Steele Oceanic (SELR) 10-Q 2014 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

FORM 10-Q

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2014

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE

EXCHANGE ACT FOR THE TRANSITION PERIOD FROM

_______________ to _______________

Commission File Number  000-53474

STEELE RESOURCES CORPORATION

(Exact name of small business issuer as specified in its charter)

NEVADA	75-3232682
(State of other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
2705 Garnet Avenue, Suite 2A San Diego, CA	95682
(Address of Principal Executive Offices)	(Zip Code)
Issuer's telephone number:	(225) 246-2181

2705 Garnet Avenue, Suite 2A

San Diego, CA  92109

(Former address if changed since last report)

Indicate by check mark whether the issuer (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 issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:  Yes [X]  No [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes [   ]  No [X]

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

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 Exchange Act).    Yes [   ]  No [X]

The number of shares of the issuer’s common stock outstanding as of May 13, 2014 was 205,702,522.

INDEX

PART I - FINANCIAL INFORMATION	3
ITEM 1. FINANCIAL STATEMENTS	3
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION	12
ITEM 4.  CONTROLS AND PROCEDURES	16
PART II - OTHER INFORMATION	17
ITEM 1A. RISK FACTORS	17
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES	17
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	17
ITEM 5. OTHER INFORMATION	18
ITEM 6. EXHIBITS	18
SIGNATURES	19

2

PART I - FINANCIAL INFORMATION

Item 1.  Interim Financial Statements and Notes to Interim Financial Statements

General

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q.  Therefore, they do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles applicable in the United States of America.  There has been no material change in the information disclosed in the notes to the consolidated financial statements included in our Company's annual report on Form 10-K for the year ended December 31, 2013.  In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.  Operating results for the three months ended March 31, 2014 are not necessarily indicative of the results that can be expected for the year ending December 31, 2014.

3

STEELE RESOURCES CORPORATION
(An Exploration Stage Company)
CONSOLIDATED BALANCE SHEETS
Unaudited
ASSETS:	March 31,		December 31,
	2014		2013
Cash		9,843		15,082
TOTAL ASSETS	$	9,843	$	15,082
LIABILITIES AND STOCKHOLDERS' DEFICIT:
CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	240,470	$	235,970
Accrued expenses		514,731		488,128
Derivative liability		885,863		315,944
JV agreement refund payable		540,000		540,000
Note payable - related parties		235,300		235,300
Notes payable		429,327		399,277
Convertible note payable		331,630		331,630
TOTAL LIABILITIES		3,177,321		2,546,249
CONTINGENCIES AND COMMITMENTS		-		-
STOCKHOLDERS' DEFICIT:
Preferred stock, $0.001 par value, 5,000,000 shares authorized;
0 are issued and outstanding as of
December 31, 2013 and 2012, respectively		-		-
Common stock, $0.001 par value, 300,000,000 shares authorized;
104,086,147 and 104,086,147 issued and outstanding as of
March 31, 2014 and December 31, 2013, respectively		104,086		104,086
Additional paid-in capital		2,658,883		2,658,883
Deficit accumulated during exploration stage		(5,930,447)		(5,294,136)
TOTAL STOCKHOLDERS' DEFICIT		(3,167,478)		(2,531,167)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	9,843	$	15,082

The accompanying notes are an integral part of these unaudited consolidated financial statements

4

STEELE RESOURCES CORPORATION
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
Unaudited
					For the Period
					from May 27, 2010
	March 31,				(inception) through
	2014		2013		March 31, 2014
REVENUE	$	-	$	-	$	531,126
COSTS AND OPERATING EXPENSES:
Lease operating expenses		-		-		342,025
General and administrative		40,214		-		2,197,774
Exploration expense		-		-		2,336,933
Total costs and operating expenses		40,214		-		4,876,732
OPERATING LOSS		(40,214)		-		(4,345,606)
OTHER (INCOME) EXPENSES:
Gain on the partial sale of Shooting Star LLC		-		-		(483,484)
Change in derivative value		569,919		576,550		1,202,364
Interest expense		26,178		61,333		865,961
Total other (income) expense		596,097		637,883		1,584,841
LOSS BEFORE INCOME TAXES		(636,311)		(637,883)		(5,930,447)
Provision for income taxes		-		-		-
NET INCOME (LOSS)	$	(636,311)	$	(637,883)	$	(5,930,447)
NET LOSS PER SHARE:
Basic and diluted	$	(0.01)	$	(0.01)
Weighted average common shares outstanding, basic and diluted		104,086,147		78,718,558

The accompanying notes are an integral part of these unaudited consolidated financial statements

5

STEELE RESOURCES CORPORATION
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
Unaudited
					For the Period
					from May 27, 2010
	March 31,				(inception) through
	2014		2013		March 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)	$	(636,311)	$	(637,883)	$	(5,930,447)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation		-		-		52,118
Gain on partial sale of Shooting Star LLC		-				(483,484)
Stock-based compensation		-		-		581,888
Amortization of debt discount		-		-		763,614
Fixed assets issued for services		-		-		7,132
Stock issued for exploration costs		-		-		315,000
Share based compensation		-		-		145,659
Change in derivative liability		569,919		576,550		823,579
Changes in assets and liabilities:
Accounts payable and accrued expenses		4,500		61,333		242,530
Accrued expenses		56,653		-		617,416
Net cash used in operating activities		(5,239)		-		(2,864,995)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets		-		-		(37,965)
Proceeds from disposal of assets		-		-		8,900
Net cash used in investing activities		-		-		(29,065)
CASH FLOWS FROM FINANCING ACTIVITIES:				-
Proceeds from issuance of common stock		-		-		633,500
Cash acquired in reverse merger		-		-		19,200
Proceeds from investor advances		-		-		103,649
Cash from joint venture funding		-		-		540,000
Cash form project funding partners		-		-		195,000
Payments to project funding partners		-		-		(25,000)
Cash form project funding partners - related party		-		-		50,000
Proceeds from notes payable		-		-		1,763,239
Repayments on notes payable		-		-		(453,000)
Proceeds from notes payable - related party		-		-		137,148
Repayments on notes payable - related party		-		-		(59,833)
Net cash provided by financing activities		-		-		2,903,903
INCREASE (DECREASE) IN CASH		(5,239)		-		9,843
CASH, BEGINNING OF YEAR		15,082		-		-
CASH, END OF YEAR	$	9,843	$	-	$	9,843
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid	$	-	$	-	$	9,471
Income taxes paid	$	-	$	-	$	-
NONCASH INVESTING AND FINANCING TRANSACTIONS
Transfer of property for services	$	-	$	-	$	7,132
Reclassification of Derivative to APIC	$	-	$	-	$	30,951
Correction of Par	$	-	$	-	$	18,194
Exchange of interest in Shooting Star LLC for note reduction and related accrued interest	$	-	$	-	$	(483,484)
Common stock issued for conversion of debt	$	-	$	9,500	$	275,201

The accompanying notes are an integral part of these unaudited consolidated financial statements

6

STEELE RESOURCES CORPORATION

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION AND GOING CONCERN

The unaudited interim consolidated financial statements of the Company included herein have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the instructions for Form 10-Q under Article 8.03 of Regulation S-X. These statements do not include all of the information and notes to the financial statements required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2014, are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2013, included in the Company’s Annual Report on Form 10-K, as filed with Securities and Exchange Commission.

Going Concern:

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America which contemplate continuation of the Company as a going concern.  However, the Company has a working deficit and has generated only $531,126 in revenues since inception.  During the three months ended March 31, 2014, the Company incurred a net loss of $636,311 and as of March 31, 2014 has an accumulated deficit of $5,930,447.  Further, the Company has inadequate working capital to maintain or develop its operations, and is dependent upon funds from private investors and the support of certain stockholders.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of these uncertainties.  In this regard, Management is planning to raise any necessary additional funds through loans or additional sales of its common stock.  There is no assurance that the Company will be successful in raising additional capital.

The Company's ability to meet its obligations and continue as a going concern is dependent upon its ability to obtain additional financing, achievement of profitable operations and/or the discovery, exploration, development and sale of mining reserves.  The Company cannot reasonably be expected to earn revenue in the exploration stage of operations.  Although the Company plans to pursue additional financing, there can be no assurance that the Company will be able to secure financing when needed or to obtain such financing on terms satisfactory to the Company, if at all.  Should management fail to raise sufficient financing, the Company may curtail its operations.  

7

STEELE RESOURCES CORPORATION

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

NOTE 2 - NOTES PAYABLE

The Company had the following notes payable outstanding as of March 31, 2014 and December 31, 2013:

	March 31, 2014		December 31, 2013
McClelland Family Trust (N-1)	$	45,000	$	45,000
Dated - January, 2011 (Related Party)
Lease Purchase Agreement - A & P Lease (N-2)		50,000		50,000
Dated - May, 2011
D & D McClelland Note (N-3)		63,000		63,000
Dated - January 19, 2012 (Related Party)
Lease Purchase Agreement - A & P  Lease (N-4)		50,000		50,000
Dated - April, 2011
Related Party (N-5)		2,300		2,300
Dated - January 27, 2012 (Related Party)
Mike Myrick (N-6)		4,000		4,000
Dated - March 23, 2012
NPI Notes Payable (N-7)		200,000		200,000
Dated August 1, 2011 ($125,000 is Related Party)
S Norderhaug Note (N-8)		50,000		50,000
Dated - June 24, 2010
Small World Traders Secured Note (N-9)
Dated - April 8, 2013		200,327		170,277
Total Notes payable	$	664,627	$	634,577
Less: discount applicable		--		--
Less: current portion of long-term debt		664,627		634,577
Long-term debt	$	--	$	--

N-1  McClelland Family Trust: In January, 2011, the Company issued four promissory notes payable to two related party individuals for a total of $45,000. The notes bear simple interest at an annual rate of 8% per annum and were due May 15, 2011. This note is in default.

N-2 A & P Lease Agreement: In May, 2011, the Company issued a note payable for $50,000 to one of the individuals from which we have the lease purchase agreement for as the A&P Lease, covering the balance of the initial lease payment due. The note bears 12% interest rate and was due May 31, 2011.   This note is in default.

8

STEELE RESOURCES CORPORATION

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

N-3  D & D McClelland Note:  In January 2012, the Company issued a promissory note to a related party and a relative to a related party for a total of $63,000. The note bears simple interest at an annual rate of 20% per annum and is due July 27, 2012. This note is in default.

N-4 A & P Lease Note Payable:  In March, 2012, the Company issued a note payable for $50,000 to one of the individuals from which we have the lease purchase agreement for as the A&P Lease, covering the balance of the 2012 annual lease payment due. The note bears 12% interest rate and was due April 16, 2012.  This note is in default.  

N-5 Related Party Notes:  In September, 2011, the Company borrowed $1,300 and $1,000 from two individuals.  The Notes bear no interest and are due upon demand.

N-6 Mike Myrick:  In March, 2012, the Company issued a note payable for $4,000 to one individual. The note bears interest at 20% per annum and was due May 31, 2012.  This note is in default.

N- 7 NPI Notes:  In August, 2011, the Company secured a total of $200,000 in project financing from one individual and one related party. The principal and interest of, up to, 100% of the principal, was to be repaid from the processing of stockpiled ore at the Mineral Hill Gold Mine project, subject to the net profit (the "NPI") from the processed stockpile being adequate. At March 31, 2014, $125,000 of these notes payable were held by related parties.  This note is in default.

N-8 S Norderhaug Note:  In June, 2010, the Company issued a note for $50,000 to one individual with an interest rate of 5%. The note was due December 21, 2011.   This note is in default.

N-9 Small World Traders Secured Note:  On April 8, 2013, the Company issued a revolving line of credit for $200,000 with Small World Traders Secured Note with an interest rate of 8%. This note is secured by the following assets of the Company and a UCC1 was filed for all the Intellectual Property, Current or Previously Filed, Trademarks, Formulations, Research and Development Equipment, Manufacturing Equipment, Office Equipment, and all interests in Shooting Star Mining Company LLC.  The note is due December 31, 2013.  Small World Traders paid $200,327 of expenses on behalf of the Company.  On January 1, 2014 the Note was extended to April 15, 2014 subject to additional consideration.  The Company is negotiating the increase in this line of credit because it has exceed the $200,000 maximum line.

Fair Value Measurements

Assets and liabilities recorded at fair value in the consolidated balance sheet are categorized based upon the level of judgment associated with the inputs used to measure the fair value. Level inputs, as defined by ASC 820-10, are as follows:

Level 1 - quoted in active markets for identical assets or liabilities.

Level 2 - other significant observable inputs for the assets or liabilities through corroboration with market data at the measurement date.

9

STEELE RESOURCES CORPORATION

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

Level 3 - significant unobservable inputs that reflect management’s best estimate of what market participants would use to price the assets or liabilities at the measurement date.

For certain of the Company’s financial instruments, including cash, prepaid expenses, accounts payable and accrued expenses the carrying amounts approximate fair value due to their short maturities. The carrying amounts of the Company’s notes payable approximates fair value based on the prevailing interest rates

The following table summarizes fair value measurements by level at December 31, 2013 and December 31, 2012 for assets and liabilities measured at fair value on a recurring basis.  These warrants and convertible notes are considered derivatives because the conversion prices are variable and the Company does not have enough authorized common stock to satisfy the convertible notes and warrants.  

at March 31, 2014
	Level 1	Level 2	Level 3	Total
Derivative liability
Conversion features			($848,763)	($848,763)
Warrants liability			(371)	(371)
Total Derivative liability			(885,863)	(885,863)
at December 31, 2013
	Level 1	Level 2	Level 3	Total
Derivative liability
Conversion features			($315,573)	($315,573)
Warrants liability			(371)	(371)
Total Derivative liability			(315,944)	(315,944)

Derivative liability for conversion features for the three months ended March 31, 2014 were valued using the Black-Scholes Option pricing model with the following assumptions: expected life of 0.1 to 1 year, risk free interest rate of 1%, dividend yield of 0, and expected volatility of 0.1%.

The following is a reconciliation of the derivatives liability

Value at December 31, 2013	$	315,944
Change in value		569,919
Value at March 31, 2014		885,863

In accordance with ASC 815-10-35 the Company recognized loss of $569,919 in the change in derivative value for the three months ended March 31, 2014 and $576,550 for March 31, 2013.

10

STEELE RESOURCES CORPORATION

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

NOTE 3 - COMMITMENTS AND CONTINGENCIES

On August 31, 2011, SRC and Innocent, Inc. negotiated a formal Termination of the Joint Venture Agreement (the “Termination Agreement”) of the Joint Venture Agreement established to fund the development of the Mineral Hill Project. Pursuant to the Termination Agreement SRC acknowledges its obligation to repay $540,000 paid to date by INCT to SRC under the terms of the JV Agreement. The Termination Agreement also allows SRC the option to assume the $540,000 owed to INCT note holders on terms negotiated between SRC and the note holders.

From time to time, the Company is involved in legal matters in the ordinary course of business.  Except for the matter described below, the Company is not aware of any such matters.

SRC was named in an amended complaint filed in District Court, Clark County Nevada, by Phyllis Wynn, individually and as the trustee for the Phyllis Wynn Family Trust.  The Complaint appears to name approximately 81 defendants including Steele Recording Corporation.  The Amended Complaint was filed September 23, 2009.  It alleges 17 causes of actions including breach of contract and fraud against various other defendants and fraudulent conveyance to SRC and its former President and CEO Marlon Steele.  The substance of the Complaint involves a real estate transaction not involving SRC.  We have been informed by Mr. Steele that he does not believe the Plaintiff will prevail as to her claims regarding SRC and has answered with affirmative defenses including but not limited to the defense that the injuries and damages complained of did not occur as the result of any action on the part of SRC but as the sole, direct and proximate result of actions by Plaintiff and third parties not otherwise related to SRC.  The litigation remains in the discovery stages. A former officer of SRC has agreed to indemnify the Company from any eventual costs or loss from this lawsuit.

The Company became aware that a shareholder paid $57,000 of tenant improvements in an office that the Company never occupied.  The $57,000 was recorded as an accrued liability in anticipation of occupying the space in December 2010.  Subsequently the Company elected to not occupy the space eliminating the potential obligation to amortize the cost of the improvement over the course of the lease.  We have adjusted the $57,000 to Additional Paid in Capital.  

The Company does not have enough shares authorized to convert all the debt obligations currently owed.  The Company could need at least 400,000,000 common shares to satisfy the Asher Enterprises conversion and the Benison Convertible notes which could convert at $.0008.  It would exceed its authorized shares and the Company is assessing the next legal course of action to resolve this matter.

NOTE 4 - SUBSEQUENT EVENTS

On April 8, 2014 the Company granted 101,616,375 common stock for the conversion of debt totaling $81,295.  

11

Unless otherwise noted, references in this Form 10-Q to “we”, “us”, “our”, and “our company”, means Steele Resources, Corporation a Nevada corporation.

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Management’s Discussion and Analysis contains various “forward looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding future events or the future financial performance of the Company that involve risks and uncertainties. Certain statements included in this Form 10-Q, including, without limitation, statements related to anticipated cash flow sources and uses, and words including but not limited to “anticipates”, “believes”, “plans”, “expects”, “future” and similar statements or expressions, identify forward looking statements. Any forward-looking statements herein are subject to certain risks and uncertainties in the Company’s business, including but not limited to, reliance on key customers and competition in its markets, market demand, product performance, technological developments, maintenance of relationships with key suppliers, difficulties of hiring or retaining key personnel, any changes in current accounting rules, and future regulatory or legislative actions (including additional taxes, changes in environmental regulation,  and disclosure requirements under the Dodd-Frank Wall Street Reform,  Consumer Protection Act and the Jumpstart our Business Startups Act of 2012),  all of which may be beyond the control of the Company. The Company adopted at management’s discretion, the most conservative recognition of revenue based on the most astringent guidelines of the SEC in terms of recognition of revenue. Management will elect additional changes to revenue recognition to comply with the most conservative SEC recognition on a forward going accrual basis as the model is replicated with other similar markets (i.e. SBDC).  The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth therein.  Forward-looking statements involve risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Factors and risks that could affect our results and achievements and cause them to materially differ from those contained in the forward-looking statements include those identified in the section titled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, as well as other factors that we are currently unable to identify or quantify, but that may exist in the future.  In addition, the foregoing factors may affect generally our business, results of operations and financial position. Forward-looking statements speak only as of the date the statement was made. We do not undertake and specifically decline any obligation to update any forward-looking statements.

Our financial statements have been prepared in accordance with United States generally accepted accounting principles.

Our Business

Our exploration target is to find exploitable minerals on our properties.  Our success depends on achieving that target.  There is the likelihood of our mineral claims containing little or no economic mineralization or reserves of gold and other minerals. There is the possibility that our claims do not contain any reserves and funds that we spend on exploration will be lost.  Even if we complete our current exploration program and are successful in identifying a mineral deposit we will be required to expend substantial funds to bring our claim to production.  We are unable to assure you we will be able to raise the additional funds necessary to implement any future exploration or extraction program even if mineralization is found.

12

In an effort to create and expand shareholder value, Management has entered into discussions with parties outside of the mining industry, who might be interested in building alternative business opportunities utilizing the Company’s existing skills and resources.  In October of 2013, our company, through its wholly owned subsidiary Steele Resources, Inc., a Nevada corporation (“SRI”) , entered into a Joint Venture with 2nd Wave Strategies, Inc., a Florida based company that develops consumer products primarily in the wellness and sports nutrition marketplace.  Among other requirements, the terms of the Joint Venture are contingent upon our company completing timely filing of its reports with the Securities and Exchange Commission; modifying its capital structure and balance sheet, and accessing a minimum of $1 million in working capital for the Joint Venture on acceptable terms.  There is no guarantee management will be successful in achieving these requirements.

Going Concern

The report of our independent registered public accounting firm contains explanatory language that substantial doubt exists about our ability to continue as a going concern. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills.  This is because we have not generated revenues and no revenues are anticipated until we begin removing and selling minerals.  There is no assurance we will ever reach that point.

Critical Accounting Policies

The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. Significant accounting policies are as follows:

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. These estimates and assumptions also affect the reported amounts of revenues, costs and expenses during the reporting period. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates.

Exploration Stage Enterprise

The Company's financial statements are prepared pursuant to the provisions of ASC Topic 26 “Accounting for Development Stage Enterprises,” as it devotes substantially all of its efforts to acquiring and exploring mining interests that will eventually provide sufficient net profits to sustain the Company’s existence. Until such interests are engaged in major commercial production, the Company will continue to prepare its financial statements and related disclosures in accordance with entities in the development stage. Mining companies subject to ASC Topic 26 are required to label their financial statements as an “Exploratory Stage Company,” pursuant to guidance provided by SEC Guide 7 for Mining Companies.

Mineral Properties

Significant payments related to the acquisition of mineral properties, mineral rights, and mineral leases are capitalized. If a commercially mineable ore body is discovered, such costs are amortized when production begins using the units-of-production method based on proven and probable reserves. If no commercially mineable ore body is discovered, or such rights are otherwise determined to have no value, such costs are expensed in the period in which it is determined the property has no future economic value.

13

Property Evaluations

Management of the Company will periodically review the net carrying value of its properties on a property-by-property basis. These reviews will consider the net realizable value of each property to determine whether a permanent impairment in value has occurred and the need for any asset write-down. An impairment loss will be recognized when the estimated future cash flows (undiscounted and without interest) expected to result from the use of an asset are less than the carrying amount of the asset. Measurement of an impairment loss will be based on the estimated fair value of the asset if the asset is expected to be held and used.

Although management will make its best estimate of the factors that affect net realizable value based on current conditions, it is reasonably possible that changes could occur in the near term which could adversely affect management's estimate of net cash flows expected to be generated from its assets, and necessitate asset impairment write-downs.

Mineral property rights

All direct costs related to the acquisition of mineral property rights are capitalized. Exploration costs are charged to operations in the period incurred until such time as it has been determined that a property has economically recoverable reserves, at which time subsequent exploration costs and the costs incurred to develop a property are capitalized. The Company reviews the carrying values of its mineral property rights whenever events or changes in circumstances indicate that their carrying values may exceed their estimated net recoverable amounts. An impairment loss is recognized when the carrying value of those assets is not recoverable and exceeds its fair value.

At such time as commercial production may commence, depletion of each mining property will be provided on a unit-of-production basis using estimated proven and probable recoverable reserves as the depletion base. In cases where there are no proven or probable reserves, depletion will be provided on the straight-line basis over the expected economic life of the mine.

Impairment of Long-Lived Assets

In accordance with ASC Topic 365, long-lived assets, such as property, plant, and equipment, and purchased intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Goodwill and other intangible assets are tested for impairment.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Share-Based Compensation

The Company applies Topic 718 “Share-Based Payments” (“Topic 718”) to share-based compensation, which requires the measurement of the cost of services received in exchange for an award of an equity instrument based on the grant-date fair value of the award.  Compensation cost is recognized when the event occurs.  The Black-Scholes option-pricing model is used to estimate the fair value of options granted.  There are 1,617,500 warrants granted as of December 31, 2013.

Recent Accounting Pronouncements

No accounting standards or interpretations issued recently are expected to a have a material impact on the Company’s financial position, operations or cash flows.

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Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors. Certain officers and directors of the Company have provided personal guarantees to our various lenders as required for the extension of credit to the Company.

Accounting policies subject to estimation and judgment

Management's Discussion and Analysis of Financial Condition and Results of Operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. When preparing our financial statements, we make estimates and judgments that affect the reported amounts on our balance sheets and income statements, and our related disclosure about contingent assets and liabilities. We continually evaluate our estimates, including those related to revenue, allowance for doubtful accounts, reserves for income taxes, and litigation. We base our estimates on historical experience and on various other assumptions, which we believe to be reasonable in order to form the basis for making judgments about the carrying values of assets and liabilities that are not readily ascertained from other sources. Actual results may deviate from these estimates if alternative assumptions or condition are used.

RECENT DEVELOPMENTS AND OPERATIONS

We are a junior mining and exploration company identifying and acquiring properties integrated with placer ore and hard rock mineralization in geo-politically stable regions. Management continues to focus all efforts on the Steeple Rock Mining District of New Mexico.     

Results of Operation

We are an exploration stage company acquiring mineral properties or claims located in the State of Arizona, USA. The recoverability of amounts from the properties or claims will be dependent upon the discovery of economically recoverable reserves, confirmation of our interest in the underlying properties and/or claims, our ability to obtain necessary financing to satisfy the expenditure requirements under the property and/or claim agreements and to complete the development of the properties and/or claims, and upon future profitable production or proceeds for the sale thereof. For the three months ended March 31, 2014, we generated $0 revenue. Our future revenue plan is uncertain and is dependent on our ability to effectively mine our products, generate sales, and obtain contract mining opportunities. There are no assurances of our ability to begin to mine our claim. The expenditures for mining are cost intensive so it is critical for us to raise sufficient capital to implement our business plan. We incurred a net loss of $636,311 for the three months ended March 31, 2014 and a loss of $637,883 for the three months ended March 31, 2013.

Three months Ended March 31, 2014 Compared to Three months Ended March 31, 2013

For the three months ended March 31, 2014, we generated $0 revenue. Our future revenue plan is still uncertain as we are in an early testing and exploration phase and are still dependent on our ability to effectively and economically mine gold. We incurred losses of $636,211 and $637,883 for the three months ended March 31, 2014 and 2013, respectively.

Our general and administrative expenses were $40,214 and $0 for the three months ended March 31, 2014 and 2013, respectively.  The increase is primarily related increase in operations for the quarter.  

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Our interest expense were $26,178 and $61,333 for the three months ended March 31, 2014 and 2013, respectively.  The decreases are primarily attributable to the amortization of note discount in 2013 and conversion of debt from prior periods that reduced our interest expense.  

Our change in derivative value was $569,919 and $576,550 for the three months ended March 31, 2014 and 2013, respectively.  The increase was in accordance with ASC 815-10-35 the Company recognized income for the three months ended March 31, 2014.

Liquidity and Capital Resources

Our cash used in operating activities for the three months ended March 31, 2014 was $5,239 compared to $0 for the three months ended March 31, 2013. The increase in cash used in operations was primarily attributable to our mining activities and payments made to the professionals during the three months ended March 31, 2014.

Off-balance sheet arrangements

We have no off-balance sheet arrangements including arrangements that would affect the liquidity, capital resources, market risk support and credit risk support or other benefits.

Additional Information

Steele files reports and other materials with the Securities and Exchange Commission.  These documents may be inspected and copied at the Securities and Exchange Commission, Judiciary Plaza, 100 F Street, N.E., Room 1580, Washington, D.C. 20549.  You can obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330.  You can also get copies of documents that the Company files with the Commission through the Commission’s Internet site at www.sec.gov.  

ITEM 4 - CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures were designed to provide reasonable assurance that the controls and procedures would meet their objectives. As required by SEC Rule 13a-15(b), our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective for the three months ended March 31, 2014 mainly due to lack of segregation of duties.

Management has identified control deficiencies regarding the lack of segregation of duties and the need for a stronger internal control environment. Our management believes that these material weaknesses are due to the small size of our accounting staff. The small size of our accounting staff may prevent adequate controls in the future, such as segregation of duties, due to the high cost of such remediation relative the benefit expected to be derived thereby.

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We plan to resolve the segregation of duties issue by naming a CFO or new company officer that will resolve any issues surrounding segregation of duties.

In the interim period, to mitigate the current limited resources and limited employees, we rely heavily on direct management oversight of transactions, along with the use of external legal and accounting professionals. As we grow, we expect to create a new finance and accounting position that will allow for proper segregation of duties consistent with control objectives, and will increase our personnel resources and technical accounting expertise within the accounting function.  As our financing staff grows we will prepare and implement appropriate written policies and checklists which set forth procedures for accounting and financial reporting with respect to the duties within the internal control framework. These current control deficiencies could result in a misstatement of account balances that would result in a reasonable possibility that a material misstatement to our consolidated financial statements may not be prevented or detected on a timely basis. Accordingly, we have determined that these control deficiencies as described above together constitute a material weakness.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable and not absolute assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of certain events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

(b) Changes in Internal Control Over Financial Reporting

During the three months ended March 31, 2014, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1A - RISK FACTORS

Not required under Regulation S-K for “smaller reporting companies.”

ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES

None

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

All Convertible Notes are in default as of March 31, 2014.  

ITEM 4. - MINE SAFETY DISCLOSURES

The planned operation of our mines will be subject to regulation by the Federal Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). MSHA’s activities include the inspection of mines on a regular basis and the issuance of various citations and orders when it believes a violation has occurred under the Mine Act. Following passage of The Mine Improvement and New Emergency Response Act of 2006, MSHA has significantly increased its inspection program and the number of citations and orders charged against mining operations as well as the dollar penalties assessed.

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ITEM 5. - OTHER INFORMATION

There is no information with respect to which information is not otherwise called for by this form.

ITEM 6. - EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Exhibit No.	Description of Exhibit
2.1(1)	Plan and Agreement of Reorganization between Steele Recording Corporation and Steele Resources, Inc. Stockholders of Steele Resources, Inc. dated June 17, 2010.
3.1.1(2)	Articles of Incorporation
3.1.2(5)	Amendment to the Articles of Incorporation effective March 10, 2009
3.1.3(5)	Change to the Articles of Incorporation effective July 1, 2010
3.1.4(5)	Amendment to the Articles of Incorporation effective September 1, 2010
3.2(2)	Bylaws
4.1(*)	Convertible Promissory Notes
4.2(*)	Steele Resources Equity Compensation Plan
10.1(5)	Service Agreement dated June 9, 2010 between SRI and Riggs and Allen Mineral Development, LLC
10.2(3)	Assignment of Contract and Fairview Hunter Mineral Lease Agreement
10.3(4)	Drawdown Equity Financing Agreement with Auctus Private Equity Fund, LLC dated January 14, 2011.
10.4(4)	Registration Rights Agreement with Auctus Private Equity Fund, LLC dated January 14, 2011.
10.5(5)	Pony Project Mineral Lease dated February 4, 2011.
10.6(6)	Joint Venture Agreement between Steele Resources Corp. and Innocent, Inc. dated February 20, 2011.
10.7(6)	A&P Project Mineral Lease dated February 22, 2011.
10.8(7)	Copper Canyon Mineral Lease dated April 28, 2011.
10.9(8)	Convertible Promissory Note Asher Enterprises, Inc.
10.10(8)	Billali Gold Mine Purchase Agreement
10.11 (9)	Joint Venture Agreement
10.12 (10)	Contribution and Assumption Agreement
14(5)	Code of Business Conduct and Ethics
31.1(*)	Certification by CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2(*)	Certification by CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1(*)	Certification of CEO and CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(1) Filed as an exhibit to registrant’s Form 8-K filed on June 21, 2010.

(2) Filed as an exhibit to registrant’s SB-2 registration statement filed on June 22, 2007.

(3) Filed as an exhibit to registrant’s Form 8-K filed on December 31, 2010.

(4) Filed as an exhibit to registrant’s Form 8-K filed on January 21, 2011.

(5) Filed as an exhibit to registrant’s Form S-1 registration statement filed on February 10, 2011.

(6) Filed as an exhibit to registrant’s Form 8-K filed on March 28, 2011.

(7) Filed as an exhibit to registrant’s Form 10-K for December 31, 2011.

(8) Filed as an exhibit to registrant’s From 10-Q on May 15, 2012.

(9) Filed as an exhibit to registrant’s From 10-Q on August 20, 2012.

(10) Filed as an exhibit to registrant’s From 8-K on December 10, 2012.

(*) Filed as an exhibit to this Form 10-Q.

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SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

STEELE RESOURCES CORPORATION

Dated:  May 15, 2014	/s/ Scott Landow
	Scott Landow
	Chief Executive Officer
Dated:  May 15, 2014	/s/ Scott Landow
	Scott Landow
	Chief Financial Officer

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