ||||||||||||||||
| Item that will not be reclassified to profit or loss: | ||||||||||||||||
| Adjustments arising from translation of financial statements to presentation currency | ( |
) | ( |
) | ( |
) | ||||||||||
| Other comprehensive income (loss) | ( |
) | ( |
) | ( |
) | ||||||||||
| Total comprehensive loss for the period | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Comprehensive loss attributable to controlling shareholders | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Basic and diluted loss per share | ) | )(*) | ) | )(*) | ||||||||||||
| Weighted average number of shares outstanding | ||||||||||||||||
| (*) |
The accompanying notes are an integral part of these Condensed Interim Consolidated financial statements.
| 4 |
A2Z CUST2MATE SOLUTIONS CORP. (formerly A2Z Smart Technologies Corp.)
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
(Expressed in Thousands of US Dollars)
| 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, 2024 | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||||||
| Net loss for the period | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Adjustments arising from translating financial statements of foreign operations | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Total comprehensive loss for the period | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||
| Issuance of shares in January 2024 private placement (note 4(f)) | ||||||||||||||||||||||||||||||||
| Exercise of RSUs (note 4(i)) | ||||||||||||||||||||||||||||||||
| Issuance of shares in April 2024 private placement (note 4(g)) | ||||||||||||||||||||||||||||||||
| Issuance of shares in August 2024 private placement (note 4(h)) | ||||||||||||||||||||||||||||||||
| Share based compensation (note 5(b)) | - | |||||||||||||||||||||||||||||||
| Balance – September 30, 2024 | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||||||
| (*) |
| Ordinary share capital | Accumulated | |||||||||||||||||||||||||||
| Number of shares | Additional paid in capital | Warrant reserve | Other Comprehensive Income | Accumulated deficit | Non-controlling interest | Total Equity | ||||||||||||||||||||||
| Balance - January 1, 2023 | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||
| Net loss for the period | - | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||
| Adjustments arising from translating financial statements of foreign operations | - | |||||||||||||||||||||||||||
| Total comprehensive loss for the period | - | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||
| Issuance of shares in respect of private placement | ||||||||||||||||||||||||||||
| Issuance of shares in respect of registered direct offering | ||||||||||||||||||||||||||||
| Exercise of RSU’s | ||||||||||||||||||||||||||||
| Exercise of warrants | ||||||||||||||||||||||||||||
| Share based compensation | - | |||||||||||||||||||||||||||
| Balance - September 30, 2023 | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||
| (*) | On
September 24, 2024, the Board approved a |
The accompanying notes are an integral part of these Condensed Interim Consolidated financial statements.
| 5 |
A2Z CUST2MATE SOLUTIONS CORP. (formerly A2Z Smart Technologies Corp.)
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Expressed in Thousands of US Dollars)
| Nine months ended | ||||||||
| September 30 | ||||||||
| 2024 | 2023 | |||||||
| 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 | ||||||||
| Share based compensation | ||||||||
| Share based compensation to service providers | ||||||||
| Loss (gain) on revaluation of warrant liability | ( |
) | ||||||
| Changes in contingent liability | ( |
) | ( |
) | ||||
| Change in severance liability | ( |
) | ( |
) | ||||
| Change in inventory | ( |
) | ||||||
| Change in trade receivables | ( |
) | ( |
) | ||||
| Change in other account receivables | ||||||||
| Accrued interest on loans and leases | ( |
) | ||||||
| Changes in bank overdraft | ||||||||
| Change in accounts payable | ||||||||
| Changes in deferred revenues | ( |
) | ||||||
| Change in other accounts payable | ( |
) | ( |
) | ||||
| ( |
) | ( |
) | |||||
| Cash flows from investing activities | ||||||||
| Restricted deposits | ( |
) | ||||||
| Purchase of property, plant and equipment | ( |
) | ( |
) | ||||
| ( |
) | ( |
) | |||||
| Cash flows from financing activities | ||||||||
| Issuance of shares and warrants, net | ||||||||
| Changes in other accounts payable | ||||||||
| Exercise of warrants | ||||||||
| Lease payments | ( |
) | ( |
) | ||||
| Repayment of loans | ( |
) | ( |
) | ||||
| Proceeds from receipt of loans | ||||||||
| 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 right-of-use asset and lease liability | ||||||||
| 6 |
A2Z CUST2MATE SOLUTIONS CORP. (formerly A2Z Smart Technologies Corp.)
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Expressed in thousands of US Dollars)
NOTE 1 – NATURE AND CONTINUANCE OF OPERATIONS
A2Z CUST2MATE SOLUTIONS CORP. (formerly A2Z Smart Technologies Corp.) (the “Company” or “A2Z”) 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 records and registered office is located at 2200 HSBC Building 885 West Georgia Street, British Columbia, V6C 3E8.
The Company was listed on the NASDAQ Stock Market LLC (“Nasdaq”) starting January 22, 2022, and trades under the symbol “AZ”. The Company was listed on the TSX Venture Exchange (“TSX.V”) in Toronto until February 28, 2024. Following approval for a voluntary delisting, the Company no longer trades on the TSX.V but remains a reporting issuer in Canada and its common shares remain listed on Nasdaq.
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. In addition, the product includes big data smart algorithms and computer vision capabilities, allowing for customer specific targeted advertising. (“The Cust2Mate Platform”).
The Company’s other activities include the provision of services in the field of services to the military and security markets as well as the development of related products for the civilian markets. Such services include providing maintenance services and container leasing. The Company also provides maintenance services for complex electronic systems and products.
The
Company, through its
Going Concern
The
accompanying condensed interim consolidated financial statements have been prepared assuming that the Company will continue as a going
concern. The Company has incurred recurring losses and negative cash flows from operating activities since inception, such that as of
September 30, 2024, the Company had accumulated losses of $
Considering the above, the Company’s dependency on external funding for its operations raises a substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements for the nine months ended September 30, 2024, do not include any adjustments that might result from the outcome of these uncertainties.
On October 7, 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on Israeli population and industrial centres located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. These attacks resulted in extensive deaths, injuries and kidnapping of civilians and soldiers. Following the attack, Israel’s security cabinet declared war against Hamas and a military campaign against these terrorist organizations commenced in parallel to their continued rocket and terror attacks. The intensity and duration of Israel’s current war is difficult to predict, as are such war’s implications on our business and operations. While none of our supply chains have been impacted since the war broke out on October 7, 2023, the ongoing war may create supply and demand irregularities in Israel’s economy in general or lead to macroeconomic indications of a deterioration of Israel’s economic standing, which may have a material adverse effect on us and our ability to effectively conduct our operations. Moreover, we cannot predict how this war will ultimately affect Israel’s economy in general, which may involve a downgrade in Israel’s credit rating by rating agencies (such as the recent downgrade by Moody’s of its credit rating of Israel from A1 to A2, as well as the downgrade of its outlook rating from “stable” to “negative”).
In connection with the Israeli security cabinet’s declaration of war against Hamas and possible or currently occurring hostilities with other organizations, several hundred thousand Israeli military reservists were drafted to perform immediate military service. A few of our employees, none of whom are members of management, have been called to active military duty since October 7, 2023.
Some of these employees have since returned, but there can be no assurance that they will not be called to military service again. In addition, we rely on service providers located in Israel and our employees or employees of such service providers may be called for service in the current or future wars or other armed conflicts with Hamas and such persons may be absent from their positions for a period of time. As of November 13, 2024, any impact as a result of the number of absences of our personnel and personnel at our service providers or counterparties located in Israel has been manageable. However, military service call ups that result in absences of personnel from our service providers or contractual counterparties in Israel may disrupt our operations and absences for an extended period of time may materially and adversely affect our business, prospects, financial condition and results of operations.
Following the attack by Hamas on Israel’s southern border, Hezbollah in Lebanon has also launched missile, rocket, and shooting attacks against Israeli military sites, troops, and Israeli towns in northern Israel. In response to these attacks, the Israeli army has carried out a number of targeted strikes on sites belonging to Hezbollah in southern Lebanon. It is possible that other terrorist organizations, including Palestinian military organizations in the West Bank or the Houthis in Yemen, as well as other hostile countries, such as Iran, will join the hostilities. Such hostilities may include terror and missile attacks. Any hostilities involving Israel or the interruption or curtailment of trade between Israel and its trading partners could adversely affect our operations and results of operations. Our commercial insurance does not cover losses that may occur as a result of events associated with war and terrorism. Although the Israeli government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained or that it will sufficiently cover our potential damages. Any losses or damage incurred by us could have a material adverse effect on our business. Any armed conflicts or political instability in the region would likely negatively affect business conditions and could harm our results of operations.
These Condensed Interim Consolidated financial statements were authorized for issue by the Board of Directors on November 13, 2024.
| 7 |
A2Z CUST2MATE SOLUTIONS CORP. (formerly A2Z Smart Technologies Corp.)
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Expressed in thousands of US Dollars)
NOTE 2 – BASIS OF PREPARATION
| 1. | Significant accounting policy |
Statement of Compliance
These unaudited Condensed Interim Consolidated financial statements of the Company are as of September 30, 2024, and presented in US dollars, which is not the functional currency. The functional currency is the NIS. These unaudited interim condensed consolidated 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 and should be read in conjunction with the financial statements of the Company for the year ended December 31, 2023.
The policies applied in these Condensed Interim Consolidated financial statements are based on IFRS effective as of September 30, 2024, and are consistent with those included in the Company’s annual financial statements for the year ended December 31, 2023.
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 consolidated 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.
| 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 three and nine months ended September 30, 2024, there have been no such changes. The Company’s presentation currency is the U.S. dollar.
| 8 |
A2Z CUST2MATE SOLUTIONS CORP. (formerly A2Z Smart Technologies Corp.)
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Expressed in thousands of US Dollars)
The critical judgments and significant estimates in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are the same as at December 31, 2023:
| a) | The useful life of property and equipment |
Property and equipment are amortized or depreciated over their useful lives. Useful lives are based on management’s estimates of the period that the assets will generate revenue, which are periodically reviewed for continued appropriateness. Changes to estimates can result in significant variations in the amounts charged to the consolidated statement of comprehensive income in specific periods.
| b) | Determining the fair value of share-based payment transactions |
The fair value of share-based payment transactions is determined upon initial recognition by the Binomial model. The Binomial model is based on share price and exercise price and assumptions regarding expected volatility, term of share option, dividend yield and risk-free interest rate.
| c) | Intangible assets |
Intangible assets with indefinite useful life are tested for impairment annually or more frequently if three is an indication of impairment. The carrying value of intangibles with definite lives is reviewed each reporting period to determine whether there is any indication of impairment. If there are indications of impairment the impairment analysis is completed and if the carrying amount of an asset exceeds its recoverable amount, the asset is impaired, and impairment loss is recognized.
| d) | Derivative liability – Warrants |
The Company uses the Black-Scholes option-pricing model to estimate fair value at each reporting date. The key assumptions used in the model are the expected future volatility in the price of the Company’s Common Shares and the expected life of the warrants.
| e) | ECL and their measurement |
ECL are measured as the unbiased probability-weighted present value of all cash shortfalls over the expected life of each financial asset. For receivables from financial services, ECL are mainly calculated with a statistical model using three major risk parameters: probability of default, loss given default and exposure at default. The estimation of these risk parameters incorporates all available relevant information, not only historical and current loss data, but also reasonable and supportable forward-looking information reflected by the future expectation factors. This information includes macroeconomic factors (e.g., gross domestic product growth, unemployment rate, cost performance index) and forecasts of future economic conditions. For receivables from financial services, these forecasts are performed using a scenario analysis (base case, adverse and optimistic scenarios).
As of September 30, 2024, and December 31, 2023, ECL for trade and other account receivables are not material, and as such are not disclosed, in accordance with IFRS 9.
| 3. | New Accounting Standards |
The following new standards and amendments are effective for the period beginning 1 January 2024:
| a. | Amendment to IAS 1 “Presentation of Financial Statements”: |
In January 2020, the IASB published a revision to IAS 1 on requirements to classify liabilities as current or non-current (hereinafter: “the Original Revision”). In October 2022, IASB issued a subsequent revision to the above revision (hereinafter: “the Subsequent Revision”).
The Subsequent Revision states that:
| ● | Only financial covenants an entity must comply with at the end of the reported period or prior to that impact the classification of that liability as a current liability or a non-current liability. | |
| ● | For liabilities that the examination of compliance with financial covenants is tested within 12 months consecutively to the report date, disclosure must be provided in a manner that allows users of the Financial Statements to assess the risk for that liability. This means that the Consecutive Amendment still states that disclosures must be provided for the book value of the liability, as well as additional financial information that will include the terms and conditions of the covenants and any compliance (or lack thereof) that the entity will be facing within the framework of the covenants. The Original Amendment states that a conversion right of a liability will impact the classification of the liability as a whole as a current or non-current liability, except in cases in which the conversion option is classified as equity. |
Both the Original Revision and the Subsequent Revision were applied retroactively as from annual reporting periods starting on or after January 1, 2024.
The above Amendment had no material impact on the Company’s Interim Consolidated Financial Statements.
| b. | Revision to IFRS 16 “Leases”: |
In September 2022, IASB issued a revision to IFRS 16 “Leases” (hereinafter: “the Revision”), designed to provide for accounting treatment for lease agreements that include seller-lessee lease and lease back transactions, where lease payments are variable lease payments that are not based on an index or rate. In the Revision, it is stated that any seller-lessee will have to apply the regulations that provide accounting treatment for any sale transaction of such agreements. The approach selected includes accounting policy, to wit the sale of control of the transfer of the asset.
The Revision was applied to annual reporting periods starting on January 1, 2024. The Revision is expected to have minimal impact.
The above Amendment had no material impact on the Company’s Interim Consolidated Financial Statements.
| c. | Amendments to IAS 7, “Statement of Cash Flows”, and IFRS 7, “Financial Instruments: Disclosures”: |
In May 2023, IASB issued amendments to IAS 7, “Statement of Cash Flows”, and IFRS 7, “Financial Instruments: Disclosures” (“the Amendments”) to address the presentation of liabilities and the associated cash flows arising out of supplier finance arrangements, as well as disclosures required for such arrangements.
The disclosure requirements in the Amendments enhance the current requirements and are intended to assist users of financial statements in understanding the effects of supplier finance arrangements on an entity’s liabilities, cash flows and exposure to liquidity risk.
The Amendments are effective for annual reporting periods beginning on or after January 1, 2024. Early adoption is permitted but will need to be disclosed.
The Company believes that the Amendments are not expected to have a material impact on its consolidated financial statements.
| 4. | Disclosure for new IFRS standards to be applicable in future reporting periods
IFRS 18 “Presentation and Disclosure in Financial Statements”:
In April 2024, IASB issued IFRS 18 “Presentation and Disclosure in Financial Statements” (hereinafter: “the New Standard”), superseding IAS 1 “Presentation of Financial Statements” (hereinafter: “IAS 1”).
The objective of the New Standard is to improve comparability and transparency on financial statements.
The New Standard is to include current IAS 1 stipulations, as well as new requirements for presentation on the income statement, including presentation of amounts and sub-totals required by the New Standard, providing disclosure of management-defined performance measures and new requirements for grouping and un-grouping of financial information.
The New Standard does not change the recognition and measurement provisions for items on financial statements. However, since items on the income statement would be required to be classified under one of five categories (current operations, investment operations, financing operations, taxes on income and discontinued operations), this may change the entity’s operating income. Furthermore, the publication of the New Standard resulted in limited revisions to other accounting standards, including IAS 7 “Statement of Cash Flows” and IAS 34 “Interim Financial Reporting”.
The New Standard shall be applied retroactively starting with annual reporting periods starting on or after January 1, 2027. Early implementation is possible, subject to disclosure.
The Company is reviewing the impact of the New Standard, including the impact of revisions to other accounting standards resulting from the New Standard, on its consolidated financial statements. |
| 9 |
A2Z CUST2MATE SOLUTIONS CORP. (formerly A2Z Smart Technologies Corp.)
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Expressed in thousands of US Dollars)
NOTE 3 – WARRANT LIABILITY
| a) | January 2024 Warrants
On
January 4, 2024, the Company issued an aggregate of |
Level 3 Warrant liability for the period ended on September 30, 2024:
| Balance at January 1, 2024 | $ | |||
| Issuance of January 2024 Registered Direct Offerings Warrants | ||||
| Revaluation at March 31, 2024 | ( | ) | ||
| Effect of changes in foreign exchange rates | ( | ) | ||
| Balance at March 31, 2024 | $ | |||
| Revaluation at June 30, 2024 | ( | ) | ||
| Effect of changes in foreign exchange rates | ( | ) | ||
| Balance at June 30, 2024 | $ | |||
| Revaluation at September 30, 2024 | ||||
| Effect of changes in foreign exchange rates | ||||
| Balance at September 30, 2024 | $ |
For
the three-month period ended September 30, 2024, the Company recorded a loss on the revaluation of the January 2024 warrant liability
in the amount of $
| b) | December 2023 Warrants
On
December 13, 2023, the Company issued an aggregate of |
Level 3 Warrant liability for the period ended on September 30, 2024:
| Balance at December 31, 2023 | $ | |||
| Revaluation at March 31, 2024 | ( | ) | ||
| Effect of changes in foreign exchange rates | ( | ) | ||
| Balance at March 31, 2024 | $ | |||
| Revaluation at June 30, 2024 | ( | ) | ||
| Effect of changes in foreign exchange rates | ( | ) | ||
| Balance at June 30, 2024 | $ | |||
| Revaluation at September 30, 2024 | ||||
| Effect of changes in foreign exchange rates | ||||
| Balance at September 30, 2024 | $ |
For
the three-month period ended September 30, 2024, the Company recorded a loss on the revaluation of the December 2023 warrant liability
in the amount of $
| c) | June 2023 Warrants
On
June 15 and on June 20, 2023, the Company issued an aggregate of |
| 10 |
A2Z CUST2MATE SOLUTIONS CORP. (formerly A2Z Smart Technologies Corp.)
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Expressed in thousands of US Dollars)
NOTE 3 – WARRANT LIABILITY – (CONTINUED)
Level 3 Warrant liability for the period ended on September 30, 2024:
| Balance at December 31, 2023 | $ | |||
| Revaluation at March 31, 2024 | ( | ) | ||
| Effect of changes in foreign exchange rates | ( | ) | ||
| Balance at March 31, 2024 | $ | |||
| Revaluation at June 30, 2024 | ( | ) | ||
| Effect of changes in foreign exchange rates | ( | ) | ||
| Balance at June 30, 2024 | $ | |||
| Revaluation at September 30, 2024 | ||||
| Effect of changes in foreign exchange rates | ||||
| Balance at September 30, 2024 | $ |
For
the three-month period ended September 30, 2024, the Company recorded a loss on the revaluation of the June 2023 warrant liability in
the amount of $
| d) | March 2023 Warrants
On
March 20, 2023, the Company issued an aggregate of |
Level 3 Warrant liability for the period ended on September 30, 2024:
| Balance at December 31, 2023 | $ | |||
| Revaluation at March 31, 2024 | ( | ) | ||
| Effect of changes in foreign exchange rates | ( | ) | ||
| Balance at March 31, 2024 | $ | |||
| Revaluation at June 30, 2024 | ( | ) | ||
| Effect of changes in foreign exchange rates | ( | ) | ||
| Balance at June 30, 2024 | $ | |||
| Revaluation at September 30, 2024 | ||||
| Effect of changes in foreign exchange rates | ||||
| Balance at September 30, 2024 | $ |
For
the three-month period ended September 30, 2024, the Company recorded a loss on the revaluation of the March 2023 warrant liability in
the amount of $
| 11 |
A2Z CUST2MATE SOLUTIONS CORP. (formerly A2Z Smart Technologies Corp.)
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Expressed in thousands of US Dollars)
NOTE 3 – WARRANT LIABILITY (CONTINUED)
| c) | November 2022 Warrants
On
November 2, 2022, the Company issued an aggregate of |
Level 3 Warrant liability for the period ended on September 30, 2024:
| Balance at December 31, 2023 | $ | |||
| Revaluation at March 31, 2024 | ( | ) | ||
| Effect of changes in foreign exchange rates | ( | ) | ||
| Balance at March 31, 2024 | $ | |||
| Revaluation at June 30, 2024 | ( | ) | ||
| Effect of changes in foreign exchange rates | ( | ) | ||
| Balance at June 30, 2024 | $ | |||
| Revaluation at September 30, 2024 | ||||
| Effect of changes in foreign exchange rates | ||||
| Balance at September 30, 2024 | $ |
For
the three-month period ended September 30, 2024, the Company recorded a loss on the revaluation of the November 2022 warrant liability
in the amount of $
| 12 |
A2Z CUST2MATE SOLUTIONS CORP. (formerly A2Z Smart Technologies Corp.)
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Expressed in thousands of US Dollars)
| The Company’s Authorized share capital is unlimited common shares without par value (“Shares”). |
| a) | On
September 24, 2024, the Board approved a | |
| b) | During
the nine months ended September 30, 2023, the Company issued shares in respect of | |
| c) | During the nine months ended September 30, 2023, the Company issued shares in respect of RSUs that were exercised (note 5 (c)). | |
| d) | On
March 20, 2023, the Company closed a private placement for gross proceeds of $ | |
| e) | On
June 15 and on June 20, 2023, the Company closed registered direct offerings for gross proceeds of $ | |
| f) | On
January 4, 2024, the Company closed a registered direct offering for gross proceeds of $ | |
| g) | On April 2, 2024, the Company closed a registered direct offering for gross proceeds of approximately $ at a purchase price of $ per share and issued an aggregate of common shares in the registered direct offering. The Company issued common shares as finders’ fee. | |
| h) | On August 12, 2024, the Company closed its previously announced private placement for gross proceeds of approximately $, at a purchase price of $ per common share and $ per pre-funded warrant. The Company issued a total of common shares and pre-funded warrants to purchase up to common shares, with each pre-funded warrant having an exercise price of $ per share. Each pre-funded warrant has an exercise price of $ per share and will expire when exercised in full.
Certain directors and officers of the Company purchased $ value of common shares in the private placement. In connection with the closing, the Company has issue certain non-U.S. residents common shares as finders fees. | |
| i) | During the nine months ended September 30, 2024, the Company issued Shares in respect of RSUs that were exercised (note 5 (c)). |
| 13 |
A2Z CUST2MATE SOLUTIONS CORP. (formerly A2Z Smart Technologies Corp.)
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Expressed in thousands of US Dollars)
NOTE 5 - WARRANTS AND OPTIONS
a) Warrants
| (i) | Warrant transactions for the nine months ended September 30, 2024, and for the year ended December 31, 2023 are as follows: |
| Number | Weighted Average Exercise Price | |||||||
| Balance, January 1, 2023 | $ | |||||||
| Warrants issued in the March 2023 Private Placement | ||||||||
| Exercise of warrants | ( | ) | ||||||
| Warrants issued in the June 2023 Registered Direct Offering | ||||||||
| Warrants issued in the December 2023 Registered Direct Offering | ||||||||
| Balance, December 31, 2023 | $ | |||||||
| Warrants issued in the January 2024 Registered Direct Offering | ||||||||
| Pre-Funded Warrants issued in the August 2024 Registered Direct Offering | ||||||||
| Balance, September 30, 2024 | $ | |||||||
| 14 |
A2Z CUST2MATE SOLUTIONS CORP. (formerly A2Z Smart Technologies Corp.)
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Expressed in thousands of US Dollars)
NOTE 5 - WARRANTS AND OPTIONS (CONTINUED)
a) Warrants (continued)
As at September 30, 2024, the Company had outstanding warrants, enabling the holders to acquire common shares as follows:
| September 30, 2024 | Expiry date | Exercise price | Exercise price (USD) | |||||||||||
| ILS | $ | |||||||||||||
| ILS | $ | |||||||||||||
| ILS | $ | |||||||||||||
| ILS | $ | |||||||||||||
| CAD | $ | |||||||||||||
| CAD | $ | |||||||||||||
| CAD | $ | |||||||||||||
| CAD | $ | |||||||||||||
| CAD | $ | |||||||||||||
b) Stock Options
| Number | Weighted Average Exercise Price (CAD) | Weighted Average Exercise Price (USD) | ||||||||||
| Unaudited | Unaudited | Unaudited | ||||||||||
| Balance January 1, 2023 | $ | $ | ||||||||||
| Options granted (i)(ii)(iii)(iv) | ||||||||||||
| Exercise of options | ||||||||||||
| Expiry of options | ( | ) | ||||||||||
| Balance December 31, 2023 | $ | $ | ||||||||||
| Options cancelled | ( | ) | ||||||||||
| Options granted (v) | ||||||||||||
| Balance September 30, 2024 | $ | $ | ||||||||||
| ||
| ||
| 15 |
A2Z CUST2MATE SOLUTIONS CORP. (formerly A2Z Smart Technologies Corp.)
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Expressed in thousands of US Dollars)
NOTE 5 - WARRANTS AND OPTIONS (CONTINUED)
b) Stock Options (continued)
| Outstanding as of September 30, 2024 | Exercisable as of September 30, 2024 | Expiry date | Exercise price (CAD) | Exercise price (USD) | ||||||||||||||
| 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 nine months ended September 30, 2024, share-based compensation of $ and $ was recognized and charged to the Consolidated Statement of Loss and Comprehensive Loss, respectively (September 30, 2023 – $ and $, respectively).
c) RSUs
On August 4, 2022, the Company granted RSUs to directors, officers and advisers, of which RSUs are to executives and directors, pursuant to the Company’s RSU Plan and in acknowledgment of the Company’s management recent success and increased future workload.
On January 4, 2023, the Company granted RSUs to directors, officers and advisers, of which RSUs are to executives and directors, pursuant to the Company’s RSU Plan and in acknowledgment of the Company’s management recent success and increased future workload.
On April 18, 2023, the Company granted RSUs to employees, pursuant to the Company’s RSU Plan.
On June 28, 2023, the Company granted Restricted Share Units (“RSUs”) to officers pursuant to the Company’s RSU Plan.
On August 14, 2024, the Company granted Restricted Share Units (“RSUs”) to officers and advisors, pursuant to the Company’s RSU Plan.
| Number | ||||
| Balance, January 1, 2023 | ||||
| RSUs granted | ||||
| Expiry of RSUs | ( | ) | ||
| Exercise of RSUs | ( | ) | ||
| Balance, December 31, 2023 | ||||
| RSUs cancelled | ( | ) | ||
| RSUs granted | ||||
| Exercise of RSUs | ( | ) | ||
| Balance, September 30, 2024 | ||||
Total exercisable RSUs as of September 30, 2024, are (December 31, 2023 – ). During the three and nine months ended September 30, 2024, share-based compensation of $ and $ was recognized and charged to the Consolidated Statement of Loss and Comprehensive Loss respectively (September 30, 2023 – $ and $).
| 16 |
A2Z CUST2MATE SOLUTIONS CORP. (formerly A2Z Smart Technologies Corp.)
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Expressed in thousands of US Dollars)
NOTE 6 - REVENUES:
Revenue streams:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenues from services: | ||||||||||||||||
| Revenues from services | ||||||||||||||||
| Revenues from leasing | ||||||||||||||||
| Precision metal parts: | ||||||||||||||||
| Revenues from sales of precision metal parts | ||||||||||||||||
| Smart Carts: | ||||||||||||||||
| Revenues from smart carts project | ||||||||||||||||
| Total | ||||||||||||||||
NOTE 7 – OPERATING SEGMENTS:
The
Company and its subsidiaries are engaged in the following
| a. | Services to the military/security markets as well as development of related products for the civilian and retail markets. (“Services”) | |
| b. | Retail automation solutions – Smart Carts (“Smart Carts”) | |
| c. | Manufacturing and selling of precision metal parts – “Precision Metal Parts” |
| Nine Months Ended September 30, 2024 | ||||||||||||||||
| Precision Metal Parts | Advanced Engineering | Smart Carts | Total | |||||||||||||
| Revenues | ||||||||||||||||
| External | $ | $ | $ | $ | ||||||||||||
| Inter-segment | ( | ) | ( | ) | ||||||||||||
| Total | ||||||||||||||||
| Segment loss (profit) | ( | ) | ||||||||||||||
| Gain on revaluation of warrant liability | ( | ) | ||||||||||||||
| Finance expense, net | ||||||||||||||||
| Tax expenses | ||||||||||||||||
| Loss | $ | |||||||||||||||
| 17 |
A2Z CUST2MATE SOLUTIONS CORP. (formerly A2Z Smart Technologies Corp.)
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Expressed in thousands of US Dollars)
| Nine Months Ended September 30, 2023 | ||||||||||||||||
| Precision Metal Parts | Advanced Engineering | Smart Carts | Total | |||||||||||||
| Revenues | ||||||||||||||||
| External | $ | $ | $ | $ | ||||||||||||
| Inter-segment | ( | ) | ( | ) | ||||||||||||
| Total | ||||||||||||||||
| Segment loss (gain) | ||||||||||||||||
| Loss on revaluation of warrant liability | ||||||||||||||||
| Finance expense, net | ||||||||||||||||
| Tax expenses | ||||||||||||||||
| Loss | $ | |||||||||||||||
| Three Months Ended September 30, 2024 | ||||||||||||||||
| Precision Metal Parts |
Advanced Engineering | Smart Carts |
Total | |||||||||||||
| Revenues | ||||||||||||||||
| External | $ | $ | $ | $ | ||||||||||||
| Inter-segment | ||||||||||||||||
| Total | ||||||||||||||||
| Segment loss | ( |
) | ||||||||||||||
| Loss on revaluation of warrant liability | ||||||||||||||||
| Finance expense, net | ||||||||||||||||
| Tax expenses | ||||||||||||||||
| Loss | $ | |||||||||||||||
| Three Months Ended September 30, 2023 | ||||||||||||||||
| Precision Metal Parts | Advanced Engineering | Smart Carts | Total | |||||||||||||
| Revenues | ||||||||||||||||
| External | $ | $ | $ | $ | ||||||||||||
| Inter-segment | ( | ) | ( | ) | ||||||||||||
| Total | ||||||||||||||||
| Segment loss | ||||||||||||||||
| Loss on revaluation of warrant liability | ( | ) | ||||||||||||||
| Finance income, net | ( | ) | ||||||||||||||
| Tax expenses | ||||||||||||||||
| Loss | $ | |||||||||||||||
| 18 |
A2Z CUST2MATE SOLUTIONS CORP. (formerly A2Z Smart Technologies Corp.)
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Expressed in thousands of US Dollars)
NOTE 8 - FINANCIAL RISK FACTORS:
ECL and their measurement
ECL are measured as the unbiased probability-weighted present value of all cash shortfalls over the expected life of each financial asset. For receivables from financial services, ECL are mainly calculated with a statistical model using three major risk parameters: probability of default, loss given default and exposure at default. The estimation of these risk parameters incorporates all available relevant information, not only historical and current loss data, but also reasonable and supportable forward-looking information reflected by the future expectation factors. This information includes macroeconomic factors (e.g., gross domestic product growth, unemployment rate, cost performance index) and forecasts of future economic conditions. For receivables from financial services, these forecasts are performed using a scenario analysis (base case, adverse and optimistic scenarios).
As of September 30, 2024, and December 31, 2023, ECL for trade and other account receivables are not material, and as such are not disclosed, in accordance with IFRS 9.
NOTE 9 – SUBSEQUENT EVENTS
| a) | On October 2, 2024, the Company closed its previously announced securities purchase agreement with certain accredited investors to issue, in a registered direct offering, common shares at a purchase price of US$per share, for gross proceeds of $. The Company paid $and issued warrants as finders’ fees. | |
| b) | On October 8, 2024 the Company effected a (“Reverse Share Split”) of its common shares. The common shares continue to trade on the Nasdaq Capital Market under the Company’s existing trading symbol, “AZ,” and a new CUSIP number 002205102 has been assigned as a result of the Reverse Share Split. | |
| c) | On October 15, 2024, the Company closed its previously announced securities purchase agreement with certain accredited investors to issue, in a registered direct offering, common shares at a purchase price of US$per share, for gross proceeds of $, The Company paid $and issue common shares as finders’ fees. |
| 19 |