The following discussion and analysis of our financial condition, results of operations and liquidity should be read in conjunction with our consolidated financial statements for the years ended December 31, 2022 and 2021 and the related notes appearing elsewhere in this annual report. Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles.





CRITICAL ACCOUNTING POLICIES

Our critical accounting policies, including the assumptions and judgments underlying those policies, are more fully described in the notes to our consolidated financial statements. We have consistently applied these policies in all material respects. Investors are cautioned, however, that these policies are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially. Set forth below are the accounting policies that we believe most critical to an understanding of our financial condition, results of operations and liquidity.

Principles of Consolidation

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





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.





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 have interests in telecommunications, data and switching services, specifically providing international long distance reselling services on a business-to-business ("B2B") basis. We seek partnerships to expand our business as well as seek technological advancement opportunities that may provide us with a substantial advantage over our competition. Additionally, Spectral has majority ownership of two non-operating technology companies: Noot and Monitr.

We believe the underlying technology for both Noot and Monitr has the potential to create profitable businesses on their own but require substantial capital to upgrade their software to become competitive. Spectral currently does not have the financial means for these required upgrades.





PLAN OF OPERATIONS

Spectral Capital is a technology startup accelerator that invests in early stage companies. Spectral targets industry verticals and solutions where disruption and network effects allow for rapid adoption and displacement of incumbents. We work with startups focusing them on rapid development, getting to market, and refining their products and services with innovative features that reflect direct customer and market feedback. In addition to meeting some of the financing needs of our portfolio companies, we provide our teams with executive support at the technology, marketing and operations level in effort to bring optimal results.

--------------------------------------------------------------------------------


                                       24

--------------------------------------------------------------------------------

Our technology portfolio consists of two companies where Spectral is the majority owner: Noot and Monitr.

Noot is a mobile technology company that created the mobile application "Noot" which utilized proprietary search engine technology for mobile devices that delivered personalized information to the user. While Noot is no longer a working mobile application, its foundation of mobile search and machine learning is still relevant today. Given adequate funding to upgrade its software, we believe there are alternative markets in which Noot could enter. The mobile search sector has much room to grow. Currently Spectral is unable to provide the necessary funds for this upgrade.

Monitr, launched in late 2014, is a technology and financial data services company that identifies for investors stocks that its software detects to be trending up in price at the moment.

·Monitr leverages cloud computing, big data and software to analyze the financial markets to discover those stocks that are trending now. Thousands of companies, news stories, blogs and opinion pieces are analyzed daily to uncover the trends and displayed in an accessible and easy-to-use web based interface for investors and traders.

·Many investors use only a few sources to become informed of market conditions, Monitr provides investors with access to thousands of sources.

Monitr specializes in the analysis of news and opinion to determine the aggregate sentiment and trends of equities across markets in part to detect trends and provide relevant data for its users.

With the growth of Fintech, Monitr has a growing list of competitors, however, we believe that Monitr´s trend detecting software could perform well relative to the competition. However, Monitr will require substantial additional investment into its software to become competitive in the growing marketplace. Currently Spectral is unable to provide the necessary funds for this upgrade.

Additionally, we have recently entered the telecommunications, data and switching services market, specifically providing international long distance reselling services on a B2B basis. We form partnerships to expand our business as well as seek technological advancement opportunities that may provide us with a substantial advantage over our competition.

Over the course of the next 12 months, Spectral intends to increase capital so that we may advance our telecommunication reselling business, foster the development of Noot and Monitr as well as expand our portfolio, given adequate capital.

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Revenues and Cost of Revenues

We are currently engaged in a technology development business and recently commenced operations within the telecom industry. Net, revenues increased from $0 for the year ended December 31, 2021 to $98,323 for the year ended December 31, 2022. The increase is due commencing our new business venture in the telecom industry. The Company temporarily paused its current operations during increase is due to launching of our new business venture.





Operating Expenses

Operating expenses increased $167,153, from $172,230 for the year ended December 31, 2021 to $339,383 for the year ended December 31, 2022. The significant increase was due to the expansion of our operations due to our new line of business.

--------------------------------------------------------------------------------


                                       25

--------------------------------------------------------------------------------

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2022, we had $87 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 $16,522, from $28,500 for the year ended December 31, 2021 to $45,022 for the year ended December 31, 2022. This continued low amount of costs was primarily related to the Company having limited operations, due to the cash flow limitations.

Net cash provided by (used in) financing activities increased by $27,079 from $28,351 for the year ended December 31, 2021 to $55,530 for the year ended December 31, 2022. Net cash provided by financing activities during the year ended December 31, 2022 primarily related to sales 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 favorable 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.

© Edgar Online, source Glimpses