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Shelfie Tech — Management Reports 2025
May 30, 2025
48529_rns_2025-05-29_7deb9773-2001-48e1-b059-fb78005a31e1.pdf
Management Reports
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SHELFIE-TECH LTD
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For the three-month period ended March 31, 2025
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 three month period ended March 31, 2025, which has been prepared on the basis of information available up until May 29, 2025. This Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with the Company’s financial statements for the three months ended March 31, 2025, 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 29, 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 4 Ariel Sharon, Givatayim, Israel.
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Significant developments during the period
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. 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.
On April 28, 2025, the Company 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, including funds received in 2024, were released to the Company and the Company issued the Underlying Shares. The total amount of Restricted Funds released were $1,230,648.
The Company's sharers commenced trading on the CSE from May 26, 2025.
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 three-month periods ended March 31, 2025, and March 31, 2024.
| Three months ended March 31, | ||
|---|---|---|
| 2025 | 2024 | |
| Operating Expenses | ||
| Research and development costs | $ 40,526 | $ 13,615 |
| General and administration costs | 55,236 | 23,171 |
| Sales and marketing expenses | - | 2,000 |
| Operating Loss | (95,762) | (38,786) |
| Other income (expenses) | ||
| Interest income | - | 659 |
| Foreign exchange gain (loss) | (3,829) | 404 |
| Total other income (expenses) | (3,829) | 1,063 |
| Loss and comprehensive loss for the period | $ (99,591) | $ (37,723) |
| Basic and fully diluted loss per share | $ (0.00) | $ (0.00) |
| Weighted average number of shares outstanding | 20,974,640 | 19,855,378 |
Three-month period ended March 31, 2025, compared to the three-month period ended March 31, 2024
Research and development costs
For the three months ended March 31, 2025, research and development costs amounted to $40,526 (three months ended March 31, 2024 - $13,615). The increase in 2025 is a result the recommencement of research and development activities following the private placement that took place at the end of 2024.
General and administrative expenses
For the three months ended March 31, 2025, general and administrative expenses amounted to $55,236 (three months ended March 31, 2024 - $23,171). General and administrative expenses consist of professional and consulting fees - $52,990 and office rental and other related office expenses - $2,246 (three months ended March 31, 2024 – professional and consulting fees – $21,271 and office rental and other related expenses - $1,900).
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Sales and marketing expenses
For the three months ended March 31, 2025, sales and marketing expenses amounted to $nil (three months ended March 31, 2024- $2,000). The Company expects sales and marketing expenses to increase throughout 2025 as operations recommend following the private placement at the end of 2024 and the listing on the CSE.
Net loss
The Company reported a loss and comprehensive loss for the three months ended March 31, 2025 of $99,591 (three months ended March 31, 2024 loss of - $37,723).
Inflation
During the three months ended March 31, 2025 and the three months ended March 31, 2024, inflation has not had a material impact on the Company's operations.
Summary of Quarterly Results
| Quarter ended 31-Mar-25 | Quarter ended 31-Dec-24 | Quarter ended 30-Sept-24 | Quarter ended 30-Jun-24 | |
|---|---|---|---|---|
| Net loss | $ (99,591) | $ (30,787) | $ (17,204) | $ (25,608) |
| Net loss and comprehensive loss | $ (99,591) | $ (30,787) | $ (17,204) | $ (25,608) |
| Net loss per share | $ (0.00) | $ (0.01) | $ (0.00) | $ (0.00) |
| Quarter ended 31-Mar-24 | Quarter ended 31-Dec-23 | Quarter ended 30-Sept-23 | Quarter ended 30-Jun-23 | |
| Net loss and comprehensive loss | $ (37,723) | $ (43,600) | $ (213,913) | $ (174,009) |
| Net loss per share | $ (37,723) | $ (43,600) | $ (213,913) | $ (174,009) |
| Net loss per share | $ (0.00) | $ 0.00 | $ (0.01) | $ (0.01) |
The loss per quarter and related net loss per share is a function of the level of activity that took place during that quarter. During the last six quarters, expenses remain low since the Company suspended its research and development program until the completion of a private placement and CSE listing.
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 March 31, 2025, the Company had total assets of $1,568,657 and a net equity position of $55,818. This compares with total assets of $1,629,218 and a net equity position of $155,409 as at December 31, 2024.
As at March 31, 2025, the Company had working capital of $55,818 compared to working capital of $155,409 as at December 31, 2024. The Company had cash on hand of $289,100 as at March 31, 2025, compared with $426,321 as at December 31, 2024.
As of March 31, 2025, the Company has an accumulated deficit of $2,604,298 ($2,504,707 as of December 31, 2024).
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Three months ended March 31, 2025
During the three months ended March 31, 2025, the Company’s overall position of cash decreased by $137,221. This decrease can be attributed to the following activity:
- Cash flows used in operating activities were $81,126. The cash was used to pay research and development and general administrative expenditures.
- Cash flow from investing activities for the three months ended March 31, 2025 of $55,687 was the result of an increase in short term deposits and restricted cash.
- Cash flow from financing activities for the three months ended March 31, 2025 of $408 was the result of money owed to a related party, offset by the receipt of funds from the issuance of shares.
Three months ended March 31, 2024
During the three months ended March 31, 2024 the Company’s overall position of cash decreased by $3,851. This decrease can be attributed to the following activity:
- Cash flows used in operating activities were $44,163. The cash was used to pay research and development and general administrative expenditures.
- Cash flow from financing activities for the three months ended March 31, 2025 of $40,312 was the result of money received from a related party.
Capital Resources
As of March 31, 2025, the Company has a working capital of $55,818 (December 31, 2024 – working capital of $155,409).
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 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 (March 31, 2025 – 20,974,640). There are no warrants or options outstanding at this date.
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 three months ended March 31, 2025 and for the three months ended March 31, 2024, and the balances owing as of March 31, 2025 and December 31, 2024:
| Three months ended March 31, | ||
|---|---|---|
| 2025 | 2024 | |
| CFO | $ 6,000 | $ 6,000 |
| $ 6,000 | $ 6,000 |
Balances with related parties:
| March 31, 2025 | December 31, 2024 | |
|---|---|---|
| Amounts owed to the CFO | $ 38,000 | $ 36,000 |
| Amounts owed to the Company by a company controlled by the CEO | (67,747) | (17,721) |
| $ (29,747) | $ 18,279 |
a. On January 1, 2024, a CEO services consulting agreement (“CEO 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 $5,000 per month. On June 3, 2024 the Company and Mida signed an amendment to the CEO Agreement, pursuant to which the CEO will not receive any compensation until such time as the Company is a publicly listed company and has raised an additional $1,000,000 post such listing.
b. 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 several times and most recently, on January 1, 2025, 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.
c. On April 1, 2022, the Company and the CFO of the Company entered into a CFO services agreement pursuant to which the CFO shall receive an amount of $2,000 per month. Following the Company’s listing on the CSE, the amount shall increase to $3,000 per month.
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Critical Accounting Policies and Estimates
Our results of operation and financial condition are based on our 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 three months ended March 31, 2025, 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 March 31, 2025 was $1,568,657 which consisted of $289,100 in cash held in bank accounts, $8,069 in short term deposit, $1,230,648 in restricted cash, $11,093 in VAT receivable and $29,747 in amounts due from related parties. (December 31, 2024 - $1,629,218, which consisted of $426,321 in cash held in bank accounts, $1,183,030 in restricted cash, $5,615 in VAT receivable and $14,252 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 March 31, 2025, the Company had available cash of $289,100 Funds as detailed above, to settle current liabilities in the amount of $282,191. The Company also held Restricted Cash of $1,230,648 and reflected a current liability $1,230,648 in respect of the Restricted Cash.
(December 31, 2024 – cash of $426,321 to settle current liabilities in the amount of $290,779 and Restricted Cash of $1,183,030 and reflected a current liability $1183,030 in respect of the Restricted Cash). The tables
below present the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments:
As of March 31, 2025:
| Carrying amount | |
|---|---|
| Receipt on account of shares | $ 1,230,648 |
| Accounts payable | 282,191 |
| $ 1,512,839 |
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 |
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 March 31, 2025, 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 $14,000.
Development Stage Company
The Company 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 The Company 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. 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.
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 Shelflie, 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
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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.
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