UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the year ended December 31, 20172023.
☐ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________ to _________
Commission File No. 0-50274
Spectral Capital Corporation
(Name of small business issuer in its charter)
Nevada | 51-0520296 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
4500 9th Avenue | 98105 |
(Address of principal executive offices) | (Zip Code) |
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $0.0001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act ☐Act. [ ] Yes ☒[X] No
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 ☐[X] No
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 requirement for the past 90 days. ☒
[X] Yes ☐[ ] No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒
[X] Yes ☐[ ] No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large“large accelerated filer," "accelerated filer"” “accelerated filer” and "smaller“smaller reporting company"company” in Rule 12b-2 of the Exchange Act).
Large accelerated filer | [ ] | Accelerated filer | [ ] |
Non-accelerated filer | [X] | Smaller reporting company | ☒ |
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant has filed a report to its management’s assessment of the effectiveness of its internal control over financial reporting under section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. [ ]
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).[ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-212b2 of the Act).☐
Yes ☒☐ No
As of FebruaryMarch 28, 2018, there are issued and2024, we have 42,018,162 shares of Common Stock outstanding, only common equity shares in the amount of 117,857,623 shares, par value $0.0001 of which there is only a single class. There are 5,000,000 preferred shares authorized and none issued and outstanding.
As of June 30, 2017,2023, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the last reported salesclosing price of such common equity was approximately $707,062.
DOCUMENTS INCORPORATED BY REFERENCE
None
Page | |||
FORWARD LOOKING STATEMENTS | |||
PART I | |||
ITEM 1 | 3 | ||
ITEM | 6 | ||
ITEM 1B | 6 | ||
ITEM 2 | 6 | ||
ITEM | 6 | ||
ITEM | |||
6 | |||
PART II | |||
ITEM | Market for Common Equity and Related Stockholder | 7 | |
ITEM 6 | 7 | ||
ITEM 7 | Management’s Discussion and Analysis or Plan of | 7 | |
ITEM | 10 | ||
ITEM 8 | F-2 | ||
ITEM 9 | Changes In and Disagreements With Accountants on Accounting and Financial | 11 | |
ITEM 9A | 11 | ||
ITEM 9B | 12 | ||
ITEM 9C | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 12 | |
PART III | |||
ITEM | 12 | ||
ITEM 11 | 14 | ||
ITEM 12 | 15 | ||
ITEM 13 | Certain Relationships and Related Transactions, and Director | 16 | |
ITEM 14 | 16 | ||
PART IV | |||
ITEM | 17 | ||
18 |
In this report, unless the context indicates otherwise, the terms “Spectral,” “Company,” “we,” “us,” “our” and similar words refer to Spectral Capital Corporation, a Nevada corporation.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K press releasescontains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact contained in this Annual Report on Form 10-K, including statements regarding our future results of operations and certain information provided periodically in writing or verbally by our officers or our agents contain statements which constitute forward-looking statements. The words "may", "would", "could", "will", "expect", "estimate", "anticipate", "believe", "intend", "plan", "goal",financial position, business strategy and similar expressionsplans and variations thereofobjectives of management for future operations, are intended to specifically identify forward-looking statements. These statements appearinvolve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as “may,” “should,” “would,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Annual Report on Form 10-K are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Annual Report on Form 10-K and are subject to a number of placesrisks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in this Annual Report on Form 10-K and include all statements that are not statements of historical fact regarding the intent, belief or current expectations of us, our directors or our officers, with respect to, among other things: (i) our liquidity and capital resources; (ii) our financing opportunities and plans; (iii) our ability to generate revenues; (iv) competition in our business segments; (v) market and other trends affecting our future financial condition or results of operations; (vi) our growth strategy and operating strategy; (vii) the declaration and/or payment of dividends; and (viii) any statements regarding any reserves, potential reserves, potential mineral yield or extraction costs with respect to our mining properties.
· | our ability to further develop upgrade our telecommunications and software services in a cost-effective manner | |
· | our ability to meet, and to continue to meet, applicable regulatory requirements for the use of our telecommunications and software services; | |
· | our ability to comply on an ongoing basis with the numerous regulatory requirements applicable to our telecommunications and software services; | |
· | the introduction, market acceptance and success of our telecommunications and software services; | |
· | the success or profitability of our future arrangements with to our telecommunications and software services; | |
· | a failure of demand for our telecommunications and software services; | |
· | our future capital requirements and sources and uses of cash; | |
· | our ability to obtain funding for our operations and future growth; | |
· | the extensive costs, time and uncertainty associated with upgrading and marketing our telecommunications and software services; | |
· | developments and projections relating to our competitors and industry; | |
· | the ability to recognize the anticipated benefits of the acquisition of assets of Noot Holdings, Inc. and Monitr Holdings, Inc. | |
· | problems with the performance of our telecommunication and software upon our potential completion of planned upgrades; | |
· | our dependence on a limited number of third-party suppliers for certain components; | |
· | our inability to adapt to changing technology impacting or used in our technologies; | |
· | our inability to protect our intellectual property and the risk of claims that we have infringed on the intellectual property of others; | |
· | our inability to compete effectively; | |
· | risks associated with the current economic environment; | |
· | risks associated with our international operations; | |
· | geopolitical risk and changes in applicable laws or regulations; | |
· | our inability to adequately protect our technology infrastructure; | |
· | our inability to hire or retain skilled employees and the loss of any of our key personnel; |
· | operational risk; | |
· | costs and other risks associated with being a reporting company subject to the Sarbanes-Oxley Act; | |
· | our inability to implement and maintain effective internal controls. |
These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. Any forward-looking statement in Part II, Item 7 of this annual reportAnnual Report on Form 10-K entitled Management's Discussionreflects our current view with respect to future events and Analysis or Planis subject to these and other risks, uncertainties, and assumptions relating to our operations, results of Operation, including without limitation the risk factors contained therein.operations, industry, and future growth. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we undertakeassume no obligation to update any of theor revise these forward-looking statements for any reason, even if new information becomes available in the future.
This Annual Report on Form 10-K also contains estimates, projections, and other information concerning our industry, our business, and the markets for certain drugs, including data regarding the estimated size of those markets, their projected growth rates, and the incidence of certain medical conditions. Information that is based on estimates, forecasts, projections, or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained these industry, business, market, and other data from reports, research surveys, studies, and similar data prepared by third parties, industry, medical and general publications, government data, and similar sources. In some cases, we do not expressly refer to the sources from which these data are derived.
Except where the context otherwise requires, in this Annual Report on Form 10-K, “we,” “us,” “our,” and the
“Company” refer to Spectral Capital Corporation and, where appropriate, its consolidated subsidiaries.
PART I
ITEM 1. BUSINESS
OVERVIEW
Spectral Capital Corporation, a Nevada corporation (“us”, “we”, “our” or the “Company”) was formed in the state of Nevada on September 13, 2000.
Our principal executive offices are located at 4500 9th Avenue NE, Seattle, Washington 98105. Our phone number is (206) 385-6490. Our website is www.spectralcapital.com.
In December 2021, we began providing wholesale telecommunications, data and switching services consisting of international long distance reselling services on a business-to-business (“B2B”) basis. Since December 2021, we have provided this service in conjunction with approximately 3 network providers who, in turn, provided services directly to customers around the world. We paused these services in Q3 2022 because we believed that we could increase our profits if we could find partners that provide real time data exchange and technical advantages over what we had previously. We intend to resume this business in the third quarter of 2024.
On January 3, 2022, we entered into a telecommunications services agreement with Sky Data PLL OU (Estonia) (“Sky”) to provide long distance switching services. We provided services under this agreement to 3 customers and generated $98,323 of revenue from the contract during 2022. We have paused this line of business and plan to resume our telecommunications reselling services through our partnership with SKY within the 2024 fiscal year and without third-party intervention. Testing of these services will begin initially via SKY, and after sufficient revenue streams and data providers have been resolved, we intend to join this arrangement. Having control of this traffic will allow full transparency and full control of this line of business and will allow us to scale the initial small traffic into higher amounts without added costs.
We incurred a net loss of $(215,387) and $(240,988) for the years ended December 31, 2023 and 2022. Our revenues were $0 and $98,323 from the sale of our telecom services for the years ended December 31, 2023 and 2022. Our assets were $240 and $35,672 for the years ended December 31, 2023 and December 31, 2022. As of the date of this report.
CORPORATE HISTORY AND DEVELOPMENT
We were incorporated in the State of Nevada on September 13, 2000 as Galaxy Championship Wrestling, Inc., a media and entertainment company focused on developing, producing and marketing live entertainment in the professional wrestling sphere.
On August 8, 2022, we increased our common stock, $0.0001 par value per share, from 500,000,000 to 1,000,000,000 (the “Increase in Authorized Capital”). On November 22, 2022, we effected a reverse stock split of the agreementour common stock whereby every ten (10) shares of issued and outstanding common stock was extended to December 31, 2014. Ascombined into one (1) share of December 31, 2017, all loans with Akoranga have been forgiven. The forgiveness was treated as a capital contribution to additional paid-in capital as the Company's CEO also controls the operations of Akoranga.
On February 26, 2013, Spectral Capital Corporation, through its subsidiary, Spectral Holdings, Inc.we signed a definitive Technology Acquisition Agreement ("Agreement") to acquire mobile search engine and mobile sharing technology from Fiveseas Securities Ltd. (“Fiveseas”). Under the Agreement, Spectralagreement, we issued Fiveseas 5,000,000 common shares of Spectral Capital Corporation,our common stock, par value $0.0001. The Agreement callsagreement called for the technology to reside within a newly formed entityDelaware corporation called Noot Holdings, Inc. (“Noot”), a Delaware corporation, which Spectral iswe formed on February 28, 2013 and are a 60% owner of and Fiveseas is a 40% owner of. Fiveseas was granted a right of first refusal for any subsequent sale of the technology.
On December 1, 2013, Spectral Capital Corporation, through its subsidiary, Spectral Holdings, Inc.we signed a definitive Technology Acquisition Agreement ("Agreement") to acquire a technology application and service that enhances the way people find, consume, analyze, share and discuss financial news and topics, equities, commodities and currencies on the web from TL Global Inc.Inc (“TL Global”). Under the Agreement, Spectralagreement, we issued TL Global Inc. 5,000,000 common shares of Spectral Capital Corporation,our common stock, par value $0.0001. The Agreement callsagreement
called for the technology to reside within a newly formed entityDelaware corporation called Monitr Holdings, Inc. (“Monitr”), a Delaware corporation, which Spectral iswe formed on December 1, 2013 and are a 60% owner of and TL Global Inc. is a 40% owner of. TL Global Inc. was granted a right of first refusal for any subsequent sale of the technology.
We have not been involved in a material bankruptcy, receivership, or similar proceeding. Other than as set forth above, in the prior five years, we have not been involved in any material reclassification, merger or consolidation.
PRINCIPAL PRODUCTS AND SERVICES
We have a deep management expertise, developed knowledge withinmajority ownership of two non-operating technology companies: Noot and Monitr. We plan to commercialize Noot and Monitr which will require substantial capital of at least $500,000 to upgrade their software. We do not currently have the financial means to commercialize these products and have not identified sources to finance the upgrade of the Noot and Monitr software.
We intend to provide international long distance reselling services on a B2B basis for select customers through our efforts of development and control of switching infrastructure with SKY.
We plan to provide wholesale voice services, global routing solutions and direct bilateral connections with major PTTs, Tier-1 carriers and mobile operators around the world. We are seeking relationships that can further expand our network and improve voice quality experience in order to increase the number of carriers and mobile operators around the world who utilize our network solutions. Through SKY, we plan to offer services along with new providers and expect to resume this business in Q3 2024 with one or more providers.
Noot is no longer a working mobile application; however, its foundation of mobile search media and analytics fields, attractive positioning,machine learning is still relevant today. Given adequate funding to upgrade its software, we believe there are alternative markets in which Noot could enter. The mobile search sector has much room to grow.
With the ability to identify and close transactions quickly andgrowth of financial technology (“Fintech”), Monitr has a willingness to invest in technologygrowing list of competitors; however, we believe that is mispricedMonitr´s trend-detecting software could perform well relative to its economic potential. Although the 2008 financial crisis has abated and technology companies generally are enjoying some robust growth, it still remains a challenge for early stage technology companiescompetition.
Additionally, we plan to find the financial and human resources to foster required growth. This challenge creates an environment where Spectral can seek out and find high impact technology and investresume our telecommunication reselling service business in or acquire this technology at reasonable valuations.
Our business differs from those companies whose capital reserves, successful previous ability to monetize technology and scale, efficiencies and existing customer base allow them to select and develop technology by flooding the technology with financial and human resources. Spectral's approach is much more targeted. We only develop technology that we believe has a very specific fit with our expertise and limited capital. We develop technology that does not require massive investments in sale and marketing in order to reach an initial audience.
Competition
We compete with a wide variety of parties in connection with our efforts to: (i) attract users to our various Analytics, Search & Software portfolio companiesservices and the ones we intend to develop; (ii) develop, market and distribute our current and anticipated B2C ("(“Business to Consumer"Consumer”) and B2B ("Business to Business") software applications ("Applications(“Applications” or Apps"“Apps”) as developed by our portfolio companies; (iii) attract third parties to distribute our Applications and related technology; and (iv) attract advertisers. In the case of our anticipated search services generally, our competitors include Google Yahoo!, Facebook, Amazon and other destination search websites and search centricsearch-centric portals (some of which provide a broad range of content and services and/or link to various desktop applications), third party toolbar, convenience search and applications providers, other search technology and convenience service providers (including internet access providers, social media platforms, online advertising networks, traditional media companies and companies that provide online content). When we market our portfolio search and analytics services, we compete against a variety of established players and new entrants.
Moreover, somemany of our current and potential competitors have longer operating histories, greater brand recognition, larger customer bases and/or significantly greater financial, technical and marketing resources than we do. As a result, they have the ability to devote comparatively greater resources to the development and promotion of their products and services, which could result in greater market acceptance of their products and services relative to those offered by us.
The telecommunication industry is a growing market, and new entrants frequently enter this industry. Entering the usefulness of our analyticsreselling industry does not require substantial capital. The most successful companies have developed long-lasting relationships with data carrier traffic providers and other content, the functionality of our various Websitescan utilize these relationships for high traffic within their networks. We are a new entrant to this industry and software and the quality of related content and features and the attractiveness of the services provided by our technology generally to consumers and business relative to those of our competitors. All of these attributes require capital expendituresmust form relationships in order to competegrow and develop our customer base. Providing carriers with technological advancements for better connections and high-quality customer service will be part of our mission in this marketplace effectively.
Principal Agreements Affecting Our Ordinary Business
We do not have any current long termlong-term agreements that impact our business.
Information Technology Governmental Regulation
Our operations are subject to various rules, regulations and limitations impacting the information technology industry as a whole.
Our compliance with these laws and regulations may be onerous and could, individually or in the aggregate, increase our cost of doing business, make our products and services less useful, limit our ability to pursue certain business models, cause us to change our business practices, affect our competitive position relative to our peers, and/or otherwise have an adverse effect on our business, reputation, financial condition, and operating results.
Environmental Matters
We do not anticipate any significant impact of environmental regulations on our business.
OPERATIONS
We look for technology that addresses current market problems and that could be protected through patents or laws regarding trade secrets. Spectral hashave acquired significant stakes in two technology companies currentlyas well as interests within telecommunications, data and actively works with management to drive these companies toward increasing market penetration in their particular verticals. Spectral intends to own, in full or in part, technology companies whose founders and key management can take advantage of the deep networks and experience in technology development embodied in Spectral management.
Our operations consist of (1)fostering partnerships for the resumption and expansion of our telecommunication reselling business as well as the development and commercialization of portfolio technology;technology, including attendant information security needs and providing consistent and reliable access to our applications/technology.
RESEARCH AND DEVELOPMENT
For the year ended December 31, 2017,2023, we have not incurred research and development expenses related to the development of our current software products and for our previous technology business. For Monitr, 2016 was used to test the software and gather historical data in order to share the results with prospective clients. Given an expected increase in sales for Monitr and any added investor capital, we intend to invest more into the technology over 2018 but we cannot forecast as to how much we can allocate for this purpose.
SIGNIFICANT CUSTOMERS AND SUPPLIERS
In the year ended December 31, 2023, we had 0 customers. And presently have 0 customers. We are not particularly dependent on any one customer or supplier.
INTELLECTUAL PROPERTY
We regard our intellectual property rights, including trademarks, domain names, trade secrets, patents, copyrights and other similar intellectual property, as critical to our success.
Trade Secrets
Whenever we deem it important for purposes of maintaining the secrecy of information, such as sensitive and valuable search algorithms, we plan to require parties with whom we share, or who otherwise are likely to become privy to, our trade secrets or other confidential information to execute and deliver to us confidentiality and/or non-disclosure agreements. Among others, this may include employees, consultants and other advisors, each of whom may require us to execute such an agreement upon commencement of their employment, consulting or advisory relationships. These agreements will generally provide that all confidential information developed or made known to the individual by us during the course of the individual'sindividual’s relationship with us is to be kept confidential and not to be disclosed to third parties except under specific circumstances.
As of the date of this annual report on Form 10-K for the year ended December 31, 2017,2023, we have executed non-disclosure agreements with all of our key employees, consultants or advisors.
HUMAN CAPITAL
For the year ended December 31, 2017,2023, we had one full-time employee.
We are not subject to any collective bargaining agreements and believe that our relationships with our employees and consultants are good.
Available Information
Our common stock is quoted on the OTC Markets Pink Sheets under the symbol “FCCN”. We file annual, quarterly, and current reports and other information with the U.S. Securities Exchange Commission (the “SEC”). These filings are available to the public on the Internet at the SEC’s website at http://www.sec.gov. We maintain a website where our annual, quarterly and current reports and amendments to those reports, if any, are available free of charge.
Not required.
Item 1B. Unresolved Staff Comments.
N/A.
We rent a virtual office located at 701 Fifth 4500 9th Avenue Suite 4200,NE, Seattle, Washington, 98104. Our telephone number is (206) 262-7820. The lease98105, under a month-to-month basis. We pay monthly rent of $99.00 for this location. We believe that our current facilities are sufficient to meet our current and near-term needs and that, should it be needed, suitable additional space is a revolving three-month term.
We are not party to any material legal proceedings to whichmatters or claims. In the future, we were a party and we are not aware that any were contemplated. There can be no assurance, however, that we will not be made amay become party to litigationlegal matters and claims arising in the future. Any findingordinary course of liability imposed against us is likely tobusiness. We cannot predict the outcome of any such legal matters or claims, and despite the potential outcomes, the existence thereof may have an adverse effectimpact on our business, our financial condition, including liquidityus because of defense and profitability,settlement costs, diversion of management resources and our results of operations
N/A.
PART II
Our common stock is quoted on the OTC Markets Pink Sheets under the symbol "FCCN"“FCCN”.
The following table sets forth the high and low bid prices for our common stock as reported each quarterly period within the last seventwo years on the OTC Bulletin Board,Markets Pink Sheets and as obtained from investopedia.com.otcmarkets.com. The high and low prices reflect inter-dealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions.
Period | High* | Low* | ||||||
Year ended 2016 | ||||||||
Quarter ended | ||||||||
March 31, 2016 | $ | 0.017 | $ | 0.006 | ||||
June 30, 2016 | $ | 0.016 | $ | 0.008 | ||||
September 30, 2016 | $ | 0.040 | $ | 0.007 | ||||
December 31, 2016 | $ | 0.014 | $ | 0.010 |
Year ended 2017 | ||||||||
Quarter ended | ||||||||
March 31, 2017 | $ | 0.01 | $ | 0.006 | ||||
June 30, 2017 | $ | 0.01 | $ | 0.006 | ||||
September 30, 2017 | $ | 0.01 | $ | 0.0025 | ||||
December 31, 2017 | $ | 0.005 | $ | 0.0022 |
Period |
| High* |
| Low* | ||
|
|
|
|
|
|
|
Year ended 2022 |
|
|
|
|
|
|
Quarter ended | ||||||
March 31, 2022 |
| $ | 0.168 |
| $ | 0.076 |
June 30, 2022 |
| $ | 0.16 |
| $ | 0.05 |
September 30, 2022 |
| $ | 0.129 |
| $ | 0.027 |
December 31, 2022 |
| $ | 0.21 |
| $ | 0.028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 2023 |
|
|
|
|
|
|
Quarter ended | ||||||
March 31, 2023 |
| $ | 0.0775 |
| $ | 0.055 |
June 30, 2023 |
| $ | 0.0638 |
| $ | 0. 0503 |
September 30, 2023 |
| $ | 0.0609 |
| $ | 0.0511 |
December 31, 2023 |
| $ | 0.0586 |
| $ | 0.0452 |
STOCKHOLDERS
As of FebruaryMarch 28, 2018,2024, there were approximately 90ninety-seven (97) holders of record of our common shares.
DIVIDENDS
From our inception, we have never declared or paid any cash dividends on shares of our common stock, and we do not anticipate declaring or paying any cash dividends in the foreseeable future. The decision to declare any future cash dividends will depend upon our results of operations, financial condition, current and anticipated cash needs, contractual restrictions, restrictions imposed by applicable law and other factors that our board of directors deem relevant. Although it is our intention to utilize all available funds for the development of our business, no restrictions are in place that would limit our ability to pay dividends. The payment of any future cash dividends will be at the sole discretion of our board of directors.
RECENT SALES OF UNREGISTERED SECURITIES
During the year ended December 31, 2022, the Company sold 5 million shares of common stock to 5 shareholders, resulting in proceeds of $49,930. None of the following transactions involved any underwriters, underwriting discounts or commissions, or any public offering. We believe that the share of the 5 million shares of common stock to 5 shareholders was exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act (and Regulation D promulgated thereunder). The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof. The sales of these securities were made without any general solicitation or advertising.
Issuer Purchases of Equity Securities
None.
ITEM 6.
Reserved.
The following discussion and analysis of our financial condition, results of operations and liquidity should be read in conjunction with our consolidated financial statements for the years ended December 31, 20172023 and 20162022 and the related notes appearing elsewhere in this annual report. Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles.
CRITICAL ACCOUNTING POLICIES
Our critical accounting policies, including the assumptions and judgments underlying those policies, are more fully described in the notes to our consolidated financial statements. We have consistently applied these policies in all material respects. Investors are cautioned, however, that these policies are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially. Set forth below are the accounting policies that we believe are most critical to an understanding of our financial condition, results of operations and liquidity.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company, Spectral Holdings, Inc,Inc., its 60% owned subsidiary, Noot Holdings, Inc,Inc., from its date of incorporation of February 28, 2013, and its 60% owned subsidiary, Monitr Holdings, Inc. from its date of incorporation of December 1, 2013. All material intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
OVERVIEW
Spectral Capital Corporation ("Spectral"(“Spectral” or the Company,“Company”, also "We“We” or Us"“Us”) is a technology company focused on the identification, acquisition, development, and financing of technology that has the potential to transform existing industries. We lookhave interests in telecommunications, data and switching services, specifically providing international long distance reselling services on a business-to-business (“B2B”) basis. We intend to resume this line of our business and seek partnerships to expand our network as well as seek technological advancement opportunities that may provide us with a substantial advantage over our competition. Additionally, we have majority ownership of two non-operating technology companies: Noot Holdings, Inc. (“Noot”) and Monitr Holdings, Inc. (“Monitr”). We believe the underlying technologies for technology that can be protected through patents or laws regarding trade secrets. Spectral has acquired significant stakesboth Noot and Monitr have the potential to create profitable businesses on their own but require substantial capital to upgrade their software to become competitive. We currently do not have the financial means for these required upgrades and are actively seeking optimal partners for these assets in two technology companies currently and actively works with managementorder to drivedevelop these companies toward increasing market penetration inservices to their particular verticals. Spectral intends to own, in full or in part, technology companies whose founders and key management can take advantage of the deep networks and experience in technology development embodied in Spectral management.
PLAN OF OPERATIONS
We are a technology startup accelerator that invests in early stageearly-stage companies. Spectral targetsWe target industry verticals and solutions where disruption and network effects allow for rapid adoption and displacement of incumbents. We work with startups, focusing them on rapid development, getting to market, and refining their products and services with innovative features that reflect direct customer and market feedback. In addition to meeting some of the financing needs of our portfolio companies, we provide our teams with executive support at the technology, marketing and operations level in an effort to bring optimal results. Additionally, We have interests in wholesale telecommunications, data and switching services consisting of international long distance reselling services on a business-to-business (“B2B”) basis.
Our technology portfolio consists of two companies, of which we are the majority owner: Noot and Monitr.
Noot is a mobile technology company that has created "Noot"the mobile application “Noot” which utilizesutilized proprietary search engine technology for mobile devices. The technology actually learns what users like and improves its results over time, providing verydevices that delivered personalized information forto the user. A key benefit of Noot is that the search engine continues to work even when the user is not actively searching and will discover new and relevant items without prompting, providing more enhanced and personalized information the next time the user searches for that topic. While Noot is no longer a working mobile application, asits foundation of mobile search and machine learning is still relevant today. Given adequate funding to upgrade its software, we have determined that the revenue potential did not meet our expectations,believe there are alternative markets in which Noot could enter. The mobile search sector has much room to grow. Currently, we are unable to provide the necessary funds for this upgrade; however, we are actively seeking alternative business opportunities to utilize the technology.
Monitr, launched in late 2014, is a technology and financial data services company. In September 2015, Monitr launched a significant update to its technologycompany that makes it easyidentifies for the new or non-professional investor to find theinvestors stocks that areits software detects to be trending up in price at the moment.
·Monitr leverages cloud computing, big data and software to analyze the financial markets to discover those stocks that are trending now. Thousands of companies, news stories, blogs and opinion pieces are analyzed daily to uncover the trends and displayed in an accessible and easy-to-use web-based interface for investors and traders.
·Many investors use only a few sources to become informed of market conditions. Monitr provides investors with access to thousands of sources.
Monitr specializes in the analysis of news and opinion to determine the aggregate sentiment and trends of equities commoditiesacross markets in part to detect trends and currencies across world markets. In a change toprovide relevant data for its business model,users.
Although Monitr no longer offers these services direct to individual customers for monthly or annual fees. Instead it has focused on sourcing its services to professional trading organizations that want access to Monitr´s trend detecting software.
Additionally, we intend to resume our telecommunications reselling services through our partnership with Sky Data PLL OU (Estonia) (“SKY”), specifically providing international long distance reselling services on a B2B basis. We are working to form partnerships in order to expand our business as well as seek technological advancement opportunities that may provide us with an advantage over our competition.
Over the course of the next 12 months, we intend to: 1. Resume the telecommunication re-selling services operations along with our partner, SKY; 2. Form partnerships with data providers to expand traffic; 3. Identify optimal partnerships to develop Noot and/or Monitr; 3. Increase capital through private placement or other equity sale opportunities.
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 20172023 AND 2016
Revenues
We are currently engaged in a technology development business and have exited natural resources. To date we have not recognized any revenues.
Operating Expenses
Operating expenses decreased $123,906, from $339,383 for the year ended December 31, 20172022 to $215,477 for the year ended December 31, 2023. The decrease was due to our pause in the telecom reselling services business.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2023, we had $692$240 of cash on hand. We intend to fund operations through the use of cash on hand, and through additional advances from our chief executive officer, and through debt and equity financings until sufficient cash flows from operations can be achieved.
Net cash used in operating activities decreased $6,529,increased $2,510, from $38,134$45,022 for the year ended December 31, 20162022 to $31,605$47,532 for the year ended December 31, 2017.2023. This decreasecontinued low amount of costs was primarily related to the Company havingour limited operations due to the cash flow limitations.
Net cash provided by financing activities decreased by $4,606$18,330 from $35,681$55,530 for the year ended December 31, 20162022 to $31,075 cash provided$37,100 for the year ended December 31, 2017.2023. Net cash provided by financing activities during the yearsyear ended December 31, 2017 and 20162022 primarily related to net payments on advances from a related party in connection with paymentsales of Spectral's obligations.
We believe that our current financial resources are not sufficient to meet our working capital requirements over the next year. Additional funding will be necessary in order to expand portfolio operations and to reach our goals. Currently, the Company doeswe do not have any commitments or assurances for additional capital, nor can the Companywe provide assurance that such financing will be available to it on favorable terms, or at all. If, after utilizing the existing sources of capital available to the Company,us, further capital needs are identified and the Company iswe are not successful in obtaining the financing, itwe may be forced to curtail itsour existing or planned future operations. In addition, if necessary, we will decrease expenses and redirect our efforts towards atoward the sale of one ofor more of our assets should funding become inadequate.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
As a “Smaller Reporting Company”, this Item and the related disclosure are promising given our success to date in securing the two portfolio companies, Nootnot required.
Item 8. Financial Statements and Monitr. We believe we will experience significant operational and financial growth from these and other portfolio companies during the next 12 months. However, we need significant capital to implement our plan.
SPECTRAL CAPITAL CORPORATION
TABLE OF CONTENTS
DECEMBER 31, 20172023 AND 20162022
Report of Independent Registered Public Accounting Firm | |
F - 2 | |
Consolidated Balance Sheets as of December 31, | F - 3 |
Consolidated Statements of Operations for the years ended December 31, | F - 4 |
Consolidated Statement of | F - 5 |
Consolidated Statements of Cash Flows for the years ended December 31, | F - 6 |
Notes to Consolidated Financial Statements | F - 7 |
To the shareholders and the board of directors of Spectral Capital Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheetsheets of Spectral Capital Corporation(the "Company") as of December 31, 2017,2023 and 2022, the related statementstatements of operations, stockholders' equity (deficit), and cash flows for the yearyears then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017,2023 and 2022, and the results of its operations and its cash flows for the yearyears then ended, in conformity with accounting principles generally accepted in the United States.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matter
Critical audit matters are matters arising from the Company's Ability to Continue as a Going Concern
We determined that might result from the outcome of this uncertainty.
/s/S/ BF Borgers CPA PC
We have served as the Company's auditor since 2017
Lakewood, CO
March __, 2018
SPECTRAL CAPITAL CORPORATION | ||||
CONSOLIDATED BALANCE SHEETS | ||||
December 31, | December 31, 2022 | |||
Assets: | ||||
Cash and cash equivalents | $240 | $10,672 | ||
Accounts receivable | - | 25,000 | ||
Current assets | 240 | 35,672 | ||
Total assets | $240 | $35,672 | ||
Liabilities and Stockholders' Deficit: | ||||
Current liabilities | ||||
Accounts payable and accrued liabilities | $290,119 | $222,174 | ||
Related party advances and accruals | 6,150 | 5,500 | ||
Short-term advances | 36,450 | - | ||
Current liabilities | 332,719 | 227,674 | ||
Commitments and contingencies | ||||
Stockholders' Deficit: | ||||
Preferred stock, par value $0.0001, 5,000,000 shares | - | - | ||
Common stock, par value $0.0001, 1,000,000,000 and 500,000,000 shares authorized, 42,017,948 shares issued and outstanding as of December 31, 2023 and 2022 | 4,202 | 4,202 | ||
Additional paid-in capital | 29,181,804 | 29,106,804 | ||
Accumulated deficit | (29,296,599) | (29,081,212) | ||
Total stockholders' equity (deficit) | (110,593) | 29,794 | ||
Non-controlling interest | (221,886) | (221,796) | ||
Total stockholders' deficit - Spectral Capital Corp. | (332,479) | (192,002) | ||
Total liabilities and stockholders' deficit | $240 | $35,672 |
December 31, 2017 | December 31, 2016 | |||||||
Assets: | ||||||||
Cash and cash equivalents | $ | 692 | $ | 1,222 | ||||
Prepaid expenses | - | 9,168 | ||||||
Current assets | 692 | 10,390 | ||||||
Total assets | $ | 692 | $ | 10,390 | ||||
Liabilities and Stockholders' Deficit: | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | 779 | 2,663 | ||||||
Related party advances and accruals | 564,509 | 724,600 | ||||||
Current liabilities | 565,288 | 727,263 | ||||||
Total liabilities | 565,288 | 727,263 | ||||||
Stockholders' Deficit: | ||||||||
Preferred stock, par value $0.0001, 5,000,000 shares authorized, no shares issued and outstanding | - | - | ||||||
Common stock, par value $0.0001, 500,000,000 shares authorized, 117,857,623 shares issued and outstanding as of December 31, 2017 and 2016 | 11,786 | 11,786 | ||||||
Additional paid-in capital | 27,787,681 | 27,445,400 | ||||||
Accumulated deficit | (28,144,934 | ) | (27,955,333 | ) | ||||
Total stockholders' deficit | (345,467 | ) | (498,147 | ) | ||||
Non-controlling interest | (219,129 | ) | (218,726 | ) | ||||
Total stockholders' deficit | (564,596 | ) | (716,873 | ) | ||||
Total liabilities and stockholders' deficit | $ | 692 | $ | 10,390 |
The accompanying notes are an integral part of these consolidated financial statements.
Year Ended December 31, 2017 | Year Ended December 31, 2016 | |||||||
Revenues | $ | - | $ | - | ||||
Operating expenses: | ||||||||
Selling, general and administrative | 38,889 | 39,909 | ||||||
Wages and benefits | 151,115 | 149,974 | ||||||
Total operating expenses | 190,004 | 189,883 | ||||||
Operating loss | (190,004 | ) | (189,883 | ) | ||||
Other income and (expense): | ||||||||
Gain on foreign currently translation | - | 9,223 | ||||||
Total other income (expense) | - | 9,223 | ||||||
Loss from operations and before non-controlling interest and provision for income taxes | (190,004 | ) | (180,660 | ) | ||||
Provision for income taxes | - | - | ||||||
Net loss before non-controlling interest | (190,004 | ) | (180,660 | ) | ||||
(Income) loss attributable to non-controlling interest | 403 | (2,834 | ) | |||||
Net loss attributable to Spectral Capital Corporation | $ | (189,601 | ) | $ | (183,494 | ) | ||
Basic and diluted loss per common share | $ | (0.00 | ) | $ | (0.00 | ) | ||
Weighted average shares - basic and diluted | 117,857,623 | 117,857,623 |
SPECTRAL CAPITAL CORPORATION | |||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||
| |||||
|
| Year Ended December 31, 2023 |
| Year Ended December 31, 2022 |
|
|
|
|
|
|
|
Revenues |
| $ - |
| $ 98,323 |
|
|
|
|
|
|
|
Costs of sales |
| - |
| - |
|
|
|
|
|
|
|
Gross profit |
| - |
| 98,323 |
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
Selling, general and administrative |
| 71,477 |
| 195,383 |
|
Wages and benefits |
| 144,000 |
| 144,000 |
|
Total operating expenses |
| 215,477 |
| 339,383 |
|
|
|
|
|
|
|
Net loss before non-controlling interest |
| (215,477) |
| (241,060) |
|
|
|
|
|
|
|
Loss attributable to non-controlling interest |
| 90 |
| 72 |
|
|
|
|
|
|
|
Net loss attributable to Spectral Capital Corporation |
| $ (215,387) |
| $ (240,988) |
|
|
|
|
|
|
|
Basic and diluted loss per common share |
| $ (0.01) |
| $ (0.01) |
|
Weighted average shares - basic and diluted |
| 42,017,948 |
| 34,644,111 |
|
The accompanying notes are an integral part of these consolidated financial statements.
Common Stock | ||||||||||||||||||||||||
Shares | Amount | Additional Paid-in Capital | Non-Controlling Interest | Accumulated Deficit | Shareholders' Deficit | |||||||||||||||||||
December 31, 2015 | 117,857,623 | $ | 11,786 | $ | 27,445,400 | $ | (221,560 | ) | $ | (27,771,839 | ) | $ | (536,213 | ) | ||||||||||
Non-controlling interest | - | - | - | 2,834 | - | 2,834 | ||||||||||||||||||
Net loss | - | - | - | - | (183,494 | ) | (183,494 | ) | ||||||||||||||||
December 31, 2016 | 117,857,623 | 11,786 | 27,445,400 | (218,726 | ) | (27,955,333 | ) | (716,873 | ) | |||||||||||||||
Non-controlling interest | - | - | - | (403 | ) | - | (403 | ) | ||||||||||||||||
Related party advances and accruals relieved through contribution to additional paid-in capital | - | - | 342,281 | - | - | 342,281 | ||||||||||||||||||
Net loss | - | - | - | - | (189,601 | ) | (189,601 | ) | ||||||||||||||||
December 31, 2017 | 117,857,623 | $ | 11,786 | $ | 27,787,681 | $ | (219,129 | ) | $ | (28,144,934 | ) | $ | (564,596 | ) |
SPECTRAL CAPITAL CORPORATION | |||||||||||
CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT | |||||||||||
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 | |||||||||||
Common Stock | |||||||||||
Shares | Amount | Additional Paid-in Capital | Non-Controlling Interest | Accumulated Deficit | Total Stockholders' Deficit | ||||||
December 31, 2021 | 11,785,762 | $1,179 | $27,798,288 | $(221,724) | $(28,840,224) | $(1,262,481) | |||||
Proceeds from sale of common stock | 5,000,000 | 500 | 49,430 | - | - | 49,930 | |||||
Conversion of convertible note | 25,232,186 | 2,523 | 1,259,086 | - | - | 1,261,609 | |||||
Non-controlling interest | - | - | - | (72) | - | (72) | |||||
Net loss | - | - | - | - | (240,988) | (240,988) | |||||
December 31, 2022 | 42,017,948 | $4,202 | $29,106,804 | $(221,796) | $(29,081,212) | $(192,002) | |||||
Non-controlling interest | - | - | - | (90) | - | (90) | |||||
Settlement of liability by shareholder | - | - | 75,000 | - | - | 75,000 | |||||
Net loss | - | - | - | - | (215,387) | (215,387) | |||||
December 31, 2023 | 42,017,948 | $4,202 | $29,181,804 | $(221,886) | $(29,296,599) | $(332,479) |
The accompanying notes are an integral part of these consolidated financial statements.
SPECTRAL CAPITAL CORPORATION | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
Year Ended December 31, 2023 | Year Ended December 31, 2022 | |||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Net loss attributable to Spectral Capital Corporation | $(215,387) | $(240,988) | ||
Adjustments to reconcile net loss to net cash | ||||
Non-controlling interest | (90) | (72) | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable | 25,000 | (25,000) | ||
Due to related parties - accrued salary | 144,000 | 144,000 | ||
Accounts payable and accrued expenses | (1,055) | 77,038 | ||
Net cash used in operating activities | (47,532) | (45,022) | ||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Net cash used in investing activities | - | - | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Short-term advances | 36,450 | - | ||
Proceeds from related party advances | 650 | 5,500 | ||
Proceeds from sale of common stock | - | 49,930 | ||
Net cash provided by financing activities | 37,100 | 55,430 | ||
Change in cash and cash equivalents | (10,432) | 10,408 | ||
Cash and cash equivalents, beginning of period | 10,672 | 264 | ||
Cash and cash equivalents, end of period | $240 | $10,672 | ||
Supplemental disclosures of cash flow information: | ||||
Cash paid for interest | $- | $- | ||
Cash paid for income taxes | $- | $- | ||
Non-cash investing and financing activities: | ||||
Exchange of related party advances and accruals for a convertible note payable and subsequent conversion into common stock | $- | $1,261,609 | ||
Settlement of a liability by a shareholder | $75,000 | $- |
Year Ended December 31, 2017 | Year Ended December 31, 2016 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss attributable to Spectral Capital Corporation | $ | (189,601 | ) | $ | (183,494 | ) | ||
Adjustments to reconcile net loss to net cash used in by operating activities: | ||||||||
Non-controlling interest | (403 | ) | 2,834 | |||||
Changes in operating assets and liabilities: | ||||||||
Prepaids and other assets | 9,168 | (9,168 | ) | |||||
Due to related parties - accrued salary | 151,115 | 149,974 | ||||||
Accounts payable and accrued expenses | (1,884 | ) | 1,720 | |||||
Due to related parties | - | - | ||||||
Net cash used in operating activities | (31,605 | ) | (38,134 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from related party advances | 31,075 | 35,681 | ||||||
Net cash provided by financing activities | 31,075 | 35,681 | ||||||
Change in cash and cash equivalents | (530 | ) | (2,453 | ) | ||||
Cash and cash equivalents, beginning of year | 1,222 | 3,675 | ||||||
Cash and cash equivalents, end of year | $ | 692 | $ | 1,222 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid for interest | $ | - | $ | - | ||||
Cash paid for income taxes | $ | - | $ | - | ||||
Non cash investing and financing activities: | ||||||||
Relief of related party advances and accruals treated as a capital contribution to additional paid-in capital | $ | 342,281 | $ | - |
The accompanying notes are an integral part of these consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – BUSINESS AND NATURE OF OPERATIONS
Spectral Capital Corporation (the "Company"“Company” or "Spectral"“Spectral”) was incorporated on September 13, 2000 under the laws of the State of Nevada. The Company was formerly in the business of developing internet search engine technology. From August 2010 until December 2012, the Company evaluated and sought out opportunities in the natural resource sector. Spectral acquired various interests in natural resource assets in Russia, Kazakhstan and Alberta, Canada. In December 2012, Spectral changed its corporate focus from the natural resource sector and back to information technology. Spectral has divested of its principal natural resource asset in Alberta, Canada and intends to divest any remaining natural resources in the near future and focus solely on acquiring and developing information technology. See below and Notes 3 and 4 for disclosures regarding the acquisition of certain technology and a cost investment.
In January 2022, the Company formed Noot Holdings, Inc.,commenced a Delaware corporation,new line of business which is providing data and telecommunications reselling services on a global basis. On January 3, 2022, the Company entered into a telecommunications services agreement with Sky Data PLL OU (Estonia) to provide long distance switching services. The contract does not contain a fixed term or value and is on an as needed basis via invoice from Sky Data PLL OU. The Company has paused this line of business and plans to resume activities within the 2024 fiscal year. We intend to keep our partnership with Sky and together form partnerships with existing carriers who have substantial customers and without third party intervention. We intend to provide business to business (B2) telecommunications interconnection services to international clientele and are currently a 60% owner, in order to acquire mobile search engine technology. Under the agreement to acquire technology, the Company issued 5,000,000 common shares of Spectral Capital Corporation.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company is in the development stage and has sustained substantial losses since inception. As of December 31, 2017,2023, the Company has cash on hand of $692$240 and negative working capital of $564,596.$332,479. The Company expects current cash on hand will not be able to fund operations for a period 12 months or more. These factors raise substantial doubt regarding the Company'sCompany’s ability to continue as a going concern.
To date management has funded its operations through selling equity securities and advances from related parties. The ability of the Company to continue as a going concern is dependent on the Company generating cash from the sale of its common stock and/or obtaining debt financing and attaining future profitable operations, however, there can be no assurance the Company will be successful in these efforts. As of the date of these consolidated financial statements the Company does not have any firm commitments for capital. Without the required capital, the Company will be required to reduce their development expenditures which will potentially delay the completion of products which are expected to generate future revenues.
The Company has a limited operating history and has not generated revenues from our planned principal operations.
The Company'sCompany’s business and operations are sensitive to general business and economic conditions in the U.S. and worldwide. These conditions include short-term and long-term interest rates, inflation, fluctuations in debt and equity capital markets and the general condition of the U.S. and world economy. A host of factors beyond the Company'sCompany’s control could cause fluctuations in these conditions, including the political environment and acts or threats of war or terrorism. Adverse developments in these general business and economic conditions, including through recession, downturn or otherwise, could have a material adverse effect on the Company'sCompany’s consolidated financial condition and the results of its operations.
The Company currently has no sales and limited marketing and/or distribution capabilities. The Company has limited experience in developing, training or managing a sales force and will incur substantial additional expenses if we decide to market any of our current and future products. Developing a marketing and sales force is also time consuming and could delay launch of our future products. In addition, the Company will compete with many companies that currently have extensive and well-funded marketing and sales operations. Our marketing and sales efforts may be unable to compete successfully against these companies. In addition, the Company has limited capital to devote sales and marketing.
The Company'sCompany’s industry is characterized by rapid changes in technology and customer demands. As a result, the Company'sCompany’s products may quickly become obsolete and unmarketable. The Company'sCompany’s future success will depend on its ability to adapt to technological advances, anticipate customer demands, develop new products and enhance our current products on a timely and cost-effective basis. Further, the Company'sCompany’s products must remain competitive with those of other companies with substantially greater resources. The Company may experience technical or other difficulties that could delay or prevent the development, introduction or marketing of new products or enhanced versions of existing products.
Also, the Company may not be able to adapt new or enhanced products to emerging industry standards, and the Company'sCompany’s new products may not be favorably received. Nor may we have the capital resources to further the development of existing and/or new ones.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company, Spectral Holdings, Inc, and its 60% owned subsidiaries, Noot Holdings, Inc. from its date of incorporation of February 28, 2013, and Monitr Holdings, Inc. from its date of incorporation of December 1, 2013. All material intercompany accounts and transactions have been eliminated in consolidation.
Basis of Presentation
The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars.
Stock-Based Compensation
The Company accounts for employee stock-based compensation in accordance with the guidance of the Financial Accounting Standards Board ("FASB"(“FASB”) Accounting Standards Codification ("ASC"(“ASC”) Topic 718, Compensation – Stock Compensation which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values.
The Company follows ASC Topic 505-50, Equity: Equity-Based Payments to Non-Employees for stock options and warrants issued to consultants and other non-employees. In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined. The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital over the period during which services are rendered.
Because the Company'sCompany’s stock-based compensation options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the estimate, amounts estimated using the Black-Scholes option pricing model may differ materially from the actual fair value of the Company'sCompany’s stock-based compensation options.
Use of Estimates
The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
The Company recognizes revenues in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue from contracts with customers”. Revenues are recognized when deliverycontrol of the promised goods or completionservices is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Revenues during the year ended December 31, 2022, were provided primarily to three customers. The loss of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by itsthese customers the fee is fixed or determinable basedwould have a significant impact on the completionCompany’s financial statements. At June 30, 2022, the Company paused their operations to improve their internal processes in the hopes of stated termsincreasing future profits and conditions, and collection of any related receivable is probable.
Fair Value of Financial Instruments
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an
established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company'sCompany’s assumptions about the factors that market participants would use in valuing the asset or liability. There are three levels of inputs that may be used to measure fair value:
Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities
in active markets.
Level 2 - Include other inputs that are directly or indirectly observable in the marketplace.
Level 3 - Unobservable inputs which are supported by little or no market activity.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. As of December 31, 20172023 and 2016,2022, the Company does not have any assets or liabilities which would be considered Level 2 or 3.
The Company'sCompany’s financial instruments primarily consist of cash and cash equivalents, prepaid expensesaccounts payable, deferred revenue and amounts payable to related parties. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these consolidated financial statements.
Income Taxes
The Company follows ASC 740, Income Taxes for recording the provision for income taxes. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Tax law and rate changes are reflected in income in the period such changes are enacted. The Company records a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized. The Company includes interest and penalties related to income taxes, including unrecognized tax benefits, within the income tax provision.
The Company'sCompany’s income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities. In addition, the calculation of the Company'sCompany’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known.
The Company recognizes windfall tax benefits associated with share-based awards directly to stockholders'stockholders’ equity only when realized. A windfall tax benefit occurs when the actual tax benefit realized by the Company upon an employee'semployee’s disposition of a share-based award exceeds the deferred tax asset, if any, associated with the award that the Company had recorded. When assessing whether a tax benefit relating to share-based compensation has been realized, the Company follows the tax law ordering method, under which current year share-based compensation deductions are assumed to be utilized before net operating loss carryforwards and other tax attributes.
We are currently delinquent with respect to our U.S. federal income tax filings for the past several years.
Investment in Securities
The Company'sCompany’s investments consisting of common shares of non-controlled entities are accounted for on the cost basis. Impairment losses will be recorded when indicators of impairment are present. See Note 4 for additional information.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents.
Basic Loss Per Share
Basic loss per share is calculated by dividing the Company'sCompany’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company'sCompany’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.
Non-Controlling Interests
Non-controlling interests disclosed within the consolidated statement of operations represent the minority ownership'sownership’s 40% share of net losses of Noot Holdings, Inc. and Monitr Holdings, Inc incurred during the years ended December 31, 20172023 and 2016.2022. The following table sets forth the changes in non-controlling interest for the years ended December 31, 20172023 and 2016:
Non-Controlling | ||||
Interest | ||||
Balance at December 31, 2015 | $ | (221,560 | ) | |
Net loss attributable to non-controlling interest | 2,834 | |||
Balance at December 31, 2016 | (218,726 | ) | ||
Net loss attributable to non-controlling interest | (403 | ) | ||
Balance at December 31, 2017 | $ | (219,129 | ) |
Balance at December 31, 2021 | $ (221,724) | ||
Net loss attributable to non-controlling interest | (72) | ||
Balance at December 31, 2022 | (221,796) | ||
Net loss attributable to non-controlling interest | (90) | ||
Balance at December 31, 2023 | $ (221,886) |
Foreign Currency
The Company'sCompany’s functional currency is the United States Dollar. Transaction gains or losses related to balances denominated in a currency other than the functional currency are recognized in the consolidated statements of operations. As a result of these foreign currency transactions, the Company has recorded foreign currency income of $0 and $9,223, recorded on the accompanying consolidated statements of operations during the years ended December 31, 2017 and 2016, respectively.
Recent Accounting Pronouncements
The FASB issues ASUs to amend the authoritative literature in the FASB Accounting Standards Codification ("ASC"(“ASC”). There have been a number of ASUs to date, including those above, that amend the original text of ASC. Management believes that those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company'sCompany’s financial statements.
NOTE 3 – RELATED PARTY TRANSACTIONS
Jenifer Osterwalder, the CEO of Spectral. Akoranga was formed to facilitate the Company's business in Europe. In connection with the facilitation of the Company's operations which includes making payments on the Company's obligations, AkorangaCompany’s Chief Executive Officer
Jenifer Osterwalder charges the Company a 10% fee on all transactions processed by Akoranga on behalf of the Company. The Company ceased using Akoranga$12,000 per month beginning January 1, 2021 for services in August 2014. The advances do not incur interest and are payable upon demand. The decrease in amounts payable were due to changes in foreign currency exchange rates. As of December 31, 2017, all loans with Akoranga have been forgiven. The forgivenessrendered. Previously, she was treated as a capital contribution to additional paid-in capital as the Company's CEO also controls the operations of Akoranga.
From time to time due to the limited cash flow available, the Company's CEO pays certain operating expenditures on behalf of the Company. These advances bear no interest and are due on demand. As of December 31, 20172023 and 2016,2022, the Company's CEO was due $96,354$6,150 and $65,603$5,500 in connection with these advances, respectively. Decrease in the current period is due to the conversion of accounts payable into a related party convertible note payable.
As noted above, all amounts due to the Chief Executive Officer as December 31, 2021, were converted into a convertible note payable. The note is due and demand and convertible at $0.005 per share. During the first quarter of 2022, the Chief Executive Officer sold the $1,054,653 and $206,956 convertible notes to a third party which was then converted into approximately 25.2 million shares in April 2022.
NOTE 4 – STOCKHOLDER'SSTOCKHOLDERS’ DEFICIT
Changes in Stockholders’ Deficit
During the year ended December 31, 2023, a shareholder of the Company satisfied various liabilities totaling $75,000 which were recorded as contributed capital.
During the year ended December 31, 2022, the Company sold 5 million shares of common stock resulting in proceeds of $49,930.
See Note 3 for discussion of convertible note converted into common stock.
Employee Options
The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation – Stock Compensation which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values.
The Company has adopted a stock option and award plan to attract, retain and motivate its directors, officers, employees, consultants and advisors. Options provide the opportunity to acquire a proprietary interest in the Company and to benefit from its growth. Vesting terms and conditions are determined by the Board of Directors at the time of the grant. The Plan provides for the issuance of up to 15,000,000 common shares for employees, consultants, directors, and advisors.
Stock Options | Weighted Average Exercise Price | Weighted Average Life Remaining | ||||||||||
Outstanding, December 31, 2015 | 13,750,000 | $ | 0.75 | 5.50 | ||||||||
Exercised | - | - | - | |||||||||
Expired | (750,000 | ) | 1.55 | - | ||||||||
Outstanding, December 31, 2016 | 13,000,000 | 0.70 | 4.80 | |||||||||
Issued | - | - | - | |||||||||
Exercised | - | - | - | |||||||||
Expired | - | - | - | |||||||||
Outstanding, December 31, 2017 | 13,000,000 | $ | 0.70 | 3.80 | ||||||||
Vested, December 31, 2017 | 13,000,000 | $ | 0.70 | 3.80 |
NOTE 5 – INCOME TAXES
As of December 31, 2017,2023, the Company had net operating loss carry forwards of approximately $13,700,000$14,800,000 that may be available to reduce future years'years’ taxable income through 2037. Future tax benefits which may arise as a result of these losses have not been recognized in these consolidated financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards. The difference between the Company'sCompany’s tax rate and the statutory rate is due to significant non-deductible expenses.
The provision for Federal income tax consists of the following:
December 31, | December 31, | |||||||
2017 | 2016 | |||||||
Federal income tax benefit attributable to: | ||||||||
Current operations | $ | 64,464 | $ | 62,388 | ||||
Less: valuation allowance | (64,464 | ) | (62,388 | ) | ||||
Net provision of income taxes | $ | - | $ | - |
|
|
| December 31, |
| December 31, |
|
|
| 2023 |
| 2022 |
Federal income tax benefit attributable to: |
|
|
| ||
Current operations | $ | 45,250 | $ | 50,607 | |
Less: valuation allowance |
| (45,250) |
| (50,607) | |
Net provision of income taxes | $ | - | $ | - |
The cumulative tax effect at the expected rate of 34%21% of significant items comprising our net deferred tax amount is as follows:
December 31, | December 31, | |||||||
2017 | 2016 | |||||||
Deferred tax asset attributable to: | ||||||||
Net operating loss carryforward | $ | 4,749,974 | $ | 4,685,510 | ||||
Less: valuation allowance | (4,749,974 | ) | (4,685,510 | ) | ||||
Net deferred tax asset | $ | - | $ | - |
|
|
| December 31, |
| December 31, |
|
|
| 2023 |
| 2022 |
Deferred tax asset attributable to: |
|
|
|
| |
Net operating loss carryforward | $ | 4,967,180 | $ | 4,921,930 | |
Less: valuation allowance |
| (4,967,180) |
| (4,921,930) | |
Net deferred tax asset | $ | - | $ | - |
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur net operating loss carry forwards may be limited as to use in future years. The Company is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Company believes they are no longer subject to income tax examinations for years prior to 2012.
NOTE 6 – COMMITMENTS AND CONTINGENCIES
As of December 31, 2023, the Company owes advances of $36,450 to a third party. The advances are due on demand and do not incur interest.
NOTE 7 – COMMITMENTS AND CONTINGENCIES
The Company leases virtual office space on a three monthmonth-to-month basis in Seattle, Washington.
NOTE 8 – SUBSEQUENT EVENTS
In accordance with ASC 855-10, the Company has analysed its operations subsequent to December 31, 2023 to the date these consolidated financial statements were issued and has determined that it does not have any material subsequent events to disclose in these consolidated financial statements, other than those disclosed above.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AN ACCOUNTING FINANCIAL DISCLOSURE
Not applicable.
Jenifer Osterwalder, our Chief Executive Officer, and Procedures
Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgement in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of the end of the period covered by this report were ineffective.
In the course of preparing the financial statements that are included in this Form 10-K, management has determined that a material weaknesses which are described below, our management performed additional analyses, reconciliationsweakness exists within the internal controls over financial reporting. The material weakness identified relates to the lack of a sufficient complement of personnel within the finance and other post-closing proceduresaccounting function with an appropriate degree of knowledge, experience and hastraining. We also noted a material weakness related to logical security and privileged access in the area of information technology. We concluded that the Company's consolidated financial statements for the periods covered by and includedmaterial weaknesses in this Annual Report on Form 10-K are fairly stated in all material respects in accordance with generally accepted accounting principles in the U.S. for each of the periods presented herein.
In order to remediate the material weaknesses, we expect to hire additional accounting, finance and information technology resources or consultants with public company experience upon receiving sufficient capital.
We may not be able to fully remediate the identified material weakness until the steps described above have been completed and our internal controls have been operating effectively for a sufficient period of time. We cannot assure you that we will be able to fully remediate the material weakness in 2024. If the steps we take do not correct the material weakness in a timely manner, we will be unable to conclude that we maintain effective internal control over financial reporting. Accordingly, there could continue to be a reasonable possibility that a material misstatement of our financial statements would not be prevented or detected on a timely basis. We also may incur significant costs to execute various aspects of our remediation plan but cannot provide a reasonable estimate of such costs at this time.
Management’s Annual Report on Internal Controls Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles. The Company'sprinciples in the United States. Due to inherent limitations, internal control over financial reporting includes those policies and procedures that:
Commission, as published in "Internal Control over Financial Reporting – Guidance for Smaller Public Companies."or COSO. Based on the assessment bysuch evaluation, our management we determinedconcluded that our internal control over financial reporting was ineffectiveeffective as of December 31, 2017.
This Annual Report on Form 10-K does not include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. Our auditors will not be required to opine on the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 until we are no longer an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012.
Changes in Internal Control ofOver Financial Reporting
There were no changes in our internal control over financial reporting that haveoccurred during our most recent fiscal quarter that materially affected, or areis reasonably likely to materially affect, our internal control over financial reporting.
None.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
Our board of directors was elected and will serve until their successor is duly elected and qualified or until their earlier resignation. The following table sets forth our directors and executive officers and their ages as of the year ended December 31, 2017:2023:
Name | Age | Position | ||
Jenifer Osterwalder | 59 | Chief Executive Officer, President and Director | ||
Stephen Spalding | 77 | Chief Financial and Accounting Officer and Director |
Jenifer Osterwalder has served as our Chief Executive Officer, Principal Accounting Officer, President, Treasurer, Secretary and as a director since March 7, 2005. Previously, from January 2005 to March 2005, Ms. Osterwalder served as President, Chief Executive Officer, Treasurer, Secretary and as a director of FUSA Technology Investments Corp. From January 2000 to January 2005, she served as a consultant investment banker to Five Seas Securities, Ltd., a securities firm in British Columbia, Canada. From August 2004 to December 2004, Ms. Osterwalder served as a consultant MangerManager to International Conference Services, Ltd., a conference and destination management firm in British Columbia, Canada. From January 2003 to December 2003, she served as a consultant Investment Liaison and Marketing Director for Terrikon Corporation in British Columbia, Canada. Ms. Osterwalder received her Bachelor of Science in Business Administration in marketing and logistics from Ohio State University.
Jennifer Osterwalder, our Chief Executive Officer, President and Director donates approximately 160 hours per month to our business.
Stephen Spalding -
Since March 2008, Mr. Spalding has been an independent management and financial consultant based in Mill Valley, California since March 2008.California. In the course of his management and financial consulting business, Mr. Spalding serves on numerous boards and is an advisor and interim officer for numerous companies, which include Paxton Energy Incorporated, Cytta Corporation and Verde Resources, Inc. Mr. Spalding is also formerlyformer CEO of Vigilant Privacy Corporation, a private Nevada corporation that was based in Pleasanton, California, from 2003 to March
2008, where he procured the firmsfirm’s angel round of financing and leadled the organization while the company'scompany’s product was transformed from a desktop product to an enterprise security solution. Previously, he was a Partner at Deloitte & Touche LLP from 1997 - 2003, where he was responsible for their IDI Practice (Implementation, Development and Integration) Division. He was formerly a partner at KPMG Peat Marwick LLP from 1995 - 1997 and was involved in Strategic Services, Enabling Technology Practice. Until recent budget cuts, Mr. Spalding is currentlywas an Assistant Professor at San Francisco State University of Business Systems Management and Control, Course Number 507 (Senior/Graduate Level), present.. He has an MBA, ina Master of Business Administration, Quantitative Analysis, University of Arizona, 1974. He also has a B.S.,Bachelor of Science, Finance and Management, Eastern Illinois University, 1973, a B.S.,Bachelor of Science, Physics (solid state), Eastern Illinois University, 1969 and a B.S.,Bachelor of Science, Mathematics, Eastern Illinois University, 1969.
Stephen Spalding, our Interim Chief Financial, Accounting Officer and Director donates approximately 1 hour per month to our business.
FAMILY RELATIONSHIPS
There are no family relationships, by blood or marriage, among any of our directors or executive officers.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
During the past fiveten years, none of our directors, executive officers and control persons have been involved in any of the following events:
·any bankruptcy petition filed by or against any business of which such person was an executive officer either at the time of the bankruptcy or within two years prior to that time;
·any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
·being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and
·being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
BOARD OF DIRECTORS COMMITTEES
As of the date of this annual report on Form 10-K for the year ended December 31, 2017,2023, we have no standing committees and our entire board of directors serves as our audit, compensation and nominating committees. Our board of directors has determined that Stephen Spalding, a member of our board, qualifies as an audit committee financial expert. However, we intend to appoint an audit, a compensation and a nominating committee of our board of directors.
As of the date of this annual report on Form 10-K for the year ended December 31, 2017,2023, there have been no material changes to the procedures by which our security holders may recommend nominees to our board of directors.
CODE OF ETHICS
We currently do not have a Code of Ethics, but we plan to adopt one as we develop our business.
Number of Late Reports | Number of Transactions Not Timely Reported | Failure to File | ||||||||||
Jenifer Osterwalder | 0 | 0 | 0 | |||||||||
Stephen Spalding | 0 | 0 | 0 |
The following table sets forth the total compensation awarded to, earned by, or paid to our Chief Executive Officer during each of the last two completed years. No other individuals are employed by us or have earned a total annual salary and bonus in excess of $100,000 during any of the last two completed years.
SUMMARY COMPENSATION TABLE
Name and Principal Position | Year | Salary | Bonus | Stock Awards | Option Awards** | Non-Equity Incentive Plan Compensation | Nonqualified Deferred Compensation Earnings | All Other Compensation | Total | ||||||||||||||||||||||||
Jenifer Osterwalder | 2017 | $ | 151,115 | - | - | - | - | - | - | $ | 151,115 | ||||||||||||||||||||||
Chief Executive Officer* | 2016 | $ | 149,974 | - | - | - | - | - | - | $ | 149,974 |
Name and Principal Position |
| Year |
| Salary |
| Bonus |
| Stock Awards |
| Option Awards |
| Non-Equity Incentive Plan Compensation |
| Nonqualified Deferred Compensation Earnings |
| All Other Compensation |
| Total |
Jenifer Osterwalder |
| 2023 |
| $144,000 |
| - |
| - |
| - |
| - |
| - |
| - |
| $144,000 |
President and Chief Executive Officer |
| 2022 |
| $144,000 |
| - |
| - |
| - |
| - |
| - |
| - |
| $144,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen Spalding |
| 2023 |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| $144,000 |
Interim Chief Financial and Accounting Officer and Director |
| 2022 |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| $144,000 |
EMPLOYMENT AGREEMENTS
Our President and CEO, Ms. Osterwalder, does not currently have an employment agreement,agreement; however, the Company has agreed towe pay Ms. Osterwalder 12,350 CHF$12,000 a month beginning January 1, 2020 for her services.services rendered. As of December 31, 20172023 and 2015,2022, amounts due to Ms. Osterwalder for accrued compensation were $467,832$288,000 and $366,717,$144,000, respectively.
As of the date of this annual report on Form 10-K for the year ended December 31, 2017,2023, we have no other employment agreements in place with any of our other executive officers, directors or employees.
OUTSTANDING EQUITY AWARDS AT YEAR END
There were 13,000,000no outstanding option equity awards at our year end, 6,000,000 held by our President and Chief Executive Officer, Jenifer Osterwalder, 3,500,000 held by director Stephen Spalding and 1,000,000 held by members of our advisory board and 2,500,000 held by service providers and others.
COMPENSATION OF DIRECTORS
Pursuant to authority granted under our Article II, Section 2.16 of our bylaws, directors are entitled to such compensation as our board of directors shall, from time to time, determine. The following table sets forth the compensation of our directors for the year ended December 31, 2017:
DIRECTOR COMPENSATION | ||||||||||||||||||||||||||||
Name | Fees Earned or Paid in Cash | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Non- Qualified Deferred Compensation Earnings | All Other Compensation | Total | |||||||||||||||||||||
Stephen Spalding* | $ | 0 | - | - | - | - | - | $ | 0 |
DIRECTOR COMPENSATION | |||||||||||||||
Name | Fees Earned or Paid in Cash | Stock Awards | Option Awards | Non-Equity Incentive | Non-Qualified Deferred Compensation Earnings | All Other Compensation | Total | ||||||||
Jenifer Osterwalder | |||||||||||||||
Stephen Spalding | $ | $ |
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table sets forth information with respect to compensation plans under which our equity securities are authorized for issuance as of the end of the year ended December 31, 2017:
EQUITY COMPENSATION PLAN INFORMATION
Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | ||||||||||
Equity compensation plans approved by security holders | -- | -- | -- | |||||||||
Equity compensation plans not approved by security holders | 13,000,000 | $ | 0.75 | 2,000,000 | ||||||||
Total |
Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | ||||
Equity compensation plans approved by security holders | -- | -- | -- | |||
Equity compensation plans not approved by security holders | ||||||
Total |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of our common stock as of FebruaryMarch 28, 2018.2024. The information in these tables provides ownership information for:
·each person known by us to be the beneficial owner of more than 5% of our common stock;
·each of our directors and executive officers; and
·all of our directors and executive officers as a group.
Beneficial ownership has been determined in accordance with the rules and regulations of the SEC and includes voting or investment power with respect to our common stock and those rights to acquire additional shares within sixty days. Unless otherwise indicated, the persons named in the table below have sole voting and investment power with respect to the number of shares of common stock indicated as beneficially owned by them, except to the extent such power may be shared with a spouse. In computing the number of shares beneficially owned by a person and the percentage of ownership of that person, shares of common stock subject to options and/or warrants held by that person that are currently exercisable, as appropriate, or will become exercisable within sixty (60) days of the reporting date are deemed outstanding, even if they have not actually been exercised. Those shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person. The address of each person listed is care of Spectral Capital Corporation., 701 Fifth4500 9th Avenue Suite 4200,NE, Seattle, Washington, 98104.
Name |
| Amount and |
| Percent of Class |
|
|
|
|
|
Jenifer Osterwalder |
| 1,060 |
| <0.01% |
|
|
|
|
|
Stephen Spalding |
| - |
| 0.0% |
|
|
|
|
|
Decus Pro OU |
| 26,232,185 |
| 62.43% |
|
|
|
|
|
All officers, directors, and 5% or greater shareholders as a group (3 persons) |
| 26,233,246 |
| 62.43% |
Name | Amount and Nature of Ownership | Percent of Class* | ||||||
Jenifer Osterwalder (1) | 6,013,934 | 4.7 | % | |||||
Stephen Spalding (2) | 3,500,000 | 2.7 | % | |||||
All officers, directors, and 5% or greater shareholders as a group (2 persons) | 9,513,934 | 7.5 | % |
Related Party Transactions
Jenifer Osterwalder, President, Director and 2016, $0 and $342,281, respectively, was owed to Akoranga AG, a Swiss Company owned by the CEO of Spectral. Akoranga was formed to facilitate the Company's business in Europe. In connection with the facilitation of the Company's operations which includes making payments on the Company's obligations, AkorangaChief Executive Officer
Jenifer Osterwalder charges the Company a 10% fee on all transactions processed by Akoranga on behalf of the Company. The Company ceased using Akoranga services in August 2014. The advances do not incur interest and are payable upon demand. As of December 31, 2017, all loans with Akoranga have been forgiven. The forgiveness was treated as a capital contribution to additional paid-in capital as the Company's CEO also controls the operations of Akoranga.
From time to time, due to the limited cash flow available, the Company's CEOMs. Osterwalder pays certain operating expenditures on behalf of the Company. These advances are bear no interest and are due on demand. As of December 31, 20172023 and 2016, the Company's CEO2022, Ms. Osterwalder was due $96,354$6,150 and $65,603$5,500 in connection with these advances, respectively.
Independent Directors
The Board of Directors has determined that director Stephen Spalding is an independent director under standards established by the Securities and Exchange Commission.
Review, Approval or Ratification of Transactions with Related Persons
The board of directors may ratify a “Related Transaction” by a majority vote of the disinterested directors that are voting at any Special or Regularly scheduled board meeting. A Related Transaction is defined as a material agreement, contract, or other transaction between a current officer, director, or shareholder of the Company and the Company itself. Additionally, under no circumstances may the Related Transaction that is ratified be on less favorable terms to the Company than it would have it been negotiated with an unrelated third party.
The following table sets forth the aggregate amount of various professional fees billed by our principal accountants with respect to our last two years:
|
| 2023 |
|
|
| 2022 |
|
Audit fees |
| $36,500 |
|
| $ | 36,500 |
|
Audit-related fees |
| - |
|
|
| - |
|
Tax fees |
| - |
|
|
| - |
|
All other fees |
| - |
|
|
| - |
|
Total |
| $36,500 |
|
| $ | 36,500 |
|
2017 | 2016 | |||||||
Audit fees | $ | 23,600 | $ | 28,000 | ||||
Audit-related fees | - | |||||||
Tax fees | - | |||||||
All other fees | - | |||||||
Total | $ | 23,600 | $ | 28,000 |
ITEM 15. EXHIBITS.EXHIBITS
No. | Description of Exhibit |
3.1 | |
3.2 | |
3.3 | |
3.4 | |
10.1 | Telecommunications services agreement with Sky Data PLL OU (Estonia) dated January 3, 2022. |
10.2 | |
31.1 | |
31.2 | |
32.1 | |
32.2 | |
*
Signatures
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: March | SPECTRAL CAPITAL CORPORATION | |
By: | /s/ Jenifer Osterwalder | |
Jenifer Osterwalder | ||
President and Chief Executive Officer | ||
/s/ Stephen Spalding | ||
Stephen Spalding | ||
Chief Financial and Accounting Officer |
18