Shellron Capital Ltd — Interim / Quarterly Report 2023

Dec 1, 2022

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Management’s Discussion and Analysis (Unaudited)

Six Months Ended October 31, 2022

(Stated in Canadian Dollars)

Dated December 1, 2022

Shellron Capital Ltd. Management’s Discussion and Analysis (Unaudited) For the Six Months Ended October 31, 2022

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(Expressed in Canadian Dollars, except where noted)

Table of Contents

Profile and Strategy ................................................................................................................................................................................... 2 Overall Performance and Outlook ............................................................................................................................................................. 2 Summary of Quarterly Information ........................................................................................................................................................... 3 Liquidity and Capital Resources ................................................................................................................................................................ 3 Off-Balance Sheet Arrangements .............................................................................................................................................................. 4 Related Party Transactions ........................................................................................................................................................................ 4 Discussion of Operations and Proposed Transaction ................................................................................................................................. 4 Critical Accounting Estimates ................................................................................................................................................................... 5 Changes in Accounting Standards ............................................................................................................................................................. 5 Financial Instruments and Risk Management ............................................................................................................................................ 5 Other Information ...................................................................................................................................................................................... 6

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Shellron Capital Ltd. Management’s Discussion and Analysis (Unaudited) For the Six Months Ended October 31, 2022 (Expressed in Canadian Dollars, except where noted)

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This Management’s Discussion and Analysis (“MD&A”) focuses on significant factors that have affected Shellron Capital Ltd.’s (“Shellron”, the “Company” or “Issuer”) performance and such factors that may affect its future performance. This MD&A should be read in conjunction with the Company’s audited financial statements and related notes for the year ended April 30, 2022, and the accompanying unaudited condensed interim financial statements for the interim period ended October 31, 2022, both of which were prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). “This quarter” or “current quarter” means the three-month period ended October 31, 2022. “This period” or “current period” means the six-month period ended October 31, 2022. The information contained in this MD&A is current to December 1, 2022.

Forward Looking Information

This MD&A contains “forward-looking information and statements” that are subject to risk factors set out under the caption Caution regarding forward looking statements later in this document. The reader is cautioned not to place undue reliance on forward-looking statements.

Profile and Strategy

The Company was incorporated under the laws of the province of British Columbia, Canada on January 21, 2021. The Company’s head office and principal address is located at 1090 Hamilton Street, Vancouver, British Columbia, Canada, V6B 2R9.

On November 22, 2021, the Company completed an initial public offering (“IPO”) to be classified as a Capital Pool Company (“CPC”) pursuant to the policies of the TSX Venture Exchange (“TSXV”) Policy 2.4, and is listed on the TSXV under the trading symbol “SHLL”. The Company is in the startup stage and its principal business will be the identification and evaluation of assets or businesses with a view to completing a Qualifying Transaction as defined by the rules of the TSXV. Such a transaction will be subject to regulatory approval.

The Company’s activities are not dependent on seasonality and may operate year-round; however, the Company may adjust the level of activities to manage its capital structure in light of changes in global economic conditions.

The Company’s financial condition is affected by general market conditions.

On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic and has adversely affected global workforces, financial markets, and the general economy. Although, it is not possible for the Company to determine the duration or magnitude of the adverse results of COVID-19, the Company’s ability to raise capital has not been impacted by COVID-19 and the Company does not expect such ability to raise capital to be impacted by COVID-19 in the future. The Company does not expect COVID19 to significantly impact its ability to completing a Qualifying Transaction as it will leverage technological and local resources as required, and as a result, pandemic-related restrictions on trans-national travel are not expected to adversely impact the Company’s ability to complete a Qualifying Transaction.

Overall Performance and Outlook

The following highlights the Company’s overall performance for the three and six months ended October 31, 2022:

	Three Months Ended	Six Months Ended
	October 31 2022 ($) October 31, 2021 ($) Change	October 31 2022 ($) October 31, 2021 ($) Change
Net loss Cash used in operating activities Cash at end of period Lossper share – basic and diluted	(40,550) (8,939) (31,611) (262,484) (16,968) (245,516) 194,824 153,223 41,601 (0.00) (0.00) (0.00)	(49,229) (31,722) (17,507) (296,587) (52,101) (244,486) 194,824 153,223 41,601 (0.01) (0.01) (0.00)

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Shellron Capital Ltd. Management’s Discussion and Analysis (Unaudited) For the Six Months Ended October 31, 2022

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(Expressed in Canadian Dollars, except where noted)

Summary of Quarterly Information

Q2 2023 ($) Q1 2023 ($) Q4 2022 ($) Q3 2022 ($) Q2 2022 ($) Q1 2022 ($) Q4 2021 ($) Q3 20211 ($)	Q2 2023 ($) Q1 2023 ($) Q4 2022 ($) Q3 2022 ($) Q2 2022 ($) Q1 2022 ($) Q4 2021 ($) Q3 20211 ($)
Net loss for the period (40,550) (8,679) (6,727) (92,008) (8,939) (22,783) (6,162) - Basic and diluted net loss per share (0.00) (0.00) (0.00) (0.01) (0.00) (0.01) (0.00) (0.00)
1 The Company was incorporated on January 21, 2021.
Oct 31, 2022 ($) July 31, 2022 ($) Apr 30, 2022 ($) Jan 31, 2022 ($) Oct 31, 2021 ($) July 31, 2021 ($) Apr 30, 2021 ($) Jan 31, 20211 ($)
Cash 194,824 454,609 486,849 502,380 153,223 170,191 205,324 - Total assets 453,572 488,972 495,319 512,272 181,860 198,055 210,338 -

1 The Company was incorporated on January 21, 2021.

During the current quarter, the Company incurred a net loss of $40,550, as compared to $8,679, $6,727, $8,939, $22,783 and $6,162 for Q1 2023, Q4 2022, Q2 2022, Q1 2022 and Q4 2021, respectively. The variability in net loss is primarily attributable to the timing of overhead expenditures which include filing fees, general and administration, and professional fees.

Net loss for Q3 2022 of $92,008 was higher than the current quarter, mainly attributable to Q3 2022 including the granting of 825,000 share options to certain directors, officers, and consultants of the Company, resulting in share-based payments expense of $61,530, and higher filing fees and professional fees in connection with the Company’s CPC plans.

Review of Financial Results – Year to Date

The Company incurred a net loss of $49,229 this period, compared to $31,722 during the same period in the prior year. The variance is mainly attributable to general and administration expenses (see Related Party Transactions).

Liquidity and Capital Resources

The Company does not currently derive any significant revenues from operations. The Company’s activities have been funded primarily through equity financing and the Company expects that it will continue to be able to utilize this source of financing until it develops cash flow from operations. The Company has been successful in its fund raising efforts in the past, but there can be no assurance that the Company will continue to be successful in the future. If such funds are not available or other sources of finance cannot be obtained, then the Company will be required to curtail its activities to a level for which funding is available and can be obtained. The Company’s ability to access funding is also contingent on the ongoing demand for CPC’s and general capital market conditions.

	Three Months Ended October 31, October 31, 2022 2021 ($) ($)	Six Months Ended
		October 31, October 31, 2022 2021 ($) ($)
Cash used in operating activities Cash from investing activities Cash,end ofperiod	(262,484) (16,968) 2,699 - 194,824 153,223	(296,587) (52,101) 4,562 - 194,824 153,223

As at October 31, 2022, the Company had working capital of $445,592, compared to $494,821 at April 30, 2022.

During the three and six months ended October 31, 2022, the Company used $262,484 and $296,587 respectively, in operating activities, including a secured loan of $250,000 to Launchtrip (see Discussion of Operations and Proposed Transaction). During the three and six months ended October 31, 2021, the Company used $16,968 and $52,101 respectively, in operating activities primarily for filing fees and professional fees in connection with the Company’s IPO.

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Shellron Capital Ltd. Management’s Discussion and Analysis (Unaudited) For the Six Months Ended October 31, 2022 (Expressed in Canadian Dollars, except where noted)

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As at October 31, 2022, the Company had cash of $194,824 and current liabilities of $7,980. The Company has sufficient cash and access to capital to meet working capital requirements, and obligations as they become due.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Related Party Transactions

The Company entered into an office cost reimbursement agreement (the “OCRA”) with Orea Mining Corp. (“Orea”), effective January 1, 2022, whereby the Company reimburses Orea for certain office costs totaling $2,000 per month. The Company and Orea have certain directors and officers in common.

The following is a summary of related party transactions:

	Three Months Ended	Three Months Ended
	October 31, October 31, 2022 ($) 2021 ($)	October 31, October 31, 2022 ($) 2021 ($)
Amountspaid or accrued under the OCRA	6,000 -	12,000 –

Discussion of Operations and Proposed Transaction

On July 26, 2022, the Company entered into a binding letter of intent with Launchtrip Technologies Corp. for a proposed Qualifying Transaction (the “Proposed Transaction”).

The Proposed Transaction is expected to be structured by way of a three-cornered amalgamation among Shellron, a wholly owned British Columbia subsidiary of Shellron (“Shellron AcquisitionCo”), and Launchtrip which will result in Shellron acquiring all of the issued and outstanding securities of Launchtrip in exchange for the issuance of securities of Shellron on a one-for-one (1:1) basis, subject to adjustments as may be agreed between Shellron and Launchtrip, which will result in the amalgamation of Shellron AcquisitionCo and Launchtrip being conducted pursuant to the provisions of the Business Corporations Act (British Columbia) and the entity resulting from the amalgamation of Shellron AcquisitionCo and Launchtrip becoming a wholly-owned subsidiary of Shellron. The existing shareholders of Launchtrip are expected to own a majority of the outstanding Shellron Common Shares after completion of the Proposed Transaction and Shellron will be renamed to such name as mutually agreed to by Shellron and Launchtrip. The final structure of the Proposed Transaction is subject to the receipt of tax, corporate and securities law advice by both Shellron and Launchtrip.

The completion of the Proposed Transaction is subject to the satisfaction of certain conditions, including but not limited to: (i) the completion of an offering of convertible, unsecured debentures of Launchtrip for gross proceeds of a minimum of $500,000 (the “Debenture Offering”); (ii) the completion of a concurrent financing on terms sufficient to meet the applicable listing requirements of the Exchange (the “Concurrent Financing”); (iii) the proposed board of directors and management of the Resulting Issuer being acceptable to the Exchange and each of Shellron and Launchtrip; (iv) the receipt of all requisite regulatory, stock exchange, or governmental authorizations and consents, including the TSXV; and (v) certain other conditions as may be agreed between Shellron and Launchtrip.

Subject to satisfaction or waiver of all conditions precedents to the Proposed Transaction, Shellron and Launchtrip anticipate that the Proposed Transaction will be completed no later than January 31, 2023. There can be no assurance that the Proposed Transaction, or Concurrent Financing will be completed on the terms proposed above or at all.

Upon closing of the Proposed Transaction, Shellron will issue 250,000 common shares of the Resulting Issuer as a finder’s fee to a third party (the “Finder”), which is an arm’s length party to each of Shellron and Launchtrip.

On October 6, 2022, the Company entered into a secured loan agreement providing an aggregate of $250,000 (the “Loan”) to Launchtrip, of which $25,000 was previously advanced. The Loan is interest free and repayable within 7 days of the earlier of (i) 12 months from the date of the Loan; or (ii) termination of the Proposed Transaction.

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Shellron Capital Ltd. Management’s Discussion and Analysis (Unaudited) For the Six Months Ended October 31, 2022 (Expressed in Canadian Dollars, except where noted)

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Commitments

The Company had no financial commitments as at October 31, 2022 and the date of this MD&A.

Critical Accounting Estimates

The preparation of financial statements in accordance with IFRS requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s management reviews these estimates and underlying assumptions on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted for prospectively in the period in which the estimates are revised.

Estimates and assumptions used by management where there is risk of material adjustments to assets and liabilities in future accounting periods include the recoverability and measurement of deferred tax assets.

The preparation of financial statements in accordance with IFRS requires the Company to make judgments, apart from those involving estimates, in applying accounting policies. The most significant judgments in preparing the Company’s financial statements include the assumption that the Company will continue as a going concern, assumptions used to determine if a business combination is an asset or business acquisitions, classification of expenditures as intangible assets or operating expenses and the classification of financial instruments.

Changes in Accounting Standards

Certain accounting standards or amendments to existing accounting standards that have been issued but have future effective dates are either not applicable or are not expected to have a significant impact on the Company’s financial statements.

Financial Instruments and Risk Management

Financial Risks

The Company’s financial instruments are exposed to certain financial risks. The risk exposures and the impact on the Company's financial instruments as at October 31, 2022 are summarized below.

• (a) Credit Risk

The credit risk exposure on cash is limited to its carrying amount at the date of the statement of financial position. Cash is held as cash deposits with a creditworthy bank.

• (b) Liquidity Risk

Liquidity risk arises from the Company’s general and capital financing needs. The Company manages liquidity risk by attempting to maintain sufficient cash balances. Liquidity requirements are managed based on expected cash flows to ensure that there is sufficient capital in order to meet short term obligations. As at October 31, 2022, the Company has working capital of $445,592.

• (c) Market Risks

• (i) Foreign Currency Risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company’s functional and reporting currency is the Canadian dollar. The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates. As at October 31, 2022, the Company has a cash balance of US$19,191. The Company has not hedged its exposure to currency fluctuations.

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Shellron Capital Ltd. Management’s Discussion and Analysis (Unaudited) For the Six Months Ended October 31, 2022 (Expressed in Canadian Dollars, except where noted)

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Sensitivity Analysis

A 1% change in interest rates does not have a material effect on the Company’s profit or loss and equity.

The Company has certain cash balances in US Dollars, a currency other than the functional currency of Company. The Company estimates that a +/-10% change in the value of the Canadian dollar relative to the US dollar would have a corresponding effect of approximately $3,000 to profit or loss.

• (ii) Interest Rate Risk

The Company does not have any interest bearing debt and is therefore not exposed to interest rate risk.

Fair Values

Fair value measurements are classified using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The fair value hierarchy has the following levels:

• Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

• Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The fair values of the Company’s financial instruments, which includes cash, accounts payable and accrued liabilities, approximate their carrying values due to the immediate or short-term maturity of these financial instruments.

			Fair value at
	Measurement		October 31, 2022
Financial Instrument	Method	Associated Risks	($)
Cash	FVTPL (Level 1)	Credit and currency	194,824
Receivables	Amortized cost	Credit and concentration	258,260
Accounts payable and accruedliabilities	Amortized cost	Currency	(7,980)
			445,104

Capital Management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue a Qualifying Transaction and to maintain a flexible capital structure for its projects for the benefit of its stakeholders. As the Company is in the startup stage, its principal source of funds is from the issuance of common shares.

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. The proceeds raised from the issuance of common shares may only be used to identify and evaluate assets or businesses for future investment, with the exception that no more than the lesser of 30% of the gross proceeds from the issuance of common shares may be used to cover prescribed costs of issuing the common shares or administrative and general expenses of the Company. These restrictions apply until completion of a Qualifying Transaction by the Company as defined under the Exchange Policy 2.4. The Company currently is not subject to other externally imposed capital requirements.

Other Information

Disclosure By Venture Issuer Without Significant Revenue

An analysis of the material components of the Company’s general and administrative expenses is disclosed in the unaudited financial statements for the three and six months ended October 31, 2022 to which this MD&A relates.

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Shellron Capital Ltd. Management’s Discussion and Analysis (Unaudited) For the Six Months Ended October 31, 2022 (Expressed in Canadian Dollars, except where noted)

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Outstanding Share Data

The Company has authorized capital of an unlimited number of common shares without par value. The table below represents the Company’s capital structure as at the date of this MD&A and October 31, 2022:

	As at date of this	October 31,
	**MD&A **	2022
Common shares issued and outstanding	8,539,000	8,539,000
Sharepurchase options	825,000	825,000

Risk and Uncertainties

Risk Factors

Prior to making an investment decision, investors should consider the investment risks set out below and those described elsewhere in this document, which are in addition to the usual risks associated with an investment in a business at an early stage of development. The directors of the Company consider the risks set out below to be the most significant to potential investors in the Company, but do not represent all of the risks associated with an investment in securities of the Company. Some of the following statements are forwardlooking and actual results may differ materially from the results anticipated in these forward-looking statements. Please refer to the section titled “Caution Regarding Forward-Looking Statements” in this report. If any of these risks materialize into actual events or circumstances or other possible additional risks and uncertainties of which the directors are currently unaware or which they consider not to be material in relation to the Company’s business, actually occur, the Company’s assets, liabilities, financial condition, results of operations (including future results of operations), business and business prospects could be materially and adversely affected.

Dilution

In order to finance future operations and development efforts, the Company may raise funds through the issue of shares or securities convertible into shares. The constating documents of the Company allow it to issue, among other things, an unlimited number of shares for such consideration and on such terms and conditions as may be established by the directors of the Company, in many cases, without the approval of shareholders. The Company cannot predict the size of future issues of shares or securities convertible into shares or the effect, if any, that future issues and sales of shares will have on the price of the shares. Any transaction involving the issue of previously authorized but unissued shares or securities convertible into shares would result in dilution, possibly substantial, to present and prospective shareholders of the Company.

Reliance on Key Employees

The success of the Company will be largely dependent upon the performance of its management and key employees. The Company does not have any key man insurance policies and therefore there is a risk that the death or departure of any member of management or any key employee could have a material adverse effect on the Company. In assessing the risk of an investment in the Company’s shares, potential investors should realize that they are relying on the experience, judgment, discretion, integrity and good faith of the management of the Company. An investment in the Company’s shares is suitable only for those investors who are willing to risk a loss of their entire investment and who can afford to lose their entire investment.

The Market Price of Shares May be Subject to Wide Price Fluctuations

If, and when applicable, the market price of the Company’s shares may be subject to wide fluctuations in response to many factors, including variations in the operating results of the Company, divergence in financial results from analysts’ expectations, changes in earnings estimates by stock market analysts, changes in the business prospects for the Company, general economic conditions, legislative changes, and other events and factors outside of the Company’s control.

In addition, stock markets have from time to time experienced extreme price and volume fluctuations, which, as well as general economic and political conditions, could adversely affect the market price for the shares.

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Shellron Capital Ltd. Management’s Discussion and Analysis (Unaudited) For the Six Months Ended October 31, 2022 (Expressed in Canadian Dollars, except where noted)

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Conflict of Interest of Management

Certain of the Company’s directors and officers are also directors and officers of other companies. Consequently, there exists the possibility for such directors and officers to be in a position of conflict. Any decision made by any of such directors and officers relating to the Company will be made in accordance with their duties and obligations to deal fairly and in good faith with the Company and such other companies.

Insurance

The Company does not intend to obtain insurance while it is a classified as a CPC. The occurrence of a significant event that the Company is not fully insured against, or the insolvency of the insurer or such event, could have a material adverse effect on the Company’s financial position, results of operations or prospects.

Global Financial Conditions

Global financial conditions over the last few years have been characterized by increased volatility and several financial institutions have either gone into bankruptcy or have had to be rescued by governmental authorities. These factors may affect the ability of the Company to obtain equity or debt financing in the future on terms favourable to it. Additionally, these factors, as well as other related factors, may cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. If such increased levels of volatility and market turmoil continue, the operations of the Company may suffer adverse impact and the price of our shares may be adversely affected.

Credit Risk

Credit risk is the risk of an unexpected loss if a party to its financial instruments fails to meet its contractual obligations. The Company’s financial assets exposed to credit risk will be primarily composed of cash and amounts receivable. While the Company will attempt to mitigate its exposure to credit risk, there can be no assurance that unexpected losses will not occur. Such unexpected losses could adversely affect the Company.

Management's Responsibility for Financial Statements

The information provided in this report, including the financial statements, is the responsibility of management. In the preparation of these statements, estimates are sometimes necessary to make a determination of future values for certain assets or liabilities. Management believes such estimates have been based on careful judgments and have been properly reflected.

Controls and Procedures

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Any system of internal control over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Caution Regarding Forward Looking Statements

Certain statements made in this and other Shellron public disclosure documents, including statements relating to matters that are not historical facts and statements of the Company’s beliefs, intentions and expectations about developments, results and events which will or may occur in the future, constitute “forward looking information” within the meaning of applicable Canadian securities legislation (“forward-looking statements”). Forward-looking statements relate to future events or future performance, reflect current expectations or beliefs regarding future events and are typically identified by words such as “anticipate”, “could”, “should”, “expect”, “seek”, “may”, “intend”, “likely”, “budget”, “plan”, “estimate”, continue”, “forecast”, “believe”, “predict”, “potential”, “target”, “would”, “might”, “will”, and similar words, expressions or phrases (including negative variations) suggesting future outcomes or statements regarding an outlook.

Forward-looking statements are made based upon certain assumptions and other important factors that, if untrue, could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such statements. Such assumptions and analyses are made by the Company’s management in light of their experience and perception of historical trends, current conditions and expected future developments, as well as other factors management believes are reasonable and appropriate in the circumstances. There can be no assurance that such statements will prove to be accurate.

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Shellron Capital Ltd. Management’s Discussion and Analysis (Unaudited) For the Six Months Ended October 31, 2022 (Expressed in Canadian Dollars, except where noted)

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Forward-looking statements are based on numerous assumptions regarding present and future business strategies, local and global economic conditions, and the environment in which the Company will operate in the future, including compliance by the Company with regulatory requirements, the sufficiency of Company’s working capital; the Company’s ability to secure additional funding; and the Company’s ability to retain key personnel. You are hence cautioned not to place undue reliance on forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements. By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, which contribute to the possibility that the predicted outcomes will not occur. Events or circumstances could cause the Company’s actual results to differ materially from those estimated or projected and expressed in, or implied by, these forward-looking statements.

Additional Information

Additional information relating to the Company is available on SEDAR at www.sedar.com.

Corporation Information

Head Office: 1090 Hamilton Street Vancouver, BC V6B 2R9 Canada Directors: Robert Giustra, Chairman Andrew Yau Jorge Martinez Officers: Andrew Yau, Chief Executive Officer & Chief Financial Officer Daniela Freitas, Corporate Secretary Auditor: Saturna Group Chartered Professional Accounts LLP Suite 1605, 1116 Alberni Street Vancouver, BC V6E 3Z3 Legal Counsel: S. Paul Simpson Law Corporation 2800 – 777 Hornby Street Vancouver, BC V6Z 1S4 Transfer Agent: Computershare Investor Services Inc. 2[nd] Floor – 510 Burrard Street Vancouver, BC V6C 3B9

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