0001096906-16-001498.txt : 20160329 0001096906-16-001498.hdr.sgml : 20160329 20160329130851 ACCESSION NUMBER: 0001096906-16-001498 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 71 CONFORMED PERIOD OF REPORT: 20151231 FILED AS OF DATE: 20160329 DATE AS OF CHANGE: 20160329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPECTRAL CAPITAL Corp CENTRAL INDEX KEY: 0001131903 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 880472860 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-50274 FILM NUMBER: 161534656 BUSINESS ADDRESS: STREET 1: 1420 5TH AVENUE. SUITE 2200, CITY: SEATTLE STATE: WA ZIP: 98101 BUSINESS PHONE: 206-274-5107 MAIL ADDRESS: STREET 1: 1420 5TH AVENUE. SUITE 2200, CITY: SEATTLE STATE: WA ZIP: 98101 FORMER COMPANY: FORMER CONFORMED NAME: SPECTRA CAPITAL Corp DATE OF NAME CHANGE: 20100813 FORMER COMPANY: FORMER CONFORMED NAME: FUSA CAPITAL CORP DATE OF NAME CHANGE: 20040707 FORMER COMPANY: FORMER CONFORMED NAME: GALAXY CHAMPIONSHIP WRESTLING INC DATE OF NAME CHANGE: 20010108 10-K 1 spectral.htm SPECTRAL CAPITAL CORPORATION 10K 2015-12-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

 
[X]
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the year ended December 31, 2015.

 
[  ]
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _________
 
Commission File No. 0-50274

Spectral Capital Corporation
(Name of small business issuer in its charter)

Nevada
51-0520296
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
 
701 Fifth Avenue, Suite 4200, Seattle, Washington
98104
(Address of principal executive offices)
(Zip Code)


Issuer's telephone number:  (206) 262-7820

Securities registered under Section 12(b) of the Exchange Act:

None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $0.0001 par value
(Title of Class)


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act      Yes     No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.   Yes    No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days.  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 (§229.405 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     No


Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

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

Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes      No

The number of shares of the issuer's Common Stock outstanding as of March 24, 2016 is 117,857,623. 

As of June 30, 2015, the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the last reported sales price of such common equity was approximately $17,676,553.
 

DOCUMENTS INCORPORATED BY REFERENCE

None

TABLE OF CONTENTS

FORWARD LOOKING STATEMENTS 
Page Number
   
PART I
 
 
 
 
 
ITEM 1
Description of Business.
1
     
ITEM 1A
Risk Factors
9
     
ITEM 2
Description of Property.
9
     
ITEM 3
Legal Proceedings.
9
     
ITEM 4.
Mine Safety Disclosures
9
 
 
 
PART II
 
 
 
 
 
ITEM 5.
Market for Common Equity and Related Stockholder Matters.
10
     
ITEM 7
Management's Discussion and Analysis or Plan of Operation.
11
     
ITEM 8
Financial Statements.
F-1
     
ITEM 9
Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.
17
     
ITEM 9A
Controls and Procedures.
17
     
ITEM 9B
Other Information.
18
 
 
 
PART III
 
 
 
 
 
ITEM 10.
Directors, Executive Officers, Promoters and Control Persons and Corporate Governance; Compliance With Section 16(a) of the  Exchange Act.
19
     
ITEM 11
Executive Compensation.
21
     
ITEM 12
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
22
     
ITEM 13
Certain Relationships and Related Transactions, and Director Independence.
23
     
ITEM 14
Principal Accountant Fees and Services.
24
     
PART IV    
     
 ITEM 15.   Exhibits  25
     
  Signatures  26


       
PART I

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-K, press releases and certain information provided periodically in writing or verbally by our officers or our agents contain statements which constitute forward-looking statements. The words "may", "would", "could", "will", "expect", "estimate", "anticipate", "believe", "intend", "plan", "goal", and similar expressions and variations thereof are intended to specifically identify forward-looking statements. These statements appear in a number of places in this Form 10-K and include all statements that are not statements of historical fact regarding the intent, belief or current expectations of us, our directors or our officers, with respect to, among other things: (i) our liquidity and capital resources; (ii) our financing opportunities and plans; (iii) our ability to generate revenues; (iv) competition in our business segments; (v) market and other trends affecting our future financial condition or results of operations; (vi) our growth strategy and operating strategy; (vii) the declaration and/or payment of dividends; and (viii) any statements regarding any reserves, potential reserves, potential mineral yield or extraction costs with respect to our mining properties.

Investors and prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. The factors that might cause such differences include, among others, those set forth in Part II, Item 7 of this annual report on Form 10-K, entitled Management's Discussion and Analysis or Plan of Operation, including without limitation the risk factors contained therein. Except as required by law, we undertake no obligation to update any of the forward-looking statements in this Form 10-K after the date of this report.

ITEM 1. DESCRIPTION OF BUSINESS.

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 three technology companies currently and actively works with management to drive these companies toward increasing market penetration in their particular verticals.  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.
1


CORPORATE HISTORY AND DEVELOPMENT
 
We were incorporated in the State of Nevada on September 13, 2000 as Galaxy Championship Wrestling, Inc., a media and entertainment company focused on developing, producing and marketing live entertainment in the professional wrestling sphere.
 
On March 31, 2004, unable to generate sufficient revenues to sustain our professional wrestling business, we ceased operations in this field and began exploring other business opportunities.
 
Also on March 31, 2004 our controlling shareholders entered into a certain private stock purchase agreement, wherein they sold an aggregate of 5,750,000 of our common shares, representing a sixty-two and seventeen twentieths percent (62.85%) controlling interest, to an unrelated third party.
 
By certificate of amendment filed June 17, 2004, we changed our name from Galaxy Championship Wrestling, Inc. to FUSA Capital Corporation.
 
During the period from March 31, 2004 until March 7, 2005 we had no meaningful operations and did not carry on any active business, focusing instead on identifying and evaluating the merits of alternative potential business and acquisition opportunities which might allow us to restart operations.
 
On March 7, 2005 we entered into a certain plan and agreement of reorganization with FUSA Technology Investments Corp. ("FTIC"), a Nevada corporation engaged in the emerging growth field of audio and video search engine technology, whereby we acquired all of the issued and outstanding capital stock of FTIC in addition to obtaining certain intellectual property concepts related to search engine technology as developed by FTIC and its principals. In March of 2005 we also entered into a 3 for one stock dividend payable to our shareholders.
 
 From April, 2005 until September 2010, we were engaged continuously in the development and operation of consumer focused media search engine technologies and portals. During the last nine months of 2009, we began to substantially curtail our operations and ongoing technology development as a consequence of (i) having completed a substantial portion of our planned principal technology development work and (ii) being unable to raise sufficient funds through revenue or sales of debt or equity securities to continue our previous levels of operation and development.  We ceased operating our Internet properties in December 2010.

We had consistently lost money on our on-line consumer media properties due to the expenses involved in hosting, promotion, development and management of those sites.  In an effort to maintain as much traffic as possible on our most popular media site, www.searchforvideo.com, which is also responsible for a large proportion of our expenses, we contracted with Brass Consulting Ltd. to maintain the site in exchange for net revenue produced from the site.  This agreement was cancellable after 30 days notice. We cancelled this agreement in September 2009.   We were not able to operate the site properly internally or through an external provider.
 
On June 29, 2009, our Board of Directors resolved to amend the Articles of Incorporation pursuant to Nevada Revised Statues 78.207 to decrease the number of authorized shares of our common stock, par value $0.0001, from 500,000,000 to 333,333 shares. Correspondingly, our Board of Directors affirmed a reverse split of one thousand and five hundred (1,500) to one (1) in which each shareholder was issued one (1) share in exchange for every one thousand and five hundred (1,500) common shares of their currently issued common stock. The record date for the reverse split was July 6, 2009.

On July 27, 2010, our shareholders voted to change our name to Spectral Capital Corporation and to increase number of shares of our authorized common stock from 333,333, par value $0.0001 to 500,000,000, par value $0.0001.

On August 18, 2010, we entered into a financing with a third party, Trafalgar Wealth Management.  Under the terms of the financing, for aggregate consideration of $50,000 or $0.001 per common share, we sold 50,000,000 common shares and issued warrants to purchase 10,000,000 common shares at an exercise price of $1.00 per share.  Under the terms of the agreements as amended in 2011, subject to certain terms and conditions, Trafalgar is obligated to exercise at least $1,000,000 worth of these warrants over the next 24 months or Spectral will receive back 5,000,000 of the shares.

2

Pursuant to a notice of conversion by holders of our April 2009 promissory notes, we converted the outstanding of interest and principal under the notes, which was in excess of $50,000, for a settled amount of $50,000.  Under the terms of the April 2009 note, we are required to convert these shares at the current financing price of $0.001 per share.  Therefore, on August 18, 2010 we issued 50,000,000 shares to various holders of the April 2009 promissory notes, which represents 49.9% of our current issued and outstanding shares.

In September 2010, the Company purchased an interest in mineral properties in the Chita region of the Russian Federation. The Kadara and Kaltagay license is located in the Mogochinsky district of the Chita Region in the Russian Federation. Initially, we purchased 47% of the License for prospecting, exploration and production of gold and all other metals. The length of the License runs to August 31, 2031. The size of the License is 186 square kilometers or 18,200 hectares. Development and exploration activities are currently being undertaken. In December, 2010, we purchased an additional interest of 5% in this property, bringing our total interest in the property to 52%.

In January, 2011, we purchased a 65% interest in mineral properties in the Bayankol River region of Kazakhstan ("Bayankol").

In July, 2011, we conveyed our interest in our Chita property back to our counterparty in exchange for cancellation of warrants to purchase Spectral common stock issued in the transaction and our right to be reimbursed for incurred costs to date.   We have not yet sought any reimbursement under this agreement.

In September, 2011, we developed a partnership in Saratov, Russia to acquire and develop oil leases in the region.

In December, 2011, we restructured our interest in our Bayankol property The agreement rescinded the original transaction of January 14, 2011 and the previously issued warrants were cancelled.  Spectral agreed to issue 1,000,000 common shares of Spectral stock in exchange for an option to purchase 65% of the property.  Spectral will also have an obligation to find third party debt financing of $200,000,000 over five years to maintain its interest in the Bayankol property.

In February, 2012, we acquired a 60% interest in a Canadian oil and gas field in the Red Earth region of Alberta for a cash payment of $750,000, which we paid.  Under the agreement, we also had the right to fund additional drilling on the property up to $17,500,000 on a secured creditor basis.  The property is currently in production and producing oil.  There are eight permitted drilling locations on the property.

In December, 2012, the Company entered into an agreement with Akoranga AG, a Company owned by the CEO of Spectral, to transfer its ownership interests in the Alberta oil and gas properties for $950,000, the value of Spectral's contributions to the project to date. In satisfaction of the purchase price, Akoranga agreed to offset liabilities of Spectral in the amount of $626,022.  The balance owing of $323,978 is non-interest bearing and was to be repaid within a one year period. Subsequent to the year ended December 31, 2013, the fulfillment of the agreement was extended to December 31, 2014.
On February 26, 2013, Spectral Capital Corporation, through its subsidiary, Spectral Holdings, Inc. signed a definitive Technology Acquisition Agreement ("Agreement") to acquire mobile search engine and mobile sharing technology from Fiveseas Securities Ltd.  Under the Agreement, Spectral issued Fiveseas 5,000,000 common shares of Spectral Capital Corporation, par value $0.0001.  The Agreement calls for the technology to reside within a newly formed entity called Noot Holdings, Inc., a Delaware corporation, which Spectral is a 60% owner of and Fiveseas is a 40% owner of. Fiveseas was granted a right of first refusal for any subsequent sale of the technology.
On March 7, 2013, Spectral sold 1,650,000 common shares, par value $0.0001 at approximately $0.61 per share and received a total of $1,000,000 USD in financing proceeds.  Spectral also issued warrants to purchase 1,650,000 common shares, par value $0.0001 to the purchasers at an exercise price of $0.80 per share.  The warrants expired on March 6, 2015.  The shares were sold in a private placement to a non-US purchaser.  There were no commissions paid in the financing and no registration rights granted.
3

On March 14, 2013, Spectral Capital Corporation purchased 8% of the issued and outstanding shares of Kontexto, Inc., a Canadian corporation.  Spectral purchased the shares from Sargas Capital, Ltd., a minority shareholder, in exchange for 5,000,000 common shares of Spectral stock, par value $0.0001 and warrants to purchase 5,000,000 common shares at $0.85 per share, expiring on March 13, 2015.  There were no commissions associated with the transaction and the shares were issued to non US shareholders of a Sargas Capital, Ltd., a Canadian company. The Company's CEO is an officer of Sargas Capital, Ltd. but does not have any holdings in Sargas Capital, Ltd.
On December 1, 2013, Spectral Capital Corporation, through its subsidiary, Spectral Holdings, Inc. signed a definitive Technology Acquisition Agreement ("Agreement") to acquire a technology application and service that enhances the way people find, consume, analyze, share and discuss financial news and topics, equities, commodities and currencies on the web from TL Global Inc.  Under the Agreement, Spectral issued TL Global Inc. 5,000,000 common shares of Spectral Capital Corporation, par value $0.0001.  The Agreement calls for the technology to reside within a newly formed entity called Monitr Holdings, Inc., a Delaware corporation, which Spectral is a 60% owner of and TL Global Inc. is a 40% owner of. TL Global Inc. was granted a right of first refusal for any subsequent sale of the technology.
Our principal executive offices are located at 701 Fifth Avenue, Suite 4200, Seattle, Washington 98104. Our phone number is (206) 262-7820.  The Company's year end is December 31.

PRINCIPAL PRODUCTS AND SERVICES
 
Spectral is 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 three technology companies currently and actively works with management to drive these companies toward increasing market penetration in their particular verticals.  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.
 
Companies within the technology development and commercialization sector have a variety of areas of principal competence.  Some companies focus on aggressively developing a portfolio of intellectual property and then licensing that property and defending it through litigation.  Others focus on a technology embodied in a software product or device which has the potential to be acquired by businesses and/or consumers at a profit.  Others seek to develop and commercialize technology that attracts a significant number of users who can be monetized through advertising. Of course, technology development and commercialization is a vast and complex field.  Spectral has had an initial focus on information technology with a direct value proposition to businesses or consumers.

Like all companies that seek to develop a portfolio of high impact technologies and the corporate and organizational structure to monetize those technologies, Spectral must do the specialized work of lowering the risk profile of the commercialization of a particular technology to the point where it is able to grow at a reasonable customer acquisition cost.

We have a deep management expertise, developed knowledge within the search, media and analytics fields, attractive positioning, the ability to identify and close transactions quickly and a willingness to invest in technology that is mispriced relative to its economic potential.  Although the 2008 financial crisis has abated and technology companies generally are enjoying some robust growth, it still remains a challenge for early stage technology companies to find the financial and human resources to foster required growth.  This challenge creates an environment where Spectral can seek out and find high impact technology and invest in or acquire this technology at reasonable valuations.

Our business differs from those companies whose capital reserves, successful previous ability to monetize technology and scale, efficiencies and existing customer base allow them to select and develop technology by flooding the technology with financial and human resources.  Spectral's approach is much more targeted.  We only develop technology that we believe has a very specific fit with our expertise and limited capital.  We develop technology that does not require massive investments in sale and marketing in order to reach an initial audience.

4

We currently have two technology companies in the Spectral portfolio, Noot, and Monitr.

Noot is a mobile technology company that has created "Noot" which ulitilizes proprietary search engine technology for mobile devices. Noot helps people easily find news, social media, photos and video that match their interests. The technology actually learns what users like and improves its results over time, providing very personalized information for the user. A key benefit of Noot is that the search engine continues to work even when the user is not actively searching and will discover new and relevant items without prompting, providing more enhanced and personalized information the next time the user searches for that topic. While Noot is still a working mobile application, we have determined that the revenue potential does not meet our expectations and we are seeking alternative business opportunities to utilize the technology. Monitr, launched in late 2014, is a technology and financial data services company. In September 2015, Monitr launched a significant update to its technology that makes it easy for the new or non-professional investor to find the stocks that are 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 is offered at an accessible price for all types of investors
   
Monitr is independent and not being paid to promote stocks
   
Monitr is simple to use and removes a lot of guess work for new investors
 
Monitr specializes in the analysis of news, opinion and social media to determine the aggregate sentiment and trends of equities, commodities and currencies across world markets.  It offers these services direct to customers on the web and as a mobile application for tablets and smartphones. In addition to SAAS (software as a service) , Monitr offers customized analysis and real time data to larger financial institutions and hedge funds for use in fundamental and algorithmic analysis of financial markets.

On September 30, 2015 one of Spectral´s portfolio companies, Kontexto, ceased operations and is no longer in business.

Competition

We compete with a wide variety of parties in connection with our efforts to: (i) attract users to our various Analytics, Search & Software portfolio companies and the ones we intend to develop; (ii) develop, market and distribute our current and anticipated B2C ("Business to Consumer") and B2B ("Business to Business") software applications ("Applications or Apps") as developed by our portfolio companies; (iii) attract third parties to distribute our Applications and related technology; and (iv) attract advertisers. In the case of our anticipated search services generally, our competitors include Google, Yahoo!, Facebook, Amazon and other destination search websites and search centric portals (some of which provide a broad range of content and services and/or link to various desktop applications), third party toolbar, convenience search and applications providers, other search technology and convenience service providers (including internet access providers, social media platforms, online advertising networks, traditional media companies and companies that provide online content). Other competitors within the news reader market place include Flipboard, Trove, Paper to name a few. When we market our portfolio search and analytics services, we compete against a variety of established players and new entrants.
5

Moreover, some of our current and potential competitors have longer operating histories, greater brand recognition, larger customer bases and/or significantly greater financial, technical and marketing resources than we do. As a result, they have the ability to devote comparatively greater resources to the development and promotion of their products and services, which could result in greater market acceptance of their products and services relative to those offered by us.

In the case of our portfolio companies Noot and Monitr, we believe that our ability to compete successfully will depend primarily upon the relevance and authority of our search results, the usefulness of our analytics and other content, the functionality of our various Websites and software and the quality of related content and features and the attractiveness of the services provided by our technology generally to consumers and business relative to those of our competitors.

Marketing and Customers
       
Noot competes in the rapidly evolving area of mobile search as well as within the news reader market place.  The demand for consumer news content on mobile devices has surged over the recent past,, however, we believe the market is reaching its saturation point in news aggregation. Noot´s underlying technology is search and we believe this area still has potential for business development and, as such, Spectral is seeking alternative businesses for the Noot technology.

Monitr has few competitors, however, it is expected that new market entrants will emerge quickly, although the software is extremely technically challenging to produce. There are a few companies that are currently using software to detect trends on the market. Companies like Bloomberg or I Know First are competitors in the financial data services industry that use software to assist investors to make better trading decisions. Often these types of competitors attempt to capture a broad market and in doing so complicate the product to a level in which it becomes nearly impossible for an average investor to utilize the data. Monitr has kept its focus on building a product that any level of investor can come in and starts utilizing from the get go. The other big differentiator from Monitr to other systems is the filtering so that end users can find the stocks that match their interest and taste for risk

Principal Agreements Affecting Our Ordinary Business

We do not have any current long term agreements that impact our business.
 
Information Technology Governmental Regulation

Our operations are subject to various rules, regulations and limitations impacting the information technology industry as whole.

Environmental Matters

We do not anticipate any significant impact of environmental regulations on our business.

OPERATIONS

Spectral is focused on the identification, acquisition, development, financing of early stage technology that has the potential to transform existing industries. We look for technology that addresses current market problems and that could be protected through patents or laws regarding trade secrets.  Spectral has acquired significant stakes in three technology companies currently and actively works with management to drive these companies toward increasing market penetration in their particular verticals.  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.

The majority of our operations consist of (1) the development and commercialization of portfolio technology; including attendant information security needs and providing consistent and reliable access to our applications/technology.

6

RESEARCH AND DEVELOPMENT

We conducted development efforts regarding our previously held oil and gas properties.  As we have divested of our operating oil assets, we do not anticipate any additional development expenses in existing the natural resource sector.

From Inception to the year ended December 31, 2015, we have incurred research and development expenses related to the development of our current software products and for our previous technology business. We believe that our research and development expenses will increase substantially in 2016, assuming the availability of capital.  We expect to spend in excess of $5,000,000 in development expenses on our existing and to be acquired technology portfolio companies, assuming available financing.  We have already begun these efforts and have already expended substantial amounts on these activities.

COMPETITION

Overview

Some of the largest and most technologically sophisticated and financially successful companies in the world compete in the search engine and software development space. Capital requirements in this space can easily run into the hundreds of millions of dollars and Spectral is in no way able to compete directly against its larger and more well-financed competitors with respect to technology brands which require hundreds of millions of dollars to be spent either on technology development or sales and marketing.  Instead, we tend to compete against much smaller companies, with limited capital resources, who are all looking at early stage technology companies which require 1-4 years of development and $2-$5 million dollars in financing in order to reach critical mass in an important market.

Therefore, Spectral, like its smaller competitors within this space, can compete only by having a low enough overhead, a flexible enough risk profile, patience, a willingness to secure expensive management and technological resources on a flexible project basis and the utilization of equity based incentives to attract talented personnel who find the risk reward profile of emerging growth companies appealing.

Failure of Competitors

Many of our smaller competitors fail because of improperly architected technology, excessive spending on sales and marketing, information technology security problems, the failure to secure required development capital, the inability to efficiently develop a customer acquisition program cost effectively and the inability to efficiently and cost effectively manage technology development.

Our Competitive Position

Because we currently have already acquired interests in two portfolio companies, our competitive position with respect to our existing projects is relevant to our ability to attract and retain key management personnel.   The technology sector is booming and successes like Google, Facebook and Twitter, as well as a proliferation of other mobile technologies, drive intense competition for executive talent in the industry.  As a smaller competitor without a track record operating in a booming area, we will have to offer significant cash and equity incentives to attract talented personnel.  As we have had some limited success to date in attracting officers and board members based on the strength of our portfolio companies to date, we believe that we are reasonably well positioned to compete for these human resources.

SIGNIFICANT CUSTOMERS AND SUPPLIERS

We are not particularly dependent on any one customer or supplier.

INTELLECTUAL PROPERTY

Overview

Our intellectual property consists almost exclusively of patentable or trade secret protectable software code and proprietary information technology architecture.

7

We regard our intellectual property rights, including trademarks, domain names, trade secrets, patents, copyrights and other similar intellectual property, as critical to our success.

The businesses within our Noot Search segment also rely upon trade secrets, including algorithms for the generation, organization and presentation of search results.  To a lesser extent, these businesses also rely upon patent-pending proprietary technologies and processes, primarily those relating to search-related products and services, with expiration dates for patented technologies ranging from 2027 and beyond, if filed, and copyrighted material, including trade dress.

We rely on a combination of laws and contractual restrictions with employees, customers, suppliers, affiliates and others to establish and protect our various intellectual property rights.

For example, we intend to apply to register and renew, or secure by contract where appropriate, trademarks and service marks as they are developed and used, and reserve, register and renew domain names as we deem appropriate.  Effective trademark protection may not be available or may not be sought in every country in which products and services are made available and contractual disputes may affect the use of marks governed by private contract.  Similarly, not every variation of a domain name may be available or be registered, even if available.

We also generally intend to seek to apply for patents or for other similar statutory protections as and if we deem appropriate, based on then current facts and circumstances, and will continue to do so in the future.  No assurances can be given that any patent application we will have filed will result in a patent being issued, or that any future patents will afford adequate protection.

We cannot be certain that the precautions we have taken to safeguard pending trademarks and trade secrets will provide meaningful protection from unauthorized use. If we must pursue litigation in the future to enforce or otherwise protect our intellectual property rights, or to determine the validity and scope of the proprietary rights of others, we may not prevail and will likely have to make substantial expenditures and divert valuable resources in the process. Moreover, we may not have adequate remedies if our intellectual property is appropriated or our trade secrets are disclosed.

Trademarks

We intend to apply for registration of a trademark with the United States Patent and Trademark Office in order to establish and protect our brand names as part of our intellectual property assets. As of the date of this annual report on Form 10-K for the year ended December 31, 2015, no filings have been made in application process.

Trade Secrets

Whenever we deem it important for purposes of maintaining the secrecy of information, such as sensitive and valuable search algorithms, we require parties with whom we share, or who otherwise are likely to become privy to, our trade secrets or other confidential information to execute and deliver to us confidentiality and/or non-disclosure agreements. Among others, this may include employees, consultants and other advisors, each of whom may require us to execute such an agreement upon commencement of their employment, consulting or advisory relationships. These agreements generally provide that all confidential information developed or made known to the individual by us during the course of the individual's relationship with us is to be kept confidential and not to be disclosed to third parties except under specific circumstances.

As of the date of this annual report on Form 10-K for the year ended December 31, 2015, we have executed non-disclosure agreements with all of our key employees, consultants or advisors.

EMPLOYEES

For the year ended December 31, 2015, we had one full-time employee.

We are not subject to any collective bargaining agreements and believe that our relationships with our employees and consultants are good.

8

Item 1A.  RISK FACTORS

Not required.

ITEM 2. DESCRIPTION OF PROPERTY.

Our principal executive offices are located at 701 Fifth Avenue, Suite 4200, Seattle, Washington, 98104.  Our telephone number is (206) 262-7820. The lease for this space is a month-to-month term.
      
ITEM 3. LEGAL PROCEEDINGS.

As of the date of this annual report on Form 10-K for the year ended December 31, 2015, there were no pending material legal proceedings to which we were a party and we are not aware that any were contemplated. There can be no assurance, however, that we will not be made a party to litigation in the future. Any finding of liability imposed against us is likely to have an adverse effect on our business, our financial condition, including liquidity and profitability, and our results of operations
 
ITEM 4. MINE SAFETY DISCLOSURES.

N/A.

9

PART II
 
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Our common stock is quoted on the OTC Bulletin Board, a service provided by the Nasdaq Stock Market Inc., under the symbol "FCCN", and on certain international Exchanges under the symbol "F3SN".

The following table sets forth the high and low bid prices for our common stock as reported each quarterly period within the last seven years on the OTC Bulletin Board, and as obtained from investopedia.com. The high and low prices reflect inter-dealer prices, without retail mark-up, markdown or commission and may not necessarily represent actual transactions.
 
Period   High*     Low*  
             
Year ended 2014
Quarter ended
 
   
 
March 31, 2014
 
$
0.28
   
$
0.15
 
June 30, 2014
 
$
0.43
   
$
0.21
 
September 30, 2014
 
$
0.45
   
$
0.24
 
December 31, 2014
 
$
0.34
   
$
0.15
 
 
Year ended 2015
Quarter ended
 
   
 
March 31, 2015
 
$
0.19
   
$
0.15
 
June 30, 2015
 
$
0.17
   
$
0.15
 
September 30, 2015
 
$
0.15
   
$
0.02
 
December 31, 2015
 
$
0.03
   
$
0.01
 

STOCKHOLDERS

As of March 24, 2016, there were approximately 90 holders of record of our common shares.

DIVIDENDS

From our inception we have never declared or paid any cash dividends on shares of our common stock and we do not anticipate declaring or paying any cash dividends in the foreseeable future. The decision to declare any future cash dividends will depend upon our results of operations, financial condition, current and anticipated cash needs, contractual restrictions, restrictions imposed by applicable law and other factors that our board of directors deem relevant. Although it is our intention to utilize all available funds for the development of our business, no restrictions are in place that would limit our ability to pay dividends. The payment of any future cash dividends will be at the sole discretion of our board of directors.

10


RECENT SALES OF UNREGISTERED SECURITIES

None.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

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, 2015 and 2014 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.

Fair Value of Financial Instruments
Spectral Capital's financial instruments consist of cash and cash equivalents, prepaid expenses, accounts payable, and accrued expenses, and due to related parties. The carrying amount of these financial instruments approximates fair value due to either length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.

Stock-Based Compensation
The Company accounts for employee stock-based compensation in accordance with the guidance of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("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.

The Company follows ASC Topic 505-50, formerly EITF 96-18, Equity: Equity-Based Payments to Non-Employees for stock options and warrants issued to consultants and other non-employees.  In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined.  The fair value of the equity instrument is charged directly to compensation expense or prepaid expense and additional paid-in capital over the period during which services are rendered.
11

 
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 is in the development stage and has yet to realize revenues from operations.  Once the Company has commenced operations, it will recognize revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.

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 currently and actively works with management to drive these companies toward increasing market penetration in their particular verticals.  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.

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. 
 
Spectral has entered some of the fastest growing industries in technology: Big Data, Mobile Technology, Mobile Search, News Aggregation and Sentiment Analysis.  Below is a list of our current portfolio companies:
 
Noot is a mobile technology company that has created "Noot" which ulitilizes proprietary search engine technology for mobile devices. Noot helps people easily find news, social media, photos and video that match their interests. The technology actually learns what users like and improves its results over time, providing very personalized information for the user. A key benefit of Noot is that the search engine continues to work even when the user is not actively searching and will discover new and relevant items without prompting, providing more enhanced and personalized information the next time the user searches for that topic. While Noot is still a working mobile application, we have determined that the revenue potential does not meet our expectations and we are seeking alternative business opportunities to utilize the technology.

Monitr, launched in late 2014, is a technology and financial data services company. In September 2015 Monitr launched a significant update to its technology that makes it easy for the new or non-professional investor to find the stocks that are 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 is offered at an accessible price for all types of investors
   
Monitr is independent and not being paid to promote stocks
   
Monitr is simple to use and removes a lot of guess work for new investors

12

Monitr specializes in the analysis of news, opinion and social media to determine the aggregate sentiment and trends of equities, commodities and currencies across world markets.  It offers these services direct to customers on the web and as a mobile application for tablets and smartphones. In addition to SAAS (software as a service) , Monitr offers customized analysis and real time data to larger financial institutions and hedge funds for use in fundamental and algorithmic analysis of financial markets.

On September 30, 2015, one of Spectral´s portfolio companies, Kontexto, ceased operations and is no longer in business.

Spectral's twelve-month plan includes the following goals/targets:
 
Complete one or more private equity placements to provide funding for developing of our current technologies and the acquisition of additional portfolio companies;
   
Expand Monitr´s audience to international markets;
   
Launch a mobile web application for Monitr to give users complete access;
   
Market and grow Monitr´s revenue from paying users
   
Obtain subscription revenue from Monitr data sales through the API;
   
Determine business development opportunities for Noot´s search technology.
 
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014

Revenues

We are currently engaged in a technology development business and have exited natural resources. To date we have not recognized any revenues.

Operating Expenses

Operating expenses decreased $5,827,866, from $6,640,927 for the year ended December 31, 2014 to $813,061 for the year ended December 31, 2015. Stock based compensation, included with operating expense, was $349,994 during the year ended December 31, 2015 and $623,892 during the year ended December 31, 2014. The decrease was due to a decreased amount of expense as stock options are fully vested.

Selling, general and administrative expenses principally include professional fees, investor relations fees, rent and general corporate overhead. The decrease of selling, general and administrative expense of $141,227 to $76,278 during the year ended December 31, 2015 from $217,505 for the year ended December 31, 2014 was directly related to decreases in professional fees related to legal, accounting, public relations, etc. In addition, the prior year included administrative charges from Akoranga for their services. Due to the decrease in operations, these costs were decreased to conserve capital.

Research and development expenses, which includes development costs related to our products, decreased to $0 during the year ended December 31, 2015 from $330,760 during the year ended December 31, 2014. The decrease is related to amounts paid to consultants for the development of Monitr as well as for the continued internal development of the Noot technology after the initial project launch to which none were incurred in 2015 due to the limited capital.

13

During the year ended December 31, 2014, the Company wrote off a receivable from a related party of $323,978 as it was deemed uncollectible. The expected proceeds from the use of the assets acquired by the related party which created the receivable were never fully realized and thus the Company determined that the likelihood of collectability was not probable.

Depreciation and amortization primarily consists of the amortization of the Noot technology. The Company began amortizing such costs in October 2013 when the Noot product was launched. In addition, at December 31, 2014, the Company reviewed the carrying amount of the Noot assets and determined that they had been fully impaired and thus an impairment of $2,983,762 was recorded. Although, the Company maintains that Noot's technology is a valuable asset, the Company does not currently have access to capital to sufficiently market the asset. The Company estimates it would take approximately $2.0 million to appropriately promote the Noot product, which at the time of the impairment analysis was not probable. Additionally, at December 31, 2014, the Company determined based upon the future discounted cash flows from our cost investment in Kontexto, Inc that an impairment of $305,000 should be recorded. Reducing the current carrying value of the investment to $232,000.  The decline in expected cash flows was primarily due lower revenues than initially projected under Kontexto, Inc's technology products.

In 2015, the remaining Kontexto, Inc. investment of $232,000 was impaired as they ceased operations.
14

LIQUIDITY AND CAPITAL RESOURCES

As of the year ended December 31, 2015 we had $3,675 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 decreased $645,861, from $710,287 for the year ended December 31, 2014 to $64,426 for the year ended December 31, 2015. This decrease was primarily the result of a lower net loss due to a decrease in expenditures related to the development of the Monitr and Noot products during 2015 due to the cash flow limitations.

Net cash provided by financing activities increased by $46,113 from ($26,931) for the year ended December 31, 2014 to $19,182 cash provided for the year ended December 31, 2015. Net cash provided by financing activities during the year ended December 31, 2014 related to net payments on advances from a related party in connection with payment of Spectral's obligations. In 2015, the increase related to advances made by our Chief Executive Officer to pay various operating costs.

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.

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.
15

SPECTRAL CAPITAL CORPORATION

 TABLE OF CONTENTS

DECEMBER 31, 2015 AND 2014

Report of Independent Registered Public Accounting Firm
F - 1
   
Consolidated Balance Sheets as of December 31, 2015 and 2014
F - 2
   
Consolidated Statements of Operations for the years ended December 31, 2015 and 2014
F - 3
   
Consolidated Statement of Stockholders' Deficit for the years ended December 31, 2015 and 2014
F - 4
   
Consolidated Statements of Cash Flows for the years ended December 31, 2015 and 2014
F - 5
   
Notes to Consolidated Financial Statements
F - 6 – F -15


16

 





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and
Stockholders of Spectral Capital Corporation

We have audited the accompanying consolidated balance sheets of Spectral Capital Corporation as of December 31, 2015 and 2014 and the related consolidated statements of operations, stockholders' equity (deficit), and cash flows for the year then ended. Spectral Capital Corporation's management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Spectral Capital Corporation as of December 31, 2015 and 2014, the results of their operations, and their cash flows, for the years ended December 31, 2015 and 2014, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 2 to the consolidated financial statements, the Company has incurred losses from operations, has negative working capital and is in need of additional capital to grow its operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.


/s/ KLJ & Associates, LLP
KLJ & Associates, LLP
Edina, MN
March 28, 2016

F - 1

SPECTRAL CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2015 AND 2014

  
 
December 31,
2015
   
December 31,
2014
 
Assets:
 
   
 
Cash and cash equivalents
 
$
3,675
   
$
48,919
 
Prepaid expenses
   
-
     
11,000
 
Current assets
   
3,675
     
59,919
 
 
               
Property and equipment, net
   
-
     
-
 
Other assets:
               
Investment in Kontexto, Inc.
   
-
     
232,000
 
Intangible assets, net
   
-
     
5,000
 
Total assets
 
$
3,675
   
$
296,919
 
 
               
Liabilities and Stockholders' Deficit:
               
Current liabilities
               
Accounts payable and accrued liabilities
   
943
     
-
 
Related party advances and accruals
   
538,945
     
371,181
 
Current liabilities
   
539,888
     
371,181
 
Total liabilities
   
539,888
     
371,181
 
 
               
Stockholders' Deficit:
               
Preferred stock, par value $0.0001, 5,000,000 shares authorized, no shares issued and outstanding
   
-
     
-
 
Common stock, par value $0.0001, 500,000,000 shares authorized, 117,857,623 shares issued and outstanding as of December 31, 2015 and 2014
   
11,786
     
11,786
 
Additional paid-in capital
   
27,445,400
     
25,263,906
 
Common stock warrants
   
-
     
1,831,500
 
Accumulated deficit
   
(27,771,839
)
   
(26,964,108
)
Total stockholders' equity
   
(314,653
)
   
143,084
 
Non-controlling interest
   
(221,560
)
   
(217,346
)
Total stockholders' deficit
   
(536,213
)
   
(74,262
)
Total liabilities and stockholders' deficit
 
$
3,675
   
$
296,919
 
 
The accompanying notes are an integral part of these consolidated financial statements.
F - 2

SPECTRAL CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2015 and 2014
 
  
 
Year Ended
December 31,
2015
   
Year Ended
December 31,
2014
 
 
     
 
Revenues
 
$
-
   
$
-
 
 
               
Operating expenses:
               
Selling, general and administrative
   
76,278
     
225,154
 
Wages and benefits
   
149,789
     
151,022
 
Research and development
   
-
     
330,760
 
Stock-based compensation
   
349,994
     
623,892
 
Bad debt expense - related party
   
-
     
323,978
 
Depreciation and amortization
   
-
     
1,705,008
 
Impairment of investments
   
237,000
     
3,288,762
 
Total operating expenses
   
813,061
     
6,648,576
 
Operating loss
   
(813,061
)
   
(6,648,576
)
 
               
Other income and (expense):
               
Gain (loss) on foreign currently translation
   
1,116
     
7,649
 
Total other income (expense)
   
1,116
     
7,649
 
 
               
Loss from operations and before non-controlling interest and provision for income taxes
   
(811,945
)
   
(6,640,927
)
 
               
Provision for income taxes
   
-
     
-
 
 
               
Net loss before non-controlling interest
   
(811,945
)
   
(6,640,927
)
 
               
Loss attributable to non-controlling interest
   
4,214
     
2,016,403
 
 
               
Net loss attributable to Spectral Capital Corporation
 
$
(807,731
)
 
$
(4,624,524
)
 
               
Basic and diluted loss per common share
 
$
(0.01
)
 
$
(0.04
)
Weighted average shares - basic and diluted
   
117,857,623
     
117,857,623
 
 
The accompanying notes are an integral part of these consolidated financial statements.
F - 3

SPECTRAL CAPITAL CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2015 and 2014

 
 
Common Stock
   
Additional
Paid-in
   
Prepaid
   
Common
Stock
   
Non-Controlling
   
Accumulated
   
Shareholders'
 Equity
 
 
 
Shares
   
Amount
   
Capital
   
Consulting
   
Warrants
   
Interest
   
Deficit
   
 (Deficit)
 
December 31, 2013
   
117,857,623
   
$
11,786
   
$
24,687,359
   
$
(47,345
)
 
$
1,831,500
   
$
1,799,057
   
$
(22,339,584
)
 
$
5,942,773
 
 
                                                               
Stock options issued for compensation
   
-
     
-
     
576,547
     
47,345
     
-
     
-
     
-
     
623,892
 
Non-controlling interest
   
-
     
-
     
-
     
-
     
-
     
(2,016,403
)
   
2,016,403
     
-
 
Net loss
   
-
     
-
     
-
     
-
     
-
     
-
     
(6,640,927
)
   
(6,640,927
)
 
                                                               
December 31, 2014
   
117,857,623
     
11,786
     
25,263,906
     
-
     
1,831,500
     
(217,346
)
   
(26,964,108
)
   
(74,262
)
 
                                                               
Expired warrants
   
-
     
-
     
1,831,500
     
-
     
(1,831,500
)
   
-
     
-
     
-
 
Non-controlling interest
   
-
     
-
     
-
     
-
     
-
     
(4,214
)
   
-
     
(4,214
)
Stock based compensation
   
-
     
-
     
349,994
     
-
     
-
     
-
     
-
     
349,994
 
Net loss
   
-
     
-
     
-
     
-
     
-
     
-
     
(807,731
)
   
(807,731
)
 
                                                               
December 31, 2015
   
117,857,623
   
$
11,786
   
$
27,445,400
   
$
-
   
$
-
   
$
(221,560
)
 
$
(27,771,839
)
 
$
(536,213
)
 
he accompanying notes are an integral part of these consolidated financial statements.
F - 4

SPECTRAL CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2015 and 2014

   
Year Ended
December 31,
2015
   
Year Ended
December 31,
 2014
 
CASH FLOWS FROM OPERATING ACTIVITIES:
       
Net loss attributable to Spectral Capital Corporation
 
$
(807,731
)
 
$
(4,624,524
)
Adjustments to reconcile net loss to net cash used in by operating activities:
 
Non-controlling interest
   
(4,213
)
   
(2,016,403
)
Depreciation and amortization
   
-
     
1,705,008
 
Stock-based compensation
   
349,994
     
623,892
 
Bad debt - accounts receivable - related party
   
-
     
323,978
 
Impairment of investments and assets
   
237,000
     
3,288,762
 
Changes in operating assets and liabilities:
               
Prepaids and other assets
   
11,000
     
(11,000
)
Due to related parties - accrued salary
   
148,581
     
-
 
Accounts payable and accrued expenses
   
943
     
-
 
Net cash used in operating activities
   
(64,426
)
   
(710,287
)
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Proceeds from related party advances
   
19,182
     
(26,931
)
Net cash provided by (used in) financing activities
   
19,182
     
(26,931
)
                 
Change in cash and cash equivalents
   
(45,244
)
   
(737,218
)
Cash and cash equivalents, beginning of period
   
48,919
     
786,137
 
Cash and cash equivalents, end of period
 
$
3,675
   
$
48,919
 
 
The accompanying notes are an integral part of these consolidated financial statements.
F - 5

SPECTRAL CAPITAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – NATURE OF OPERATIONS

Spectral Capital Corporation (the "Company" or "Spectral") was incorporated on September 13, 2000 under the laws of the State of Nevada. The Company was formerly in the business of developing internet search engine technology. From August 2010 until December 2012, the Company evaluated and sought out opportunities in the natural resource sector.  Spectral acquired various interests in natural resource assets in Russia, Kazakhstan and Alberta, Canada.  In December 2012, Spectral changed its corporate focus from the natural resource sector and back to information technology.  Spectral has divested of its principal natural resource asset in Alberta, Canada and intends to divest any remaining natural resources in the near future and focus solely on acquiring and developing information technology. See Notes 4 and 5 for disclosures regarding the acquisition of certain technology and a cost investment.

Spectral is focused on the identification, acquisition, development, financing of technology that has the potential to transform existing industries. The Company looks for technology that can be protected through patents or laws regarding trade secrets.  Spectral has acquired significant stakes in three technology companies currently and actively works with management to drive these companies toward increasing market penetration in their particular verticals.  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.
On February 26, 2013, the Company formed Noot Holdings, Inc., a Delaware corporation, which the Company is currently a 60% owner, in order to acquire mobile search engine technology. Under the agreement to acquire technology, the Company issued 5,000,000 common shares of Spectral Capital Corporation, see Note 4 for additional information.
On March 14, 2013, the Company purchased 8% of the issued and outstanding shares of Kontexto, Inc., a Canadian corporation.  Spectral purchased the shares from Sargas Capital, Ltd., a minority shareholder, in exchange for 5,000,000 common shares of Spectral stock and warrants to purchase 5,000,000 common shares at $0.85 per share, which expired on March 13, 2015.  The Company's CEO was an officer of Sargas Capital, Ltd. at the time of the transaction but did not have any holdings in Sargas Capital, Ltd, see Note 5 for additional information.
On December 1, 2013, the Company formed Monitr Holdings, Inc., a Delaware corporation, which the Company is currently a 60% owner of, in order to acquire a technology application and service.  Under the agreement to acquire technology, the Company issued 5,000,000 common shares of Spectral Capital Corporation, see Note 4 for additional information.
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 stage and has sustained substantial losses since inception. As of December 31, 2015, the Company has cash on hand of $3,675 and negative working capital of $536,213. The Company expects current cash on hand will not be able to fund operations for a period 12 months or more.  These factors raise substantial doubt regarding the Company'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 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 will be required to reduce their development expenditures which will potentially delay the completion of products which are expected to generate future revenues.
F - 6


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

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 sales 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 favorably received. Nor may we have the capital resources to further the development of existing and/or new ones.

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 consolidated 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.

Stock-Based Compensation
The Company accounts for employee stock-based compensation in accordance with the guidance of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("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 follows ASC Topic 505-50, Equity: Equity-Based Payments to Non-Employees for stock options and warrants issued to consultants and other non-employees.  In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined.  The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital over the period during which services are rendered.

Because the Company's stock-based compensation options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the estimate, amounts estimated using the Black-Scholes option pricing model may differ materially from the actual fair value of the Company's stock-based compensation options.

F - 7

Use of Estimates
The preparation of the consolidated 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 of the consolidated 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 recognizes revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.

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:
 
Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 - Include other inputs that are directly or indirectly observable in the marketplace.
Level 3 - Unobservable inputs which are supported by little or no market activity.
  
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 December 31, 2015 and 2014, the Company does not have any assets or liabilities which would be considered Level 2 or 3.

The Company's financial instruments primarily consist of cash and cash equivalents, prepaid expenses and amounts payable to related parties. 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. In 2013, the Company acquired various technologies and an investment in a third party in which the investment is being treated under the cost basis of accounting. See Notes 4 and 5, for discussion regarding impairment charges related to these items. 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.

Income Taxes
The Company follows ASC 740, Income Taxes for recording the provision for income taxes. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Tax law and rate changes are reflected in income in the period such changes are enacted. The Company records a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized. The Company includes interest and penalties related to income taxes, including unrecognized tax benefits, within the income tax provision.
 
F - 8

The Company's income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities. In addition, the calculation of the Company's tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known.
 
The Company recognizes windfall tax benefits associated with share-based awards directly to stockholders' equity only when realized. A windfall tax benefit occurs when the actual tax benefit realized by the Company upon an employee's disposition of a share-based award exceeds the deferred tax asset, if any, associated with the award that the Company had recorded. When assessing whether a tax benefit relating to share-based compensation has been realized, the Company follows the tax law ordering method, under which current year share-based compensation deductions are assumed to be utilized before net operating loss carryforwards and other tax attributes.

Investment in Securities
The Company's investments consisting of common shares of non-controlled entities are accounted for on  the cost basis.  Impairment losses will be recorded when indicators of impairment are present.  See Note 5 for additional information.

Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents.

Basic Loss Per Share
Basic loss per share is calculated by dividing the Company's net 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 totaling 13,750,000 and 20,250,000 were outstanding at December 31, 2015 and 2014, respectively, representing outstanding warrants and options, and were not included in the computation of diluted earnings per share for the years ended December 31, 2015 and 2014, as their effect would have been anti-dilutive.

Non-Controlling Interests
Non-controlling interests disclosed within the consolidated statement of operations represent the minority ownership's 40% share of net losses of Noot Holdings, Inc. and Monitr Holdings, Inc incurred during the years ended December 31, 2015 and 2014. The following table sets forth the changes in non-controlling interest for the year ended December 31, 2015:

 
 
Non-Controlling
 
 
 
Interest
 
Balance at December 31, 2014
 
$
(217,346
)
Net loss attributable to non-controlling interest
   
(4,214
)
Balance at December 31, 2015
 
$
(221,560
)

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, the Company has recorded foreign currency income of $1,116 and $7,649, recorded on the accompanying consolidated statements of operations during the years ended December 31, 2015 and 2014, respectively.

F - 9

Change in Prior Year Presentation
The prior year financial statements have been reclassed to conform with current year presentation. Specifically, the Company reclassed the foreign currency gain of $7,649 included within selling, general and administrative to gain on foreign currency translation. The reclass only impacted the consolidated statement of operations.

New Accounting Pronouncements
In February 2015, the FASB issued ASU 2015-02, "Consolidation: Amendments to the Consolidation Analysis" ("ASU 2015-02"). This standard update is intended to improve targeted areas of consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. This ASU simplifies consolidation accounting by reducing the number of consolidation models and improves current U.S. GAAP by (1) placing more emphasis on risk of loss when determining a controlling financial interest; (2) reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity; and (3) changing consolidation conclusions for public and private companies in several industries that typically make use of limited partnerships or variable interest entities. The amendments in ASU 2015-02 are effective for reporting periods beginning after December 15, 2015, with early adoption permitted. Entities can transition to the standard either retrospectively or as a cumulative effect adjustment as of the date of adoption. The Company has not adopted ASU 2015-02 as of December 31, 2015, and the adoption is not expected to have an impact on the Company's consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, "Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs". This standard update requires an entity to present debt issuance costs on the balance sheet as a direct deduction from the related debt liability as opposed to an asset. Amortization of the costs will continue to be reported as interest expense. The update is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued, and the new guidance would be applied retrospectively to all prior periods presented.  The Company has not adopted ASU 2015-02 as of December 31, 2015, and the adoption is not expected to have an impact on the Company's consolidated financial statements.

NOTE 3 – DISCONTINUED OPERATIONS

Shamrock Oil & Gas Ltd

On February 13, 2012, the Company closed its planned purchase of an oil and gas property in the Red Earth Region of Alberta, Canada, which property Spectral purchased from receivership though its newly formed Canadian subsidiary, Shamrock Oil & Gas Ltd. Spectral was the 60% owner of the Canadian subsidiary and its Canadian joint venture partner owned 40% of the subsidiary.  On December 31, 2012, the Company entered into an agreement with Akoranga AG, a Company owned by the CEO of Spectral, to transfer its ownership interests in the Shamrock Oil and Gas properties for $950,000, the value of Spectral's contributions to the project at that date. In satisfaction of the purchase price, Akoranga agreed to offset liabilities of Spectral in the amount of $626,022.  The balance owing Spectral of $323,978 was non-interest bearing and was to be repaid within a one year period, which was extended to December 31, 2014. At December 31, 2014, the Company determined that the receivable collectability was not probable due to Akoranga's inability to generate revenues from the operation and/or sale of the oil and gas properties. Thus, the receivable from Akoranga was written off.

There were no material assets, liabilities or operations associated with discontinued operations which need to be presented within the accompanying consolidated financial statements.

F - 10

NOTE 4 – TECHNOLOGY ASSETS

Noot Holdings, Inc.
On February 26, 2013, the Company, through its subsidiary, Spectral Holdings, Inc. signed a definitive Technology Acquisition Agreement ("Agreement") to acquire mobile search engine and mobile sharing technology from Fiveseas Securities Ltd ("Fiveseas").  Under the Agreement, the Company issued Fiveseas 5,000,000 shares of the Company's common stock.  The Agreement called for the technology to reside within a newly formed entity called Noot Holdings, Inc.( "Noot"), a Delaware corporation, which the Company is a 60% owner of and Fiveseas is a 40% owner of. Fiveseas was granted a right of first refusal for any subsequent sale of the technology.  The common shares were valued at $3,000,000 based on the closing market price of the Company's common stock as of the date of the agreement. In addition, the fair value assigned to the asset contributed by Fiveseas was $2,000,000, resulting in total intangible assets of $5,000,000 being recorded. The Company has recorded the value as an investment in technology as the in process development did not constitute a business. The Company records income/losses from Noot attributable to the percentage owned by Fiveseas as a non-controlling interest. The Company completed substantial development of the technology acquired during September 2013. Costs were capitalized in relation to the technology's development through September 30, 2013.  During the year ended December 31, 2013, costs of approximately $115,000 were capitalized in connection with the continued development. Starting October 1, 2013, the Company began amortizing the asset over the expected life of three years. During the years ended December 31, 2015 and 2014, the Company amortized $0and $1,705,008 to depreciation and amortization on the accompanying statements of operations.
At December 31, 2014, the Company reviewed whether or not there were any indicating factors that the carrying value of the assets related to Noot were impaired. As part of this analysis, the Company prepared and reviewed future estimated cash flow projections from Noot's operations. Based upon the Company's analysis, it was determined that a full impairment to Noot's assets of $2,983,762 would be recorded. Although, the Company maintains that Noot's technology is a valuable asset, the Company does not currently have access to capital to sufficiently market the asset. The Company estimates it would take approximately $2.0 million to appropriately promote the Noot product, which at the time of the impairment analysis was not probable.
Monitr Holdings, Inc.
On December 1, 2013, the Company, through its subsidiary, Spectral Holdings, Inc. signed a definitive Technology Acquisition Agreement ("Agreement") to acquire technology which enhances the way people find, consume, analyze, share and discuss financial news and topics, equities, commodities and currencies on the web from TL Global, Inc. ("TL Global").  Under the Agreement, the Company issued TL Global 5,000,000 shares of the Company's common stock.  The Agreement calls for the technology to reside within a newly formed entity called Monitr Holdings, Inc.( "Monitr"), a Delaware corporation, which the Company is a 60% owner of and TL Global is a 40% owner of. TL Global was granted a right of first refusal for any subsequent sale of the technology.  The common shares were valued at $1,300,000 based on the closing market price of the Company's common stock as of the date of the agreement. In addition, the fair value assigned to the asset contributed by TL Global was $866,667, resulting in total assets of $2,166,667 being recorded. The Company recorded the transaction as an investment in technology as the in process development did not constitute a business. In addition, at the time of acquisition, the Company determined that the technology required extensive development in order to achieve technological feasibility, and expensed $2,161,667, the entire amount of except for $5,000 assigned to the website domain. The $5,000 was impaired during the year ended December 31, 2015 due to limited projected cash flows. The Company records losses from Monitr attributable to the percentage owned by TL Global as a non-controlling interest. During the year ended December 31, 2014, the Company expended a significant amount of development costs in connection with development of the Monitr products, however, none of these costs were capitalized in relation to the technology's development, as they didn't meet the applicable accounting standards for the application of such.  Such development was minimal during the year ended December 31, 2015, due to limited capital available to the Company.
F - 11

NOTE 5 – COST INVESTMENT

On March 14, 2013, the Company entered into an agreement to purchase 8% of the issued and outstanding common shares of Kontexto, Inc., ("Kontexto") a Canadian corporation.  The Company purchased the shares from Sargas Capital, Ltd. , a minority shareholder, in exchange for 5,000,000 common shares of the Company's common stock and warrants to purchase 5,000,000 shares of the Company's common stock at $0.85 per share, which expired on March 13, 2015 (see Note 7).  The Company valued the common stock using the closing price of the Company's common stock on the date of the agreement and the warrants were valued using the Black-Scholes pricing model. The Company's investment in 8% of the common shares, initially valued at $6,398,500, was accounted for on the cost basis.  During 2013, a third party valuation specialist valued the investment in Kontexto using a hybrid between the market and income methods and determined that the fair value was $537,000.  Accordingly, an impairment loss of $5,861,500 was recognized in the statements of operations for the year ended December 31, 2013. The Company's CEO was an officer of Sargas Capital, Ltd. but does not have any holdings in Sargas Capital, Ltd.

At December 31, 2014, the Company reviewed whether or not there were any indicating factors that the carrying value of the cost investment was impaired. As part of this analysis, the Company obtained the current financial statements and future estimated discounted cash flow projections from Kontexto. Based upon the Company's review, it was determined that the carry value of the investment should be decreased to $232,000, resulting in an impairment of $305,000 during the year ended December 31, 2014.

In September 2015, the Company was notified by the management of Kontexto that the operations were being discontinued due to cash flow limitations. Thus, at September 30, 2015, the remaining investment of $232,000 was written off.

NOTE 6 – RELATED PARTY TRANSACTIONS

Akoranga, AG

At December 31, 2015 and 2014, $351,502 and $352,619, respectively, was owed to Akoranga AG, a Swiss Company owned by the CEO of Spectral. Akoranga was formed to facilitate the Company's business in Europe. In connection with the facilitation of the Company's operations which includes making payments on the Company's obligations, Akoranga charges the Company a 10% fee on all transactions processed by Akoranga on behalf of the Company. The Company ceased using Akoranga services in August 2014. Fees expensed for services provided by Akoranga totaled approximately $18,239 for the year ended December 31, 2014.  The advances do not incur interest and are payable upon demand.

At December 31, 2012, the Company sold its oil and gas business to Akoranga for $950,000 plus the assumption of all debt related to the oil and gas business. As a result of that transaction, Akoranga owed $323,978 to the Company and was reflected on the December 31, 2013 accompanying balance sheet as accounts receivable - related party. The balance was unsecured, non-interest bearing and originally due on December 31, 2013, which was extended to December 31, 2014. Related party loans are unsecured, and non-interest bearing and have no specific terms of repayment unless otherwise noted. At December 31, 2014, the Company determined that the receivable collectability was not probable due to Akoranga's inability to generate revenues from the operation and/or sale of the oil and gas properties. Thus, the receivable from Akoranga was written off.

Jenifer Osterwalder, the Company's Chief Executive Officer

Through August 2014, Akoranga charged the Company 12,350 CHF per month for the Company's CEO, Jenifer Osterwalder, for services related to the Company. Starting in September 2014, these amounts were the responsibility of the Company. Total amounts expended in the Company's consolidated financial statements in connection with the CEO's services was $151,022 and $155,350 for the years ended December 31, 2015 and 2014, respectively. Amounts charged by Akoranga to the Company prior to August 2014 are included within the Akoranga liability disclosed above. As of December 31, 2015 and 2014, amounts due to the CEO related to accrued salaries were $166,742 and $16,953, respectively.

F - 12

Commencing in September 2014, from time to time due to the limited cash flow available, the Company's CEO pays certain operating expenditures on behalf of the Company. These advances are bear no interest and are due on demand. As of December 31, 2015 and 2014, the Company's CEO was due $20,701 and $1,357 in connection with these advances, respectively.

NOTE 7 – STOCKHOLDER'S EQUITY

Sale of Common Stock and Warrants Issued
On March 7, 2013, the Company sold 1,650,000 common shares, par value $0.0001 at approximately $0.61 per share and received a total of $1,000,000 USD in financing proceeds.  Spectral also issued warrants to purchase 1,650,000 common shares to the purchasers at an exercise price of $0.80 per share.  The warrants expired on March 6, 2015.
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 options to two employees. Stock-based compensation is being recognized over the two year vesting period. The options were valued at $3,408,750 using the Black-Scholes Option Pricing Model. Employee stock-based compensation expense relating to options granted in 2010 and 2012, and recognized during the years ended December 31, 2015 and 2014 totaled $349,995 and $576,547, respectively.
Non-Employee Options
During the year ended December 31, 2014, $47,345 of prepaid consulting expense was charged to stock-based compensation on the accompanying consolidated statements of operations. As of December 31, 2014, all prepaid consulting expense had been recorded..

F - 13

Summary of Stock Options

A summary of changes in stock options during the years ended December 31, 2015 and 2014 is as follows:

 
 
Stock Options
   
Weighted
Average
 Exercise
Price
   
Weighted
Average Life Remaining
 
Outstanding, December 31, 2013
   
13,750,000
   
$
0.75
     
8.50
 
Issued
   
-
     
-
     
-
 
Exercised
   
-
     
-
     
-
 
Expired
   
-
     
-
     
-
 
Outstanding, December 31, 2014
   
13,750,000
     
0.75
     
6.50
 
Issued
   
-
     
-
     
-
 
Exercised
   
-
     
-
     
-
 
Expired
   
-
     
-
     
-
 
Outstanding, December 31, 2015
   
13,750,000
   
$
0.75
     
5.50
 
Vested, December 31, 2015
   
13,750,000
   
$
0.75
     
5.50
 

Warrants

On March 7, 2013, Spectral sold 1,650,000 common shares at approximately $0.61 per share and received a total of $1,000,000 in financing proceeds.  Contemporaneously, Spectral issued warrants to purchase 1,650,000 common shares at an exercise price of $0.80 per share.  The warrants expired on March 7, 2015.  The warrants were valued using the Black-Scholes pricing model and $283,000 of the proceeds were allocated to the warrants.

As disclosed in Note 5 , the C0mpany previously had warrants outstanding to purchase 5,000,000 shares of the Company's common stock at $0.85 per share, which expired on March 13, 2015.

A summary of changes in warrants during the years ended December 31, 2015 and 2014 is as follows:
 
 
Warrants
 
Outstanding, December 31, 2013
   
6,650,000
 
Issued
   
-
 
Exercised
   
-
 
Expired
   
-
 
Outstanding, December 31, 2014
   
6,650,000
 
Issued
   
-
 
Exercised
   
-
 
Expired
   
(6,650,000
)
Outstanding, December 31, 2015
   
-
 
Vested, December 31, 2015
   
-
 

NOTE 8 – INCOME TAXES
As of December 31, 2015, the Company had net operating loss carry forwards of approximately $13,327,000 that may be available to reduce future years' taxable income through 2033. Future tax benefits which may arise as a result of these losses have not been recognized in these consolidated financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards. The difference between the Company's tax rate and the statutory rate is due to significant non-deductible expenses.

F - 14

The provision for Federal income tax consists of the following:

 
 
December 31,
   
December 31,
 
 
 
2015
   
2014
 
Federal income tax benefit attributable to:
 
   
 
Current operations
 
$
76,483
   
$
237,758
 
Less: valuation allowance
   
(76,483
)
   
(237,758
)
Net provision of income taxes
 
$
-
   
$
-
 

The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:

 
 
December 31,
   
December 31,
 
 
 
2015
   
2014
 
Deferred tax asset attributable to:
 
   
 
Net operating loss carryforward
 
$
4,623,122
   
$
4,546,639
 
Less: valuation allowance
   
(4,623,122
)
   
(4,546,639
)
Net deferred tax asset
 
$
-
   
$
-
 

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur net operating loss carry forwards may be limited as to use in future years. The Company is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.  The Company believes they are no longer subject to income tax examinations for years prior to 2012.

NOTE 9 – COMMITMENTS AND CONTINGENCIES

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

NOTE 10– SUBSEQUENT EVENTS

In accordance with ASC 855-10, the Company has analyzed its operations subsequent to December 31, 2015 to the date these consolidated financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these consolidated financial statements.
F - 15


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AN ACCOUNTING FINANCIAL DISCLOSURE.
 
Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15 under the Exchange Act, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2015.  This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Principal Financial and Accounting Officer, as well as outside consultants.  In assessing the effectiveness of our internal control over financial reporting we utilized the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission as published in "Internal Control over Financial Reporting – Guidance for Smaller Public Companies."  Based on that evaluation, our Chief Executive Officer and Principal Financial and Accounting Officer found material weaknesses in our disclosure controls and procedures and therefore concluded that our disclosure controls and procedures as of the end of the period covered by this report were ineffective.

The determination of ineffective internal control is based upon the lack of separation of duties, which was first identified during the year ended December 31, 2010. Our entire management is comprised of one individual. It is impossible to create a system of checks and balances with oversight in this circumstance. It is management's intention to bring additional people into the management team. Once there are more members of management, responsibilities can be divided and oversight roles created.  The Company estimates the annual costs of such remediation efforts in the form of additional management will be $150,000 per year. The Company intends to make such hires and create segregation of duties and proper oversight as soon as the capital is obtained.

We understand that remediation of disclosure controls is a continuing work in progress due to the issuance of new standards and promulgations.  However, remediation of the material weaknesses described above is among our highest priorities.  Our management will periodically assess the progress and sufficiency of our ongoing initiatives and make adjustments as and when necessary.  As of the date of this report, our management believes that our efforts will remediate the material weaknesses in internal control over financial reporting as described above.

Notwithstanding these material weaknesses which are described below, our management performed additional analyses, reconciliations and other post-closing procedures and has concluded that the Company's consolidated financial statements for the periods covered by and included in this Annual Report on Form 10-K are fairly stated in all material respects in accordance with generally accepted accounting principles in the U.S. for each of the periods presented herein.

Inherent Limitations Over Internal Controls

The Company's internal control over financial reporting is 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. The Company's internal control over financial reporting includes those policies and procedures that:

(i)   pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company's assets;

(ii)   provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that the Company's receipts and expenditures are being made only in accordance with authorizations of the Company's management and directors; and

(iii)   provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.
17


Management does not expect that the Company's internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management's Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the (i) effectiveness and efficiency of operations, (ii) reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and (iii) compliance with applicable laws and regulations. Our internal controls framework is based on the criteria set forth in the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Management, consisting of our Chief Executive Officer and Principal Accounting and Financial Officer, is responsible for establishing and maintaining adequate internal control over the Company's financial reporting.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2014, utilizing the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission as published in "Internal Control over Financial Reporting – Guidance for Smaller Public Companies."  Based on the assessment by management, we determined that our internal control over financial reporting was ineffective as of December 31, 2015.

Changes in Internal Control of Financial Reporting

During the year ended there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

None.
18

PART III

ITEM 10  . DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

The following table sets forth our directors and executive officers and their ages as of the year ended December 31, 2014:

Name
 
Age
 
Position
Jenifer Osterwalder
 
50
 
Chief Executive Officer,  President and Director
         
Stephen Spalding
 
66
 
Interim Chief Financial and Accounting Officer and Director

Jenifer Osterwalder - Chief Executive Officer, President, 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 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. From August 2004 to December 2004 Ms. Osterwalder served as a consultant Manger to International Conference Services, Ltd., a conference and destination management firm in British Columbia, Canada. From January 2003 to December 2003, she served as a consultant Investment Liaison and Marketing Director for Terrikon Corporation, in British Columbia, Canada. Ms. Osterwalder received her Bachelor of Science in Business Administration in marketing and logistics from Ohio State University.

Stephen Spalding - Interim Chief Financial and Accounting Officer, Director

Mr. Spalding has been an independent management and financial consultant based in Mill Valley, California since March 2008. In the course of his management and financial consulting business, Mr. Spalding serves on numerous boards and is an advisor and interim officer for numerous companies, which include Paxton Energy Incorporated, Cytta Corporation and Verde Resources, Inc.  Mr. Spalding is also formerly CEO, Vigilant Privacy Corporation, a private Nevada corporation that was based in Pleasanton, California, from 2003 to March, 2008 where he procured the firms angel round of financing and lead the organization while the company's product was transformed from a desktop product to an enterprise security solution. Previously he was a Partner, Deloitte & Touche LLP, from 1997 - 2003, responsible for their IDI Practice (Implementation, Development and Integration) Division. He was formerly a partner at KPMG Peat Marwick LLP from 1995 - 1997, involved in Strategic Services, Enabling Technology Practice. Mr. Spalding is currently Assistant Professor, San Francisco State University, Business Systems Management and Control, Course Number 507 (Senior/Graduate Level), present. He has an MBA, in Quantitative Analysis, University of Arizona, 1974. He also has a B.S., Finance and Management, Eastern Illinois University, 1973, a B.S., Physics (solid state), Eastern Illinois University, 1969 and a B.S., Mathematics, Eastern Illinois University, 1969.

FAMILY RELATIONSHIPS

There are no family relationships, by blood or marriage, among any of our directors or executive officers.

19

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

During the past five 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, 2015, we have no standing committees and our entire board of directors serves as our audit, compensation and nominating committees. Our board of directors has determined that Stephen Spalding, a member of our board, qualifies as an audit committee financial expert.  However, we intend to appoint an audit, a compensation and a nominating committee of our board of directors.

As of the date of this annual report on Form 10-K for the year ended December 31, 2015, 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

As of the date of this annual report on Form 10-K for the year ended December 31, 2015, we have not yet adopted a code of ethics for our principal executive officer, principal financial officer or principal accounting officer. We are, however, in the process of drafting such a code of ethics and, upon adoption, it we will provide a copy of our code of ethics, without charge, to any person who so requests a copy, in writing, at: Spectral Capital Corporation., 701 Fifth Avenue, Suite 4200, Seattle, Washington  98104.
 
20

COMPLIANCE WITH SECTION 16(A)

Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than ten percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities of ours. Officers, directors and greater than ten percent stockholders are required by the SEC's regulations to furnish us with copies of all Section 16(a) forms they filed.

The following table sets for the compliance reporting under Section 16(a) during the last year.

 
 
Number of
Late Reports
   
Number of
Transactions Not
Timely Reported
   
Failure
to File
 
Jenifer Osterwalder
   
0
     
0
     
0
 
 
                       
Stephen Spalding
   
0
     
0
     
0
 
 
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.

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
2015
 
$
149,789
     
-
     
-
     
-
     
-
     
-
     
-
   
$
149,789
 
Chief Executive Officer*
2014
 
$
151,022
     
-
     
-
     
-
     
-
     
-
     
-
   
$
151,022
 
 
EMPLOYMENT AGREEMENTS

Our President and CEO, Ms. Osterwalder, does not currently have an employment agreement, however, the Company has agreed to pay Ms. Osterwalder 12,350 CHF a month for her services. As of December 31, 2015 and 2014, amounts due to Ms. Osterwalder for accrued compensation were $166,742 and $16,953, respectively.

As of the date of this annual report on Form 10-K for the year ended December 31, 2015, we have no other employment agreements in place with any of our other executive officers, directors or employees.

21

OUTSTANDING EQUITY AWARDS AT YEAR END

There were 13,750,000 outstanding option equity awards at our year end, 6,000,000 held by our President and Chief Executive Officer, Jenifer Osterwalder, 3,500,000 held by director Stephen Spalding and 1,000,000 held by members of our advisory board and 3,250,000 held by service providers and others.

COMPENSATION OF DIRECTORS

Pursuant to authority granted under our 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, 2015:
 
DIRECTOR COMPENSATION
 
 
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
 
Stephen Spalding*
 
$
0
     
-
     
-
     
-
     
-
     
-
   
$
0
 
 
*Mr. Spalding was granted options to purchase 1,000,000 shares of our common stock at an exercise price of $1.00, with five year vesting that vests annually on the 12 month anniversary of his service as director, which means that 1,000,000 of his option shares are currently exercisable. In 2012, he was also awarded options to purchase 2,500,000 shares of common stock at $0.61 per share in February 2012 of which are 100% vested as of December 31, 2015.

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, 2015:

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
   
13,000,000
   
$
0.75
     
2,000,000
 
Total
                       

22

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 March 15, 2016. The information in these tables provides ownership information for:

each person known by us to be the beneficial owner of more than a 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.
 
Name
 
Amount and
Nature of
Ownership
   
Percent of Class*
 
 
 
   
 
Jenifer Osterwalder (1)
   
6,013,934
     
4.7
%
 
               
Stephen Spalding (2)
   
3,500,000
     
2.7
%
 
               
All officers, directors, and 5% or greater shareholders as a group (2 persons)
   
9,513,934
     
7.5
%

(1)
Consists of 13,934 shares owned directly and immediately exercisable options to purchase 1,000,000 common shares at an exercise price of $1.00 per share and 5,000,000 options to purchase common stock at $0.61 per share.
   
(2)
Includes options to purchase 1,000,000 shares of common stock at $1.00 per share, and options to purchase 2,500,000 shares of common stock at $0.61 per share.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

Related Party Transactions

Akoranga, AG

At December 31, 2015 and 2014, $351,502 and $352,619, respectively, was owed to Akoranga AG, a Swiss Company owned by the CEO of Spectral. Akoranga was formed to facilitate the Company's business in Europe. In connection with the facilitation of the Company's operations which includes making payments on the Company's obligations, Akoranga charges the Company a 10% fee on all transactions processed by Akoranga on behalf of the Company. The Company ceased using Akoranga services in August 2014. Fees expensed for services provided by Akoranga totaled approximately $18,239 for the year ended December 31, 2014.  The advances do not incur interest and are payable upon demand.

23

At December 31, 2012, the Company sold its oil and gas business to Akoranga for $950,000 plus the assumption of all debt related to the oil and gas business. As a result of that transaction, Akoranga owed $323,978 to the Company and was reflected on the December 31, 2013 accompanying balance sheet as accounts receivable - related party. The balance was unsecured, non-interest bearing and originally due on December 31, 2013, which was extended to December 31, 2014. Related party loans are unsecured, and non-interest bearing and have no specific terms of repayment unless otherwise noted. At December 31, 2014, the Company determined that the receivable collectability was not probable due to Akoranga's inability to generate revenues from the operation and/or sale of the oil and gas properties. Thus, the receivable from Akoranga was written off.

Jenifer Osterwalder, the Company's Chief Executive Officer

Through August 2014, Akoranga charged the Company 12,350 CHF per month for the Company's CEO, Jenifer Osterwalder, for services related to the Company. Starting in September 2014, these amounts were the responsibility of the Company. Total amounts expended in the Company's consolidated financial statements in connection with the CEO's services was $151,022 and $155,350 for the years ended December 31, 2015 and 2014, respectively. Amounts charged by Akoranga to the Company prior to August 2014 are included within the Akoranga liability disclosed above. As of December 31, 2015 and 2014, amounts due to the CEO related to accrued salaries were $166,742 and $16,953, respectively.

Commencing in September 2014, from time to time due to the limited cash flow available, the Company's CEO pays certain operating expenditures on behalf of the Company. These advances are bear no interest and are due on demand. As of December 31, 2015 and 2014, the Company's CEO was due $20,701 and $1,357 in connection with these advances, respectively.

Independent Directors

The Board of Directors has determined that director Stephen Spalding is an independent director under standards established by the Securities and Exchange Commission.

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:

 
 
2015
   
2014
 
Audit fees
 
$
23,300
   
$
28,000
 
Audit-related fees
         
-
 
Tax fees
         
-
 
All other fees
         
-
 
Total
 
$
23,300
   
$
28,000
 


24

ITEM 15. EXHIBITS.
 
No.
Description of Exhibit
 
 
3(i)(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(i)(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(ii)
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.
 
 
31.1
Certification of Spectral Capital Corporation Chief Executive Officer, Jenifer Osterwalder, required by Rule 13a-14(a) or Rule 15d-14(a), dated March 31, 2014. FILED HEREWITH
 
 
31.2
Certification of Spectral Capital Corporation Chief Financial Officer, Stephen Spalding, required by Rule 13a-14(a) or Rule 15d-14(a), dated March 31, 2014. FILED HEREWITH
 
 
32.1
Certification of Spectral Capital Corporation Chief Executive Officer, Jenifer Osterwalder, 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), dated March 31, 2014. FILED HEREWITH.
 
 
32.2
Certification of Spectral Capital Corporation Chief Financial Officer, Stephen Spalding, 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), dated March 31, 2014. FILED HEREWITH.
 
101 INS
XBRL Instance Document*
   
101 SCH
XBRL Schema Document*
   
101 CAL
XBRL Calculation Linkbase Document*
   
101 DEF
XBRL Definition Linkbase Document*
   
101 LAB
XBRL Labels Linkbase Document*
   
101 PRE
XBRL Presentation Linkbase Document*

*            The XBRL related information in Exhibit 101 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

25

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: March __, 2016
 SPECTRAL CAPITAL CORPORATION
 
 
 
 
By:
 /s/ Jenifer Osterwalder                 
 
 
Jenifer Osterwalder
 
 
President and Chief Executive Officer
 
/s/  Stephen Spalding
Chief Financial and Accounting Officer
 

26
EX-31.1 2 spectralexh311.htm CERTIFICATION OF SPECTRAL CAPITAL CORPORATION CHIEF EXECUTIVE OFFICER, JENIFER OSTERWALDER, REQUIRED BY RULE 13A-14(A) OR RULE 15D-14(A), DATED MARCH 31, 2014. spectralexh311.htm
EXHIBIT 31.1


CERTIFICATE OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Jenifer Osterwalder certify that:
 
1. I have reviewed this 10-K for the period ended December 31, 2015, of Spectral Capital Corporation;
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
 
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 

 
/s/ Jenifer Osterwalder
Date: March __, 2016
Jenifer Osterwalder
President and Chief Executive Officer
 
 
 
 
 
 

 
 
EX-3.2 3 spectralexh312.htm CERTIFICATION OF SPECTRAL CAPITAL CORPORATION CHIEF FINANCIAL OFFICER, STEPHEN SPALDING, REQUIRED BY RULE 13A-14(A) OR RULE 15D-14(A), DATED MARCH 31, 2014. spectralexh312.htm
EXHIBIT 31.2


CERTIFICATE OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Stephen Spalding, certify that:
 
1. I have reviewed this 10-K for the period ended  December 31, 2015, of Spectral Capital Corporation
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
 
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 

 
/s/ Stephen Spalding
Date: March ___, 2016
Stephen Spalding
Chief Financial and Accounting Officer
 
 
 
 
 

 
EX-32.1 4 spectralexh321.htm CERTIFICATION OF SPECTRAL CAPITAL CORPORATION CHIEF EXECUTIVE OFFICER, JENIFER OSTERWALDER, 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), DATED MARCH 31, 2014. spectralexh321.htm
EXHIBIT 32.1


CERTIFICATION PURSUANT TO
18 U.S.C. 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 

In connection with the Quarterly Report of Spectral Capital Corporation (the "Company") on Form 10-K for the period ended  December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jenifer Osterwalder, in my capacity as President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 

 
/s/ Jenifer Osterwalder
Date:   March ____, 2016
Jenifer Osterwalder
President and Chief Executive Officer


 
 
 
 
 
 
 
 

 
EX-32.2 5 spectralexh322.htm CERTIFICATION OF SPECTRAL CAPITAL CORPORATION CHIEF FINANCIAL OFFICER, STEPHEN SPALDING, 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), DATED MARCH 31, 2014. spectralexh322.htm
EXHIBIT 32.2


CERTIFICATION PURSUANT TO
18 U.S.C. 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 

In connection with the Quarterly Report of Spectral Capital Corporation (the "Company") on Form 10-K for the period ended  December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Stephen Spalding, in my capacity as Chief Financial Officer and Accounting Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 

 
/s/ Stephen Spalding
Date:   March ___, 2016
Stephen Spalding
Chief Financial and Accounting Officer



 
 
 
 
 
 
 
 

 
EX-101.INS 6 fccn-20151231.xml XBRL INSTANCE DOCUMENT 11000 3675 59919 232000 5000 3675 296919 943 538945 371181 539888 371181 539888 371181 11786 11786 27445400 25263906 1831500 -27771839 -26964108 -314653 143084 3675 296919 0.0001 0.0001 5000000 5000000 0.0001 0.0001 500000000 500000000 117857623 117857623 117857623 117857623 76278 225154 149789 151022 330760 323978 1705008 813061 6648576 -813061 -6648576 1116 7649 -811945 -6640927 -2016403 -0.01 -0.04 117857623 117857623 11786 24687359 -47345 1831500 1799057 -22339584 5942773 117857623 47345 -2016403 2016403 -6640927 -6640927 11786 25263906 1831500 -217346 -26964108 -74262 117857623 1831500 -1831500 -4214 4214 -811945 -811945 11786 27445400 -221560 -27771839 -536213 117857623 -807731 -4624524 -4213 -2016403 -1705008 349994 623892 237000 3288762 11000 -11000 148581 -943 -64426 -710287 19182 -26931 19182 -26931 -45244 -737218 786137 48919 <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>NOTE 1 &#150; NATURE OF OPERATIONS </b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;background:white'>Spectral Capital Corporation (the &quot;Company&quot; or &quot;Spectral&quot;) was incorporated on September 13, 2000 under the laws of the State of Nevada. The Company was formerly in the business of developing internet search engine technology. From August 2010 until December 2012, the Company evaluated and sought out opportunities in the natural resource sector. &nbsp;Spectral acquired various interests in natural resource assets in Russia, Kazakhstan and Alberta, Canada. &nbsp;In December 2012, Spectral changed its corporate focus from the natural resource sector and back to information technology. &nbsp;Spectral has divested of its principal natural resource asset in Alberta, Canada and intends to divest any remaining natural resources in the near future and focus solely on acquiring and developing information technology. See Notes 4 and 5 for disclosures regarding the acquisition of certain technology and a cost investment.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;background:white'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;background:white'>Spectral is focused on the identification, acquisition, development, financing of technology that has the potential to transform existing industries. The Company looks for technology that can be protected through patents or laws regarding trade secrets.&nbsp;&nbsp;Spectral has acquired significant stakes in three technology companies currently and actively works with management to drive these companies toward increasing market penetration in their particular verticals.&nbsp;&nbsp;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.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;background:white'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;background:white'>On February 26, 2013, the Company formed Noot Holdings, Inc., a Delaware corporation, which the Company is currently a 60% owner, in order to acquire mobile search engine technology. Under the agreement to acquire technology, the Company issued 5,000,000 common shares of Spectral Capital Corporation, see Note 4 for additional information.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;background:white'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;background:white'>On March 14, 2013, the Company purchased 8% of the issued and outstanding shares of Kontexto, Inc., a Canadian corporation.&nbsp; Spectral purchased the shares from Sargas Capital, Ltd. , a minority shareholder, in exchange for 5,000,000 common shares of Spectral stock and warrants to purchase 5,000,000 common shares at $0.85 per share, which expired on March 13, 2015.&nbsp; The Company's CEO was an officer of Sargas Capital, Ltd. at the time of the transaction but did not have any holdings in Sargas Capital, Ltd, see Note 5 for additional information.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;background:white'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;background:white'>On December 1, 2013, the Company formed Monitr Holdings, Inc., a Delaware corporation, which the Company is currently a 60% owner of, in order to acquire a technology application and service.&#160; Under the agreement to acquire technology, the Company issued 5,000,000 common shares of Spectral Capital Corporation, see Note 4 for additional information.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>NOTE 2 &#150; SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES </b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Going Concern</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.&#160; The Company is in the development stage and has sustained substantial losses since inception. As of December 31, 2015, the Company has cash on hand of $3,675 and negative working capital of $536,213. The Company expects current cash on hand will not be able to fund operations for a period 12 months or more. &#160;These factors raise substantial doubt regarding the Company's ability to continue as a going concern.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>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 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 will be required to reduce their development expenditures which will potentially delay the completion of products which are expected to generate future revenues. </p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Risks and Uncertainties</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>The Company has a limited operating history and has not generated revenues from our planned principal operations.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;background:white'>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.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;background:white'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;background:white'>The Company currently has no sales 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.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;background:white'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;background:white'>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 favorably received. Nor may we have the capital resources to further the development of existing and/or new ones.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Principles of Consolidation</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>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.&#160; All material intercompany accounts and transactions have been eliminated in consolidation.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Basis of Presentation</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>The consolidated 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.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Stock-Based Compensation</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>The Company accounts for employee stock-based compensation in accordance with the guidance of the Financial Accounting Standards Board (&#147;FASB&#148;) Accounting Standards Codification (&#147;ASC&#148;) Topic 718, <i>Compensation &#150; Stock Compensation </i>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.&nbsp; </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>The Company follows ASC Topic 505-50, <i>Equity: Equity-Based Payments to Non-Employees</i> for stock options and warrants issued to consultants and other non-employees.&nbsp;&nbsp;In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined.&nbsp;&nbsp;The&nbsp;fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital over the period during which services are rendered. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>Because the Company&#146;s stock-based compensation options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the estimate, amounts estimated using the Black-Scholes option pricing model may differ materially from the actual fair value of the Company&#146;s stock-based compensation options.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Use of Estimates</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>The preparation of the consolidated 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 of the consolidated financial statements and the reported amount of revenues and expenses during the reporting period.&#160; Actual results could differ from those estimates.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Revenue Recognition</b> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>The Company recognizes revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Fair Value of Financial Instruments</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>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&#146;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:</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:27.0pt'>Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:27.0pt'>&#160; in active markets.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:27.0pt'>Level 2 - Include other inputs that are directly or indirectly observable in the marketplace.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:27.0pt'>Level 3 - Unobservable inputs which are supported by little or no market activity.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in'>&nbsp;&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>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 December 31, 2015 and 2014, the Company does not have any assets or liabilities which would be considered Level 2 or 3.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;margin-left:0in;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;margin-left:0in;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify'>The Company&#146;s financial instruments primarily consist of cash and cash equivalents, prepaid expenses and amounts payable to related parties. 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.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;margin-left:0in;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;margin-left:0in;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify'>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. In 2013, the Company acquired various technologies and an investment in a third party in which the investment is being treated under the cost basis of accounting. See Notes 4 and 5, for discussion regarding impairment charges related to these items. 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.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;margin-left:0in;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;margin-left:0in;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify'><b>Income Taxes</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font lang="X-NONE">The Company follows ASC 740, <i>Income Taxes</i> for recording the provision for income taxes. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Tax law and rate changes are reflected in income in the period such changes are enacted. The Company records a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized. The Company includes interest and penalties related to income taxes, including unrecognized tax benefits, within the income tax provision.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font lang="X-NONE">&nbsp;</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font lang="X-NONE">The Company&#146;s income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities. In addition, the calculation of the Company&#146;s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font lang="X-NONE">&nbsp;</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font lang="X-NONE">The Company recognizes windfall tax benefits associated with share-based awards directly to stockholders&#146; equity only when realized. A windfall tax benefit occurs when the actual tax benefit realized by the Company upon an employee's disposition of a share-based award exceeds the deferred tax asset, if any, associated with the award that the Company had recorded. When assessing whether a tax benefit relating to share-based compensation has been realized, the Company follows the tax law ordering method, under which current year share-based compensation deductions are assumed to be utilized before net operating loss carryforwards and other tax attributes.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Investment in Securities</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>The Company&#146;s investments consisting of common shares of non-controlled entities are accounted for on&#160; the cost basis.&#160; Impairment losses will be recorded when indicators of impairment are present.&#160; See Note 5 for additional information. </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;margin-left:0in;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;margin-left:0in;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify'><b>Cash and Cash Equivalents</b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;margin-left:0in;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify'>The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Basic Loss Per Share</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>Basic loss per share is calculated by dividing the Company&#146;s net 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&#146;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 totaling 13,750,000 and 20,250,000 were outstanding at December 31, 2015 and 2014, respectively, representing outstanding warrants and options, and were not included in the computation of diluted earnings per share for the years ended December 31, 2015 and 2014, as their effect would have been anti-dilutive.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Non-Controlling Interests</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>Non-controlling interests disclosed within the consolidated statement of operations represent the minority ownership's 40% share of net losses of Noot Holdings, Inc. and Monitr Holdings, Inc incurred during the years ended December 31, 2015 and 2014. The following table sets forth the changes in non-controlling interest for the year ended December 31, 2015:</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%;border-collapse:collapse'> <tr style='height:12.75pt'> <td width="39%" valign="bottom" style='width:39.38%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="27%" valign="bottom" style='width:27.12%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="3%" valign="bottom" style='width:3.24%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="30%" valign="bottom" style='width:30.26%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Non-Controlling</p> </td> </tr> <tr style='height:12.75pt'> <td width="39%" valign="bottom" style='width:39.38%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="27%" valign="bottom" style='width:27.12%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="3%" valign="bottom" style='width:3.24%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="30%" valign="bottom" style='width:30.26%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Interest</p> </td> </tr> <tr style='height:12.75pt'> <td width="66%" colspan="2" valign="bottom" style='width:66.5%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Balance at December 31, 2014</p> </td> <td width="3%" valign="bottom" style='width:3.24%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="30%" valign="bottom" style='width:30.26%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'> $ &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(217,346)</p> </td> </tr> <tr style='height:33.75pt'> <td width="66%" colspan="2" valign="bottom" style='width:66.5%;background:white;padding:0in 5.4pt 0in 5.4pt;height:33.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Net loss attributable to non-controlling interest</p> </td> <td width="3%" valign="bottom" style='width:3.24%;background:white;padding:0in 5.4pt 0in 5.4pt;height:33.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="30%" valign="bottom" style='width:30.26%;background:white;padding:0in 5.4pt 0in 5.4pt;height:33.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (4,214)</p> </td> </tr> <tr style='height:13.5pt'> <td width="66%" colspan="2" valign="bottom" style='width:66.5%;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>Balance at December 31, 2015</p> </td> <td width="3%" valign="bottom" style='width:3.24%;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="30%" valign="bottom" style='width:30.26%;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'> $ &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(221,560)</p> </td> </tr> </table> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Foreign Currency</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>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, the Company has recorded foreign currency income of $1,116 and $7,649, recorded on the accompanying consolidated statements of operations during the years ended December 31, 2015 and 2014, respectively.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Change in Prior Year Presentation</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>The prior year financial statements have been reclassed to conform with current year presentation. Specifically, the Company reclassed the foreign currency gain of $7,649 included within selling, general and administrative to gain on foreign currency translation. The reclass only impacted the consolidated statement of operations.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;background:white'><b>New Accounting Pronouncements</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>In February 2015, the FASB issued ASU 2015-02, &quot;Consolidation:&nbsp;Amendments to the Consolidation Analysis&quot; (&#147;ASU 2015-02&#148;).&nbsp;This standard update is intended to improve targeted areas of consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. This ASU simplifies consolidation accounting by reducing the number of consolidation models and improves current U.S. GAAP by (1) placing more emphasis on risk of loss when determining a controlling financial interest; (2) reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity; and (3) changing consolidation conclusions for public and private companies in several industries that typically make use of limited partnerships or variable interest entities. The amendments in ASU 2015-02 are effective for reporting periods beginning after December 15, 2015, with early adoption permitted. Entities can transition to the standard either retrospectively or as a cumulative effect adjustment as of the date of adoption. The Company has not adopted ASU 2015-02 as of December 31, 2015, and the adoption is not expected to have an impact on the Company&#146;s consolidated financial statements. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;background:white'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>In April 2015, the FASB issued ASU 2015-03, &quot;Interest&#151;Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs&quot;. This standard update requires an entity to present debt issuance costs on the balance sheet as a direct deduction from the related debt liability as opposed to an asset. Amortization of the costs will continue to be reported as interest expense. The update is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued, and the new guidance would be applied retrospectively to all prior periods presented.&nbsp; The Company has not adopted ASU 2015-02 as of December 31, 2015, and the adoption is not expected to have an impact on the Company&#146;s consolidated financial statements. </p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-right:.9pt;text-align:justify'><b>NOTE 3 &#150; DISCONTINUED OPERATIONS</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-right:.9pt;text-align:justify'><i>Shamrock Oil &amp; Gas Ltd</i></p> <p style='margin:0in;margin-bottom:.0001pt;margin-right:.9pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-right:.9pt;text-align:justify'>On February 13, 2012, the Company closed its planned purchase of an oil and gas property in the Red Earth Region of Alberta, Canada, which property Spectral purchased from receivership though its newly formed Canadian subsidiary, Shamrock Oil &amp; Gas Ltd. Spectral was the 60% owner of the Canadian subsidiary and its Canadian joint venture partner owned 40% of the subsidiary. &#160;On December 31, 2012, the Company entered into an agreement with Akoranga AG, a Company owned by the CEO of Spectral, to transfer its ownership interests in the Shamrock Oil and Gas properties for $950,000, the value of Spectral&#146;s contributions to the project at that date. In satisfaction of the purchase price, Akoranga agreed to offset liabilities of Spectral in the amount of $626,022.&#160; The balance owing Spectral of $323,978 was non-interest bearing and was to be repaid within a one year period, which was extended to December 31, 2014. At December 31, 2014, the Company determined that the receivable collectability was not probable due to Akoranga's inability to generate revenues from the operation and/or sale of the oil and gas properties. Thus, the receivable from Akoranga was written off.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-right:.9pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>There were no material assets, liabilities or operations associated with discontinued operations which need to be presented within the accompanying consolidated financial statements.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>NOTE 4 &#150; TECHNOLOGY ASSETS</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><i>Noot Holdings, Inc.</i></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>On February 26, 2013, the Company, through its subsidiary, Spectral Holdings, Inc. signed a definitive Technology Acquisition Agreement (&#147;Agreement&#148;) to acquire mobile search engine and mobile sharing technology from Fiveseas Securities Ltd (&#147;Fiveseas&quot;).&nbsp; Under the Agreement, the Company issued Fiveseas 5,000,000 shares of the Company's common stock.&nbsp; The Agreement called for the technology to reside within a newly formed entity called Noot Holdings, Inc.( &#147;Noot&#148;), a Delaware corporation, which the Company is a 60% owner of and Fiveseas is a 40% owner of. Fiveseas was granted a right of first refusal for any subsequent sale of the technology.&#160; The common shares were valued at $3,000,000 based on the closing market price of the Company's common stock as of the date of the agreement. In addition, the fair value assigned to the asset contributed by Fiveseas was $2,000,000, resulting in total intangible assets of $5,000,000 being recorded. The Company has recorded the value as an investment in technology as the in process development did not constitute a business. The Company records income/losses from Noot attributable to the percentage owned by Fiveseas as a non-controlling interest. The Company completed substantial development of the technology acquired during September 2013. Costs were capitalized in relation to the technology&#146;s development through September 30, 2013.&#160; During the year ended December 31, 2013, costs of approximately $115,000 were capitalized in connection with the continued development. Starting October 1, 2013, the Company began amortizing the asset over the expected life of three years. During the years ended December 31, 2015 and 2014, the Company amortized $0 and $1,705,008 to depreciation and amortization on the accompanying statements of operations. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>At December 31, 2014, the Company reviewed whether or not there were any indicating factors that the carrying value of the assets related to Noot were impaired. As part of this analysis, the Company prepared and reviewed future estimated cash flow projections from Noot's operations. Based upon the Company's analysis, it was determined that a full impairment to Noot's assets of $2,983,762 would be recorded. Although, the Company maintains that Noot's technology is a valuable asset, the Company does not currently have access to capital to sufficiently market the asset. The Company estimates it would take approximately $2.0 million to appropriately promote the Noot product, which at the time of the impairment analysis was not probable.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><i>Monitr Holdings, Inc.</i></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>On December 1, 2013, the Company, through its subsidiary, Spectral Holdings, Inc. signed a definitive Technology Acquisition Agreement (&#147;Agreement&#148;) to acquire technology which enhances the way people find, consume, analyze, share and discuss financial news and topics, equities, commodities and currencies on the web from TL Global, Inc. (&#147;TL Global&quot;).&nbsp; Under the Agreement, the Company issued TL Global 5,000,000 shares of the Company's common stock.&nbsp; The Agreement calls for the technology to reside within a newly formed entity called Monitr Holdings, Inc.( &#147;Monitr&#148;), a Delaware corporation, which the Company is a 60% owner of and TL Global is a 40% owner of. TL Global was granted a right of first refusal for any subsequent sale of the technology.&#160; The common shares were valued at $1,300,000 based on the closing market price of the Company's common stock as of the date of the agreement. In addition, the fair value assigned to the asset contributed by TL Global was $866,667, resulting in total assets of $2,166,667 being recorded. The Company recorded the transaction as an investment in technology as the in process development did not constitute a business. In addition, at the time of acquisition, the Company determined that the technology required extensive development in order to achieve technological feasibility, and expensed $2,161,667, the entire amount of except for $5,000 assigned to the website domain. The $5,000 was impaired during the year ended December 31, 2015 due to limited projected cash flows. The Company records losses from Monitr attributable to the percentage owned by TL Global as a non-controlling interest. During the year ended December 31, 2014, the Company expended a significant amount of development costs in connection with development of the Monitr products, however, none of these costs were capitalized in relation to the technology&#146;s development, as they didn't meet the applicable accounting standards for the application of such.&#160; Such development was minimal during the year ended December 31, 2015, due to limited capital available to the Company. </p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>NOTE 5 &#150; COST INVESTMENT</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>On March 14, 2013, the Company entered into an agreement to purchase 8% of the issued and outstanding common shares of Kontexto, Inc., (&#147;Kontexto&#148;) a Canadian corporation.&nbsp; The Company purchased the shares from Sargas Capital, Ltd., a minority shareholder, in exchange for </font><font style='background:white'>5,000,000</font><font style='background:white'> common shares of the Company's common stock and warrants to purchase </font><font style='background:white'>5,000,000</font><font style='background:white'> shares of the Company's common stock at </font><font style='background:white'>$0.85</font><font style='background:white'> per share, which expired on March 13, 2015 (see Note 7).&nbsp;&nbsp;The Company valued the common stock using the closing price of the Company's common stock on the date of the agreement and the warrants were valued using the Black-Scholes pricing model. The Company&#146;s investment in 8% of the common shares, initially valued at </font><font style='background:white'>$6,398,500</font><font style='background:white'>, was accounted for on the cost basis.&nbsp;&nbsp;During 2013, a third party valuation specialist valued the investment in Kontexto using a hybrid between the market and income methods and determined that the fair value was </font><font style='background:white'>$537,000</font><font style='background:white'>.&nbsp;&nbsp;Accordingly, an impairment loss of </font><font style='background:white'>$5,861,500</font><font style='background:white'> was recognized in the statements of operations for the year ended December 31, 2013. The Company's CEO was an officer of Sargas Capital, Ltd. but does not have any holdings in Sargas Capital, Ltd. </font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>At December 31, 2014, the Company reviewed whether or not there were any indicating factors that the carrying value of the cost investment was impaired. As part of this analysis, the Company obtained the current financial statements and future estimated discounted cash flow projections from Kontexto. Based upon the Company's review, it was determined that the carry value of the investment should be decreased to $232,000, resulting in an impairment of $305,000 during the year ended December 31, 2014.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>In September 2015, the Company was notified by the management of Kontexto that the operations were being discontinued due to cash flow limitations. Thus, at September 30, 2015, the remaining investment of $232,000 was written off. </p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>NOTE 6 &#150; RELATED PARTY TRANSACTIONS</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><i>Akoranga, AG</i></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>At December 31, 2015 and 2014, $351,502 and $352,619, respectively, was owed to Akoranga AG, a Swiss Company owned by the CEO of Spectral. Akoranga was formed to facilitate the Company&#146;s business in Europe. In connection with the facilitation of the Company's operations which includes making payments on the Company's obligations, Akoranga charges the Company a 10% fee on all transactions processed by Akoranga on behalf of the Company. The Company ceased using Akoranga services in August 2014. Fees expensed for services provided by Akoranga totaled approximately $18,239 for the year ended December 31, 2014.&#160; The advances do not incur interest and are payable upon demand.</p> <p style='margin-top:0in;margin-right:-1.0pt;margin-bottom:0in;margin-left:6.0pt;margin-bottom:.0001pt;line-height:10.0pt;text-autospace:none;margin:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>At December 31, 2012, the Company sold its oil and gas business to Akoranga for $950,000 plus the assumption of all debt related to the oil and gas business. As a result of that transaction, Akoranga owed $323,978 to the Company and was reflected on the December 31, 2013 accompanying balance sheet as accounts receivable - related party. The balance was unsecured, non-interest bearing and originally due on December 31, 2013, which was extended to December 31, 2014. Related party loans are unsecured, and non-interest bearing and have no specific terms of repayment unless otherwise noted. At December 31, 2014, the Company determined that the receivable collectability was not probable due to Akoranga's inability to generate revenues from the operation and/or sale of the oil and gas properties. Thus, the receivable from Akoranga was written off.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><i>Jenifer Osterwalder, the Company's Chief Executive Officer</i></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>Through August 2014, Akoranga charged the Company 12,350 CHF per month for the Company's CEO, Jenifer Osterwalder, for services related to the Company. Starting in September 2014, these amounts were the responsibility of the Company. Total amounts expended in the Company's consolidated financial statements in connection with the CEO's services was $151,022 and $155,350 for the years ended December 31, 2015 and 2014, respectively. Amounts charged by Akoranga to the Company prior to August 2014 are included within the Akoranga liability disclosed above. As of December 31, 2015 and 2014, amounts due to the CEO related to accrued salaries were $166,742 and $16,953, respectively.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>Commencing in September 2014, from time to time due to the limited cash flow available, the Company's CEO pays certain operating expenditures on behalf of the Company. These advances are bear no interest and are due on demand. As of December 31, 2015 and 2014, the Company's CEO was due $20,701 and $1,357 in connection with these advances, respectively. </p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>NOTE 7 </b><b>&#150; STOCKHOLDER'S EQUITY</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><i>Sale of Common Stock and Warrants Issued</i></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>On March 7, 2013, the Company sold 1,650,000 common shares, par value $0.0001 at approximately $0.61 per share and received a total of $1,000,000 USD in financing proceeds.&nbsp; Spectral also issued warrants to purchase 1,650,000 common shares to the purchasers at an exercise price of $0.80 per share.&nbsp; The warrants expired on March 6, 2015. </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:.25in;margin:0in;margin-bottom:.0001pt;text-align:justify'><i>Employee Options</i></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:.25in;margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:.25in;margin:0in;margin-bottom:.0001pt;text-align:justify'><font lang="X-NONE">The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, <i>Compensation &#150; Stock Compensation </i>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.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>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.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:.25in;margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:.25in;margin-left:0in;text-align:justify'><font lang="X-NONE">On February 6, 2012, the Company granted 7,500,000 options to two employees. Stock-based compensation is being recognized over the two year vesting period. The options were valued at $3,408,750 using the Black-Scholes Option Pricing Model</font>. <font lang="X-NONE">Employee stock-based compensation expense relating to options granted in 2010 and 2012, and recognized </font>during the years ended December 31, 2015 and 2014 <font lang="X-NONE">totaled </font><font lang="X-NONE">$</font>349,994<font lang="X-NONE"> and </font><font lang="X-NONE">$</font>576,547<font lang="X-NONE">, respectively. </font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><i>Non-Employee Options</i></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>During the year ended December 31, 2014, $47,345 of prepaid consulting expense was charged to stock-based compensation on the accompanying consolidated statements of operations. As of December 31, 2014, all prepaid consulting expense had been recorded.&#160; </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><i>Summary of Stock Options</i></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>A summary of changes in stock options during the years ended December 31, 2015 and 2014 is as follows:</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%;border-collapse:collapse'> <tr style='height:12.75pt'> <td width="47%" rowspan="3" valign="top" style='width:47.2%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="16%" rowspan="3" valign="bottom" style='width:16.92%;border:none;border-bottom:solid black 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Stock Options</p> </td> <td width="19%" rowspan="3" valign="bottom" style='width:19.74%;border:none;border-bottom:solid black 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Weighted Average Exercise Price</p> </td> <td width="16%" rowspan="3" valign="bottom" style='width:16.16%;border:none;border-bottom:solid black 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Weighted Average Life Remaining</p> </td> <td width="0" height="17" style='height:12.75pt;border:none'></td> </tr> <tr style='height:12.75pt !msorm'> <td width="0" height="17" style='height:12.75pt;border:none'></td> </tr> <tr style='height:11.5pt'> <td width="0" height="15" style='height:11.5pt;border:none'></td> </tr> <tr style='height:12.75pt'> <td width="47%" valign="bottom" style='width:47.2%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Outstanding, December 31, 2013</p> </td> <td width="16%" valign="bottom" style='width:16.92%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>13,750,000</p> </td> <td width="19%" valign="bottom" style='width:19.74%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 0.75</p> </td> <td width="16%" valign="bottom" style='width:16.16%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>8.50</p> </td> <td width="0" height="17" style='height:12.75pt;border:none'></td> </tr> <tr style='height:12.75pt'> <td width="47%" valign="bottom" style='width:47.2%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Issued</p> </td> <td width="16%" valign="bottom" style='width:16.92%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -&#160;&#160; </p> </td> <td width="19%" valign="bottom" style='width:19.74%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="16%" valign="bottom" style='width:16.16%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>-</p> </td> <td width="0" height="17" style='height:12.75pt;border:none'></td> </tr> <tr style='height:12.75pt'> <td width="47%" valign="bottom" style='width:47.2%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Exercised</p> </td> <td width="16%" valign="bottom" style='width:16.92%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -&#160;&#160; </p> </td> <td width="19%" valign="bottom" style='width:19.74%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="16%" valign="bottom" style='width:16.16%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>-</p> </td> <td width="0" height="17" style='height:12.75pt;border:none'></td> </tr> <tr style='height:13.5pt'> <td width="47%" valign="bottom" style='width:47.2%;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>Expired</p> </td> <td width="16%" valign="bottom" style='width:16.92%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -&#160;&#160; </p> </td> <td width="19%" valign="bottom" style='width:19.74%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="16%" valign="bottom" style='width:16.16%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>-</p> </td> <td width="0" height="18" style='height:13.5pt;border:none'></td> </tr> <tr style='height:12.75pt'> <td width="47%" valign="bottom" style='width:47.2%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Outstanding, December 31, 2014</p> </td> <td width="16%" valign="bottom" style='width:16.92%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>13,750,000</p> </td> <td width="19%" valign="bottom" style='width:19.74%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>0.75</p> </td> <td width="16%" valign="bottom" style='width:16.16%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>6.50</p> </td> <td width="0" height="17" style='height:12.75pt;border:none'></td> </tr> <tr style='height:12.75pt'> <td width="47%" valign="bottom" style='width:47.2%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Issued</p> </td> <td width="16%" valign="bottom" style='width:16.92%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -&#160;&#160; </p> </td> <td width="19%" valign="bottom" style='width:19.74%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="16%" valign="bottom" style='width:16.16%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>-</p> </td> <td width="0" height="17" style='height:12.75pt;border:none'></td> </tr> <tr style='height:12.75pt'> <td width="47%" valign="bottom" style='width:47.2%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Exercised</p> </td> <td width="16%" valign="bottom" style='width:16.92%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -&#160;&#160; </p> </td> <td width="19%" valign="bottom" style='width:19.74%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="16%" valign="bottom" style='width:16.16%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>-</p> </td> <td width="0" height="17" style='height:12.75pt;border:none'></td> </tr> <tr style='height:12.75pt'> <td width="47%" valign="bottom" style='width:47.2%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Expired</p> </td> <td width="16%" valign="bottom" style='width:16.92%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -&#160;&#160; </p> </td> <td width="19%" valign="bottom" style='width:19.74%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="16%" valign="bottom" style='width:16.16%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>-</p> </td> <td width="0" height="17" style='height:12.75pt;border:none'></td> </tr> <tr style='height:13.5pt'> <td width="47%" valign="bottom" style='width:47.2%;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>Outstanding, December 31, 2015</p> </td> <td width="16%" valign="bottom" style='width:16.92%;border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>13,750,000</p> </td> <td width="19%" valign="bottom" style='width:19.74%;border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 0.75</p> </td> <td width="16%" valign="bottom" style='width:16.16%;border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>5.50</p> </td> <td width="0" height="18" style='height:13.5pt;border:none'></td> </tr> <tr style='height:14.25pt'> <td width="47%" valign="bottom" style='width:47.2%;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p style='margin:0in;margin-bottom:.0001pt'>Vested, December 31, 2015</p> </td> <td width="16%" valign="bottom" style='width:16.92%;border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>13,750,000</p> </td> <td width="19%" valign="bottom" style='width:19.74%;border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 0.75</p> </td> <td width="16%" valign="bottom" style='width:16.16%;border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>5.50</p> </td> <td width="0" height="19" style='height:14.25pt;border:none'></td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:.25in;margin-left:0in;text-align:justify'><i>Warrants</i></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:.25in;margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>On March 7, 2013, Spectral sold 1,650,000 common shares at approximately $0.61 per share and received a total of $1,000,000 in financing proceeds.&nbsp; Contemporaneously, Spectral issued warrants to purchase 1,650,000 common shares at an exercise price of $0.80 per share.&nbsp; The warrants expired on March 7, 2015.&#160; The warrants were valued using the Black-Scholes pricing model and $283,000 of the proceeds were allocated to the warrants. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>As disclosed in Note 5, the C0mpany previously had warrants outstanding to purchase 5,000,000 shares of the Company's common stock at $0.85 per share, which expired on March 13, 2015.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:.25in;margin-left:0in;text-align:justify'><font lang="X-NONE">A summary of changes in warrants during the years ended December 31, 2015 and 2014 is as follows:</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:.25in;margin-left:0in;text-align:justify'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%;border-collapse:collapse;width:100.0% !msorm;border-collapse:collapse !msorm'> <tr style='height:13.5pt !msorm'> <td width="75%" valign="top" style='width:75.38%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;border:none !msorm;border-bottom:solid windowtext 1.0pt !msorm;padding:0in 5.4pt 0in 5.4pt !msorm;height:13.5pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Warrants</p> </td> </tr> <tr style='height:12.75pt !msorm'> <td width="75%" valign="bottom" style='width:75.38%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Outstanding, December 31, 2013</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160; 6,650,000 </p> </td> </tr> <tr style='height:12.75pt !msorm'> <td width="75%" valign="bottom" style='width:75.38%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Issued</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-&#160;&#160; </p> </td> </tr> <tr style='height:12.75pt !msorm'> <td width="75%" valign="bottom" style='width:75.38%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Exercised</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -&#160;&#160; </p> </td> </tr> <tr style='height:13.5pt !msorm'> <td width="75%" valign="bottom" style='width:75.38%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>Expired</p> </td> <td width="24%" valign="bottom" style='width:24.62%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;border:none !msorm;border-bottom:solid windowtext 1.0pt !msorm;padding:0in 5.4pt 0in 5.4pt !msorm;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -&#160;&#160; </p> </td> </tr> <tr style='height:12.75pt !msorm'> <td width="75%" valign="bottom" style='width:75.38%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Outstanding, December 31, 2014</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160; 6,650,000 </p> </td> </tr> <tr style='height:12.75pt !msorm'> <td width="75%" valign="bottom" style='width:75.38%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Issued</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -&#160;&#160; </p> </td> </tr> <tr style='height:12.75pt !msorm'> <td width="75%" valign="bottom" style='width:75.38%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Exercised</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-&#160;&#160; </p> </td> </tr> <tr style='height:12.75pt !msorm'> <td width="75%" valign="bottom" style='width:75.38%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Expired</p> </td> <td width="24%" valign="bottom" style='width:24.62%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;border:none !msorm;border-bottom:solid windowtext 1.0pt !msorm;padding:0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160; (6,650,000)</p> </td> </tr> <tr style='height:13.5pt !msorm'> <td width="75%" valign="bottom" style='width:75.38%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>Outstanding, December 31, 2015</p> </td> <td width="24%" valign="bottom" style='width:24.62%;border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;border:none !msorm;border-bottom:double windowtext 2.25pt !msorm;padding:0in 5.4pt 0in 5.4pt !msorm;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -&#160;&#160; </p> </td> </tr> <tr style='height:14.25pt !msorm'> <td width="75%" valign="bottom" style='width:75.38%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:14.25pt'> <p style='margin:0in;margin-bottom:.0001pt'>Vested, December 31, 2015</p> </td> <td width="24%" valign="bottom" style='width:24.62%;border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;border:none !msorm;border-bottom:double windowtext 2.25pt !msorm;padding:0in 5.4pt 0in 5.4pt !msorm;height:14.25pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -&#160;&#160; </p> </td> </tr> </table> <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:.25in;margin-left:0in;text-align:justify'><b><font lang="X-NONE">NOTE 8 &#150; INCOME TAXES</font></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>As of December 31, 2015, the Company had net operating loss carry forwards of approximately $13,327,000 that may be available to reduce future years&#146; taxable income through 2033. Future tax benefits which may arise as a result of these losses have not been recognized in these consolidated financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards. The difference between the Company's tax rate and the statutory rate is due to significant non-deductible expenses.&#160; </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>The provision for Federal income tax consists of the following: </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='border-collapse:collapse;border-collapse:collapse !msorm'> <tr style='height:12.75pt !msorm'> <td width="29%" valign="bottom" style='width:29.36%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="13%" valign="bottom" style='width:13.12%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="27%" valign="bottom" style='width:27.26%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>December 31,</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>December 31,</p> </td> </tr> <tr style='height:12.75pt !msorm'> <td width="29%" valign="bottom" style='width:29.36%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="13%" valign="bottom" style='width:13.12%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="27%" valign="bottom" style='width:27.26%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;border:none !msorm;border-bottom:solid windowtext 1.0pt !msorm;padding:0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2015</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;border:none !msorm;border-bottom:solid windowtext 1.0pt !msorm;padding:0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2014</p> </td> </tr> <tr style='height:12.75pt'> <td width="45%" colspan="3" valign="bottom" style='width:45.3%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Federal income tax benefit attributable to:</p> </td> <td width="27%" valign="bottom" style='width:27.26%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> </tr> <tr style='height:12.75pt'> <td width="42%" colspan="2" valign="bottom" style='width:42.48%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Current operations</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="27%" valign="bottom" style='width:27.26%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'> $ &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;76,483 </p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'> $&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;237,758 </p> </td> </tr> <tr style='height:12.75pt !msorm'> <td width="42%" colspan="2" valign="bottom" style='width:42.48%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Less: valuation allowance</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="27%" valign="bottom" style='width:27.26%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (76,483)</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160; (237,758)</p> </td> </tr> <tr style='height:13.5pt'> <td width="42%" colspan="2" valign="bottom" style='width:42.48%;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>Net provision of income taxes</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="27%" valign="bottom" style='width:27.26%;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'> $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;-&#160;&#160; </p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'> $ &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-&#160;&#160; </p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%;border-collapse:collapse;width:100.0% !msorm;border-collapse:collapse !msorm'> <tr style='height:12.75pt !msorm'> <td width="29%" valign="bottom" style='width:29.36%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="14%" valign="bottom" style='width:14.06%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="26%" valign="bottom" style='width:26.32%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>December 31,</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>December 31,</p> </td> </tr> <tr style='height:12.75pt !msorm'> <td width="29%" valign="bottom" style='width:29.36%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="14%" valign="bottom" style='width:14.06%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="26%" valign="bottom" style='width:26.32%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;border:none !msorm;border-bottom:solid windowtext 1.0pt !msorm;padding:0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2015</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;border:none !msorm;border-bottom:solid windowtext 1.0pt !msorm;padding:0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2014</p> </td> </tr> <tr style='height:12.75pt'> <td width="43%" colspan="2" valign="bottom" style='width:43.42%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Deferred tax asset attributable to:</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="26%" valign="bottom" style='width:26.32%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> </tr> <tr style='height:12.75pt'> <td width="43%" colspan="2" valign="bottom" style='width:43.42%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Net operating loss carryforward</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="26%" valign="bottom" style='width:26.32%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'> $&#160;&#160; 4,623,122 </p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'> $&#160;&#160; 4,546,639 </p> </td> </tr> <tr style='height:12.75pt !msorm'> <td width="43%" colspan="2" valign="bottom" style='width:43.42%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Less: valuation allowance</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="26%" valign="bottom" style='width:26.32%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;(4,623,122)</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (4,546,639)</p> </td> </tr> <tr style='height:13.5pt'> <td width="43%" colspan="2" valign="bottom" style='width:43.42%;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>Net deferred tax asset</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="26%" valign="bottom" style='width:26.32%;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'> $&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-&#160;&#160; </p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'> $&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-&#160;&#160; </p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur net operating loss carry forwards may be limited as to use in future years. The Company is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.&#160; The Company believes they are no longer subject to income tax examinations for years prior to 2012.&#160; </p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>NOTE 9 &#150; COMMITMENTS AND CONTINGENCIES</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>The Company leases office space on a month to month basis in Seattle, Washington. </p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>NOTE 10&#150; SUBSEQUENT EVENTS</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>In accordance with ASC 855-10, the Company <strong><font style='font-weight:normal'>has analyzed its operations subsequent to December 31, 2015 to the date these consolidated financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these consolidated financial statements.</font></strong></p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Going Concern</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.&#160; The Company is in the development stage and has sustained substantial losses since inception. As of December 31, 2015, the Company has cash on hand of $3,675 and negative working capital of $536,213. The Company expects current cash on hand will not be able to fund operations for a period 12 months or more. &#160;These factors raise substantial doubt regarding the Company's ability to continue as a going concern.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>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 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 will be required to reduce their development expenditures which will potentially delay the completion of products which are expected to generate future revenues. </p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Risks and Uncertainties</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>The Company has a limited operating history and has not generated revenues from our planned principal operations.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;background:white'>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.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;background:white'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;background:white'>The Company currently has no sales 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.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;background:white'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;background:white'>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 favorably received. Nor may we have the capital resources to further the development of existing and/or new ones.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Principles of Consolidation</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>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.&#160; All material intercompany accounts and transactions have been eliminated in consolidation.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Basis of Presentation</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>The consolidated 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.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Stock-Based Compensation</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>The Company accounts for employee stock-based compensation in accordance with the guidance of the Financial Accounting Standards Board (&#147;FASB&#148;) Accounting Standards Codification (&#147;ASC&#148;) Topic 718, <i>Compensation &#150; Stock Compensation </i>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.&nbsp; </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>The Company follows ASC Topic 505-50, <i>Equity: Equity-Based Payments to Non-Employees</i> for stock options and warrants issued to consultants and other non-employees.&nbsp;&nbsp;In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined.&nbsp;&nbsp;The&nbsp;fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital over the period during which services are rendered. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>Because the Company&#146;s stock-based compensation options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the estimate, amounts estimated using the Black-Scholes option pricing model may differ materially from the actual fair value of the Company&#146;s stock-based compensation options.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Use of Estimates</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>The preparation of the consolidated 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 of the consolidated financial statements and the reported amount of revenues and expenses during the reporting period.&#160; Actual results could differ from those estimates.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Revenue Recognition</b> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>The Company recognizes revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Fair Value of Financial Instruments</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>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&#146;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:</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:27.0pt'>Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:27.0pt'>&#160; in active markets.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:27.0pt'>Level 2 - Include other inputs that are directly or indirectly observable in the marketplace.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:27.0pt'>Level 3 - Unobservable inputs which are supported by little or no market activity.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in'>&nbsp;&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>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 December 31, 2015 and 2014, the Company does not have any assets or liabilities which would be considered Level 2 or 3.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;margin-left:0in;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;margin-left:0in;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify'>The Company&#146;s financial instruments primarily consist of cash and cash equivalents, prepaid expenses and amounts payable to related parties. 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.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;margin-left:0in;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;margin-left:0in;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify'>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. In 2013, the Company acquired various technologies and an investment in a third party in which the investment is being treated under the cost basis of accounting. See Notes 4 and 5, for discussion regarding impairment charges related to these items. 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.</p> <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;margin-left:0in;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify'><b>Income Taxes</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font lang="X-NONE">The Company follows ASC 740, <i>Income Taxes</i> for recording the provision for income taxes. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Tax law and rate changes are reflected in income in the period such changes are enacted. The Company records a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized. The Company includes interest and penalties related to income taxes, including unrecognized tax benefits, within the income tax provision.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font lang="X-NONE">&nbsp;</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font lang="X-NONE">The Company&#146;s income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities. In addition, the calculation of the Company&#146;s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font lang="X-NONE">&nbsp;</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font lang="X-NONE">The Company recognizes windfall tax benefits associated with share-based awards directly to stockholders&#146; equity only when realized. A windfall tax benefit occurs when the actual tax benefit realized by the Company upon an employee's disposition of a share-based award exceeds the deferred tax asset, if any, associated with the award that the Company had recorded. When assessing whether a tax benefit relating to share-based compensation has been realized, the Company follows the tax law ordering method, under which current year share-based compensation deductions are assumed to be utilized before net operating loss carryforwards and other tax attributes.</font></p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Investment in Securities</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>The Company&#146;s investments consisting of common shares of non-controlled entities are accounted for on&#160; the cost basis.&#160; Impairment losses will be recorded when indicators of impairment are present.&#160; See Note 5 for additional information. </p> <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;margin-left:0in;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify'><b>Cash and Cash Equivalents</b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;margin-left:0in;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify'>The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents. </p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Basic Loss Per Share</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>Basic loss per share is calculated by dividing the Company&#146;s net 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&#146;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 totaling 13,750,000 and 20,250,000 were outstanding at December 31, 2015 and 2014, respectively, representing outstanding warrants and options, and were not included in the computation of diluted earnings per share for the years ended December 31, 2015 and 2014, as their effect would have been anti-dilutive.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Non-Controlling Interests</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>Non-controlling interests disclosed within the consolidated statement of operations represent the minority ownership's 40% share of net losses of Noot Holdings, Inc. and Monitr Holdings, Inc incurred during the years ended December 31, 2015 and 2014. The following table sets forth the changes in non-controlling interest for the year ended December 31, 2015:</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%;border-collapse:collapse'> <tr style='height:12.75pt'> <td width="39%" valign="bottom" style='width:39.38%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="27%" valign="bottom" style='width:27.12%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="3%" valign="bottom" style='width:3.24%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="30%" valign="bottom" style='width:30.26%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Non-Controlling</p> </td> </tr> <tr style='height:12.75pt'> <td width="39%" valign="bottom" style='width:39.38%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="27%" valign="bottom" style='width:27.12%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="3%" valign="bottom" style='width:3.24%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="30%" valign="bottom" style='width:30.26%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Interest</p> </td> </tr> <tr style='height:12.75pt'> <td width="66%" colspan="2" valign="bottom" style='width:66.5%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Balance at December 31, 2014</p> </td> <td width="3%" valign="bottom" style='width:3.24%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="30%" valign="bottom" style='width:30.26%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'> $ &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(217,346)</p> </td> </tr> <tr style='height:33.75pt'> <td width="66%" colspan="2" valign="bottom" style='width:66.5%;background:white;padding:0in 5.4pt 0in 5.4pt;height:33.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Net loss attributable to non-controlling interest</p> </td> <td width="3%" valign="bottom" style='width:3.24%;background:white;padding:0in 5.4pt 0in 5.4pt;height:33.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="30%" valign="bottom" style='width:30.26%;background:white;padding:0in 5.4pt 0in 5.4pt;height:33.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (4,214)</p> </td> </tr> <tr style='height:13.5pt'> <td width="66%" colspan="2" valign="bottom" style='width:66.5%;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>Balance at December 31, 2015</p> </td> <td width="3%" valign="bottom" style='width:3.24%;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="30%" valign="bottom" style='width:30.26%;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'> $ &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(221,560)</p> </td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Foreign Currency</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>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, the Company has recorded foreign currency income of $1,116 and $7,649, recorded on the accompanying consolidated statements of operations during the years ended December 31, 2015 and 2014, respectively.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify;background:white'><b>New Accounting Pronouncements</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>In February 2015, the FASB issued ASU 2015-02, &quot;Consolidation:&nbsp;Amendments to the Consolidation Analysis&quot; (&#147;ASU 2015-02&#148;).&nbsp;This standard update is intended to improve targeted areas of consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. This ASU simplifies consolidation accounting by reducing the number of consolidation models and improves current U.S. GAAP by (1) placing more emphasis on risk of loss when determining a controlling financial interest; (2) reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity; and (3) changing consolidation conclusions for public and private companies in several industries that typically make use of limited partnerships or variable interest entities. The amendments in ASU 2015-02 are effective for reporting periods beginning after December 15, 2015, with early adoption permitted. Entities can transition to the standard either retrospectively or as a cumulative effect adjustment as of the date of adoption. The Company has not adopted ASU 2015-02 as of December 31, 2015, and the adoption is not expected to have an impact on the Company&#146;s consolidated financial statements. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;background:white'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>In April 2015, the FASB issued ASU 2015-03, &quot;Interest&#151;Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs&quot;. This standard update requires an entity to present debt issuance costs on the balance sheet as a direct deduction from the related debt liability as opposed to an asset. Amortization of the costs will continue to be reported as interest expense. The update is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued, and the new guidance would be applied retrospectively to all prior periods presented.&nbsp; The Company has not adopted ASU 2015-02 as of December 31, 2015, and the adoption is not expected to have an impact on the Company&#146;s consolidated financial statements. </p> <!--egx--> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%;border-collapse:collapse'> <tr style='height:12.75pt'> <td width="39%" valign="bottom" style='width:39.38%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="27%" valign="bottom" style='width:27.12%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="3%" valign="bottom" style='width:3.24%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="30%" valign="bottom" style='width:30.26%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Non-Controlling</p> </td> </tr> <tr style='height:12.75pt'> <td width="39%" valign="bottom" style='width:39.38%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="27%" valign="bottom" style='width:27.12%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="3%" valign="bottom" style='width:3.24%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="30%" valign="bottom" style='width:30.26%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Interest</p> </td> </tr> <tr style='height:12.75pt'> <td width="66%" colspan="2" valign="bottom" style='width:66.5%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Balance at December 31, 2014</p> </td> <td width="3%" valign="bottom" style='width:3.24%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="30%" valign="bottom" style='width:30.26%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'> $ &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(217,346)</p> </td> </tr> <tr style='height:33.75pt'> <td width="66%" colspan="2" valign="bottom" style='width:66.5%;background:white;padding:0in 5.4pt 0in 5.4pt;height:33.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Net loss attributable to non-controlling interest</p> </td> <td width="3%" valign="bottom" style='width:3.24%;background:white;padding:0in 5.4pt 0in 5.4pt;height:33.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="30%" valign="bottom" style='width:30.26%;background:white;padding:0in 5.4pt 0in 5.4pt;height:33.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (4,214)</p> </td> </tr> <tr style='height:13.5pt'> <td width="66%" colspan="2" valign="bottom" style='width:66.5%;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>Balance at December 31, 2015</p> </td> <td width="3%" valign="bottom" style='width:3.24%;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="30%" valign="bottom" style='width:30.26%;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'> $ &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(221,560)</p> </td> </tr> </table> <!--egx--> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%;border-collapse:collapse'> <tr style='height:12.75pt'> <td width="47%" rowspan="3" valign="top" style='width:47.2%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="16%" rowspan="3" valign="bottom" style='width:16.92%;border:none;border-bottom:solid black 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Stock Options</p> </td> <td width="19%" rowspan="3" valign="bottom" style='width:19.74%;border:none;border-bottom:solid black 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Weighted Average Exercise Price</p> </td> <td width="16%" rowspan="3" valign="bottom" style='width:16.16%;border:none;border-bottom:solid black 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Weighted Average Life Remaining</p> </td> <td width="0" height="17" style='height:12.75pt;border:none'></td> </tr> <tr style='height:12.75pt !msorm'> <td width="0" height="17" style='height:12.75pt;border:none'></td> </tr> <tr style='height:11.5pt'> <td width="0" height="15" style='height:11.5pt;border:none'></td> </tr> <tr style='height:12.75pt'> <td width="47%" valign="bottom" style='width:47.2%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Outstanding, December 31, 2013</p> </td> <td width="16%" valign="bottom" style='width:16.92%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>13,750,000</p> </td> <td width="19%" valign="bottom" style='width:19.74%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 0.75</p> </td> <td width="16%" valign="bottom" style='width:16.16%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>8.50</p> </td> <td width="0" height="17" style='height:12.75pt;border:none'></td> </tr> <tr style='height:12.75pt'> <td width="47%" valign="bottom" style='width:47.2%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Issued</p> </td> <td width="16%" valign="bottom" style='width:16.92%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -&#160;&#160; </p> </td> <td width="19%" valign="bottom" style='width:19.74%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="16%" valign="bottom" style='width:16.16%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>-</p> </td> <td width="0" height="17" style='height:12.75pt;border:none'></td> </tr> <tr style='height:12.75pt'> <td width="47%" valign="bottom" style='width:47.2%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Exercised</p> </td> <td width="16%" valign="bottom" style='width:16.92%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -&#160;&#160; </p> </td> <td width="19%" valign="bottom" style='width:19.74%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="16%" valign="bottom" style='width:16.16%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>-</p> </td> <td width="0" height="17" style='height:12.75pt;border:none'></td> </tr> <tr style='height:13.5pt'> <td width="47%" valign="bottom" style='width:47.2%;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>Expired</p> </td> <td width="16%" valign="bottom" style='width:16.92%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -&#160;&#160; </p> </td> <td width="19%" valign="bottom" style='width:19.74%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="16%" valign="bottom" style='width:16.16%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>-</p> </td> <td width="0" height="18" style='height:13.5pt;border:none'></td> </tr> <tr style='height:12.75pt'> <td width="47%" valign="bottom" style='width:47.2%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Outstanding, December 31, 2014</p> </td> <td width="16%" valign="bottom" style='width:16.92%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>13,750,000</p> </td> <td width="19%" valign="bottom" style='width:19.74%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>0.75</p> </td> <td width="16%" valign="bottom" style='width:16.16%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>6.50</p> </td> <td width="0" height="17" style='height:12.75pt;border:none'></td> </tr> <tr style='height:12.75pt'> <td width="47%" valign="bottom" style='width:47.2%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Issued</p> </td> <td width="16%" valign="bottom" style='width:16.92%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -&#160;&#160; </p> </td> <td width="19%" valign="bottom" style='width:19.74%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="16%" valign="bottom" style='width:16.16%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>-</p> </td> <td width="0" height="17" style='height:12.75pt;border:none'></td> </tr> <tr style='height:12.75pt'> <td width="47%" valign="bottom" style='width:47.2%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Exercised</p> </td> <td width="16%" valign="bottom" style='width:16.92%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -&#160;&#160; </p> </td> <td width="19%" valign="bottom" style='width:19.74%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="16%" valign="bottom" style='width:16.16%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>-</p> </td> <td width="0" height="17" style='height:12.75pt;border:none'></td> </tr> <tr style='height:12.75pt'> <td width="47%" valign="bottom" style='width:47.2%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Expired</p> </td> <td width="16%" valign="bottom" style='width:16.92%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -&#160;&#160; </p> </td> <td width="19%" valign="bottom" style='width:19.74%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="16%" valign="bottom" style='width:16.16%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>-</p> </td> <td width="0" height="17" style='height:12.75pt;border:none'></td> </tr> <tr style='height:13.5pt'> <td width="47%" valign="bottom" style='width:47.2%;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>Outstanding, December 31, 2015</p> </td> <td width="16%" valign="bottom" style='width:16.92%;border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>13,750,000</p> </td> <td width="19%" valign="bottom" style='width:19.74%;border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 0.75</p> </td> <td width="16%" valign="bottom" style='width:16.16%;border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>5.50</p> </td> <td width="0" height="18" style='height:13.5pt;border:none'></td> </tr> <tr style='height:14.25pt'> <td width="47%" valign="bottom" style='width:47.2%;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p style='margin:0in;margin-bottom:.0001pt'>Vested, December 31, 2015</p> </td> <td width="16%" valign="bottom" style='width:16.92%;border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>13,750,000</p> </td> <td width="19%" valign="bottom" style='width:19.74%;border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 0.75</p> </td> <td width="16%" valign="bottom" style='width:16.16%;border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>5.50</p> </td> <td width="0" height="19" style='height:14.25pt;border:none'></td> </tr> </table> <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:.25in;margin-left:0in;text-align:justify'><font lang="X-NONE">A summary of changes in warrants during the years ended December 31, 2015 and 2014 is as follows:</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:.25in;margin-left:0in;text-align:justify'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%;border-collapse:collapse;width:100.0% !msorm;border-collapse:collapse !msorm'> <tr style='height:13.5pt !msorm'> <td width="75%" valign="top" style='width:75.38%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;border:none !msorm;border-bottom:solid windowtext 1.0pt !msorm;padding:0in 5.4pt 0in 5.4pt !msorm;height:13.5pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Warrants</p> </td> </tr> <tr style='height:12.75pt !msorm'> <td width="75%" valign="bottom" style='width:75.38%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Outstanding, December 31, 2013</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160; 6,650,000 </p> </td> </tr> <tr style='height:12.75pt !msorm'> <td width="75%" valign="bottom" style='width:75.38%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Issued</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-&#160;&#160; </p> </td> </tr> <tr style='height:12.75pt !msorm'> <td width="75%" valign="bottom" style='width:75.38%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Exercised</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -&#160;&#160; </p> </td> </tr> <tr style='height:13.5pt !msorm'> <td width="75%" valign="bottom" style='width:75.38%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>Expired</p> </td> <td width="24%" valign="bottom" style='width:24.62%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;border:none !msorm;border-bottom:solid windowtext 1.0pt !msorm;padding:0in 5.4pt 0in 5.4pt !msorm;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -&#160;&#160; </p> </td> </tr> <tr style='height:12.75pt !msorm'> <td width="75%" valign="bottom" style='width:75.38%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Outstanding, December 31, 2014</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160; 6,650,000 </p> </td> </tr> <tr style='height:12.75pt !msorm'> <td width="75%" valign="bottom" style='width:75.38%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Issued</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -&#160;&#160; </p> </td> </tr> <tr style='height:12.75pt !msorm'> <td width="75%" valign="bottom" style='width:75.38%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Exercised</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-&#160;&#160; </p> </td> </tr> <tr style='height:12.75pt !msorm'> <td width="75%" valign="bottom" style='width:75.38%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Expired</p> </td> <td width="24%" valign="bottom" style='width:24.62%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;border:none !msorm;border-bottom:solid windowtext 1.0pt !msorm;padding:0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160; (6,650,000)</p> </td> </tr> <tr style='height:13.5pt !msorm'> <td width="75%" valign="bottom" style='width:75.38%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>Outstanding, December 31, 2015</p> </td> <td width="24%" valign="bottom" style='width:24.62%;border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;border:none !msorm;border-bottom:double windowtext 2.25pt !msorm;padding:0in 5.4pt 0in 5.4pt !msorm;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -&#160;&#160; </p> </td> </tr> <tr style='height:14.25pt !msorm'> <td width="75%" valign="bottom" style='width:75.38%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:14.25pt'> <p style='margin:0in;margin-bottom:.0001pt'>Vested, December 31, 2015</p> </td> <td width="24%" valign="bottom" style='width:24.62%;border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;border:none !msorm;border-bottom:double windowtext 2.25pt !msorm;padding:0in 5.4pt 0in 5.4pt !msorm;height:14.25pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -&#160;&#160; </p> </td> </tr> </table> <!--egx--> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='border-collapse:collapse;border-collapse:collapse !msorm'> <tr style='height:12.75pt !msorm'> <td width="29%" valign="bottom" style='width:29.36%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="13%" valign="bottom" style='width:13.12%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="27%" valign="bottom" style='width:27.26%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>December 31,</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>December 31,</p> </td> </tr> <tr style='height:12.75pt !msorm'> <td width="29%" valign="bottom" style='width:29.36%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="13%" valign="bottom" style='width:13.12%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="27%" valign="bottom" style='width:27.26%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;border:none !msorm;border-bottom:solid windowtext 1.0pt !msorm;padding:0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2015</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;border:none !msorm;border-bottom:solid windowtext 1.0pt !msorm;padding:0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2014</p> </td> </tr> <tr style='height:12.75pt'> <td width="45%" colspan="3" valign="bottom" style='width:45.3%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Federal income tax benefit attributable to:</p> </td> <td width="27%" valign="bottom" style='width:27.26%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> </tr> <tr style='height:12.75pt'> <td width="42%" colspan="2" valign="bottom" style='width:42.48%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Current operations</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="27%" valign="bottom" style='width:27.26%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'> $ &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;76,483 </p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'> $&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;237,758 </p> </td> </tr> <tr style='height:12.75pt !msorm'> <td width="42%" colspan="2" valign="bottom" style='width:42.48%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Less: valuation allowance</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="27%" valign="bottom" style='width:27.26%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (76,483)</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160; (237,758)</p> </td> </tr> <tr style='height:13.5pt'> <td width="42%" colspan="2" valign="bottom" style='width:42.48%;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>Net provision of income taxes</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="27%" valign="bottom" style='width:27.26%;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'> $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;-&#160;&#160; </p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'> $ &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-&#160;&#160; </p> </td> </tr> </table> <!--egx--> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%;border-collapse:collapse;width:100.0% !msorm;border-collapse:collapse !msorm'> <tr style='height:12.75pt !msorm'> <td width="29%" valign="bottom" style='width:29.36%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="14%" valign="bottom" style='width:14.06%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="26%" valign="bottom" style='width:26.32%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>December 31,</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>December 31,</p> </td> </tr> <tr style='height:12.75pt !msorm'> <td width="29%" valign="bottom" style='width:29.36%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="14%" valign="bottom" style='width:14.06%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="26%" valign="bottom" style='width:26.32%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;border:none !msorm;border-bottom:solid windowtext 1.0pt !msorm;padding:0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2015</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;border:none !msorm;border-bottom:solid windowtext 1.0pt !msorm;padding:0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2014</p> </td> </tr> <tr style='height:12.75pt'> <td width="43%" colspan="2" valign="bottom" style='width:43.42%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Deferred tax asset attributable to:</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="26%" valign="bottom" style='width:26.32%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> </tr> <tr style='height:12.75pt'> <td width="43%" colspan="2" valign="bottom" style='width:43.42%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Net operating loss carryforward</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="26%" valign="bottom" style='width:26.32%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'> $&#160;&#160; 4,623,122 </p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'> $&#160;&#160; 4,546,639 </p> </td> </tr> <tr style='height:12.75pt !msorm'> <td width="43%" colspan="2" valign="bottom" style='width:43.42%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Less: valuation allowance</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="26%" valign="bottom" style='width:26.32%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;(4,623,122)</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;background:white;padding:0in 5.4pt 0in 5.4pt 0in 5.4pt 0in 5.4pt !msorm;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (4,546,639)</p> </td> </tr> <tr style='height:13.5pt'> <td width="43%" colspan="2" valign="bottom" style='width:43.42%;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>Net deferred tax asset</p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="26%" valign="bottom" style='width:26.32%;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'> $&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-&#160;&#160; </p> </td> <td width="2%" valign="bottom" style='width:2.82%;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="24%" valign="bottom" style='width:24.62%;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'> $&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-&#160;&#160; </p> </td> </tr> </table> 0.6000 5000000 5000000 5000000 0.85 0.6000 5000000 3675 -536213 0.6000 13750000 20250000 -217346 -4214 -221560 -1116 -7649 0.6000 0.4000 -323978 3000000 2000000 5000000 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Document and Entity Information - USD ($)
12 Months Ended
Dec. 31, 2015
Mar. 24, 2016
Jun. 30, 2015
Document and Entity Information:      
Entity Registrant Name SPECTRAL CAPITAL CORPORATION    
Document Type 10-K    
Document Period End Date Dec. 31, 2015    
Trading Symbol fccn    
Amendment Flag false    
Entity Central Index Key 0001131903    
Current Fiscal Year End Date --12-31    
Entity Common Stock, Shares Outstanding   117,857,623  
Entity Public Float     $ 17,676,553
Entity Filer Category Smaller Reporting Company    
Entity Current Reporting Status Yes    
Entity Voluntary Filers No    
Entity Well-known Seasoned Issuer No    
Document Fiscal Year Focus 2015    
Document Fiscal Period Focus FY    
XML 15 R2.htm IDEA: XBRL DOCUMENT v3.3.1.900
CONSOLIDATED BALANCE SHEETS - USD ($)
Dec. 31, 2015
Dec. 31, 2014
Assets:    
Cash and cash equivalents $ 3,675 $ 48,919
Prepaid expenses   11,000
Current assets $ 3,675 $ 59,919
Property and equipment, net
Other assets:    
Investment in Kontexto, Inc.   $ 232,000
Intangible assets, net   5,000
Total Assets $ 3,675 296,919
Current liabilities    
Accounts payable and accrued liabilities 943  
Related party advances and accruals 538,945 371,181
Current liabilities 539,888 371,181
Total Liabilities $ 539,888 $ 371,181
Stockholders' Deficit:    
Preferred stock, par value $0.0001, 5,000,000 shares authorized, no shares issued and outstanding
Common stock, par value $0.0001, 500,000,000 shares authorized, 117,857,623 shares issued and outstanding as of December 31, 2015 and 2014 $ 11,786 $ 11,786
Additional paid-in capital 27,445,400 25,263,906
Common stock warrants   1,831,500
Accumulated deficit (27,771,839) (26,964,108)
Total stockholders' equity (314,653) 143,084
Non-controlling interest (221,560) (217,346)
Total stockholders' deficit (536,213) (74,262)
Total liabilities and stockholders' deficit $ 3,675 $ 296,919
XML 16 R3.htm IDEA: XBRL DOCUMENT v3.3.1.900
CONSOLIDATED BALANCE SHEETS PARENTHETICAL - $ / shares
Dec. 31, 2015
Dec. 31, 2014
CONSOLIDATED BALANCE SHEETS PARENTHETICAL    
Preferred stock par value $ 0.0001 $ 0.0001
Preferred stock shares authorized 5,000,000 5,000,000
Preferred stock shares issued
Preferred stock shares outstanding
Common stock par value $ 0.0001 $ 0.0001
Common stock shares authorized 500,000,000 500,000,000
Common stock shares issued 117,857,623 117,857,623
Common stock shares outstanding 117,857,623 117,857,623
XML 17 R4.htm IDEA: XBRL DOCUMENT v3.3.1.900
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
CONSOLIDATED STATEMENTS OF OPERATIONS    
Revenues
Operating expenses:    
Selling, general and administrative $ 76,278 $ 225,154
Wages and benefits 149,789 151,022
Research and development   330,760
Stock-based compensation 349,994 623,892
Bad debt expense - related party   323,978
Depreciation and amortization   1,705,008
Impairment of investments 237,000 3,288,762
Total operating expenses 813,061 6,648,576
Operating loss (813,061) (6,648,576)
Other income and (expense):    
Gain (loss) on foreign currency translation 1,116 7,649
Total other income (expense) 1,116 7,649
Loss from operations and before non-controlling interest and provision for income taxes $ (811,945) $ (6,640,927)
Provision for income taxes
Net loss before non-controlling interest $ (811,945) $ (6,640,927)
Loss attributable to non-controlling interest 4,214 2,016,403
Net loss attributable to Spectral Capital Corporation $ (807,731) $ (4,624,524)
Basic and diluted loss per common share $ (0.01) $ (0.04)
Weighted average shares - basic and diluted 117,857,623 117,857,623
XML 18 R5.htm IDEA: XBRL DOCUMENT v3.3.1.900
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($)
Common Stock
Additional Paid in Capital
Prepaid Consulting
Common Stock Warrants
Non-Controlling Interest
Accumulated Deficit
Total
Balance at Dec. 31, 2013 $ 11,786 $ 24,687,359 $ (47,345) $ 1,831,500 $ 1,799,057 $ (22,339,584) $ 5,942,773
Balance Shares at Dec. 31, 2013 117,857,623            
Stock-based compensation   576,547 $ 47,345       623,892
Non-controlling interest         (2,016,403) 2,016,403  
Net loss           (6,640,927) (6,640,927)
Balance at Dec. 31, 2014 $ 11,786 25,263,906   1,831,500 (217,346) (26,964,108) (74,262)
Balance Shares at Dec. 31, 2014 117,857,623            
Stock-based compensation   349,994         349,994
Expired warrants   1,831,500   $ (1,831,500)      
Non-controlling interest         (4,214) 4,214  
Net loss           (811,945) (811,945)
Balance at Dec. 31, 2015 $ 11,786 $ 27,445,400     $ (221,560) $ (27,771,839) $ (536,213)
Balance Shares at Dec. 31, 2015 117,857,623            
XML 19 R6.htm IDEA: XBRL DOCUMENT v3.3.1.900
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss attributable to Spectral Capital Corporation $ (807,731) $ (4,624,524)
Adjustments to reconcile net loss to net cash used in by operating activities:    
Non-controlling interest (4,213) (2,016,403)
Depreciation and amortization   1,705,008
Stock-based compensation 349,994 623,892
Bad debt - accounts receivable - related party   323,978
Impairment of investments and assets 237,000 3,288,762
Changes in operating assets and liabilities:    
Change in prepaids and other assets 11,000 (11,000)
Change in due to related parties - accrued salary 148,581  
Change in accounts payable and accrued expenses 943  
Net cash used in operating activities (64,426) (710,287)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from related party advances 19,182 (26,931)
Net cash provided by (used in) financing activities 19,182 (26,931)
Change in cash and cash equivalents (45,244) (737,218)
Cash and cash equivalents, beginning of period 48,919 786,137
Cash and cash equivalents, end of period $ 3,675 $ 48,919
XML 20 R7.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 1 - Nature of Operations
12 Months Ended
Dec. 31, 2015
Notes  
Note 1 - Nature of Operations

NOTE 1 – NATURE OF OPERATIONS

 

Spectral Capital Corporation (the "Company" or "Spectral") was incorporated on September 13, 2000 under the laws of the State of Nevada. The Company was formerly in the business of developing internet search engine technology. From August 2010 until December 2012, the Company evaluated and sought out opportunities in the natural resource sector.  Spectral acquired various interests in natural resource assets in Russia, Kazakhstan and Alberta, Canada.  In December 2012, Spectral changed its corporate focus from the natural resource sector and back to information technology.  Spectral has divested of its principal natural resource asset in Alberta, Canada and intends to divest any remaining natural resources in the near future and focus solely on acquiring and developing information technology. See Notes 4 and 5 for disclosures regarding the acquisition of certain technology and a cost investment.

 

Spectral is focused on the identification, acquisition, development, financing of technology that has the potential to transform existing industries. The Company looks for technology that can be protected through patents or laws regarding trade secrets.  Spectral has acquired significant stakes in three technology companies currently and actively works with management to drive these companies toward increasing market penetration in their particular verticals.  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.

 

On February 26, 2013, the Company formed Noot Holdings, Inc., a Delaware corporation, which the Company is currently a 60% owner, in order to acquire mobile search engine technology. Under the agreement to acquire technology, the Company issued 5,000,000 common shares of Spectral Capital Corporation, see Note 4 for additional information.

 

On March 14, 2013, the Company purchased 8% of the issued and outstanding shares of Kontexto, Inc., a Canadian corporation.  Spectral purchased the shares from Sargas Capital, Ltd. , a minority shareholder, in exchange for 5,000,000 common shares of Spectral stock and warrants to purchase 5,000,000 common shares at $0.85 per share, which expired on March 13, 2015.  The Company's CEO was an officer of Sargas Capital, Ltd. at the time of the transaction but did not have any holdings in Sargas Capital, Ltd, see Note 5 for additional information.

 

On December 1, 2013, the Company formed Monitr Holdings, Inc., a Delaware corporation, which the Company is currently a 60% owner of, in order to acquire a technology application and service.  Under the agreement to acquire technology, the Company issued 5,000,000 common shares of Spectral Capital Corporation, see Note 4 for additional information.

XML 21 R8.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 2 - Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2015
Notes  
Note 2 - Summary of Significant Accounting Policies

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 stage and has sustained substantial losses since inception. As of December 31, 2015, the Company has cash on hand of $3,675 and negative working capital of $536,213. The Company expects current cash on hand will not be able to fund operations for a period 12 months or more.  These factors raise substantial doubt regarding the Company'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 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 will be required to reduce their development expenditures which will potentially 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.

 

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 sales 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 favorably received. Nor may we have the capital resources to further the development of existing and/or new ones.

 

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 consolidated 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.

 

Stock-Based Compensation

The Company accounts for employee stock-based compensation in accordance with the guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“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 follows ASC Topic 505-50, Equity: Equity-Based Payments to Non-Employees for stock options and warrants issued to consultants and other non-employees.  In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined.  The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital over the period during which services are rendered.

 

Because the Company’s stock-based compensation options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the estimate, amounts estimated using the Black-Scholes option pricing model may differ materially from the actual fair value of the Company’s stock-based compensation options.

 

Use of Estimates

The preparation of the consolidated 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 of the consolidated 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 recognizes revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.

 

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:

 

Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities

  in active markets.

Level 2 - Include other inputs that are directly or indirectly observable in the marketplace.

Level 3 - Unobservable inputs which are supported by little or no market activity.

  

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 December 31, 2015 and 2014, the Company does not have any assets or liabilities which would be considered Level 2 or 3.

 

The Company’s financial instruments primarily consist of cash and cash equivalents, prepaid expenses and amounts payable to related parties. 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. In 2013, the Company acquired various technologies and an investment in a third party in which the investment is being treated under the cost basis of accounting. See Notes 4 and 5, for discussion regarding impairment charges related to these items. 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.

 

Income Taxes

The Company follows ASC 740, Income Taxes for recording the provision for income taxes. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Tax law and rate changes are reflected in income in the period such changes are enacted. The Company records a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized. The Company includes interest and penalties related to income taxes, including unrecognized tax benefits, within the income tax provision.

 

The Company’s income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities. In addition, the calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known.

 

The Company recognizes windfall tax benefits associated with share-based awards directly to stockholders’ equity only when realized. A windfall tax benefit occurs when the actual tax benefit realized by the Company upon an employee's disposition of a share-based award exceeds the deferred tax asset, if any, associated with the award that the Company had recorded. When assessing whether a tax benefit relating to share-based compensation has been realized, the Company follows the tax law ordering method, under which current year share-based compensation deductions are assumed to be utilized before net operating loss carryforwards and other tax attributes.

 

Investment in Securities

The Company’s investments consisting of common shares of non-controlled entities are accounted for on  the cost basis.  Impairment losses will be recorded when indicators of impairment are present.  See Note 5 for additional information.

 

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents.

 

Basic Loss Per Share

Basic loss per share is calculated by dividing the Company’s net 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 totaling 13,750,000 and 20,250,000 were outstanding at December 31, 2015 and 2014, respectively, representing outstanding warrants and options, and were not included in the computation of diluted earnings per share for the years ended December 31, 2015 and 2014, as their effect would have been anti-dilutive.

 

Non-Controlling Interests

Non-controlling interests disclosed within the consolidated statement of operations represent the minority ownership's 40% share of net losses of Noot Holdings, Inc. and Monitr Holdings, Inc incurred during the years ended December 31, 2015 and 2014. The following table sets forth the changes in non-controlling interest for the year ended December 31, 2015:

 

 

 

 

Non-Controlling

 

 

 

Interest

Balance at December 31, 2014

 

$            (217,346)

Net loss attributable to non-controlling interest

 

                       (4,214)

Balance at December 31, 2015

 

$            (221,560)

 

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, the Company has recorded foreign currency income of $1,116 and $7,649, recorded on the accompanying consolidated statements of operations during the years ended December 31, 2015 and 2014, respectively.

 

Change in Prior Year Presentation

The prior year financial statements have been reclassed to conform with current year presentation. Specifically, the Company reclassed the foreign currency gain of $7,649 included within selling, general and administrative to gain on foreign currency translation. The reclass only impacted the consolidated statement of operations.

 

New Accounting Pronouncements

In February 2015, the FASB issued ASU 2015-02, "Consolidation: Amendments to the Consolidation Analysis" (“ASU 2015-02”). This standard update is intended to improve targeted areas of consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. This ASU simplifies consolidation accounting by reducing the number of consolidation models and improves current U.S. GAAP by (1) placing more emphasis on risk of loss when determining a controlling financial interest; (2) reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity; and (3) changing consolidation conclusions for public and private companies in several industries that typically make use of limited partnerships or variable interest entities. The amendments in ASU 2015-02 are effective for reporting periods beginning after December 15, 2015, with early adoption permitted. Entities can transition to the standard either retrospectively or as a cumulative effect adjustment as of the date of adoption. The Company has not adopted ASU 2015-02 as of December 31, 2015, and the adoption is not expected to have an impact on the Company’s consolidated financial statements.

 

In April 2015, the FASB issued ASU 2015-03, "Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs". This standard update requires an entity to present debt issuance costs on the balance sheet as a direct deduction from the related debt liability as opposed to an asset. Amortization of the costs will continue to be reported as interest expense. The update is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued, and the new guidance would be applied retrospectively to all prior periods presented.  The Company has not adopted ASU 2015-02 as of December 31, 2015, and the adoption is not expected to have an impact on the Company’s consolidated financial statements.

XML 22 R9.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 3 - Discontinued Operations
12 Months Ended
Dec. 31, 2015
Notes  
Note 3 - Discontinued Operations

NOTE 3 – DISCONTINUED OPERATIONS

 

Shamrock Oil & Gas Ltd

 

On February 13, 2012, the Company closed its planned purchase of an oil and gas property in the Red Earth Region of Alberta, Canada, which property Spectral purchased from receivership though its newly formed Canadian subsidiary, Shamrock Oil & Gas Ltd. Spectral was the 60% owner of the Canadian subsidiary and its Canadian joint venture partner owned 40% of the subsidiary.  On December 31, 2012, the Company entered into an agreement with Akoranga AG, a Company owned by the CEO of Spectral, to transfer its ownership interests in the Shamrock Oil and Gas properties for $950,000, the value of Spectral’s contributions to the project at that date. In satisfaction of the purchase price, Akoranga agreed to offset liabilities of Spectral in the amount of $626,022.  The balance owing Spectral of $323,978 was non-interest bearing and was to be repaid within a one year period, which was extended to December 31, 2014. At December 31, 2014, the Company determined that the receivable collectability was not probable due to Akoranga's inability to generate revenues from the operation and/or sale of the oil and gas properties. Thus, the receivable from Akoranga was written off.

 

There were no material assets, liabilities or operations associated with discontinued operations which need to be presented within the accompanying consolidated financial statements.

 

XML 23 R10.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 4 - Technology Assets
12 Months Ended
Dec. 31, 2015
Notes  
Note 4 - Technology Assets

NOTE 4 – TECHNOLOGY ASSETS

 

Noot Holdings, Inc.

 

On February 26, 2013, the Company, through its subsidiary, Spectral Holdings, Inc. signed a definitive Technology Acquisition Agreement (“Agreement”) to acquire mobile search engine and mobile sharing technology from Fiveseas Securities Ltd (“Fiveseas").  Under the Agreement, the Company issued Fiveseas 5,000,000 shares of the Company's common stock.  The Agreement called for the technology to reside within a newly formed entity called Noot Holdings, Inc.( “Noot”), a Delaware corporation, which the Company is a 60% owner of and Fiveseas is a 40% owner of. Fiveseas was granted a right of first refusal for any subsequent sale of the technology.  The common shares were valued at $3,000,000 based on the closing market price of the Company's common stock as of the date of the agreement. In addition, the fair value assigned to the asset contributed by Fiveseas was $2,000,000, resulting in total intangible assets of $5,000,000 being recorded. The Company has recorded the value as an investment in technology as the in process development did not constitute a business. The Company records income/losses from Noot attributable to the percentage owned by Fiveseas as a non-controlling interest. The Company completed substantial development of the technology acquired during September 2013. Costs were capitalized in relation to the technology’s development through September 30, 2013.  During the year ended December 31, 2013, costs of approximately $115,000 were capitalized in connection with the continued development. Starting October 1, 2013, the Company began amortizing the asset over the expected life of three years. During the years ended December 31, 2015 and 2014, the Company amortized $0 and $1,705,008 to depreciation and amortization on the accompanying statements of operations.

 

At December 31, 2014, the Company reviewed whether or not there were any indicating factors that the carrying value of the assets related to Noot were impaired. As part of this analysis, the Company prepared and reviewed future estimated cash flow projections from Noot's operations. Based upon the Company's analysis, it was determined that a full impairment to Noot's assets of $2,983,762 would be recorded. Although, the Company maintains that Noot's technology is a valuable asset, the Company does not currently have access to capital to sufficiently market the asset. The Company estimates it would take approximately $2.0 million to appropriately promote the Noot product, which at the time of the impairment analysis was not probable.

 

Monitr Holdings, Inc.

 

On December 1, 2013, the Company, through its subsidiary, Spectral Holdings, Inc. signed a definitive Technology Acquisition Agreement (“Agreement”) to acquire technology which enhances the way people find, consume, analyze, share and discuss financial news and topics, equities, commodities and currencies on the web from TL Global, Inc. (“TL Global").  Under the Agreement, the Company issued TL Global 5,000,000 shares of the Company's common stock.  The Agreement calls for the technology to reside within a newly formed entity called Monitr Holdings, Inc.( “Monitr”), a Delaware corporation, which the Company is a 60% owner of and TL Global is a 40% owner of. TL Global was granted a right of first refusal for any subsequent sale of the technology.  The common shares were valued at $1,300,000 based on the closing market price of the Company's common stock as of the date of the agreement. In addition, the fair value assigned to the asset contributed by TL Global was $866,667, resulting in total assets of $2,166,667 being recorded. The Company recorded the transaction as an investment in technology as the in process development did not constitute a business. In addition, at the time of acquisition, the Company determined that the technology required extensive development in order to achieve technological feasibility, and expensed $2,161,667, the entire amount of except for $5,000 assigned to the website domain. The $5,000 was impaired during the year ended December 31, 2015 due to limited projected cash flows. The Company records losses from Monitr attributable to the percentage owned by TL Global as a non-controlling interest. During the year ended December 31, 2014, the Company expended a significant amount of development costs in connection with development of the Monitr products, however, none of these costs were capitalized in relation to the technology’s development, as they didn't meet the applicable accounting standards for the application of such.  Such development was minimal during the year ended December 31, 2015, due to limited capital available to the Company.

XML 24 R11.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 5 - Cost Investment
12 Months Ended
Dec. 31, 2015
Notes  
Note 5 - Cost Investment

NOTE 5 – COST INVESTMENT

 

On March 14, 2013, the Company entered into an agreement to purchase 8% of the issued and outstanding common shares of Kontexto, Inc., (“Kontexto”) a Canadian corporation.  The Company purchased the shares from Sargas Capital, Ltd., a minority shareholder, in exchange for 5,000,000 common shares of the Company's common stock and warrants to purchase 5,000,000 shares of the Company's common stock at $0.85 per share, which expired on March 13, 2015 (see Note 7).  The Company valued the common stock using the closing price of the Company's common stock on the date of the agreement and the warrants were valued using the Black-Scholes pricing model. The Company’s investment in 8% of the common shares, initially valued at $6,398,500, was accounted for on the cost basis.  During 2013, a third party valuation specialist valued the investment in Kontexto using a hybrid between the market and income methods and determined that the fair value was $537,000.  Accordingly, an impairment loss of $5,861,500 was recognized in the statements of operations for the year ended December 31, 2013. The Company's CEO was an officer of Sargas Capital, Ltd. but does not have any holdings in Sargas Capital, Ltd.

 

At December 31, 2014, the Company reviewed whether or not there were any indicating factors that the carrying value of the cost investment was impaired. As part of this analysis, the Company obtained the current financial statements and future estimated discounted cash flow projections from Kontexto. Based upon the Company's review, it was determined that the carry value of the investment should be decreased to $232,000, resulting in an impairment of $305,000 during the year ended December 31, 2014.

 

In September 2015, the Company was notified by the management of Kontexto that the operations were being discontinued due to cash flow limitations. Thus, at September 30, 2015, the remaining investment of $232,000 was written off.

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Note 6 - Related Party Transactions
12 Months Ended
Dec. 31, 2015
Notes  
Note 6 - Related Party Transactions

NOTE 6 – RELATED PARTY TRANSACTIONS

 

Akoranga, AG

 

At December 31, 2015 and 2014, $351,502 and $352,619, respectively, was owed to Akoranga AG, a Swiss Company owned by the CEO of Spectral. Akoranga was formed to facilitate the Company’s business in Europe. In connection with the facilitation of the Company's operations which includes making payments on the Company's obligations, Akoranga charges the Company a 10% fee on all transactions processed by Akoranga on behalf of the Company. The Company ceased using Akoranga services in August 2014. Fees expensed for services provided by Akoranga totaled approximately $18,239 for the year ended December 31, 2014.  The advances do not incur interest and are payable upon demand.

 

At December 31, 2012, the Company sold its oil and gas business to Akoranga for $950,000 plus the assumption of all debt related to the oil and gas business. As a result of that transaction, Akoranga owed $323,978 to the Company and was reflected on the December 31, 2013 accompanying balance sheet as accounts receivable - related party. The balance was unsecured, non-interest bearing and originally due on December 31, 2013, which was extended to December 31, 2014. Related party loans are unsecured, and non-interest bearing and have no specific terms of repayment unless otherwise noted. At December 31, 2014, the Company determined that the receivable collectability was not probable due to Akoranga's inability to generate revenues from the operation and/or sale of the oil and gas properties. Thus, the receivable from Akoranga was written off.

 

Jenifer Osterwalder, the Company's Chief Executive Officer

 

Through August 2014, Akoranga charged the Company 12,350 CHF per month for the Company's CEO, Jenifer Osterwalder, for services related to the Company. Starting in September 2014, these amounts were the responsibility of the Company. Total amounts expended in the Company's consolidated financial statements in connection with the CEO's services was $151,022 and $155,350 for the years ended December 31, 2015 and 2014, respectively. Amounts charged by Akoranga to the Company prior to August 2014 are included within the Akoranga liability disclosed above. As of December 31, 2015 and 2014, amounts due to the CEO related to accrued salaries were $166,742 and $16,953, respectively.

 

Commencing in September 2014, from time to time due to the limited cash flow available, the Company's CEO pays certain operating expenditures on behalf of the Company. These advances are bear no interest and are due on demand. As of December 31, 2015 and 2014, the Company's CEO was due $20,701 and $1,357 in connection with these advances, respectively.

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Note 7 - Stockholder's Equity
12 Months Ended
Dec. 31, 2015
Notes  
Note 7 - Stockholder's Equity

NOTE 7 – STOCKHOLDER'S EQUITY

 

Sale of Common Stock and Warrants Issued

On March 7, 2013, the Company sold 1,650,000 common shares, par value $0.0001 at approximately $0.61 per share and received a total of $1,000,000 USD in financing proceeds.  Spectral also issued warrants to purchase 1,650,000 common shares to the purchasers at an exercise price of $0.80 per share.  The warrants expired on March 6, 2015.

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 options to two employees. Stock-based compensation is being recognized over the two year vesting period. The options were valued at $3,408,750 using the Black-Scholes Option Pricing Model. Employee stock-based compensation expense relating to options granted in 2010 and 2012, and recognized during the years ended December 31, 2015 and 2014 totaled $349,994 and $576,547, respectively.

 

Non-Employee Options

 

During the year ended December 31, 2014, $47,345 of prepaid consulting expense was charged to stock-based compensation on the accompanying consolidated statements of operations. As of December 31, 2014, all prepaid consulting expense had been recorded. 

 

Summary of Stock Options

 

A summary of changes in stock options during the years ended December 31, 2015 and 2014 is as follows:

 

 

Stock Options

Weighted Average Exercise Price

Weighted Average Life Remaining

Outstanding, December 31, 2013

13,750,000

$            0.75

8.50

Issued

                   -  

-

-

Exercised

                   -  

-

-

Expired

                   -  

-

-

Outstanding, December 31, 2014

13,750,000

0.75

6.50

Issued

                   -  

-

-

Exercised

                   -  

-

-

Expired

                   -  

-

-

Outstanding, December 31, 2015

13,750,000

$            0.75

5.50

Vested, December 31, 2015

13,750,000

$            0.75

5.50

 

Warrants

 

On March 7, 2013, Spectral sold 1,650,000 common shares at approximately $0.61 per share and received a total of $1,000,000 in financing proceeds.  Contemporaneously, Spectral issued warrants to purchase 1,650,000 common shares at an exercise price of $0.80 per share.  The warrants expired on March 7, 2015.  The warrants were valued using the Black-Scholes pricing model and $283,000 of the proceeds were allocated to the warrants.

 

As disclosed in Note 5, the C0mpany previously had warrants outstanding to purchase 5,000,000 shares of the Company's common stock at $0.85 per share, which expired on March 13, 2015.

 

A summary of changes in warrants during the years ended December 31, 2015 and 2014 is as follows:

 

 

Warrants

Outstanding, December 31, 2013

      6,650,000

Issued

                   -  

Exercised

                   -  

Expired

                   -  

Outstanding, December 31, 2014

      6,650,000

Issued

                   -  

Exercised

                   -  

Expired

    (6,650,000)

Outstanding, December 31, 2015

                   -  

Vested, December 31, 2015

                   -  

XML 27 R14.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 8 - Income Taxes
12 Months Ended
Dec. 31, 2015
Notes  
Note 8 - Income Taxes

NOTE 8 – INCOME TAXES

 

As of December 31, 2015, the Company had net operating loss carry forwards of approximately $13,327,000 that may be available to reduce future years’ taxable income through 2033. Future tax benefits which may arise as a result of these losses have not been recognized in these consolidated financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards. The difference between the Company's tax rate and the statutory rate is due to significant non-deductible expenses. 

 

The provision for Federal income tax consists of the following:

 

 

 

 

December 31,

 

December 31,

 

 

 

2015

 

2014

Federal income tax benefit attributable to:

 

 

 

Current operations

 

$                 76,483

 

$               237,758

Less: valuation allowance

 

                     (76,483)

 

                   (237,758)

Net provision of income taxes

 

$                        -  

 

$                        -  

The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:

 

 

 

 

December 31,

 

December 31,

 

 

 

2015

 

2014

Deferred tax asset attributable to:

 

 

 

 

Net operating loss carryforward

 

$   4,623,122

 

$   4,546,639

Less: valuation allowance

 

                (4,623,122)

 

                (4,546,639)

Net deferred tax asset

 

$                        -  

 

$                        -  

 

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur net operating loss carry forwards may be limited as to use in future years. The Company is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.  The Company believes they are no longer subject to income tax examinations for years prior to 2012. 

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Note 9 - Commitments and Contingencies
12 Months Ended
Dec. 31, 2015
Notes  
Note 9 - Commitments and Contingencies

NOTE 9 – COMMITMENTS AND CONTINGENCIES

 

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

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Note 10- Subsequent Events
12 Months Ended
Dec. 31, 2015
Notes  
Note 10- Subsequent Events

NOTE 10– SUBSEQUENT EVENTS

 

In accordance with ASC 855-10, the Company has analyzed its operations subsequent to December 31, 2015 to the date these consolidated financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these consolidated financial statements.

XML 30 R17.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 2 - Summary of Significant Accounting Policies: Going Concern (Policies)
12 Months Ended
Dec. 31, 2015
Policies  
Going Concern

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 stage and has sustained substantial losses since inception. As of December 31, 2015, the Company has cash on hand of $3,675 and negative working capital of $536,213. The Company expects current cash on hand will not be able to fund operations for a period 12 months or more.  These factors raise substantial doubt regarding the Company'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 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 will be required to reduce their development expenditures which will potentially delay the completion of products which are expected to generate future revenues.

XML 31 R18.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 2 - Summary of Significant Accounting Policies: Risks and Uncertainties (Policies)
12 Months Ended
Dec. 31, 2015
Policies  
Risks and Uncertainties

Risks and Uncertainties

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

 

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 sales 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 favorably received. Nor may we have the capital resources to further the development of existing and/or new ones.

XML 32 R19.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 2 - Summary of Significant Accounting Policies: Principles of Consolidation (Policies)
12 Months Ended
Dec. 31, 2015
Policies  
Principles of Consolidation

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.

XML 33 R20.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 2 - Summary of Significant Accounting Policies: Accounting Basis (Policies)
12 Months Ended
Dec. 31, 2015
Policies  
Accounting Basis

Basis of Presentation

The consolidated 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.

XML 34 R21.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 2 - Summary of Significant Accounting Policies: Stock-based Compensation (Policies)
12 Months Ended
Dec. 31, 2015
Policies  
Stock-based Compensation

Stock-Based Compensation

The Company accounts for employee stock-based compensation in accordance with the guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“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 follows ASC Topic 505-50, Equity: Equity-Based Payments to Non-Employees for stock options and warrants issued to consultants and other non-employees.  In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined.  The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital over the period during which services are rendered.

 

Because the Company’s stock-based compensation options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the estimate, amounts estimated using the Black-Scholes option pricing model may differ materially from the actual fair value of the Company’s stock-based compensation options.

XML 35 R22.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 2 - Summary of Significant Accounting Policies: Use of Estimates (Policies)
12 Months Ended
Dec. 31, 2015
Policies  
Use of Estimates

Use of Estimates

The preparation of the consolidated 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 of the consolidated financial statements and the reported amount of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

XML 36 R23.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 2 - Summary of Significant Accounting Policies: Revenue Recognition (Policies)
12 Months Ended
Dec. 31, 2015
Policies  
Revenue Recognition

Revenue Recognition

The Company recognizes revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.

XML 37 R24.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 2 - Summary of Significant Accounting Policies: Fair Value of Financial Instruments (Policies)
12 Months Ended
Dec. 31, 2015
Policies  
Fair Value of Financial Instruments

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:

 

Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities

  in active markets.

Level 2 - Include other inputs that are directly or indirectly observable in the marketplace.

Level 3 - Unobservable inputs which are supported by little or no market activity.

  

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 December 31, 2015 and 2014, the Company does not have any assets or liabilities which would be considered Level 2 or 3.

 

The Company’s financial instruments primarily consist of cash and cash equivalents, prepaid expenses and amounts payable to related parties. 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. In 2013, the Company acquired various technologies and an investment in a third party in which the investment is being treated under the cost basis of accounting. See Notes 4 and 5, for discussion regarding impairment charges related to these items. 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.

XML 38 R25.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 2 - Summary of Significant Accounting Policies: Income Taxes (Policies)
12 Months Ended
Dec. 31, 2015
Policies  
Income Taxes

Income Taxes

The Company follows ASC 740, Income Taxes for recording the provision for income taxes. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Tax law and rate changes are reflected in income in the period such changes are enacted. The Company records a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized. The Company includes interest and penalties related to income taxes, including unrecognized tax benefits, within the income tax provision.

 

The Company’s income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities. In addition, the calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known.

 

The Company recognizes windfall tax benefits associated with share-based awards directly to stockholders’ equity only when realized. A windfall tax benefit occurs when the actual tax benefit realized by the Company upon an employee's disposition of a share-based award exceeds the deferred tax asset, if any, associated with the award that the Company had recorded. When assessing whether a tax benefit relating to share-based compensation has been realized, the Company follows the tax law ordering method, under which current year share-based compensation deductions are assumed to be utilized before net operating loss carryforwards and other tax attributes.

XML 39 R26.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 2 - Summary of Significant Accounting Policies: Investment in Securities (Policies)
12 Months Ended
Dec. 31, 2015
Policies  
Investment in Securities

Investment in Securities

The Company’s investments consisting of common shares of non-controlled entities are accounted for on  the cost basis.  Impairment losses will be recorded when indicators of impairment are present.  See Note 5 for additional information.

XML 40 R27.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 2 - Summary of Significant Accounting Policies: Cash and Cash Equivalents (Policies)
12 Months Ended
Dec. 31, 2015
Policies  
Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents.

XML 41 R28.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 2 - Summary of Significant Accounting Policies: Basic Loss Per Share (Policies)
12 Months Ended
Dec. 31, 2015
Policies  
Basic Loss Per Share

Basic Loss Per Share

Basic loss per share is calculated by dividing the Company’s net 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 totaling 13,750,000 and 20,250,000 were outstanding at December 31, 2015 and 2014, respectively, representing outstanding warrants and options, and were not included in the computation of diluted earnings per share for the years ended December 31, 2015 and 2014, as their effect would have been anti-dilutive.

XML 42 R29.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 2 - Summary of Significant Accounting Policies: Non-controlling Interests (Policies)
12 Months Ended
Dec. 31, 2015
Policies  
Non-controlling Interests

Non-Controlling Interests

Non-controlling interests disclosed within the consolidated statement of operations represent the minority ownership's 40% share of net losses of Noot Holdings, Inc. and Monitr Holdings, Inc incurred during the years ended December 31, 2015 and 2014. The following table sets forth the changes in non-controlling interest for the year ended December 31, 2015:

 

 

 

 

Non-Controlling

 

 

 

Interest

Balance at December 31, 2014

 

$            (217,346)

Net loss attributable to non-controlling interest

 

                       (4,214)

Balance at December 31, 2015

 

$            (221,560)

XML 43 R30.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 2 - Summary of Significant Accounting Policies: Foreign Currency (Policies)
12 Months Ended
Dec. 31, 2015
Policies  
Foreign Currency

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, the Company has recorded foreign currency income of $1,116 and $7,649, recorded on the accompanying consolidated statements of operations during the years ended December 31, 2015 and 2014, respectively.

XML 44 R31.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 2 - Summary of Significant Accounting Policies: New Accounting Pronouncements (Policies)
12 Months Ended
Dec. 31, 2015
Policies  
New Accounting Pronouncements

New Accounting Pronouncements

In February 2015, the FASB issued ASU 2015-02, "Consolidation: Amendments to the Consolidation Analysis" (“ASU 2015-02”). This standard update is intended to improve targeted areas of consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. This ASU simplifies consolidation accounting by reducing the number of consolidation models and improves current U.S. GAAP by (1) placing more emphasis on risk of loss when determining a controlling financial interest; (2) reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity; and (3) changing consolidation conclusions for public and private companies in several industries that typically make use of limited partnerships or variable interest entities. The amendments in ASU 2015-02 are effective for reporting periods beginning after December 15, 2015, with early adoption permitted. Entities can transition to the standard either retrospectively or as a cumulative effect adjustment as of the date of adoption. The Company has not adopted ASU 2015-02 as of December 31, 2015, and the adoption is not expected to have an impact on the Company’s consolidated financial statements.

 

In April 2015, the FASB issued ASU 2015-03, "Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs". This standard update requires an entity to present debt issuance costs on the balance sheet as a direct deduction from the related debt liability as opposed to an asset. Amortization of the costs will continue to be reported as interest expense. The update is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued, and the new guidance would be applied retrospectively to all prior periods presented.  The Company has not adopted ASU 2015-02 as of December 31, 2015, and the adoption is not expected to have an impact on the Company’s consolidated financial statements.

XML 45 R32.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 2 - Summary of Significant Accounting Policies: Non-controlling Interests: Redeemable Noncontrolling Interest (Tables)
12 Months Ended
Dec. 31, 2015
Tables/Schedules  
Redeemable Noncontrolling Interest

 

 

 

 

Non-Controlling

 

 

 

Interest

Balance at December 31, 2014

 

$            (217,346)

Net loss attributable to non-controlling interest

 

                       (4,214)

Balance at December 31, 2015

 

$            (221,560)

XML 46 R33.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 7 - Stockholder's Equity: Schedule of Share-based Compensation, Activity (Tables)
12 Months Ended
Dec. 31, 2015
Tables/Schedules  
Schedule of Share-based Compensation, Activity

 

 

Stock Options

Weighted Average Exercise Price

Weighted Average Life Remaining

Outstanding, December 31, 2013

13,750,000

$            0.75

8.50

Issued

                   -  

-

-

Exercised

                   -  

-

-

Expired

                   -  

-

-

Outstanding, December 31, 2014

13,750,000

0.75

6.50

Issued

                   -  

-

-

Exercised

                   -  

-

-

Expired

                   -  

-

-

Outstanding, December 31, 2015

13,750,000

$            0.75

5.50

Vested, December 31, 2015

13,750,000

$            0.75

5.50

XML 47 R34.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 7 - Stockholder's Equity: Schedule of purchase warrants activity (Tables)
12 Months Ended
Dec. 31, 2015
Tables/Schedules  
Schedule of purchase warrants activity

A summary of changes in warrants during the years ended December 31, 2015 and 2014 is as follows:

 

 

Warrants

Outstanding, December 31, 2013

      6,650,000

Issued

                   -  

Exercised

                   -  

Expired

                   -  

Outstanding, December 31, 2014

      6,650,000

Issued

                   -  

Exercised

                   -  

Expired

    (6,650,000)

Outstanding, December 31, 2015

                   -  

Vested, December 31, 2015

                   -  

XML 48 R35.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 8 - Income Taxes: Schedule of Components of Income Tax Expense (Benefit) (Tables)
12 Months Ended
Dec. 31, 2015
Tables/Schedules  
Schedule of Components of Income Tax Expense (Benefit)

 

 

 

 

December 31,

 

December 31,

 

 

 

2015

 

2014

Federal income tax benefit attributable to:

 

 

 

Current operations

 

$                 76,483

 

$               237,758

Less: valuation allowance

 

                     (76,483)

 

                   (237,758)

Net provision of income taxes

 

$                        -  

 

$                        -  

XML 49 R36.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 8 - Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Tables)
12 Months Ended
Dec. 31, 2015
Tables/Schedules  
Schedule of Deferred Tax Assets and Liabilities

 

 

 

 

December 31,

 

December 31,

 

 

 

2015

 

2014

Deferred tax asset attributable to:

 

 

 

 

Net operating loss carryforward

 

$   4,623,122

 

$   4,546,639

Less: valuation allowance

 

                (4,623,122)

 

                (4,546,639)

Net deferred tax asset

 

$                        -  

 

$                        -  

XML 50 R37.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 1 - Nature of Operations (Details) - $ / shares
Dec. 01, 2013
Mar. 14, 2013
Feb. 26, 2013
Details      
Ownership of newly formed subsidiary 60.00%   60.00%
Shares to acquire mobile search engine and mobile sharing technology   5,000,000 5,000,000
Warrants to purchase common shares for cash   5,000,000  
Warrants to purchase common shares for cash per share   $ 0.85  
Shares to acquire technology application and service 5,000,000    
XML 51 R38.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 2 - Summary of Significant Accounting Policies: Going Concern (Details) - USD ($)
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Details      
Cash and cash equivalents $ 3,675 $ 48,919 $ 786,137
Working Capital $ 536,213    
XML 52 R39.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 2 - Summary of Significant Accounting Policies: Principles of Consolidation (Details)
Dec. 31, 2015
Details  
Ownership percentage of Shamrock Oil & Gas, Ltd. 60.00%
XML 53 R40.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 2 - Summary of Significant Accounting Policies: Basic Loss Per Share (Details) - shares
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Details    
Common share equivalents 13,750,000 20,250,000
XML 54 R41.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 2 - Summary of Significant Accounting Policies: Non-controlling Interests: Redeemable Noncontrolling Interest (Details) - USD ($)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Details    
Non-controlling interest $ (221,560) $ (217,346)
Loss attributable to non-controlling interest $ (4,214) $ (2,016,403)
XML 55 R42.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 2 - Summary of Significant Accounting Policies: Foreign Currency (Details) - USD ($)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Details    
Gain (loss) on foreign currency translation $ 1,116 $ 7,649
XML 56 R43.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 3 - Discontinued Operations (Details) - USD ($)
12 Months Ended
Dec. 31, 2014
Feb. 13, 2012
Details    
Ownership percentage of Shamrock Oil & Gas, Ltd.   60.00%
Non-controlling interest in Shamrock   40.00%
Bad debt - accounts receivable - related party $ 323,978  
XML 57 R44.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 4 - Technology Assets (Details) - USD ($)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Dec. 01, 2013
Feb. 26, 2013
Details          
Common shares value       $ 1,300,000 $ 3,000,000
Fair Value Assigned to the Asset Contributed by Fiveseas         2,000,000
Total Instangible Assets Related to Fiveseas         $ 5,000,000
Approximate cost capitalized in connection with the continued development     $ 115,000    
Amortization of Intangible Assets $ 0 $ 1,705,008      
Asset Impairment Charges $ 2,983,762        
Fair Value Assigned to the Asset Contributed by TL Global       866,667  
Total Instangible Assets Related to TL Global       $ 2,166,667  
XML 58 R45.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 5 - Cost Investment (Details) - USD ($)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Mar. 14, 2013
Cost-method Investments, Other than Temporary Impairment   $ 5,861,500  
KontextoMember      
Stock Issued During Period, Shares, New Issues 5,000,000    
Warrants Issued To Purchase Common Shares     5,000,000
Warrants Issued To Purchase Common Shares Exercise Price     $ 0.85
Total Investment Value     $ 6,398,500
Fair value of investement $ 537,000    
XML 59 R46.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 6 - Related Party Transactions (Details) - USD ($)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Related party advances and accruals $ 538,945 $ 371,181    
Service Fees from Akoranga   18,239    
Pledged Assets, Not Separately Reported, Nonsecuritized Investments       $ 950,000
Accounts receivable - related party     $ 323,978  
Salaries, Wages and Officers' Compensation 151,022 155,350    
Akoranga        
Related party advances and accruals 351,502 352,619    
Chief Executive Officer        
Related party advances and accruals 166,742 16,953    
Osterwalder        
Related party advances and accruals $ 20,701 $ 1,357    
XML 60 R47.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 7 - Stockholder's Equity (Details) - USD ($)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Mar. 07, 2013
Stock-based compensation $ 349,994 $ 623,892    
Stock Issued During Period, Shares, Other     1,650,000  
Stock Issued Share Price       0.61
Proceeds From Sale Of Common Stock       $ 1,000,000
Deemed value of warrants       $ 283,000
Additional Paid in Capital        
Stock-based compensation $ 349,994 576,547    
Prepaid Consulting        
Stock-based compensation   47,345    
Stock options issued for compensation   $ 47,345    
XML 61 R48.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 7 - Stockholder's Equity: Schedule of Share-based Compensation, Activity (Details) - USD ($)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Details      
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number 13,750,000 13,750,000 13,750,000
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Exercise Price $ 0.75 $ 0.75 $ 0.75
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term 5 years 6 months 6 years 6 months 8 years 6 months
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares 13,750,000    
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Aggregate Intrinsic Value $ 0.75    
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Weighted Average Remaining Contractual Term 5 years 6 months    
XML 62 R49.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 7 - Stockholder's Equity: Schedule of purchase warrants activity (Details) - shares
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Details      
Warrants Outstanding   6,650,000 6,650,000
Expired warrants (6,650,000)    
XML 63 R50.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 8 - Income Taxes: Net operating loss carry forward details (Details)
Dec. 31, 2015
USD ($)
Details  
Net operating loss carry forwards $ 13,327,000
XML 64 R51.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 8 - Income Taxes: Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Details    
Current operations $ 76,483 $ 237,758
Valuation allowance $ (76,483) $ (237,758)
XML 65 R52.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 8 - Income Taxes (Details)
12 Months Ended
Dec. 31, 2015
Details  
Expected Rate 34.00%
XML 66 R53.htm IDEA: XBRL DOCUMENT v3.3.1.900
Note 8 - Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($)
Dec. 31, 2015
Dec. 31, 2014
Details    
Net operating loss carryover $ 4,623,122 $ 4,546,639
Valuation allowance $ (4,623,122) $ (4,546,639)
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