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Equibles

6-K

A2z Cust2mate Solutions Corp. (AZ)

6-K 2022-08-15 For: 2022-08-15
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Added on April 10, 2026

UNITEDSTATES

SECURITIESAND EXCHANGE COMMISSION

Washington,D.C. 20549

FORM6-K

REPORTOF FOREIGN PRIVATE ISSUER

PURSUANTTO RULE 13a-16 OR 15d-16

OFTHE SECURITIES EXCHANGE ACT OF 1934

Forthe month to August 2022

CommissionFile Number: 001-40472

A2ZSMART TECHNOLOGIES CORP.

(Registrant)

1600-609Granville Street

Vancouver,British Columbia V7Y 1C3 Canada

(Addressof Principal Executive Offices)

Indicate by check mark whether the Registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☐ Form 40-F ☒

Indicate by check mark if the Registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the Registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

A2Z SMART TECHNOLOGIES CORP.
(Registrant)
Date<br> August 15, 2022 By /s/ Joseph Bentsur
Joseph<br> Bentsur
Chief<br> Executive Officer

EXHIBITINDEX

Exhibit Description of Exhibit
99.1 Unaudited Interim Condensed Consolidated Financial Statements for the six months period ended June 30, 2022
99.2 Management’s Discussion and Analysis for the six months period ended June 30, 2022
99.3 Certificate of Interim Filings CEO dated August 15, 2022
99.4 Certificate of Interim Filings CFO dated August 15, 2022

Exhibit 99.1

A2ZSmart Technologies Corp.

CONDENSEDINTERIM CONSOLIDATED

FINANCIALSTATEMENTS

FORTHE SIX MONTHS ENDED

JUNE30, 2022

(Unaudited)

(Expressedin US Dollars)

A2ZSMART TECHNOLOGIES CORP.

A2ZSMART TECHNOLOGIES CORP.

CONDENSEDINTERIM CONSOLIDATED FINANCIAL STATEMENTS

FORTHE THREE MONTHS ENDED JUNE 30, 2022

(Unaudited)

(Expressedin US Dollars)

INDEX

Page
Condensed Interim Consolidated Statements of Financial Position 3
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss 4
Condensed Interim Consolidated Statements of Changes in Equity (Deficit) 5-6
Condensed Interim Consolidated Statements of Cash Flows 7
Notes to the Condensed Interim Consolidated Financial Statements 9 - 17 
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A2ZSMART TECHNOLOGIES CORP.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Unaudited)

(Expressed in Thousands of US Dollars)

June 30, 2022 December 31, 2021
ASSETS
Current assets
Cash and cash equivalents 1,662 8,470
Restricted cash 79 60
Inventories 1,233 1,147
Trade receivables 2,209 857
Other accounts receivable 2,654 434
Total current assets 7,837 10,968
Intangible asset - patent, net 2,034 2,091
Goodwill (note 3) 1,538 -
Property, plant and equipment, net 1,264 1,072
Total non-current assets 4,836 3,163
Total Assets 12,673 14,131
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short term loan and current portion of long-term loans 135 158
Lease liability 104 126
Trade payables 1,450 989
Deferred revenues 1,236 -
Other accounts payable 1,457 1,099
Total current liabilities 4,382 2,372
Lease liability 95 151
Long term loans 654 483
Warrant Liability (note 4) - 51
Severance payment, net 181 167
Total non-current liabilities 930 852
Total liabilities 5,312 3,224
Shareholders’ equity (note 5)
Share capital and additional paid in capital 34,640 28,297
Warrant Reserve 31,968 34,763
Accumulated other comprehensive income (1,705 ) (708 )
Accumulated deficit (56,140 ) (50,838 )
8,763 11,514
Non-controlling interest (1,402 ) (607 )
Total shareholders’ equity 7,361 10,907
Total liabilities and shareholders’ equity 12,673 14,131
August<br> 15, 2022 “Yonathan<br> De Yonge” “Joseph<br> Bentsur”
--- --- ---
Date<br> of approval of the financial statements Yonathan<br> De Yonge - Director Joseph<br> Bentsur<br><br> <br>President<br> and<br><br> <br>Chief<br> Executive Officer

Theaccompanying notes are an integral part of these Condensed Interim Consolidated financial statements.

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A2ZSMART 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 June 30, Six Months Ended June 30,
2022 2021 2022 2021
Revenues (note 7) 1,430 1,404 2,876 1,920
Cost of revenues 1,219 503 2,389 744
Gross profit 211 901 487 1,176
Expenses:
Research and development costs 1,106 153 2,171 417
Sales and marketing costs 199 133 282 276
General and administration expenses 2,276 1,690 4,122 3,067
Operating loss (3,370 ) (1,075 ) (6,088 ) (2,584 )
Loss on revaluation of warrant liability (note 4) - 3,451 - 31,554
Loss on property, plant and equipment - - 16 -
Financial (income) expense (5 ) (16 ) (7 ) 11
Loss before taxes on income (3,365 ) (4,510 ) (6,097 ) (34,149 )
Income tax expense - - -
Net loss for the period (3,365 ) (4,510 ) (6,097 ) (34,149 )
Less: Net loss attributable to non-controlling interests (416 ) 8 (795 ) (37 )
Net loss attributable to controlling shareholders (2,949 ) (4,518 ) (5,302 ) (34,112 )
(3,365 ) (4,510 ) (6,097 ) (34,149 )
Other comprehensive income (loss)
Item that will not be reclassified to profit or loss:
Adjustments arising from translating financial statements of foreign<br> operations (425 ) 660 (997 ) 530
Other comprehensive income (loss) (425 ) 660 (997 ) 530
Total comprehensive loss for the period (3,790 ) (3,850 ) (7,094 ) (33,619 )
Less: Comprehensive loss attributable to non-controlling interests (410 ) 8 (795 ) (37 )
Comprehensive loss attributable to controlling shareholders 2,955 (4,518 ) (6,298 ) (34,112 )
Basic and diluted loss per share (0.11 ) (0.20 ) (0.23 ) (1.51 )
Weighted average number of shares outstanding 27,261,525 22,884,403 27,049,715 22,557,588

Theaccompanying notes are an integral part of these Condensed Interim Consolidated financial statements.

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A2ZSMART TECHNOLOGIES CORP.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

(Expressed in Thousands of US Dollars)

Ordinary share capital Accumulated **** **** **** ****
**** Number of shares Additional paid in capital Warrant reserve Other Comprehensive Income **** Accumulated deficit **** Non-controlling<br><br> <br>interest **** Total Equity (Deficit) ****
Balance - January 1, 2021 (*) 22,219,910 $ 10,445 $ - $ (1,339 ) $ (11,599 ) $ 520 **** $ (1,973 )
Net<br> loss for the period **** - - - - (34,112 ) (37 ) **** (34,149 )
Adjustments<br> arising from translating financial statements of foreign operations **** - - - 530 - - 530
Net<br> comprehensive loss for the period **** - - - 530 (34,112 ) (37 ) (33,619 )
Reclassification<br> of warrant liability - 142 44,037 - - - 35,204
Issue<br> of shares in private placement, net 1,305,662 3,572 - - - - 3,572
Exercise<br> of warrants 95,000 196 - - - - 196
Exercise<br> of stock options 101,190 76 - - - - 76
Share<br> based compensation - 397 - - - - 397
Balance - June 30, 2021 (*) 23,721,762 $ 14,828 $ 44,037 $ (809 ) $ (45,711 ) $ 483 **** $ 12,828 ****

(*) On August 13, 2021, the Board and the TSX-V approved a 1-for-3 reverse stock split, (the “Reverse Split”). Consequently, all share numbers, share prices, and exercise prices have been retroactively adjusted in these consolidated financial statements for all periods presented.

Theaccompanying notes are an integral part of these Condensed Interim Consolidated financial statements.

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A2ZSMART TECHNOLOGIES CORP.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

(Expressed in Thousands of US Dollars)

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, 2022 26,326,488 $ 28,297 $ 34,763 $ (708 ) $ (50,838 ) $ (607 ) $ 10,907
Net loss for the period - - - - (5,302 ) (795 ) (6,097 )
Adjustments arising from translating financial statements of foreign operations - - - (997 ) - (12 ) (997 )
Net comprehensive loss for the period - - - (997 ) (5,302 ) (795 ) (7,094 )
Issuance of shares in respect of crowd funding 74,895 - - - - - -
Exercise of warrants 584,207 4,072 (2,795 ) - - - 1,277
Issuance of shares in respect of Isramat deal (note 3) 273,774 2,089 - - - - 2,089
Exercise of options 16,667 20 - - - - 20
Expiration of warrants - 51 - - - - 51
Share based compensation - 111 - - - - 111
Balance - June 30, 2022 27,276,031 34,640 $ 31,968 (1,705 ) (56,140 ) (1,402 ) 7,361

Theaccompanying notes are an integral part of these Condensed Interim Consolidated financial statements.

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A2ZSMART TECHNOLOGIES CORP.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Expressed in Thousands of US Dollars)

Six months ended
June 30
2022 2021
Cash flows from operating activities
Net loss for the period (6,097 ) (34,149 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization and depreciation 303 97
Share based compensation 111 397
Loss on revaluation of warrant liability - 31,554
Change in severance liability (21 ) (17 )
Change in inventory (64 ) (453 )
Change in trade receivables 367 (1,259 )
Change in other account receivables (2,211 ) (231 )
Accrued interest on loans and leases 1 -
Loss from sale of property, plant and equipment 16 -
Change in accounts payable (151 ) (172 )
Changes in deferred revenues 1,236 -
Change in other accounts payable 45 22
(6,465 ) (4,211 )
Cash flows from investing activities
Restricted deposits (14 ) 3
Newly consolidated subsidiary (see Appendix B) (879 ) -
Purchase of property, plant and equipment (209 ) (215 )
(1,102 ) (212 )
Cash flows from financing activities
Issuance of shares and warrants, net - 8,358
Exercise of options 20 76
Exercise of warrants 1,277 196
Lease payments (47 ) (54 )
Repayment of loans (282 ) (245 )
Proceeds from receipt of loans 429 110
1,398 8,441
Decrease in cash and cash equivalents (6,169 ) 4,018
Effect of changes in foreign exchange rates (639 ) (60 )
Cash at beginning of period 8,470 5,397
Cash at end of period 1,662 9,355
Interest paid during the period 6 26
APPENDIX A: NON-CASH ACTIVITIES
Issuance of shares in respect of Isramat deal (note 3) 2,089 - 
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A2ZSMART TECHNOLOGIES CORP.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Expressed in Thousands of US Dollars)

APPENDIXB: INVESTMENT IN NEWLY CONSOLIDATED SUBSIDIARIES

Three months ended
June 30
2022 2021
Issuance of the Company’s ordinary shares 2,089 -
Working capital other than cash and cash equivalents (878 ) -
Liability for severance pay fund, net 35 -
Provision for vacation leave 49 -
Property, plant and equipment (636 ) -
Goodwill (1,538 ) -
Total cash and cash equivalents paid (*) (879 ) -

(*) See note 3.

Estimated useful lives
(years)
Machines and manufacturing equipment 10
Leasehold Improvement 10
Furniture and equipment 3-16

Theaccompanying notes are an integral part of these Condensed Interim Consolidated financial statements.

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A2ZSMART TECHNOLOGIES CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Expressed in thousands of US Dollars)

NOTE1 – NATURE AND CONTINUANCE OF OPERATIONS

A2Z SMART TECHNOLOGIES CORP. (the “Company” or “A2ZST”) 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” and on the TSX Venture Exchange (“TSX Venture”) and trades under the symbol “AZ.V”.

The Company owns 79.49% of the common shares of Cust2Mate Ltd (“Cust2Mate”), a technology company focused on providing retail automation solutions, in particular for large grocery stores and supermarkets. The Company’s primary product is the Cust2Mate system which incorporates a “smart cart” which automatically calculates the value of the customers purchases in their smart cart, without having to unload and reload their purchases at a customer checkout point.

The Cust2Mate system offers unique 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 Cust2Mate Platform is being rolled out in Israel and is being marketed throughout the world, with pilots in North and South America and in the Middle East.

The Company’s other activities include the provision of services in the field of advanced engineering capabilities 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 80% owned subsidiary, Advanced Automotive Innovations Inc., (“AAI”) continues the development of a product for the automotive market - the FTICS or Fuel Tank Inertia Capsule System which activates automatically in the event of a vehicle collision. This eliminates the danger of fuel tank combustion thereby saving lives and reducing damage.

These Condensed Interim Consolidated financial statements were authorized for issue by the Board of Directors on August 15, 2022.

COVID-19

Since January 2020, the Coronavirus outbreak has dramatically expanded into a worldwide pandemic creating macro-economic uncertainty and disruption in the business and financial markets. Many countries around the world, including Israel, have been taking measures designated to limit the continued spread of the Coronavirus, including the closure of workplaces, restricting travel, prohibiting assembling, closing international borders and quarantining populated areas. Such measures present concerns that may dramatically affect the Company’s ability to conduct its business effectively, including, but not limited to, adverse effects relating to employees’ welfare, slowdown and stoppage of manufacturing, commerce, shipping, delivery, work, travel and other activities which are essential and critical for maintaining on-going business activities.

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A2ZSMART TECHNOLOGIES CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Expressed in thousands of US Dollars)

NOTE1 – NATURE AND CONTINUANCE OF OPERATIONS (CONTINUED)

COVID-19(CONTINUED)

The nature of the Company’s work in Israel is such that it is defined as an essential service for the industry, and therefore, it is able to continue all of its operations in Israel with little disruption. The Company has experienced an impact on all of its business activities, including delays in the roll out and completion of certain pilot programs and the slowed pace in research and development projects. Given the uncertainty around the extent and timing of the future spread or mitigation of COVID-19 and around the imposition or relaxation of protective measures, the Company cannot reasonably estimate the impact to its future results of operations, cash flows or financial condition; infections may become more widespread and the limitation on the ability to work, travel and timely sell and distribute products, as well as any closures or supply disruptions, may be extended for longer periods of time and to other locations, all of which would have a negative impact on the Company’s business, financial condition and operating results. In addition, the unknown scale and duration of these developments have macro and micro negative effects on the financial markets and global economy which could result in an economic downturn that could affect demand for the Company’s products and have a material adverse effect on its operations and financial results, earnings, cash flow and financial condition.

NOTE2 – BASIS OF PREPARATION

Statementof Compliance

These unaudited Condensed Interim Consolidated financial statements of the Company are as of June 30, 2022, and presented in US dollars, which is the presentation currency of the Company. These unaudited interim condensed consolidated financial statements have been prepared in accordance with the requirements of International Accounting Standard IAS 34 “Interim Financial Reporting”. 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, 2021.

The policies applied in these Condensed Interim Consolidated financial statements are based on IFRS effective as of June 30, 2022, and are consistent with those included in the Company’s annual financial statements for the year ended December 31, 2021.

Estimatesand assumptions

The preparation of these condensed interim financial statements requires management to make estimates and assumptions that have an effect on the application of the accounting policies and on the reported amounts of assets, liabilities, revenues and expenses. These estimates and underlying assumptions are reviewed regularly. Changes in accounting estimates are reported in the period of the change in estimate.

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A2ZSMART TECHNOLOGIES CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Expressed in thousands of US Dollars)

NOTE3- ACQUISITION

On February 3, 2022, the Company announced it has completed the acquisition of all of the outstanding shares of Isramat Ltd (“Isramat”), an Israeli manufacturer of precision metal parts. In connection with closing of the acquisition, the Company paid NIS 2,800,000 (approximately $879) in cash and issued the shareholders of Isramat 273,774 common shares in the capital of the Company at a price per share of $7.6311.

The purchase consideration is being allocated between the acquired tangible assets and intangible assets, based on their fair values.

Management is fully responsible for the valuation of the assets. An initial valuation has been completed and a final assessment will be made within one year. The fair value assigned to identifiable intangible assets acquired has been determined by using valuation methods that accounts for replacement costs, using estimates and assumptions determined by management.

Based on the above, the Company has initially determined that the purchase price exceeds the fair values of identifiable net assets acquired by approximately $1,538, which is recognized as goodwill.

The table below summarizes the preliminary fair value of assets acquired at the purchase date:

February 3, 2022
Working capital other than cash and cash equivalents 878
Liability for severance pay fund, net (35 )
Provision for vacation leave (49 )
Property, plant and equipment 636
Goodwill (*) 1,538
Total consideration paid (**) 2,968
Consideration paid in cash 879
Consideration paid in common shares in the capital of the Company 2,089
Total consideration paid (**) 2,968

(*) Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired. The goodwill is attributed to the expected benefits arising from the synergies of the combination of the activities of the Company and acquired company, and to the value of assembled workforce.

(**) Consideration paid in cash for the purchase of Isramat shares was $879, and the balance of the consideration was settled by the issuance of 273,774 common shares in the capital of the Company at a value of $2,089.

The contribution of Isramat’s results to the Company’s consolidated revenues and net loss during the six months ended June 30, 2022 were $1,872 and $204 respectively.

The pro forma financial information presented below is for information purposes only, is subject to a number of estimates, assumptions and other uncertainties, and is not indicative of the results of operations that would have been achieved had the transaction taken place at January 1, 2022. The pro forma financial information is as follows:

For the six<br><br> <br>months ended<br><br> <br>June 30, 2022
(in thousands)
Pro forma
Unaudited
Total revenues 3,250
Net loss attributable to the Company 6,277

Revenues generated in Isranat are recognized from sale of goods in profit or loss at the point in time when the control of the goods is transferred to the customer, generally upon delivery of the goods to the customer.

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A2ZSMART TECHNOLOGIES CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Expressed in thousands of US Dollars)

NOTE4 – WARRANT LIABILITY

Certain warrants issued in 2020 were issued with an exercise price denominated in Canadian Dollars (CAD) rather than the functional currency of the Company, which is New Israeli Shekels (NIS). These warrants were recorded at their fair value at the end of each reporting period and classified as a derivative liability.

During 2021 certain warrant holders agreed to change the exercise price from CAD to NIS and therefore the Company reclassified the balance of the warrant liability in respect of these warrants as equity.

As of June 30, 2022, 61,077 of these warrants were exercised, and the remaining 5,437 warrants have expired during the period and therefore the liability is nil.

NOTE5 - SHAREHOLDERS EQUITY

a) During<br> the six months ended June 30, 2022, the Company issued 584,207 shares in respect of 584,207 warrants that were exercised (note 6<br> (a)).
b) During<br> the six months ended June 30, 2022, the Company issued 16,667 shares in respect of 16,667 options that were exercised (note 6 (b)).
c) On<br> February 3, 2022, the Company issued the shareholders of Isramat 273,774 shares in respect of the acquisition of Isramat (see Note<br> 3).
d) On<br> February 11, 2022, the Company issued 74,985 shares to a trustee in respect of a crowd funding transaction that was completed in<br> 2019, for which shares were not immediately issued until the completion of an Israeli tax ruling which was only finalized in late<br> 2021. 
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A2ZSMART TECHNOLOGIES CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Expressed in thousands of US Dollars)

NOTE6 - WARRANTS AND OPTIONS

a)Warrants

(i) Warrant<br> transactions for the six months ended June 30, 2022 and for the year ended December 31, 2021 are as follows:
Number Weighted Average <br>Exercise Price
--- --- --- --- --- ---
Balance, January 1, 2021 7,289,885 ILS 6.1280
Warrants issued in the April 2021 Private Placement 221,100 ILS 29.025
Warrants issued in the May 2021 Private Placement 1,084,562 ILS 29.025
Exercise of warrants (2,629,343 ) ILS 5.0543
Balance, December 31, 2021 5,966,204 ILS 11.0318
Expiration of warrants (5,437 ) ILS 5.124
Exercise of warrants (584,207 ) ILS 7.1418
Balance, June 30, 2022 5,376,560 ILS 11.8785 
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A2ZSMART TECHNOLOGIES CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Expressed in thousands of US Dollars)

NOTE6 - WARRANTS AND OPTIONS (CONTINUED)

a)Warrants (continued)

As at June 30, 2022, the Company had outstanding warrants, enabling the holders to acquire common shares as follows:

June 30, 2022 Expiry date Exercise price Exercise price ()
2,704,267 November 10, 2025 ILS 7.1418 ^(1)^
1,366,631 December 24, 2025 ILS 7.1418 ^(1)^
221,100 April 18, 2023 ILS 29.025 ^(2)^
1,084,562 May 28, 2023 ILS 29.025 ^(2)^
5,376,560

All values are in US Dollars.

1. On<br> March 31, 2021, warrant holders and the Company, agreed that the exercise price of CAD$2.70 would be payable in New Israeli Shekels.<br> The exercise price is NIS 7.1418 per warrant (see also Note 4).
2. On<br> June 30, 2021, warrant holders and the Company, agreed that the exercise price of CAD$11.04 would be payable in New Israeli Shekels.<br> The exercise price is NIS 29.025 per warrant (see also Note 4).

b)Stock Options

Stock option transactions for the three months ended June 30, 2022 and for the year ending December 31, 2021 are as follows:

Number Weighted Average Exercise Price (CAD) Weighted Average Exercise Price ()
Balance January 1, 2021 889,523 $ 1.62
Options granted 333,377 3.00
Exercise of options (286,223 ) 2.25
Expiry of options (116,667 ) 3.00
Balance December 31, 2021 820,010 $ 2.10
Exercise of options (16,667 ) 1.5
Expiry of options (20,000 ) 1.5
Balance June 30, 2022 783,343 $ 2.64

All values are in US Dollars.

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A2ZSMART TECHNOLOGIES CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Expressed in thousands of US Dollars)

NOTE6 - WARRANTS AND OPTIONS (CONTINUED)

b)Stock Options (continued)

As at June 30, 2022, the Company had outstanding stock options, enabling the holders to acquire common shares as follows:

Outstanding<br><br> <br>as of<br><br> <br>June 30, 2022 Exercisable<br><br> <br>as of<br><br> <br>June 30, 2022 Expiry date Exercise price<br><br> <br>(CAD) Exercise<br> price ()
100,000 100,000 January 23, 2023 CAD 2.40
543,333 437,500 August 20, 2025 CAD 1.50
40,000 40,000 September 1, 2025 CAD 2.25
33,333 33,333 January 28, 2025 CAD 3.00
50,000 33,333 June 3, 2026 CAD 8.40
16,677 5,559 October 28, 2026 CAD 8.00
783,344 649,726

All values are in US Dollars.

Share-based compensation expense is recognized over the vesting period of options. During the six months ended June 30, 2022, share-based compensation of $111 was recognized and charged to the Consolidated Statement of Comprehensive Loss (June 30, 2021 – $397).

NOTE7 - REVENUES:

Revenuestreams Thousands of US Dollars:

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Revenues from services:
Revenues from services 263 457 558 819
Revenues from leasing 75 131 159 234
Revenues from maintenance services 38 66 80 117
Precision metal parts:
Revenues from sales of precision metal parts 1,054 - 1,872 -
Smart Carts:
Revenues from smart carts project - 750 207 750
1,430 1,404 2,876 1,920

NOTE8 – COMMITMENTS

a) The<br> Company’s Israeli subsidiary’s fixed assets (motor vehicles) are secured against bank borrowings.
b) The<br> Company has facility leases as follows:
1. a<br> lease which expires on March 1, 2024. Lease payments are approximately $11 per month ($132 annually).
--- ---
2. a<br> lease which expires on June 30, 2024. Lease payments are approximately $3.5 per month ($45 annually). 
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A2ZSMART TECHNOLOGIES CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Expressed in thousands of US Dollars)

NOTE9 – COST OF REVENUES:

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Payroll and related expenses 607 184 1,116 269
Subcontractor and outsourced work 37 72 53 105
Materials and components consumed 479 132 1,050 215
Car maintenance 62 46 98 78
Other 34 69 72 77
1,219 503 2,389 744

NOTE10 - RESEARCH AND DEVELOPMENT EXPENSES:

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Payroll and related expenses 237 137 503 375
Subcontractor and outsourced work 607 - 1,406 -
Other 262 16 262 42
1,106 153 2,171 417

NOTE11 – GENERAL AND ADMINISTRATIVE EXPENSES:

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Payroll and related 1,415 326 815 280
Professional fees 1,290 1,783 596 877
Share-based compensation 111 397 51 210
Depreciation and amortization 163 56 64 27
Office maintenance 175 48 68 -
Investor relations 59 - 40 -
Travel 127 - 75 -
Public company related expenses 111 55 47 25
Other 671 402 520 271
4,122 3,067 2,276 1,690 
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A2ZSMART TECHNOLOGIES CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Expressed in thousands of US Dollars)

NOTE12 – OPERATING SEGMENTS:

The Company and its subsidiaries are engaged in the following two segments:

a. Advanced<br> engineering capabilities to the military/security markets as well as development of related products for the civilian and retail<br> markets. (“Advanced Engineering”)
b. Retail<br> automation solutions – Smart Carts (“Smart Carts”)
Six Months Ended June 30, 2022
--- --- --- --- --- --- --- --- --- ---
Precision Metal Parts Advanced Engineering Smart Carts Total
Revenues
External $ 1,872 $ 797 $ 207 $ 2,876
Inter-segment - - - -
Total 1,872 797 207 2,876
Segment loss 199 492 5,397 6,088
Loss on sale of fixed asset 16
Finance expense, net (7 )
Tax expenses -
Loss $ 6,097
Six Months Ended June 30, 2021
--- --- --- --- --- --- --- --- ---
Precision Metal Parts Advanced Engineering Smart Carts Total
Revenues
External $ - $ 1,170 $ 750 $ 1,920
Inter-segment - - - -
Total - 1,170 750 $ 1,920
Segment loss - 2,415 169 2,584
Loss on revaluation of warrant liability $ 31,554
Finance expense, net 11
Tax expenses -
Loss $ 34,149
Three Months Ended June 30, 2022
--- --- --- --- --- --- --- --- --- ---
Precision Metal Parts Advanced Engineering Smart Carts Total
Revenues
External $ 1,054 $ 376 $ - $ 1,430
Inter-segment - - - -
Total 1,054 376 - 1,430
Segment loss 137 210 3,023 3,370
Loss on sale of fixed asset -
Finance expense, net (5 )
Tax expenses -
Loss $ 3,365
Three Months Ended June 30, 2021
--- --- --- --- --- --- --- --- --- --- ---
Precision Metal Parts Advanced Engineering Smart Carts Total
Revenues
External $ - $ 654 $ 750 $ 1,404
Inter-segment - - - -
Total - 654 750 $ 1,404
Segment loss (profit) - 1,129 (54 ) 1,075
Loss on revaluation of warrant liability $ 3,451
Finance expense (income), net (363 )
Tax expenses -
Loss $ 4,163 
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A2ZSMART TECHNOLOGIES CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Expressed in thousands of US Dollars)

NOTE12 - OPERATING SEGMENTS (CONTINUED)

As at June 30, 2022
Precision Metal Parts Advanced Engineering Smart Carts Adjustment & Elimination Total
Segment assets $ 3,947 $ 4,691 $ 4,035 $ - $ 12,673
Segment liabilities $ 1,787 $ 1,107 $ 2,418 $ - $ 5,312
As at June 30, 2021
--- --- --- --- --- --- --- --- --- --- ---
Precision<br> Metal Parts Advanced<br> Engineering Smart<br> Carts Adjustment &<br><br> <br>Elimination Total
Segment<br> assets $ - $ 14,704 $ 509 $ - $ 15,213
Segment<br> liabilities $ - $ 1,533 $ 852 $ - $ 2,385

NOTE13 - FINANCIAL RISK FACTORS:

A. Credit Risk

Credit risk from balances with banks and financial institutions is managed by the Company’s management. Investments of surplus funds are made only with approval of management. The Company’s maximum exposure to credit risk for the components of the statement of financial position as of April 30, 2022, and July 31, 2021, is the carrying amounts of cash and cash equivalents included in the Company’s consolidated statement of financial positions.

B. Liquidly Risk

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 $ 1,450 $ 1,450 $ -
Deferred revenues $ 1,236 $ 1,236 $ -
Other accounts payable $ 1,457 $ 1,107 $ 350
Loans $ 789 $ 135 $ 654
Lease liability $ 199 $ 104 $ 95
Total $ 5,131 $ 4,032 $ 1,099

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.

As of June 30, 2022, 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 year would decrease /increase by approximately $144.

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A2ZSMART TECHNOLOGIES CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Expressed in thousands of US Dollars)

DInterest rate and inflation risks:

The Company is exposed to cash flow interest rate risk from long-term borrowings at variable rate. It is currently Company policy that between 50% and 75% of Company borrowings are fixed rate borrowings. This policy is managed centrally. Although the board accepts that this policy neither protects the Company entirely from the risk of paying rates in excess of current market rates nor eliminates fully cash flow risk associated with variability in interest payments, it considers that it achieves an appropriate balance of exposure to these risks.

During 2022, the Company’s borrowings at variable rate were denominated in NIS.

The Company analyses the interest rate exposure on a quarterly basis. A sensitivity analysis is performed by applying a simulation technique to the liabilities that represent major interest-bearing positions. Various scenarios are run taking into consideration refinancing, renewal of the existing positions, alternative financing and hedging. Based on the simulations performed, the impact on profit and loss and net assets of a 100 basis point shift (being the maximum reasonable expectation of changes in interest rates) would be approximately 14.

The Company is exposed to inflation risk. Management of the Company does not believe that the current levels of inflation will have a material effect on the business activities of the Company.

E.Capital management

The Company considers its capital to be comprised of shareholders’ equity. The Company’s objectives in managing its capital are to maintain its ability to continue as a going concern and to further develop its business. To effectively manage the Company’s capital requirements, the Company has a planning and budgeting process in place to meet its strategic goals. In order to facilitate the management of its capital requirements, the Company prepares expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions. Management reviews the capital structure on a regular basis to ensure the above objectives are met. There have been no changes to the Company’s approach to capital management during the year ended December 31, 2021. There are no externally imposed restrictions on the Company’s capital.

NOTE14 – SUBSEQUENT EVENTS

a) During<br> July 2022, 100,000 share options with an exercise price of CAD 2.4 were exercised for gross proceeds of $188.
b) On<br> August 4, 2022, the Company granted 1,265,000 Restricted Share Units (“RSUs”) to directors, officers and advisers, of<br> which 590,000 RSU’s are to executives and directors, pursuant to the Company’s RSU Plan and in acknowledgment of the<br> Company’s management recent success and increased future workload. The RSUs will vest at each recipient’s discretion<br> and taking into account personal tax implications and convert into 1,265,000 common shares of no par value in the Company (“Common<br> Shares”).<br><br> <br><br><br> <br>In<br> addition, the Company granted a director of the Company, options to subscribe for up to 900,000 Common Shares at a price of CAD$3.56<br> per Common Share (the “Options”). 225,000 Options vest immediately, and the remainder in six equal installments every<br> 6 months with the first installment on February 2, 2023. The options are exercisable for a period of 10 years from the date of issue.
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Exhibit 99.2

A2ZSmart Technologies Corp.

MANAGEMENT’SDISCUSSION AND ANALYSIS

Forthe Six Months Ended June 30, 2022

(Expressed in U.S. Dollars)

August 15, 2022

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The following Amended Management’s Discussion and Analysis (“MD&A”) for A2Z Smart Technologies Corp (“A2Z” or the “Company”) is prepared as of August 15, 2022 and relates to the financial condition and results of operations of the Company for the six months ended June 30, 2022. Past performance may not be indicative of future performance. This MD&A should be read in conjunction with the Company’s audited consolidated annual financial statements for the year ended December 31, 2021, and with the Company’s condensed consolidated interim financial statements for the six months ended June 30, 2022, which have been prepared using accounting policies consistent with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”).

All amounts are presented in United States dollars (“USD” or “$”), the Company’s presentation currency, unless otherwise stated.

Statements are subject to the risks and uncertainties identified in the “Risks and Uncertainties”, and “Cautionary Note Regarding Forward-Looking Statements” sections of this document. Readers are cautioned not to put undue reliance on forward-looking statements.

COMPANYOVERVIEW AND DESCRIPTION OF THE BUSINESS

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 records and registered office is located at 2200 HSBC Building 885 West Georgia Street, British Columbia, V6C 3E8.

The Company’s common shares (the “Common Shares”) are listed for trading on the TSX Venture Exchange (the “TSXV”) under the trading symbol “AZ”, in the United States on Nasdaq Stock Market LLC (“Nasdaq”) under the trading symbol “AZ” and on the Frankfurt Stock Exchange under the trading symbol “A230”.

The Company is an innovative technology company specializing in the application of the Company’s existing military and civilisation technology for supermarket “smart carts” (the “Cust2Mate Carts”). The Company has four main business lines: (i) the development and commercialization of retail automation solutions, in particular for large grocery stores and supermarkets, including the Cust2Mate Carts (the “Cust2Mate Products”); (ii) manufacturing of precision metal parts (following the acquisition of a new subsidiary, as outlined in further detail below); (iii) the provision of maintenance services utilizing the application of advanced engineering capabilities and the production of unmanned remote-controlled vehicles and energy power packs for the Israeli military (the “Military and Civilian Products”); and (iv) the development of the Company’s Fuel Tank Inertia Capsule System (“FTICS”) technology and a vehicle device cover for the military and civilian automotive industry (collectively, the “Automotive Products”).

Historically, the Company’s revenues were principally generated from the maintenance services that are provided to the Israeli military/security market. The Company’s products, which have historically been sold to the Israeli military/security markets, include unmanned remote-controlled vehicles of various sizes and capabilities designed for intricate bomb disposal, counter terrorism, and firefighting, as well as energy storage power packs, all of which are fully commercialized for military use. It was on this basis that the Company filed its filing statement dated November 28, 2019 (the “Filing Statement”).

During 2020, in line with stated objectives disclosed in the Filing Statement, the Company began to rapidly adapt its existing technology and know-how for the civilian markets, including the development of its Cust2Mate Products. This was in addition to the continuation of the Company’s existing sales to the Israeli military/security markets. The expansion into the civilian markets led to significantly increased expenditures which the Company was able to finance through a series of equity raises in 2020 and 2021. The Company has not, and does not intend to, export any military or defense related technology and accordingly, no approvals are required.

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In 2022, the Company continues to focus its attention on its Cust2Mate Products division and aims to become the leading mobile checkout system in the international market, providing the optimum solution which simultaneously meets the needs of both shoppers and supermarket retailers. Due to this shift in the Company’s business focus, adaption of certain of its military-grade products and know-how to the civilian market, and the development of the Company’s Automotive Products, will be completed at a slower place than was anticipated at the time of the Filing Statement.

The Company will continue to sell its Military and Civilian Products in Israel only. However, the focus has shifted towards the civilian applications as previously disclosed. The military division of the Company is self sustaining financially. It provides a steady base for the Company’s operations and the Company intends to maintain this operation.

However, to the extent that future research, development and marketing expenditures are concerned, the Company currently intends on investing the majority of its resources in the smart cart industry. The Company currently believes its current technological and operational capabilities are most effectively focused on growing the Company’s position in the smart cart industry.

During the first quarter of 2022, the Company completed the acquisition of 100% of the shares of Isramat, a privately held Israeli company. This acquisition vertically integrates certain manufacturing capabilities for the production of the Cust2Mate Products, such as precision metal fabrication of parts, while complementing existing contract manufacturing partnerships with Flex and Acromatis to support the Company’s growth.

Cust2Mate aims to generate orders of several thousand of the Cust2Mate Carts in 2022, with a target of tens of thousands in 2023^1^. The penetration strategy is to run several pilots of 10-15 Cust2Mate Carts used by shoppers in selected customer stores for a period of 30-60 days, full integrated with the store’s software. The pilots will be full subsidized for strategic retailers and paid for by other customers.

Cust2Mate is currently running six pilots, with one store per pilot. To the extent that all these pilots are successful, this would translate to initial purchase orders of approximately 5,000 Cust2Mate Carts^2^. As of the date of this Prospectus, Cust2Mate has completed one pilot project with Yochananof, which following completion, became a US$10 million purchase order.

Pilot Project Phases

As part of our strategy for proof of concept implementation, the Company’s wholly-owned subsidiary, Cust2Mate Ltd. (“Cust2Mate”) will follow a multi-phase pilot project evaluation process:

1. Discovery:<br> Conduct a GAP analysis workshop to review, discuss, and analyze customer business and requirements, which is key for the pilots<br> success. Resources allocated by Cust2Mate for this phase include a project manager, product manager, and technology expert. The estimated<br> time to complete the discovery stage is approximately 2 weeks.

^1^This forward-looking statement is based on the following material factors and assumptions: (i) historic sales of 1,000 Cust2Mate Carts to Yochananof which can be extrapolated into projected sales for the remainder of fiscal 2022 and the entirety of fiscal 2023; (ii) the Company will convert 50% of its pilot programs into roll-outs based on past performance; and (iii) market conditions remain the same.

^2^See footnote 1.

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| --- | | 2. | Integration:<br> Together with customer, conduct remote integration into the retailer’s store systems. The estimated time to complete the<br> integration stage is approximately 10 weeks. | | --- | --- | | 3. | Initial<br> evaluation: The customer, with the full support of Cust2Mate, will conduct an initial evaluation test in the customer’s<br> labs. The evaluation test will be planned and scheduled based on the customer’s processes. This is the final testing phase<br> before the pilot. The estimated time to complete the initial evaluation stage is approximately 2 weeks. | | 4. | Pilot: The<br> customer, with the full support of Cust2Mate, will implement the solution in a single pilot store, for a period of ~30<br> days and will include ~12 Cust2Mate Carts. The estimated time to complete the pilot stage is approximately 1-2 months. | | 5. | Roll<br> Out: Following the successful completion of the pilot, rollout for the entire chain will replace at least 30% and up to 80% of<br> the current cart fleet. | | --- | --- |

The following table details the status of each of the Company’s current pilot programs:

Supermarket name Numbers of Cust2Mate Carts in pilot Length of pilot Current Status
Yochananof 57<br> Carts 90<br> days Roll-out
Middle<br> East Hypermarket chain 12<br> Carts 45<br> days Phase<br> 1
Evergreen 12<br> Carts 90<br> days Phase<br> 4
Morton<br> Williams 10<br> Carts 30<br> days Phase<br> 2
Chedraui 12<br> Carts 60<br> days Phase<br> 4
Singapore<br> Retail Chain Retailer 16<br> Carts 60<br> days Phase<br> 2
Thailand<br> Retail chain 25<br> Carts 60<br> days Phase<br> 1
2nd<br> Thailand Retail chain Nil 45<br> days Signed<br> agreement pending
Carrefour Nil 45<br> days Signed<br> agreement pending
Migros 10 60<br> days Phase<br> 1

With its development of its Automotive Products and Military/Civilian Products on hold in order to focus on the development of its Cust2Mate Products, the Company does not currently have any pilot programs for any Automotive Products or Military/Civilian Products.

BUSINESSDEVELOPMENTS DURING THE PERIOD

On February 3, 2022, the Company announced it has completed the acquisition of all of the outstanding shares of Isramat Ltd (“Isramat”), an Israeli manufacturer of precision metal parts. In connection with closing of the acquisition, the Company paid NIS 2,800,000 (approximately $900 thousand) in cash and issued the shareholders of Isramat 273,774 Common Shares at a deemed price per share of $7.6311.

On February 10, 2022, the Company announced that it has launched a pilot program for its Cust2Mate smart carts with Chedraui, the third largest retailer in Mexico, operating more than 250 stores as well as operating stores in California, Arizona, New Mexico, and Nevada under the name “El Super”. The pilot has reached the user acceptance test phase and is expected to be completed in by the end of the 2022

On February 23, 2022, the Company announced that it has signed a partnership agreement with Cardknox, a Fidelity Payments company and leading developer-friendly omnichannel payment platform for the integration of its seamless payment solutions to the Cust2Mate smart cart. Cardknox’s technology is already integrated into CustMate’s smart cart and is fully operational.

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On March 15, 2022, the Company announced that its Cust2Mate smart cart platform received National Measurement Office (“NMO”) certification for its Legal For Trade weighing system. The certification, which was issued by NMO in accordance with measuring instruments regulations, qualifies the Cust2Mate scale platform for use of all forms of world-wide weight measurements and currencies.

On May 11, 2022, the Company announced that Cust2Mate received an order for additional Smart Carts from Yochananof for an aggregate of US$10 million, including the receipt of a US$1.75 million down payment. The remaining balance will be paid upon delivery of the carts which will occur on an ongoing basis by October 31, 2022. Yochananof has committed to rolling out Cust2mate smart carts in all of its stores in Israel.

On May 16, 2022, the Company announced that it has launched a pilot program for its Cust2Mate smart carts with NTUC FairPrice Co-Operative (“FairPrice”), the largest supermarket chain in Singapore, operating more than 230 stores.

On May 31, 2022, the Company announced that it has entered into a partnership agreement with Accenture Italy (“Accenture”) to increase the brand recognition and expand the market presence of the Cust2Mate Smart Cart Platform in Europe. Accenture is a global IT company with a strong presence in the retail tech space.

On July 12, 2022, the Company announced that it has entered into an agreement with STCR Business Systems, Inc. to facilitate the adoption of Cust2Mate Smart Carts in retailers across the US and Caribbean.

STCR is a Toshiba and LOC POS integrator and service provider with over 55 years in business. STCR will actively market Cust2Mate Smart Carts to its partners and customers across the US and Caribbean, supporting the continued rollout of Cust2Mate’s innovative platform.

On August 1, 2022, the Company singed agreement with Migros Turkey about new pilot projects. The pilot is expected to start by the end of the year. Migros is a large retailer with about 2,500 branches in Turkey.

EQUITY ISSUANCES DURING THE SIX MONTHS ENDED JUNE 30, 2022 AND THROUGH TO THE DATE OF THIS REPORT

● During<br> the period between January 1, 2022, through to the date of this report the Company issued 600,874 Common Shares in respect of 574,207<br> warrants and 16,667 share options that were exercised.
● On<br> February 3, 2022, the Company issued 273,774 Common Shares to the shareholders of Isramat in connection with the closing of the Isramat<br> acquisition.
● On<br> February 11, 2022, the Company issued 74,985 Common Shares to a trustee in respect of a crowd funding transaction that was completed<br> in 2019, for which Common Shares were not immediately issued until the completion of an Israeli tax ruling which was only finalized<br> in late 2021. 
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PriorUse of Proceeds Disclosure

The table below describe the difference between the Company’s anticipated use of proceeds from private placements completed since the date of the Filing Statement, as disclosed in news releases dated January 30, 2020, November 16, 2020, December 29, 2020, April 9, 2021 and June 3, 2021 (the “Private Placements”). The table shows the amounts actually spent for the period from November 28, 2019 (being the date of the Filing Statement) to July 31, 2022, The Company notes the below variances do not have a material impact on the Company’s ability to achieve its business objectives and milestones.

In December 2019, following the Filing Statement, the Company’s business shifted to adapt its existing technology and know-how for the civilian markets, including the development of its Cust2mate Cart. This was in addition to the continuation of the Company’s existing sales to the Israeli military/security markets. The expansion into the civilian markets led to significantly increased expenditures which the Company was able to finance through the Private Placements. As at the date hereof, the business objectives and milestones that the Company outlined in its Filing Statement, have been completed without any additional spend and are no longer applicable to the ongoing business of the Company.

A B
Use of Available Funds Previous Disclosure Regarding Use of Proceeds (CAD) Previous Disclosure Regarding Use of Proceeds (USD)
Filing Statement^(1)^
Commission relating to the Concurrent Private Placement $ 35,000 $ 27,000 (already spent)
Costs related to the Qualifying Transaction $ 100,000 $ 77,000 (already spent)
General and administrative^(2)^ $ 871,098 $ 670,000 (already spent)
Research and development expenses $ 157,895 $ 121,000 (already spent)
2020 and 2021 Financings – Integration and Growth of Cust2mate Business^(3)^
Military/Civilian Products
Launch sales of Military and Civilian Products to the marketplace in Israel - -
Launch sales of Military and Civilian Products to the marketplace outside of Israel - -
Growth of Military and Civilian Product sales - -
Cust2Mate Products
Successful integration of the Cust2mate business $ 6,778,043 $ 5,214,000 (already spent)
Continued research and development of Cust2mate Products and Automotive Products^(4)(5)^ $ 10,056,000 $ 8,590,000 (already spent) 
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| --- | | | | A | | B | | --- | --- | --- | --- | --- | | Use of Available Funds | | Previous Disclosure Regarding Use of Proceeds (CAD) | | Previous Disclosure Regarding Use of Proceeds (USD) | | Completion of four pilots of the Cust2mate Products | $ | 1,000,000 | $ | 769,000 (already spent) | | Production costs to grow sales of the Cust2mate Products^(6)^ | | N/A | | - | | Sales and Marketing and General and administrative^(7)^ | | N/A | | - | | Total use of funds | $ | 18,998,036 | $ | 15,468,000 | | Unallocated working capital | $ | 1,298,027 | $ | 998,000 | | TOTAL: | $ | 20,296,063 | $ | 16,466,000 |

Notes:

(1) Based on the Company’s stated objectives at the time of the Filing Statement.

(2) As disclosed in the Filing Statement, general and administrative expenses originally were comprised of: $150,000 (investor relations and communication fees); $71,168 (office and rent); $98,684 (professional fees); $20,005 (listing, filing and transfer agent fees); $20,000 (travel); $46,068 (miscellaneous G&A); $26,316 (insurance); $36,445 (marketing); and $395,613 (salaries and consulting fees).

(3) In 2022, the Company continues to focus its attention on its Cust2Mate Products division and aims to become the leading mobile checkout system in the international market, providing the optimum solution which simultaneously meets the needs of both shoppers and supermarket retailers. Due to this shift in the Company’s business focus, adaption of certain of its military-grade products and know-how to the civilian market, and the development of the Company’s Automotive Products, will be completed at a slower place than was anticipated.

(4) The Company has decided to place on hold, the advancement the development of its Automotive Products.

TheCompany has negative cash flow from operating activities and has historically incurred net losses. To the extent that the Company hasnegative operating cash flows in future periods, it may need to deploy a portion of its existing working capital to fund such negativecash flows. The Company may be required to raise additional funds through the issuance of additional equity securities, through loanfinancing, or other means, such as through partnerships with other companies and research and development reimbursements. There is noassurance that additional capital or other types of financing will be available if needed or that these financings will be on terms atleast as favourable to the Company as those previously obtained. See “Risk Factors”.

The expected use of proceeds represents the Company’s current intentions based upon its present plans and business condition, which could change in the future as its plans and business conditions evolve. The amounts and timing of the actual use of the net proceeds will depend on multiple factors and there may be circumstances where, for sound business reasons, a reallocation of funds may be necessary in order for the Company to achieve its stated business objectives. The Company may also require additional funds in order to fulfill its expenditure requirements to meet existing and any new business objectives, and the Company expects to either issue additional securities or incur debt to do so. As a result, management will retain broad discretion in the application of the net proceeds, and investors will be relying on management’s judgment regarding the application of the net proceeds.

The actual amount that the Company spends in connection with each of the intended uses of proceeds will depend on a number of factors, including those listed under “Cautionary Note Regarding Forward-Looking Information”.

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Certain COVID-19 related risks could delay or slow the implementation of the planned objectives resulting in additional costs for the Company to achieve its business objectives. The extent to which COVID-19 may impact the Company’s business activities will depend on future developments, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions, business disruptions, and the effectiveness of actions taken in Canada and other countries to contain and treat the disease. As these events are highly uncertain and the Company cannot determine their potential impact on operations at this time. The COVID-19 pandemic may negatively impact the Company’s business through disruption of supply and manufacturing, which would influence the amount and timing of planned expenditure. For example, prolonged disruptions in the supply of goods and services relied on by the Company to develop its products or restrictions resulting from government regulations that impact the Company ability to conduct its studies may adversely impact the Company’s business.

AdditionalDisclosure for Venture Issuers without Significant Revenues (in Thousands of US Dollars):

Six months ended
June 30,
2022 2021
Research and development costs 2,171 417
Sales and marketing costs 282 276
General and administration costs 4,122 3,067
6,575 3,760

DISCUSSIONSOF OPERATIONS

Sixmonths ended June 30, 2022, compared to the six months ended June 30, 2021

Revenues

Six months ended
June 30,
2022 2021
Advanced Engineering 797 1,170
Smart Carts 207 750
Precision Metal Parts 1,872 -
2,876 1,920

Revenues for the six months ended June 30, 2022 were $2,876 thousand as compared to $1,920 thousand for the six months ended June 30, 2021. The increase is due primarily to the inclusion of revenues of Isramat ($1,872 thousand), a newly acquired subsidiary, from February 3, 2022, which provides the Company with a new operating segment – precision metal parts. Revenues from the Company’s smart cart segment for the six months ended June 30, 2022 were $207 thousand as compared to $750 thousand for the six months ended June 30, 2021. The revenues in 2021 were from a one-time transaction; revenues from the supply of smart carts started in 2022, with the delivery of the first smart carts to Yochannof, the Company’s first pilot project. Revenues from the Company’s traditional operations remain largely consistent with the six months ended June 30, 2022.

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While revenues from the smart cart division is currently derived from only one customer, revenues from the Company’s advanced engineering and precision metal parts segments are derived from hundreds of customers.

Cost of revenues

Cost of revenues for the six months ended June 30, 2022 was $2,389 thousand as compared to $744 thousand for the six months ended June 30, 2021. The increase is due primarily to the inclusion of cost of revenues of Isramat ($1,566 thousand). Cost of revenues in the smart cart segment for the six months ended June 30, 2022 was $161 thousand as compared to $nil for the six months ended June 30, 2021.

The Company’s gross margin in the advanced engineering segment fluctuates depending on the level of revenue, since a large component relates to fixed payroll costs, and the nature of the project, as some project types have higher margins than others. The gross margin for smart carts is nil in the prior year as there were no revenues during that period.

Research and development expenses

Six months ended
June 30,
2022 2021
Payroll and related expenses 503 375
Subcontractor and outsourced work 1,406 -
Other 262 42
2,171 417

Research and development expenses related to the Company’s Cust2Mate product. Most of these expenses relate to outsourced software engineers that work on integrating future customers’ point of sales systems to the Company’s software.

Research and development expenses were $2,171 thousand for the six months ended June 30, 2022, as compared to $417 thousand for the six months ended June 30, 2021. The increase is primarily due to an increase in subcontractor and outsourced work costs for the development of the Company’s Cust2Mate smart cart.

Sales and marketing expenses

Sales and marketing expenses were $282 thousand for the six months ended June 30, 2022, as compared to $276 thousand for the six months ended June 30, 2021.

General and administrative expenses

Six months ended
June 30,
2022 2021
Payroll and related 1,415 326
Professional fees 1,290 1,783
Share-based compensation 111 397
Depreciation and amortization 163 56
Office maintenance 175 48
Investor relations 59 -
Travel 127 -
Public company related expenses 111 55
Other 671 402
4,122 3,067 
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General and administrative expenses were $4,122 thousand for the six months ended June 30, 2022, as compared to $3,067 thousand for the three months ended June 30, 2021. The increase is primarily due to the increase in payroll which amounted to $1,415 thousand for the six months ended June 30, 2022, compared to $326 thousand for the six months ended June 30, 2021. The increase in payroll is mainly due to the growth of operating activities of the Company’s smart cart segment and to the inclusion of payroll expenses of Isramat ($401 thousand).

Loss on revaluation of warrant liability

Loss on revaluation of warrant liability for the six months ended June 30, 2022 was $nil as compared to a loss of $31,554 for the six months ended June 30, 2021. The loss in 2021 relates to the increase in the value of the warrant liability as of June 30, 2022, which was subsequently charged to equity as certain warrant holders agreed to change the exercise price of the warrants to the Company’s functional currency.

Financial expenses

Financial revenues for the six months ended June 30, 2022, were $7 thousand as compared to financial expenses of $11 thousand for the six months ended June 30, 2021. Financial expenses comprise interest on loans and leases, interest and accretion in respect of application of IFRS 16, and credit card charges.

Trends, demands, commitments, events or uncertainties

Current overall economic conditions together with market uncertainty and volatility may have an adverse impact on the demand for the Company’s products and services as industry may adjust quickly to exercise caution on capital spending. This uncertainty may impact the Company’s revenue.

Our financial performance, share price, business prospects and financial condition are subject to numerous risks and uncertainties, and are affected by various factors outside the control of management. Prior to making any investment decision regarding the Company, investors should carefully consider, among other things, the risks described herein and the risk factors set forth in our annual information form dated June 30, 2022 for our most recently completed fiscal year. These risks and uncertainties are not the only ones that we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business. If any of these risks occurs, our financial performance, share price, business prospects and financial condition could be materially adversely affected.

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Threemonths ended June 30, 2022, compared to the Three months ended June 30, 2021

Revenues

Three months ended
June 30,
2022 2021
Advanced Engineering 376 654
Smart Carts - 750
Precision Metal Parts 1,054 -
1,430 1,404

Revenues for the three months ended June 30, 2022, were $1,430 thousand as compared to $1,404 thousand for the three months ended June 30, 2021. The increase is due primarily to the inclusion of revenues of Isramat ($1,054 thousand), a newly acquired subsidiary, from February 3, 2022, which provides the Company with a new operating segment – precision metal parts. Revenues from the Company’s smart cart segment for the three months ended June 30, 2022, were $nil thousand as compared to $750 thousand for the three months ended June 30, 2021. The revenues in 2021 were from a one-time transaction.

While revenues from the smart cart division is currently derived from only one customer, revenues from the Company’s advanced engineering and precision metal parts segments are derived from hundreds of customers.

Cost of revenues

Cost of revenues for the three months ended June 30, 2022, were $1,219 thousand as compared to $503 thousand for the three months ended June 30, 2021. The increase is due primarily to the inclusion of cost of revenues of Isramat, a newly acquired subsidiary.

The Company’s gross margin in the advanced engineering segment fluctuates depending on the level of revenue, since a large component relates to fixed payroll costs, and the nature of the project, as some project types have higher margins than others. The gross margin for smart carts is nil in the prior year as there were no revenues during that period.

Research and development expenses

Three months ended
June 30,
2022 2021
Payroll and related expenses 237 137
Subcontractor and outsourced work 607 -
Other 262 16
1,106 153

Research and development expenses were $1,106 thousand for the three months ended June 30, 2022, as compared to $153 thousand for the three months ended June 30, 2021. The increase is primarily due to an increase in development of the Company’s Cust2Mate smart cart.

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Sales and Marketing expenses

Sales and Marketing expenses were $199 thousand for the three months ended June 30, 2022, as compared to $133 thousand for the three months ended June 30, 2021.

General and administrative expenses

Three months ended
June 30,
2022 2021
Payroll and related 815 280
Professional fees 596 877
Share-based compensation 51 210
Depreciation and amortization 64 27
Office maintenance 68 -
Investor relations 40 -
Travel 75 -
Public company related expenses 47 25
Other 520 271
2,276 1,690

General and administrative expenses were $2,276 thousand for the three months ended June 30, 2022, as compared to $1,690 thousand for the three months ended June 30, 2021. The increase is primarily due to the inclusion of the general and administrative expenses of Isramat, a newly acquired subsidiary, and the increase in payroll.

Gain on revaluation of warrant liability

Gain on revaluation of warrant liability for the nine months ended June 30, 2022, was $nil as compared to a loss of $3,451 for the three months ended June 30, 2021. The loss in 2021 relates to the increase in the value of the warrant liability as of June 30, 2021, which was subsequently charged to equity as certain warrant holders agreed to change the exercise price of the warrants to the Company’s functional currency.

Financial expenses

Financial revenues for the three months ended June 30, 2022, were $5 thousand as compared to $16 thousand for the three months ended June 30, 2021. Financial expenses comprise interest on loans and leases, interest and accretion in respect of application of IFRS 16, and credit card charges.

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REVIEWOF QUARTERLY RESULTS

(In Thousands) 30/06/2022 31/03/2022 31/12/2021 30/09/2021
Total revenue $ 1,430 $ 1,446 $ 487 $ 278
Net profit (loss) for the period $ (2,949 ) $ (2,353 ) $ (3,380 ) $ (1,747 )
Basic profit (loss) per share $ (0.11 ) $ (0.09 ) $ (0.14 ) $ (0.07 )
30/06/2021 31/03/2021 31/12/2021 30/09/2020
--- --- --- --- --- --- --- --- --- --- --- --- ---
Total revenue $ 1,404 $ 516 $ 263 $ 281
Net profit (loss) for the period $ (4,171 ) $ (29,941 $ (4,334 ) $ (768 )
Basic profit (loss) per share $ (0.18 ) $ (1.35 ) $ (0.21 ) $ (0.05 )

The loss per quarter and related net loss per share is a function of the level of activity that took place during the relevant quarter. Operating losses in the second quarter of 2022 and throughout four quarters in 2021 remained consistent. The reason for the losses is due to increased research and development expenses and general and administrative costs, largely due to the Company’s expansion ahead of expected increased revenues in future periods.

LIQUIDITYAND CAPITAL RESOURCES

Liquidity is a measure of a company’s ability to meet potential cash requirements. The Company has historically met its capital requirements through the issuance of Common Shares and securing bank loans.

The Company had an accumulated deficit of $56,140 thousand as of June 30, 2022 ($50,838 thousand as of December 31, 2021), and the Company had negative cash flows from operations of $6,465 thousand for the six months ended June 30, 2022 (negative $4,211) thousand for the six months ended June 30, 2021).

Workingcapital (In Thousands)

June 30, 2022 December 31, 2021
Cash and cash equivalents 1,662 8,470
Restricted cash 79 60
Inventories 1,233 1,147
Trade receivables 2,209 857
Other accounts receivable 2,654 434
Total current assets 7,837 10,968
Short term loan and current portion of long-term loans 135 158
Lease liability 104 126
Trade payables 1,450 989
Deferred revenues 1,236 -
Other accounts payable 1,457 1,099
Total current liabilities 4,382 2,372
Working capital 3,455 8,596 
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Cash flow (In Thousands)

Six months ended June 30,
2022 2021
Net cash used in operating activities (6,465 ) (4,211 )
Net cash used in investing activities (1,102 ) (212 )
Net cash provided from financing activities 1,398 8,441
Increase (decrease) in cash (6,169 ) 4,018

Cash position

During the six months ended June 30, 2022, the Company’s overall cash position decreased by $6,169 thousand as compared to increase of $4,018 thousand for the six months ended June 30, 2021. This decrease in can be attributed to the following activities:

Operating activities

The Company’s net cash used in operating activities during the six months ended June 30, 2022, was $6,465 thousand as compared to $4,211 thousand for the six months ended June 30, 2021. The increase is due primarily to the increase in the research and development and general and administrative expenses for the period.

Investing activities

Cash used in investing activities for the six months ended June 30, 2022 was $1,102 thousand as compared to $212 thousand used in investing activities during the six months ended June 30, 2021. The increase is due primarily to the acquisition of Isramat, a newly purchased subsidiary.

Financing activities

Cash provided from financing activities for the six months ended June 30, 2022, was $1,398 thousand, and was mainly due to the exercise of warrants in the amount of $1,277 thousand, and proceeds from receipt of loans in the amount of $429 thousand, offset by repayment of loans in the amount of $282 thousand. Cash provided from financing activities for the six months ended June 30, 2021, was $8,441 thousand, and was mainly due an issuance of shares and warrants in a private placement which closed in June 2021 in the amount of $8,358 thousand.

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CapitalResources

The Company is an early-stage technology company focused on research and development of its products, and currently does not generate significant cash flows from some areas of its operations. However, following the acquisition of the Isramat during the first quarter of 2022, the Company expects to generate profits and cash flows from this segment (Isramat generated revenues during the years ended December 31, 2020 and 2021 of $5 million and $4.9 million, respectively, and profits of $500 thousand and $735 thousand, respectively).

As at June 30, 2022, the Company had an estimated positive working capital of $3.4 million including a cash balance of $1.7 million. The Company’s current financial resources are sufficient to meet its short-term liquidity requirements and to fund its operations for at least the coming 12 months, exclusive of any additional proceeds to be raised through an offering of securities. As at June 30, 2022, and assuming that no additional funds will be raised through an offering of securities, the Company will spend approximately $4,100,000 (approximately $341,000 per month) on its current operations over the 12 months ending June 30, 2023. Such expenditures will require the delay in the roll out of the next generation Cust2Mate Cart.

In addition, the Company will generate net cash of approximately $3 million following the completion of the delivery of the first purchase order from Yochananof.

Short-termborrowings

Short term borrowing relates to bank loans which will be repaid in over the following 12 months. The Company requires short-term borrowing from time to time to accommodate urgent requests from customers that require an initial outlay of cash by the Company.

Long-termborrowings

Long-term borrowing relates to bank loans which will be repaid after the following 12 months. Currently, the nature of cash requirements by the Company can fluctuate greatly from year to year as the Company is reliant on a relatively small pool of customers that have shifting needs. As contracts can vary greatly from year to year the Company is sometimes required to take on long term debt.

NoHistory of Dividends

Since incorporation, the Company has not paid any cash or other dividends on its Common Shares and does not expect to pay such dividends in the foreseeable future.

Managementof Capital

The Company’s main use for liquidity is to fund the development of its programs and working capital purposes. These activities include staffing, preclinical studies, clinical trials 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.

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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. As such, substantial additional financing may be required if the Company is to be successful in continuing to develop its business, meet ongoing obligations and discharge its liabilities in the normal course of business. No assurances can be given that the Company will be able to raise the additional capital that it may require for its anticipated future development. 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 reduce the scope of its operations or anticipated expansion.

The Company defines its capital as share capital plus warrants. To effectively manage the Company’s capital requirements, the Company has a planning and budgeting process in place to ensure that adequate funds are available to meet its strategic goals. The Company monitors actual expenses to budget to manage its costs and commitments. The Company manages liquidity risk by reviewing, on an ongoing basis, its sources of liquidity and capital requirements. In evaluating the Company’s capital requirements and its ability to fund the execution of its business strategy, the Company believes that it has adequate available liquidity to enable it to meet its working capital and other operating requirements, and other capital expenditures and settle its liabilities for at least the next 12 months. The Company’s objective is to maintain sufficient cash to fund the Company’s operating requirements and expansion plans identified from time to time. While the Company expects to incur losses for at minimum the next 12 months, management of the Company continues to work towards the success and eventual profitability of the business.

The Company’s capital management objective is to maximize investment returns to its equity-linked stakeholders within the context of relevant opportunities and risks associated with the Company’s operations. Achieving this objective requires management to consider the underlying nature of research and development and sales and marketing activities, the availability of capital, the cost of various capital alternatives and other factors. Establishing and adjusting capital requirements is a continuous management process.

The Company’s ability to access both public and private capital is dependent upon, among other things, general market conditions and the capital markets generally, market perceptions about the Company and its business operations, and the trading prices of the Company’s securities from time to time. When additional capital is required, the Company intends to raise funds through the issuance of equity or debt securities. Other possible sources include the exercise of stock options of the Company. There can be no assurance that additional funds can be raised upon terms acceptable to the Company, or at all, as funding for early-stage companies remain challenging generally. Given the nature of the Company’s business as of the date of this MD&A, and in particular, the fact that its operations are undertaken exclusively within a foreign jurisdiction, the Company may face difficulty in accessing traditional sources of financing, notwithstanding that its business operations are conducted in a regulatory environment within which the Company’s activities are neither illegal nor subject to conflicting laws.

OFFBALANCE SHEET ARRANGEMENTS

There are no off-balance sheet arrangements to which the Company is committed.

TRANSACTIONSWITH RELATED PARTIES

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making operating and financial decisions. This would include the Company’s senior Management, who are considered to be key management personnel by the Company.

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Parties are also related if they are subject to common control or significant influence. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

Thefollowing transactions arose with related parties: (in Thousands of US$)

Six months ended June 30, 2022
Directors Fees Consulting Fees / Salaries Share based awards Total Amounts<br><br> <br>owing at<br><br> <br>June 30, 2022
Director and CEO^(1)^ $ - $ 502 $ - $ 502 $ 412
CFO^(2)^ - 63 16 79 -
Directors^(3)^ 12 - 32 44 -
$ 12 $ 565 $ 48 $ 625 $ 412
Six months ended June 30, 2021
--- --- --- --- --- --- --- --- --- --- ---
Directors Fees Consulting Fees / Salaries Share based awards Total Amounts<br><br> <br>owing at<br><br> <br>June 30, 2021
Director and CEO $ - $ 293 $ - $ 293 $ 155
CFO - 56 37 93 7
Directors 8 - 12 20 -
$ 8 $ 349 $ 59 $ 406 $ 162
(1) The<br> Company’s CEO has a consulting agreement with the Company pursuant to which he earn $43,000 per month.
(2) The<br> Company’s CFO has a consulting agreement with the Company pursuant to which he earn $7,000 per month.
(3) Two<br> non-executive directors earn directors’ fees of $1,750 per month

FinancialInstruments and Financial Risk Exposure

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. 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.

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Liquidity Risk:

The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities as they come due. As of June 30, 2022, the Company has working capital balance of $3,445 thousand (December 31, 2021 – working capital of $8,596 thousand). The table below presents the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments:

Contractual
Carrying amounts Within 1 year over 1 year
Trade payables $ 1,450 $ 1,450 $ -
Deferred revenues $ 1,236 $ 1,236 $ -
Other accounts payable $ 1,457 $ 1,107 $ 350
Loans $ 789 $ 135 $ 654
Lease liability $ 199 $ 104 $ 95
Total $ 5,131 $ 4,032 $ 1,099

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 the 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 as well as other receivables 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.

Market risks:

That part of the Company’s’ business of providing 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 commercialization of its products and services currently in development.

The Company’s Cust2Mate smart cart platform 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.

CriticalAccounting Policies and Estimates

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.

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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. The Company’s presentation currency is the U.S. dollar.

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:

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   and goodwill

Intangible assets and goodwill 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.

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MANAGEMENTSRESPONSIBILITY FOR FINANCIAL STATEMENTS

Evaluationof disclosure controls and procedures

Our Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining disclosure controls and procedures for the Company. As such, we maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed in filings is recorded, processed, summarized, and reported within the time periods specified by the Canadian Securities Administrators rules and forms. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our Chief Executive Officer and Chief Financial Officer have established that after conducting an internal review, that our disclosure controls and procedures as at June 30, 2022 that were previously considered not be effective, are now effective.

Management’sreport on internal controls over financial reporting

Our Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining effective internal controls over financial reporting. Our internal controls over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Because of their inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

As identified in the Company’s MD&A as of December 31, 2021 management identified a weakness in the design of certain internal controls relating to the appropriate level of oversight regarding the financial recordkeeping and review of the Company’s financial reporting processes. During the three month period ended March 31, 2022, management remedied this weakness by strengthening the finance team through the hiring of additional staff with relevant financial expertise and with relevant technical accounting skills and through the use of additional external consultants.

As a result of the above, during the three month period ended June 30, 2022, the Company did not make any significant changes to its internal controls over financial reporting that would have materially affected, or reasonably likely to materially affect, its internal controls over financial reporting.

CURRENTSHARE DATA

A2Z is authorized to issue an unlimited number of Common Shares. As of the date of this MD&A there were 27,276,031 Common Shares issued and outstanding. In addition, the following warrants and options were outstanding:

Outstanding as of<br> <br>the date of this report Date of expiry Exercise price
2,704,267 Warrants November 10, 2025
1,366,631 Warrants December 24, 2025
221,100 Warrants April 18, 2023
1,084,562 Warrants May 28, 2023
543,333 Options August 20, 2025
40,000 Options September 1, 2025
33,333 Options January 28, 2025
50,000 Options June 3, 2026
16,677 Options October 28, 2026
6,059,903

All values are in US Dollars.

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RISKS

Dilution

The Company has limited financial resources and has financed its operations primarily through the sale of securities such as Common Shares. The Company will need to continue its reliance on the sale of such securities for future financing, resulting in dilution to the Company’s existing shareholders.

Capitaland Liquidity Risk

The amount of financial resources available to invest for the enhancement of shareholder value is dependent upon the size of the treasury, profitable operations, and a willingness to utilize debt and issue equity. Due to the size of the Company, financial resources are limited and if the Company exceeds growth expectations or finds investment opportunities it may require debt or equity financing. There is no assurance that the Company will be able to obtain additional financial resources that may be required to successfully finance transactions or compete in its markets on favorable commercial terms.

Acquisitionand Expansion Risk

The Company intends to expand its operations through organic growth, adaptation of its technology and products to the civilian markets, development of new technologies and depending on certain conditions, by identifying a proposed acquisition.

Dependenceon Key Personnel

Loss of certain members of the executive team or key operational leaders of the company could have a disruptive effect on the implementation of the Company’s business strategy and the efficient running of day-to-day operations until their replacement is found. Recruiting personnel is time consuming and expensive and the competition for professionals is intense.

The Company may be unable to retain its key employees or attract, assimilate, retain or train other necessary qualified employees, which may restrict its growth potential.

COVID-19

Since January 2020, COVID-19 has dramatically expanded into a worldwide pandemic creating macro-economic uncertainty and disruption in the business and financial markets. Many countries around the world, including Israel, have been taking measures designated to limit the continued spread of COVID-19, including the closure of workplaces, restricting travel, prohibiting assembling, closing international borders and quarantining populated areas. Such measures present concerns that may dramatically affect the Company’s ability to conduct its business effectively, including, but not limited to, adverse effects relating to employees’ welfare, slowdown and stoppage of manufacturing, commerce, shipping, delivery, work, travel and other activities which are essential and critical for maintaining on-going business activities.

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The nature of the Company’s work in Israel is such that it is defined as an essential service for the industry, and therefore, it is able to continue all of its operations in Israel with little disruption. The Company has experienced an impact on all of its business activities, including delays in the roll out and completion of certain pilot programs and the slowed pace in research and development projects. Given the uncertainty around the extent and timing of the future spread or mitigation of COVID-19 and around the imposition or relaxation of protective measures, the Company cannot reasonably estimate the impact to its future results of operations, cash flows or financial condition; infections may become more widespread and the limitation on the ability to work, travel and timely sell and distribute products, as well as any closures or supply disruptions, may be extended for longer periods of time and to other locations, all of which would have a negative impact on the Company’s business, financial condition and operating results. In addition, the unknown scale and duration of these developments have macro and micro negative effects on the financial markets and global economy which could result in an economic downturn that could affect demand for the Company’s products and have a material adverse effect on its operations and financial results, earnings, cash flow and financial condition.

CAUTIONARYNOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain of the statements made and information contained herein is “forward-looking information” within the meaning of the Ontario Securities Act. These statements relate to future events or the Company’s future performance. All statements, other than statements of historical fact, may be forward-looking statements. Generally, these forward-looking statements can be identified by the use of forward looking terminology such as “anticipates”, “plans”, “budget”, “scheduled”, “continue”, “estimates”, “forecasts”, “expect”, “is expected”, “project”, “propose”, “potential”, “targeting”, “intends”, “believes” or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might”, or “will be taken”, “occur” or “be achieved” or the negative connotation thereof. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Company believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this MD&A should not be unduly relied upon by readers, as actual results may vary. These statements speak only as of the date of this MD&A and are expressly qualified, in their entirety, by this cautionary statement.

The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth above. Although the Company has attempted to identify important factors that could cause results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Readers are cautioned that the foregoing lists of factors are not exhaustive. Forward looking statements are made as of the date hereof and accordingly are subject to change after such date. The forward-looking statements contained in this MD&A are expressly qualified by this cautionary statement. The Company does not undertake to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws.

OTHER INFORMATION

Additional information related to the Company, is available for viewing on SEDAR at www.sedar.com.

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Exhibit99.3

FORM52-109F2 CERTIFICATION OF INTERIM FILINGS

FULLCERTIFICATE

I, Joseph Bentsur**, Chief Executive Officer** of A2Z SMART TECHNOLOGIES CORP., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of A2Z SMART TECHNOLOGIES CORP. (the “issuer”) for the interim period ended June 30, 2022.
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue<br> statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not<br> misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other<br> financial information included in the interim filings fairly present in all material respects the financial condition, financial<br> performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and<br> procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109<br> Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.
5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I<br> have, as at the end of the period covered by the interim filings
(a) designed<br> DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
--- ---
(i) material<br> information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are<br> being prepared; and
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(ii) information<br> required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities<br> legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
(b) designed<br> ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting<br> and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
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5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR<br> is Internal Control – Integrated Framework (2013) published by the Committee of Sponsoring Organization of the Treadway Commission<br> (“COSO”)
--- ---
5.2 ICFR – material weakness relating to design: The issuer has disclosed in its interim MD&A for each material weakness relating<br> to design existing at the interim period ended
(a) a<br> description of the material weakness;
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(b) the<br> impact of the material weakness on the issuer’s financial reporting and its ICFR; and
(c) the<br> issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.
5.3 Limitation on scope of design: N/A
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6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during<br> the period beginning on January 1, 2022 and ended on June 30, 2022 that has materially affected, or is reasonably likely<br> to materially affect, the issuer’s ICFR.
Date:<br> August 15, 2022
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“ Joseph Benzur “
Joseph<br> Bentsur
Chief Executive Officer

Exhibit99.4

FORM52-109F2 CERTIFICATION OF INTERIM FILINGS

FULLCERTIFICATE

I, Gadi Levin, Chief Financial Officer of A2Z SMART TECHNOLOGIES CORP., certify the following:

7. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of A2Z SMART TECHNOLOGIES CORP. (the “issuer”) for the interim period ended June 30, 2022.
8. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue<br> statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not<br> misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
9. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other<br> financial information included in the interim filings fairly present in all material respects the financial condition, financial<br> performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
10. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and<br> procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109<br> Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.
11. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I<br> have, as at the end of the period covered by the interim filings
(a) designed<br> DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
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(i) material<br> information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are<br> being prepared; and
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(ii) information<br> required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities<br> legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
(b) designed<br> ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting<br> and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
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5.4 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR<br> is Internal Control – Integrated Framework (2013) published by the Committee of Sponsoring Organization of the Treadway Commission<br> (“COSO”)
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5.5 ICFR – material weakness relating to design: The issuer has disclosed in its interim MD&A for each material weakness relating<br> to design existing at the interim period ended
(d) a<br> description of the material weakness;
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(e) the<br> impact of the material weakness on the issuer’s financial reporting and its ICFR; and
(f) the<br> issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.
5.6 Limitation on scope of design: N/A
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12. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during<br> the period beginning on January 1, 2022 and ended on June 30, 2022that has materially affected, or is reasonably likely<br> to materially affect, the issuer’s ICFR.
Date:<br> August 15, 2022
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“Gadi Levin”
Gadi Levin
Chief Financial Officer

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