UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:

September 30, 2011

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from: _____________ to _____________

SHELRON GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	000-31176	04-2968425
(State or Other Jurisdiction	(Commission	(I.R.S. Employer
of Incorporation)	File Number)	Identification No.)

39 Broadway, Suite 3010, New York, NY 10006

(Address of Principal Executive Office) (Zip Code)

(516) 620-6794

(Registrant’s telephone number, including area code)

Not Applicable

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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.

x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.

Large accelerated filer	¨			Accelerated filer	¨
Non-accelerated filer	¨			Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

¨ Yes x No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of November 23, 2011, there were 313,877,492 shares of common stock outstanding.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

¨ Yes ¨ No

(Former name, former address and former fiscal year, if changed since last report)

SHELRON GROUP, INC.

Table of Contents

	Page
Part I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited):

Balance Sheets at September 30, 2011 and December 31, 2010	2

Statements of Operations for the nine months and three months ended September 30, 2011 and 2010	3

Statements of Cash Flows for the nine months ended September 30, 2011 and 2010	4

Notes to Unaudited Financial Statements	5

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	9

Item 3. Quantitative and Qualitative Disclosures About Market Risk	12

Item 4. Controls and Procedures	12

Part II. OTHER INFORMATION	14

Item 1. Legal Proceedings	14

Item 1A. Risk Factors	14

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	14

Item 3. Defaults upon Senior Securities	14

Item 4. Removed and Reserved	14

Item 5. Other Information	14

Item 6. Exhibits	14

Signatures	14

Certifications

FORWARD LOOKING STATEMENTS

CERTAIN STATEMENTS MADE IN THIS QUARTERLY REPORT ON FORM 10-Q ARE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY TERMINOLOGY SUCH AS "MAY", "WILL", "SHOULD", "EXPECTS", "INTENDS", "ANTICIPATES", "BELIEVES", "ESTIMATES", "PREDICTS", OR "CONTINUE" OR THE NEGATIVE OF THESE TERMS OR OTHER COMPARABLE TERMINOLOGY. BECAUSE FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES, THERE ARE IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY BELIEVES THAT EXPECTATIONS REFLECTED IN THE FORWARD-LOOKING STATEMENTS ARE REASONABLE, IT CANNOT GUARANTEE FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS. MOREOVER, NEITHER THE COMPANY NOR ANY OTHER PERSON ASSUMES RESPONSIBILITY FOR THE ACCURACY AND COMPLETENESS OF THESE FORWARD-LOOKING STATEMENTS. THE COMPANY IS UNDER NO DUTY TO UPDATE ANY FORWARD-LOOKING STATEMENTS AFTER THE DATE OF THIS REPORT TO CONFORM SUCH STATEMENTS TO ACTUAL RESULTS.

SHELRON GROUP INC.

BALANCE SHEETS

	September 30,			December 31,
	2011			2010
	(Unaudited)
ASSETS

Current Assets:
Cash	$	13,095		$	54

Total Current Assets		13,095			54

Deposit on Software License		900,000			-

Total Assets	$	913,095		$	54

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current Liabilities:
Accounts payable and accrued expenses	$	120,176		$	104,986
Due to stockholders		313,275			444,068
Convertible note payable		11,000			50,000

Total Current Liabilities		444,451			599,054

Liability for common stock to be issued to officer		205,740			205,740
Software License Payable		900,000

Total Liabilities		1,550,191			804,794

Commitments

Stockholders' 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			1,000
Common stock, par value $0.001 par value per share
Authorized 500,000,000 shares;
Issued and outstanding 310,877,492 shares and 18,477,492 shares, respectively		310,877			18,477
Common stock to be issued, 6,000,000 shares		24,000			-
Additional paid-in capital		5,529,830			5,497,806
Accumulated deficit		(6,502,803	)		(6,322,023	)

Total Stockholders' Deficiency		(637,096	)		(804,740	)

Total Liabilities and Stockholders' Deficiency	$	913,095		$	54

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

SHELRON GROUP, INC.

STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
	2011			2010			2011			2010

Revenues	$	-		$	-		$	-		$	17,690

Operating Expenses:
Consulting fees		25,500			2,000			29,500			28,165
Employment compensation		39,000			39,000			117,000			117,000
Professional fees		5,000			5,000			15,000			22,000
Office and general expenses		17,044			-			17,044			280
Depreciation and amortization		-			-			-			263
Bank charges		301			192			376			1,027

Total Operating Expenses		86,845			46,192			178,920			168,735

Loss from operations		(86,845	)		(46,192	)		(178,920	)		(151,045	)

Other Income (Expense):
Interest expense		(360	)		(750	)		(5,334	)		(5,724	)

Net Loss	$	(87,205	)	$	(46,942	)	$	(184,254	)	$	(156,769	)

Net loss per share:
Basic and diluted	$	0.00		$	0.00		$	0.00		$	(0.01	)

Weighted average shares outstanding
Basic and Diluted		299,840,535			18,477,492			127,947,821			18,477,492

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

SHELRON GROUP, INC.

STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Nine Months Ended
	September 30,			September 30,
	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(184,254	)	$	(156,769	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		-			263
Common stock issued for consulting services		24,000			-
Changes in operating assets and liabilities:
Increase in accounts payable		15,190			35,801
Increase in due to stockholders		133,105			112,340
Net cash used in operating activities		(11,959	)		(8,365	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Cash received for sale of stock		25,000			-
Cash received from officer for common stock to be issued		-			8,195
Net cash provided by financing activities		25,000			8,195

Net increase (decrease) in cash		13,041			(170	)
Cash at the beginning of the period		54			282

Cash at the end of the period	$	13,095		$	112

Schedule of Non-Cash Activity:
Payment of Due to Stockholder in the Form of Shares of Common Stock	$	250,000		$	-
Conversion of Note Payable and Accrued Interest into Shares of Common Stock	$	39,900
Deposit on Software License	$	900,000		$	-

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

SHELRON GROUP, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

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 Communications, 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 is currently focused on two sectors, internet and mining. The Company has entered into the following agreements related to these areas:

During April 2011, the Company signed a non-binding Memorandum of Understanding (“MOU”) to acquire gold mining rights in Ghana. The Company is currently conducting due diligence on these mines and if satisfactory we will move to close the transaction. Until the completion of the due diligence process, the Company will be unable to determine if it will make an offer to acquire these mines and if its offer will be accepted by the sellers.

During September 2011, the Company s signed a non binding MOU with a local Tanzanian company which has the rights to prospect for gold in the Geita district. The MOU is for the acquisition of 51% of the mineral rights of the property. The Company is currently conducting due diligence on these mines and if satisfactory we will move to close the transaction. Until the completion of the due diligence process, the Company will be unable to determine if it will make an offer to acquire these mines and if its offer will be accepted by the sellers.

During September 2011, the Company signed an additional non-binding MOU with a local Tanzanian company which has the rights to prospect for gold in the Kahama district. The MOU is for the acquisition of 51% of the mineral rights of the property. The size of the plot is 790 Hectares, which represents four times the size of Geita district license. The Company is currently conducting due diligence on these mines and if satisfactory we will move to close the transaction. Until the completion of the due diligence process, the Company will be unable to determine if it will make an offer to acquire these mines and if its offer will be accepted by the sellers.

During November 2011, the Company started looking into gold exploration opportunities in Chile based on Chile’s potential, and the Company's strategy to explore gold in Africa and in the Americas. The Company is interested in more deals to increase its portfolio and opportunities. The focus of the company is to adhere to its acquisition criteria and only acquire a prospecting license in Chile that can potentially be developed into proven reserves or productive metal resource mines.

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 $13,095 of cash and an accumulated deficit of approximately $6.5 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 - SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim financial statements reflect all adjustments of a normal recurring nature, which are, in the opinion of management, necessary for a fair statement of the results of operations for the interim periods presented. The financial statements are unaudited and are subject to such year-end adjustments as may be considered appropriate and should be read in conjunction with the historical financial statements of the Company for the years ended December 31, 2010 and 2009 included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010. The December 31, 2010 balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (“US GAAP”). Operating results for the nine months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2011.

These interim financial statements have been prepared in accordance with US GAAP and under the same accounting principles as the financial statements included in the Annual Report on Form 10-K. Certain information and footnote disclosures related thereto normally included in the financial statements prepared in accordance with US GAAP have been omitted in accordance with Rule 8.03 of Regulation S-X.

Fair Value of Financial Instruments

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

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:

	September 30,		September 30,
	2011		2010
Series A convertible preferred stock		1,000,000		1,000,000
Convertible note payable		23,687,667		1,974,178

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.

NOTE 3 - DUE TO STOCKHOLDERS AND RELATED PARTIES

Hull Services, Inc. ("Hull")

The Company is controlled by Hull, a company wholly-owned by Eliron Yaron, 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 the nine months ended September 30, 2011 and 2010, consulting services totaled $117,000 and $117,000, respectively. For the three months ended September 30, 2011 and 2010, consulting services totaled $39,000 and $39,000, respectively. Such amounts are reflected on the statements of operations as employment compensation. On June 15, 2011, the Company issued 250,000,000 shares to Mr. Yaron as partial payment of the debt it owes to Hull. The Company valued the shares at $250,000 and recorded a reduction in the amount of debt it owes to Hull. At September 30, 2011 and December 31, 2010, the Company owed Hull $313,275 and $442,568, respectively.

Liability for Common Stock to be issued to officer

The Company has received proceeds 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 September 30, 2011 and 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 as of September 30, 2011 and December 31, 2010.

NOTE 4 – CONVERTIBLE NOTE PAYABLE

On October 2, 2008, the Company received proceeds of $50,000 for an 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 maturity date the Company did not make any payments in respect of the amounts due. The non-payment of this amount constituted an Event of Default under the transaction document. On June 20, 2011, the Company and the note holder entered into an agreement whereby the maturity of the note was extended until December 31, 2011. In addition, in consideration for the waiver of the Event of Default, the Company agreed to reduce the price at which the note holder may convert the principal amount of the loan and interest accrued thereon (or any portion hereof) into shares of the Company’s common stock at $0.001 per share. In the beginning of August 2011, the note holder converted $39,000 of the convertible note payable into 39,900,000 shares of the Company’s stock.

The Company accounted for the modification of the convertible note payable as an extinguishment of debt in accordance with FASB ASC 470-50-40 “Accounting for Modifications and Extinguishments in Debt” The Company deemed the terms of the note modification to be substantially different due to the change in the conversion rate and treated the Convertible Promissory Note as extinguished and exchanged for a new note. The Company determined that there was no gain or loss on the extinguishment.

NOTE 5 – DEPOSIT ON SOFTWARE LICENSE

On May 25, 2011, the Company entered into an exclusive perpetual worldwide software license. The Company will utilize the software to create an affiliate network for online stores. The software requires further modifications. The Company expects the software to be available for use during the fourth quarter of 2011. The Company agreed to pay $900,000 for such license in cash or in shares of the Company based the average share price on the preceding 30 days before payment. Such payment is scheduled to be made on or about August 12, 2012 and only if the Company achieves $1,250,000 in aggregate revenues from the use of the software prior to the payment date. If the aggregate revenues are below $1,250,000, the Company has a right to terminate the license agreement with no penalty or payment required.

NOTE 6 – STOCK COMPENSATION EXPENSE

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with ASC Topic 505. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earlier of a performance commitment or completion of performance by the provider of goods or services as defined by ASC Topic 505.

On July 1 2011, the Company entered into a three-month agreement with a service provider to provide marketing, business development and consulting services. In consideration of the services provided, the Company agreed to issue 6,000,000 shares of the Company’s Common Stock valued at $24,000 or $0.004 per share. As of September 30, 2011, these shares have not been issued and the Company has recorded this amount as a component of stockholders’ deficiency called common stock to be issued. On November 14, 2011, the Company issued 3,000,000 of the shares.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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.

During April 2011, we signed a non-binding Memorandum of Understanding (“MOU”) 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.

During May 2011, the Company entered into an exclusive perpetual worldwide software license. The Company will utilize the software to create an affiliate network for online stores. The software requires further modifications. The Company expects the software to be available for use during the fourth quarter of 2011. The Company agreed to pay $900,000 for such license in cash or in shares of the Company based the average share price on the preceding 30 days before payment. Such payment is scheduled to be made on or about August 12, 2012 and only if the Company achieves $1,250,000 in aggregate revenues from the use of the software prior to the payment date. If the aggregate revenues are below $1,250,000, the Company has a right to terminate the license agreement with no penalty or payment required.

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

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 differ 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 2 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.

RESULTS OF OPERATIONS

Comparison of the three months ended September 30, 2011 (the "2011 Period") and the three months ended September 30, 2010 (the "2010 Period"):

Revenues

The Company did not have any revenues for the three months ended September 30, 2011 and 2010. Beginning in 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.

Operating Expenses

Operating expenses consist of salaries, consulting expenses, professional fees and other expenses associated with the operations of our business. For the 2011 Period, operating expenses were $86,845, an increase of $40,653 or 88.0%, as compared to $46,192 for the 2010 Period. The increase is primarily attributable to increased costs related to the signing of a consulting agreement on July 1, 2011 and the costs associated with the signing of the MOU’s in the 2011 Period as compared to the 2010 Period.

Employment Compensation

Our sole full-time employee is our Chairman of the Board, Eliron Yaron. Employment compensation totaled $39,000 for the 2011 and 2010 Periods.

Consulting Fees

For the 2011 Period, consulting fees were $25,500, an increase of $23,500 as compared to $2,000 for the 2010 Period. On July 1 2011, the Company entered into a three-month agreement with a service provider to provide marketing, business development and consulting services. In consideration of the services provided, the Company agreed to issue 6,000,000 shares of the Company’s Common Stock valued at $24,000 or $0.004 per share.

Professional Fees

Professional fees consist primarily of legal, accounting and auditing. Professional fees totaled $5,000 for the 2011 and 2010 Periods.

Comparison of the nine months ended September 30, 2011 (the "2011 Period") and the nine months ended September 30, 2010 (the "2010 Period"):

Revenues

The Company did not have any revenues for the nine months ended September 30, 2011 as compared to revenues of $17,690 during the nine months ended September 30, 2010. Beginning in 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.

Operating Expenses

Operating expenses consist of salaries, consulting expenses, professional fees and other expenses associated with the operations of our business. For the 2011 Period, operating expenses were $178,920, an increase of $10,185 or 6.0%, as compared to $168,735 for the 2010 Period. The increase is primarily attributable to increased costs related to the signing of a consulting agreement on July 1, 2011 and the costs associated with the signing of the MOU’s in the 2011 Period as compared to the 2010 Period.

Employment Compensation

Our sole full-time employee is our Chairman of the Board, Eliron Yaron. Employment compensation totaled $117,000 for the 2011 and 2010 Periods.

Consulting Fees

For the 2011 Period, consulting fees were $29,500, an increase of $1,335 or 4.7% as compared to $28,165 for the 2010 Period.

Professional Fees

Professional fees consist primarily of legal, accounting and auditing. For the 2011 Period, professional fees were $15,000, a decrease of $7,000 or 31.8% as compared to $22,000 for the 2010 Period. The decrease in professional fees is primarily due to decreased fees incurred during the 2011 Period as a result of the slowdown in our business activities.

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 September 30, 2011, we had cash of $13,095 and a working capital deficit of $431,356.

Cash used in operating activities was $11,959 for the 2011 Period compared to $8,365 for the 2010 Period. The decrease in cash from operating activities for the 2011 Period is primarily attributable to the cash needed to fund the loss for the 2011 Period.

Cash provided by financing activities in the 2011 Period was $25,000 compared to $8,195 for the 2010 Period. The 2011 Period consisted of cash received by the Company for the sale of shares. The 2010 Period consisted of proceeds received from Eliron Yaron, our President, for investments in the Company’s common stock.

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 is currently focused on two sectors, internet and mining.

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 cash of $13,095 and an accumulated deficit of approximately $6.5 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 grow its affiliate network business or 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.

On October 2, 2008, the Company received proceeds of $50,000 for an unsecured convertible note payable issued for working capital purposes. The note bears interest at 6% per annum and matured on April 18, 2009. As of the maturity date the Company did not make any payments in respect of the amounts due. The non-payment of this amount constituted an Event of Default under the transaction document. On June 20, 2011, the Company and the note holder entered into an agreement whereby the maturity of the note was extended until December 31, 2011. In addition, in consideration for the waiver of the Event of Default, the Company agreed to reduce the price at which the note holder may convert the principal amount of the loan and interest accrued thereon (or any portion hereof) into shares of the Company’s common stock at $0.001 per share. In the beginning of August 2011, the note holder converted $39,000 of the convertible note payable into 39,900,000 shares of the Company’s stock. The Company accounted for the modification of the convertible note payable as an extinguishment of debt. The Company deemed the terms of the note modification to be substantially different due to the change in the conversion rate and treated the Convertible Promissory Note as extinguished and exchanged for a new note. The Company determined that there was no gain or loss on the extinguishment.

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 additional 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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required for Smaller Reporting Companies.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Effectiveness of Disclosure Controls and Procedures

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Securities Exchange Act Rule 13a-15(f). Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with U.S. GAAP.

Under the supervision and with the participation of our Chief Executive Officer who also acts as our Chief Financial Officer, we conducted an assessment of the design and effectiveness of our internal control over financial reporting as of the fiscal year covered by this Report based on the framework issued by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission in Internal Control—Integrated Framework.

Based on this assessment, management concluded that, as of September 30, 2011, the Company’s internal control over financial reporting was not effective. Our management reached this conclusion after identifying the following two areas of material weakness in our internal control systems:

1. Inadequate and ineffective application of complex accounting; and

2. Management did not sufficiently monitor internal control over financial reporting. Specifically the Company did not have sufficient personnel with an appropriate level of technical accounting knowledge and experience who could execute appropriate application of complex accounting with respect to stock compensation and warrant modification.

We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we intend to hire on an as-needed outsourced basis, a qualified person to address the above stated issues; however, the remediation effort is dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be materially adversely affected.

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 six months ended September 30, 2011 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 that 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.

Part II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDING

We are not a party to any material legal proceeding.

ITEM 1A. RISK FACTORS

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable.

ITEM 4. REMOVED AND RESERVED

ITEM 5. OTHER INFORMATION

Not Applicable.

ITEM 6. EXHIBITS

Exhibit Number		Description
31.1		PEO and PFO certifications required under Section 302 of the Sarbanes-Oxley Act of 2002
32.1		PEO and PFO certifications required under Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Signature	Capacity	Date
/s/ Eliron Yaron	Chief Executive Officer, President and Principal Financial Accounting	November 28, 2011
Eliron Yaron	Officer

SHELRON GROUP INC 10-Q