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, 2020 filed with the Securities and Exchange Commission on February 18, 2021 and all subsequent filings.





OVERVIEW

Spectral Capital Corporation ("Spectral" or the Company, also "We or 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 intends to own, in full or in part, technology companies whose founders and key management can take advantage of the deep networks and experience in technology development embodied in Spectral management.





RESULTS OF OPERATIONS

Comparison of the Nine Months Ended September 30, 2021 and September 30, 2020





Revenues

We are currently engaged in a technology development business and have exited natural resources. Revenues decreased from $48 for the nine months ended September 30, 2020 to zero for the nine months ended September 30, 2021. The decrease is due to three months' worth 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.





Operating Expenses

Operating expenses increased $4,665, from $128,659 for the nine months ended September 30, 2020 to $133,324 for the nine months ended September, 2021. The minimal increase is due to increase in professional fees related to keeping the Company current in their SEC reporting requirements.

Liquidity and Capital Resources

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

Net cash used in operating activities increased $5,291, from $20,659 for the nine months ended September 30, 2020 to $25,950 for the nine months ended September 30, 2021. This increase was primarily related to the increase in professional fees.

Net cash provided by financing activities increased by $5,583 from $20,269 for the nine months ended September 30, 2020 to $25,852 for the nine months ended September 30, 2021. Net cash provided by financing activities during the nine months ended September 30, 2021 and 2020 related to net proceeds from advances from a related party in connection with payment of the Company's obligations.

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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 favourable 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.

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