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Shelfie Tech — Management Reports 2025
May 9, 2025
48529_rns_2025-05-08_c7cd2f1f-65ed-4a4d-91c1-41d76e047cf3.pdf
Management Reports
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SHELFIE-TECH LTD
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For the year ended December 31, 2024
Management's Discussion and Analysis
The following is management’s discussion and analysis of the activities, results of operations and financial condition of SHELFIE-TECH LTD (“Shelfie”, “Shelfie Tech”, “we”, “our”, “us”, or the “Company”) for the year ended December 31, 2024, which has been prepared on the basis of information available up until May 8, 2025. This Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with the Company’s financial statements for the year ended December 31, 2024, together with the notes thereto.
All monetary amounts are reported in US dollars and in accordance with IFRS unless otherwise noted. This MD&A is dated May 8, 2025.
Forward-Looking Statements
This MD&A contains "forward-looking information" within the meaning of applicable Canadian securities legislation ("forward-looking information"). Such forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statements were made, and readers are advised to consider such forward-looking statements in light of the risks set forth below and as detailed under RISKS AND UNCERTAINTIES in this MD&A.
Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking information contained herein is given as of the date of this MD&A and the Company disclaims any obligation to update any forward-looking information, whether as a result of new information, future events or results, except as may be required by applicable securities laws. There can be no assurance that forward-looking information 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 information.
Description of Business
- Corporate Structure
- Name and Incorporation
SHELFIE-TECH LTD was incorporated on November 18, 2021 in Israel. The Company’s robotic retail shelf monitoring system uses advanced machine learning and image processing algorithms to automatically optimize inventory management and retail store shelf filling while ensuring an enhanced customer experience. The Company's head office is located at 3, Aminadav St, Tel Aviv, Israel.
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Significant developments during the year
During November and December 2024, the Company received $1,183,030 from investors to be held by the Company (“Restricted Funds”). The Restricted Funds are in respect of subscription receipts to issue 1,792,469 Shares at $0.66 per share (the “Underlying Shares”). The Restricted Funds will be released by the Company upon (a) the receipt by the Company of a final receipt from the Ontario Securities Commission (or such other securities regulator as the Company selects as its principal regulator) for a final long form prospectus qualifying the Underlying Shares; and (b) the Company being conditionally approved for listing on the CSE.
During December 2024, the Company received $600,000 in respect of a private placement and issued 909,092 Shares, representing a price per share of $0.66.
During January 2025, the Company received an additional investment of Restricted Funds in the amount of $47,618. These Restricted Funds are in respect of subscription receipts to issue 72,148 Shares at $0.66 per share.
On April 28, 2025, the Company announced that it has received a letter from the Canadian Securities Exchange (the "CSE") confirming conditional approval to list its common shares for trading on the CSE. The conditional approval follows the receipt by the Company of a receipt for its Final Long Form Prospectus dated April 22, 2025 relating to the securities of the Company (the "Prospectus"). A copy of the Prospectus can be found under the Company's profile at www.sedarplus.ca.
On April 29, 2025, the Restricted Funds were released to the Company and the Company issued the Underlying Shares.
Business of Shelfie
- The Company is a technological company focused on providing retail automation solutions, in particular for large grocery stores and supermarkets.
- The Company estimates that the total global addressable market for the Company is approximately $27 billion per year, based on the intended subscription revenue model.
Using innovative patented technology, the Company’s robotic retail shelf monitoring system uses advanced machine learning and image processing algorithms to automatically optimize inventory management while ensuring an enhanced customer experience. In addition, the Company’s software application (“App”) ensures that supermarket employees do shelf filling efficiently and on-time.
Product and Technology
- The Company’s robotic retail shelf monitoring system is designed to take the guesswork out of inventory management by improving visibility into the retail shelf supply.
- The Company’s innovative solution consists of a digital image capturing system mounted on a shelf that automatically captures an image of all products on the shelf, a transportation system that moves the camera along the shelf, and a centralized inventory management system.
- The artificial intelligence (“AI”) and computer vision-based system is equipped with advanced machine learning and image processing algorithms that analyze the images, determine the number of units on the shelf, and calculate the required number of items to be restocked. The innovative system can deliver item-level alerts in real-time to in-store personnel, pinpointing the exact products running low, allowing for rapid remediation and an enhanced customer experience.
The key features include:
- Suitable for multiple shelf types - unit can be mounted on a variety of shelving units, including those with fixed shelves or shelves that can be rearranged and adjusted.
- Flexible image capture options - unit can be configured to capture images at a defined time interval or a specified distance, ensuring complete coverage of the scanned shelf.
- Flexible product identification options - solution can capture an image of the barcode or use AI and computer vision to identify the products and count the number of units on each shelf.
- Unobtrusive operation - system recognizes if a shopper is standing in front of or in the vicinity of a shelf and can halt its operations accordingly. This prevents any interference with the customer shopping experience.
Selected Financial Information
The following financial data prepared in accordance with IFRS in US dollars, is presented for the years ended December 31, 2024, and December 31, 2023.
| Year ended December 31, 2024 | Year ended December 31, 2023 | |
|---|---|---|
| Operating Expenses | ||
| Research and development costs | $ 14,571 | $ 458,292 |
| General and administration costs | 106,969 | 95,059 |
| Sales and marketing expenses | 2,000 | 32,676 |
| Operating Loss | (123,540) | (586,027) |
| Other income (expenses) | ||
| Interest income | 1,976 | 2,927 |
| Foreign exchange gain (loss) | 10,242 | (6,044) |
| Total other income (expenses) | 12,218 | (3,117) |
| Loss and comprehensive loss for the year | $ (111,322) | $ (589,144) |
| Basic and fully diluted loss per share | $ (0.01) | $ (0.03) |
| Weighted average number of shares outstanding | 20,060,126 | 19,662,590 |
Year ended December 31, 2024, compared to the year ended December 31, 2023
Research and development costs
For the year ended December 31, 2024, research and development costs amounted to $14,571 year ended December 31, 2023 - $458,292. These expenses consist of patent work - $11,752, software development and subcontractors - $2,819 (year ended December 31, 2023 - hardware engineering and subcontractors - $355,575, professional and consulting fees - $48,562, patent work - $nil, and software development-subcontractors - $54,155). The decrease in 2024 is a result of insufficient funding to continue these operations.
General and administrative expenses
For the year ended December 31, 2024, general and administrative expenses amounted to $106,969 (year ended December 31, 2023 - $95,059). General and administrative expenses consist of professional and consulting fees - $95,680, office rental and other related office expenses - $11,289 (year ended December 31, 2023 - professional and consulting fees - $79,030 and office rental and other related expenses - $16,029).
Sales and marketing expenses
For the year ended December 31, 2024, Sales and marketing expenses amounted to $2,000 (year ended December 31, 2023 - $32,676). During 2023, the Company developed the first generation of the system and characterized the specific technology of the system for the first generation version of the system. In addition, during 2023 the Company worked on building the first generation for pilots and exhibitions and the Company has participated in two exhibitions in which it presented the system's capabilities. The decrease in 2024 is a result of insufficient funding to continue these operations.
Net losses
The Company reported a net and comprehensive loss for the year ended December 31, 2024 of $111,322 (year ended December 31, 2023 - $589,144).
Inflation
During the year ended December 31, 2024 and the year ended December 31, 2023, inflation has not had a material impact on the Company's operations.
Summary of Quarterly Results
The Company does not have quarterly results for the year ended December 31, 2024 as it is not a public issuer.
Liquidity
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.
Financial position
As at December 31, 2024, the Company had total assets of $1,629,218 and a net equity position of $155,409. This compares with total assets of $105,885 and a net deficit position of $234,895 as at December 31, 2023. The Company had current liabilities of $1,473,809 as at December 31, 2024, as compared with $340,780 as at December 31, 2023.
As at December 31, 2024, the Company had working capital of $155,409 compared to working capital deficit of $234,895 as at December 31, 2023. The Company had cash on hand of $426,321 and held $1,183,030 in Restricted Funds as at December 31, 2024, compared with cash on hand of $9,616 as at December 31, 2023. Included in working capital as at December 31 2023, is $90,749 being amounts that the Company advanced to a service provider in return for consultancy services in connection with the
Company's IPO process. As of December 31, 2024, the Company received these services and the amounts plus accrued interest were charged to the Statement of Comprehensive Loss.
As of December 31, 2024, the Company has an accumulated deficit of $2,504,707 ($2,393,385 as of December 31, 2023).
Year ended December 31, 2024
During the year ended December 31, 2024 the Company's overall available cash position increased by $416,705. This increase can be attributed to the following activities: The Company also has $1,183,030 in Restricted Funds as detailed above.
Cash flows used in operating activities were $55,236. The cash used included payments for research and development and general administrative expenditures.
Cash flow from financing activities for the year ended December 31, 2023 was the result of an issuance of shares and repayment of amounts owed to a related party for a net amount of $471,941. In addition, the Company held $1,183,030 in Restricted Funds, as detailed above.
Year months ended December 31, 2023
During the year ended December 31, 2023 the Company's overall position of cash decreased by $204,562. This decrease can be attributed to the following activities:
Cash flows used in operating activities were $450,018. The cash was used to pay research and development and general administrative expenditures.
Cash flow from financing activities for the year ended December 31, 2023 of $245,456 was the result of a private placement and loan amounts received from related parties.
Capital Resources
As of December 31, 2024, the Company has a working capital of $155,409 (December 31, 2023 – working capital deficit of $234,895). As of the date of this report, the Company has cash and cash equivalents of approximately $1,459,000 and approximately $1,060,000 in working capital. The Company's expected monthly cash burn rate is equal to approximately $50,000 based on its intention to allocate approximately $600,000 on the completion of its research and development, selling and marking expenses and general and administrative costs, including costs relating to going public in Canada.
The Company cannot offer any assurance that future expenses will not exceed funds currently available. The Company may require additional funds after 18 months and will be dependent upon its ability to secure equity and/or debt financing, the availability of which cannot be assured.
Commitments
On October 30, 2022, the Company entered into an agreement with Buchwalter Presentation and Storage Ltd. ("Buchwalter") under which Buchwalter, a leading supplier of products, fixtures and technologies to supermarkets in Israel, will serve as exclusive representatives of the Company in Israel. Buchwalter will have exclusive distribution rights for the Company's products in Israel until December 31, 2024 with an extension to March 31, 2026 based on Buchwalter achieving specified sales targets.
Disclosure of Outstanding Share Data
As of the date of this report, the Company has 22,839,257 ordinary shares outstanding (December 31, 2024 – 20,974,640). There are no warrants or options outstanding at this date.
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Management of Capital
The Company's capital comprises share capital and accumulated other comprehensive loss. The Company manages its capital structure, and makes adjustments to it, based on the funds available to the Company in order to support the Company's business activities. The Board of Directors does not establish quantitative return on capital criteria for management; it relies on the expertise of the Company's management to sustain future development of the business.
The intellectual property in which the Company currently has an interest is in the development stage; as such, the Company may be dependent on external financing to fund its activities beyond the next 18 months. During November, December 2024 and January 2025, the Company raised approximately $1.8 million which will be used to carry out the planned research and development and pay for administrative costs for at least the next 18 months.
Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.
Off-Balance Sheet arrangements
See "Commitments" above.
Transactions with Related Parties
The following are the expenses incurred with related parties for the year ended December 31, 2024 and for the year ended December 31, 2023, and the balances owing as of December 31, 2024 and December 31, 2023:
| Year ended December 31, | Year ended December 31, | |||
|---|---|---|---|---|
| 2024 | 2023 | |||
| CEO | $ | - | $ | 14,388 |
| CFO | 24,000 | 24,000 | ||
| President | - | 14,168 | ||
| $ | 24,000 | $ | 52,556 |
Balances with related parties:
| December 31, | December 31, | |||
|---|---|---|---|---|
| 2024 | 2023 | |||
| Amounts owed to the CFO | $ | 36,000 | $ | 24,000 |
| Amounts owed to the Company by a company controlled by the CEO | (17,721) | 29,197 | ||
| $ | 18,279 | $ | 53,197 |
On February 1, 2022, a CEO services consulting agreement was signed between the Company and Mida Consulting and Investments Ltd (“Mida”), a company controlled by the CEO of the Company, pursuant to which the Company shall pay the CEO of the Company NIS 50,000 per month (approximately $13,500) ("2022 CEO Compensation Agreement"). From the month following the completion of an IPO, RTO or listing of the Company’s shares for trade on an international stock exchange or a similar transaction the fee shall increase to NIS 100,000 per month (approximately $27,000). On February 1, 2023, the Company and the CEO verbally agreed to terminate the agreement. A new agreement was signed on January 1, 2024, pursuant to which the Company shall pay the CEO $5,000 per month. On June 3, 2024 an amendment to the new agreement was signed between the Company and Mida, pursuant to which the CEO will not be paid any compensation until such time as Shelfie is a publicly listed company and has raised an additional $1,000,000 post such listing.
On February 1, 2022, the Company entered into an occupancy rental agreement with A2Z Cust2Mate Solutions Corp, (“A2Z”), a company controlled by the CEO of the Company (“Rental Agreement”). The Rental Agreement expired on January 31, 2023 and was renewed for a further 12 months. On February 1, 2024, the Rental Agreement was renewed for 11 months to December 31, 2024. On January 1, 2025, the Rental Agreement was renewed for 6 months, through to June 30, 2025. The Company’s base rent is ILS2,000 per month ($590). The Company has elected to not recognize right-of-use assets and lease liabilities for leases that have a lease term of 12 months or less and for leases of low-value assets.
On April 1, 2022, the Company and the CFO of the Company entered into a CFO services consulting agreement pursuant to which the CFO shall receive $2,000 per month. From the month following the completion of an IPO, RTO or listing of the Company’s shares for trade on an international stock exchange or similar transaction, the amount shall be increased to $3,000 per month.
On November 1, 2022, the Company and the President of the Company entered into an agreement pursuant to which the President of the Company shall receive NIS 50,000 per month (approximately $13,500). The Company also paid the president one month fee as a signing bonus. On February 1, 2023, the Company and the President verbally agreed to terminate the agreement. A formal agreement to this effect was signed on May 22, 2024 in which it was re confirmed by the Company and the president of the termination as of February 1, 2023.
Critical Accounting Policies and Estimates
Our results of operation and financial condition are based on our consolidated financial statements, which are presented in accordance with IFRS. Certain accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at that time. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the periods presented. To the extent there are material differences between these estimates, judgments or assumptions and actual results, our financial statements will be affected.
The significant accounting policies and estimates that we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:
- Provisions are recognized when: a) the Company has a present obligation (legal or constructive) as a result of a past event; and b) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made for the amount of the obligation.
A contingent liability is not recognized in the case where no reliable estimate can be made; however, disclosure is required unless the possibility of an outflow of resources embodying economic benefits is remote. By its nature, a contingent liability will only be resolved when one or more future events occur or fail to occur. The assessment of a contingent liability inherently involves the exercise of significant judgment and estimates of the outcome of future events.
Disclosure Controls and Procedures and Internal Controls over Financial Reporting
There were no changes to the Company’s internal controls over financial reporting during the year ended December 31, 2024, which have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Risks and Uncertainties
Credit risk
The Company manages credit risk, in respect of cash, by holding them at major Israeli financial institutions in accordance with the Company’s investment policy. The Company places its cash with high credit quality Israeli financial institutions. Concentration of credit risk exists with respect to the Company’s cash. The Company’s exposure as of December 31, 2024 was $1,629,218 which consisted of $426,321 in cash held in bank accounts, $1,183,030 in restricted cash, $5,615 in VAT tax and $14,252 in prepaid expenses. (December 31, 2023 - $105,885, which consisted of $9,616 in cash held in bank accounts, $5,520 in VAT tax and $90,749 in prepaid expenses).
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in obtaining funds to meet current obligations and future commitments. The Company's approach to managing liquidity risk is to forecast cash requirements to provide reasonable assurance that it will have sufficient funds to meet its liabilities when due. As of December 31, 2024, the Company had available cash of $426,321 Funds as detailed above, to settle current liabilities in the amount of $290,779. The Company also held Restricted Cash of $1,183,030 and reflected a current liability $1,183,030 in respect of the Restricted Cash.
(December 31, 2023 – cash of $9,616 to settle current liabilities in the amount of $340,780). The tables below present the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments:
As of December 31, 2024:
| Carrying amount | |
|---|---|
| Receipt on account of shares | $ 1,183,030 |
| Accounts payable | 256,048 |
| Related parties | 18,279 |
| Accrued expenses | 16,452 |
| $ 1,473,809 |
As of December 31, 2023:
| Carrying amount | |
|---|---|
| Accounts payable | $ 273,831 |
| Related parties | 53,197 |
| Accrued expenses | 13,752 |
| $ 340,780 |
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk is comprised of two types of risk: interest rate risk, and foreign currency risk.
(i) Interest rate risk
The Company is not exposed to significant interest rate risk due to the short-term maturity of its cash equivalents.
(ii) Foreign currency risk
The Company is exposed to financial risk related to the fluctuation of foreign exchange rates. The Company operates in Israel and most of the Company's expenditures are currently incurred in USD. However, the Company also has expenditures in NIS. The Company has not hedged its exposure to currency fluctuations. As of December 31, 2024, if the Company's functional currency (USD) had strengthened/ weakened by 5% against the ILS, with all other variables held constant, the loss for the period would decrease /increase by approximately $16,900.
Development Stage Company
Shelffe has only a limited history upon which one can evaluate its business and prospects as its technologies are still at an early stage of development and thus Shelffe has limited experience and has not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the biopharmaceutical area. The likelihood of the success of the Company must be considered in light of the risks inherent in, and the difficulties, costs and complications associated with the early growth stages of a business enterprise, as well as with the development and marketing of new products.
Future Capital Needs
During November, December 2024 and January 2025 the Company raised approximately $1.8 million which will be used to carry out the planned research and development and pay for administrative costs for at least the next 18 months. The Company may not be able to fully implement and execute its long-term business strategy without additional financing. There can be no assurance that such additional financing will be available, and if available, there can be no assurance that the cost of obtaining such financing will be on favorable or reasonable commercial terms or that it will not result in substantial dilution to its shareholders. If additional funds are raised through the issuance of equity or equity-linked debt securities, the percentage ownership in The Company of the shareholders will be reduced, and such securities may have rights, preferences, or privileges senior to or equal to those of the Company's shares held by the current shareholders, or any other securities outstanding on the date thereof.
If adequate funds in the future are not available to satisfy ongoing capital requirements, the Company may be required to curtail its operations significantly or to obtain funds, if available, through arrangements with strategic partners or others that may require the Company to relinquish material rights to certain technologies or potential markets. There is no certainty that financing will be available in amounts or on acceptable terms, if at all.
Any failure to raise additional funds on favorable terms is likely to have a material adverse effect on the Company's liquidity and financial condition.
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Dependence on Key Personnel
The Company's future success depends on its ability to retain key employees and attract, train, retain and successfully integrate new talent into its management team. The Company is dependent on the services of its senior management team. The loss of any of the members of the Company's senior management team could have a material adverse effect on the Company's results of operations, business and prospects. The Company's future success also depends, to a significant extent, on its ability to attract and retain talented personnel. Recruiting and retaining talented personnel, particularly those with the expertise required for the Company's business is vital to the Company's success and may prove difficult.
Applicability of Patents and Proprietary Technology
Competitors may have filed patent applications, or hold issued patents, relating to products or processes competitive with those The Company has developed or will in future develop. The Company's patent applications for a product may not be approved or approved as desired. The patents of the Company's competitors may impair its ability to do business in a particular area. Others may independently develop similar products or duplicate any of the Company's unpatented products or technologies. The Company's success will depend, in part, on its ability in the future to obtain patents, protect trade secrets and other proprietary information and operate without infringing the proprietary rights of others. Patent protection is uncertain and involves many complex legal, scientific and technical questions. The degree of legal protection afforded under patents is unclear. As a result, the scope of patents issued to the Company, or their partners may not successfully prevent third parties from developing similar or competitive products.
The Company has and will continue to enter into confidentiality agreements with its employees, suppliers and vendors. However, these confidentiality agreements may be breached, and the Company may not have adequate remedies for such breaches. Others may independently develop substantially equivalent proprietary information without infringing upon any proprietary technology belonging to the Company. Third parties may otherwise gain access to the Company's proprietary information and adopt it in a competitive manner.
In addition, the coverage claimed in a patent application can be significantly reduced before a patent is issued. Also, The Company faces the following intellectual property risks: (i) some or all patent applications may not result in the issuance of a patent; (ii) patents issued may not provide the holder with any competitive advantages; (iii) patents could be challenged by third parties; (iv) the patents of others could impede our ability to do business; (v) competitors may find ways to design around our patented products; and (vi) competitors could independently develop products which duplicate our products.
Economic and military instability in Israel and in the Middle East
The Company's operational offices are located in Israel. In addition, a majority of the Company's employees, officers and directors are residents of Israel. Accordingly, political, economic and military conditions in the Middle East may directly affect the business. Since October 2023, Israel has been at war with Hamas a terrorist designated organization. The Company is continuing with its operations in Israel. The Company continues to assess the effects of the state of war on its financial statements and business. The intensity and duration of Israel's current war against Hamas is difficult to predict at this stage, as are such war's economic implications on our business and operations and on Israel's economy in general. If the war extends for a long period of time or expands to other fronts, such as Lebanon, Syria and the West Bank, our operations may be adversely affected.
Continued hostilities between Israel and its neighbors and any future armed conflict, terrorist activity or political instability in the region could adversely affect our operations in Israel and adversely affect the market price of our ordinary shares. An escalation of tensions or violence might result in a significant downturn in the economic or financial condition of Israel, which could have a material adverse effect on our operations in Israel and our business.
Our commercial insurance does not cover losses that may occur as a result of events associated with war and terrorism. Although the Israeli government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained or that it will sufficiently cover our potential damages. Any losses or damages incurred by us could have a material adverse effect on our business. Any armed conflicts or political instability in the region would likely negatively affect business conditions and could adversely affect our results of operations.
Further, in the past, the State of Israel and Israeli companies have been subjected to economic boycotts. Several countries still restrict business with the State of Israel and with Israeli companies. These restrictive laws and policies may have an adverse impact on our operating results, financial condition or the expansion of our business. A campaign of boycotts, divestment and sanctions has been undertaken against Israel, which could also adversely impact our business.