SPECTRAL CAPITAL Corp 10-K

ITEM 9A. CONTROLS AND PROCEDURES. 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 11 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. ITEM 9B. OTHER INFORMATION None. ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections N/A. PART III 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, 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 - Chief Executive Officer, President, 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 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. 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 – Interim Chief Financial and Accounting Officer , Director 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. Mr. Spalding is also former CEO of Vigilant Privacy Corporation, a private Nevada corporation that was based in Pleasanton, California, from 2003 to March 12 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. 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 was an Assistant Professor at San Francisco State University of Business Systems Management and Control, Course Number 507 (Senior/Graduate Level). 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 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 ten 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, 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, 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. 13 ITEM 11. EXECUTIVE COMPENSATION 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 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; however, we pay Ms. Osterwalder $12,000 a month beginning January 1, 2020 for services rendered. As of December 31, 2023 and 2022, amounts due to Ms. Osterwalder for accrued compensation 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. 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 There were no outstanding option equity awards at our year end. COMPENSATION OF DIRECTORS 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 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 Jenifer Osterwalder Stephen Spalding $ $ 14 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, 2023: 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 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 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 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., 4500 9 th Avenue NE, Seattle, Washington, 98105. Name Amount and Nature of Ownership 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% 15 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE Related Party Transactions Jenifer Osterwalder, President, Director and Chief Executive Officer Jenifer Osterwalder charges the Company $12,000 per month beginning January 1, 2020 for services rendered. 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, 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. Osterwalder pays certain operating expenditures on behalf of the Company. These advances bear no interest and are due on demand. As of December 31, 2023 and 2022, Ms. 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 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. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 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 16 ITEM 15. EXHIBITS No. Description of Exhibit 3.1 Articles of Incorporation of Spectral Capital Corporation, dated September 13, 2000, incorporated by reference to Exhibit 3(a) on Form 10-SB filed May 1, 2003. 3.2 Certificate of Amendment to Articles of Incorporation of Spectral Capital Corporation, dated June 17, 2007, incorporated by reference to Exhibit 2.1 on Form 8-K filed July 7, 2004. 3.3 By-laws of Spectral Capital Corporation, dated September 14, 2000, incorporated by reference to Exhibit 3(b) on Form 10-SB filed May 1, 2003. 3.4 Certificate of Amendment to Articles of Incorporation of Spectral Capital Corporation, dated November 22, 2022 filed with the secretary of state of Nevada and effective on December 2, 2022 . 10.1 Telecommunications services agreement with Sky Data PLL OU (Estonia) dated January 3, 2022 . 10.2 Reciprocal Carrier Services Agreement entered into between EZ Mobile, LLC and Spectral Capital Corp. dated February 15, 2022. 31.1 Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002. 31.2 Certification of Chief Financial and Principal Accounting Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002. 32.1 Certification of Chief Executive 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. 1350). 32.2 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. 1350). * Filed herewith 17 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 28, 2024 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