STEELE OCEANIC CORP - FORM 10-K/A

Attached files

file	filename
EX-32 - STEELE OCEANIC CORP	src_ex32.htm
EX-4.1 - STEELE OCEANIC CORP	src_ex4-1.htm
EX-10.1 - STEELE OCEANIC CORP	src_ex10-1.htm
EX-31.2 - STEELE OCEANIC CORP	src_ex31-2.htm
EX-31.1 - STEELE OCEANIC CORP	src_ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 2)

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

THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended		Commission File Number
December 31, 2010		333-143970

STEELE RESOURCES CORPORATION

Nevada		75-3232682
(State of Incorporation)		(I.R.S. Employer Identification)

Principal Executive Offices:

3081 Alhambra Drive, Suite 208

Cameron Park, CA 95682

(530) 672-6225

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

Title of Each Class	Name of Each Exchange on Which Registered
None	None

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

Title of Each Class

Common Stock $0.001 Par Value

Indicate by check mark if the registrant is a well-known seasoned issued, as defined in Rule 405 of the Securities Act.

Yes

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

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.

Yes

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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. [ ]

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

[ ] Large accelerated filer

[ ] Accelerated filer

[ ] Non-accelerated filer (do not check if a smaller reporting company)

[X] Smaller reporting company

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

Yes

As of June 30, 2010 the aggregate value of the voting stock held by non-affiliates of the registrant, computed by reference to the average of the bid and ask price on such date was approximately $475,000 based upon the average price of $0.25 per share.

As of March 28, 2011, the Registrant had outstanding 100,383,334 shares of common stock.

Transitional Small Business Disclosure Format: Yes [ ] No [X]

Documents Incorporated by Reference

None

EXPLANATORY NOTE - The Registrant is amending this Form 10-K to revise certain disclosure in certain ITEMS indicated below. This Second Amended 10-K includes only those Items which have been revised from the Registrant’s Form 10-K filed with the SEC on March 31, 2011. ITEM 1, Business, contains no new information but incorporates previous revisions contained in the Amendment #1 to the Form 10-K. ITEM 7, Management’s Discussion and Analysis, contains no new information but condenses the MD&A disclosures contained in the original Form 10-K and the Amendment #1 to the Form 10-K. The Financial Statements have been revised to reflect a previous 10-for-1 stock split. Except as set forth herein and as previously set forth in the Amendment #1 to the Registrant’s Form 10-K, there are no other changes to the disclosures in the Form 10-K for the fiscal year ended December 31, 2010 previously filed with the SEC.

TABLE OF CONTENTS

	Page of Report

PART I	1
ITEM 1. BUSINESS	1

PART II	15
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	15
ITEM 8. FINANCIAL STATEMENTS	22

PART III	23
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTION AND DIRECTOR INDEPENDENCE	23

PART IV	25
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	25

SIGNATURES	26

iii

PART I

ITEM 1. BUSINESS

Corporate Overview

Steele Resources Corporation (formerly Steele Recording Corporation) was incorporated in the state of Nevada on February 12, 2007, at which time it was deemed a “shell company” carrying on minimal operations in the business of producing, acquiring, licensing and distribution of recorded music.

On June 17, 2010 the Company entered into and consummated a Plan and Agreement of Reorganization between the Company and Steele Resources, Inc. and certain stockholders of Steele Resources, Inc. (the “Reorganization”). Pursuant to the Reorganization, the Company acquired all of the issued and outstanding shares of Steele Resources, Inc., a Nevada Corporation (“SRI”) in exchange for 5,730,000 shares of the common stock of the Company. As a result of the Reorganization, SRI became a wholly-owned subsidiary of the Company and the four former stockholders of SRI became owners, in the aggregate, of approximately 60% of the Company’s outstanding common stock. In conjunction with this Reorganization, one previous officer and Director of the Company resigned and the Board appointed new officers and Directors. See below for further information on the new executive officers and Directors of the Company.

As a result of the Reorganization, the Company acquired the business operations of SRI which became the Company’s primary business activity consisting of mining property acquisition, mineral exploration and development and mining services with a portfolio of precious metals exploration properties located near producing regions primarily within the state of Nevada. As a result of the Reorganization SRC is no longer involved in the previous business of producing, acquiring, licensing and distribution of recorded music. The Company also changed its name from "Steele Recording Corporation" to "Steele Resources Corporation".

Business of Steele Resources Corporation

Our wholly-owned subsidiary, SRI, was incorporated in the state of Nevada on May 27, 2010 as an exploration and mining company which is focused on identifying and developing advanced stage precious metal exploration projects which show potential to achieve full production. The overall business strategy is to identify, explore and, if warranted, develop and operate mineral exploration properties and to provide mine exploration and operations services to mining properties located initially in the Western United States and Nevada in particular. The initial business strategy is to service the niche market between speculative exploration and large scale production. This niche market lies between, at one end, relatively small companies which have conducted preliminary mineral exploration on their properties and, at the other end, companies which conduct major mining operations which could generally be defined as properties having gold mineral reserves in excess of 2,000,000 ounces. Within this niche market, SRI believes there are a large number of projects in Nevada and other parts of the United States that have excellent potential but do not meet the size requirements for development by the major operators in the mining industry.

SRI’s business plan will be to evaluate properties which have considerable amounts of exploration already completed and potential resources identified yet are not of sufficient size and scope for development by the major mining companies. Based on management’s extensive experience in evaluating geological exploration data and exploration feasibility, SRI will seek to identify those exploration properties which offer the best potential for producing significant gold and silver reserves and offer favorable conditions, if warranted, for the future efficient development of the property to reach a production stage. However, the Company and SRI together represent a relatively new, exploration stage company. There is no assurance that a commercially viable mineral deposit exists on any of the properties currently leased by SRI and further exploration will be required before an evaluation of the economic and regulatory feasibility of the properties can be determined.

Once suitable projects are identified, SRI will utilize its contract services division in order to perform further exploration drilling, prepare feasibility studies, mine modeling, on-site construction and advance stage project engineering with the goal of establishing, if warranted, a producing mine project. Exploration services would also include securing necessary permits, environmental compliance and remediation plans.

SRI will provide its mine exploration services in one of two ways. The first approach is for SRI to acquire part or all of the mineral rights to a designated property. In this approach SRI would prepare a comprehensive mining development plan including the tasks to be accomplished, the timetable for each phase of the plan and the nature and number of service providers to perform the tasks. The exploration plan would include a detailed budget, payment schedules and a percentage royalty from any gold or silver produced, if the property is found worthy of development. SRI would then assemble the necessary service providers to carryout the exploration and, if warranted, development plan. In this approach, SRI would fund the property exploration and possible development itself in which case it would own all or a substantial portion of all the mineral production, if any, which might be realized from that particular property with a royalty typically paid to the property owner or the mineral rights assignor. This approach would also typically include certain work requirements and expenditure requirements in order to maintain the exploration/mineral rights.

The second approach will be to contract with the property owner or mineral rights holder to provide the services listed above on a contract fee basis which would include a percentage royalty on any mineral production which is actually achieved. This approach would have SRI acting in the nature of a general contractor. SRI would prepare the same type of comprehensive mining exploration plan as described above and assemble the necessary service providers to carry out the plan.

Suitable projects will typically have the following characteristics:

properties located near existing mineral zones initially focusing in the USA;

properties having a considerable amount of exploration completed; and

properties not of sufficient size for the major mining companies to advance themselves.

Success in gold or other mineral exploration is dependent upon a number of factors including, but not limited to, quality of management, quality and availability of geological data and the expertise to interpret it, availability of trained miners and equipment and availability of exploration capital. The exploration process can be long and costly. Due to these and other factors, the probability of our identifying individual prospects having commercially significant reserves cannot be predicted.

Properties/Interests Acquired

All of the properties currently leased by SRI have a certain amount of prior exploration data available however none of the properties currently have any probable or proven reserves. Consequently, there is no assurance that a commercially viable mineral deposit exists on any of the properties and further exploration will be required before an evaluation of the economic and regulatory feasibility of the properties can be determined.

Comstock-Tyler Project

SRI’s initial exploration project consists of 30 mineral claims covering approximately 600 acres of property owned by the Bureau of Land Management (“BLM”) and referred to as the “Comstock-Tyler Project”. These claims were registered with the BLM on June 7, 2010 and allows SRI the right to conduct thorough mineral and precious metal exploration. Such exploration will be subject to typical notification to the BLM and the Nevada Department of Environmental Protection and the posting of remediation bonds as the exploration process continues. The property is located at Township 16N Range 20E Section 1 which is approximately 5 miles southwest of Virginia City, NV and lies in the historically producing Comstock Mining District. Corresponding property filings have been recorded in the Nevada Counties of Washoe and Storey reflecting SRI’s mineral rights in the Comstock-Tyler Project. The property has been physically examined in the field by the Company's senior geologist and an independent geologist with over 30 years of experience in this particular district. Pursuant to an agreement with Riggs and Allen Mineral Development LLC (“Riggs and Allen”), which performed the property staking, SRI agreed to pay a total of $60,000 in cash and stock and has granted Riggs and Allen a production royalty of 1% of the Net Smelter Returns (“NSR”) from any production realized from the property. Riggs and Allen have been issued 30,000 shares of Common Stock of SRC and cash payments of $17,580 with an additional $12,420 paid to perfect the mineral claims. SRI has the right to repurchase the 1% NSR from Riggs and Allen for $1,000,000.

The property does not have any known mineral reserves. The exploration plan is currently underway and is designed to explore the extent of gold mineralization on known fault and vein structures. After early geology and mapping by SRC staff, the company intends to have a full geophysical survey of the property completed. Based on the results of the survey, and upon receiving approved exploration permits from the appropriate government agencies, SRC will commence a multi-phase drill program consisting of 10,000 linear feet of drilling.

Fairview Hunter Mine Project

On September 24, 2010 our subsidiary SRI entered into an Asset Purchase Agreement with DuraRock Resources, Inc. (“DuraRock”) pursuant to which SRI acquired a mineral lease agreement dated July 19, 2010 relating to property referred to as the Fairview Hunter Mine Project (the “Fairview Hunter Project”). In exchange for acquiring the mineral rights to the Fairview Hunter Project SRC issued 500,000 shares of its restricted common stock to DuraRock and granted DuraRock a 2% Net Production Royalty on any future production sold from the property. The property is comprised of 115 mineral claims covering approximately 2,300 acres located 30 miles southeast of Fallon, Nevada. The Fairview Hunter Project lease has a term of ten years (through July 2020) and annual lease payments commencing at $25,000 and ending at $50,000 in the fifth year of the lease (2015). The Lessor also retains a production royalty of 3% of the NSR from the leased property of which SRI can buyout up to 2% of such royalty upon payment of $1,000,000 per 1% royalty amount. The lease does not specify dollar commitments for any development and allows SRI complete discretion as to conducting exploration or development activity on the property. The lease provides for SRI to pay all taxes and assessments on the property and pay all fees to the BLM or the Nevada mining agencies relating to the mining exploration or any future development of the property. The lease can be extended automatically for so long as SRI is engaged in Mining Operations on the expiration date of the lease.

The property is located approximately 30 miles southeast of Fallon, NV and occupies the northern and central portions of the historic Fairview Mining District. The topography consists of moderate to steep hilly terrain in the southern portion, becoming pediment-covered in the north with gentle slopes and numerous intermittent stream channels. Several old prospects, adits and shafts are scattered throughout the property. The project has recently had drilling conducted and two primary zones have been identified for further drilling. According to a geologic report on the property, two separate target areas were drilled at the Fairview Hunter Project. The highest Au values come from a 195’ zone (measured down hole) of anomalous geochem, with an average grade of 267 ppb (0.008 opt). This interval includes a 10’ section that averages 0.06 opt Au, contained within a large intercept (55’) that averages 0.02 opt Au. Material in the overlying rocks, which would theoretically be up dip, have a weak Au signature but are anomalous in Ag, containing a down hole intercept of 65’ averaging 7.7 ppm Ag (or 0.22 opt). Roughly 650’ along strike to the southeast, where holes FHRC –3 and 8 were drilled, and a zone within tuffs in a similar stratigraphic position were also highly anomalous in Ag but low in Au. In hole FHRC – 8 (the steeper of the two) there was a 150’ down hole interval that averaged 8.2 ppm Ag (0.24 opt). It appears that the west northwest trending structure identified on the surface could contain subsurface precious metals zones.

The current exploration program commenced in February, 2008 with the collection of 88 soil samples from the northern pediment-covered area, an additional 37 in-fill samples from the central portion and 36 rock chip and float samples. All the surface samples were fire assayed for gold and silver and analyzed using ICP spectrometer multi-element testing. Based on these findings, two prospective target areas were drill tested with 12 angled reverse circulation drill holes resulting in 5,360 feet of drilling and producing 1,072 samples which were submitted for both gold and silver fire assay and multi-element ICP analysis.

The property has no known mineral reserves. Our exploration plan is to perform another 12 drill holes during 2011 in targeted areas resulting in an estimated 7,200 feet of additional drilling results. The estimated 1,440 samples from this drilling program will be tested and analyzed allowing us to prepare extensive geological mapping and prepare feasibility studies for the project.

Further exploration will require the posting of a bond and filing a Notice of Intent with the BLM relating to the drilling of 12 drill holes to be performed on the property.

Pony Project

On November 3, 2010 SRI entered into a non-binding Letter Of Intent with a group of individual land owners in the state of Montana to acquire rights to 17 patented and 67 unpatented mining claims known as the Pony Exploration project (“the Pony Project”). The Project currently contains two active mines operating under a Small Miner Exclusion Statement (SMES). The Pony Project is located in the Pony Mining District near Pony, Montana. Officers of SRC have met with Montana Department of Environmental Quality officials to discuss permitting for both mining and exploration activities. The non-binding LOI provided terms for SRI to lease (with the right to acquire) the Lessors’ interests in the 84 mining claims comprising the Pony Project. The LOI included a $10,000 non-refundable deposit and allowed for a 90 day due diligence period.

Upon satisfactory completion of due diligence and securing project financing, SRI and the individual Lessors entered into a Mineral Lease Agreement With Option To Purchase (the “Pony Lease”) effective February 4, 2011. The Pony Lease provides for a six year lease period with an initial payment of $300,000 which SRI paid upon signing and an annual lease payment of $500,000 for the next five years. The initial payment of $300,000 was provided through the initial funding of the Joint Venture Agreement described below under “Project Financing”. The Leasors will also have a 2% NSR on the property. In addition the Lessors will receive a 1% NSR on any property developed by SRI located within one linear mile from any portion of the exterior boundary of the Pony Project. After the lease period expires, SRI will have the option to purchase the Pony Project for $190,000.

During its due diligence process, SRI began taking samples from the existing underground mine and surrounding claims in order to better define the extent of the potential mineralization.

The property has no known mineral reserves. The Mineral Hill Project includes both patented and unpatented claims. There are sixty-seven (67) unpatented lode claims each 20 acres for a total of 1340 acres for the purposes of exploration. There are 17 federal patented lode claims plus fractions, and total 322.05 acres. The following is a list of the names, acreages, survey numbers (Sur) and Bureau of Land Management (NMC) numbers associated with the claims:

Claim Name	ID Number	Acreage	Claim type:
Golden	NMC 215959	20	Unpatented, lode
Way	NMC 215964	20	Unpatented, lode
Old	NMC 215963	20	Unpatented, lode
Joe	NMC 215960	20	Unpatented, lode
Gem#2	NMC 215958	20	Unpatented, lode
Mexi 1	NMC 215961	20	Unpatented, lode
Mexi 2	NMC 215962	20	Unpatented, lode
MN # 1 - 60	NMC 221240 - 221299	1200	Unpatented, lode
North Star	Sur#2600; ME#2097	20.26	Federal patented lode
Pony	Sur#5303; ME#3805	15.57	Federal patented lode
Mountain Cliff	#2629; Lot 3483A	16.87	Federal patented lode
Grouse	Sur#5997; ME#4080	18.64	Federal patented lode
Clipper Fractured	Sur#6080; ME#408	6.6	Federal patented lode
Standby	Sur#5998; ME#4081	10.93	Federal patented lode
Bill Nye	Sur#59999; ME#4081	14.33	Federal patented lode
MKT	Sur#8730; ME#0307	9.59	Federal patented lode
Willow Creek	Sur#6128; ME#4358	2.97	Federal patented lode
Ned	Sur#504; ME 1970;Lot 38	11.11	Federal patented lode
Policy	ME#2865; Lot 3586	20.22	Federal patented lode
Rustler	Sur#2617; ME#2078;Lot 46A	14.68	Federal patented lode
Strawberry	#780; ME#842; Lot 41	10.28	Federal patented lode
Strawberry East	Sur#551; ME#1735, Lot 39	10.33	Federal patented lode
Keystone	Sur#728; Lot 43	11.41	Federal patented lode
Iron Mine Lode	Sur#2598; ME#2016, Lot 44	18.37	Federal patented lode
Owls Roost	Sur#5684; ME#4048	15.76	Federal patented lode
Success	Sur#568	10.22	Federal patented lode
N J Isdell	#5683; ME#4048	2.56	Federal patented lode
Dead Pine	Sur#6021; ME#4348	10.23	Federal patented lode
Golden Chariot	Sur#4673; ME#3377	19.03	Federal patented lode
Iron Chief Lode	Sur#5302	19.82	Federal patented lode
Dividend	Sur#6213; ME 4086	17.64	Federal patented lode
Clipper No. 2 Lode	Sur#5405; ME#3977	14.63	Federal patented lode

Our exploration plan is to perform another 50 drill holes during 2011 in targeted areas resulting in an estimated 25,000 feet of additional drilling results. The estimated 5,000 samples from this drilling program will be tested and analyzed allowing us to prepare extensive geological mapping and prepare feasibility studies for the project. Based on the reported historic production, the regional potential identified in historic geologic reports and SRI’s feasibility studies, SRI will prepare a Plan of Operations required by the SMES for the Pony Project.

A&P Project

On November 22, 2010 SRI entered into a non-binding Letter Of Intent with a group of individual land owners in the state of Montana to acquire two patented mining claims known as the Atlantic and Pacific Mine ("the A&P") located in the Pony Mining District in Montana. The A&P was actively mined in the early 20th Century and produced 128,600 ounces of gold from 1934 to 1941. Chicago Mining also briefly pit mined the project in 1991 but did not finish processing an estimated 12,000 ton stockpile which remains at the mine site. The A&P claim is contiguous with the larger Pony Project and is considered a key piece of the regional mineralization target. Historic reports by Chicago Mining and Newmont Mining indicated that those geologists believed the A&P to have significant gold resource potential.

The non-binding LOI provides terms for SRI to lease (with the right to acquire) two patented mining claims located in the Pony Mining District, near Pony, MT. The LOI includes a $5,000 non-refundable deposit and allows for a 90 day due diligence period. As part of its due diligence process, SRI reviewed the historical geological reports previously prepared by Chicago Mining and Newmont Mining and began taking samples from the existing underground mine and surrounding claims in order to better define the extent of the potential mineralization.

Upon satisfactory completion of due diligence and securing project financing, SRI and the individual lessors entered into a Mineral Lease Agreement With Option To Purchase (the “A&P Lease”) effective as of February 22, 2011. The A&P Lease provides for a five year lease period with an initial payment of $200,000 and an annual commitment of $100,000.00 for the next five years. The Lessors will also have a 2% NSR on the property during the lease term. After the lease period expires and all lease payments have been paid, full right and title of ownership of the A&P property shall be transferred to SRI. The initial payment of $200,000 was paid on March 23, 2011.

The Mineral Hill Project properties are located 3-5 miles west of Pony, Montana in the Tobacco Roots Mountain Range in Madison County. Access includes BLM and U.S. Forest service dirt roads that exist throughout the entire district and pass through most if not all of the Mineral Hill Project claims. The roads are maintained well enough to allow exploration equipment such as drill rigs and water trucks, as well as privately owned vehicles to the priority sites marked for exploration and development. Once mining activities begin the roads will likely need maintenance for haulage purposes.

There are presently two exploration projects within the Mineral Hill Project: the A&P target and the Mountain Meadow target.

The A&P target is a site of a small open pit and gloryhole mined in the early 20th century. The historic workings go no deeper than 180 feet beneath the surface, however, the mineralized structures likely continue downward. Mining was halted due to WWII. Current plans are to drill beneath the workings to determine if high grade mineralization continues.

Mountain Meadow is approximately 3000 feet east of the A&P target. Surface is covered with glacial till; therefore, the structural intersections that likely occur beneath the glacial deposit have never been visible from the surface. Since these structures are known to be mineralized to the west, north, and south, the current plan is to conduct a geophysical survey to identify the location of possible structural intersections and drill them.

To retain mineral rights to the property, the yearly maintenance fees must be paid as well as the appropriate lease payments to the owners of the claims as outlined in the definitive agreement.

The northern part of the Mineral Hill District is comprised of Archean metamorphics of the Pony Series which include gneisses and schist intruded by mafic/aplite/pegmatite dikes. The southern portion of the district is comprised of the Tobacco Root quartz-monzonite batholith which intruded into the surrounding Archean metamorphic rocks. The district contains both pre-Cambrian faults as well as region wide block faulting due to uplift of the Tobacco Root Mountains. The mineralization is always structurally controlled and occurs as quartz-sulfide vein deposits in shear zones and faults. Higher grades and tonnages usually occur at the intersections of the easterly trending structures and the subsidiary northerly trending structures. Several claims have historic workings on these structures at minimal depth, and mining activities ceased once WWII started. The mineralization likely continues at depth, a theory that will be tested during exploratory drilling. There are other potential sites covered by glacial material and never explored that are of high interest as well.

There had been work done by several companies back in the 1980’s and early 1990’s. Caara Drilling drilled 24 holes in the A&P area, and Pathfinder Gold had drilled an unknown number of holes at the Boss Tweed property. We sent our geologist to investigate the property in October and November of 2010, and conducted a limited sampling program of the Mountain Cliff mine, the A&P mine, and a district wide sampling of waste rock and dump material to assess typical grades.

There is no equipment or processing facility in place on any of the properties. There are underground workings with rail in places, but future underground work will require new drifts and shafts, as well as modern equipment. No infrastructure exists on the property.

The source of water can be a reservoir two mile east of the property, or several streams that exist throughout the district. The source of power will initially be generator based. Ultimately, power lines from Mammoth to the west or Pony to the east could be established.

The property currently has no known reserves, only in-house resource calculations established by various companies as noted in Steele Resource’s technical report on the Mineral Hill Project. Therefore, to establish any reserves, sufficient drilling will be required, and until then, this property is exploratory in nature.

The sampling program to date has been restricted to rock chip sampling and grab sampling at various locations. The following methodology was used with respect to rock/soil sampling:

Rock/Soil Sampling Methodologies: Grab samples will be taken from a location, usually less than 1 foot across and can be a single piece of rock. Composite samples are taken over a large area and represent the average composition and grade of the rock and can’t define high grade from low grade zones. Chip channel samples are continuous chip samples taken in a line across a structure or rock. This allows the geologist to determine the widths of the mineralized zones and the presence of high grade zones within low grade halos. High grade samples focus on obviously mineralized rock that is known to grade high in gold, silver, etc. Soil samples are taken from material at least 12 to 18 inches beneath the surface if possible. Soil samples can be taken in a line or grid, with the grid allowing the identification of geochemical trends. All sample sites will be tagged by a metal tag, logged in a GPS unit (if possible), and the sample will be bagged and marked.

Sample preparation/analysis/security: Samples have been and will always be protected from contamination or disturbance from third parties by storage away from other activity at the drill site and only geologists, drillers or lab personnel touch the lab sample bags.

No samples will never be collected or in any way handled by directors of the company or any associate of the issuer. The samples will be drilled, collected, transported, and processed by company employees (i.e. drillers or geologist) or independent contractors.

Most drill samples in the future will be processed by independent 43-101 compliant assay laboratories. Samples will be picked up at the storage building or drill site by the lab personnel and transported by them or by geologist directly to its sample preparation facility using chain-of-custody identification and tracking procedures. The lab will prepare the samples for assay and geochemical analysis. If the samples are wet, they will be dried in low temperature ovens. Then, depending on the type of analysis requested, the samples will be split, sieved, crushed, pulverized and analyzed at the lab. The lab will thus maintain custody of the samples the entire time. Finally, the lab will return pulps and coarse rejects back to Steele Resources on a quarterly basis, which will be transported on pallets to the appropriate storage building for long term storage. Secure steel shipping containers are being investigated as safe, secure storage options.

For future verification of assay results: 10% of all samples for soil and drill cuttings/core will be duplicates. Also, all drill samples will have standards every 100 feet and blanks every 500 feet. These “standard” samples, which have a verified known, measured content of precious metals, will be sent to lab along with regular samples in each given shipping batch. Where higher gold values are possibly encountered in the drilling or the presence of visible gold is suspected by visual geologic logging, Steele Resources will request a screen fire metallic assay. In addition, selected samples at random will have the duplicate sent to a referee lab for additional confirmation.

SRI's current operating plan for this project consists of completion of the geological mapping and geophysics analysis that will establish the exploration drilling phase. This initial phase will cover the first six to nine months of operations and will include performing another 42 drill holes during 2011 in targeted areas resulting in an estimated 18,000 feet of additional drilling results. The estimated 3,600 samples from this drilling program will be tested and analyzed allowing us to prepare extensive geological mapping and prepare feasibility studies for the project. Based on the reported historic production, the regional potential identified in historic geologic reports and SRI’s feasibility studies, SRI will prepare a Plan of Operations required by the SMES for the Project.

Upon satisfactory completion of this phase and with appropriate mineral deposit indications, the mining phase will commence. We do not anticipate that the Mineral Hill Project will generate revenues during the initial twelve months of operations. We do expect the mining operation to begin revenue generation during the second full year of operations. We believe that the funds provided by INCT in conjunction with the matching funds provided by us are sufficient to execute the current operating plan. SRC plans to raise the matching funds for the JV required through the private placement of our equity securities, by way of loans, utilization of the Drawdown Agreement and such other means as the Company may determine.

Proposed Property Acquisitions

Comstock-Tyler Expansion

On July 1, 2010 SRI entered into a letter of Intent with Riggs and Allen Mineral Development LLC (R&A) in which R&A agreed to stake and register 148 mineral claims totaling approximately 2,960 acres contiguous to SRI’s existing Comstock-Tyler project. On September 15, 2010 SRI terminated this LOI without further expense or obligation to SRI.

Nevada Mine Properties II, Inc.

On July 22, 2010, SRI entered into a Letter of Intent to purchase Nevada Mine Properties II, Inc, an exploration company with nine properties located in Nevada and Idaho. On August 20, 2010 SRI terminated this LOI without further expense or obligation to SRI.

Filipinni and Plumas Properties

On October 1, 2010 SRI entered into a Letter of Intent to acquire certain mineral rights to the Filipinni and Plumas exploration properties located in Lander County, Nevada. On October 19, 2010, SRI terminated these LOI’s without further expense or obligation to SRI.

Project Financing

Joint Venture Agreement Governing Exploration and Development of Pony Project and A&P Project

On January 27, 2011, 2010 SRI entered into a non-binding Letter Of Intent with Innocent Inc. ("INCT"), a Nevada corporation engaged in the financing of exploration and development of mineral properties. The LOI provides for a Joint Venture Agreement ("JV") which will govern the exploration and operations of mineral rights within the Pony Project and A&P Project jointly referred to as the Mineral Hill Project (the "Mineral Hill Project").

The non-binding LOI provides terms for INCT to contribute up to $5,000,000 in operating funds over a one year period beginning with the execution of the JV agreement. The parties may jointly extend this period, by mutual agreement. In addition, upon signing of the LOI, INCT agreed to advance $550,000 in order to allow SRI to close the Pony and A&P Project lease transactions. SRI will initially contribute its leases in the Mineral Hill Project into the JV. SRI also agrees to fund the JV with a matching $5,000,000 in operating funds no later than one year following the first $1,000,000 funded by INCT. The JV will govern the operations of the various sites within the Mineral Hill Project wherein the parties to this agreement will initially share 50%-50% joint ownership of the JV, based upon the assumption, each party fulfills its terms and responsibilities pursuant to the LOI and the final JV agreement. If either party fails to contribute the funds committed to, that party’s interest in the JV will be reduced. SRI will be responsible for operations of the JV.

On February 7, 2011, INCT completed its initial funding to the JV pursuant to the LOI in the amount of $290,000 with the proceeds being used to close the definitive lease agreement covering the Pony Project.

Pursuant to the LOI, on February 20, 2011 INCT and SRC entered into a definitive Joint Venture Agreement (the “JVAgreement”) relating to the Mineral Hill Mining Project. Pursuant to the JVAgreement INCT agreed to provide funding of $1,000,000 upon signing the JV Agreement and up to an additional $4,000,000 to fund the exploration and development of the Mineral Hill Mining Project. Of the initial $1,000,000 commitment, INCT agreed to provide an initial $540,000 to close the Pony Project and the A&P Project, of which $290,000 was provided to close the Pony Project lease and an additional $250,000 was to be funded by February 25, 2011. In addition, INCT agreed to fund the remaining $460,000 upon signing the JV Agreement. The JV Agreement provided that if INCT provided at least $1,000,000 within the first year, then SRC would agree to match INCT’s investment up to $5,000,000 thus providing up to an aggregate of $10,000,000 to explore and, if warranted, develop the Mineral Hill Mining Project. Under the terms of the JV Agreement INCT and SRC would each own 50% of the Joint Venture however the percentage ownership would be reduced by 10% for each $1,000,000 a party failed to contribute to the Joint Venture.

On March 23, 2011 INCT, through one of its investors, completed its second funding to the Joint Venture in the amount of $250,000 with the proceeds being used to close the A&P Lease and for working capital. As of March 31, 2011, the Joint Venture entity was not yet formed and INCT had advanced $540,000 of its initial funding obligation of $1,000,000 leaving $460,000 remaining to be funded.

Drawdown Equity Financing Agreement

On January 14, 2011, we entered in to a drawdown equity financing agreement and registration rights agreement (collectively the “Agreements”) with Auctus Private Equity Fund, LLC (“Auctus”). In accordance with the Agreements, Auctus has committed, subject to certain conditions set forth in the Agreements, to purchase up to $10 million of the Company’s common stock over a term of up to three (3) years. Although the Company is not mandated to sell shares under the Agreement, the Agreement gives the Company the option to sell to Auctus shares of common stock at a per share purchase price equal to 95% of the average of the lowest closing bid price of the common stock of any two trading days during the five trading days following the Company’s delivery of a Drawdown Notice to Auctus (the “Notice”). At its option, the Company may set a floor price under which Auctus may not sell the shares which were the subject of the Notice. The floor price shall be a minimum price determined by the Company or 75% of the average closing price of the stock over the preceding ten (10) trading days prior to the Notice and can be waived at the discretion of the Company. The maximum amount of Common Stock that the Company can sell pursuant to any Notice is the greater of (i) an amount of the shares with an aggregate maximum purchase price of $500,000 or (ii) 200% of the average daily trading volume based on the 10 days preceding the Notice date.

Auctus is not required to purchase the shares unless: a) the shares which are subject to the Notice have been registered for resale and are freely tradable in accordance with the federal securities laws, including the Securities Act of 1933, as amended; and b) under certain conditions which are set forth in the Agreements, and which are outside of Auctus’ control. The Company is obligated to file and did file on February 10, 2011 with the U.S. Securities and Exchange Commission (the “SEC”) a registration statement on Form S-1, covering the sale of up to 20,000,000 shares of common stock to Auctus. The Company must use all commercially reasonable efforts to have such registration statement declared effective by the SEC within 120 days of filing. The Company has agreed to pay Auctus an aggregate amount of $10,000 as an origination fee with respect to the transaction.

Industry Overview

Gold Market

For centuries, gold has been desirable for its rarity, beauty and unique properties. Because gold is highly valued and in very limited supply, it has long been used as a medium of exchange or money. The CPM Group estimates in its 2009 Yearbook that about 79% of the gold consumed each year is used in the manufacture of jewelry, with approximately 13% of gold used in industrial processes. Gold is an excellent conductor of electricity, is extremely resistant to corrosion and is one of the most chemically stable of the elements, making it uniquely suited for electronic and other high-tech applications. A small amount of gold is currently used in almost every sophisticated electronic device.

Because of gold’s perceived inherent value, its demand and, hence, its price, tends to increase when there is uncertainty in the markets for other “paper currencies” such as the US dollar or Euro. Due to the current recession, threats of terrorism and the huge debt burden of many countries, the spot market price of an ounce of gold has increased to historic levels having surpassed the $1,000 per ounce mark in 2008.

The following table presents the annual high, low and average afternoon fixing prices for gold over the past ten years, expressed in US dollars per troy ounce, on the London Bullion Market.

Gold Price (USD) on the London Bullion Market
Year	High		Low		Average
2005	$	536	$	411	$	444
2006	$	725	$	525	$	604
2007	$	841	$	608	$	695
2008	$	1,011	$	713	$	872
2009	$	1,212	$	810	$	972
2010	$	1,420	$	1,058	$	1,224

Source: London Metal Exchange

On March 28, 2011, the afternoon fixing price for gold on the London Bullion Market was $1,421 per troy ounce.

This current price level has made it more economically feasible to produce gold as well as making gold a more attractive investment for many. Accordingly, the gross margin per ounce of gold produced per the historical spot market price range above provides significant profit potential if we are successful in identifying, exploring and, if warranted, developing suitable projects.

Gold Mining Industry Participants

By industry standards, there are generally four types of mining companies. Typically, an “exploration stage” mining company is focused on exploration to identify new, commercially viable gold deposits. “Junior mining companies” typically have proven and probable reserves of less than one million ounces of gold, generally produce less than 100,000 ounces of gold annually and / or are in the process of trying to raise enough capital to fund the remainder of the steps required to move from a staked claim to production. “Mid-tier” and large mining (“major”) companies may have several projects in production plus several million ounces of gold in proven reserves.

To the extent that SRI is hired by a property owner to carry out advanced stage exploration and development of a mining project, SRI would not be deemed a “mining company” but rather a mining service provider. To the extent SRI actually acquires the mining rights to a mining property, which will be its primary focus, it could be characterized as an exploration company falling somewhere between an “exploration stage” and a “junior” mining company depending on the stage of development activity at each project.

Gold Reserves

Generally worldwide gold reserves have been declining for a number of years for the following reasons:

The extended period of low gold prices from 1996 to 2001 made it economically unfeasible to explore for new deposits for most mining companies.

The demand for and production of gold products have exceeded the amount of new reserves added over the last several consecutive years.

Reversing the decline in lower gold reserves is a long term process. Due to the extended time frame it takes to explore, develop and bring new production on line, the large mining companies are facing an extended period of lower gold reserves. Accordingly, junior companies that are able to increase their gold reserves and/or development projects more quickly should directly benefit with an increased valuation.

Additional factors causing higher gold prices over the past two years have come from a weakened United States dollar. Reasons for the lower dollar compared to other currencies include the historically low US interest rates, the increasing US budget deficit and trade deficits, the current economic recession and the general worldwide political instability caused by the war on terrorism.

Competition

Of the four types of mining companies, we believe junior companies represent the largest group of gold mining companies. All four types of mining companies may have projects located in any of the gold producing continents of the world and many have projects located in Nevada and other Western states. As an exploration stage company, we will compete with other mineral resource exploration and development companies for financing and for acquisition of new mineral properties.

Many of our competitors have greater exploration, production, and capital resources than we do, and may be able to compete more effectively in any of these areas. For example, these competitors may be able to spend greater amounts on acquisition of desirable mineral properties, on exploration of their mineral properties and on development of their mineral properties. This competition could result in competitors having mineral properties of greater quality and interest to prospective investors who may finance the exploration and development of their mineral properties. Our inability to secure capital to fund exploration and, if warranted, development costs for our mineral properties would create a competitive cost disadvantage in the marketplace which would have a material adverse effect on our operations and potential profitability.

We also compete in the hiring and retention of key executives, skilled laborers, experienced subcontractors and other employees and contract personnel. Consequently, though unlikely, it is possible that we may not be able to hire or retain qualified geologists, miners or operators in the numbers or at the times desired.

Employees

As of December 31, 2010, we had four full-time employees and one part-time employee. Employees include a CEO, a Mine Manager and a CFO. We anticipate hiring additional employees during the current year to work on the mining sites in Nevada as our exploration development programs commence. While skilled equipment and operations personnel are in demand, we believe we will be able to hire the necessary workers to sustain our current exploration and any future development programs. Our employees are not expected to be subject to a labor contract or collective bargaining agreement. We consider our employee relations to be good.

Consulting services, relating primarily to geologic and geophysical interpretations, and relating to such metallurgical, engineering, and other technical matters as may be deemed useful in the evaluation and exploration activities, will be provided by independent contractors.

Government Controls and Regulations

Gold exploration, mining and processing operations are subject to various federal, state and local laws and regulations governing prospecting, exploration, development, production, labor standards, occupational health, mine safety, control of toxic substances, and other matters involving environmental protection and employment. United States environmental protection laws address the maintenance of air and water quality standards, the preservation of threatened and endangered species of wildlife and vegetation, the preservation of certain archaeological sites, reclamation, and limitations on the generation, transportation, storage and disposal of solid and hazardous wastes, among other things. There can be no assurance that all the required permits and governmental approvals necessary for any mining project with which we may be associated can be obtained on a timely basis, or maintained. Delays in obtaining or failure to obtain government permits and approvals may adversely impact our operations. The regulatory environment in which we operate could change in ways that would substantially increase costs to achieve compliance. In addition, significant changes in regulation could have a material adverse effect on our operations and ability to timely and effectively explore and, if warranted, develop mining properties.

Outlined below are some of the more significant aspects of governmental controls and regulations which materially affect the mining properties we will seek to explore.

Regulation of Mining Activity

Federal

Mining activities, including exploration, and possible future development and production activities are subject to environmental laws, policies and regulations. These laws, policies and regulations affect, among other matters, emissions to the air, discharges to water, management of waste, management of hazardous substances, protection of natural resources, protection of endangered species, protection of antiquities and reclamation of land. Mining properties are also subject to numerous other federal, state and local laws and regulations. At the federal level, the mines are subject to inspection and regulation by the Division of Mine Safety and Health Administration of the Department of Labor (“MSHA”) under provisions of the Federal Mine Safety and Health Act of 1977. The Occupation and Safety Health Administration (“OSHA”) also has jurisdiction over certain safety and health standards not covered by MSHA. Mining operations and all proposed exploration and development will require a variety of permits. In addition, any mining operations occurring on federal property are subject to regulation and inspection by the Bureau of Land Management (“BLM”). While we have considerable experience in the mine permitting process, permitting procedures are complex, costly, time consuming and subject to potential regulatory delay. We will seek to identify projects where existing permitting requirements and other applicable environmental protection laws and regulations would not pose a material hindrance to our ability to explore and possibly develop such mine properties. As part of our initial evaluation of suitable projects, we will ascertain a property’s regulatory compliance status and any issues affecting current or future permitting requirements. However, we cannot be certain that future changes in laws and regulations would not result in significant additional expenses, capital expenditures, restrictions or delays associated with the exploration and possible future development of our selected projects. We cannot predict whether we will be able to obtain new permits or whether material changes in permit conditions will be imposed. Granting new permits or the imposition of additional conditions could have a material adverse effect on our ability to explore and develop the mining properties which we are providing services for or in which we have an interest.

Legislation has been introduced in prior sessions of the U.S. Congress to make significant revisions to the U.S. General Mining Law of 1872 that would affect our exploration and potential development of unpatented mining claims on federal lands, including any royalty on gold production. It cannot be predicted whether any of these proposals will become law. Any levy of the type proposed would only apply to unpatented federal lands and accordingly could adversely affect the profitability of any future gold production from projects being explored by SRI on federal property.

Nevada

The State of Nevada, where we expect our initial mine properties to be located, adopted the Mined Land Reclamation Act (the “Nevada Act”) in 1989 which established design, operation, monitoring and closure requirements for all mining facilities located in Nevada. The Nevada Act has increased the cost of designing, operating, monitoring and closing mining facilities and could affect the cost of operating, monitoring and closing existing or future mine facilities. The State of Nevada also has adopted reclamation regulations pursuant to which reclamation plans must be prepared and financial assurances established for existing facilities. The financial assurances can be in the form of cash placed on deposit with the State or reclamation bonds underwritten by insurance companies. Nevada mining and environmental regulations are enforced by the Nevada Department of Environmental Protection (“NDEP”). Compliance with all required environmental regulations required by BLM and NDEP is a prerequisite to the issuance of mining permits. Our ability to develop mining properties in the future is subject to obtaining all necessary mining permits. We have not yet submitted applications for the requisite permits in the State of Nevada.

Montana

In the State of Montana our exploration and mining operations will be under supervision of the Montana Department of Environmental Quality (“MDEQ”) which enforces Montana’s Environmental Policy Act and mining regulations. Exploration and mining activity at the Mineral Hills Project, which SRI intends to acquire, is currently conducted under a Small Miner Exclusion Statement (SMES). An SMES allows for expedited treatment for exploration/mining operations which affect no more than 25 square miles of property. While such a limitation makes mining under an SMES infeasible for large gold mining companies, SRC, by contrast, can operate efficiently in this smaller space as a small exploration company. In order to carry on our planned exploration program we will need to secure necessary permits by filing a Plan of Operation with the MDEQ which was submitted in March, 2011.

Environmental Regulations

Legislation and implementation of regulations adopted or proposed by the United States Environmental Protection Agency (“EPA”), the BLM and by comparable agencies in various states directly and indirectly affect the mining industry in the United States. These laws and regulations address the environmental impact of mining and mineral processing, including potential contamination of soil and water from tailings, discharges and other wastes generated by mining process. In particular, legislation such as the Clean Water Act, the Clean Air Act, the Federal Resource Conservation and Recovery Act (“RCRA”), and the National Environmental Policy Act require analysis and/or impose effluent standards, new source performance standards, air quality standards and other design or operational requirements for various components of mining and mineral processing, including gold-ore mining and processing. Such statutes also may impose liability on mine developers for remediation of waste they have created.

Gold mining and processing operations by an entity would generate large quantities of solid waste which is subject to regulation under the RCRA and similar state laws. The majority of the waste which is produced by such operations is “extraction” waste that EPA has determined not to regulate under RCRA's "hazardous waste" program. Instead, the EPA is developing a solid waste regulatory program specific to mining operations under the RCRA. Of particular concern to the mining industry is a proposal by the EPA entitled “Recommendation for a Regulatory Program for Mining Waste and Materials under Subtitle D of the Resource Conservation and Recovery Act” (“Strawman II”) which, if implemented, would create a system of comprehensive Federal regulation of the entire mine site. Many of these requirements would be duplicates of existing state regulations. Strawman II as currently proposed would regulate not only mine and mill wastes but also numerous production facilities and processes which could limit internal flexibility in operating a mine. To implement Strawman II the EPA must seek additional statutory authority, which is expected to be requested in connection with Congress' reauthorization of RCRA.

Mining projects also are subject to regulations under (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA" or “Superfund”) which regulates and establishes liability for the release of hazardous substances and (ii) the Endangered Species Act (“ESA”) which identifies endangered species of plants and animals and regulates activities to protect these species and their habitats. Revisions to “CERCLA” and “ESA” are being considered by Congress; however, the impact of these potential revisions on our business is not clear at this time

The Clean Air Act, as amended, mandates the establishment of a Federal air permitting program, identifies a list of hazardous air pollutants, including various metals and cyanide, and establishes new enforcement authority. The EPA has published final regulations establishing the minimum elements of state operating permit programs. We will be required to comply with these EPA standards to the extent adopted by the State in which development projects are located.

In addition, developing mine sites requires mitigation of long-term environmental impacts by stabilizing, contouring, resloping, and revegetating various portions of a site. While a portion of the required work can be performed concurrently with developing the property, completion of the environmental mitigation occurs once removal of all facilities has been completed. These reclamation efforts are conducted in accordance with detailed plans which have been reviewed and approved by the appropriate regulatory agencies. The mine developer must insure that all necessary cash deposits and provision to cover the estimated costs of such reclamation as required by permit are made.

Any exploration and development of mining projects by SRI will be conducted in substantial compliance with federal and state regulations and be consistent with the need to remediate any environmental impact.

PART II

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

For more detailed financial information, please refer to the audited December 31, 2010 Financial Statements and Notes included in this Form 10-K.

Caution about forward-looking statements

This Form 10-K includes “forward-looking” statements about future financial results, future business changes and other events that haven’t yet occurred. For example, statements like we “expect,” we “anticipate” or we “believe” are forward-looking statements. Investors should be aware that actual results may differ materially from our expressed expectations because of risks and uncertainties about the future. We have not included a discussion and analysis of prior June 17, 2010 as those prior periods reflect SRC’s “shell company” status with minimal operations in the music recording business. As of June 17, 2010, SRC was no longer a “shell company” and its business was no longer in the music recording industry.

We do not undertake to update the information in this Form 10-K if any forward-looking statement later turns out to be inaccurate. Details about risks affecting various aspects of SRC’s business are discussed throughout this Form 10-K and should be considered carefully.

Plan of Operation

SRC is an exploration stage company which operates in the natural resources industry. Since our inception in 2007 until the Reorganization in June, 2010, we carried on minimal business involving the music recording business and we were deemed a “shell company” under the Securities Act. Since the Reorganization on June 17, 2010, our business changed to focus on the evaluation of various advanced stage mineral exploration projects primarily in Nevada and Montana.

On June 17, 2010 we entered into and consummated a Plan and Agreement of Reorganization between SRC and Steele Resources, Inc. and certain stockholders of Steele Resources, Inc. (the “Reorganization”). Pursuant to the Reorganization, SRC acquired all of the issued and outstanding shares of Steele Resources, Inc., a Nevada Corporation (“SRI”) in exchange for 57,300,000 shares (post July 1, 2010 split) of the common stock of the Company. This transaction has been accounted for as a reverse acquisition in a public shell.

As a result of the Reorganization, SRI became a wholly-owned subsidiary of SRC and the acquired business operations of SRI have become SRC’s primary business activity. SRC will not pursue its previous business of producing, acquiring, licensing and distributing of recorded music.

Steele Resources, Inc. was incorporated in the state of Nevada on May 27, 2010 as an exploration and mining company which focuses on identifying and developing advanced stage precious metal exploration projects which show potential to achieve full production. The overall business strategy is to identify, explore and, if warranted, develop and operate mineral exploration properties and to provide mine exploration and operations services to mining properties located initially in the Western United States. The initial business strategy is to service the niche market between speculative exploration and large scale production. This niche market lies between, at one end, relatively small companies which have conducted preliminary mineral exploration on their properties and, at the other end, companies which conduct major mining operations which could generally be defined as properties having multimillion ounce gold mineral reserves. Within this niche market, SRI believes there are a large number of projects in the United States that have excellent potential but do not meet the size requirements for development by the major operators in the mining industry.

Once suitable projects are identified, SRI will conduct exploration drilling, prepare feasibility studies, create mine modeling, and perform on-site construction and advance stage project engineering with the goal of establishing, if warranted, a producing mine project. Exploration services would also include securing necessary permits, environmental compliance and remediation plans.

SRI will provide its mine exploration services in one of two ways. The first way is for SRI to acquire part or all of the mineral rights to a designated property and perform the services listed above. SRI would fund the property exporation and any future development itself and would own all or a substantial portion of the gold production, if any, which might be realized from that particular property, with a royalty paid to the property owner or the mineral rights assignor. This approach would typically include certain work requirements and expenditure requirements in order to maintain the exploration/mineral rights.

The second approach will be to contract with the property owner or mineral rights holder to provide the services listed above on a contract fee basis which would include a percentage royalty paid to SRI on any gold production which is actually achieved. This approach would have SRI acting in the nature of a general contractor. SRI would prepare the same type of comprehensive mining exploration plan as described above and assemble the necessary service providers to carry out the plan.

Suitable projects will have the following characteristics:

properties located near existing mineral zones initially focusing in the USA;

properties having a considerable amount of exploration completed; and

properties not of sufficient size for the major mining companies to advance themselves.

On January 27, 2011, SRI entered into a non-binding Letter Of Intent with Innocent Inc. ("INCT"), a Nevada corporation engaged in the financing of exploration and development of mineral properties. The LOI provides for a Joint Venture Agreement ("JV Agreement") which will govern the exploration and operations of mineral rights within the Pony Project and A&P Project jointly referred to as the Mineral Hill Project (the "Mineral Hill Project").

The non-binding LOI provides terms for INCT to contribute up to $5,000,000 in operating funds over a one year period beginning with the execution of the JV Agreement. The parties may jointly extend this period, by mutual agreement. In addition, upon signing of the LOI, INCT will advance $500,000 in order to allow SRI to close the Pony and A&P Project lease transactions. SRI will initially contribute its leases in the Mineral Hill Project into the JV. SRI also agrees to fund the JV with a matching $5,000,000 in operating funds no later than one year following the first $1,000,000 funded by INCT. The JV will be created to govern the operations of the various sites within the Mineral Hill Project wherein the parties to this agreement will initially share 50%-50% joint ownership of the JV, based upon the assumption, each party fulfills its terms and responsibilities pursuant to the LOI and the final JV Agreement. If either party fails to contribute the funds committed to, that party’s interest in the JV will be reduced. SRI will be responsible for operations of the JV.

SRI's current operating plan for this project consists of completion of the geological mapping and geophysics analysis that will establish the exploration drilling phase. This initial phase will cover the first six to nine months of operations. Upon satisfactory completion of this phase and with appropriate mineral deposit indications, the development phase could commence. We do not anticipate that the Mineral Hill Project will generate revenues during the initial twelve months of operations. We do expect the mining operation could begin revenue generation during the second full year of operations. We believe that the funds provided by INCT in conjunction with the matching funds provided by us are sufficient to execute the current operating plan. SRC plans to raise the matching funds for the JV required through the private placement of our equity securities, by way of loans, utilization of the Drawdown Agreement and such other means as the Company may determine. If we are unable to obtain additional funds then according to the terms of the JV agreement, we would be at risk to losing our 50% ownership share.

Based on our current operating plan, we do not expect to generate revenue sufficient to cover our expenses for the foreseeable future. Consequently, we expect to fund our operations primarily from outside investment capital, debt financing in addition to proceeds from the Drawdown Agreement.

Results of Operation

We have not included a discussion and analysis comparing our current financial position and results of operation with periods prior to the Reorganization on June 17, 2010 as management believes a discussion of SRC’s past operations (prior to the Reorganization) would not be helpful in evaluating our new line of business in the natural resources sector commenced as a result of the Reorganization. SRC’s wholly-owned subsidiary, SRI, has been in existence for a short period of time and has conducted only limited operations to date.

Operating Results for the Period May 27, 2010 (SRI’s Inception) to December 31, 2010

During the period from May 27, 2010 (SRI’s inception) through December 31, 2010 neither SRC or its subsidiary SRI had any revenue from operations. Total exploration stage expenses for the business amounted to $785,937 for the approximately seven month period ended December 31, 2010. Initial exploration costs were $147,771 and general and administrative expenses were $485,078 for the period. G&A expenses included increased operating expenses, reorganization costs and start-up costs of SRC’s operations and property/lease acquisition costs and professional fees were $153,088 consisting primarily of legal and accounting expenses relating to SRI’s reorganization transaction with SRC and preparation of reports filed with the SEC.

We incurred a net operating loss of $785,937 for the seven month period ended December 31, 2010. The net operating loss is the result of expenses relating to SRI’s reorganization transaction with SRC, increasing general business expenses relating to establishing the Company’s business and lease acquisitions coupled with a lack of revenues to offset these expenses. We had an $18,233 interest expense which resulted in a net loss of $804,170 for the period of May 27, 2010 (SRI’s inception) through December 31, 2010.

Liquidity and Capital Resources

At December 31, 2010, our cash balance was $623. We have limited cash on hand and we will be required to raise capital to fund our operations. Our ability to meet our current financial liabilities and commitments is primarily dependent upon the continued issuance of equity to new stockholders or loans from existing stockholders and management or outside loans. Management believes that our Company's current cash and cash equivalents will not be sufficient to meet our working capital requirements for the next twelve month period. We have had negative cash flow from operating activities as we are in the exploration stage and have not yet begun to generate revenues. Our Company plans to raise the capital required to satisfy our immediate short-term needs and additional capital required to meet our estimated funding requirements for the next twelve months primarily through the Joint Venture Agreement with INCT, the private placement of our equity securities, by way of loans, utilization of the Drawdown Agreement and such other means as the Company may determine.

We expect exploration of suitable projects to commence during the next twelve months but do not expect revenues from this work to cover our current operating expenses which we expect to increase as we implement our business plan. Consequently, we are dependent on the proceeds from the Joint Venture Agreement, the Drawdown Agreement and other outside sources of capital to sustain our operations and implement our business plan until operating income is sufficient to cover our operating expenses. If we are unable to raise sufficient capital pursuant to the Drawdown Agreement or other sources, we will be required to delay or forego some portion of our business plan, which would have a material adverse affect on our anticipated results from operations and financial condition. There is no assurance that we will be able to obtain necessary amounts of capital or that our estimates of our capital requirements will prove to be accurate. We may find it necessary to raise additional outside financing which may not be available. Even if we are able to secure outside financing, it may not be available in the amounts or times when we require. Furthermore, such financing would likely take the form of bank loans, private placements of debt or equity securities or some combination of these. The issuance of additional equity securities would dilute the stock ownership of current investor while incurring loans, lines of credit or debt by SRC would increase its cash flow requirements and possible loss of valuable assets if such obligations were not repaid in accordance with their terms.

Recent Financing Transactions

Since the Reorganization and through June 30, 2010, we raised $100,000 through the issuance of notes to stockholders.

From July 1, 2010 thru the end of the fiscal year, we raised the following capital. In July, 2010 we raised proceeds of $75,000 through the private sale of shares of our restricted common stock at $0.225 per share; in early September, 2010 we raised proceeds of $37,000 through the private sale of shares of our restricted common stock at $0.10 per share; and in late September, 2010 we raised proceeds of $50,000 through the private sale of shares of our restricted common stock at $0.077 per share. In October, 2010 we raised $25,000 through the issuance of a convertible promissory note due April 5, 2011 bearing interest at 16.9% per annum and secured by $50,000 worth of the Company general assets including, but not limited to, patents, patent applications, trademarks, machinery, inventory, accounts receivable, cash, computers, hardware, vehicles, etc.

As of the due date, the noteholder had indicated its intention to convert this note into shares of SRC common stock.

In October, 2010 we raised $150,000 through the issuance of units (1share/1 warrant). In November we also raised $65,000 through the private sale of a convertible note.

In addition, in July, 2010 and September, 2010 we issued 30,000 shares and 500,000 shares respectively, in payment of mining claim staking services and payment for certain mineral lease rights.

The valuation of our common stock in these private sales was the fair value of our restricted common stock as determined by the Board of Directors. We did not obtain contemporaneous valuations by an unrelated valuation appraiser because, at the times of the issuances of stock, our efforts were focused on establishing our business and the financial resources for doing so were limited.

Determining the fair value of our restricted stock in the early development stage of our business and the developing public market for our stock since the Reorganization requires various subjective judgments. While we did not utilize any specific methodology, we considered various significant factors in valuing these shares which included the early stage development of our business, the trading value of our common stock, the prospects for our business, the general condition of the gold mining industry and the limited sources of capital available to us. While the Board used its best judgment in evaluating these factors, there is inherent uncertainty in any such valuation.

In addition to the shares being issued to Auctus pursuant to the Drawdown Agreement, we have several outstanding convertible promissory notes which, if converted, would result in additional shares being issued. The precise number of shares issuable upon conversion of each outstanding promissory note is based on the market price of our stock at the time of conversion. Assuming the notes are converted in their entirety and assuming a share price of $0.20 at the time of conversion, the following shares would be issuable:

Stock Price	$	0.20		$	0.15		$	0.10		$	0.05
Shares outstanding @ 5/2/11		33,877,778			33,877,778			33,877,778			33,877,778
Shares issued upon conversion:
October 2010 $25,000 convertible note		192,308			256,410			384,615			769,213
November 2010 $65,000 convertible note		928,571			1,238,095			1,857,143			3,714,286
January 2011 $32,500 convertible note		325,000			433,333			650,000			1,300,000
April 2011 $37,500 convertible note		375,000			500,000			750,000			1,500,000
Converted shares % of shares outstanding		5.4	%		7.2	%		10.7	%		21.5	%

The conversion price for each of the above referenced convertible notes is based on a percentage ranging from 35% to 50% of the current market price of SRC common stock at the time of conversion. The “market price” is defined as the average of the lowest three closing prices during the ten trading day period ending one trading day prior to the conversion date.

Tabular Disclosure of Contractual Obligations

			Payments due by period
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Long-Term Debt Obligations	$	190,000	$	190,000		-0-		-0-		-0-
Operating Lease Obligations	$	303,568	$	57,544	$	220,113	$	25,911		-0-
Total	$	493,568	$	247,544	$	220,113	$	25,911		-0-

Off-Balance Sheet Arrangements

Since SRI’s inception through December 31, 2010, we have not engaged in any off-balance sheet arrangements as defined in Item 303(a) of the SEC’s Regulation S-K.

Critical Accounting Policies

Use of Estimates and Assumptions

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with an original maturity of three months or less at the time of issuance to be cash equivalents.

Income Taxes

Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax bases of assets and liabilities, applying tax rates expected to be enacted for the year in which we expect the differences will reverse or settle. Based on the evaluation of available evidence, we recognize future tax benefits, such as net operating loss carryforwards, to the extent that we believe it is more likely than not that we will realize these benefits. We periodically assess the likelihood that we will be able to recover our deferred tax assets and reflect any changes in our estimates in the valuation allowance, with a corresponding adjustment to earnings as appropriate. In assessing a need for a valuation allowance, we look to the future reversal of existing taxable temporary differences and estimated future taxable income.

Exploration Stage Company

Effective May 27, 2010 (date of inception), SRC is considered an exploration stage company as defined in Industry Guide No. 7. SRC’s exploration stage activities consist of exploring and evaluating several mining properties located in Nevada and Montana. Sources of financing for these exploration stage activities have been primarily debt and equity financing.

Valuation of long-lived assets

Long-lived assets, consisting primarily of property and equipment, comprise a significant portion of our total assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying values may not be recoverable. Recoverability of assets is measured by a comparison of the carrying value of an asset to the future net cash flows expected to be generated by those assets. The cash flow projections are based on historical experience, management’s view of growth rates within the industry, and the anticipated future economic environment.

Factors we consider important that could trigger a review for impairment include the following:

(a)

significant underperformance relative to expected historical or projected future operating results,

(b)

significant changes in the manner of our use of the acquired assets or the strategy of our overall business, and

(c)

significant negative industry or economic trends.

When we determine that the carrying value of long-lived assets and related goodwill and enterprise-level goodwill may not be recoverable based upon the existence of one or more of the above indicators of impairment, we measure any impairment based on a projected discounted cash flow method using a discount rate determined by our management to be commensurate with the risk inherent in our current business model.

Deferred Reclamation Costs

In August 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 143, “Accounting for Asset Retirement Obligations,” (now ASC 410-20) which established a uniform methodology for accounting for estimated reclamation and abandonment costs. The statement was adopted February 1, 2003. The reclamation costs will be allocated to expense over the life of the related assets and will be adjusted for changes resulting from the passage of time and revisions to either the timing or amount of the original present value estimate.

Prior to adoption of SFAS No. 143, estimated future reclamation costs were based principally on legal and regulatory requirements. Such costs related to active mines were accrued and charged over the expected operating lives of the mines using the units-of-production method based on proven and probable reserves. Future remediation costs for inactive mines were accrued based on management’s best estimate at the end of each period of the undiscounted costs expected to be incurred at a site. Such cost estimates included, where applicable, ongoing care, maintenance and monitoring costs. Changes in estimates at inactive mines were reflected in earnings in the period an estimate was revised.

Exploration Costs

Exploration costs are expensed as incurred. All costs related to property acquisitions are capitalized.

Mine Development Costs

Mine development costs consist of all costs associated with bringing mines into production, to develop new ore bodies and to develop mine areas substantially in advance of current production. The decision to develop a mine is based on assessment of the commercial viability of the property and the availability of financing. Once the decision to proceed to development is made, development and other expenditures relating to the project will be deferred and carried at cost with the intention that these will be depleted by charges against earnings from future mining operations. No depreciation will be charged against the property until commercial production commences. After a mine has been brought into commercial production, any additional work on that property will be expensed as incurred, except for large development programs, which will be deferred and depleted.

Reclamation Costs

Reclamation costs and related accrued liabilities, which are based on our interpretation of current environmental and regulatory requirements, are accrued and expensed, upon determination.

Based on current environmental regulations and known reclamation requirements, management has included its best estimates of these obligations in its reclamation accruals. However, it is reasonably possible that our best estimates of our ultimate reclamation liabilities could change as a result of changes in regulations or cost estimates.

Valuation of Derivative Instruments

ASC 815-15 requires bifurcation of embedded derivative instruments and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black Scholes model as a valuation technique. Derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as Adjustments to Fair Value of Derivatives. In addition, the fair values of freestanding derivative instruments such as warrants are valued using Black Scholes models.

Stock-Based Compensation

We currently account for the issuance of stock options to employees using the fair market value method according to ASC 718, Share-Based Payment.

Adopted Accounting Pronouncements

See Note 1 to the Financial Statements.

ITEM 8. FINANCIAL STATEMENTS

STEELE RESOURCES CORP.

FINANCIAL STATEMENTS

FOR THE PERIOD FROM MAY 27, 2010(INCEPTION)

THROUGH DECEMBER 31, 2010

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-1

Consolidated Balance Sheet as of December 31, 2010	F-2

Consolidated Statement of Operations for the period
from May 27, 2010 (inception) Through December 31, 2010	F-3

Consolidated Statement of Stockholders’ Deficit from May 27, 2010
(inception) Through December 31, 2010	F-4

Consolidated Statement of Cash Flows for the period from May 27, 2010
(inception) Through December 31, 2010	F-5

Notes to Consolidated Financial Statements	F-6

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Steele Resources Corporation

We have audited the accompanying consolidated balance sheet of Steele Resources Corporation (an exploration stage Nevada corporation) and Subsidiary as of December 31, 2010, and the related consolidated statements of operations, stockholders’ deficit and cash flows for the period from May 27, 2010 (Inception) through December 31, 2010. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards established by 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 audit 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 disclosures in the financial statements, 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 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Steele Resources Corporation and Subsidiary as of December 31, 2010, and the consolidated results of their operations and their cash flows for the period from May 27, 2010 (Inception) through December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated 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 has incurred significant operating losses and negative cash flows from operations during the year ended December 31, 2010. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans regarding those matters also are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Rose, Snyder & Jacobs

Rose, Snyder & Jacobs

A Corporation of Certified Public Accountants

Encino, California
March 31, 2011, except for Note 11, for which the date is August 18, 2011

F-1

STEELE RESOURCES CORPORATION

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED BALANCE SHEET

	December 31, 2010

ASSETS
Current assets
Cash	$	623
Prepaid expenses		1,336
Total Current Assets		1,959

Fixed assets (Note 3)		30,185
Accumulated depreciation		(2,710	)
Total Fixed Assets		27,475

Other long-term assets		2,712

Total Assets	$	32,146

LIABIITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable	$	66,126
Accrued expenses		108,412
Derivative Liability (Note 4)		52,250
Notes payable (Notes 4 and 5)		145,755
Notes payable – related parties (Note 7)		6,800
Total Current Liabilities		379,343

COMMITMENTS AND CONTINGENCIES (NOTE 6)
Stockholders’ deficit:
Preferred stock, par value $0.001,
5,000,000 shares authorized,
-0- and -0- shares issued and outstanding,
Respectively		-
Common stock, par value $0.001, 300,000,000 shares
authorized, 33,461,111 shares issued and outstanding		14,433
Additional paid-in capital		442,540
Accumulated deficit during exploration stage		(804,170	)
Total Stockholders’ Deficit		(347,197	)
Total Liabilities and Stockholders’ Deficit	$	32,146

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

F-2

STEELE RESOURCES CORPORATION

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENT OF OPERATIONS

	May 27, 2010 (Inception) Through December 31, 2010

Revenue	$	-

Operating expenses:

Exploration costs		147,771
General and administrative		485,078
Professional fees		153,088
Total operating expense		785,937

Loss from operations		(785,937	)

Interest expense		(18,233	)

Net loss	$	(804,170	)


Net loss per share, basic and diluted *	$	(0.03	)

Weighted average common shares outstanding *		29,880,856

* The calculation of net loss per share, basic and diluted and the weighted average shares outstanding for the period May 27, 2010 through December 31, 2010 has been adjusted to reflect the 10 for 1 forward stock split that occurred on July 1, 2010 and the 1-for-3 reverse stock split that occurred on May 2, 2011.

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

F-3

STEELE RESOURCES CORPORATION

(AN EXPLORATION STAGE COMPANY)

STATEMENT OF STOCKHOLDERS’ DEFICIT

FROM MAY 27, 2010 (INCEPTION) THROUGH DECEMBER 31, 2010

	Common Shares				Additional Paid-in Capital		Accumulated DeficitDuring Exploration Stage			Total
	Number		$							$
Balance, May 27, 2010		-		-		-		-			-

Issuance of shares for cash		19,100,000	$	5,730	$	9,270	$	-		$	15,000

Recapitalization due to reverse merger with
Steele Resources, Inc.		12,733,333		3,820		14,950		-			18,770

Issuance of shares:
For cash (at $0.24, $0.30, $0.60, $0.15)		1,451,111		4,353		307,647		-			312,000
Shares issued for exploration costs		176,667		530		104,470		-			105,000

Issuance of warrants with notes payable		-		-		6,203		-			6,203

Net loss								(804,170	)		(804,170	)
Balance, December 31, 2010		33,461,111	$	14,433	$	442,540	$	(804,170	)	$	(347,197	)

The number of shares above have been retroactively restated to reflect the 10-for-1 forward split that occurred on July1, 2010 and the 1-for-3 reverse split that occurred on May 2, 2011.

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

F-4

STEELE RESOURCES CORPORATION

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENT OF CASH FLOWS

FROM MAY 27, 2010 (INCEPTION) THROUGH DECEMBER 31, 2010

Cash from Operating Activities:

Net loss	$	(804,170	)

Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation		2,710
Amortization of note discount		14,208
Shares issued for exploration costs		105,000
Changes in operating assets and liabilities:
(Increase) in prepaid expense		(1,336	)
Increase in accounts payable		65,696
Increase in accrued expenses		108,412
(Increase) in other assets		(2,712	)
NET CASH USED IN OPERATING ACTIVITIES		(512,192	)

Cash From Financing Activities:
Proceeds from issuance of common stock		327,000
Cash acquired in reverse merger with Steele Resources Corporation		19,200
Proceeds from issuance of notes payable		190,000
Proceeds from issuance of notes payable – related party		27,648
Payments on notes payable - related party		(51,033	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		512,815

NET INCREASE IN CASH		623

CASH, BEGINNING		-
CASH, ENDING	$	623

SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid during the period for :
Interest	$	-
Income taxes	$	-

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
The Company acquired $30,185 of property and equipment through the issuance of notes payable during the period from May 27, 2010 (Inception) through December 31, 2010

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

F-5

STEELE RESOURCES CORPORATION

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business Activity

Although from a legal perspective, SRC acquired Steele Resources, Inc., from an accounting perspective, the transaction is viewed as a recapitalization of SRI accompanied by the equivalent of an issuance of stock by SRI for the net assets of SRC. This is because SRC did not have operations immediately prior to the merger and, following the merger, SRI is the operating company.

Basis of Presentation and Going Concern

The accompanying consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern. The Company has incurred a net operating loss of $804,170 from May 27, 2010 (inception) through December 31, 2010 and had a working capital deficiency of $377,384 as of December 31, 2010. The Company does not have sufficient cash at December 31, 2011 to fund normal operations for the next 12 months. The Company has no recurring source of revenue and its ability to continue as a going concern is dependent on the Company’s ability to raise capital to fund its future exploration and working capital requirements. The Company’s plans for the long-term attainment and continuation as a going concern include financing the Company’s future operations through sales of its common stock, entering into debt or line of credit facilities, sales of gold produced in mining activities and the eventual profitable exploitation of its mining properties. Additionally, the current capital markets and general economic conditions in the United States are significant obstacles to raising the required funds. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company is currently investigating a number of alternatives for raising additional capital with potential investors, lessees and joint venture partners.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Because of our net loss and our negative working capital position, our independent auditors express substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that could result from the outcome of this uncertainty.

The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. If the going concern basis was not appropriate for these financial statements, adjustments would be necessary in the carrying value of assets and liabilities, the reported expenses and the balance sheet classifications used.

F-6

Principles of Consolidation

All significant inter-company accounts and transactions have been eliminated in the consolidated financial statements in conformity with U.S. generally accepted accounting principles. Management believes the assumptions underlying the consolidated financial statements are reasonable.

The Accounting Standards Codification

In June 2009, the Financial Accounting Standards Board (“FASB”) established the FASB Accounting Standards Codification (“ASC”) as the single source of authoritative GAAP to be applied by nongovernmental entities. The ASC is a new authoritative source that took existing accounting pronouncements and organized them by accounting topic. Relevant authoritative literature issued by the Securities and Exchange Commission (“SEC”) and select SEC staff interpretations and administrative literature was also in the ASC. All other accounting guidance not included in the ASC is nonauthorititave. The adoption of the ASC did not have an impact on our consolidated financial position, results of operations or cash flows.

Exploration Stage Enterprise

The Company is in the exploration stage of operation, as it devotes substantially all of its efforts to acquiring and exploring mining interests that management believes should eventually provide sufficient net profits to sustain the Company’s existence.

Cash and Cash Equivalents

The Company considers cash in banks, deposits in transit, and highly liquid debt instruments purchased with original maturities of three months or less to be cash and cash equivalents. The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash balances.

Property and Equipment

Property and equipment are carried at cost. Depreciation is computed using straight line depreciation methods. Major additions and improvements are capitalized. Costs of maintenance and repairs which do not improve or extend the life of the associated assets are expensed in the period in which they are incurred. When there is a disposition of property and equipment, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is reflected in net income.

Mining Exploration Costs

Exploration costs are expensed in the period in which they occur. The Company capitalizes costs for acquiring mineral properties and expenses costs to maintain mineral rights and leases as incurred. Should a property reach the production stage, these capitalized costs would be amortized using the units-of-production method on the basis of periodic estimates of ore reserves. Mineral properties are periodically assessed for impairment of value, and any subsequent losses are charged to operations at the time of impairment. If a property is abandoned or sold, its capitalized costs are charged to operations.

Income Taxes

The Company is expected to have net operating loss carryforwards that it can use to offset a certain amount of taxable income in the future. The Company is currently analyzing the amount of loss carryforwards that will be available to reduce future taxable income. The resulting deferred tax assets

F-7

will be offset by a valuation allowance due to the uncertainty of its realization. The primary difference between income tax expense attributable to continuing operations and the amount of income tax expense that would result from applying domestic federal statutory rates to income before income taxes relates to the recognition of a valuation allowance for deferred income tax assets.

The Company has adopted Financial Accounting Standards Board (“FASB”) ASC 740-10 which clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold of more likely than not as a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, a company must determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position and must assume that the tax position will be examined by taxing authorities. The Company’s policy is to include interest and penalties related to unrecognized tax benefits in income tax expense. Interest and penalties totaled $0 for the period from May 27, 2010 (inception) through December 31, 2010. The Company’s net operating loss carryforwards are subject to IRS examination until they are fully utilized and such tax years are closed.

Net (Loss) Per Share

The Company calculates net income (loss) per share as required by Accounting Standards Codification subtopic 260-10, Earnings per Share (ASC 260-10”). Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During the periods when they are anti-dilutive, common stock equivalents, if any, are not considered in the computation.

Use of Estimates and Assumptions

New Accounting Pronouncements

In February 2010, the FASB issued ASU 2010-09, “Subsequent Events, Amendments to Certain Recognition and Disclosure Requirements” which made a number of changes to the existing requirements to the FASB Accounting Standards Codification 855 Subsequent Events. The amended guidance was effective upon issuance and as a result of the amendments, SEC filers that file financial statements after February 24, 2010 are not required to disclose the date through which subsequent events have been evaluated. This ASU did not have a material impact on our consolidated financial statements.

In January 2010, the FASB issued ASU 2010-06, “Fair Value Measurements and Disclosures: Improving Disclosures about Fair Value Measurements” which is intended to enhance the usefulness of fair value measurements by requiring both the disaggregation of the information in certain existing disclosures, as well as the inclusion of more robust disclosures about valuation techniques and inputs to recurring and non-recurring fair value measurements. The amended guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disaggregation requirement for the reconciliation disclosure of Level 3 measurements, which is effective for fiscal years beginning after December 31, 2010 and for interim periods within those years. This ASU was adopted as of December 31, 2010 and did not have a material impact on our consolidated financial statements.

F-8

In January 2010, the FASB issued ASU 2010-02, “Accounting and Reporting for Decreases in Ownership of a Subsidiary – Scope Clarification” which is intended to clarify which transactions require a decrease in ownership provisions particularly for non-controlling interests in consolidated financial statements. In addition, it requires increased disclosures about deconsolidation of a subsidiary. It requires retrospective application and was effective for the first interim or annual periods ending on or after December 15, 2009. Adoption of this ASU did not have a material impact on our consolidated financial statements.

In January 2010, the FASB issued ASU 2020-01 “Accounting for Distributions to Shareholders with Components of Stock and Cash” which is intended to clarify the accounting treatment for a stock portion of a shareholder distribution that (1) contains both cash and stock components, (2) allows shareholders to select their preferred form of distribution, and (3) limits the total amount of cash to be distributed. It defines a stock dividend as a dividend that takes nothing from the property of an entity and adds nothing to the interests of an entity’s shareholders because the proportional interest of each shareholder remains the same. The stock portion of the distribution must be treated as a stock issuance and be reflected in the EPS calculation prospectively. It requires retrospective application and is effective for annual periods ending on or after December 15, 2009. Adoption of this ASU did not have a material impact on our consolidated financial statements.

In August 2009, the FASB issued ASU 2009-15, which changes the fair value accounting for liabilities. These changes clarify existing guidance that in circumstances in which a quoted price in an active market for the identical liability is not available, an entity is required to measure fair value using either a valuation technique that uses a quoted price of either a similar liability or a quoted price of an identical or similar liability when traded as an asset, or another valuation technique that is consistent with the principles of fair value measurements, such as an income approach (e.g., present value technique). This guidance also states that both a quoted price in an active market for the identical liability and a quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. This ASU was adopted effective on January 1, 2010 and did not have a material impact on our consolidated financial statements.

In June 2009, the FASB issued ASU 2009-17, “Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities,” the FASB issued changes to the accounting for variable interest entities. These changes require an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity; to require ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity; to eliminate the quantitative approach previously required for determining the primary beneficiary of a variable interest entity; to add an additional reconsideration event for determining whether an entity is a variable interest entity when any changes in facts and circumstances occur such that holders of the equity investment at risk, as a group, lose the power from voting rights or similar rights of those investments to direct the activities of the entity that most significantly impact the entity’s economic performance; and to require enhanced disclosures that will provide users of financial statements with more transparent information about an enterprise’s involvement in a variable interest entity. These changes became effective for us beginning on January 1, 2010. The adoption of this change did not have a material impact on our consolidated financial statements.

In June 2009, the FASB issued ASU 2009-16, “Accounting for Transfers of Financial Assets,” which changes the accounting for transfers of financial assets. These changes remove the concept of a qualifying special-purpose entity and remove the exception from the application of variable interest accounting to variable interest entities that are qualifying special-purpose entities; limits the circumstances in which a transferor derecognizes a portion or component of a financial asset; defines a participating interest; requires a transferor to recognize and initially measure at fair value all assets obtained and liabilities incurred as a result of a transfer accounted for as a sale; and requires enhanced disclosure; among others. These changes became effective January 1, 2010 and did not have a material impact on our financial statements.

F-9

NOTE 2. PROPERTIES

Comstock-Tyler Project

SRI’s initial exploration project consists of 30 mineral claims covering approximately 600 acres of property owned by the Bureau of Land Management (“BLM”) and referred to as the “Comstock-Tyler Project”. These claims were registered with the BLM on June 7, 2010 and allow SRI the right to conduct thorough mineral and precious metal exploration. Such exploration will be subject to typical notification to the BLM and the Nevada Department of Environmental Protection and the posting of remediation bonds as the exploration process continues. The property is located at Township 16N Range 20E Section 1 which is approximately 5 miles southwest of Virginia City, NV and lies in the historically producing Comstock Mining District. Corresponding property filings have been recorded in the Nevada Counties of Washoe and Storey reflecting SRI’s mineral rights in the Comstock-Tyler Project. Pursuant to an agreement with Riggs and Allen Mineral Development LLC, which performed the property staking, SRI paid a total of $60,000 in cash and stock and has granted Riggs and Allen a production royalty of 1% of the Net Smelter Returns (“NSR”) from any production realized from the property. SRI has the right to repurchase the 1% NSR from Riggs and Allen for $1,000,000.

Fairview Hunter

On September 24, 2010 SRI entered into an Asset Purchase Agreement with an entity controlled by the Company’s CEO, pursuant to which SRI acquired a mineral lease agreement dated July 19, 2010 relating to property referred to as the Fairview Hunter Mine Project (the “Fairview Hunter Project”). The property is comprised of 115 mineral claims covering approximately 2,300 acres located 30 miles southeast of Fallon, Nevada. The Company issued 500,000 shares of restricted common stock for this agreement, valued at $75,000, which is included in Exploration costs in the accompanying financial statements. The Fairview Hunter Project lease has a term of ten years (through July 2020) and annual lease payments commencing at $25,000 and ending at $50,000 in the fifth year of the lease (2015). The Lessor also retains a production royalty of 3% of the Net Smelter Returns from the leased property of which SRI can buy out up to 2% of such royalty upon payment of $1,000,000 per 1% royalty amount. The lease does not specify dollar commitments for development and allows SRI complete discretion as to conducting exploration or development activity on the property. The lease provides for SRI to pay all taxes and assessments on the property and pay all fees to the BLM or the Nevada mining agencies relating to the mining exploration or development of the property. The lease can be extended automatically for so long as SRI is engaged in mining operations (as defined in the lease) on the expiration date of the lease.

NOTE. 3. PROPERTY AND EQUIPMENT

Property and equipment consist of the following at December 31, 2010:

Vehicles	$	30,185
		30,185
Less: Accumulated Depreciation		(2,710	)
	$	27,475

NOTE 4. DERIVATIVE INSTRUMENT LIABILITIES AND CONVERTIBLE NOTES

In October 2010, the Company issued a convertible promissory note in the principal amount of $25,000 bearing interest at 16.9% per annum. The note is due and payable on or before April 5, 2011 and can be converted into shares of SRC’s restricted common stock at a conversion rate based on 60% of the market value of SRC’s common stock at the time of conversion. The investor was also issued warrants to purchase 100,000 shares of SRC common stock at an exercise price of $0.50/share maturing in October 2013. The sale was made to one entity in a private, negotiated transaction without any public solicitation. As of December 31, 2010, interest payable on these notes totaled $1,053.

F-10

In November 2010 the Company issued a convertible note for $65,000 to one entity. The note bears interest at 8% per annum and is due October 17, 2011. The conversion price shall be 35% of the average of the lowest three closing bid prices in the 10 trading days ending one day before notice of conversion is given. As of December 31, 2010, interest payable on these notes totaled $869.

These notes were evaluated using Emerging Issues Task Force (“EITF”) issue No. 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock (“EITF 00-19”)” and it was determined that the embedded conversion should be accounted for as derivative instrument liabilities. Accordingly, they are to be marked to market each reporting period, with the corresponding non-cash gain or loss reflected in the Company’s current period statement of operations.

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 cooboration with market data at the measurement date.

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.

The following table summarizes fair value measurements by level at December 31, 2010 for assets and liabilities measured at fair value on a recurring basis:

	Level 1	Level 2	Level 3			Total

Derivative liability
Conversion features				(52,250	)		(52,250	)

Derivative liability for conversion features was valued using Monte Carlo Simulation.

The following is a reconciliation of the derivatives liability

Issuance of instruments			52,250
Decrease in value			-
Value at December 31, 2010			52,250

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 components of the convertible notes payable are as follows as of December 31, 2010:

		Principal Amount				Unamortized Discount				Net
Convertible notes payable		$	90,000			$	(44,245	)		$	45,755

F-11

NOTE 5. NOTES PAYABLE

On June 24, 2010, the Company issued three promissory notes payable for a total of $100,000. The notes bear simple interest at an annual rate of 5% and the principal and accrued interest are payable on June 23, 2011. Upon the occurrence of an event of default, which shall include voluntary or involuntary bankruptcy, all unpaid principal, accrued interest and other amounts owing hereunder shall, automatically, be immediately due, payable and collectible by the lenders pursuant to applicable law. As of December 31, 2010, interest payable on these notes totaled $2,603.

NOTE 6. COMMITMENTS AND CONTINGENCIES

Office and Rental Property Leases

On October 1, 2010, the Company entered into a lease for office space located in Cameron Park, California, for a period of five years. Future minimum lease payments under operating leases are $32,544, $32,709, $33,369, $34,035 and $25,911 for the years ended December 31, 2011, 2012, 2013, 2014, 2015 respectively. Total rental expense was $16,786 for the year ended December 31, 2010.

Legal 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 Resources 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 do not believe the Plaintiff will prevail as to her claims regarding Steele Resources Corporation and have answered with affirmative defenses including but not limited to the following: (1) 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. A former officer of SRC has indemnified the Company from any eventual costs or loss from this lawsuit.

Contractual Matters

On June 9, 2010, SRI entered into an agreement with Riggs and Allen Mineral Development LLC, which performed services relating to property staking at the Comstock-Tyler project. SRI agreed to pay a total of $60,000 in cash and stock and has granted Riggs and Allen a production royalty of 1% of the Net Smelter Returns (“NSR”) from any production realized from the property. SRI has the right to repurchase the 1% NSR from Riggs and Allen for $1,000,000. Continued use of the land owned by the BLM (see Note 2) will require annual payments by the Company to the BLM.

On September 24, 2010 SRI entered into an Asset Purchase Agreement pursuant to which SRI acquired a mineral lease agreement dated July 19, 2010 relating to property referred to as the Fairview Hunter Mine Project (the “Fairview Hunter Project”). The property is comprised of 115 mineral claims covering approximately 2,300 acres located 30 miles southeast of Fallon, Nevada. The Fairview Hunter Project lease has a term of ten years (through July 2020) and annual lease payments commencing at $25,000 and ending at $50,000 in the fifth year of the lease (2015). The Lessor also retains a production royalty of 3% of the Net Smelter Returns from the leased property of which SRI can buyout up to 2% of such royalty upon payment of $1,000,000 per 1% royalty amount. The lease does not specify dollar commitments for development and allows SRI complete discretion as to conducting exploration or development activity on the property. The lease provides for SRI to pay all taxes and assessments on the property and pay all fees to the BLM or the Nevada mining agencies relating to the mining exploration or development of the property. The lease can be extended automatically for so long as SRI is engaged in mining operations (as defined in the lease) on the expiration date of the lease.

F-12

NOTE 7. COMMON STOCK

In June 2010, SRI issued 19,100,000 shares of common stock for $15,000. Immediately prior to the Reorganization on June 17, 2010, SRC had 41,066,666 shares of common stock outstanding. Pursuant to the Reorganization, SRC acquired all of the issued and outstanding shares of SRI in exchange for 19,100,000 shares of common stock. In conjunction with the Reorganization, a shareholder of SRC cancelled 28,333,333 shares of his common stock. These share numbers reflect the 10-for-1 forward stock split that occurred on July 1, 2010, and the 1-for-3 reverse stock split that occurred on May 2, 2011 (see Note 11).

On July 1, 2010, the Company effected a 10 for 1 forward split of its common stock.

Warrants outstanding at December 31, 2010 are as follows:

Shares	Exercise Price	Maturity
100,000	$0.50	Oct 2013
3,000,000	$0.15	Nov 2015

NOTE 8. RELATED PARTY TRANSACTIONS

In August 2010, the Company issued three promissory notes to an officer and director of the Company for a total of $20,848. The notes bore no interest and were repaid in October 2010.

In August 2010 the Company issued a note payable to an individual who is related to an officer and director of the Company in the amount of $7,000 for the purchase of a vehicle. The note had a 3% annual interest rate and was repaid in October 2010.

In August 2010 the Company entered into a lease/purchase agreement with an officer and director of the Company for a vehicle, for $23,185. The lease/purchase agreement had a 0% annual interest rate and was paid off in October 2010.

In September 2010 the Company issued a promissory note to an officer and director of the Company for $2,000. The notes bore no interest and were repaid in October 2010.

The Fairview Hunter Project lease was acquired from a company of which Scott Dockter (CEO of the Company) is a majority stockholder and David McClelland (a Director of the Company) is a less than 5% stockholder. Mr. Dockter, Mr. McClelland and Chris Whitaker (a Director of SRI) serve as directors of Assignor. The transaction was approved unanimously by both the Board of Directors of SRI and the Company with Mr. Dockter abstaining from such votes. SRC issued 500,000 shares of restricted common stock valued at $75,000 for this acquisition in September 2010. This amount is included in Exploration costs in the accompanying financial statements.

NOTE 9. NAME CHANGES

On July 16, 2010, SRC’s wholly owned subsidiary changed its name from Steele Resource, Inc. to Steele Resources, Inc.

Effective September 1, 2010, Steele Recording Corporation changed its name to Steele Resources Corporation.

F-13

NOTE 10. SUBSEQUENT EVENTS

On November 3, 2010 SRI entered into a non-binding Letter Of Intent with a group of individual land owners in the state of Montana to acquire rights to 17 patented and 67 unpatented mining claims known as the Pony Exploration project (“the Pony Project”). Upon satisfactory completion of due diligence and securing project financing, SRI and the individual Lessors entered into a Mineral Lease Agreement With Option to Purchase (the “Pony Lease”) effective February 4, 2011. The Pony Lease provides for a six year lease period with an initial payment of $300,000, which SRI paid upon signing, and an annual lease payment of $500,000 for the next five years. The Leasors will also have a 2% Net Smelter Return (“NSR”) on the property. In addition the Lessors will receive a 1% NSR on any property developed by SRI located within one linear mile from any portion of the exterior boundary of the Pony Project. After the lease period expires, SRI will have the option to purchase the Pony Project for $190,000.

On November 22, 2010 SRI entered into a non-binding Letter Of Intent with a group of individual land owners in the state of Montana to acquire two patented mining claims known as the Atlantic and Pacific Mine ("the A&P") located in the Pony Mining District in Montana. Upon satisfactory completion of due diligence, SRI entered into a definitive agreement on February 22, 2011, for a five year mineral lease, with an initial payment of $200,000 and an annual commitment of $100,000.00 for the next five years. The Leasors will also have a 2% NSR on the property during the lease term. After the lease period expires and all lease payments have been paid, SRI will own the A&P Project outright without any further compensation.

On January 14, 2011, we entered in to a drawdown equity financing agreement and registration rights agreement (collectively the “Agreements”) with Auctus Private Equity Fund, LLC (“Auctus”), one of the Selling Stockholders. In accordance with the Agreements, Auctus has committed, subject to certain conditions set forth in the Agreements, to purchase up to $10 million of the Company’s common stock over a term of up to three (3) years. Although the Company is not mandated to sell shares under the Agreements, the Agreement gives the Company the option to sell to Auctus shares of common stock at a per share purchase price of equal to 95% of the average of the lowest closing bid price of the common stock of any two trading days during the five trading days following the Company’s delivery of a Drawdown Notice to Auctus (the “Notice”). At its option, the Company may set a floor price under which Auctus may not sell the shares which were the subject of the Notice. The floor price shall be a minimum price determined by the Company or 75% of the average closing price of the stock over the preceding ten (10) trading days prior to the Notice and can be waived at the discretion of the Company. The maximum amount of Common Stock that the Company can sell pursuant to any Notice is the greater of (i) an amount of the shares with an aggregate maximum purchase price of $500,000 or (ii) 200% of the average daily trading volume based on the 10 days preceding the Notice date.

Auctus is not required to purchase the shares unless: a) the shares which are subject to the Notice have been registered for resale and are freely tradable in accordance with the federal securities laws, including the Securities Act of 1933, as amended; and b) under certain conditions which are set forth in the Agreements, and which are outside of Auctus’ control. The Company is obligated to file with the U.S. Securities and Exchange Commission (the “SEC”) a registration statement on Form S-1, of which this Prospectus forms a part of, within 30 days from the date of the Agreements and to use all commercially reasonable efforts to have such registration statement declared effective by the SEC within 120 days of filing. The Company has agreed to pay Auctus an aggregate amount of $10,000 as an origination fee with respect to the transaction.

F-14

The non-binding LOI provides terms for INCT to contribute up to $5,000,000 in operating funds over a one year period beginning with the execution of the JV agreement. The parties may jointly extend this period, by mutual agreement. In addition, upon signing of the LOI, INCT will advance $500,000 in order to allow SRI to close the Pony and A&P Project lease transactions. SRI will initially contribute its leases in the Mineral Hill Project into the JV. SRI also agrees to fund the JV with a matching $5,000,000 in operating funds no later than one year following the first $1,000,000 funded by INCT. The JV will govern the operations of the various sites within the Mineral Hill Project wherein the parties to this agreement will initially share 50%-50% joint ownership of the JV, based upon the assumption, each party fulfills its terms and responsibilities pursuant to the LOI and the final JV agreement. If either party fails to contribute the funds committed to, that party’s interest in the JV will be reduced. SRI will be responsible for operations of the JV.

On February 7, 2011, INCT completed its initial funding to the JV pursuant to the LOI in the amount of $300,000 with the proceeds being used to close the definitive lease agreement covering the Pony Project. On March 23, 2011, INCT, through one of its investors, completed a second funding to the JV in the amount of $250,000, with the proceeds being used to close the definitive lease agreement covering the A&P Project.

NOTE 11. SUBSEQUENT STOCK SPLIT

The financial statements have been restated to retroactively reflect the 1-for-3 reverse stock split that occurred on May 2, 2011.

F-15

PART III

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTION AND DIRECTOR INDEPENDENCE

Interest of Management and Others in Certain Transactions

On May 17, 2010, the Company’s Board agreed to transfer 100% of the membership interests in the Company’s subsidiary, Steele Land Investments LLC to Mack Steele in full and final payment of all amounts previously advanced by Mr. Steele to the Company through the Closing Date of the above referenced Reorganization. The advances repaid amounted to $64,884 through June 17, 2010.

On May 18, 2010 Peter Kristensen acquired 10,000,000 shares of SRC’s common stock (representing 81% of the outstanding stock at that time) from Mack Steele in a privately negotiated transaction for $30,000. Thereafter, due to Mr. Kristensen’s background in geophysics and geology, he reviewed several merger or acquisition opportunities in the mineral resources sector culminating in the reorganization with SRI. Due to Mr. Kristensen’s involvement in establishing SRC’s current business, he would be deemed a “promoter” as that term is defined under SEC regulations.

Scott Dockter and David McClelland were the principal organizers of SRI and its exploration business which, as a result of the Reorganization, became the principal business of SRC. Due to Mr. Dockter’s and Mr. McClelland’s involvement in establishing SRI’s business which became SRC’s current business, they would be deemed a “promoter” as that term is defined under SEC regulations.

On June 14, 2010 the Board of Directors of SRI approved a consulting agreement with Pauline Schneider. The consulting agreement provides for Ms. Schneider to be paid $140/hour for services rendered as a consultant to SRI from June 4, 2010 to June 18, 2010. Upon her appointment as CFO on June 17, 2010, Ms. Schneider was paid a salary of $8,332 per month. This agreement was terminated upon Ms. Schneider’s resignation as CFO on January 17, 2011.

During June and July 2010, expenses of approximately $29,000, which are included in general and administrative expenses, were paid on behalf of SRC by an entity which is controlled by the SRC’s CEO. These advances were repaid in July 2010. At December 31, 2010, there is approximately $27,000 of prepaid expense – related party on the SRC’s balance sheet associated with this entity.

Commencing in September, 2010 SRC rented a house in Cameron Park, CA for use by employees while working at SRC’s corporate office. The house is rented on a month-to-month basis with rent ranging from $500 - $750 depending on the number of employees utilizing the house in the month. Mr. McClelland has utilized this house for one or more days each month.

In August 2010, SRC issued three promissory notes to Mr. McClelland for a total of $20,848. The notes bore no interest and were repaid in October and November 2010.

In August 2010, SRC issued a note payable to Mr. McClelland’s father in the amount of $7,000 for the purchase of a vehicle. The note had no stated interest rate and was repaid in November 2010.

In September 2010, SRC purchased a vehicle from Mr. McClelland for $23,185. This amount was paid in full in November 2010.

On September 24, 2010 SRC’s wholly owned subsidiary, SRI, entered into an Asset Purchase Agreement and Assignment of Contract pursuant to which SRI acquired the mineral lease rights to explore the Fairview Hunter Gold Exploration Project (the “Fairview Hunter Project”). The Fairview Hunter Project lease was acquired from Durarock Resources, Inc., a company of which Scott Dockter (CEO of SRC) is a majority stockholder and David McClelland (a Director of SRC) is a less that 5% stockholder. Mr. Dockter, Mr. McClelland and Chris Whitaker (a Director of SRI) serve as directors of Durarock. In exchange for acquiring the Fairview Hunter Project SRC issued 500,000 shares of its restricted common stock to DuraRock and granted DuraRock a 2% Net Production Royalty on any production sold from the property. The transaction was approved unanimously by both the Board of Directors of SRC and SRI with Mr. Dockter abstaining from such votes.

Through December 31, 2010 Mr. Dockter was paid a total of $9,004 for expenses relating to the use of his private plane for Company business travel.

Except for the above transaction, since the inception of SRI on May 27, 2010 through December 31, 2010 there have not been, any material agreements or proposed transactions, whether direct or indirect, with any of the following:

a Director or Officer;

any nominee for election as a director;

any principal security holder identified in the preceding “Security Ownership of Certain Beneficial Owners and Management” section; or

any relative, spouse, or relative of such spouse, of the above referenced person.

The Reorganization transaction involved Mr. Dockter and Mr. McClelland who were, at the time, major stockholders of SRI. However, prior to the Reorganization, neither Mr. Dockter nor Mr. McClelland was a Director, Director nominee, officer or stockholder of SRC.

Should a transaction, proposed transaction, or series of transactions involve one of our officers or directors or a related entity or an affiliate of a related entity, or holders of stock representing 5% or more of the voting power (a “related entity”) of our then outstanding voting stock, the transactions must be approved by the unanimous consent of our Board of Directors. In the event a member of the Board of Directors is a related party, that member will abstain from the vote.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(b)

Exhibits

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
10.1 (*)	Assignment of Contract and Fairview Hunter Mineral Lease Agreement
10.2(5)	Service Agreement dated June 9, 2010 between SRI and Riggs and Allen Mineral Development, LLC
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.
14(5)	Code of Business Conduct and Ethics
21(5)	Subsidiaries of Steele Resources Corporation
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
________
(*) Filed as an exhibit herewith (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 September 30, 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.

SIGNATURES

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

	STEELE RESOURCES CORP.


Date: August 29, 2011	By /s/ A. Scott Dockter
	A. Scott Dockter
	Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date


/s/ A. Scott Dockter	Director and	August 29, 2011
A.Scott Dockter	Chief Executive Officer

/s/ David Bridgeford	Secretary and
David Bridgeford	Chief Financial Officer	August 29, 2011
	(Principal Financial &
	Accounting Officer)

/s/ Pauline Schneider	Director	August 29, 2011
Pauline Schneider

/s/ Peter Kristensen	Director	August 29, 2011
Peter Kristensen

/s/ David McClelland	Director	August 29, 2011
David McClelland

Attached files

Stock widget

Investing forum

STEELE OCEANIC CORP Reports