Shellron Capital Ltd — Interim / Quarterly Report 2023

Dec 1, 2022

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Condensed Interim Financial Statements (Unaudited)

For the Six Months Ended October 31, 2022

(Expressed in Canadian Dollars)

NOTICE OF NO REVIEW BY AUDITOR

In accordance with National Instrument 51-102 Continuous Disclosure Obligations of The Canadian Securities Administrators we hereby give notice that our condensed interim financial statements for the six months ended October 31, 2022, which follow this notice, have not been reviewed by an auditor.

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Shellron Capital Ltd. Condensed Interim Statements of Financial Position (Unaudited) (Expressed in Canadian Dollars)

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	October 31,	April 30,
	2022	2022
	($)	($)
Assets
Current assets
Cash	194,824	486,849
Receivables (note 3)	258,260	5,670
Advances and prepaid expenses	488	2,800
Total assets	453,572	495,319
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable and accrued liabilities	7,980	498
Total liabilities	7,980	498
Shareholders’ equity
Share capital (note 4a)	569,910	569,910
Reserves (note 4d)	61,530	61,530
Deficit	(185,848)	(136,619)
Total shareholders’equity	445,592	494,821
Total liabilities and shareholders’ equity	453,572	495,319

Nature of operations and going concern (note 1)

Approved and authorized for issuance on behalf of the Board of Directors on December 1, 2022:

/s/ Andrew Yau Andrew Yau, Director	_/s/ Jorge Martinez _
	Jorge Martinez, Director

The accompanying notes are an integral part of these financial statements.

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Shellron Capital Ltd. Condensed Interim Statements of Operations and Comprehensive Loss (Unaudited) (Expressed in Canadian Dollars)

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	Three Months Ended	Three Months Ended	Six Months Ended
	October 31, October 31, 2022 2021 ($) ($)		October 31, October 31, 2022 2021 ($) ($)
Expenses General and administration (note 5) Professional fees Transfer agent and filing fees Travel	6,005 - 24,257 8,854 12,709 262 1,751 -		12,168 - 24,257 19,354 17,088 12,690 1,751 -
Totalexpenses	(44,722) (9,116)		(55,264) (32,044)
Interest income Foreign exchange gain	2,699 85 1,473 92		4,562 230 1,473 92
Net loss and comprehensive loss for theperiod	(40,550)	(8,939)	(49,229) (31,722)
Lossper share, basic and diluted	(0.00)	(0.00)	(0.01) (0.01)
Weighted average shares outstanding	8,539,000 4,250,000		6,937,461 4,250,000

The accompanying notes are an integral part of these financial statements.

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Shellron Capital Ltd. Condensed Interim Statements of Changes in Shareholders’ Equity (Unaudited) (Expressed in Canadian Dollars)

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	Share Capital Number of Shares Amount ($) Reserves ($) Deficit ($) Total ($)
Balance, May 1, 2021 Comprehensivelossforthe period	4,250,000 212,500 - (6,162) 206,338 - - - (31,722) (31,722)
Balance, October 31, 2021 Balance, May 1, 2022 Comprehensive loss for the period	4,250,000 212,500 - (37,884) 174,616 8,539,000 569,910 61,530 (136,619) 494,821 - - - (49,229) (49,229)
Balance, October 31, 2022	8,539,000 569,910 61,530 (185,848) 445,592

The accompanying notes are an integral part of these financial statements.

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Shellron Capital Ltd. Condensed Interim Statements of Cash Flows (Unaudited) (Expressed in Canadian Dollars)

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	Three Months Ended October 31, October 31, 2022 2021 ($) ($)	Six Months Ended
		October 31, October 31, 2022 2021 ($) ($)
Operating Activities Net loss for the period Changes in non-cash working capital: Receivables Advances and prepaid expenses Accounts payable and accrued liabilities	(40,550) (8,939) (250,322) (773) 27,800 - 588 (7,256)	(49,229) (31,722) (252,590) (3,623) 2,312 (20,000) 2,920 3,244
Cash used in operating activities	(262,484) (16,968)	(296,587) (52,101)
Investing Activities Interest income	2,699 -	4,562 -
Cash from investingactivities	2,699 -	4,562 -
Decrease in cash Cash, beginning of period	(259,785) (16,968) 454,609 170,191	(292,025) (52,101) 486,849 205,324
Cash, end ofperiod	194,824 153,223	194,824 153,223

The accompanying notes are an integral part of these financial statements.

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Shellron Capital Ltd. Notes to the Condensed Interim Financial Statements (Unaudited) For the Six Months Ended October 31, 2022 (Expressed in Canadian Dollars, except where noted)

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1. Nature of Operations and Going Concern

Shellron Capital Ltd. (the “Company” or “Shellron”) 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.

These financial statements have been prepared on a going concern basis which implies that the Company will continue realizing assets and discharging liabilities in the normal course of business for the foreseeable future. Should the going concern assumption not continue to be appropriate, further adjustments to carrying values of assets and liabilities may be required. During the six months ended October 31, 2022, the Company had no business operations and incurred negative cash flow from operations of $296,587 (2021 – $8,029). As at October 31, 2022, the Company had an accumulated deficit of $185,848 (April 30, 2022 - $136,619). The Company’s continuing operations are dependent upon its ability to identify and evaluate assets or businesses with a view to potential acquisition or participation by completing a Qualifying Transaction, as defined in Exchange Policy 2.4. The preceding indicates the existence of a material uncertainty that may cast substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments relating to the recovery of assets and classification of assets and liabilities that may arise should the Company be unable to continue as a going concern.

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 COVID-19 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.

2. Basis of Presentation

These condensed interim financial statements have been prepared in accordance with International Accounting Standards 34, Interim Financial Reporting (“IAS 34”) using accounting policies consistent with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). These condensed interim financial statements have been prepared using the same accounting policies and methods of computation as the most recent annual financial statements for the year ended April 30, 2022. Certain amounts in the prior period have been reclassified to conform with the presentation in the current period.

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.

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Shellron Capital Ltd. Notes to the Condensed Interim Financial Statements (Unaudited) For the Six Months Ended October 31, 2022 (Expressed in Canadian Dollars, except where noted)

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3. Receivables

	October 31,	April 30,
	2022	2022
	($)	($)
Secured loan receivable (note 9)	250,000	-
Other receivables	8,260	6,075
	258,260	6,075

On October 6, 2022, the Company entered into a secured loan agreement providing an aggregate of $250,000 (the “Loan”) to Launchtrip Technologies Corp. (note 9), 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 (note 9).

4. Share Capital

(a) Common Shares

Authorized - unlimited common shares without par value

At October 31, 2022, the Company had 8,539,000 (April 30, 2022 - 8,539,000) common shares issued and outstanding.

On November 22, 2021, the Company issued 4,289,000 common shares at $0.10 per share for proceeds of $428,900 pursuant to its IPO. In connection with the IPO, the Company incurred share issuance costs of $71,490.

(b) Share Options

The Company has a share option plan to issue share options whereby the total share options outstanding may be up to 10% of its issued capital at the time of an applicable option grant. The Board of Directors may from time to time, grant options to directors, officers, employees or consultants. The exercise price of an option is not less than the closing price on the TSXV on the last trading day preceding the grant date.

The continuity of the Company's share options is as follows:

		Weighted
		Average
	Number of	Exercise Price
	Options	($)
Balance, May 1, 2021	-	-
Granted	825,000	0.10
Balance, April 30, 2022 and October 31, 2022	825,000	0.10

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Shellron Capital Ltd. Notes to the Condensed Interim Financial Statements (Unaudited) For the Six Months Ended October 31, 2022 (Expressed in Canadian Dollars, except where noted)

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4. Share Capital - continued

Additional information regarding the Company’s share options as at October 31, 2022 is as follows:

Exercise Price ($)	Options Outstanding Number of Options Outstanding Weighted Average Remaining Contractual Life (Years)	Options Exercisable Number of Options Exercisable Weighted Average Remaining Contractual Life (Years)
0.10	825,000 4.06	825,000 4.06

The fair value of vested share options recognized as an expense during the three and six months ended October 31, 2022 was $nil (2021 - $nil).

The fair value of each share option is estimated on the date of grant using the Black-Scholes Option Pricing Model that uses the assumptions noted in the table below. Expected volatilities are based on historical volatility of the Company’s shares or an applicable comparable company, and other factors. The expected term of share options granted represents the period of time that share options granted are expected to be outstanding. The risk-free rate of periods within the contractual life of the share option is based on the Canadian government bond rate. Assumptions used for share options granted during fiscal 2022 are as follows:

	Number of	Expected	Risk Free	Expected	Expected	Fair Value	Total
	Share	Price	Interest	Life	Dividend	Per Option	Fair Value
Grant Date	Options	Volatility	Rate	(Years)	Yield	($)	($)
November 22,2021	825,000	100%	1.44%	5.0	-	0.08	61,530

(c) Loss per Share

	Three Months Ended October 31, October 31, 2022 2021 ($) ($)	Six Months Ended
		October 31, October 31, 2022 2021 ($) ($)
Basic loss per share Diluted loss per share Net loss for theperiod	(0.00) (0.00) (0.00) (0.00) (40,550) (8,939)	(0.01) (0.01) (0.01) (0.01) (49,229) (31,722)

	Three Months Ended October 31, October 31, 2022 2021	Six Months Ended
		October 31, October 31, 2022 2021
Shares outstanding, beginning ofperiod	8,539,000 4,250,000	6,937,461 4,250,000
Basic weighted average number of shares outstanding Effect ofdilutive share options	8,539,000 4,250,000 - -	6,937,461 4,250,000 - -
Diluted weighted average number of shares outstanding	8,539,000 4,250,000	6,937,461 4,250,000

As at October 31, 2022, there were 825,000 (October 31, 2021 – nil) share options that were potentially dilutive but not included in the diluted loss per share calculation as the effect would be anti-dilutive.

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Shellron Capital Ltd. Notes to the Condensed Interim Financial Statements (Unaudited) For the Six Months Ended October 31, 2022 (Expressed in Canadian Dollars, except where noted)

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4. Share Capital - continued

• (d) Reserves

Share Options

The share options reserves records items recognized as share based compensation expense and other share-based payments until such time that the share options are exercised, at which time the corresponding amount will be transferred to share capital.

5. 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 -

6. Segmented Disclosure

The Company has one reportable business segment, being the completion of a Qualifying Transaction. All assets are held in Canada.

7. 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. Notes to the Condensed Interim Financial Statements (Unaudited) For the Six Months Ended October 31, 2022 (Expressed in Canadian Dollars, except where noted)

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7. Financial Instruments and Risk Management - continued

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

8. 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.

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Shellron Capital Ltd. Notes to the Condensed Interim Financial Statements (Unaudited) For the Six Months Ended October 31, 2022 (Expressed in Canadian Dollars, except where noted)

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9. Qualifying Transaction

On July 26, 2022, the Company entered into a binding letter of intent with Launchtrip 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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