Shellron Capital Ltd — Management Reports 2023

Aug 19, 2023

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Management’s Discussion and Analysis

Year Ended April 30, 2023

(Stated in Canadian Dollars)

Dated August 18, 2023

Shellron Capital Ltd. Management’s Discussion and Analysis For the Year Ended April 30, 2023 (Expressed in Canadian Dollars, except where noted)

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Table of Contents

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

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Shellron Capital Ltd. Management’s Discussion and Analysis For the Year Ended April 30, 2023 (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, 2023, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). All figures in this MD&A are expressed in Canadian Dollars except where noted. “This quarter” or “current quarter” means the three month period ended April 30, 2023, and “this year” or “current year” means the year ended April 30, 2023. The information contained in this MD&A is current to August 18, 2023.

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 is the identification and evaluation of assets or businesses with a view to completing a Qualifying Transaction as defined by the rules of the TSXV (the “Principal Business”). 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.

Overall Performance and Outlook

The following highlights the Company’s overall performance for the year ended April 30, 2023:

	Year Ended
	April 30, 2023 ($) April 30, 2022 ($) Change
Net loss Cash used in operating activities Cash at end of year Lossper share – basic and diluted	(330,695) (130,457) (200,238) (82,010) (75,885) (6,125) 154,839 486,849 (332,010) (0.04) (0.02) (0.02)

Discussion of Operations and Proposed Transaction

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

The Proposed Transaction was 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 would have resulted 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.

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Shellron Capital Ltd. Management’s Discussion and Analysis For the Year Ended April 30, 2023 (Expressed in Canadian Dollars, except where noted)

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The completion of the Proposed Transaction was 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.

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

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.

Summary of Quarterly Results

Q4 2023 ($) Q3 2023 ($) Q2 2023 ($) Q1 2023 ($) Q4 2022 ($) Q3 2022 ($) Q2 2022 ($) Q1 2022 ($)	Q4 2023 ($) Q3 2023 ($) Q2 2023 ($) Q1 2023 ($) Q4 2022 ($) Q3 2022 ($) Q2 2022 ($) Q1 2022 ($)	Q4 2023 ($) Q3 2023 ($) Q2 2023 ($) Q1 2023 ($) Q4 2022 ($) Q3 2022 ($) Q2 2022 ($) Q1 2022 ($)
Net loss for the period (271,352) (10,114) (40,550) (8,679) (6,727) (92,008) (8,939) (22,783) Basic and diluted net loss per share (0.03) (0.00) (0.00) (0.00) (0.00) (0.01) (0.00) (0.01)
Apr 30, 2023 ($) Jan 31, 2023 ($) Oct 31, 2022 ($) July 31, 2022 ($) Apr 30, 2022 ($) Jan 31, 2022 ($) Oct 31, 2021 ($) July 31, 2021 ($)
Cash 154,839 178,850 194,824 454,609 486,849 502,380 153,223 170,191 Total assets 174,700 437,727 453,572 488,972 495,319 512,272 181,860 198,055

During the three months ended April 30, 2023, the Company recorded a net loss of $271,352, compared to $6,727 during the same quarter in the prior year. The increase is mainly attributable to a loan impairment of $250,000 relating to the Loan as described in the section titled Discussion of Operations and Proposed Transaction .

Similarly, net loss this quarter is significantly higher than the prior seven consecutive quarters presented above as a result of the Loan impairment.

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Shellron Capital Ltd. Management’s Discussion and Analysis For the Year Ended April 30, 2023 (Expressed in Canadian Dollars, except where noted)

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Selected Annual Information

	Year ended
	April 30, April 30, April 30, 2023 2022 20211 ($) ($) ($)
Net loss for the year Basic and diluted lossper share	(330,695) (130,457) (6,162) (0.04) (0.02) (0.00)
1 Year ending April 30, 2021 is from the date of incorporation, January 21, 2021, to April 30, 2021

	April 30,	April 30,	April 30,
	2023	2022	2021
	($)	($)	($)
Cash	154,839	486,849	205,324
Total assets	174,700	495,319	210,338

During the year ended April 30, 2023, the Company incurred a net loss $330,695, compared to $130,457 during fiscal 2022 and $6,162 during fiscal 2021, which was for the period from the date of incorporation (January 21, 2021) to April 30, 2021. The significantly higher net loss in fiscal 2023 is attributable to a loan impairment of $250,000 relating to the Loan as described in the section titled Discussion of Operations and Proposed Transaction .

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.

	Year Ended
	April 30, April 30, 2023 2022 ($) ($)
Cash used in operating activities Cash used in investing activities Cash from financing activities Cash,end ofyear	(82,010) (75,885) (250,000) - - 357,410 154,839 486,849

As at April 30, 2023, the Company had working capital of $164,126, compared to $494,821 at April 30, 2022.

During the current year, the Company used $82,010 in operating activities, generally consistent with $75,885 during the prior year.

The Company also provided a loan to Launchtrip in the amount of $250,000 during the current year, included in cash used in investing activities. There were no cash used in investing activities for the comparative prior year.

There were no financing activities during the current year. During the comparative prior year, the Company completed its IPO and received net proceeds of $357,410.

As at April 30, 2023, the Company had cash of $154,839 and current liabilities of $10,574. The Company has sufficient cash and access to capital to meet working capital requirements, and obligations as they become due.

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Shellron Capital Ltd. Management’s Discussion and Analysis For the Year Ended April 30, 2023 (Expressed in Canadian Dollars, except where noted)

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Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Related Party Transactions

During the year ended April 30, 2023, the Company incurred general and administration costs of $24,000 (2022 - $8,000) to Orea Mining Corp., a company with common officers and directors. There are no amounts owing to Orea Mining Corp. as at April 30, 2023 and 2022.

Commitments

The Company had no financial commitments as at April 30, 2023 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 Policies and 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 April 30, 2023 and 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. 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.

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Shellron Capital Ltd. Management’s Discussion and Analysis For the Year Ended April 30, 2023 (Expressed in Canadian Dollars, except where noted)

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• (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 April 30, 2023, the Company has a cash balance of US$19,055 (2022 – US$19,127). 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 $2,500 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.

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.

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 audited financial statements for year ended April 30, 2023 to which this MD&A relates.

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Shellron Capital Ltd. Management’s Discussion and Analysis For the Year Ended April 30, 2023 (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 dates presented:

	As at date of this	April 30,
	MD&A	2023
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.

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

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Shellron Capital Ltd. Management’s Discussion and Analysis For the Year Ended April 30, 2023 (Expressed in Canadian Dollars, except where noted)

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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. 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.

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Shellron Capital Ltd. Management’s Discussion and Analysis For the Year Ended April 30, 2023 (Expressed in Canadian Dollars, except where noted)

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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 Accountants 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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