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Item 8. Financial Statements and Supplementary Data

2024-03-28 compared with 2023-03-27 · 57 added, 49 removed, 265 unchanged (29% of the section changed)

Financial Statements and Supplementary Data

SPECTRAL CAPITAL CORPORATION

DECEMBER 31, 2023 AND 2022

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 202 3 and 202 2

Consolidated Statements of Operations for the years ended December 31, 202 3 and 202 2

Consolidated Statement of Stockholders’ Deficit for the years ended December 31, 202 3 and 202 2

Consolidated Statements of Cash Flows for the years ended December 31, 202 3 and 202 2

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

To the shareholders and the board of directors of Spectral Capital Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Spectral Capital Corporation (the “Company”) as of December 31, 2022 and 2021, the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”).

We have audited the accompanying consolidated balance sheets of Spectral Capital Corporation as of December 31, 2023 and 2022, the related statements of operations, stockholders' equity (deficit), and cash flows for the years 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, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.

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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 minimal activities raise substantial doubt about its ability to 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.

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We believe that our audit provides a reasonable basis for our opinion.

/s BF Borgers CPA PC

BF Borgers CPA PC

Critical Audit Matter

Critical audit matters are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

/S/ BF Borgers CPA PC (PCAOB ID 5041 )

We have served as the Company's auditor since 2017

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CONSOLIDATED BALANCE SHEETS

December 31, 2023

December 31, 2022

Cash and cash equivalents

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Related party advances and accruals

Short-term advances

Current liabilities

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authorized, no shares issued and outstanding

Common stock, par value $ 0.0001 , 1,000,000,000 and 500,000,000 shares authorized, 42,017,948 and 11,785,762 shares issued and outstanding as of December 31, 2022 and 2021, respectively

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

Additional paid-in capital

3 unchanged sentences

Total stockholders' equity (deficit)

( 1,040,757 )

Non-controlling interest

Total stockholders' deficit - Spectral Capital Corp.

( 1,262,481 )

Total liabilities and stockholders' deficit

2 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Year Ended December 31, 2022

For the Year Ended December 31, 2021

Year Ended December 31, 2023

Year Ended December 31, 2022

Costs of sales

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$ ( 240,988 )

Basic loss per common share

Diluted loss per common share

Weighted average shares - basic

Weighted average shares - diluted

Basic and diluted loss per common share

Weighted average shares - basic and diluted

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

SPECTRAL CAPITAL CORPORATION

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT

CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT

FOR THE YEARS ENDED DECEMBER 31, 202 3 AND 202 2

Additional Paid-in Capital

Controlling Interest

Non-Controlling Interest

Accumulated Deficit

Stockholders' Deficit

Total Stockholders' Deficit

December 31, 2021

2 unchanged sentences

$ ( 1,262,481 )

Proceeds from sale of common stock

Conversion of convertible note

Non-controlling interest

3 unchanged sentences

$ ( 192,002 )

Proceeds from sale of common stock

Conversion of convertible note

Non-controlling interest

September 30, 2021

Settlement of liability by shareholder

December 31, 2023

$ ( 221,886 )

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CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Year Ended December 31, 2022

For the Year Ended December 31, 2021

Year Ended December 31, 2023

Year Ended December 31, 2022

CASH FLOWS FROM OPERATING ACTIVITIES:

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$ ( 240,988 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) by operating activities:

Adjustments to reconcile net loss to net cash

used in operating activities:

Non-controlling interest

Changes in operating assets and liabilities:

Accounts receivable

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CASH FLOWS FROM FINANCING ACTIVITIES:

Short-term advances

Proceeds from related party advances

2 unchanged sentences

Change in cash and cash equivalents

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Supplemental disclosures of cash flow information:

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Exchange of related party advances and accruals for a convertible note payable and subsequent conversion into common stock

Settlement of a liability by a shareholder

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

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Spectral is focused on the identification, acquisition, development, and financing of technology that has the potential to transform existing industries.

Spectral has acquired significant stakes in two technology companies as well as interests within telecommunications, data and switching services, specifically providing international long distance reselling services on a business-to-business (B2B) basis.

Spectral has acquired significant stakes in two non-active technology companies as well as interests within telecommunications, data and switching services, specifically providing international long distance reselling services on a business-to-business (B2B) basis.

In January 2022, the Company commenced a new line of business which is providing data and telecommunications reselling services on a global basis.

On February 15, 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 for Sky Data PLL OU.

The Company is focusing on this line of business and is currently expanding its network on an as needed basis by adding as many ports as its customers require in any given month.

We provide business to business (B2) telecommunications interconnection services to mainly Asia, South America and Africa.

This is done by negotiating directly with international private and public carriers for telecommunications rates based on certain volume and transaction levels.

Our wholesale voice services provide global routing solutions and direct bilateral connections with many major PTTs, Tier-1 carriers and Mobile operators around the world to further expand our network and improve voice quality.

Our global network is comprised of over 100 Tier 1 carriers, Mobile Operators & PTTs from across all continents.

A geographically-load balanced, multi-data center architecture design ensures 99.999% uptime and business continuity with 24-hour fully redundant, state-of-the-art Network Operations Center (NOC) and we conduct routine security audits.

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 in talks with vendors.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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Further, the Company’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’s new products may not be favourably received.

The Company may experience technical or other difficulties that could delay or prevent the development, introduction or marketing of new products.

Also, the Company may not be able to adapt new or enhanced products to emerging industry standards, and the Company’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.

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The loss of these customers would have a significant impact on the Company’s financial statements.

At June 30, 2022, the Company paused their operations to improve their internal processes and expect to recommence in second quarter of 2023.

At June 30, 2022, the Company paused their operations to improve their internal processes in the hopes of increasing future profits and expect to recommence in Q3 2024.

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.

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.

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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 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.

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The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.

Common share equivalents totalling zero and 10,000,000 were outstanding at December 31, 2022 and 2021, respectively, representing outstanding options, and were not included in the computation of diluted earnings per share for the years ended December 31, 2022 and 2021, as their effect would have been anti-dilutive.

The Company does not have any dilutive securities outstanding as of December 31, 2023 and 2022.

Non-Controlling Interests

2 unchanged sentences

The following table sets forth the changes in non-controlling interest for the years ended December 31, 2023 and 2022:

Non-Controlling

Balance at December 31, 2021

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Recent Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt—Debt with “Conversion and Other Options” and ASC subtopic 815-40 “Hedging—Contracts in Entity’s Own Equity”.

The standard reduced the number of accounting models for convertible debt instruments and convertible preferred stock.

Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting;

and, (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital.

The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

The Company adopted this standard on January 1, 2022 with no impact on the financial statements.

The FASB issues ASUs to amend the authoritative literature in the FASB Accounting Standards Codification (“ASC”).

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As of December 31, 2023 and 2022, amounts due to the CEO related to accrued salaries were $ 288,000 and $ 144,000 , respectively.

Decrease in the current period is due to the conversion of accounts payable into a related party convertible note payable.

From time to time due to the limited cash flow available, the Company's CEO pays certain operating expenditures on behalf of the Company.

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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.

Net loss and non-controlling interest were the only changes to stockholders’ deficit during the year ended December 31, 2021.

Employee Options

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NOTE 6 – COMMITMENTS AND CONTINGENCIES

The Company leases office space on a three-month basis in Seattle, Washington.

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 month-to-month basis in Seattle, Washington.

NOTE 8 – SUBSEQUENT EVENTS

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data