What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-06-24 compared with 2024-03-28 · 250 added, 66 removed, 256 unchanged (55% of the section changed)

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Report of Independent Registered Public Accounting Firm

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

To the Board of Directors and Stockholders of

Spectral Capital Corporation and subsidiaries,

Opinion on 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.

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.

We have audited the accompanying consolidated balance sheets of Spectral Capital Corporation and subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph - Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 2 to the consolidated financial statements, the Company has suffered recurring losses from operations, had an accumulated deficit and has a deficit working capital raise substantial doubt about its ability to continue as going concern.

The consolidated 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.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

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.

We conducted our audits 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 consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

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Accordingly, we express no such opinion.

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 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.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated 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 consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

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 2025.

March 28, 2024

June 23, 2025

SPECTRAL CAPITAL CORPORATION

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Cash and cash equivalents

Accounts receivable

Prepaid expenses

Current assets

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Accounts payable and accrued liabilities

Related party advances and accruals

Related party advances

Short-term advances

Current liabilities

Total liabilities

Commitments and contingencies

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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 shares issued and outstanding as of December 31, 2023 and 2022

Series Quantum Preferred Stock, par value $ 0.0001 ,

2,000,000 and 0 shares authorized, 1,000,000 and 0

shares issued and outstanding as of December 31, 2024

Common stock, par value $ 0.0001 , 1,000,000,000 and

500,000,000 shares authorized, 67,699,302 and

42,017,948 shares issued and outstanding as of

December 31, 2024 and 2023

Additional paid-in capital

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( 31,062,852 )

Total stockholders' equity (deficit)

Total stockholders' deficit

Non-controlling interest

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Wages and benefits

Research and development

Total operating expenses

Operating loss

( 3,004,948 )

Other income and (expense):

Extinguishment of debt

Total other income (expense)

Net loss before non-controlling interest

( 3,270,544 )

Loss attributable to non-controlling interest

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SPECTRAL CAPITAL CORPORATION

CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT

FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023

Series Quantum Preferred Stock

Additional Paid-in Capital

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$ ( 192,002 )

Proceeds from sale of common stock

Conversion of convertible note

Settlement of liability by shareholder

Non-controlling interest

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$ ( 332,479 )

Non-controlling interest

Settlement of liability by shareholder

Sale of common stock

Issuance of common stock for liabilities

Common and preferred stock issued for cash

Stock-based compensation

( 3,270,544 )

December 31, 2024

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Non-controlling interest

Stock-based compensation

Excess value of common stock issued to settle liabilities

Changes in operating assets and liabilities:

Accounts receivable

Prepaids and other assets

Due to related parties - accrued salary

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Net cash used in operating activities

( 1,653,959 )

CASH FLOWS FROM INVESTING ACTIVITIES:

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Proceeds from related party advances

Proceeds from sale of common stock

Proceeds from sale of common and preferred stock

Net cash provided by financing activities

Effect of exchange rate changes on cash

Change in cash and cash equivalents

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Non-cash investing and financing activities:

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

Common stock issued to settle liabilities

Settlement of a liability by a shareholder

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NOTE 1 – BUSINESS AND NATURE OF OPERATIONS

Spectral Capital Corporation (the “Company” or “Spectral”) was incorporated on September 13, 2000 under the laws of the State of Nevada.

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 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 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.

Spectral Capital Corporation (“Spectral” or the “Company”) is a Nevada corporation, originally incorporated on September 13, 2000.

Since its inception, the Company has undergone several strategic transitions, ultimately refocusing its operations in 2024 to become a deep technology company centered on hybrid classical-quantum computing.

Headquartered in Seattle, Washington, Spectral now operates as a vertically integrated quantum and AI innovation platform, offering Quantum as a Service (QaaS), intellectual property licensing, proprietary software products, and value-driven acquisitions.

Spectral’s business model is built on four synergistic pillars:

(1) the development of a robust intellectual property portfolio—including patents and trade secrets—at the intersection of artificial intelligence and hybrid classical computing;

(2) monetization of that IP through licensing agreements that include both cash payments and equity in licensee companies;

(3) creation of high-impact software tools derived from Spectral’s core IP that are modular, cost-efficient, and capable of producing significant risk-adjusted returns;

and (4) acquisition and transformation of smaller technology companies through the strategic application of Spectral’s proprietary technology.

In 2024, Spectral filed 104 patent applications across artificial intelligence, quantum computing, and autonomous systems, while concurrently developing an internal pipeline of over 400 additional patentable innovations.

The Company also engaged a network of senior scientific and commercial advisors to enhance IP defensibility and commercialization readiness.

These efforts support an expanding pipeline of licensing negotiations and product development initiatives.

The Company’s legacy as a technology incubator included several historical acquisitions, such as Noot Holdings and Monitr Holdings.

In 2024, Spectral entered a new strategic phase through a series of acquisitions and platform developments in quantum and decentralized computing.

However, in 2025, the Company formally rescinded certain transactions involving former Chairman Sean Michael Brehm and related entities.

These rescissions preserved Spectral’s independently developed intellectual property, clarified ownership of over 100 provisional patents, and returned in excess of \$100 million in share-based consideration to shareholders—thereby restoring strategic focus and corporate governance alignment.

Spectral’s current operations are focused on licensing its IP, developing quantum- and AI-enhanced software products, and executing acquisitions where its technologies can drive transformative growth.

The Company has not yet generated revenues and reported net losses for fiscal years 2023 and 2024.

Management is actively pursuing strategic partnerships and financing opportunities to support operational expansion and long-term commercialization efforts.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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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.

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.

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All material intercompany accounts and transactions have been eliminated in consolidation.

See Note 1 and 3 for discussion of the acquisition and then rescindment of the NNN acquisition.

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.

Revised Financial Statements

The Company has revised its previously issued consolidated statement of stockholders' deficit as of December 31, 2022 to correct an immaterial misstatement identified during the current period.

Specifically, in connection with the conversion of certain liabilities into common stock during 2022, the Company determined it had not previously recorded the full excess fair value of the consideration issued.

As a result, the Company revised the previously reported additional paid-in capital, increasing it from $29,106,804 to $30,873,057, and the accumulated deficit, increasing it from $32,613,718 to $34,379,971.

These adjustments reflect a net increase of $1,766,253 to both accounts.

The Company has evaluated and concluded that the misstatement, was not material to its previously issued consolidated financial statements.

However, it has revised the consolidated statement of stockholders’ deficit to reflect the corrections described above.

There was no impact on the remaining consolidated financial statements or disclosures.

Stock-Based Compensation

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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.

The Company accounts for forfeitures as they occur.

Accordingly, compensation expense is recognized only for awards that ultimately vest.

Forfeitures are recognized in the period in which they occur, and no estimations or adjustments are made for anticipated forfeitures.

Because the Company’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’s stock-based compensation options.

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Revenues are recognized when control of the promised goods or services 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 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 in the hopes of increasing future profits and expect to recommence in Q3 2024.

There was no revenue during the year ended December 31, 2024 and 2023.

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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As of December 31, 2024 and 2023, the Company does not have any assets or liabilities which would be considered Level 2 or 3.

The Company’s financial instruments primarily consist of cash and cash equivalents, accounts payable, deferred revenue and amounts payable to related parties.

The Company’s financial instruments primarily consist of cash and cash equivalents, accounts payable, 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.

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federal income tax filings for the past several years.

Investment in Securities

The Company’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.

The Company has evaluated the criteria for segment reporting under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting , and has determined that it operates as a single operating and reportable segment.

This conclusion is based on the following factors:

· The chief operating decision maker (“CODM”) reviews financial information on a consolidated basis for purposes of evaluating performance and allocating resources.

· The Company’s operations exhibit similar economic characteristics and are managed and reported as a single business unit.

· The Company’s products and services are offered in a consistent manner across its markets, with no discrete business lines requiring separate reporting.

As a result, no additional segment disclosures are required.

Cash and Cash Equivalents

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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.

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

During the year ended December 31, 2024, the Company had options to purchase 6,810,000 shares of common stock for which the effects were anti-dilutive.

During the year ended December 31, 2023, the Company did not have any dilutive shares.

Non-Controlling Interests

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The following table sets forth the changes in non-controlling interest for the years ended December 31, 2024 and 2023:

Non-Controlling

Balance at December 31, 2022

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Recent Accounting Pronouncements

In March 2024, the FASB issued ASU No.

2024-01, “Compensation—Stock Compensation (Topic 718):

Scope Applications of Profits Interests and Similar Awards” (“ASU 2024-01”).

ASU 2024-01 adds an example to Topic 718 which illustrates how to apply the scope guidance to determine whether profits interests and similar awards should be accounted for as share-based payment arrangements under Topic 718 or under other U.S.

ASU 2024-01 is effective for annual periods beginning after December 15, 2025, although early adoption is permitted.

Upon adoption, ASU 2024-01 is not expected to have an impact on the Company’s consolidated financial statements.

In March 2024, the FASB issued ASU No 2024-02, “Codification Improvements - Amendments to Remove References to the Concepts Statements” (“ASU 2024-02”).

ASU 2024-02 removes references to various Concepts Statements.

In most instances, the references are extraneous and not required to understand or apply the guidance.

ASU 2024-02 is effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted.

ASU 2024-02 can be applied prospectively or retrospectively.

Upon adoption, ASU 2024-01 is not expected to have an impact on the Company’s consolidated financial statements.

In November 2024, the FASB issued ASU No.

2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40).” This standard requires disclosure of specific information about costs and expenses and becomes effective January 1, 2027.

We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-04, “Debt - Debt with Conversions and Other Options (Subtopic 470-20):

Induced Conversions of Convertible Debt Instruments” (“ASU 2024-04”).

ASU 2024-04 clarifies the requirements for determining whether certain settlements of convertible debt instruments, including convertible debt instruments with cash conversion features or convertible debt instruments that are not currently convertible, should be accounted for as an induced conversion.

The requirements of ASU 2024-04 are effective for the Company for fiscal years beginning after December 15, 2025, and interim periods within those periods.

We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.

In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis.

Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280, on an interim and annual basis.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024,

with early adoption permitted.

The Company adopted this standard in the year ended December 31, 2024.

The adoption did not have a material effect on the Company’s consolidated financial statements.

In December 2023, the FASB issued Accounting Standards Update 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company adopted this standard in the year ended December 31, 2024.

The adoption did not have a material effect on the Company’s consolidated financial statements.

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

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Jenifer Osterwalder, the Company’s Chief Executive Officer

Jenifer Osterwalder charges the Company $12,000 per month beginning January 1, 2021 for services rendered.

Previously, she was charging 12,350 CHF per month for services rendered.

Total amounts expended in the Company's condensed consolidated financial statements in connection with the CEO's services was $ 144,000 and $ 144,000 for the years ended December 31, 2023 and 2022, respectively.

Jenifer Osterwalder, the Company’s Chief Executive Officer, charges the Company $12,000 per month beginning January 1, 2021 for services rendered.

Total amounts expended in the Company's consolidated financial statements in connection with the CEO's services were $ 144,000 and $ 144,000 for the years ended December 31, 2024 and 2023, respectively.

As of December 31, 2024 and 2023, amounts due to the CEO related to accrued salaries were $ 432,000 and $ 288,000 , respectively.

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As of December 31, 2024 and 2023, the Company's CEO was due $ 0 and $ 6,150 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.

During the year ended December 31, 2024, the Company issued 68,311 shares of common stock in satisfaction of $ 6,150 in advances.

During the year ended December 31, 2024, the Company received $ 550,700 in total demand advances from the Chairman of the Board of Directors, Sean Michael Brehm.

These advances are documented under a promissory note dated November 14, 2024 (“Note”).

The Note provides for up to $2,500,000 in advances under the Note by Mr.

Brehm to Spectral.

The Note must be repaid by the Company, including accrued interest at 4% APR at the end of five years.

As of December 31, 2024, accrued interest on the note was insignificant to the financial statements.

The Note balance may be applied to the exercise of Mr.

Brehm’s options to acquire common stock in the Company at any time while the Note is outstanding.

Subsequently, the Company entered into a settlement agreement with Sean Brehm and affiliated entities to rescind all prior agreements and no longer owes Mr.

Brehm compensation for the demand advances (see Note 7).

Sean Michael Brehm, the Company’s Chairman and a member of the board of directors, is also the sole shareholder of NNN, which the Company has acquired in exchange for 1,000,000 shares of newly designated Series Quantum Preferred Stock effective August 29, 2024;

In connection with the acquisition, Sean Michael Brehm also purchased 5,050,000 of the Company’s common shares at $0.20 per share for a total purchase price of $ 1,010,000 .

Due to the related party and common control nature of this transaction, the acquisition was accounted for at the carrying value of the acquired net assets of NNN.

Assets acquired consisted of approximately $ 4,955 in cash.

The pre-acquisition financial results of NNN were not significant.

Due to the cancellation, the initial transaction recorded at par value.

Prior to the close of the acquisition, the Company paid approximately $145,000 to NNN for development services.

Subsequently, on November 13, 2024, the transaction was rescinded.

The 1,000,000 Series Quantum Preferred Shares that were issued have been assigned to a new Delaware corporation, controlled by Sean Michael Brehm, which was assigned the intellectual property previously owned by NNN.

The new entity was recently established and had no operations.

See Note 7 for subsequent event regarding the return of the 1,000,000 Series Quantum Preferred Shares.

NOTE 4 – STOCKHOLDERS’ DEFICIT

Changes in Stockholders’ Deficit

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 our common stock whereby every ten (10) shares of issued and outstanding common stock was combined into one (1) share of common stock (the “Reverse Stock Split”).

Preferred Stock

On August 30, 2024, the Company filed a Certificate of Designation for the newly designated Series Quantum Preferred Stock.

The number of Series Quantum Preferred Stock designated is 2,000,000 .

The Series Quantum Preferred Stock contain a liquidation preference over common shareholders equal to 40 times the amount per share to be distributed to the common shareholders.

The Series Quantum Preferred Stock is convertible at the option of the Company or the holder into 40 shares of the Company’s common stock, contingent upon the Company having enough authorized shares to effectuate the conversion.

In addition, the conversion right shall not become exercisable by the holder until 12 months have elapsed from the date of issuance of the Series Quantum Preferred Stock.

The holders of the Series Quantum Preferred Stock have the right to vote on an as-converted-to-common basis, such that one share of Series Quantum Preferred Stock has 40 votes.

On August 29, 2024, the Company issued 1,000,000 shares of Series Quantum Preferred Stock to Sean Michael Brehm in connection with the acquisition of NNN.

See Note 7 for subsequent event regarding the return of the 1,000,000 Series Quantum Preferred Shares.

Due to the cancellation, the initial transaction recorded at par value.

Private Placements

On April 22, 2024, the Board of Directors approved a Private Placement Offering pursuant to Rule 506(b) of the Securities Act of 1933, as amended (the “Securities Act”) for up to 15,000,000 restricted shares of the Company’s common stock at a price of $0.01 per share, or an aggregate of $150,000.

The offering commenced on April 22, 2024 and ended on June 3, 2024.

The $150,000 was used for operating capital.

As of the date of this filing, the Company has received $ 150,041 in proceeds from this offering.

In June 2024, the Company commenced an additional offering looking to raise up to $1,000,000 at a price of $0.20 per shares.

As of December 31, 2024, total proceeds of $ 1,010,000 had been received from this offering.

In addition, cash contributed through NNN was $4,955.

As further discussed in Note 3, this offering was consummated with a related party in connection with the acquisition of NNN.

Settlement of Advances

During the year ended December 31, 2024, the Company issued 3,563,043 shares of common stock in satisfaction of $ 81,950 in advances.

On the date of the agreement, the fair market value of the common stock per the Company’s closing stock price was $ 347,040 resulting in an extinguishment of debt of $ 265,090 .

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.

See Note 3 for additional share issuances.

Stock for Services

On April 26, 2024, we entered into a consulting contract with Scandere OU (Estonia) (“Scandere”).

Scandere has the same management and has been contracted on behalf of Sky Data PPL and has experience in the telecommunications industry.

Scandere will provide us with management services, CDR processing, fraud management, reporting and analytics and credit and finance management to facilitate our entry into the data center market.

The contract shall remain in force until the completion of the services or the earlier termination of the agreement.

As payment for its services, Scandere receives 2,000,000 restricted shares of the Company’s common stock, valued at $ 194,800 based upon the closing price of the Company’s common stock on the date of the agreement.

Asset Acquisitions

On September 10, 2024, the Company entered into an Acquisition Agreement to exchange shares with Quantomo OU., an Estonian corporation (“Quantomo”), whereby the Company agreed to acquire from Quantomo 100% of the Quantomo’s outstanding shares in exchange for 2,000,000 shares of the Company’s common stock and a one-time cash payment of $ 135,000 or (120,000 Euros) which was paid and expensed in 2024.

The closing of the transaction was expected to occur by December 10, 2024, subject to the satisfaction of the certain closing conditions as defined within the agreement.

Subsequent to December 31, 2024, the agreement was rescinded without an impact on the year ended December 31, 2024.

On September 10, 2024, the Company entered into an Acquisition Agreement to exchange shares with Crowdpoint Technologies, Inc., a Texas corporation (“Crowdpoint”), a company controlled by Sean Michael Brehm, and its wholly owned subsidiary, Crwdunit Inc., a Delaware corporation (“Target”), whereby the Company agreed to acquire from Crowdpoint 100% of the Target’s outstanding shares in exchange for 3,750,000 shares of the Company’s common stock.

The closing of the transaction was expected to occur by December 10, 2024, subject to the satisfaction of certain closing conditions as

defined within the agreement.

Subsequent to December 31, 2024, the agreement was rescinded without an impact on the year ended December 31, 2024.

Spectral entered into an Agreement between the Company and Verdant Quantum OU and Moshik Cohen dated December 15, 2024 whereby Spectral acquired certain plasmonic technology for the development of room temperature semiconductors.

Subsequent to December 31, 2024, the agreement was rescinded without an impact on the year ended December 31, 2024.

Employee Options

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The Plan provides for the issuance of up to 15,000,000 common shares for employees, consultants, directors, and advisors.

As of December 31, 2023, all options were expired.

During the year ended December 31, 2024, the Company issued options to purchase 6,810,000 shares of common stock at prices ranging from $ 0.43 to $ 0.61 per share.

The Company used the following variables to determine the fair value of the options:

Closing stock prices ranging from $ 0.50 - $ 0.72 ;

expected lives ranging from 6.0 to 7.0 years;

volatility of 203.49 %;

risk free rate of 3.5 % and no dividend yield.

The total grant date fair value was $ 3,345,600 with $ 1,165,151 being expensed to selling, general and administrative during the year ended December 31, 2024, respectively.

As of December 31, 2024, the remaining value of approximately $2.4 million is expected to be expensed over 3.45 years.

The following is a summary of stock option activity for the nine months ended December 31, 2024:

Exercise Price

Outstanding, December 31, 2023

Outstanding, December 31, 2024

Vested, December 31, 2024

Subsequent to December 31, 2024, various board members resigned resulting the forfeiture of approximately 3.6 million options.

NOTE 5 – INCOME TAXES

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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 month-to-month basis in Seattle, Washington.

The Company leases virtual office space on a month-to-month basis in Seattle, Washington and office space in Lugano, Switzerland on a six-month basis.

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business.

However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company’s business.

The Company is not aware of any such legal proceedings that will have, individually or in the aggregate, a material adverse effect on its business, financial condition or operating results.

There was a claim made by a third party entity regarding Mr.

Brehm and Node Nexus Network.

The Company believes there is no basis for this claim and that the Company has no legal exposure on this claim and has been provided with an indemnity by Mr.

Brehm for the same.

The Company previously owed Rubenstein Public Relations $30,000.

There was a dispute regarding the proper amount of the invoice and the parties agreed to settle the amount due for $24,000 and signed a settlement agreement to that effect.

The amount was paid in full in June 2025.

RESEARCH AND DEVELOPMENT

For the year ended December 31, 2024, we incurred research and development expenses of $ 745,024 related to the development of our current software products.

This expense consists of expenses related to our technology acquisitions, primarily the acquisition of the Node Nexus Network technology which were subsequently rescinded.

SIGNIFICANT CUSTOMERS AND SUPPLIERS

In the year ended December 31, 2024, we had 0 customers.

And presently have 1 customer whom we are entirely dependent on for our current revenue.

We expect this to change over the next 180 days.

NOTE 7 – 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.

In accordance with ASC 855-10, the Company has analyzed its operations subsequent to December 31, 2024 to the date these consolidated financial statements were issued and has determined that it has the following material subsequent events to disclose in these consolidated financial statements, other than those disclosed above and below.

From the end of fiscal 2024 through June 3, 2025, Spectral Capital Corporation (“Spectral” or the “Company”) completed several significant corporate actions.

These events are summarized below:

Investment in White Label Loyalty (May 2025):

In May 2025, the Company entered into a definitive agreement to invest $15,000,000 in White Label Loyalty, a UK-based SaaS provider of enterprise-grade loyalty and customer engagement platforms.

The investment was structured as a primary equity infusion to support White Label Loyalty’s product development and international expansion.

The transaction exemplifies Spectral’s strategy of acquiring or investing in scalable software

businesses that can be enhanced through integration with the Company’s proprietary intellectual property and platform technologies.

This investment was financed in part through the Company’s existing equity resources.

Restated Share Transfer Agreement (May 30, 2025):

On May 30, 2025, the Company executed a Restated Share Transfer Agreement with Intrepid View Partners, LP, under which Spectral acquired 169,889 common shares of a global autonomous vehicle company for an aggregate purchase price of $16,988,900, paid via the issuance of 1,698,890 restricted shares of Spectral’s common stock.

Rescission of Transactions with Sean Brehm and Affiliates:

The Company entered into a settlement agreement with Sean Brehm and affiliated entities to rescind all prior acquisitions and planned collaborations involving Node Nexus Network, Vogon Cloud, Quantomo, and Crwdunit.

Under the agreement, Spectral retains ownership of 104 patent filings developed during the course of the collaboration.

Brehm and his affiliates will pursue independent commercial development of the foregoing technologies in a separate private vehicle.

All shares previously issued to Brehm and his affiliates have been returned and cancelled except for the private placement shares of 5,050,000 purchased by Brehm which were fully paid for.

As of December 31, 2024, these entities did not have any assets or liability as to be reflected as discontinued operations.

Additionally, the Company intends to continue the development of its intellectual property and software development on its own and does not require any resources, assets or inputs from any of the above entities or individuals to continue the development of its technologies.

Board of Directors Changes:

Effective May 30, 2025, five members of the Board of Directors—Sean Brehm, Sam Lee, Aby Alexander, Chad Lemming, and Paul Breitenbach—resigned.

On the same date, the Board appointed Michael Turner and Jeffrey Chong as new directors.

These changes are part of the Company’s broader governance overhaul in preparation for a potential Nasdaq uplisting.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AN ACCOUNTING FINANCIAL DISCLOSURE

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What changed 10-K

Item 8. Financial Statements and Supplementary Data