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NOTE 1 – INTERIM FINANCIAL INFORMATION

Nature of Operations

Steele Oceanic Corporation (the “Company” or “Steele Oceanic Corporation”) was originally incorporated in Nevada on February 12, 2007. Steele Oceanic Corporation (formerly Steele Recording Corporation and Steele Resource Corporation) was a U.S. exploration and mining company. On June 17, 2010, the Company entered into and consummated a Plan and Agreement of Reorganization between Steele Resources Corporation and Steele Resources Corporation (Nevada) and certain stockholders of Steele Resources Corporation Pursuant to the Reorganization, Steele Resources Corporation acquired all of the issued and outstanding shares of Steele Resources Corporation, a Nevada Corporation (“SRI”), formed in May 2010. From an accounting perspective, Steele Resources Corporation was the acquirer.

On July 18, 2008, Steele Recording Corporation became a reporting company under Section 12(g) of the Securities Exchange Act of 1934.  Steele Resources (formerly “Steele Recording Corporation”) filed its annual and quarterly reports, wherein the last report filed was the annual report for the period March 31, 2014.  On July 11, 2016, Steele Resources filed a Form 15-12G and terminated its reporting responsibility.  There were no other financial reports filed between March 31, 2014 and July 11, 2016.

On July 22, 2016, Steele Resources Corporation implemented a domicile change from Nevada to Oklahoma by creating and merging into Steele Seafood Corporation (“Steele Seafood”), an Oklahoma corporation.  The domicile change was approved by the Oklahoma Secretary of State.  The domicile change was approved by the Board of Directors and the majority shareholders of Steele Resources Corporation.

Steele Oceanic Corporation (“SOC” or “Steele Oceanic Corporation”), formally referred to as Steele Resources Corporation) was incorporated in Oklahoma on August 26, 2016.  On that same date, Steele Resources/Steele Seafood Corporation prior to the Merger Agreement as discussed in corporate history below was re-domiciled as an Oklahoma corporation on August 26, 2016, became the holding company of SELR PRE, Inc. (“SELR”) on the same date and is engaged in the business of procurement and distribution of seafood internationally.

Steele Seafood Corporation. merged with and into SELR (the "Merger"), and SELR became the surviving corporation (hereinafter sometimes referred to as the "Surviving Corporation").  The Merger became effective upon the date and time of filing an executed copy of a Merger Agreement with the Secretary of State of the State of Oklahoma in accordance with Section 1081(g) of the OCGL (the "Effective Time")

At the Effective Time, the separate corporate existence of Steele Seafood Corporation ceased, and SELR succeeded to all of the assets and property (whether real, personal or mixed), rights, privileges, franchises, immunities and powers of Steele Seafood Corporation , and SELR assumed and became subject to all of the duties, liabilities, obligations and restrictions of every kind and description of Steele Seafood Corporation, including, without limitation, all outstanding indebtedness of Steele Seafood Corporation.

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The Board of Directors of Steele Seafood Corporation. immediately preceding the Effective Time became the directors of the Surviving Corporation and Steele Oceanic Corporation at and after the Effective Time until their successors are duly elected and qualified.

The officers of Steele Seafood Corporation immediately preceding the Effective Time became the officers of the Surviving Corporation.

Conversion of Securities.  At the Effective Time, by virtue of the Merger and without any action on the part of the holder thereof:  

a.each share of Steele Seafood Corporation common stock issued and outstanding immediately prior to the Effective Time was changed and converted into and was be one fully paid and non-assessable share of Steele Oceanic Corporation;   

b.each share of Steele Seafood Corporation common stock held in the treasury of Steele Seafood Corporation immediately prior to the Effective Time was cancelled and retired;   

c.each option, warrant, purchase right, unit debenture or other security of Steele Seafood Corporation convertible into shares of Steele Seafood Corporation common stock had become convertible into the same number of shares of Steele Oceanic Corporation common stock as such security would have received if the security had been converted into shares of Steele Oceanic Corporation  common stock  immediately prior to the Effective Time, and Steele Oceanic Corporation share of common stock reserved for purposes of the exercise of such options, warrants, purchase rights, units, debentures or other securities an equal number of shares of Steele Oceanic Corporation common stock as Steele Seafood Corporation. had reserved; and   

d.each share of Steele Oceanic Corporation common stock issued and outstanding in the name of Steele Oceanic Corporation. immediately prior to the Effective Time was cancelled and retired and resumed the status of authorized and unissued shares of Steele Oceanic Corporation common stock.  

On October 1, 2016, the Company completed a Stock Purchase Agreement to acquire 100% of the equity interests of Global Seafood Incorporated (“GSI”) held by Global 2.0 Corporation (“Global 2.0). As consideration for the transaction, the Company provided Global 2.0 284,490 shares of Series B Convertible Preferred Stock. These Series B Preferred Shares were not subject to the reverse stock split discussed otherwise in these footnotes and would convert into 284,490 shares of common stock at the discretion of Global 2.0. The ex-dividend date implementing the reverse stock split as applied through the Financial Industry Regulatory Authority, Inc. (hereby and through the filing, referred to as “FINRA”) was determined as March 17, 2017 and the Series B Preferred Shares were converted to shares of common stock.

On April 17, 2017, Steele Oceanic Corporation became a reporting company under Section 12(g) of the Securities Exchange Act of 1934, sixty days following its filing of a Registration Statement on Form 10 with the Securities and Exchange Commission.  

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and

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with the instructions of the Securities and Exchange Commissions (SEC) on Form 10-Q and Rule 10-01 of Regulation S-X.  Accordingly, they do not include all of the information and disclosure required by GAAP for complete financial statements.  In the opinion of management, the consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the period presented.  The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiary.

Under SEC rules, GSI is considered the predecessor business to SOC given GSI’s significant size compared to SOC at the date of acquisition.

The basis of presentation is not consistent between the successor and predecessor entities and the financial statements are not presented on a comparable basis. GSI was formed in January 2016 and had minimal activity in the first two months of operations and therefore the statement of operations presents the period from inception to July 31, 2016 for the predecessor. Operating results for the three and nine months ended July 31, 2017 are not necessarily indicative of the results that can be expected for the year ending October 31, 2017.  The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10 for the one month period ended October 31, 2016 filed with the Securities and Exchange Commission.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and (iii) the reported amount of net sales and expenses recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates.

Management evaluates these estimates and assumptions on a regular basis.  Actual results could differ from those estimates.

Recent Accounting Pronouncements

The Company’s management does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements.

NOTE 2 – GOING CONCERN

The accompanying unaudited consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As our business has grown, we have transitioned from purchasing readily available local inventory to ordering Full Container Loads, (FCLs), which require a 25-30% down payment.  The turnaround time from placing our order; transportation by boat; clearing USDA/customs and land transportation is approximately 70 days as against 35 days for local trades, the result of which has been a depletion of our working capital from time to time.  As we continue to execute our business plan and grow, there will be a need to increase available working capital.  We have been successful in raising cash through debt and equity offerings in the past and have financing efforts in place to continue to

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raise cash through debt and equity offerings.  We cannot assure you that our plans to address these matters in the future will be successful.

Our operating entity, GSI, was profitable during the nine months ended July 31, 2017 while the parent company, SOC, which does not generate revenues, incurred losses during the same period related to the costs incurred being a reporting public company.  We anticipate running a small monthly deficit each month and will need additional working capital to fund growth plans and normal operations in future periods. In the event that we are unable to obtain financing on acceptable terms, or at all, we could be required to decrease and/or cease our operations or otherwise modify our business strategy, which could materially harm our future business prospects and as a result there is substantial doubt regarding our ability to continue as a going concern.  These financial statements do not include any adjustments that might result from this uncertainty.

NOTE 3 – RELATED PARTY PAYABLE

On November 1, 2016, the Company entered into an Assignment and Assumption Agreement (see Note 5) with the two related parties in which the Company agreed to issue 106,355 shares of the Company’s common stock in exchange for the payable balance.  On June 3, 2017, the Company, pursuant to an Assignment and Assumption Agreement, issued an aggregation of 106,355 shares of common stock to two related parties, Global 2.0 Corporation, a Delaware corporation (“2.0”) and Global Seafood Holdings Corporation, a Delaware corporation to settle its payable to them in total of $106,355. The fair value of the shares at issuance date was $120,181 resulting in a loss upon conversion of the related party notes payable of $13,826 which was recorded within Other Expense on the Statement of Operations.

The Chairman of the Company, Scott Landow, provides office space located in San Diego, California to the Company without cost. This office space is used as the corporate headquarters of the Company.

NOTE 4 – LOAN PAYABLE

On October 14, 2016, the Company entered a 90 Day unsecured Debenture for $80,000 with an interest rate of 12% due on January 13, 2017 with an unrelated party.  On January 12, 2017, the Debenture maturity date was extended to April 14, 2017 and on April 12, 2017, the maturity date was extended again to July 14, 2017, and subsequently extended to August 14, 2017, in all cases for no additional consideration.  Interest is payable on the 14th of each month. The Company promises to issue 2,400 shares of its common stock to the note holder on the maturity date.  All overdue accrued and unpaid interest to be paid will incur a late fee at a rate of 18% per annum. In October 2017, the outstanding Debenture and accrued but unpaid interest was repaid.

NOTE 5 – SHAREHOLDERS’ EQUITY

On July 22, 2016, Steele Oceanic implemented a four thousand to one, (4,000:1), reverse stock split of its issued and outstanding shares of common stock.  The ex-dividend date implementing the reverse stock split as applied through FINRA) was determined as March 17, 2017. All shares of common stock and per share information presented in the financial statements have been adjusted to reflect the reverse stock split on a retroactive basis for all periods presented.

Series A Preferred Stock

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As of December 19, 2016, Small World Traders, LLC received 1,000 shares of Series A Preferred Stock as consideration for the previous debt that was due from Steele Seafood Corporation, which was settled upon the merger that occurred in August 2016.

On March 22, 2017, subsequent to the reverse stock split enactment, Small World Traders LLC cancelled its Series A Preferred Stock and received 2,137,573 shares of common stock.

On March 29, 2017, the Company filed a new designation of rights and preferences for Series A Preferred Stock.  The Series A Preferred Stock has no conversion rights but has the right to vote on all matters presented to be voted by the holders of Company common stock at a ratio of 10,000 for each common share voted.  100,000 shares of Series A Preferred Stock were reserved.  

 There were no outstanding shares of Series A Preferred Stock as of the date of this filing.

Series B Preferred Stock

On March 29, 2017, the Company filed a new designation of rights and preferences for Series B Preferred Stock.  The Series B Preferred Stock has voting rights of one vote preferred share on all matters presented to be voted by the holders of shares of common stock and conversion rights of ten (10) shares of common stock for each share of Series B Preferred Stock.   The Series B Preferred Stock shall not be eligible for conversion until the following requirements are satisfied: (a) the Corporation has achieved, based on the last quarterly report, annual revenue or projected annual revenue, of no less than $25,000,000 and (b) based on the last quarterly report, annual or projected annual EBITA (earnings before interest, taxes and amortization) of $500,000.   Once these requirements for conversion have been met, the Holders of Series B convertible shares may submit a maximum of 33.34% of their shares for conversion during any year, beginning 90 days after the filing date of the most recent current quarterly or annual report.  3,000,000 shares of Series B Preferred Stock were reserved, and 1,052,046 shares are issued and outstanding as of July 31, 2017.

On May 23, 2017, the Company issued an aggregate of 1,052,046 shares of Series B Preferred Stock as consideration to defer the conversion of certain securities until the reverse stock split was implemented.   The Company determined that the Series B Preferred Stock did not have any value as of the issuance date due to the conversion restrictions.

Additionally, Global 2.0 converted 284,490 shares of Series B Preferred Stock into 284,490 shares of common stock and cancelled its Series B Preferred Stock.

Assignment and Assumption Agreement

On November 1, 2016, the Company entered into an Assignment and Assumption Agreement (the “Agreement”) with two related parties, Global 2.0 Corporation and Global Seafood Holdings Corporation.  The Company agreed to settle its related party payable totaling $106,355 by issuing 106,355 shares of the Company’s common stock, which were issued on June 3, 2017. The fair value of the common stock on the date of issuance was $1.13 which resulted in a loss on the settlement of the debt of $13,826 which was recorded as an Other Expense within the Statement of Operations.

Common Stock

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On March 22, 2017, two debt holders, one of which was a related party, converted their debt in the amount of $260,000 plus unpaid interest into 526,511 shares of common stock and cancelled the previous debt obligation, which was settled upon the merger that occurred in August 2016.

On May 23, 2017, the Company issued an aggregate of 266,000 shares of common stock to two third parties in return for services. These shares were fully vested upon issuance. In addition, an aggregate of 250,000 shares of common stock were issued to consultants for services, such shares vest in increments commencing in 2018 and fully vested in January 2019.  

On May 23, 2017, the Company granted restricted stock awards to an officer under the Company 2017 Omnibus Equity Compensation Plan, in an aggregate total of 2,500,000 shares of common stock, vesting 535,714 at January 5, 2018, 892,857 shares at January 5, 2019, and 1,071,429 shares at January 5, 2020. The Company will increase the number of shares reserved in the 2017 Omnibus Equity Compensation Plan to accommodate the vested shares prior to vesting. (See Subsequent Events)

On July 15, 2017, the Board of Directors approved the issuance of 250,000 shares of common stock to LP Funding for consulting services provided.

During the nine months ended July 31, 2017, the Company recorded stock-based compensation expense totaling $992,040 for the issuance of the above mentioned common stock.  As of July 31, 2017, the Company has unamortized stock-based compensation expense of $2,666,620 to be recognized through January 5, 2020.

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

Management’s Discussion and Analysis contains various “forward looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding future events or the future financial performance of the Company that involve risks and uncertainties. Certain statements included in this Form 10-Q, including, without limitation, statements related to anticipated cash flow sources and uses, and words including but not limited to “anticipates”, “believes”, “plans”, “expects”, “future” and similar statements or expressions, identify forward looking statements. Any forward-looking statements herein are subject to certain risks and uncertainties in the Company’s business, including but not limited to, reliance on key customers and competition in its markets, market demand, product performance, technological developments, maintenance of relationships with key suppliers, difficulties of hiring or retaining key personnel, any changes in current accounting rules, and future regulatory or legislative actions (including additional taxes, changes in environmental regulation,  and disclosure requirements under the Dodd-Frank Wall Street Reform,  Consumer Protection Act and the Jumpstart our Business Startups Act of 2012),  all of which may be beyond the control of the Company. The Company adopted at management’s discretion, the most conservative recognition of revenue based on the most astringent guidelines of the SEC in terms of recognition of revenue. Management will elect additional changes to revenue recognition to comply with the most conservative SEC recognition on a forward going accrual basis as the model is replicated with other similar markets (i.e. SBDC).  The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth therein.  Forward-looking statements involve risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Factors and risks that could affect our results and achievements and cause them to materially differ from those contained in the forward-looking statements include those identified in the section titled “Risk Factors” in the Company’s Registration Statement on Form 10, as amended, for the year ended October 31, 2016, as well as other factors that we are currently unable to identify or quantify, but that may exist in the future.  In addition, the foregoing factors may affect generally our business, results of operations and financial position. Forward-looking statements speak only as of the date the statement was made. We do not undertake and specifically decline any obligation to update any forward-looking statements.

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

Our Business

We focused our efforts for the year building a lean organization led by Management that combined depth in their respective areas of expertise, Category Management; Brand development and Management; Industry specific systems and technology; Acquisition Integration Strategy and Capital Markets Experience, before attempting to complete our first acquisition.  The majority of our revenue was generated building our customer base, buying and selling salmon (see the note below regarding the salmon business) with a small entry into the crab category.

Results of Operation

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Management, during the latter quarters of the Company fiscal year, recognized that the margins in salmon products continued to decline, specifically in the third quarter and determined that reducing the salmon transactions until the market value increased was in the best interests of the business plan. The disclosure below reflects this general reduction as well as resulting reductions in inventory and reduction in general and administrative expenses.   

A breakdown of these results are:  

Three and nine months ended July 31, 2017

GSI:

Our general and administrative expenses of GSI for the three and nine months ended July 31, 2017 was $70,053 and $259,450, respectively.

Our net operating income of GSI specifically for the three and nine months ended July 31, 2017 was ($3,126) and $66,391.

SOC:

For the three and nine months ended July 31, 2017, SOC did not generate revenues (as all revenues were derived from GSI). For the three and nine months ended July 31, 2017, SOC generated general and administrative expenses of $1,026,779 and $1,127,394, respectively.

GSI and SOC Consolidated:

We reported consolidated financials for the three and nine months ended July 31, 2017 of $618,522 and $3,632,093 in sales, respectively, against costs of $572,884 and 3,306,252, respectively.

Our general and administrative expenses for the three and nine months ended July 31, 2017 was $1,096,832 and $1,386,844, respectively.

Our net operating loss for the three and nine months ended July 31, 2017 was $1,068,246 and $1,082,842.  

Liquidity and Capital Resources

Current Assets

Our consolidated current assets equal $296,182 for the quarter ended July 31, 2017 (which include cash and cash equivalents of $69,740, accounts receivables of $167,991, inventories of $51,069, prepaid expenses and other current assets of $7,382) compared to consolidated current assets of $798,323 for the year ended October 31, 2016.

Liabilities

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Our consolidated current liabilities equal $167,961 for quarter ended July 31, 2017 (which includes accounts payable of $87,785, loan payable of $80,000, and other current liabilities of $176), compared to consolidated current liabilities of $701,763 for the year ended October 31, 2016.

Liquidity and Capital Resources

Our cash and cash equivalents as of July 31, 2017 was $69,740 compared to $164,593 as of October 31, 2016.  Our total liabilities and stockholders’ equity as of July 31, 2017 was $323,472 as compared to $827,895 as of October 31, 2016.  This reflected the limited historic revenue stream as a consequence of the short reporting period since acquiring Global Seafood International.

Historically, we have funded our operations through financing activities consisting primarily of private placements of debt and equity securities with existing shareholders and outside investors. Our principal use of funds has been for sales, marketing and for general corporate expenses.

It is probable we will require additional capital in order to operate its business and there are no assurances we will be able to raise that capital in the future.

Non-Cash One Time Expensed Items

During the three and nine months ended July 31, 2017 we incurred non-cash expenses of $1,005,866 relating to stock issuances provided as disclosed in Note 5 above.  

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. While our critical accounting policies are described in Note 1 to our financial statements appearing elsewhere in this report, we believe the following policies are important to understanding and evaluating our reported financial results:

Revenue Recognition

We recognize revenue in accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition (“ASC 605-10”) which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.

At the time of each transaction, management assesses whether the fee associated with the transaction is fixed or determinable and whether or not collection is reasonably assured. The assessment of whether the fee is fixed or determinable is based upon the payment terms of the transaction. Collectability is assessed based on a number of factors, including past transaction history with the client and the creditworthiness of the client.

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Inflation

Our opinion is that inflation has not had, and is not expected to have, a material effect on our operations at this time

Climate Change

Our opinion is that neither climate change, nor governmental regulations related to climate change, have had, or are expected to have, any material effect on our operations at this time. However, as our business operations expand, the effect of climate change may have a material effect on the seafood business in general and our operations specifically

Off-balance sheet arrangements

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

Additional Information

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

ITEM 4 - CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures were designed to provide reasonable assurance that the controls and procedures would meet their objectives. As required by SEC Rule 13a-15(b), our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective for the nine months ended July 31, 2017 mainly due to lack of segregation of duties.

Management has identified control deficiencies regarding the lack of segregation of duties and the need for a stronger internal control environment. Our management believes that these material weaknesses are due to the small size of our accounting staff. The small size of our accounting staff may prevent adequate controls

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in the future, such as segregation of duties, due to the high cost of such remediation relative the benefit expected to be derived thereby.

We plan to resolve the segregation of duties issue by engaging additional   members of management that will resolve any issues surrounding segregation of duties.

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

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

(b) Changes in Internal Control Over Financial Reporting

During the nine months ended July 31, 2017, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

We are subject from time to time to litigation, claims and suits arising in the ordinary course of business. As of July 31, 2017, we were not a party to any material litigation, claim or suit whose outcome could have a material effect on our unaudited consolidated financial statements.

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

On March 22, 2017 two debt holders converted their debt in the amount of $260,000 plus unpaid interest into 526,511 shares of common stock and cancelled the debt obligation.

On May 23, 2017, the Company issued an aggregate of 266,000 shares of common stock to two third parties in return for services. In addition, an aggregate of 250,000 shares of common stock were issued to

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consultants for services, such shares to vest in increments commencing in 2018 and fully vested in January 2019.

On May 23, 2017, the Company issued an aggregate of 1,052,046 shares of Series B Preferred Stock as consideration to defer the conversion of certain securities until the reverse stock split was implemented.   

On July 15, 2017, the Board of Directors approved the issuance of 250,000 shares of common stock to LP Funding for consulting services provided.

The issuance of such shares of our common stock was effected in reliance on the exemptions for sales of securities not involving a public offering, as set forth in Rule 506 promulgated under the Securities Act of 1933, as mended (the “Securities Act”) and in Section 4(2) of the Securities Act, based on the following: the investors confirmed to us that they were “accredited investors,” as defined in Rule 501 of Regulation D promulgated under the Securities Act and had such background, education and experience in financial and business matters as to be able to evaluate the merits and risks of an investment in the securities; (b) there was no public offering or general solicitation with respect to the offering; (c) the investors were provided with certain disclosure materials and all other information requested with respect to our company; (d) the investors acknowledged that all securities being purchased were “restricted securities” for purposes of the Securities Act, and agreed to transfer such securities only in a transaction registered under the Securities Act or exempt from registration under the Securities Act; and (e) a legend was placed on the certificates representing each such security stating that it was restricted and could only be transferred if subsequent registered under the Securities Act or transferred in a transaction exempt from registration under the Securities Act.

None.

Not applicable.

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

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

STEELE OCEANIC CORPORATION

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