SPECTRAL CAPITAL Corp 10-K

ITEM 9A. CONTROLS AND PROCEDURES. Jenifer Osterwalder, our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2024 and 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, 2024 and 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, 2024 and 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 2025. If the steps we take do not correct the material weakness in a timely manner, we will be unable to conclude that we maintain effective internal control over financial reporting. Accordingly, there could continue to be a reasonable possibility that a material misstatement of our financial statements would not be prevented or detected on a timely basis. We also may incur significant costs to execute various aspects of our remediation plan but cannot provide a reasonable estimate of such costs at this time. Management’s Annual Report on Internal Controls Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles in the United States. Due to inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness of the internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate. Our management, under the supervision and with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our internal control over financial reporting as of the end of the period covered by this Annual Report on Form 10-K based on the framework in Internal Control—Integrated Framework (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. Based on such evaluation, our management concluded that our internal control over financial reporting was effective as of the end of the period covered by this Annual Report on Form 10-K. This Annual Report on Form 10-K does not include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. Our auditors will not be required to opine on the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 until we are no longer an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012. 23 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, 2024: Name Age Position Jenifer Osterwalder 60 Chief Executive Officer, President, Chief Financial and Accounting Officer and Director Sean Michael Brehm 58 Chairman of the Board, Director Moshik Cohen 50 Chief Technology Officer Aaron Christensen 50 Chief Revenue Officer Aby Alexander 59 Director Paul Breitenbach 54 Director Samson Lee 54 Director Chad McLeaming 49 Director Jenifer Osterwalder - Chief Executive Officer, President, Chief Accounting and Financial Officer 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. Ms. Osterwalder received her Bachelor of Science in Business Administration in marketing and logistics from Ohio State University. Sean Michael Brehm – Chairman of the Board, Director Sean Michael Brehm’s career encompasses Chairman and CEO of Crowd Point Technologies and the Chairman of Node Nexus Network and previous roles as the Founder and CEO of Cyber Security, and Big Data Analytic and AI. In these roles he has worked with the U.S. Department of Defense and other commercial customers developing and enhancing cyber security measures and AI and big data platforms. Moshik Cohen, PhD – Chief Technology Officer Dr. Cohen is a technology and business leader, specializing in applied research, deep technology and business strategy. Experienced in Automotive RADAR, Antennas and Phased Arrays, Semiconductor, RFCMOS, Algorithms, Hardware, Nano Photonics and Artificial Intelligence. He has vast experience in building best-in-class multidisciplinary teams and developing HW & SW products, from inception to deployment. Strong scientific background with numerous high-impact publications, including 10 papers in Nature & Science Journals. 24 Aaron Christensen – Chief Revenue Officer Skilled in Intelligence Analysis, Operations Management, Government, Operational Planning, and Team Building. Strong business development professional. 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, 2024, we have no standing committees, however, we intend to appoint an audit, a compensation and a nominating committee of our board of directors in the coming months. As of the date of this annual report on Form 10-K for the year ended December 31, 2024, 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. 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. 25 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 2024 $144,000 - - - - - - $144,000 President and Chief Executive Officer 2023 $144,000 - - - - - - $144,000 Stephen Spalding, 2023 - - - - - - - - Interim Chief Financial and Accounting Officer and Director (former) 2023 - - - - - - - - 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, 2024 and 2023, amounts due to the CEO related to accrued salaries were $432,000 and $288,000 respectively. As of the date of this annual report on Form 10-K for the year ended December 31, 2024, we have no other 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, 2024 and for December 31, 2023 DIRECTOR COMPENSATION As of December 31, 2024 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 3,000,000 Stephen Spalding 3,000,000 Aby Alexander* 30,000 Paul Breitenbach 30,000 Samson Lee* 30,000 Chad McLeaming 75,000 26 * These options were promised by the Company but have not yet been approved by the board of directors and no option agreements have been entered into between the directors and the Company. As the directors resigned before the board issued these options, these options will not be issued by the Company. These directors didn’t serve in 2023. There was no compensation paid to the Directors during the year 2023. 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, 2024: 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 June 23, 2025. 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., 701 Fifth Avenue, Suite 4200, Seattle, Washington, 98104. 27 Name Amount and Nature of Ownership Percent of Class Jenifer Osterwalder 3,069,371 4.53% Sean Michael Brehm 2,114,531 3.12% Decus Pro OU 26,232,186 38.75% Chad McLeaming 142,376 0.21% Sky Data PLL 3,563,043 5.26% All officers, directors, and 5% or greater shareholders as a group 35,121,507 51.88% *Includes options to purchase 3,000,000 shares. 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, 2024 and 2023, amounts due to the CEO related to accrued salaries were $432,000 and $288,000 respectively. Related Party Transactions (Cont’d) Spectral Capital Corporation engages in transactions with certain related parties, including directors, officers, significant shareholders, and affiliates. The Company’s policy is that any related party transaction must be reviewed and approved by disinterested members of the Board of Directors to ensure fairness and compliance with corporate governance best practices. Below are the related party transactions that occurred during the fiscal year ended December 31, 2024. 1. Acquisition of Node Nexus Network Co. LLC · Transaction Date: August 29, 2024 · Related Party: Sean Michael Brehm , Chairman of the Board · Transaction Description: o On August 29, 2024, Spectral completed the acquisition of 100% of Node Nexus Network Co. LLC (“Node Nexus”) from Sean Michael Brehm , the sole owner of Node Nexus and now Spectral’s Chairman. o Spectral issued 1,000,000 shares of Series Quantum Preferred Stock in exchange for all of the outstanding membership interests of Node Nexus. Each preferred share is convertible into 40 common shares after a 12-month holding period, subject to the availability of authorized shares. o Concurrently, Mr. Brehm invested $1,010,000 in Spectral through a private placement, purchasing 5,050,000 common shares at $0.20 per share . o As a result of this transaction, Mr. Brehm became Spectral’s controlling shareholder and now holds a substantial voting interest in the Company. · Conflict Mitigation: o Given that Mr. Brehm was both the seller and a newly appointed director, the transaction was reviewed and approved by Spectral’s independent directors to ensure that the terms were fair and in the best interest of the Company and its shareholders . o The Share Exchange Agreement and related documents were filed with the SEC and disclosed in the Company’s Form 8-K filed on August 30, 2024. 2. Licensing Agreement with Crwdunit, Inc. · Transaction Date: June 23, 2024 · Related Party: Crwdunit, Inc. , controlled by Sean Michael Brehm · Transaction Description: 28 o In connection with the acquisition of Node Nexus, Spectral entered into a Licensing Agreement with Crwdunit, Inc. to license the Distributed Quantum Ledger Database (DQLDB) technology that powers the Vogon Cloud. o Crwdunit, Inc. is a Delaware corporation controlled by Mr. Brehm , who was appointed as Spectral’s Chairman in June 2024. o This technology is critical to Spectral’s business, as it underpins its quantum-secured cloud infrastructure and decentralized computing model. · Potential Conflict and Oversight: o The licensing arrangement was structured on arms-length terms and reviewed by independent directors to ensure fairness. o As part of the transaction, Spectral also secured an option to acquire 100% of Crwdunit, Inc. for $10 million in cash or stock at a future date. o If Spectral does not exercise this option, the Company will remain reliant on Crwdunit’s technology under the terms of the licensing agreement. 3. Stock Issuance to CEO for Expense Reimbursement · Transaction Date: April 22, 2024 · Related Party: Jenifer Osterwalder, Chief Executive Officer · Transaction Description: o On April 22, 2024, Spectral issued 68,311 restricted common shares to CEO Jenifer Osterwalder in exchange for $6,148 in reimbursable business expenses she had personally funded. o The shares were valued at approximately $0.09 per share , based on the closing price of the Company’s stock at the time of issuance. · Purpose and Justification: o This issuance was approved by the Board of Directors as a reimbursement mechanism due to Spectral’s limited cash resources at the time. o No interest or additional compensation was granted in connection with this transaction. 4. Director and Officer Stock Option Grants · Transaction Date: June 12, 2024 · Related Parties: o Sean Michael Brehm (Chairman) – 3,000,000 options o Jenifer Osterwalder (CEO) – 3,000,000 options o Independent Directors – Smaller option grants · Transaction Description: o On June 12, 2024, Spectral granted stock options to directors and executive officers as part of its equity incentive program. o The options have an exercise price based on the then-current 409(a) valuation , with vesting schedules aligned to long-term service and performance . · Board Approval & Fairness Considerations: o The grants were reviewed and approved by the Board to ensure that they aligned with market standards for executive and director compensation. o The options provide an equity-based incentive for leadership to focus on increasing shareholder value. 5. Debt Settlement with Sky Data PLL OU · Transaction Date: April 2024 · Related Party: Sky Data PLL OU , a significant shareholder · Transaction Description: o In April 2024, Spectral settled a $81,950 liability owed to Sky Data PLL OU by issuing 3,563,043 shares of common stock . o The shares were valued at approximately $0.09 per share , based on the fair market value at the time. · Purpose and Justification: o This transaction allowed Spectral to eliminate debt without using cash resources , supporting its financial stability. o Sky Data was a major creditor and investor in Spectral’s previous telecommunications operations. · Potential Conflict and Oversight: o While Sky Data is a significant shareholder, it does not have board representation or executive control over Spectral. o The transaction was approved by independent directors and was structured to be mutually beneficial . 29 Director Independence As a smaller reporting company , Spectral is not required to comply with the stricter corporate governance requirements applicable to large publicly traded firms. However, the Board of Directors recognizes the importance of independent oversight in reviewing transactions and strategic decisions. Currently, the Company’s Board consists of five directors, three of whom are considered independent under SEC guidelines . These independent directors have no material relationships with the Company outside of their board service and stock ownership. The Board intends to continue strengthening its governance practices and may expand its independent oversight in the future. Policy on Related Party Transactions Spectral has adopted a formal policy requiring that any transaction involving an officer, director, or significant shareholder be reviewed and approved by the disinterested members of the Board . This policy is intended to ensure: · Fairness in business dealings · Alignment with shareholder interests · Compliance with regulatory and corporate governance standards 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, 2024 and 2023, Ms. Osterwalder was due $0 and $6,150 in connection with these advances, respectively. Independent Directors The Board of Directors has determined that a director is an independent director under standards established by the Securities and Exchange Commission. The following Directors are considered independent directors: Aby Alexander, Paul Breitenbach, Samson Lee and Chad McLeaming. 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: 2024 2023 Audit fees $ 36,500 $ 36,500 Audit-related fees - - Tax fees - - All other fees - - Total $ 36,500 $ 36,500 30 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. 21.1* List of Subsidiaries of the Registrant 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. 31 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: June 23, 2025 SPECTRAL CAPITAL CORPORATION By: /s/ Jenifer Osterwalder Jenifer Osterwalder President and Chief Executive Officer /s/ Jenifer Osterwalder Jenifer Osterwalder Chief Financial and Accounting Officer 32