Shellron Capital Ltd — Interim / Quarterly Report 2024

Sep 21, 2023

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Financial Statements

For the Three Months Ended July 31, 2023

(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 three months ended July 31, 2023, which follow this notice, have not been reviewed by an auditor.

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

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

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	July 31,	April 30,
	2023	2023
	($)	($)
Assets
Current assets
Cash	131,909	154,839
Receivables	10,843	9,861
Prepaid expenses	10,000	10,000
Total assets	152,752	174,700
Liabilities and shareholders’ equity
Current liabilities
Accounts payable and accrued liabilities	5,225	10,574
Total liabilities	5,225	10,574
Shareholders’ equity
Share capital (note 4a)	569,910	569,910
Reserves (note 4d)	61,530	61,530
Deficit	(483,913)	(467,314)
Total shareholders’equity	147,527	164,126
Total liabilities and shareholders’ equity	**152,752 **	174,700

Nature of operations and going concern (note 1)

Approved and authorized for issuance on behalf of the Board of Directors on September 21, 2023:

/s/ Daniela Freitas /s/ Jorge Martinez Daniela Freitas, Director 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
	July 31, 2023 July 31, 2022 ($) ($)
Expenses General and administration (note 5) Professional fees Transfer agent and filing fees	6,143 6,163 10,398 - 940 4,379
Total expenses	(17,481) (10,542)
Other expense Interest income Foreign exchange loss	1,520 1,863 (638) -
Net loss and comprehensive loss for theperiod	(16,599) (8,679)
Lossper share, basic and diluted	(0.00) (0.00)
Weighted average shares outstanding	8,539,000 8,539,000

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, 2022 Comprehensivelossforthe period	8,539,000 569,910 61,530 (136,619) 494,821 - - - (8,679) (8,679)
Balance, July 31, 2022 Balance, May 1, 2023 Comprehensive loss for the period	8,539,000 569,910 61,530 (145,298) 486,142 8,539,000 569,910 61,530 (467,314) 164,126 - - - (16,599) (16,599)
Balance, July 31, 2023	8,539,000 569,910 61,530 (483,913) 147,527

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
	July 31, 2023 July 31, 2022 ($) ($)
Operating Activities Net loss for the period Changes in non-cash working capital: Receivables Prepaid expenses Accounts payable and accrued liabilities	(16,599) (8,679) (982) (2,268) - (25,488) (6,869) 2,332
Cash used in operating activities	(24,450) (34,103)
Investing Activities Interest income	1,520 1,863
Cash from investing activities	1,520 1,863
Decrease in cash Cash, beginning of period	(22,930) (32,240) 154,839 486,849
Cash, end ofperiod	131,909 454,609

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 Three Months Ended July 31, 2023 (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 shareholder and 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 three months ended July 31, 2023, the Company has no business operations and incurred negative cash flow from operations of $24,450 (2022 – $34,103). As at July 31, 2023, the Company had an accumulated deficit of $483,913 (April 30, 2023 - $467,314). 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.

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, 2023. 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.

3. Loan Receivable

On October 6, 2022, the Company entered into a loan agreement providing an aggregate of $250,000 (the “Loan”) to Launchtrip Technologies Corp. (note 8). 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. The Loan is secured by a general security agreement. The Proposed Transaction was terminated on March 24, 2023, and the Loan became due on March 31, 2023. The Company filed a lawsuit in the Supreme Court of British Columbia against Launchtrip for the repayment of the Loan. Accordingly, the Company recognized an impairment of $250,000 as at April 30, 2023.

4. Share Capital

• (a) Common Shares

Authorized - unlimited common shares without par value.

As at July 31, 2023, the Company had 8,539,000 (April 30, 2023 - 8,539,000) common shares issued and outstanding.

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Shellron Capital Ltd. Notes to the Condensed Interim Financial Statements (Unaudited) For the Three Months Ended July 31, 2023 (Expressed in Canadian Dollars, except where noted)

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4. Share Capital – continued

• (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, April 30, 2022 and 2023	825,000	0.10
Granted	-	-
Balance, July 31, 2023	825,000	0.10

Additional information regarding the Company’s share options as at July 31, 2023, 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 3.32	825,000 3.32

The fair value of vested share options recognized as an expense during the three months ended July 31, 2023, was $nil (2022 - $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%	0.07	61,530

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Shellron Capital Ltd. Notes to the Condensed Interim Financial Statements (Unaudited) For the Three Months Ended July 31, 2023 (Expressed in Canadian Dollars, except where noted)

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4. Share Capital – continued

• (c) Loss per Share

	Three Months Ended July 31, July 31, 2023 2022 ($) ($)
Basic loss per share Diluted loss per share Net loss for theperiod	(0.00) (0.00) (0.00) (0.00) (16,599) (8,679)

	Three Months Ended July 31, July 31, 2023 2022
Shares outstanding, beginning ofperiod	8,539,000 8,539,000
Basic weighted average number of shares outstanding Effect ofdilutive share options	8,539,000 8,539,000 - -
Diluted weighted average number of shares outstanding	8,539,000 8,539,000

As at July 31, 2023, there were 825,000 (2022 – 825,000) share options that were potentially dilutive but not included in the diluted loss per share calculation as the effect would be anti-dilutive.

• (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:

	July 31, July 31, 2023 ($) 2022 ($)
Amountspaid or accrued under the OCRA	6,000 6,000

There are no amounts owing to Orea Mining Corp. as at July 31 and April 30, 2023.

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Shellron Capital Ltd. Notes to the Condensed Interim Financial Statements (Unaudited) For the Three Months Ended July 31, 2023 (Expressed in Canadian Dollars, except where noted)

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6. 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 July 31, 2023, 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. All of the Company’s financial liabilities have maturities of one year or less. The carrying values of the Company’s accounts payables and accrued liabilities on the statement of financial position equal their contractual cash flows.

• (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 July 31, 2023, the Company has a cash balance of US$19,036 (2022 – US$19,109). The Company has not hedged its exposure to currency fluctuations.

Sensitivity Analysis

The Company has a bank balance in US dollars. 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 $2,000 on the statement of operations.

• (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, loan receivable, accounts payable and accrued liabilities, approximate their carrying values due to the immediate or short-term maturity of these financial instruments.

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Shellron Capital Ltd. Notes to the Condensed Interim Financial Statements (Unaudited) For the Three Months Ended July 31, 2023 (Expressed in Canadian Dollars, except where noted)

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6. Financial Instruments and Risk Management – continued

			Fair value at
	Measurement		July 31, 2023
Financial Instrument	Method	Associated Risks	($)
Cash	FVTPL (Level 1)	Credit and currency	131,909
Receivables	Amortized cost	Credit and concentration	10,843
Accounts payable and accruedliabilities	Amortized cost	Currency	(5,225)
			137,527

7. 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, to obtain shareholder approval, if applicable, for a proposed Qualifying Transaction by the Company as defined under the Exchange Policy 2.4, to cover reasonable expenses relating to the IPO and a maximum of $3,000 per month to cover prescribed administrative and general expenses of the Company. These restrictions apply until completion of a Qualifying Transaction by the Company. The Company currently is not subject to other externally imposed capital requirements.

8. 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”). On October 6, 2022, the Company entered into a loan agreement providing an aggregate of $250,000 to Launchtrip (note 3). On March 24, 2023, the Proposed Transaction was terminated.

On April 27, 2023, the Company filed a lawsuit in the Supreme Court of British Columbia against Launchtrip for the repayment of the $250,000 loan.

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