UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended September 30, 2021March 31, 2022

OR

For the transition period from ________ to ________

Commission File No. 000-50274

Spectral Capital Corporation

(Exact name of Registrant as specified in its charter)

(Former name or former address if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

[X]x Yes  [  ]¨ NO

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ X ] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. ☐ Yes  [ X]x No

As of October 22, 2021,May 11, 2022, there are issued and outstanding only common equity shares in the amount of 117,857,623167,857,623 shares, par value $0.0001, of which there is only a single class.  There are 5,000,000 preferred shares authorized and none issued and outstanding.

SPECTRAL CAPITAL CORPORATION

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS

In addition to historical information, this Report contains forward-looking statements. Such forward-looking statements are generally accompanied by words such as "intends," "projects," "strategies," "believes," "anticipates," "plans," and similar terms that convey the uncertainty of future events or outcomes. The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in ITEM 2 of this Report, the section entitled "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION." Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof and are in all cases subject to the Company's ability to cure its current liquidity problems. There is no assurance that the Company will be able to generate sufficient revenues from its current business activities to meet day-to-day operation liabilities or to pursue the business objectives discussed herein.

The forward-looking statements contained in this Report also may be impacted by future economic conditions. Any adverse effect on general economic conditions and consumer confidence may adversely affect the business of the Company.

Spectral Capital Corporation undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the risk factors described in other documents the Company files from time to time with the Securities and Exchange Commission.

Item 1: Financial Statements

Our unaudited interim financial statements for the three and nine months ended September 30,March 31, 2022 and 2021 and 2020 are part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles.

SPECTRAL CAPITAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2021MARCH 31, 2022 AND DECEMBER 31, 20202021

(UNAUDITED)

The accompanying notes are an integral part of these condensed consolidated financial statements.

SPECTRAL CAPITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,MARCH 31, 2022 AND 2021 AND 2020

(UNAUDITED)

The accompanying notes are an integral part of these condensed consolidated financial statements.

SPECTRAL CAPITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINETHREE MONTHS ENDED SEPTEMBER 30,MARCH 31, 2022 AND 2021 AND 2020

(UNAUDITED)

Non-cash investing and financing activities:

Exchange of related party advances and accruals for a convertible note payable

$1,261,609 

$- 

The accompanying notes are an integral part of these condensed consolidated financial statements.

SPECTRAL CAPITAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021MARCH 31, 2022

(UNAUDITED)

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 a technology company focused on the identification, acquisition, development, financing of technology that has the potential to transform existing industries. The Company looksWe look for technology that can be protected through patents or laws regarding trade secrets. Spectral has acquired significant stakes in threetwo technology companies currently and actively works with management to drive these companies toward increasing market penetration in their particular verticals.  Spectralpartnerships within the telecommunications industry and intends to own,increase its portfolio over time.

In January 2022, the Company commenced a new line of business which is providing data and telecommunications reselling services on a global basis.  On February 15, 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 for Sky Data PLL OU. The company is focusing on this line of business and is currently expanding its network on an as needed basis by adding as many ports as its customers require in full or in part, technology companies whose foundersany given month. We provide business to business (B2) telecommunications interconnection services to mainly Asia, South America and key management can take advantageAfrica. This is done by negotiating directly with international private and public carriers for telecommunications rates based on certain volume and transaction levels.

Our wholesale voice services provide global routing solutions and direct bilateral connections with many major PTTs, Tier-1 carriers and Mobile operators around the world to further expand our network and improve voice quality. Our global network is comprised of the deep networksover 100 Tier 1 carriers, Mobile Operators & PTTs from across all continents. A geographically-load balanced, multi-data center architecture design ensures 99.999% uptime and experience in technology development embodied in Spectral management.business continuity with 24-hour fully redundant, state-of-the-art Network Operations Center (NOC) and we conduct routine security audits. 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  The Company is in the development stagehas recently commenced revenue generating activities and has sustained substantial losses since inception. As of September 30, 2021,March 31, 2022, the Company has cash on hand of $315$86,550 and negative working capital of ($1,223,575).$1,198,653. The Company expects current cash on hand will not be able to fund operations for a period in excess of 12 months. These factors raise substantial doubt regarding the Company'sCompany’s ability to continue as a going concern.

To date management has funded its operations through selling equity securities and advances from related parties. The ability of the Company to continue as a going concern is dependent on the Company generating cash from its recently established operations, the sale of its common stock and/or obtaining debt financing and attaining future profitable operations, however, there can be no assurance the Company will be successful in these efforts. As of the date of these consolidated financial statements the Company does not have any firm commitments for capital. Without the required capital, the Company has had to reduce their development expenditures which will delay the completion of products which are expected to generate future revenues.

Risks and Uncertainties

The Company has a limited operating history and has not generated revenues from our planned principal operations.

SPECTRAL CAPITAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2022

(UNAUDITED)

The Company's business and operations are sensitive to general business and economic conditions in the U.S. and worldwide. These conditions include short-term and long-term interest rates, inflation, fluctuations in debt and equity capital markets and the general condition of the U.S. and world economy. A host of factors beyond the Company's control could cause fluctuations in these conditions, including the political environment and acts or threats of war or terrorism. Adverse developments in these general business and economic conditions, including through recession, downturn or otherwise, could have a material adverse effect on the Company's consolidated financial condition and the results of its operations.

The Company currently has no salesgenerated limited revenues 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. Developing a marketing and sales force is also time consuming and could delay launch of our future products. In addition, the Company will compete with many companies that currently have extensive and well-funded marketing and sales operations. Our marketing and sales efforts may be unable to compete successfully against these companies. In addition, the Company has limited capital to devote sales and marketing.

The Company's industry is characterized by rapid changes in technology and customer demands. As a result, the Company's products may quickly become obsolete and unmarketable. The Company's future success will depend on its ability to adapt to technological advances, anticipate customer demands, develop new products and enhance our current products on a timely and cost-effective basis. Further, the Company's products must remain competitive with those of other companies with substantially greater resources. The Company may experience technical or other difficulties that could delay or prevent the development, introduction or marketing of new products or enhanced versions of existing products. Also, the Company may not be able to adapt new or enhanced products to emerging industry standards, and the Company's new products may not be favourably received. Nor may we have the capital resources to further the development of existing and/or new ones.

On January 30, 2020, the World Health Organization declared the coronavirus outbreak (“COVID-19”) a “Public Health Emergency of International Concern” and on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. The coronavirus and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company operates. The impact of COVID-19 to our operations had been minimal due to our limited operations. However, due to the continued uncertainty around COVID-19 the additional effects of the potential impact cannot be predicted at this time.

Interim Consolidated Financial Statements

The accompanying unaudited interim consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission.  Certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these consolidated financial statements have been included.  Such adjustments consist of normal recurring adjustments.  These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2020.2021. The results of operations for the three and nine months ended September 30, 2021March 31, 2022 are not indicative of the results that may be expected for the full year.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company, Spectral Holdings, Inc, and its 60% owned subsidiaries, Noot Holdings, Inc. from its date of incorporation of February 28, 2013, and Monitr Holdings, Inc. from its date of incorporation of December 1, 2013.  All material intercompany accounts and transactions have been eliminated in consolidation.

Basis of Presentation

The 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.

SPECTRAL CAPITAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2022

(UNAUDITED)

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. 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. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. There are three levels of inputs that may be used to measure fair value:

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. As of September 30, 2021March 31, 2022 and December 31, 2020,2021, the Company does not have any assets or liabilities which would be considered Level 2 or 3.

The Company’s financial instruments consist of cash and cash equivalents, investments in technologies and related party advances. 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.

The Company measures certain assets at fair value on a nonrecurring basis. These assets include cost method investments when they are deemed to be other-than-temporarily impaired, assets acquired and liabilities assumed in an acquisition or in a nonmonetary exchange, and property and equipment and intangible assets that are written down to fair value when they are held for sale or determined to be impaired. Excluding these items, the Company did not have any significant assets or liabilities that were measured at fair value on a nonrecurring basis in periods subsequent to initial recognition.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Revenue Recognition

The Company will recognize revenues in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue from contracts with customers”. Revenues will beare 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 ninethree months ended September 30, 2021,March 31, 2022, were insignificantprovided primarily to one customer. The loss of this customer would have a significant impact on the Company’s financial statements. These revenues are for one annual subscription sold to which is being recorded over the subscription period. Deferred revenue represents amounts in which still have yet to be earned.statements

SPECTRAL CAPITAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2022

(UNAUDITED)

Basic LossIncome (Loss) Per Share

Basic loss per share is calculated by dividing the Company’s net lossincome (loss) applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Common share equivalents totalling 10,000,000 and 13,000,000 were outstanding at September 30,March 31, 2021 and 2020, respectively, representing outstanding warrants and options, and were not included in the computation of diluted earnings per share for the three and nine months ended September 30,March 31, 2021, and 2020, as their effect would have been anti-dilutive. During the three months ended March 31, 2022, the Company included dilutive shares of 252,321,800 related to convertible notes payable in the calculation of dilutive net income per share.

Non-Controlling Interests

Non-controlling interest disclosed within the consolidated statement of operations represents the minority ownership 40%, share of net income (losses) of Noot Holdings, Inc. and Monitr Holdings, Inc. incurred during the ninethree months ended September 30, 2021.March 31, 2022. The following table sets forth the changes in non-controlling interest for the ninethree months ended September 30, 2021:March 31, 2022:

Foreign Currency

The Company's functional currency is the United States Dollar. Transaction gains or losses related to balances denominated in a currency other than the functional currency are recognized in the consolidated statements of operations. As a result of these foreign currency transactions in which require payment in a currency other than the United States Dollar, the Company has recorded foreign currency (income) losses within the accompanying condensed consolidated statement of operations.

Recent Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt—Debt with “Conversion and Other Options” and ASC subtopic 815-40 “Hedging—Contracts in Entity’s Own Equity”. The standard reduced the number of accounting models for convertible debt instruments and convertible preferred stock. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting; and, (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company adopted this standard on January 1, 2022 with no impact on the financial statements.

The FASB issues ASUs to amend the authoritative literature in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). There have been a number of ASUs to date, including those above, that amend the original text of ASC. Management believes that those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact the Company’s financial statements.

SPECTRAL CAPITAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2022

(UNAUDITED)

NOTE 3 –3– RELATED PARTY TRANSACTIONS

Jenifer Osterwalder, the Company's Chief Executive Officer

Jenifer Osterwalder charges the Company $12,000 per month beginning January 1, 20202021 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 $108,000$36,000 and $108,000$36,000 for the ninethree months ended September 30,March 31, 2022 and 2021, and 2020, respectively. As of September 30, 2021March 31, 2022 and December 31, 2020,2021, amounts due to the CEO related to accrued salaries were $1,018,653$36,000 and $910,653,$1,054,653, respectively. Decrease in the current quarter is due to the conversion of accounts payable into a related party convertible note payable.

From time to time due to the limited cash flow available, the Company's CEO pays certain operating expenditures on behalf of the Company and at times advances monies.Company. These advances bear no interest and are due on demand. As of September 30, 2021March 31, 2022 and December 31, 2020,2021, the Company's CEO was due $203,831$0 and $178,605$206,956 in connection with these advances, respectively. Decrease in the current quarter 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. Subsequent to quarter end, the Chief Executive Officer sold $1,054,653 to a third party which was then converted into approximately 211 million shares. The convertible note of $206,956 remains outstanding.

NOTE 4 – STOCKHOLDERS’ DEFICIT

Changes in Stockholders' Deficit

Net loss and non-controlling interest were the only changes to stockholders' deficit duringDuring the three and nine months ended September 30,March 31, 2021, and 2020.the Company sold 50 million shares of common stock resulting in proceeds of $49,930.

Employee Options

The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation – Stock Compensation which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values.

The Company has adopted a stock option and award plan to attract, retain and motivate its directors, officers, employees, consultants and advisors. Options provide the opportunity to acquire a proprietary interest in the Company and to benefit from its growth. Vesting terms and conditions are determined by the Board of Directors at the time of the grant. The Plan provides for the issuance of up to 15,000,000 common shares for employees, consultants, directors, and advisors.

On February 6, 2012, the Company granted 7,500,000 As of March 31, 2022, all options to two employees. Stock-based compensation is being recognized over the two year vesting period. All related compensation expense was recorded prior to periods presented within these condensed consolidated financial statements.were expired.

NOTE 5 – COMMITMENTS AND CONTINGENCIES

The Company leases office space on a three month basis in Seattle, Washington.

NOTE 6 –6– SUBSEQUENT EVENTS

In accordance with ASC 855-10,On March 31, 2022, the board of directors of Spectral resolved to convert $1,054,653 of debt owed by the Company to Decus Pro OU into 210,930,660 shares of common stock. On the same date, our board of directors also resolved to convert $206,956 of debt owed to Decus Pro OU into 41,391,200 shares of common stock. These conversions constituted a change of control of the Company to Decus Pro OU, which is owned by Boriss Aleksandrov. The debt was converted into equity in an effort to clean up the Company's balance sheet and to attract further investment in the future. These debt conversions account for substantially all of the long term debt on the Company's book and the Company has analyzedno convertible instruments left on its operations subsequent to September 30, 2021 to the date these condensed consolidated financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these consolidated financial statements.books.

The following discussion and analysis of our financial condition and results of our operations should be read in conjunction with our financial statements and related notes appearing elsewhere in this report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements. The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and related notes included in this report and those in our Form 10-K for the year ended December 31, 20202021 filed with the Securities and Exchange Commission on February 18, 2021March 4, 2022 and all subsequent filings.

OVERVIEW

Spectral Capital Corporation (“Spectral”Spectral,” the “Company,”  “we” or the Company, also “We or Us”“us”) is a technology company focused on the identification, acquisition, development, financing of technology that has the potential to transform existing industries. We look for technology that can be protected through patents or laws regarding trade secrets. Spectral has acquired significant stakes in two technology companies. Spectral intendscompanies and we have developed important partnerships within the telecommunications industry. We intend to own,increase our portfolio over time through further partnerships.

In January 2022, the Company commenced a new line of business that provides data and telecommunications reselling services on a global basis.  On February 15, 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 for Sky Data PLL OU. The Company is focusing on this line of business and is currently expanding its network on an as needed basis by adding as many ports as its customers require in full or in part, technology companies whose foundersany given month. We provide business to business (B2) telecommunications interconnection services to mainly Asia, South America and key management can take advantage of the deep networksAfrica. This is done by negotiating directly with international private and experience in technology development embodied in Spectral management.public carriers for telecommunications rates based on certain volume and transaction levels.

RESULTS OF OPERATIONS

Comparison of the NineThree Months Ended September 30,March 31, 2022 and March 31, 2021 and September 30, 2020

Revenues

We are currently engaged in a technology development business and have exited natural resources.recently commenced operations within the telecom industry. Revenues decreasedincreased from $48$0 for the ninethree months ended September 30, 2020March 31, 2021 to zero$453,340 for the ninethree months ended September 30, 2021.March 31, 2022. The decreaseincrease is due to launching of our new business venture.

Cost of Revenues

We are currently engaged in a technology development business and recently commenced operations within the telecom industry. Cost of revenues increased from $0 for the three months’ worthmonths ended March 31, 2021 to $354,877 for the three months ended March 31, 2022. The increase is due to launching of revenue in 2020 compared to zero months’ worth of revenue in 2021 related to a purchase of a subscription to the Company’s consolidated entity Monitr.our new business venture.

Operating Expenses

Operating expenses increased $4,665,$43,951, from $128,659$40,614 for the ninethree months ended September 30, 2020March 31, 2021 to $133,324$84,565 for the ninethree months ended September, 2021.March 31, 2022.  The minimalsignificant increase iswas due to increase in professional fees relatedthe expansion of our operations due to keeping the Company current in their SEC reporting requirements.our new line of business.

Liquidity and Capital Resources

As of September 30, 2021,March 31, 2022, we had $315$86,550 of cash on hand. We intend to fund operations through the use of cash on hand, and through additional advancescash flows from our chief executive officeroperations and through debt and equity financings until sufficient cash flows from operations can be achieved.

Net cash used inprovided from operating activities increased $5,291,$41,598 from $20,659$(5,242) cash used during the three months ended March 31, 2021 to $36,356 cash provided for the ninethree months ended September 30, 2020 to $25,950 for the nine months ended September 30, 2021.March 31, 2022. This increase was primarily related to the increase in professional fees.Company having increased operations.

Net cash provided by financing activities increased by $5,583$44,742 from $20,269$5,188 for the ninethree months ended September 30, 2020March 31, 2021 to $25,852$49,930 for the ninethree months ended September 30, 2021.March 31, 2022. Net cash provided by financing activities during the ninethree months ended September 30,March 31, 2022 and 2021 and 2020 related to net proceeds from advances from a related party in connection with payment of the Company's obligations.obligations and proceeds from the sale of common stock.

We believe that our current financial resources are not sufficient to meet our working capital requirements over the next year. Additional funding will be necessary in order to expand portfolio operations and to reach our goals. Currently, the Company does not have any commitments or assurances for additional capital nor can the Company provide assurance that such financing will be available to it on favourablefavorable terms, or at all. If, after utilizing the existing sources of capital available to the Company, further capital needs are identified and the Company is not successful in obtaining the financing, it may be forced to curtail its existing or planned future operations. In addition, if necessary, we will decrease expenses and redirect our efforts towards a sale of one of more of our assets should funding become inadequate.

Our short-term prospects are promising given our success to date in securing the two portfolio companies, Noot and Monitr. We believe we will experience significant operational and financial growth from these and other portfolio companies during the next 12 months.  However, we need significant capital to implement our plan.

Off Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required for a smaller reporting company.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures.

As required by Rule 13a-15 or Rule 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management, including our principal executive officer and principal accounting officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing evaluation, we have concluded that our disclosure controls and procedures were not effective as of September 30, 2021March 31, 2022 and that they do not allow for information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission (“SEC”) rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the us in the reports that we file or submit under the Exchange Act is accumulated and communicated to the Company’s management, including its Chief Executive and Principal Accounting & Financial Officers as appropriate to allow timely decisions regarding required disclosure.

The material weaknesses were first identified in our annual report on Form 10-K for the year ended December 31, 2012 in which related to a lack of an accounting staff resultingthat resulted in a lack of segregation of duties necessary for an effective system of internal control. The weakness in segregation of duties will continue to exist until such time as management can retain internal staff to properly segregate duties.  

(b) Changes in internal control over financial reporting.

There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 2. Unregistered Sales of Securities and Use of Proceeds

None.On March 31, 2022, the board of directors of Spectral resolved to convert $1,054,653 of debt owed by the Company to Decus Pro OU into 210,930,660 shares of common stock and to convert $206,956 of debt also owed to Decus Pro OU into 41,391,200 shares of common stock at a deemed conversion rate of .005. In connection with both conversions of debt, 252,321,860 shares of common stock were issued to Decus Pro OU on April 1, 2022.

On [April 1], 2022, the Company issued 50,000,000 shares of common stock at $0.001 per share to certain foreign investors for an aggregate amount of $50,000 in connection with a private placement conducted in reliance upon the exemption from registration afforded by Regulation S under the Securities Act of 1933, as amended.

Item 3. Defaults Upon Senior Securities

Not Applicable.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information

None.

Item 6. Exhibits

EXHIBITS

SIGNATURE

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

November 5, 2021

Dated: May 16, 2022

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