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Item 9A. Controls and Procedures

2024-03-28 compared with 2023-03-27 · 72 added, 57 removed, 126 unchanged (51% of the section changed)

CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15 under the Exchange Act, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2022.

This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Principal Financial and Accounting Officer, as well as outside consultants.

In assessing the effectiveness of our internal control over financial reporting we utilized the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission as published in “Internal Control over Financial Reporting – Guidance for Smaller Public Companies.” Based on that evaluation, our Chief Executive Officer and Principal Financial and Accounting Officer found material weaknesses in our disclosure controls and procedures and therefore concluded that our disclosure controls and procedures as of the end of the period covered by this report were ineffective.

The determination of ineffective internal control is based upon the lack of separation of duties, which was first identified during the year ended December 31, 2010.

Our entire management is comprised of one individual.

It is impossible to create a system of checks and balances with oversight in this circumstance.

It is management’s intention to bring additional people into the management team.

Once there are more members of management, responsibilities can be divided and oversight roles created.

The Company estimates the annual costs of such remediation efforts in the form of additional management will be $150,000 per year.

The Company intends to make such hires and create segregation of duties and proper oversight as soon as the capital is obtained.

We understand that remediation of disclosure controls is a continuing work in progress due to the issuance of new standards and promulgations.

However, remediation of the material weaknesses described above is among our highest priorities.

Our management will periodically assess the progress and sufficiency of our ongoing initiatives and make adjustments as and when necessary.

As of the date of this report, our management believes that our efforts will remediate the material weaknesses in internal control over financial reporting as described above.

Notwithstanding these material weaknesses which are described below, our management performed additional analyses, reconciliations and other post-closing procedures and has concluded that the Company’s consolidated financial statements for the periods covered by and included 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.

Inherent Limitations Over Internal Controls

The Company’s internal control over financial reporting is 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’s internal control over financial reporting includes those policies and procedures that:

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that the Company’s receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors;

(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Management does not expect that the Company’s internal controls will prevent or detect all errors and all fraud.

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

Our internal control over financial reporting is designed to provide reasonable assurance regarding the (i) effectiveness and efficiency of operations, (ii) reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and (iii) compliance with applicable laws and regulations.

Our internal controls framework is based on the criteria set forth in the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Management, consisting of our Chief Executive Officer and Principal Accounting and Financial Officer, is responsible for establishing and maintaining adequate internal control over the Company’s financial reporting.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022, utilizing the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission as published in “Internal Control over Financial Reporting – Guidance for Smaller Public Companies.” Based on the assessment by management, we determined that our internal control over financial reporting was ineffective as of December 31, 2022.

Changes in Internal Control of Financial Reporting

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

Jenifer Osterwalder, our Chief Executive Officer, and Stephen Spalding, our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2023.

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, mean controls and other procedures of a company that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Disclosure controls include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company on the reports that it files or submits under the Exchange Act is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

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 December 31, 2023, our Chief Executive Officer and Chief Financial Officer concluded that, as a result of a material weakness identified in our internal control over financial reporting, our disclosure controls and procedures were not effective as of December 31, 2023 .

In the course of preparing the financial statements that are included in this Form 10-K, management has determined that a material weakness 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 accounting function with an appropriate degree of knowledge, experience and training.

We also noted a material weakness related to logical security and privileged access in the area of information technology.

We concluded that the material weaknesses in our internal control over financial reporting information technology occurred because we did not have the necessary business processes, systems, personnel, and related internal controls necessary to satisfy the accounting and financial reporting requirements of a public company.

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 in the United States.

Due to inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness of the internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.

Our management, under the supervision and with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our internal control over financial reporting as of the end of the period covered by this Annual Report on Form 10-K based on the framework in Internal Control---Integrated Framework (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway

Commission, or COSO.

Based on such evaluation, our management concluded that our internal control over financial reporting was effective as of the end of the period covered by this Annual Report on Form 10-K.

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 Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

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COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Our board of directors were elected and will serve until their successor is duly elected and qualified, or until their earlier resignation.

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, 2023:

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Previously, from January 2005 to March 2005, Ms.

Osterwalder served as President, Chief Executive Officer, Treasurer, Secretary and as a director 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.

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 Manger to International Conference Services, Ltd., a conference and destination management firm in British Columbia, Canada.

Osterwalder served as a consultant Manager 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.

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 – Interim Chief Financial and Accounting Officer , Director

Spalding has been an independent management and financial consultant based in Mill Valley, California since March 2008.

Since March 2008, Mr.

Spalding has been an independent management and financial consultant based in Mill Valley, 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.

Spalding is also former CEO of Vigilant Privacy Corporation, a private Nevada corporation that was based in Pleasanton, California, from 2003 to March 2008, where he procured the firm’s angel round of financing and led the organization while the company’s product was transformed from a desktop product to an enterprise security solution.

Spalding is also former CEO of Vigilant Privacy Corporation, a private Nevada corporation that was based in Pleasanton, California, from 2003 to March

2008, where he procured the firm’s angel round of financing and led the organization while the company’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.

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Spalding was an Assistant Professor at San Francisco State University of Business Systems Management and Control, Course Number 507 (Senior/Graduate Level).

He has an MBA, in Quantitative Analysis, University of Arizona, 1974.

He also has a B.S., Finance and Management, Eastern Illinois University, 1973, a B.S., Physics (solid state), Eastern Illinois University, 1969 and a B.S., Mathematics, Eastern Illinois University, 1969.

He has a Master of Business Administration, Quantitative Analysis, University of Arizona, 1974.

He also has a Bachelor of Science, Finance and Management, Eastern Illinois University, 1973, a Bachelor of Science, Physics (solid state), Eastern Illinois University, 1969 and a 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

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CODE OF ETHICS

We currently do not have a Code of Ethics and plan to adopt one as we develop our business.

We currently do not have a Code of Ethics, but we plan to adopt one as we develop our business.

EXECUTIVE COMPENSATION

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President and Chief Executive Officer

Stephen Spalding, Interim Chief Financial and Accounting Officer and Director

Stephen Spalding

Interim Chief Financial and Accounting Officer and Director

EMPLOYMENT AGREEMENTS

Our President and CEO, Ms.

Osterwalder, does not currently have an employment agreement, however, the Company has agreed to pay Ms.

Osterwalder, does not currently have an employment agreement;

however, we pay Ms.

Osterwalder $12,000 a month beginning January 1, 2020 for services rendered.

1 unchanged sentence

Osterwalder for accrued compensation were $288,000 and $144,000, respectively.

As of the date of this annual report on Form 10-K for the year ended December 31, 2022, we have no other employment agreements in place with any of our other executive officers, directors or employees.

On March 16, 2022, we issued to Ms.

Osterwalder a promissory note in the amount of $1,054,653 for accrued salary of $1,054,653 due to Ms.

Osterwalder as of December 31, 2021.

On March 16, 2022, the Board of Directors approved a resolution to convert the accrued salary of $1,054,653 owed to Ms.

Osterwalder through December 31, 2021 into 210,930,660 shares of our common stock.

As of the date of this annual report on Form 10-K for the year ended December 31, 2023, we have no employment agreements in place with any of our other executive officers, directors or employees.

OUTSTANDING EQUITY AWARDS AT YEAR END

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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.

Pursuant to authority granted under 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, 2023:

DIRECTOR COMPENSATION

Fees Earned or Paid in Cash

Option Awards

Non-Equity Incentive Plan Compensation

Qualified Deferred Compensation Earnings

Non-Equity Incentive

Plan Compensation

Non-Qualified Deferred Compensation Earnings

All Other Compensation

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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 January 31, 2023.

The following table sets forth certain information regarding the beneficial ownership of our common stock as of March 28, 2024.

The information in these tables provides ownership information for:

· each person known by us to be the beneficial owner of more than a 5% of our common stock

· 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;

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The address of each person listed is care of Spectral Capital Corporation., 4500 9 th Avenue NE, Seattle, Washington, 98105.

Nature of Ownership

Percent of Class

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Jenifer Osterwalder charges the Company $12,000 per month beginning January 1, 2020 for services rendered.

Total amounts expended in the Company’s consolidated financial statements in connection with the Ms.

The total amounts expended in the Company’s consolidated financial statements in connection with Ms.

Osterwalder’s services was $144,000 for each of the years ended December 31, 2023 and 2022.

As of December 31, 2022 and 2021, amounts due to the Ms.

As of December 31, 2023 and 2022, amounts due to Ms.

Osterwalder related to accrued salaries were $288,000 and $144,000, respectively.

On March 16, 2022, we issued to Ms.

Osterwalder a promissory note in the amount of $1,054,653 for accrued salary of $1,054,653 due to Ms.

Osterwalder as of December 31, 2021.

On March 16, 2022, the Board of Directors approved a resolution to convert the accrued salary of $1,054,653 owed to Ms.

Osterwalder through December 31, 2021 into 210,930,660 shares of our common stock.

During March 2022, Ms.

Osterwalder subsequently sold the 210,930,660 shares of common stock to Decus Pro OU in a private transaction for a total purchase price of $18,910.

From time to time, due to the limited cash flow available, Ms.

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Osterwalder was due $6,150 and $5,500 in connection with these advances, respectively.

On March 16, 2022, we issued to Ms.

Osterwalder a promissory note in the amount of $206,956 in connection with these cash advances due to Ms.

Osterwalder as of December 31, 2021.

On March 20, 2022, Ms.

Osterwalder assigned the promissory note to Decus Pro OU in a private transaction for a total purchase price of $10,348.

Independent Directors

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Certification of Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C.

* Filed herewith

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.

8 unchanged sentences

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 9A. Controls and Procedures