Sarine Technologies AGM Q&A: Key Developments and Investor Insights

1. Sarine’s Position in the Diamond Grading Market

Sarine has faced substantial challenges in gaining market share in the diamond grading market, particularly against the dominant GIA and IGI. Despite the launch of its e-Grading system, rebranded as “GCAL by Sarine”, its market penetration in both natural and lab-grown diamond (LGD) segments remains limited, accounting for less than 5% of visible online retail inventory.

• Natural Diamonds: High-value stones continue to rely on GIA’s reputation, and Sarine has not made significant inroads. However, the company remains optimistic about eventually capturing some market share.
• Lab-Grown Diamonds (LGD): The LGD market, characterized by lower price points, is dominated by IGI, which uses a low-cost and high-volume methodology, allowing manufacturers to grade their own stones with IGI’s quality control. Sarine’s initial strategy of competing on cost failed to gain significant traction.
• Strategic Shift: Sarine has pivoted to target the premium segment of the LGD market, especially after GIA ceased grading LGDs by normal criteria in October. High-value producers are now seeking alternatives, and Sarine is leveraging its high-end “8X” reports to gain traction, with growing utilization in India and interest from major U.S. retailers.
• Retail Presence: Most GCAL-certified diamonds are supplied directly to U.S. retailers and may not appear in general industry inventories, which could lead to an underestimation of Sarine’s market presence.

Investor Impact: The shift to high-end LGD certification, increasing retailer adoption, and GIA’s exit from the LGD grading market are major developments that could accelerate Sarine’s growth and influence its market position in 2026 and beyond. This is potentially price sensitive as it indicates a new growth trajectory.

2. Kitov.ai’s Business Model and Growth Prospects

Kitov.ai, a Sarine subsidiary, operates primarily as a software company, integrating proprietary software with commercially available hardware to deliver automated quality control solutions for manufacturing sectors, including defense.

• Revenue Model: Kitov.ai’s software-driven approach enables strong gross margins. Its solutions are deployed both in-line (integrated with production) and off-line (sample-based, independent of production lines).
• Strategic Customers: The company serves virtually all major Israeli defense firms and several U.S. Fortune 500 industrial giants, with systems being integrated into “future technology labs” for deployment in 2027.
• Defense Industry Tailwind: Increased local and global defense demand could drive future sales, although the benefit may not be immediately visible due to order and delivery lead times.
• 2025 Revenue: Kitov.ai generated US\$1.7 million in 2025, with expectations for further growth as operations scale.

Investor Impact: Kitov.ai’s exposure to the surging defense sector and its partnerships with industry leaders could become a strong growth engine, potentially influencing Sarine’s share price as the business matures.

3. Relationship with De Beers’ Tracr Platform

Sarine has a signed cooperation agreement with De Beers’ Tracr blockchain tracing platform. While the appointment of a new Tracr CEO (Ms. Jillian Wolk from GIA) was noted, Sarine declined to speculate on future impacts but reaffirmed the existing partnership.

Investor Impact: Ongoing collaboration with Tracr, a leading blockchain traceability initiative, could enhance Sarine’s digital and traceability offerings, but the impact will depend on future strategic decisions by De Beers.

4. Potential for LGD Manufacturing Activities

Sarine does not plan to enter the crowded and low-margin gem-quality LGD manufacturing market for jewelry, which has seen many foreign companies exit. However, the company is exploring niche opportunities in high-quality LGD for industrial applications (e.g., quantum computing, semiconductors, medical uses), leveraging its technology for quality testing and optimization.

Investor Impact: Entry into the high-value industrial LGD sector, while in early stages, could open new markets for Sarine. Investors should monitor this space for future developments.

5. De Beers Ownership Uncertainty

With De Beers up for bid, Sarine acknowledges that the outcome and any impact on its business remain uncertain.

Investor Impact: Any material changes in De Beers’ ownership could affect Sarine’s partnerships and market dynamics, representing a potential risk or opportunity.

6. Growth Catalysts for Sarine

• LGD Grading Expansion: Sarine anticipates significant growth from its LGD grading business, which may have a positive ripple effect on its natural diamond grading segment.
• MVP Offering: The company’s MVP (planning technology) is being enhanced to cater to larger stones, potentially driving additional adoption and revenue from 2026 onwards.
• Tracr Collaboration: The partnership with Tracr could yield further growth opportunities.
• Market Recovery: A rebound in natural diamond demand, particularly in China, could drive increased manufacturing and related services.

Investor Impact: These catalysts could drive a new growth cycle for Sarine, especially if market conditions improve and strategic initiatives succeed.

7. Revenue Recognition Policy

Revenue from diamond grading services is recognized immediately upon completion and report generation. This straightforward policy ensures transparent and timely recognition of service revenue.

8. Natural Diamond Grading Business

While Sarine’s grading growth is focused on LGD, natural diamond grading remains a small but ongoing component. The company hopes to leverage its growing U.S. retail presence to expand in this segment.

9. Maintenance Revenue from Galaxy Systems

Approximately 75% of Galaxy systems in the field are over 10 years old. Sarine expects maintenance contract revenue to remain stable, but does not foresee significant system replacements due to aging hardware.

10. Deferred Tax Assets

Sarine holds unrecognized deferred tax assets of US\$115.5 million. While unlikely to be recognized in full soon, the company will benefit from these assets as they reduce future tax expenses on profits.

11. Clarification on Short-Term Investments

As of December 31, 2025, Sarine did not hold any bank deposits classified as short-term investments exceeding three months. Disclosures in the financial statements refer correctly to the year-end positions for both the group and the company.

Disclaimer: This article is based on Sarine Technologies’ published AGM Q&A responses and is for informational purposes only. It does not constitute investment advice. Please conduct your own research or consult a financial advisor before making investment decisions.

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