U.S. SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


FORM 10-K


ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE ACT OF 1934





For the fiscal year ended December 31, 2010


Commission file number: 000-31176





SHELRON GROUP, INC.


(Exact name of registrant as specified in its charter)





Delaware

04-2968425(State of incorporation)

(I.R.S. Employer Identification No.)





39 Broadway


New York, New York 10006


(Address of principal executive offices)





Tel: (516) 620-6794


(Registrant’s telephone number, including area code)





Securities registered pursuant to Section 12(b) of the Exchange Act:


None





Securities registered pursuant to Section 12(g) of the Exchange Act:


Common Stock, $0.001 par value





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  o      No  x





Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes  o      No  x





Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o





Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):





Large accelerated filer o

Accelerated filer oNon-accelerated filer o

Smaller reporting company x(Do not check if a smaller reporting company)





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x





The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently computed second fiscal quarter was $133,695.





The number of shares of the issuer’s common stock issued and outstanding as of April 4, 2011 was 18,477,492 shares.





Documents Incorporated By Reference:


None








TABLE OF CONTENTS





PagePART IItem 1
Business
1Item 1A
Risk Factors
3Item 1B
Unresolved Staff Comments
3Item 2
Properties
3Item 3
Legal Proceedings
3Item 4
Removed and Reserved
3PART IIItem 5
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
4Item 6
Selected Financial Data
4Item 7
Management’s Discussion and Analysis of Financial Condition and Results of Operation
5Item 7A
Quantitative and Qualitative Disclosures About Market Risk.
9Item 8
Financial Statements.
9Item 9
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
9Item 9A
Controls and Procedures
9Item 9B
Other Information
11PART IIIItem 10
Directors, Executive Officers and Corporate Governance
12Item 11
Executive Compensation
14Item 12
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
14Item 13
Certain Relationships and Related Transactions, and Director Independence
16Item 14
Principal Accountant Fees and Services
16PART IVItem 15
Exhibits, Financial Statement Schedules
17SIGNATURES

18










PART 1





ITEM 1. BUSINESS





COMPANY OVERVIEW





Shelron Group, Inc. (the “Company”, “we”, “our”, or “us”) developed e-commerce advertising and comparative shopping software products and services.  At the present time, the Company does not intend to actively promote its current ActiveShopper product but will instead explore new opportunities in the mining, media, internet, oil and gas and high-tech fields. We are also considering strategic acquisitions that management believes will enhance our market positioning.





We released our initial product, ActiveShopper, in August 2004. ActiveShopper is a free software download that automatically scans, locates and compares prices for an item that a consumer selects at an e-commerce Web site and is designed to assist consumers in making informed purchase decisions by enabling them to find the items they are looking for, compare products, prices and stores, and buy from among thousands of online merchants.





We presently generate revenues, if any, primarily from consulting work performed regarding the mining, media, internet, oil and gas and high tech fields as well as management of advertising campaigns through ActiveShopper.





On October 1, 2009, we discontinued the operations and disposed of our research and development subsidiary in Israel. The operating results of this subsidiary are classified as discontinued operations in the statement of operations.





On April 3, 2011 we have signed a non-binding Memorandum of Understanding to acquire gold mining rights in Ghana.  We are currently conducting due diligence on these mines and if satisfactory we will move to close the transaction.  Until we complete our due diligence process we will be unable to determine if we will make an offer to acquire these mines and if our offer will be accepted by the sellers.





We were originally incorporated in the State of Massachusetts in June 1987, under the name "Professional Brushes, Inc." In April 1999, we changed our state of incorporation to Delaware by means of a merger with and into a Delaware company and, in connection therewith, changed our name to "PB Acquisition Corp." In May 2000, we entered into a share exchange agreement with TTTTickets.com, Inc., a Delaware corporation ("Tickets") incorporated in April 2000 for the purposes of developing and maintaining an internet website for the sale and purchase of event tickets, pursuant to which Tickets became a wholly owned subsidiary of our company. We also changed our name to "TTTTickets Holding Corp." Thereafter, in November 2001, we entered into a stock purchase and merger agreement with B-Park Communications, Inc., ("B-Park") a Delaware corporati
on formed in August 2001 for the sole purpose of entering into such agreement.  In September 2002, we changed our name to "Shelron Group, Inc."





In this report, the terms "we," "us" and the "Company" refer to Shelron Group, Inc., its predecessors, and subsidiary, unless the context indicates otherwise.





INDUSTRY BACKGROUND





Historically, we were engaged in the online shopping business. Online shopping comparison Web sites were established to help consumers manage the task of shopping online by enabling them to find, compare, and buy products conveniently and efficiently.  Over the years, little has changed in the way comparative shopping services function and what they offer to their users. Our product ActiveShopper offered simplicity to consumers without providing complex mechanisms and comparison data, offered by most of shopping comparison services, thereby protecting consumers better from pseudo-attractive buying offers received by email and advertising banners.





At the present time, we do not intend to actively promote our current ActiveShopper product but will instead explore new opportunities in the media/internet/high-tech fields. We are also considering strategic acquisitions of synergistic technologies that management believes will enhance our market positioning.


1





OUR STRATEGY





While we may still offer our ActiveShopper software product, at the present time we do not intend to actively promote it but will instead explore new opportunities in the mining, media, internet and high-tech fields. We are also considering strategic acquisitions of synergistic technologies that management believes will enhance our market positioning.





On April 3, 2011 we have signed a non-binding Memorandum of Understanding to acquire gold mining rights in Ghana.  We are currently conducting due diligence on these mines and if satisfactory we will move to close the transaction.  Until we complete our due diligence process we will be unable to determine if we will make an offer to acquire these mines and if our offer will be accepted by the sellers.





MARKETING PLAN





Historically, our efforts have been devoted primarily to the design, development and testing of ActiveShopper, as well as raising the capital needed to develop and maintain our business. As a result of capital raises, our development and testing, as well as, our marketing efforts have significantly increased in scope and magnitude.





We do not intend to actively promote our ActiveShopper product but will instead explore new opportunities in the media/internet/high-tech fields.





PROPRIETARY RIGHTS





We seek to protect our proprietary rights through a combination of copyright, trade secret, patent and trademark law, and contractual restrictions, such as confidentiality agreements and proprietary rights agreements. We enter into confidentiality and proprietary rights agreements with our service providers, and generally control access to and distribution of our proprietary information. Despite our efforts to protect our proprietary rights, unauthorized parties may obtain and use our intellectual property, and we cannot be certain the steps we have taken will prevent misappropriation or confusion among consumers and merchants. If we are unable to procure, protect and enforce our intellectual property rights, then we may not realize the full value of these assets, and our business may suffer.





We do not currently have any additional registered trademarks. We do not currently have any patents on our technologies.





COMPETITION





Historically, the market for advertising and comparative shopping software products and services was highly competitive. Our competitors included Web sites such as Shopping.com, Shopzilla, PriceGrabber.com, and DealTime.com.





EMPLOYEES AND CONSULTANTS





We currently have one full time employee, who is our President. Our President also currently serves as one of our three Directors.





We presently retain professional service providers and consultants, who provide services including, management, technical maintenance, marketing, financial accounting and administration and public relations services. These service providers and consultants may provide their services to us on a full-time, part-time, or on demand basis.





AVAILABLE INFORMATION





The public may read and copy any materials we file with the Securities and Exchange Commission ("SEC") at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Rooms by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. The SEC's Internet website is located at http://www.sec.gov


2





Item 1A. Risk Factors





Not required for Smaller Reporting Companies.





Item 1B.Unresolved Staff Comments





None.





ITEM 2. PROPERTIES.





We do not own any real property.





We maintain an office at 39 Broadway, New York, New York.  No rent is charged for this space.  We believe that our office space in the United States is sufficient to meet our current and anticipated needs.





ITEM 3. LEGAL PROCEEDINGS.





We are not involved in any pending legal proceedings which we anticipate can result in a material adverse effect on our business or operations.





ITEM 4. REMOVED AND RESERVED.


3





PART II





Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.





Market Information





The Company's Common Stock is listed on the OTC Bulletin Board under the symbol "SRNG". The following table sets forth the high and low bid information for the Company's Common Stock for each quarterly period during the year ended December 31, 2009 and 2010 as reported by the OTC Bulletin Board. The OTC Bulletin Board quotations reflect inter-dealer prices, are without retail markup, markdown or commission, and may not represent actual transactions.  The prices shown reflect a one for twenty-five reverse stock split which became effective on October 20, 2008.





High


LowCalendar Year 2009First Quarter

$
0.020


$
0.013Second Quarter

$
0.070


$
0.005Third Quarter

$
0.040


$
0.004Fourth Quarter

$
0.009


$
0.003Calendar Year 2010First Quarter

$
0.007


$
0.004Second Quarter

$
0.027


$
0.002Third Quarter

$
0.027


$
0.003Fourth Quarter

$
0.015


$
0.002





HOLDERS





At the date of this filing there are approximately 364 holders of record of the Company's Common Stock. This does not reflect those shares held beneficially or those shares held in "street" name.





DIVIDENDS





Holders of Common Stock and Series A Preferred Stock are entitled to dividends, when, as, and if declared by our Board of Directors, out of funds legally available therefore. Except for a stock dividend distribution in August 2003 of 406,357 shares of its Common Stock, we have paid no dividends in any form on the Common Stock or Series A Preferred Stock and do not expect to pay cash dividends in the foreseeable future with respect to the Common Stock or Series A Preferred Stock.





It is the present policy of our Board of Directors to retain all earnings to provide funds for our growth. The declaration and payment of dividends in the future will be determined by our Board of Directors based upon our earnings, financial condition, capital requirements and such other factors as our Board of Directors may deem relevant. We are not under any contractual restriction as to our present or future ability to pay dividends.





EQUITY COMPENSATION PLAN INFORMATION





We do not have any existing option or equity compensation plans.





Purchases of Equity Securities by the Small Business Issuer and Affiliated Purchasers





We have not repurchased any shares of our common stock during the fiscal years ended December 31, 2010 and 2009.





Item 6.Selected Financial Data.





Not applicable.


4





ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS





FORWARD-LOOKING STATEMENTS





The Company or management may make or may have made certain forward-looking statements, orally or in writing, such as those within Management's Discussion and Analysis contained in its various SEC filings. The Company wishes to ensure that such statements are accompanied by meaningful cautionary statements, so as to ensure to the fullest extent possible the protections of the safe harbor established in the Private Securities Litigation Reform Act of 1995. Such statements are therefore qualified in their entirety by reference to and are accompanied by the following discussion of certain important factors that could cause actual results to differ materially from those described in such forward-looking statements.





The Company cautions the reader that this list of factors is not intended to be exhaustive. The Company operates in a continually changing business environment, and new risk factors emerge from time to time. Management cannot predict such factors, nor can it assess the impact, if any, of such factors on the Company's business or the extent to which any factors may cause actual results to differ materially from those described in any forward-looking statement. None of the Company's forward-looking statements should be relied upon as a prediction of actual results.





The Company faces risks and uncertainties that could render actual events materially different than those described in our forward-looking statements. These risks and uncertainties are described elsewhere in this report.





OVERVIEW





The “Company” developed e-commerce advertising and comparative shopping software products and services. At the present time, the Company does not intend to actively promote its current ActiveShopper product but will instead explore new opportunities in the mining, media, internet, oil and gas and high-tech fields. We are also considering strategic acquisitions that management believes will enhance our market positioning.





We released our initial product, ActiveShopper, in August 2004. ActiveShopper is a free software download that automatically scans, locates and compares prices for an item that a consumer selects at an e-commerce Web site and is designed to assist consumers in making informed purchase decisions by enabling them to find the items they are looking for, compare products, prices and stores, and buy from among thousands of online merchants.





We presently generate revenues primarily from consulting work performed regarding the media, internet, oil and gas and high tech fields as well as management of advertising campaigns through ActiveShopper.





On October 1, 2009, we discontinued the operations and disposed of our research and development subsidiary in Israel. The operating results of this subsidiary are classified as discontinued operations in the statement of operations.





On April 3, 2011, we have signed a non-binding Memorandum of Understanding to acquire gold mining rights in Ghana.  We are currently conducting due diligence on these mines and if satisfactory we will move to close the transaction.  Until we complete our due diligence process, we will be unable to determine if we will make an offer to acquire these mines and if our offer will be accepted by the sellers.





Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may d
iffer materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.





We do not participate in, nor have we created, any off-balance sheet special purpose entities or other off-balance sheet financing.





We have identified the accounting policies below as critical to our business operations and the understanding of our results of operations.


5





CRITICAL ACCOUNTING POLICIES AND ESTIMATES





Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may diff
er materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.





Our significant accounting policies are summarized in Note 3 of Notes to Financial Statements. While all these significant accounting policies impact its financial condition and results of operations, the Company views certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our consolidated financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our consolidated results of operations, financial position or liquidity for the presented in this report.


6





RESULTS OF OPERATIONS





Comparison of the Year Ended December 31, 2010 (the "2010 Period") and the Year Ended December 31, 2009 (the "2009 Period"):





Continuing Operations





Revenues





Revenues for the 2010 Period and 2009 Period were $17,690 and $896, respectively.  The revenues in the 2010 Period resulted from consulting services performed by the Company for a company in the oil and gas industry and advertising campaigns.  As discussed above, during 2010, we did not actively promote our current ActiveShopper product. Instead, we explored new opportunities in the mining, media, internet, oil and gas and high-tech fields and provided consulting services to some of these industries during the 2010 Period. We also considered strategic acquisitions that management believes will enhance our market positioning. In addition, on October 1, 2009, we discontinued the operations of our subsidiary.





Operating Expenses





Operating expenses consist of salaries, consulting expenses, professional fees, marketing and advertising and other expenses associated with the operations of our business. For the 2010 Period, operating expenses were $232,313, a decrease of $41,313 or 15.1%, as compared to $273,626 for the 2009 Period.  The decrease is primarily attributable to decreased office and general expenses of $11,478, depreciation and amortization of $12,499 and employment compensation of $7,104 in the 2010 Period as compared to the 2009 Period.  This was partially offset by the marketing and advertising reimbursement in the 2009 Period of $6,083 and increased consulting expenses of $9,036.





Employment Compensation





Our sole full-time employee is our Chairman of the Board, Eliron Yaron.  For the 2010 Period and 2009 Period, employment compensation totaled $156,000 and $163,104, respectively, a decrease of $7,104.





Professional Fees





Professional fees consist primarily of legal, accounting and auditing. For the 2010 Period, professional fees were $40,000, an increase of 5.3% as compared to $38,000 for the 2009 Period.





Marketing and advertising


For the 2010 Period, marketing and advertising expenses were $0 as compared to income of $6,083 resulting from an advertising reimbursement during the 2009 Period.


7





Impairment of Intangible Asset





During the 2009 Period, we changed our strategy and are no longer actively promoting our current ActiveShopper product.  As a result our intangible asset related to our ActiveShopper name became impaired and we recorded an impairment loss of $22,000 during the period.





Discontinued Operations





On October 1, 2009, we discontinued the operations and disposed of our subsidiary. The operations for our discontinued subsidiary resulted in a net loss of $42,774 during the 2009 Period. The operating results of this subsidiary are classified as discontinued operations in the statements of operations. The total of the assets and liabilities disposed was $121,190 and $188,702, respectively.  We recorded a gain on the disposition of our subsidiary in the amount of $67,512.





LIQUIDITY AND CAPITAL RESOURCES





To date, we have financed our operations primarily from cash generated through the sale of our Common Stock in private placements as well as from cash earned from our operations.





As of December 31, 2010, we had a cash balance of $54.





Cash used in operating activities from continuing operations was $43,773 for the 2010 Period compared to $70,480 for the 2009 Period. The decrease in cash from operating activities for the 2010 Period is primarily attributable to the cash needed to fund the loss for the 2010 Period.





Cash provided by financing activities in the 2010 Period was $43,545 compared to $52,195 for the 2009 Period which all related to proceeds received from Eliron Yaron, our President, for investments in the Company’s common stock.





Net cash used by discontinued operations amounted to $0 in the 2010 Period and $29,326 in the 2009 Period.





At the present time, the Company does not intend to actively promote its current Activeshopper product but will instead explore new opportunities in the mining, media, internet, mining, oil and gas and high-tech fields.





The focus of the Company’s efforts is to acquire or develop an operating business. Despite limited active operations at this time, management intends to continue in business and has no intentions to liquidate the Company. The Company has considered various business alternatives including the possible acquisition of an existing business. The Company does not contemplate limiting the scope of its search to any particular industry but we focus in the media and ecommerce business. Management has considered the risk of possible opportunities as well as their potential rewards. Management has invested time evaluating proposals for possible acquisitions or combinations; however, at this time, none of these opportunities have been pursued. The Company’s primary continuing expected expenses are comprised primarily of employment comp
ensation and professional fees.





On April 3, 2011 we signed a non-binding Memorandum of Understanding to acquire gold mining rights in Ghana.  We are currently conducting due diligence on these mines and if satisfactory we will move to close the transaction.  Until we complete our due diligence process we will be unable to determine if we will make an offer to acquire these mines and if our offer will be accepted by the sellers.





The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has incurred continuing losses, has a working capital deficiency of approximately $596,000 and an accumulated deficit of approximately $6.3 million, all of which raises substantial doubt about the Company's ability to continue as a going concern.





The Company is currently dependent on its President, Mr. Yaron, to continue to fund the Company. If the Company is unable to acquire or develop an operating business the Company will be unable to fund itself. There is no guarantee that Mr. Yaron will continue to fund the Company.


8





Management believes the Company will continue to incur losses and negative cash flows from operating activities for the foreseeable future and will need additional equity or debt financing to sustain its operations until it can achieve profitability and positive cash flows, if ever. The Company’s continuation as a going concern is dependent upon its ability to ultimately attain profitable operations, generate sufficient cash flow to meet its obligations, and obtain additional financing as may be required. The outcome of this uncertainty cannot be assured. Our independent registered public accounting firm, in their reports on our financial statements for the year ended December 31, 2010, expressed substantial doubt about our ability to continue as a going concern. These circumstances could complicate our ability to raise additiona
l capital. Our financial statements do not include any adjustments to the carrying amounts of our assets and liabilities that might result from the outcome of this uncertainty.





The accompanying consolidating financial statements do not include any adjustments that might result from the outcome of this uncertainty. There can be no assurance that management will be successful in implementing its business plan or that the successful implementation of such business plan will actually improve the Company's operating results.





OFF-BALANCE SHEET ARRANGEMENTS





None.





TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS





Consulting Agreement dated as of March 1, 2005 between the Company and Hull Services, Inc.





Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.





Not applicable.





ITEM 8. FINANCIAL STATEMENTS





The financials statements of our company for the years ended December 31, 2010 and 2009 are attached hereto following the signature page commencing on page F-1.





ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE





None.





Item 9A.  Controls and Procedures.





Evaluation of Effectiveness of Disclosure Controls and Procedures





Under the supervision and with the participation of our management, including our Chief Executive Officer, who also acts as our Chief Financial Officer, the Company evaluated the effectiveness of its disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The evaluation considered the procedures designed to provide assurance to ensure that information required to be disclosed by us in the reports filed or submitted by the Company under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and communicated to our management as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures ha
ve been designed to provide reasonable assurance of achieving their objectives. Based on that evaluation, our Chief Executive Officer concluded that our disclosure controls and procedures were effective at that reasonable assurance level, as of December 31, 2010.


9





Our internal controls over financial reporting are designed by, or under the supervision of, our Chief Executive Officer, or persons performing similar functions, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:





- Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets.





- Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and





- Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.





This annual report does not include an attestation report of Shelron’s registered public accounting firm regarding internal control over financial reporting.  Management's report was not subject to attestation by Shelron’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit Shelron to provide only management's report in this annual report.





Management’s Report on Internal Control Over Financial Reporting





Our Chief Executive Officer, is responsible to design or supervise a process to be effected by our board of directors that provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. It is management’s responsibilities to establish and maintain adequate internal controls over the Company’s financial reporting.





The policies and procedures include:





- Maintenance of records in reasonable detail to accurately and fairly reflect the transactions and dispositions of assets,





- Review and authorization by management for all receipts and expenditures,





- Reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors, and





- Reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.





Management, with the participation of our Chief Executive Officer, evaluated the effectiveness of our internal controls over financial reporting based upon the framework provided by the Treadway Commission’s Committee of Sponsoring Organizations. The Company’s Chief Executive Officer, who also acts in the capacity of Chief Financial Officer, has concluded that the Company’s internal controls over financial reporting were effective as of the end of the period covered by the Report.


10





Changes in Internal Control Over Financial Reporting





There have been no changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the year ended December 31, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.





LIMITATIONS OF EFFECTIVENESS OF INTERNAL CONTROLS





Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material errors. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations on all internal control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and t
hat breakdowns can occur because of simple error or mistake. The design of any system of internal control is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in circumstances, and/or the degree of compliance with the policies and procedures may deteriorate. Because of the inherent limitations in a cost effective internal control system, financial reporting misstatements due to error or fraud may occur and not be detected on a timely basis.





Item 9B.Other Information.





None.




11





PART III





ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE





The following table sets forth information concerning our Directors and Executive Officer:





Name

Age

Positions and Offices HeldEliron Yaron

42

Chairman, Chief Executive Officer, Principal Financial And Accounting Officer, Director and SecretaryIssac Maizel

31

DirectorYossi Levi

31

Director





Eliron Yaron, age 42, has been the Chairman of our Board of Directors, Principal Executive Officer and Principal Financial and Accounting Officer since company's inception date in August 2001. Prior to joining us, from 1996 through 2001, he was the founder and Chief Executive Officer of Shelron Internet Ltd., a web project oriented company. Prior to that time, since 1993, he has engaged in either founding web related business or working in related technology areas. Eliron Yaron has served on the boards of Internet companies in the US and Israel, and has advised venture capital funds and investment companies on IT and Internet related investments and marketing.





Isaac Maizel, age 31, has worked since 2001 as a computer network consultant, with an expertise in large networks implementation.





Yossi Levi, age 31, worked since 2001 as an E-learning consultant, and as an internet advertising salesman.





THE COMMITTEES





The Board of Directors does not have a Compensation, Audit or Nominating Committee, and the usual functions of such committees are currently performed by the Board of Directors. The Directors have determined that at present we do not have an audit committee financial expert. The Directors believe that they are capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. In addition, we have been seeking and continue to seek appropriate individuals to serve on the Board of Directors and the Audit Committee who will meet the requirements necessary to be an independent financial expert.





EXECUTIVE OFFICERS OF OUR COMPANY





Officers are appointed to serve at the discretion of the Board of Directors. Mr. Eliron Yaron currently serves as our Chairman of the Board and sole Executive Officer.





CODE OF ETHICS





We adopted a code of ethics that applies to our Principal Executive Officer and Principal Financial and Accounting Officer, and other persons who perform similar functions. A copy of our Code of Ethics is filed as an exhibit to the Annual Report on Form 10-KSB for the year ended December 31, 2003.  Our Code of Ethics is intended to be a codification of the business and ethical principles which guide us, to deter wrongdoing, promote honest and ethical conduct, avoid conflicts of interest, and foster full, fair, accurate, timely and understandable disclosures, compliance with applicable governmental laws, rules and regulations, the prompt internal reporting of violations and accountability for adherence to this Code.


12





SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE





Section 16(a) of the Exchange Act requires the Company's Executive Officers, Directors and persons who beneficially own more than 10% of a registered class of the Company's equity securities to file with the Commission initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Such persons are required by Commission regulations to furnish the Company with copies of all Section 16(a) forms they filed. Based solely upon a review of (i) Forms 3 and 4 and amendments thereto  furnished to the Company pursuant to Rule 16a-3(e), promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), during the Company's fiscal year ended December 31, 2010, and (ii) Forms 5 and amendments thereto and/or written representations furnished to us by any Director, offic
er or 10% security holder of the Company (collectively "Reporting Persons") stating that he or she was not required to file a Form 5 during the Company's fiscal year ended December 31, 2010, it has been determined that all Officers, Directors and persons who beneficially own more than 10% of a registered class of the Company's equity securities have met their reporting obligations set forth in Section 16(a) of the Exchange Act.





Potential Conflicts of Interest





Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our directors. The Board of Directors has not established an audit committee and does not have an audit committee financial expert, nor has the Board established a nominating committee. The Board is of the opinion that such committees are not necessary since the Company has only three directors, and to date, such directors have been performing the functions of such committees. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation, nominations, and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our
executive officers or directors.





Involvement in Certain Legal Proceedings





There are no legal proceedings that have occurred within the past five years concerning our directors, or control persons which involved a criminal conviction, a criminal proceeding, an administrative or civil proceeding limiting one's participation in the securities or banking industries, or a finding of securities or commodities law violations.


13





ITEM 11. EXECUTIVE COMPENSATION





The Summary Compensation Table below sets forth compensation paid by the Company for the fiscal years ended December 31, 2010 and 2009 for services to its Principal Executive Officer and other Executive Officers who received a total annual salary and bonus which exceeded $100,000.





SUMMARY COMPENSATION TABLENAME AND


ANNUAL AND TOTALPOSITION
YEAR

COMPENSATIONEliron Yaron,Chairman, Principal Executive
2010

$
156,000Officer and Principal Financial
2009

$
163,104And Accounting Officer





Mr. Yaron did not receive a bonus or any type of other compensation, not mentioned above, for the two years presented.





OPTION GRANTS





None of the Named Executive Directors were granted any options during the years ended December 31, 2010 and 2009.





AGGREGATE OPTIONS EXERCISED IN 2010 AND 2009 YEAR END VALUES





Not applicable.





EQUITY COMPENSATION PLAN INFORMATION





Not applicable.





EXECUTIVE EMPLOYMENT





In March 2005, we entered into a Consulting Agreement ("Consulting Agreement") with Hull Services Inc. ("Hull"), a company wholly-owned and controlled by Eliron Yaron, the Chairman of the Board of Directors and the Principal Executive Officer of the Company. Pursuant to the terms of this Consulting Agreement, we pay to Hull $156,000 per annum in installments of $3,000 per week for Mr. Yaron’s services, in addition to reimbursing all reasonable expenses incurred in connection with services rendered on behalf of our Company. The compensation accrues and is paid when funds for such payments are available. As of December 31, 2010, accrued and outstanding fees to Hull are $440,594. The Consulting Agreement continues in effect through March 2010 and contains certain customary confidentiality and non-compete provisions. The Consulting A
greement is renewed automatically for successive one year periods until either party gives the other a 180-day prior written notice of its intent to terminate the Consulting Agreement. As of December 31, 2010, no prior written notice with the intent to terminate the Consulting Agreement was provided. Therefore, the Consulting Agreement has been automatically extended until March 2012.





ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS





The following table sets forth information as of April 4, 2011, concerning all persons known by us to own beneficially more than 5% of our Common Stock and concerning shares beneficially owned by each Director and named Executive Officer and by all Directors and Executive Officers as a group. Unless expressly indicated otherwise, each stockholder exercises sole voting and investment power with respect to the shares beneficially owned.





In accordance with the rules of the SEC, the table gives effect to the shares of Common Stock that could be issued upon the exercise of outstanding options and common stock purchase warrants within the next 60 days. Unless otherwise noted in the footnotes to the table and subject to community property laws where applicable, the following individuals have sole voting and investment control with respect to the shares beneficially owned by them.


14





The address of each Executive Officer and Director is 29 Broadway, New York, NY 10006. We have calculated the percentages of shares beneficially owned based on 18,477,492 shares of Common Stock outstanding at April 4, 2011.





Name and Address of Beneficial

Owner

Shares of

Common Stock

Stock


Percentage

Ownership of

Shares of

Common

Stock

(1 )


Preferred

Shares of

(2 )


Voting Power

of Shares of

Preferred

StockExecutive Officers andDirectorsEliron Yaron


1,367,953



7.4
%


1,000,000



52
%Issac Maizel


0







0Yossi Levi


0







0All Executive Officers


1,367,953



7.4
%


1,000,000



52
%and Directors as a group(3 persons)5% StockholdersJoseph Corso (3)


3,560,000



19.3
%


0



*Eddie  Caspi  (4)


2,001,174



9.8
%


0



*All Executive Officers,Directors and 5%Stockholders as a group (5)


6,929,127



33.8
%


1,000,000



52
%(5 persons)


* less than one percent (1%).


(1) Percentage of beneficial ownership as to any person as of a particular date is calculated by dividing the number of shares of Common Stock issued and outstanding of such person as of such date and the number of unissued shares as to which such person has the right to acquire voting and/or investment power within 60 days, by the total issued and outstanding shares of Common Stock of the Company at such date.





(2) Comprised of 1,000,000 shares of Common Stock issuable upon the conversion of 1,000,000 shares of Series A Preferred Stock issued to Hull, a company wholly-owned and controlled by Mr. Yaron. As the sole Stockholder of Hull, Mr. Yaron may be deemed a beneficial owner of the shares of Common Stock issuable upon conversion of the Series A Preferred Stock.





(3) Derived from a Schedule 13G filed by Joseph Corso on January 4, 2007. The address of such person is: 39 Broadway, New York, NY, 10006.





(4) Derived from the assumed conversion of the Convertible Note Payable to Eddie Caspi. The address of such person is: 39 Broadway, New York, NY, 10006. The total number of shares outstanding includes the shares that would be issued upon the conversion of the Convertible Note Payable.





(5) The total number of shares outstanding includes the shares that would be issued upon the conversion of the Convertible Note Payable.


15





ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.





In March 2005, we entered into a Consulting Agreement ("Consulting Agreement") with Hull Services Inc. ("Hull"), a company wholly-owned and controlled by Eliron Yaron, the Chairman of the Board of Directors and the Principal Executive Officer of the Company. Pursuant to the terms of this Consulting Agreement, we pay to Hull $156,000 per annum in installments of $3,000 per week for Mr. Yaron’s services, in addition to reimbursing all reasonable expenses incurred in connection with services rendered on behalf of our Company. The compensation accrues and is paid when funds for such payments are available. As of December 31, 2010, accrued and outstanding fees to Hull are $440,594. The Consulting Agreement continues in effect through March 2010 and contains certain customary confid
entiality and non-compete provisions. The Consulting Agreement is renewed automatically for successive one year periods until either party gives the other a 180-day prior written notice of its intent to terminate the Consulting Agreement. As of December 31, 2010, no prior written notice with the intent to terminate the Consulting Agreement was provided. Therefore, the Consulting Agreement has been automatically extended until March 2012.





ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES





From July 17, 2006 and through the subsequent periods for fiscal year ended December 31, 2010, our principal independent auditor was Rotenberg Meril Solomon Bertiger & Guttilla, P.C. ("RMSBG"). The following are the services provided and the amount billed:





AUDIT FEES





The aggregate fees billed or to be billed by RMSBG for professional services rendered for the audit of the Company's annual financial statements for the fiscal year ended December 31, 2010 and 2009 and for the review of the financial statements included in the Company's Quarterly Reports on Form 10-Q were $36,000 and $36,000, respectively.





AUDIT RELATED FEES





Other than the fees described under the caption "Audit Fees" above, RMSBG did not bill any fees for services rendered to us during fiscal years 2010 and 2009 for assurance and related services in connection with the audit or review of our financial statements.





TAX FEES





Fees billed by RMSBG for tax services rendered during the fiscal years ended December 31, 2010 and 2009 were approximately $1,000 and $1,000, respectively.





ALL OTHER FEES





There were no fees billed by RMSBG for other professional services rendered during the periods for fiscal years ended December 31, 2010 and 2009, respectively.





PRE-APPROVAL OF SERVICES





We do not have an audit committee. Our Board of Directors pre-approves all services, including both audit and non-audit services, provided by our independent accountants. For audit services, each year the independent auditor provides our Board of Directors with an engagement letter outlining the scope of the audit services proposed to be performed during the year, which must be formally accepted by the Board of Directors before the audit commences.  The independent auditor also submits an audit services fee proposal, which also must be approved by the Board of Directors before the audit commences.


16


PART IV





Item 15.Exhibits. Financial Statement Schedules.





Exhibit Number

Description3.1

Certificate of Incorporation of the Company. (1)3.2

Bylaws of the Company. (1)3.3

Certificate of Amendment of Certificate of Incorporation.4.1

Certificate of Designation of the Company.(2)10.1

Stock Purchase Agreement. (3)10.2

Debentures dated October 31, 2001. (2)10.3

Subscription Agreement dated as of January 4, 2005 between the Company and Joseph Corso. (5)10.4

Financial Advisory Agreement dated as of January 4, 2005 between the Company and Joseph Corso. (5)10.5

Consulting Agreement dated as of March 1, 2005 between the Company and Hull Services, Inc. (5)10.6

Letter Agreement, dated April 24, 2006, by and between Joseph Corso and Shelron Group, Inc. (6)10.7

Extension letter, dated May 10, 2005, by Joseph Corso (6)10.8

Extension letter, dated June 7, 2005, by Joseph Corso (6)14

Code of Ethics. (4)31

Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.32

Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.





(1) This exhibit was filed as an exhibit to the Registration statement on Form 10-SB12G filed on October 11, 2000 and is incorporated herein by reference.





(2) This exhibit was filed as an exhibit to the Annual Report on Form 10-KSB filed on April 16, 2002 and is incorporated herein by reference.





(3) This exhibit was filed as an exhibit to the Current Report on Form 8-K filed on November 16, 2001 and is incorporated herein by reference.





(4) This exhibit was filed as an exhibit to the Annual Report on Form 10-KSB filed on May 21, 2004 and is incorporated herein by reference.





(5) This exhibit was filed as an exhibit to the Annual Report on Form 10-KSB filed on April 8, 2005 and is incorporated herein by reference.





(6) This exhibit was filed as an exhibit to the Current Report on Form 8-K filed on May 8, 2006 and is incorporated herein by reference.


17


SIGNATURES





Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.





SHELRON GROUP, INC.Dated: April 15, 2011
By:
/s/ Eliron YaronEliron YaronChairman





Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following person on behalf of the Company and in the capacities and on the date indicated.





Signature

Capacity

Date/s/ Eliron Yaron

Chairman and Director

April 15, 2011Eliron YaronIssac Maizel

Director

April 15, 2011Yossi Levi

Director

April 15, 2011


18


SHELRON GROUP INC.





INDEX TO FINANCIAL STATEMENTS





Report of Independent Registered Public Accounting Firm

F-2Balance Sheets as of December 31, 2010 and 2009

F-3Statements of Operations for the years ended December 31, 2010 and 2009

F-4Statements of Stockholders' Deficiency for the years ended December 31, 2010 and 2009

F-5Statements of Cash Flows for the years ended December 31, 2010 and 2009

F-6Notes to Financial Statements

F-7


F-1


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the Directors and Stockholders of


Shelron Group, Inc.





We have audited the accompanying balance sheets of Shelron Group, Inc. (the “Company”) as of December 31, 2010 and 2009, and the related statements of operations, changes in stockholders’ deficiency and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.





We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disc
losures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.





In our opinion, the  financial statements referred to above present fairly, in all material respects, the  financial position of the Company as of December 31, 2010 and 2009 and the results of its  operations and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.





The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company’s recurring losses from operations, stockholders' deficiency and working capital deficiency raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 1. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.





/s/ Rotenberg Meril Solomon Bertiger & Guttilla, P.C.


Saddle Brook, New Jersey


April 15, 2011


F-2


SHELRON GROUP INC.


BALANCE SHEETS


December 31,


December 31,2010


2009(Unaudited)ASSETSCurrent Assets:Cash

$
54


$
282Accounts receivable, net


-



895Total Current Assets


54



1,177Property and Equipment, net of accumulated depreciation of $211,389 and $211,126, respectively


-



263Total Assets

$
54


$
1,440LIABILITIES AND STOCKHOLDERS' DEFICIENCYCurrent Liabilities:Accounts payable and accrued expenses

$
104,986


$
81,736Due to stockholders


440,594



291,152Convertible note payable


50,000



50,000Total Current Liabilities


595,580



422,888Liability for common stock to be issued to officer


205,740



162,195Total Liabilities


801,320



585,083CommitmentsStockholders' Deficiency:Series A convertible preferred stock $0.001 par value per share, Authorized 1,000,000 shares; Issued and outstanding 1,000,000 shares


1,000



1,000Common stock, par value $0.001 par value per share Authorized 500,000,000 shares; Issued and outstanding 18,477,492 shares and 18,477,492 shares, respectively


18,477



18,477Additional paid-in capital


5,497,806



5,497,806Accumulated deficit


(6,318,549
)


(6,100,926
)Total Stockholders' Deficiency


(801,266
)


(583,643
)Total Liabilities and Stockholders' Deficiency

$
54


$
1,440





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


F-3


SHELRON GROUP INC.


STATEMENTS OF OPERATIONS





Year EndedDecember 31,


December 31,2010


2009Revenues

$
17,690


$
896Operating Expenses:Consulting fees


33,165



24,129Employment compensation


156,000



163,104Professional fees


40,000



38,000Marketing and advertising


-



(6,083
)Office and general expenses


855



12,333Depreciation and amortization


263



12,762Bank charges


1,135



4,119Bad debt expense


895



3,262Impairment loss


-



22,000Total Operating Expenses


232,313



273,626Loss from operations


(214,623
)


(272,730
)Other Income (Expense):Interest expense


(3,000
)


(3,750
)Loss from Continuing Operations


(217,623
)


(276,480
)Discontinued Operations:Loss from discontinued operations


-



(42,774
)Gain on disposition of discontinued operations


-



67,512Income from Discontinued Operations


-



24,738Net Loss

$
(217,623
)

$
(251,742
)Net loss per share:Continuing Operations - basic and diluted

$
(0.01
)

$
(0.02
)Discontinued Operations - basic and diluted

$
-


$
0.00Weighted average shares outstandingBasic and Diluted


18,477,492



17,987,108





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


F-4


SHELRON GROUP INC.


STATEMENTS OF STOCKHOLDERS' DEFICIENCY





Preferred StockNumber





Number





Additional





Totalof





of





Paid-in


Accumulated


Stockholders'Shares


Amount


Shares


Amount


Capital


Deficit


DeficiencyBalance at December 31, 2008


1,000,000


$
1,000



17,447,492


$
17,447


$
5,500,686


$
(5,849,184
)

$
(330,051
)Issuance of Common Stock for consulting fees and services


-



-



1,150,000



1,150



12,000



-



13,150Cancellation of Common Stock issued for consulting fees and services


-



-



(120,000
)


(120
)


(14,880
)


-



(15,000
)Net loss


-



-



-



-



-


$
(251,742
)


(251,742
)Balance at December 31, 2009


1,000,000


$
1,000



18,477,492


$
18,477


$
5,497,806


$
(6,100,926
)

$
(583,643
)Net loss


-



-



-



-



-


$
(217,623
)


(217,623
)Balance at December 31, 2010


1,000,000


$
1,000



18,477,492


$
18,477


$
5,497,806


$
(6,318,549
)

$
(801,266
)





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


F-5


SHELRON GROUP INC.


STATEMENTS OF CASH FLOWS





December 31,


December 31,2010


2009CASH FLOWS FROM OPERATING ACTIVITIES:Net loss

$
(217,623
)

$
(251,742
)Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization


263



12,762Common stock issued for consulting fees and services


-



13,150Cancellation of common stock issued for consulting fees and services


-



(15,000
)Allowance for doubtful accounts


895



3,262Impairment of intangible asset


-



22,000Changes in operating assets and liabilities:Decrease (increase) in accounts receivable


-



(833
)Decrease in other current assets


-



2,142Increase in accounts payable


23,250



41,247Increase in due to stockholders


149,442



102,532Net cash used in operating activities


(43,773
)


(70,480
)Discontinued OperationsAdjustments to reconcile net cash used in discontinued operations


-



(29,326
)CASH FLOWS FROM FINANCING ACTIVITIES:Cash received from officer for common stock to be issued


43,545



52,195Net cash provided by financing activities


43,545



52,195Net decrease in cash


(228
)


(47,611
)Cash at the beginning of the period


282



47,893Cash at the end of the period

$
54


$
282Supplemental Cash Flow InformationDisposition of subsidiary - non-cashAssets disposed

$
-


$
121,190Liabilities disposed

$
-


$
188,702Gain on disposition of discontinued operations

$
-


$
67,512Payment of interest

$
-


$
-





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


F-6


SHELRON GROUP INC.


NOTES TO FINANCIAL STATEMENTS


December 31, 2010 and 2009





NOTE 1 - THE COMPANY AND ITS OPERATIONS





Shelron Group, Inc. (the "Company") was originally incorporated in the State of Massachusetts in June 1987, under the name "Professional Brushes, Inc." In April 1999, the Company changed its state of incorporation to Delaware by means of a merger with and into a Delaware company and, in connection therewith, changed our name to "PB Acquisition Corp." In May 2000, the Company entered into a share exchange agreement with TTTTickets.com, Inc., a Delaware corporation ("Tickets") incorporated in April 2000 for the purposes of developing and maintaining an internet website for the sale and purchase of event tickets, pursuant to which Tickets became a wholly owned subsidiary of the Company. We also changed our name to "TTTTickets Holding Corp." Thereafter, in November 2001, we entered into a stock purchase and merger agreement with B-Park Com
munications, Inc., ("B-Park") a Delaware corporation formed in August 2001 for the sole purpose of entering into such agreement. In September 2002, we changed our name to Shelron Group, Inc.





The Company was developing and marketing e-commerce advertising and comparative shopping software products and services. The Company released its initial product, ActiveShopper, in August 2004. ActiveShopper is a free software download that automatically scans, locates and compares prices for an item that a consumer selects at an e-commerce site and is designed to assist consumers to make informed purchase decisions by enabling them to find the items they are looking for, compare products, prices and stores, and buy from among thousands of online merchants.





At the present time, the Company does not intend to actively promote its current ActiveShopper product but will instead explore new opportunities in the mining, media, internet, oil and gas, and high-tech fields.





The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has incurred continuing losses, has a working capital deficiency of approximately $596,000 and an accumulated deficit of approximately $6.3 million, all of which raises substantial doubt about the Company's ability to continue as a going concern.





Management believes that the Company will continue to incur losses and negative cash flows from operating activities for the foreseeable future and will need additional equity or debt financing to sustain its operations until it can achieve profitability and positive cash flows, if ever. Management plans to seek additional debt and/or equity financing for the Company, but cannot assure that such financing will be available on acceptable terms.  The Company's continuation as a going concern is dependent upon its ability to ultimately attain profitable operations, generate sufficient cash flow to meet its obligations, and obtain additional financing as may be required. The outcome of this uncertainty cannot be assured. The Company is currently dependent on its President to continue to fund the Company. If the Company is unable
to acquire or develop an operating business the Company will be unable to fund itself. There is no guarantee that our President will continue to fund the Company.





The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. There can be no assurance that management will be successful in implementing its business plan or that the successful implementation of such business plan will actually improve the Company's operating results.





NOTE 2 – DISCONTINUED OPERATIONS





On October 1, 2009, we discontinued the operations and disposed of our subsidiary. The operations for our discontinued subsidiary resulted in a net loss of $42,774 for the year ended December 31, 2009. The operating results of this subsidiary are classified as discontinued operations in the statements of operations. The total of the assets and liabilities disposed was $121,190 and $188,702, respectively.  We recorded a gain on the disposition of our subsidiary in the amount of $67,512.


F-7


NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES





The following accounting policies have been identified as critical to the Company's business operations and the understanding of its results of operations.





Basis of Presentation





The Company’s financial statements are prepared in conformity with US generally accepted accounting principles ("GAAP").





Consolidation





Prior to October 1, 2009 the accompanying financial statements included the accounts of Shelron Group Inc. (the "Company") and its wholly owned subsidiary. All significant intercompany transactions were eliminated.





Use of Estimates


These financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. The Company continually evaluates the accounting policies and estimates used to prepare the financial statements. The Company bases its estimates on historical experiences and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management.





Functional Currency


The majority of Company’s sales are in United States dollars. In addition, the majority of the Company’s investing and financing activities are in United States dollars. Accordingly, the Company has determined the United States dollar as the currency of its primary economic environment and thus, its functional and reporting currency. Non-dollar transactions and balances have been measured in United States dollars in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 830, “Foreign Currency Matters.” All transaction gains and losses from the measurement of monetary balance sheet items denominated in non-dollar currencies are reflected in the statement of operations as financial income or expenses, as appropriate.





Concentration of Credit Risk


The Company maintains cash in bank accounts which may, at times, exceed federally insured limits. The Company has not experienced any loss on these accounts.


F-8


Fair Value of Financial Instruments


The carrying amounts reported in the balance sheet for cash, receivables, accounts payable and accrued expenses and short-term debt approximate fair value based on the short-term maturity of these instruments.





Accounts Receivable


Accounts receivable are reported at their outstanding unpaid principal balances reduced by an allowance for doubtful accounts. The Company estimates doubtful accounts based on historical bad debts, factors related to specific customers' ability to pay, and current economic trends. The Company writes off accounts receivable against the allowance when a balance is determined to be uncollectible.  During the years ended December 31, 2010 and 2009 the Company recorded bad debt expense of $895 and $3,262, respectively.





Property and Equipment


Depreciation of property and equipment was provided for by the straight-line method over the estimated useful lives of the related assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.





Intangible Assets


Intangible assets were carried at cost less accumulated amortization. Amortization was computed on the straight-line method over the estimated useful lives of the assets. We periodically review the carrying value of our intangible assets to determine whether impairment may exist under the provisions of FASB ASC 360, “Property, Plant and Equipment.” We consider relevant cash flow and profitability information, including estimated future operating results, trends and other available information, in assessing whether the carrying value of the intangible assets can be recovered. If it is determined that the carrying value of the intangible assets will not be recovered from the undiscounted future cash flows, the carrying value of the assets would be considered impaired. An impairment charge is measured as any deficien
cy in the amount of estimated fair value of the intangible assets over carrying value.





Revenue Recognition


The Company's revenue derives from service revenue and the management of advertising campaigns, both of which are related to ActiveShopper.





Service revenue primarily derives from the implementation of partnership agreements according to which the Company provides a service of directing traffic to merchants' websites. Service revenue is primarily based on a pay-per-click model, reported at their net values to the Company, which represent the revenues the Company is entitled to receive according to the partnership agreements. In order to recognize service revenue, the following criteria must be met: (i) the partnership agreement must be signed by the customer, (ii) the signed agreement must specify the fees to be received for the services, (iii) the service has been performed and accepted by the customer, (iv) no significant Company obligations remain and (v) collectability is probable.





Management of advertising campaign revenues primarily relates to advertising through ActiveShopper websites. In order to recognize management of advertising campaigns revenue, the following criteria must be met: (i) an agreement must be signed by the customer, (ii) the signed agreement must specify the fees to be received, (iii) consultancy and management have been provided and accepted by the customer, (iv) no significant Company obligations remain and (v) collectability is probable.





When the above stated revenue recognition criteria are not met, the Company records deferred revenue.





Marketing and Advertising


Marketing and advertising costs are expensed as incurred.


F-9


Income Taxes


The Company accounts for income taxes under the provisions of FASB ASC 740, “Income Taxes.” This pronouncement requires recognition of deferred tax assets and liabilities for the estimated future tax consequences of events attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of changes in tax rates is recognized in the statement of operations in the period in which the enactment rate changes. Deferred tax assets and liabilities are reduced through the establishment of a valuatio
n allowance at such time as, based on available evidence, it is more likely than not that the deferred tax assets will not be realized.





The Company adopted the provisions of FASB ASC 740-10-05, “Accounting for Uncertainties in Income Taxes” The ASC clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The ASC prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The ASC provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.





Loss per share


Basic loss per share is computed by dividing net loss by the weighted-average number of shares of Common Stock outstanding during the period. Diluted loss per share give effect to dilutive convertible securities, options, warrants and other potential Common Stock outstanding during the period, only in periods in which such effect is dilutive.  The following securities have been excluded from the calculation of net loss per share, as their effect would be antidilutive:





2010


2009Series A convertible preferred stock


1,000,000



1,000,000Convertible note payable


2,001,174



1,892,606





Stock Based Compensation


The Company records compensation expense associated with stock options and other forms of equity compensation in accordance with FASB ASC 718, “Compensation – Stock Compensation.” Under the fair value recognition provision of FASB ASC 718, stock-based compensation cost is estimated at the grant date based on the fair value of the award. The Company estimates the fair value of stock options granted using the Black-Scholes-Merton option pricing model.





Recently Issued Accounting Standards





Management does not believe that any recently issued but not yet effective accounting standard, if currently adopted, would have a material effect on the accompanying financial statements





Subsequent Events





The Company has evaluated subsequent events through the date of the filing.


F-10


NOTE 4 – PROPERTY AND EQUIPMENT





Property and equipment at December 31, 2010 and 2009 consists of,


:


December 312009



2009

useful lifeSoftware

$
150,000


$
150,000

5 yearsComputer and office equipment


45,614



45,614

3-7 yearsFurniture and fixtures


15,775



15,775

5-10 years211,389



211,389Less - accumulated depreciation and amortization


211,389



211,126$
-


$
263





Depreciation and amortization from continuing operations amounted to $263 and $12,762 for the years ended December 31, 2010 and 2009, respectively.





NOTE 5 - INTANGIBLE ASSETS





On April 18, 2005, the Company entered into an agreement with Infospace, Inc. to purchase the rights, title and interest of Infospace, Inc. in the U.S. and foreign trademarks, trade names and service marks for "ActiveShopper" and the domain names activeshopper.com, activeshopper.org, active-shop.com, active-shopper.com, active-shopper.net and active-shopper.org. The Company made a one-time payment of $40,000.  The asset was being amortized on a straight-line basis over a period of ten years.





Amortization totaled $0 and $4,000 for the years ended December 31, 2010 and 2009, respectively.  At December 31, 2009, the Company determined that since the Company has changed its business strategy and it is no longer actively promoting its current ActiveShopper product, the asset related to the ActiveShopper name became impaired.  The Company recorded an impairment loss of $22,000 during the period.





NOTE 6 - DUE TO STOCKHOLDERS AND RELATED PARTIES





Hull Services, Inc. ("Hull")


The Company is controlled by Hull, a company wholly-owned by the Company's Principal Executive Officer/Principal Financial and Accounting Officer.  In March 2005, the Company entered into a consulting agreement with Hull.  Pursuant to the terms of the agreement, Hull receives consulting fees totaling $156,000 per annum in installments of $3,000 per week.  Due to stockholder represents accrued but unpaid consulting as well as other loans payable made by Hull.





For each of the years ended December 31, 2010 and 2009, consulting services totaled $156,000 and $163,104, respectively.  Such amounts are reflected on the statements of operations as employment compensation.  At December 31, 2010 and 2009, the Company owed Hull $440,594 and $291,152, respectively.





Liability for Common Stock to be issued to officer


In 2010 and 2009 the Company received proceeds totaling $43,545 and $52,195, respectively, for shares of Common Stock to be issued to Mr. Yaron, the Company's Principal Executive Officer/Principal Financial and Accounting Officer. As the shares were not issued as of December 31, 2010, the proceeds were not included in stockholders’ deficiency but classified as a liability for common stock to be issued to officer. The liability totaled $205,740 and $162,195 as of December 31, 2010 and 2009, respectively.


F-11


NOTE 7 – NOTES PAYABLE





Convertible Note


On October 2, 2008, the Company received proceeds of $50,000 for a unsecured convertible note payable issued for working capital purposes. The note bears interest at 6% per annum and matured on April 18, 2009. The note holder has the option to convert the note and related accrued interest into share of the Company’s Common Stock at equal or lower of (a) 20% below the average of the closing price of the Common Stock for the five trading days prior to the date of the agreement and (b) the average closing price of the Common Stock for the five trading days prior to the date of the conversion notice.





As of the filing of this Annual Report on Form 10-K, the Company has not made any payments in respect of the amounts due.  The non-payment of this amount constitutes an event of default under the transaction document.  However, the pertinent documents provide that any action upon such default can only be initiated by the note holder.  Such an action has not been commenced. From and after an event of non-payment under the note and for so long as the event of non-payment is continuing, the note will bear interest at a rate of 6% per annum.





Note Payable


On December 30, 2008, the Company’s subsidiary issued a note payable for $100,000 in order to acquire a license to utilize software, trademarks and domain names. The note bore interest at 4% per annum and matured on December 30, 2009.  As a result of the disposition of the subsidiary, the note payable is no longer reflected.





NOTE 8 - STOCKHOLDERS' (DEFICIENCY) EQUITY





Convertible Preferred Stock


On November 8, 2001, the Company filed a Certificate of Designation with the State of Delaware authorizing the issuance of one series of Preferred Stock (the "Series A Preferred Stock") consisting of 1,000,000 shares. All 1,000,000 shares of Series A Preferred Stock were issued to Hull. The holder of the Series A Preferred Stock is entitled to vote along with the holders of Common Stock as one class on all matters for which the Stockholders of the Company shall vote. The holder of Series A Preferred Stock is entitled to a vote representing 52% of the total shares entitled to vote by all holders of the then outstanding shares of Common Stock and Series A Preferred Stock combined. Each share of the Series A Preferred Stock is convertible at the option of the holder into one share of Common Stock upon not less than 15 days and not more th
an 30 days notice to the Company. In addition, if all or substantially all of the Company's assets or all of the outstanding shares of the Company are sold, the shares of Series A Preferred Stock automatically convert to Common Stock.





Issuance (cancellation) of shares of Common Stock


During the year ended December 31, 2009, the Company issued (net of cancellation of 120,000 shares of Common Stock) 1,030,000 shares of its Common Stock to one service provider in consideration of services rendered totaling $13,150.





NOTE 9 – REVENUE AND MAJOR CUSTOMERS





During the years ended December 31, 2010, revenues from continuing operations totaled $17,690. The revenues in the 2010 Period resulted from consulting services performed by the Company for a company in the oil and gas industry and advertising campaigns.  As discussed above, during 2010, we did not actively promote our current ActiveShopper product. Instead, we explored new opportunities in the mining, media, internet, oil and gas and high-tech fields and provided consulting services to some of these industries during the 2010 Period. We also considered strategic acquisitions that management believes will enhance our market positioning. In addition, on October 1, 2009, we discontinued the operations of our subsidiary.





During the year ended December 31, 2009, revenues from continuing operations totaled $896. All revenues were generated from one customer.


F-12





NOTE 10 - INCOME TAXES





Components of net loss for the years ended December 31, 2010 and 2009 are as follows:





2010


2009United States

$
(217,623
)

$
(208,968
)Israel


-



(42,774
)Total

$
(217,623
)

$
(251,742
)





At December 31, 2010, the Company had available approximately $5.885 million of net operating loss carry forwards, for U.S. income tax purposes which expire in the years 2021 through 2030.





Significant components of the Company’s deferred tax assets at December 31, 2010 and 2009 are as follows:




2010


2009Net operating loss carryforwards

$
1,893,992


$
1,873,039Stock based compensation


106,080



53,040Total deferred tax assets


2,000,072



1,926,079Valuation allowance


(2,000,072
)


(1,926,079
)Net deferred tax assets

$
—


$
—





A valuation allowance has been established equal to the full amount of the deferred tax assets as the Company is not assured at December 31, 2010 and 2009 that it is more than likely than not that these benefits will be realized.





The change in valuation allowance for the years ended December 31, 2010 and 2009 was an increase of approximately 75,000 and 85,000, respectively.





Due to the uncertainty of their realization, no income tax benefit has been recorded by the Company for these loss carry forwards as valuation allowances have been established for any such benefits. The increase in the valuation allowance was the result of increases in the above stated items.





At December 31, 2010 and 2009, the Company had no material unrecognized tax benefits and no adjustments to liabilities or operations were required. The Company does not expect that its unrecognized tax benefits will materially increase within the next twelve months. We recognize interest and penalties related to uncertain tax positions in general and administrative expense. As of December 31, 2010 and 2009, we have not recorded any provisions for accrued interest and penalties related to uncertain tax positions.





Shelron files U.S. federal and state income tax returns in jurisdictions with varying statutes of limitations. Shelron has not filed its 2009 U.S. Federal return. Due to losses in 2009, the Company would not incur an income tax liability in that year.  The 2007 through 2010 tax years generally remain subject to examination by federal and state tax authorities





NOTE 11 - COMMITMENT





We maintain an office at 39 Broadway, New York, New York.  No rent is charged for this space.


F-13