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, 2021 filed with the Securities and Exchange Commission on
March 4, 2022 and all subsequent filings.
OVERVIEW
Spectral Capital Corporation ("Spectral", the "Company", "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.
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 any given month. We provide business to
business (B2) telecommunications interconnection services to mainly Asia, South
America and Africa. This is done by negotiating directly with international
private and public carriers for telecommunications rates based on certain volume
and transaction levels.
On June 19, 2022, our Board of Directors approved a resolution regarding the
authorization of the Board to increase the number of authorized shares of common
stock, $0.0001 par value per share (the "Common Stock") from 500,000,000 to
1,000,000,000 (the "Increase in Authorized Capital"). On June 20, 2022, the
holder of a majority of the Company's issued and outstanding Common Stock (the
"Majority Stockholder") approved the Increase in Authorized Capital by written
consent. The Certificate of Amendment has been filed with the state of Nevada to
effectuate the Increase in Authorized Capital and is currently in process as of
the date of this quarterly report, and we anticipate effectiveness in September
2022.
On June 19, 2022, our Board approved a resolution to effect a reverse stock
split (the "Reverse Stock Split") of the Company's Common Stock whereby every
ten (10) shares of issued and outstanding Common Stock shall be combined into
one (1) share of issued and outstanding Common Stock. On June 20, 2022, the
Majority Stockholder approved the Reverse Stock Split by written consent. We are
currently in the process of receiving approval from FINRA to proceed with the
Reverse Stock Split and anticipate effectives and completion of the Reverse
Stock Split in September 2022.
RESULTS OF OPERATIONS
Comparison of the Six Months Ended June 30, 2022 and 2021
Revenues
We are currently engaged in a technology development business and recently
commenced operations within the telecom industry. Revenues increased from $0 for
the six months ended June 30, 2021 to $3,070,487 for the six months ended June
30, 2022. The increase is due to launching of our new business venture.
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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 six months ended June 30, 2021 to $3,128,327 for the six months
ended June 30, 2022. The increase is due to launching of our new business
venture.
Operating Expenses
Operating expenses increased $176,269, from $92,275 for the six months ended
June 30, 2021 to $268,544 for the six months ended June 30, 2022. The
significant increase was due to the expansion of our operations due to our new
line of business.
Liquidity and Capital Resources
As of June 30, 2022, we had $88,471 of cash on hand. We intend to fund
operations through the use of cash on hand, cash flows from operations and
through debt and equity financings until sufficient cash flows from operations
can be achieved.
Net cash provided from operating activities increased $59,180 from $($20,903)
cash used during the six months ended June 30, 2021 to $38,277 cash provided for
the six months ended June 30, 2022. This increase was primarily related to the
Company having increased operations.
Net cash provided by financing activities increased by $29,135 from $20,795 for
the six months ended June 30, 2021 to $49,930 for the six months ended June 30,
2022. Net cash provided by financing activities during the six months ended June
30, 2022 and 2021 related to net proceeds from advances from a related party in
connection with payment of the Company's 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 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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