SPECTRAL CAPITAL Corp 10-K

ITEM 1. BUSINESS OVERVIEW Overview Strategic Transformation and Focus Spectral Capital Corporation is a publicly traded deep quantum technology platform company that has transformed from a technology incubator into an operator of integrated quantum computing solutions. Based in Seattle, Washington, Spectral now specializes in “Quantum as a Service” (QaaS) – delivering quantum computing power and next-generation cloud services through a decentralized, quantum-ready infrastructure. This strategic evolution, initiated in 2024, positions Spectral at the forefront of the emerging quantum era by bridging the gap between classical computing and quantum innovation. Spectral’s mission is to develop and operate a fully integrated platform combining distributed cloud architecture, quantum algorithms, and advanced hardware to make quantum computing practical, scalable, and energy-efficient for real-world applications. Our business relies on four pillars for growth (1) the continued development of a patent and trade secret portfolio at the leading edge of integration between artificial intelligence (AI) and hybrid classical computing, together called our intellectual property (IP) (2) the monetization of our IP through licensing deals that provide us cash revenue as well as shares of stock in licensee companies: (3) the development of high value software products based on our IP that are easy and cost-effective for us to develop and that can provide dramatic increases in risk-adjusted return; (4) acquisition of small technology companies and radical increases in their top line and bottom line revenue through the integration of our IP in their legacy operations. Key Developments in 2024 Over the past year, Spectral has executed a series of strategic initiatives and acquisitions to build out its quantum technology platform and expand its market presence: Patent Portfolio Expansion: In 2024, Spectral Capital filed 104 patent applications across a broad range of advanced technologies including artificial intelligence, quantum computing, and autonomous systems. This aggressive expansion of our IP portfolio reflects our commitment to building long-term value through innovation. These patents form the foundation of our technology commercialization strategy and support potential licensing, joint ventures, and future revenue streams. The filings span both U.S. and international jurisdictions and are aligned with high-growth sectors where Spectral is actively engaged in product development and strategic discussions with leading OEMs and institutional partners. Scientific Research and Pipeline Development: In parallel with our 2024 patent filings, Spectral engaged in foundational scientific work that has resulted in a robust pipeline of more than 400 additional patentable innovations. These inventions are currently undergoing internal validation and drafting, with phased filings scheduled to continue through 2025 and 2026. This pipeline reflects breakthroughs in system architectures, signal processing, applied machine learning, and patents related to photonic-qubit integration. The rigor of this foundational work positions Spectral as a technology leader and creates optionality across potential licensing, potential spinouts, and potential joint R\&D ventures with academic, corporate, and government stakeholders in North America, Europe, and Asia. Strategic Consultant Engagements: During 2024, Spectral onboarded a number of senior scientific and commercial consultants with proven track records in intellectual property development, deep tech commercialization, and regulatory strategy. These engagements significantly accelerated our internal R\&D velocity and improved the defensibility of our patent claims. The consultants include former senior engineers, IP counsel, and regulatory experts from leading firms in AI, quantum computing, semiconductors, and cybersecurity. Their contributions have strengthened our patent applications, streamlined our innovation capture process, and provided critical insights into global IP protection frameworks and commercialization pathways in both regulated and rapidly evolving markets. Rescission of Brehm Transactions and Preservation of Core IP In Q2 2025, Spectral Capital successfully rescinded a series of transactions involving former Chairman Sean Michael Brehm and related entities. These transactions were found to be a suboptimal use of shareholder value. The rescission preserved our core independently developed intellectual property, clarified ownership of more than 100 provisional patents, and returned over \$100 million in share-based consideration to Spectral’s shareholders. This decisive action restored investor confidence, strengthened corporate governance, and allowed Spectral to refocus resources on advancing its proprietary technology portfolio and strategic partnerships. 6 Platform and Operations Spectral’s current operations center on developing and integrating its quantum-enabled cloud platform , which is comprised of several interrelated components and offerings: Intellectual Property Development: At the foundation of Spectral’s business model is the creation of a differentiated portfolio of intellectual property, including patents and trade secrets that combine artificial intelligence with hybrid classical computing architectures. This work positions Spectral at the convergence of software, hardware, and algorithmic innovation. In 2024, we filed 104 provisional patent applications and laid the groundwork for hundreds more. Our IP strategy emphasizes defensible claims, cross-sector applications, and forward-looking innovation to support licensing, product development, and joint ventures. This deep IP base enables us to build and control key technologies underlying the next generation of high-performance computation. IP Monetization and Licensing Strategy: Spectral is committed to monetizing its intellectual property through carefully structured licensing agreements. These deals provide immediate and long-term financial returns by securing both cash payments and equity stakes in licensee companies. Our licensing model targets firms across artificial intelligence, autonomous systems, and quantum-enabled technologies, allowing us to generate diversified revenue while maintaining strategic influence. Equity participation ensures alignment with long-term upside potential. We continue to negotiate multiple new agreements, and our pipeline includes prospective licensees ranging from venture-backed startups to publicly traded enterprises, all seeking to integrate advanced AI and hybrid compute capabilities into their offerings. Software Product Development: Spectral develops proprietary software products that are based on its patented technologies and trade secrets. These tools are designed to be lightweight, scalable, and cost-efficient to build, with a focus on producing high-value applications that improve decision-making, risk management, and operational intelligence. Many of these software tools can be deployed quickly and generate measurable improvements in risk-adjusted return for users. Because of our deep internal IP base, Spectral can create these products with minimal reliance on external engineering resources. These products also serve as proof points for the broader commercial applicability of our core inventions. Value-Driven Acquisition Strategy: Spectral targets the acquisition of small technology companies with promising assets but underutilized IP or limited access to scalable AI tools. Upon acquisition, we deploy our intellectual property into the operations of these companies to unlock top-line growth and dramatically enhance profitability. This model allows Spectral to create rapid enterprise value by combining our proprietary capabilities with the domain expertise and distribution networks of the acquired entity. Post-acquisition integration is led by our internal technical and product development teams, who work to transform these businesses into high-margin, defensible operations with the potential for follow-on capital events or exit opportunities. Integrated Growth Platform: The synergy of Spectral’s IP creation, licensing, product development, and acquisition strategies forms an integrated platform designed for scalable and capital-efficient growth. Each pillar reinforces the others: IP development feeds licensing and product initiatives; software products demonstrate market validation; and acquired businesses amplify value creation through applied innovation. This cross-functional approach allows Spectral to remain agile and opportunistic while building long-term enterprise value. Our operating structure is designed to leverage internal innovation, minimize overhead, and rapidly adapt to shifts in technology and market dynamics. As a result, we are positioned for sustainable, innovation-driven growth in complex global markets. Market Position and Strategy Spectral Capital is building a differentiated position at the convergence of artificial intelligence, hybrid classical computing, and next-generation infrastructure. Unlike firms that narrowly focus on single-point technologies such as quantum processors or large-scale cloud deployments, Spectral is developing a vertically integrated platform rooted in proprietary intellectual property. Our strategy blends deep scientific research, high-value software development, and strategic acquisitions to unlock scalable value across industries. By leading the integration of AI-driven algorithms with hybrid computing frameworks, Spectral aims to redefine how enterprises and governments access advanced computational power without requiring internal expertise in quantum or specialized AI architecture. Spectral’s business model is anchored in four mutually reinforcing pillars: the continued development of our patent and trade secret portfolio, the monetization of that IP through licensing, the creation of software products that are simple to deploy but deliver substantial ROI, and the acquisition of small technology companies that can be transformed by embedding Spectral’s IP into their operations. This ecosystem-driven approach allows us to rapidly expand our influence while remaining capital-efficient. In 2024, we filed 104 patents and laid the scientific groundwork for an additional 400 inventions in process—positioning Spectral among the most prolific early-stage IP developers in emerging computation technologies. The Company operates in a dynamic market shaped by growing demand for secure, intelligent, and energy-efficient computing solutions. Our focus on domains such as cybersecurity, data analytics, logistics optimization, and simulation—especially those requiring high-dimensional computation—enables us to serve pressing real-world needs. Spectral’s strategy to embed quantum-inspired and AI-accelerated capabilities into familiar cloud and software delivery models lowers the 7 adoption barrier for customers while preserving long-term defensibility. Our commitment to decentralized infrastructure and green compute practices further aligns our offerings with the market’s increasing prioritization of sustainability, privacy, and technological sovereignty. To support this strategy, Spectral actively engages in partnerships with research institutions, infrastructure developers, and commercial collaborators. These alliances accelerate our go-to-market efforts, enrich our technical roadmap, and support co-development of industry-specific applications. Additionally, we have brought on a team of senior consultants to guide IP development and commercialization. These efforts are complemented by targeted acquisitions, which not only expand our operating footprint but also provide high-leverage opportunities to deploy our core technologies. Our integrated platform strategy—grounded in innovation, monetization, and transformation—positions Spectral to become a leading force in the evolution of enterprise-grade computational intelligence. Outlook Spectral Capital enters 2025 with a focused strategy to commercialize its growing intellectual property portfolio, scale operational capabilities, and maximize the value of its four-pillar platform. In the near term, the Company is prioritizing integration of technologies acquired in 2024, and accelerating the deployment of software products and licensing arrangements derived from our 104 filed patents and over 400 additional inventions in development. These efforts will support near-term monetization and proof of concept for our broader technology base. Initial pilots of Spectral’s AI- and quantum-enhanced software solutions are expected to generate early customer validation, enabling conversion of IP into recurring revenue. Spectral’s outlook is rooted in the accelerating demand for advanced computing capabilities across cybersecurity, data intelligence, and predictive modeling. By delivering a unified platform built on high-value intellectual property, Spectral aims to offer practical, scalable, and secure tools that meet enterprise and government needs. Our hybrid architecture and IP licensing model are designed to minimize deployment friction and offer rapid ROI, allowing customers to access cutting-edge capabilities without internal quantum expertise or capital expenditures. Management believes this approach positions Spectral as a potential market-maker in the emerging category of AI- and quantum-enabled enterprise infrastructure. Looking forward, Spectral remains committed to its vision of leading the next generation of intelligent computing. However, the Company also recognizes the substantial capital and technical execution required to fulfill this vision. As such, Spectral is actively evaluating a range of strategic alternatives—including potential joint ventures, IP licensing arrangements, acquisitions and platform partnerships—to optimize shareholder value while ensuring technical continuity and go-to-market execution. Management remains focused on balancing bold innovation with disciplined financial stewardship as the Company transitions from an R\&D-centric organization to an integrated platform business with commercial momentum. Spectral Capital Corporation, a Nevada corporation (“us”, “we”, “our” or the “Company”) was formed in the state of Nevada on September 13, 2000. Our principal executive offices are located at 701 Fifth Avenue, Suite 4200, Seattle, Washington 98104. Our phone number is (206) 262-7799. Our website is www.spectralcapital.com. We incurred a net loss of $(215,387) and $(3,270,544) for the years ended December 31, 2023 and 2024. Our revenues were $0 and $0 for the years ended December 31, 2023 and 2024. Our assets were $240 and $107,475 at December 31, 2023 and December 31, 2024. As of the date of this Form 10-K, we had cash on hand of approximately $107,475 for our operational needs. Currently, our operating expenses are approximately $83,000 per month. If we fail to generate sufficient revenues or raise additional funds to meet our monthly operating costs, we will have available cash for our operating needs for approximately one month. CORPORATE HISTORY AND DEVELOPMENT We were incorporated in the State of Nevada on September 13, 2000 as Galaxy Championship Wrestling, Inc., a media and entertainment company. As disclosed in our Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission on March 27, 2023, since our inception, we have had various names and failed business plans. Since July 27, 2010, we have operated under the name Spectral Capital Corporation. 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”). On February 26, 2013, we signed a definitive Technology Acquisition Agreement to acquire mobile search engine and mobile sharing technology from Fiveseas Securities Ltd. (“Fiveseas”). Under the agreement, we issued Fiveseas 5,000,000 shares of our common stock, par value $0.0001. The agreement called for the technology to reside within a newly formed Delaware corporation called Noot Holdings, Inc. (“Noot”), which we formed on February 28, 2013 and are a 60% owner of and Fiveseas is a 40% owner of. Fiveseas was granted a right of first refusal for any subsequent sale of the technology. 8 On December 1, 2013, we signed a definitive Technology Acquisition Agreement to acquire a technology application and service that enhances the way people find, consume, analyze, share and discuss financial news and topics, equities, commodities and currencies on the web from TL Global Inc (“TL Global”). Under the agreement, we issued TL Global 5,000,000 shares of our common stock, par value $0.0001. The agreement called for the technology to reside within a newly formed Delaware corporation called Monitr Holdings, Inc. (“Monitr”), which we formed on December 1, 2013 and are a 60% owner of and TL Global is a 40% owner of. TL Global was granted a right of first refusal for any subsequent sale of the technology. In May 13 2024, Sean Michael Brehm joined Spectral as a member of the Board of Directors. At this time, the Company began pursuing a new direction as a quantum computing as a service (QaaS) technology accelerator, leveraging the Company’s previous expertise at incubating and accelerating cutting edge technologies, such as the Company’s Noot and Monitr technologies. Node Nexus Network Co. LLC (August 2024) – Spectral acquired Node Nexus, a developer of decentralized cloud and quantum computing technologies, in August 2024​ which was subsequently restructured as an asset purchase in November 2024. This transaction formed the core of Spectral’s flagship Vogon Cloud platform, bringing in proprietary DQ-LDB ledger technology and “QuantumVM” middleware for hybrid classical/quantum computing. The Node Nexus acquisition provided Spectral with a secure, immutable distributed ledger for data storage and a highly efficient virtual machine to integrate classical and quantum workloads, establishing the foundation for the Company’s QaaS offerings. Quantomo OU (September 2024) – In September 2024, Spectral acquired Quantomo, a pioneer in quantum tomography algorithms for advanced search and data analysis​. Quantomo’s technology leverages quantum parallelism to dramatically accelerate search functions and AI inference across distributed datasets. This acquisition is being integrated into Spectral’s platform to power next-generation search engine capabilities and other data-intensive applications, enhancing the analytical functionality of the Vogon Cloud​. This transaction was subsequently rescinded and is being restructured as an asset purchase so that the technology can be more efficiently integrated into Spectral. crwdunit, Inc. (agreement September 2024, closed December 2024) – Spectral entered into an agreement to acquire crwdunit, Inc. in September 2024 and formally closed the acquisition in December 2024​. crwdunit developed a proprietary resource quantization mechanism that optimizes computing workloads (CPU, memory, storage, and bandwidth) in decentralized cloud environments. The asset purchase added crwdunit’s performance-measurement technology and its community of stakeholders to Spectral’s portfolio​. Together with Node Nexus and Quantomo, this addition broadened Spectral’s intellectual property and technical expertise, improving the performance and efficiency of the Vogon Cloud platform and strengthening the Company’s position in decentralized “edge” computing. Subsequently, this transaction was rescinded and is being restructured to more efficiently be able to integrate the crwdunit technology into Spectral and more efficiently distribute the specified Spectral shares to crwdunit shareholders pursuant to the original intent of the acquisition. Verdant Quantum OU (December 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. Subsequently all transactions with Sean Brehm, crwdunit, Quantomo, Node Nexus and Verdant Quantum and related entities were rescinded. We have not been involved in a material bankruptcy, receivership, or similar proceeding. Other than as set forth above, in the prior five years, we have not been involved in any material reclassification, merger or consolidation. PRINCIPAL PRODUCTS AND SERVICES Products and Services Spectral Capital Corporation offers a suite of products and services built upon its proprietary intellectual property portfolio at the intersection of artificial intelligence, hybrid classical computing, and emerging quantum technologies. The Company’s platform is structured around four key growth pillars: (1) the development of patentable and protectable IP, (2) the monetization of that IP through licensing and equity-based deals, (3) the creation of cost-effective software solutions that embody our core innovations, and (4) the acquisition and transformation of technology businesses through IP integration. Each product or service offered by Spectral derives from or reinforces one or more of these strategic pillars. At the core of Spectral’s offering is its intellectual property licensing business, which enables third-party enterprises to incorporate Spectral’s inventions into their technology stacks. Licensing agreements typically include both cash payments and equity participation, giving Spectral immediate revenue upside as well as longer-term exposure to the growth of its partners. These licenses are especially valuable for companies in AI, autonomous systems, cybersecurity, logistics, and advanced analytics that seek to differentiate their offerings using cutting-edge algorithms or architectures developed by Spectral. Spectral also offers a growing portfolio of AI-enhanced software products designed to demonstrate and commercialize the company’s proprietary technology. These products are modular, lightweight, and designed for rapid deployment. Many are built to serve functions such as secure data search, model optimization, pattern recognition, and probabilistic reasoning— 9 applications where hybrid AI-quantum approaches provide material performance advantages over traditional software. These tools are designed to improve risk-adjusted decision-making, reduce computing costs, and expand the analytical capabilities of enterprises without requiring major infrastructure investment. In parallel, the Company is also developing an intelligent cloud compute environment tailored for high-dimensional AI and quantum-inspired workloads. This environment will integrate decentralized edge computing with scalable hybrid architecture to offer clients both performance and data sovereignty. Though still in the R&D phase, is expected to support quantum-enhanced simulation, ultra-secure computation, and real-time distributed intelligence for enterprise and government customers. The service is being developed with a focus on low latency, high privacy, and flexible deployment options, especially in regulated or mission-critical industries. Spectral’s acquisition and transformation services comprise a distinctive element of its value proposition. The Company seeks out underperforming or undercapitalized technology firms with valuable legacy assets and potential for growth through integration of Spectral’s IP. After acquisition, Spectral deploys its AI and hybrid computing capabilities into the operations of the acquired entity, resulting in increased top-line revenue, expanded margins, and renewed market relevance. This playbook not only generates immediate operational improvements but also opens opportunities for follow-on monetization through resale, joint ventures, or IPO pathways. Collectively, Spectral’s products and services reflect a vertically integrated strategy that blends IP creation, monetization, productization, and transformation into a cohesive platform. This approach enables Spectral to generate diversified revenue streams while amplifying the reach and impact of its core innovations across sectors and geographies. NOOT: Is currently in beta testing, and leverages quantum computing and security to enhance Collective Intelligence by drawing insights from diverse disciplines and expertise. These insights are securely stored on Spectral’s proprietary Distributed Quantum Ledger Database (DQLDB), powered by sustainable green micro data centers. Monitr: An innovative web-based collaboration and document management platform, currently in beta testing, designed to integrate seamlessly with both quantum and traditional technologies. It empowers businesses, individuals, and investment clubs to securely store, organize, share, and access information using Spectral’s proprietary Distributed Quantum Ledger Database (DQLDB). Our business differs from those companies whose capital reserves, successful previous ability to monetize technology and scale, efficiencies and existing customer base allow them to select and develop technology because we have very limited resources and have not located sources of capital to fund our operations. Competition We compete with a wide variety of parties in connection with our efforts. The AI and hybrid quantum as a service (QaaS) industry is rapidly evolving, with major tech giants like IBM, Google, and Microsoft competing alongside specialized startups such as Rigetti Computing, IonQ, and D-Wave plus many other emerging AI companies such as Anthropic, Scale AI, Shield AI and others. These companies are racing to offer cloud-based access to robust data models and neural nets, as well as hybrid environments in which problems can be tackled on quantum processors, enabling researchers and businesses to experiment with quantum algorithms without owning expensive hardware. Much of the competition centers on hardware approaches — superconducting qubits, trapped ions, and photonic systems — each offering unique advantages in terms of scalability and error correction. Additionally, players are differentiating themselves through software ecosystems, developer tools, and partnerships with industries like finance, pharmaceuticals, and logistics to explore real-world applications. As the technology matures, competition is intensifying around performance benchmarks, ease of integration, and the development of practical use cases, shaping a dynamic and fast-growing market. Moreover, many of our current and potential competitors have longer operating histories, greater brand recognition, larger customer bases and/or significantly greater financial, technical and marketing resources than we do. As a result, they have the ability to devote comparatively greater resources to the development and promotion of their products and services, which could result in greater market acceptance of their products and services relative to those offered by us. We are dependent upon the receipt of capital to fund our operations, which may not become available to us, and even if available it, may not be available upon commercially reasonable terms. Principal Agreements Affecting Our Ordinary Business We do not have any current long-term agreements that impact our business. 10 Information Technology Governmental Regulation Our operations are subject to various rules, regulations and limitations impacting the information technology industry as a whole. We are subject to numerous United States (U.S.) federal, state, and foreign laws and regulations covering a wide variety of subject matters. Like other companies in the technology industry, we face heightened scrutiny from both U.S. and foreign governments with respect to our compliance with laws and regulations. Many of these laws and regulations are evolving and their applicability and scope, as interpreted by the courts, remain uncertain. Our compliance with these laws and regulations may be onerous and could, individually or in the aggregate, increase our cost of doing business, make our products and services less useful, limit our ability to pursue certain business models, cause us to change our business practices, affect our competitive position relative to our peers, and/or otherwise have an adverse effect on our business, reputation, financial condition, and operating results. Environmental Matters We do not anticipate any significant impact of environmental regulations on our business. OPERATIONS Spectral Capital Corporation operates as a next-generation technology platform company focused on the systematic development, monetization, and application of intellectual property at the frontier of artificial intelligence (AI) and hybrid classical computing. Our business model is designed around four interlocking growth pillars: (1) the continued expansion of a robust patent and trade secret portfolio, (2) the monetization of that intellectual property through licensing agreements and equity-linked partnerships, (3) the creation of scalable, software-based products leveraging our proprietary technologies, and (4) the acquisition and transformation of small technology businesses through integration of Spectral's IP. This integrated approach supports both near-term cash generation and long-term enterprise value creation. 1. Intellectual Property Development At the core of Spectral’s operations is its commitment to building a defensible and forward-looking intellectual property portfolio. In 2024, we filed 104 new patent applications covering innovations across AI architecture, probabilistic modeling, optimization techniques, quantum-classical hybrid computing, and secure computation. These patents reflect internal research conducted by our scientific and engineering consultants, as well as technology developed through our integration of acquired entities. In parallel, Spectral has established a structured internal process for IP generation, which includes invention harvesting sessions, collaboration with outside technical consultants, and an internal review and vetting framework that ensures high-value, novel, and commercially relevant filings. This process has resulted in the development of over 400 additional patentable inventions, which we expect to file on a phased basis throughout 2025 and 2026. We believe this makes Spectral one of the most prolific early-stage IP generators in our target domains. 2. Licensing and IP Monetization Licensing of Spectral’s intellectual property represents a major channel for revenue and equity upside. Our licensing model typically includes upfront cash payments, ongoing royalties, and/or equity stakes in licensee companies. This dual-structure model allows us to capture both current income and long-term appreciation as our partners grow. We target firms across multiple sectors including AI-enabled software, edge computing, autonomous systems, cybersecurity, and industrial automation. These sectors benefit from Spectral’s unique capabilities in scalable algorithms, hybrid compute methods, and secure data processing. Spectral has ongoing licensing discussions with several early-stage and mid-market companies and anticipates finalizing new agreements throughout the coming fiscal year. We are also exploring broader joint development and white-labeling opportunities that allow third-party firms to embed our technology into their existing platforms. 3. Software Product Development In addition to licensing its technologies, Spectral develops high-value software products that showcase and operationalize its inventions. These products are designed to be cost-effective to build and deploy, relying heavily on reusable code modules and algorithmic libraries developed in-house. Our software tools address critical needs in analytics, risk forecasting, high-efficiency search, anomaly detection, and automated decision-making. These solutions are typically designed as standalone or API-accessible tools and are suitable for rapid pilot testing and scalable deployment. Because the products are IP-rich, they serve the dual purpose of generating revenue and validating the commercial viability of our underlying inventions. Software revenue is expected to grow as we continue to commercialize our internally developed tools and expand our licensing base. 11 4. Strategic Acquisitions and Business Transformation Spectral pursues targeted acquisitions of small, undercapitalized, or undervalued technology firms with latent potential that can be unlocked through application of our IP. These businesses often have customer relationships, domain expertise, or specialized distribution channels but lack scalable technological differentiation. Upon acquisition, Spectral deploys its proprietary tools and patented processes to transform these operations. We integrate AI-enhanced analytics, automated workflows, and new product offerings that significantly increase revenue and operational efficiency. By focusing on IP-led transformation, we aim to drive both top-line growth and substantial margin expansion in the acquired entities. In 2024, we began implementing this strategy with early acquisition targets and expect to report initial performance improvements in 2025. Organizational Capabilities To support our operations, Spectral has assembled a cross-disciplinary team of inventors, engineers, consultants, and business strategists. In 2024, we added a number of highly experienced advisors in IP law, AI model design, computational physics, and corporate development. This bench of experts enhances our capacity to identify patentable innovations, ensure rigorous filings, and guide technical and commercial validation of our IP. The team operates in a distributed structure across North America and Europe, giving us access to global expertise and operational flexibility. Our operational infrastructure is lean by design, with a strong emphasis on leveraging automation, cloud-based development environments, and modular deployment strategies to maximize return on R\&D investment. This capital-efficient operating model enables Spectral to generate high-value outputs with minimal fixed overhead, while retaining the agility to scale with opportunity. Technology and Market Positioning Spectral’s operations are uniquely positioned at the convergence of three critical technology trends: AI acceleration, hybrid computing, and IP-driven enterprise infrastructure. By focusing on technologies that sit at the intersection of these trends, we position ourselves not only as an innovator but as a multiplier for others’ success—whether through licensing, acquisition, or product deployment. Our emphasis on hybrid classical architectures allows us to provide practical, near-term enhancements to existing systems while preserving forward compatibility with quantum and neuromorphic compute systems as they mature. Our products and services are designed to align with the growing demand for scalable, high-performance computation in privacy-sensitive, regulated, or high-complexity domains such as healthcare, finance, logistics, and defense. We view this positioning as a durable source of long-term differentiation and value creation. Outlook for Operations In 2025, Spectral plans to significantly expand its operational footprint in all four pillars. We anticipate a sharp increase in patent filings, a broadening of our licensing relationships, a commercial launch of multiple proprietary software tools, and follow-on acquisitions to reinforce our transformation strategy. These activities will be supported by continued expansion of our expert network and disciplined capital allocation aimed at maximizing shareholder value. We believe our integrated approach—rooted in original invention and practical deployment—uniquely positions Spectral to thrive in a rapidly evolving technological landscape. 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. INTELLECTUAL PROPERTY Summary and Categorization of Spectral Capital Corporation's Provisional Patents Spectral Capital Corporation has filed 104 provisional patent applications covering various aspects of quantum computing, hybrid quantum/classical computing, AI-driven material discovery, security, and photonic technologies . Below is a summary and categorization of select patents based on the provided documents. 12 Category 1: Quantum Computing and Hybrid Quantum/Classical Systems These patents focus on advancing quantum computing architectures, improving qubit fidelity, and developing hybrid quantum-classical computational frameworks . 1. Agent-Based Migration and Optimization for Hybrid Quantum/Classical Data Systems o Patent No.: Spectral Patent 48 o Summary: Describes a system for migrating and optimizing data from classical computing environments to a hybrid quantum/classical framework using a distributed quantum ledger database . This patent introduces an intelligent agent that continuously monitors and optimizes system configurations for efficiency and security. o Applications: Enterprise data migration, financial records, government databases. 2. Quantum Information Processing Using Nuclear Spin Superposition in Bismuth-Doped Silicon o Patent No.: Spectral Patent 52 o Summary: Utilizes bismuth-doped silicon as a platform for quantum computing, leveraging nuclear spin superposition for enhanced error correction. o Applications: Fault-tolerant quantum computing, quantum memory systems. 3. Quantum Information Processing Using Crystalline Fluorine o Patent No.: Spectral Patent 53 o Summary: Investigates the use of crystalline fluorine as a novel quantum computing material, offering a potential alternative to existing superconducting and trapped-ion systems. o Applications: Next-generation quantum processors, quantum communication networks. 4. AI-Driven Design and Optimization of Fluxonium-Based Counter-Rotating Gates o Patent No.: Spectral Patent 51 o Summary: Uses Fluxonium qubits to design counter-rotating quantum gates , improving gate fidelity and reducing decoherence using AI-assisted simulations. o Applications: Error-resistant quantum computing, advanced quantum gates. Category 2: AI-Driven Quantum Security & Cryptography These patents focus on quantum-safe security solutions , including dynamic encryption techniques . 5. Continuous Dynamic Password Generation Using a Quantum/ Classical Hybrid Computing System o Patent No.: Spectral Patent 49 o Summary: Proposes a quantum-enhanced password system that continuously evolves to prevent brute-force attacks, using quantum random number generators (QRNGs) and classical security integration . o Applications: Enterprise cybersecurity, government secure networks, financial systems. Category 3: AI-Driven Material Discovery for Quantum Computing These patents focus on the discovery and simulation of novel quantum materials using AI and hybrid computing . 6. AI-Driven Design and Simulation of Single Atom Catalysts Using a Hybrid Quantum/Classical Computing System o Patent No.: Spectral Patent 50 13 o Summary: Uses AI and quantum computing to accelerate the discovery of single-atom catalysts (SACs) for industrial applications. The system integrates quantum simulations with AI algorithms to optimize catalytic performance. o Applications: Green chemistry, fuel cell research, carbon capture. 7. Fabricating Nanometer-Thin Tellurium Crystals Using Atomic Molding Plates for Quantum Computing o Patent No.: Spectral Patent 54 o Summary: Details a method for growing and controlling thin tellurium crystals for use as semiconductors in quantum computing. · Applications: Quantum transistor development, superconducting quantum computers. 8. Quantum Information Processing Using Hexagonal Boron Nitride with Nitrogen Vacancies o Patent No.: Spectral Patent 56 o Summary: Describes using nitrogen vacancies (NV) in hexagonal boron nitride (hBN) as a solid-state qubit platform with long coherence times and high scalability. o Applications: Quantum networking, secure quantum encryption. Category 4: Photonic & Optical Quantum Computing These patents explore photonic-based quantum computing and light-based qubit control . 9. Quantum Information Processing Using Rubidium Tantalate in Integrated Photonic Circuits o Patent No.: Spectral Patent 55 o Summary: Develops rubidium tantalate (RbTaO3) photonic circuits with low birefringence for integrated quantum photonics applications, enhancing coherence and qubit manipulation . o Applications: Quantum communication, optical quantum computing. Conclusion Spectral Capital Corporation's provisional patents cover a broad range of innovations at the intersection of quantum computing, AI-driven material discovery, and security . The patents suggest a strategic focus on hybrid quantum/classical systems , error-resistant quantum architectures , and AI-driven optimization . Trade Secrets Whenever we deem it important for purposes of maintaining the secrecy of information, such as sensitive and valuable search algorithms, we plan to require parties with whom we share, or who otherwise are likely to become privy to, our trade secrets or other confidential information to execute and deliver to us confidentiality and/or non-disclosure agreements. Among others, this may include employees, consultants and other advisors, each of whom may require us to execute such an agreement upon commencement of their employment, consulting or advisory relationships. These agreements will generally provide that all confidential information developed or made known to the individual by us during the course of the individual’s relationship with us is to be kept confidential and not to be disclosed to third parties except under specific circumstances. As of the date of this annual report on Form 10-K for the year ended December 31, 2024, we have executed non-disclosure agreements with key consultants or advisors. HUMAN CAPITAL For the year ended December 31, 2024, we had five full time employees and 10 consultants. We are not subject to any collective bargaining agreements and believe that our relationships with our employees and consultants are good. 14 Available Information Our common stock is quoted on the OTC Markets, OTCQB, under the symbol “FCCN”. We file annual, quarterly, and current reports and other information with the U.S. Securities Exchange Commission (the “SEC”). These filings are available to the public on the Internet at the SEC’s website at http://www.sec.gov. We maintain a website where our annual, quarterly and current reports and amendments to those reports, if any, are available free of charge.