SPTY 10-K & 10-Q changes, risk factors and insider trading

Generally, as a smaller reporting and emerging growth company, we are permittedrequired to omitdisclose risk factors.factors However,if wematerial. believeWe have chosen to present the following Risk Factors which we believe are material to our ourongoing business. These do not encompass all possible risks related to our operations.Company.

Since our inception, we have beenincurred insolventrecurring net operating losses and negative net working capital and as a result we have required had to fund our operations with debt and dilutive equity financing to maintain operations.

There is uncertainty regarding our ability to grow our business to a greater extent than we can with our existing financial resources, also described above, without additional financing. We entered into a 24-month Strata Purchase Agreement with a private investor who committed to purchase up to $5,000,000 of our registered common stock at a discounted price to market. We intend to leverage this Strata Purchase Agreement to raise equity necessary to execute its full business plan upon completion of our 2024 annual audit.plan. This source of financing is a short-term solution to our financing and growth needs. We have no other firm agreements, commitments, or understandings to secure additional financing at this time. Our long-term future growth and success is dependent upon our ability to continue selling our digital products and services, generate cash from operating activities and obtain additional financing on favorable terms. There is no assurance that we will be able to continue selling our digital products and services, generate sufficient cash from operations, sell additional shares of common stock or borrow additional funds. Our inability to obtain additional cash could have a material adverse effect on our ability to grow our business to a greater extent than we can with our existing financial resources, also described above.

Our failure to comply with reporting requirements and other provisions of securities laws could negatively affect our stock price and adversely affect our results of operations, cash flow and financial condition. If we fail to meet these requirements, we will be unable to secure a qualification for quotation of our securities on the OTCQB,OTCID, or if we have secured a qualification, we may lose the qualification and our securities would no longer trade on the OTCQB.OTCID. Further, if we fail fail to meet these obligations and consequently fail to satisfy our SEC reporting obligations, investors will then own stock in a company that that does not provide the disclosure available in quarterly, annual reports and other required SEC reports that would be otherwise publicly available leading to increased difficulty in selling their stock due to our becoming a non-reporting issuer.

As of December 31, 2024,2025, Jason Wood, our Founder, Chairman and Chief Executive Executive Officer, owns approximately 48%37% of the issued and outstanding common stock. Additionally, Mr. Wood also holds 1,000,000 shares of Series A Preferred which have voting rights, at all times, equal to 80% of all voting rights. As a result, Jason Wood possesses significant economic economic influence over our financial and operational affairs. His stock ownership and position as a director of the company may have the effect of delaying or preventing a future change in control, impeding a merger, consolidation, takeover or other business combinations or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of the company, which in turn could materially and adversely affect the market price of our common stock.

OTCBOTCID Market May Delist Our Securities From Trading On Its Exchange, Which Could Limit Investors’ Ability To Make Transactions In Our Securities And Subject Us To Additional Trading Restrictions.

Our common stock is listed on the OTCQB.OTCID. We cannot assure you that our our securities will be, or will continue to be, listed on the OTCQBOTCID or any other stock exchange in the future. In order to be eligible to to continue listing our common stock on the OTCQBOTCID our common stock must have a minimum bid price of $0.01, maintain a minimum freely traded float of at least 10% of our total issued and outstanding common stock, maintain at least 50 beneficial shareholders each holding a minimum of 100 shares, not be in bankruptcy, be in good standing in each jurisdiction in which the company is organized or conducts business, and file all required applications and fees with the OTCQB.OTCID. We cannot assure you that we will be able to meet those initial listing requirements at that time. Our inability to maintain a listing on the OTCQBOTCID could significantly limit an individual investors ability to buy or sell our securities, if at all.

In 2023,2024, we entered into a 24-month Strata Purchase Agreement (“Strata Agreement”) with a private investor who committed to purchase up to $5,000,000 of our registered common stock. We are presently unable to utilize this agreement due to our non-compliance with periodic financial reporting compliance which we anticipate will be remediated upon filing of our Form 10-K and first quarter 2025 quarterly report on Form 10-Q. We intend to leverageuse any proceeds raised under this Strata Agreement to raise equity necessary to execute our full business plan. Even with the Strata Agreement, we cannot guarantee that we will be successful in generating sufficient revenues into thesupport future.our Infull thebusiness eventplan. theAlthough Companywe ishave unablebeen able to generateobtain sufficientalternative sources revenues,of itcapital mayincluding beshort requiredterm to seekloans additionalfrom funding.our Suchfounder and convertible debt, such funding options may not be available or may not be available on terms that are beneficial and/or acceptable to the Company. In the event the Company cannot generate sufficient revenues and/or secure additional financing, the Company may be forced to cease operations and investors will likely lose some or all of their investment in the Company. Other than a short term bridge loan and shares offered by previous Offerings as reflected in our regulatory filings, no other source of capital has been identified or sought. However, our CEO and our directors have indicated a willingness to loan funds as needed during the start-up phase of our operations to cover any shortfall in funds required to pay for offering costs, filing fees, and correspondence with our shareholders. However, our directors have not guaranteed any loans to cover a shortfall in funds should our Offerings fail. As a result, we do not have an alternate source of funds should we fail to raise funds under this Strata Agreement and/or complete previous Offerings.equity offerings under our current S-1 registration. If we do find an alternative source of capital, the terms and conditions of acquiring such capital may result in dilution and the resultant lessening of value of the shares of stockholders.

If we are not successful in raising sufficient capital through this Strata Agreement, or any other alternative source of capital to execute our business plan, we will be faced with the following options:

We possess minimal capital and must limit the amount of marketing we can can perform with respect to our services. We feel we require annually a minimum of $1,000,000$1,500,000 in working capital through sales and/or capital capital raise activities to provide sufficient capital to fully develop our business plan. To support an increase our revenues over time, we need need to invest in additional tools (including AI) to create greater efficiency in our operations, expand services with our existing clients orclients, and close on new business from new clients. Our ability to generate new client business is heavily tied to the reputation and reach of our employees and our ability to support their creative digital marketing services with our existing digital technologies. To the extent Specificity cannot generate new business from new and existing clients due to these limitations, Specificity’s ability to grow its business and to increase its revenues will be limited.

Our business requires us to obtain staff with expertise in brand marketing, creative design and development, digital marketing tools and analytics, B2C media campaigns, technology development, account managers, and other subject matter specialists. Most importantly, our employees’ skills and relationships with our clients,clients are among our most important assets. An important aspect of our market competitiveness is our ability to retain key employees and management personnel. Compensation for these key employees is an essential factor in attracting and retaining them, and we may not offer a level ofsufficient compensation sufficient to attract and retain these key employees.employees, Aswhich iscould typically the case with an emerging growth company, we offer a compensation package that includes other forms of compensation including stock. If we fail to hire and retain a sufficient number of key employees, we may not be able to compete effectively. Management succession at our operating units is very important to the ongoing results because asresult in anyhigher servicethan business,expected the success of a particular agency is dependent upon the leadership of key executives and management and its relationships with its clients. If key executives were to leave our company, the relationships that Specificity has with its clients could be adversely affected.turnover.

Despite our advanced billing approachapproach, we are still exposed to the risk of significant uncollectible receivables from our clients in the event we provide services and fail to follow-upfollow up on collecting for services. The risk of material loss could significantly increase in periods of severe economic downturn. Such a loss could have a material adverse effect on our results of operations, cash flows and financial position. We often incur expenses on behalf of our clients in order to secure secure a variety of media time and space. While we take precautions against default on payment for these services (such as billing in advance advance for services, setting an advertising spend budget, credit analysis, advance billing of clients, and in some cases acting as an agent for a disclosed principal) and have historically had a very low incidence of default.

Advertising and marketing communications businesses are subject to increasing government regulation, both domestic and foreign. There has been an increasing trend in the United States and in Europe for advertisers to resort to litigation and self-regulatory bodies to challenge comparative advertising on the grounds that the advertising is false and and deceptive. Moreover, there has recently been an expansion of specific rules, prohibitions, media restrictions, labeling disclosures, and and warning requirements with respect to advertising for certain products. Proposals have been made to ban the advertising of specific products products and to impose taxes on or deny deductions for advertising which, if successful, may have an adverse effect on advertising expenditures and consequently, on our revenues.

We currently are managed by threetwo key officers, and we are entirely dependent dependent upon them in order to conduct our operations. If they should resign or die, there will be no one to run Specificity, and the company company has no Key Man insurance. If our current officers are no longer able to serve as such and we are unable to find another person to replace them, it will have a negative effect on our ability to continue active business operations and could result in investors losing some some or all of their investment in us.

In July of 20252024 we engaged an outside consultant to provide fractional Chief Financial Officer and SEC Reporting Compliance services.services to assist us with developing a remediation plan. Our outside consultant developed an information repository for all financial transactions and implemented monthly financial accounting and reporting procedures. Our outside consultant is developing a remediation plan for 20252026 and 2026 which includes (i) building an information repository for all financial transactions, (ii) developing and implementing monthly financial accounting and reporting procedures, (iii)continued financial management coaching and development; and (ivii) collaborating with senior management and operational teams to put in place critical policies and procedures to address our lack of segregation of duties as practical given the staff size.size as we scale our operations. We cannot assure you our remediation efforts will occur within a specific timeframe as we are continuing to develop a formal set of plans.

We are a full service digital marketing firm that delivers marketing solutions solutions in real-time to help our clients identify potential customers who are actively in the buying cycle. Our clients can select their digital digital market service and level that best suits their needs. We are primarily focused on attracting prospective clients that have revenues ranging ranging from $5 million to $25 million with a focus on Business to Business (“B2B”) and Business to Consumer (“B2C”) consumer markets and at least $5,100 in monthly marketing spend. Prospective clients in our target market often have their own marketing teams that can more effectively leverage our flagship Specificity digital marketing services. We have additional digital marketing solutions for small business and do-it-yourself marketing professionals. Our underlying technology solution utilizes BiToS and Mobile Advertising Identifiers (MAIDs) to build audiences, effectively eliminating bot traffic and ad waste and produces real-time messaging opportunities to reach target audiences more efficiently than broad based market messaging platforms. We also implements intuitive ad sequencing, audience ID technology, Artificial Intelligence (“AI”) integration, saturation modeling, conversion funneling, Customer Relationship Management (“CRM”) integration, traffic resolution, and comprehensive analytics reporting.

We primarily generate revenue through recurring fixed monthly digital services agreements for the vast majority of our clients. We bill for our services at the beginning of each monthmonth, and our services are completed at the end of the month. We also generate revenue through marketing campaigns for product or service launches and other non-recurring events.

We recognize revenue in accordance with Thethe Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) No. 606, Revenue from Contracts with Customers, which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Our contracts with clients are fee-for-service agreementagreements to deliver digital marketing services. AWe significant number ofbill our clients arein billedadvance a fixed monthly retainer for our services and such retainer is automatically renewed on aor monthly basis onbefore the first1st of theeach month unless cancelled by the client in accordance with the terms of the service agreement. Revenue is recorded as services are performed which typically all occurs within a calendar month. If any customer pays for digital marketing services in advance for a planned campaign or non-recurring event, those payments are initially recorded as deferred revenue and then recognized as revenue when digital marketing services are delivered. Our contracts with customers do not typically have performance conditions, milestones or other conditions that would prevent revenue from being earned in the month our services are delivered.

We may enter into negotiated short term convertible debt agreement to to provide bridge capital in between equity raises. Our convertible debt agreements often include an original issue discount,discount freestandingranging stockfrom awards10% orto 25% and additional inducements including restricted stock, warrants as additional consideration, and a common stock conversation feature features that may be exercised by the noteholder that is either at or out of the money. We evaluate the terms of convertible debt issue prior to accepting such agreements to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. IfConvertible a security or instrument becomes convertible only upon the occurrence of a future event outside the control of the Company, or,debt is convertibletreated fromas inception,traditional debt butunless containsit conversionincludes terms that change upon the occurrence of a future event, then any contingent beneficial conversion feature is measured and recognized when the triggering event occurs, and contingency has been resolved. Our prior convertible debt agreements included inducements suchfeature as restricteddescribed common stock and warrants to purchase common stock. We account for the following convertible debt features when presentbelow:

DuringFor the year ended December 31, 2024,2025, ourtotal revenue decreasedincreased approximately 10% to $991,143 $1,087,805 as compared to $1,096,575$991,143 inlast theyear. sameExcluding periodnew international revenues of approximately $64,669, domestic revenues increased approximately 9%, as compared to last year. The decreaseincrease in domestic revenues was primarily relatedattributable to delays ofthree new clientlarge marketingcustomer campaigns that were outside our control.contracts. The timingCompany’s of revenuesrevenue may varyfluctuate from timeyear to timeyear depending on the typescustomers ofdigital marketing requirements. Customers are generally permitted to pause future marketing services and campaignswhich authorizedcould bymaterially ouraffect clients.the timing of expected revenues.

During the year ended December 31, 2024,2025, cost of revenues slightly decreasedincreased to $522,715 $618,803 as compared to $548,278$522,715 last year. The decreaseincrease was due to lowerincreased market data volume and costs we use to run client marketing campaigns and services. Our total cost of services may fluctuate from time to time depending on the types of marketing services and campaigns we run for our clients.

During the year ended December 31, 2024,2025, operating expenses significantly decreased to $974,128$774,459 as compared to $1,322,607$974,128 last year. The decrease in operating expenses was primarily due to a reduction in our sales sales team and administrative staff. We attempted to execute an aggressive sales growth strategy in 2022 and 2023 to test our ability to scale our business model; but later decided near the end of 2023 to scale back and run with a nimbler and more experienced sales team.

During the year ended December 31, 2024,2025, other expenses decreasedincreased to $167,835 $109,561 as compared to $295,326$109,561 last year.year, primarily driven by higher original issue discount interest expense incurred in connection with our convertible note issuances during 2025. In 2024, we recorded an extinguishment of debt charge of $11,409 related to our convertible note note conversion rate modification and another charge of $29,242 related to our early termination of our operating lease and the remainder related to our working capital funded debt interest costs. In 2023, we had higher interest charges related to original issue discounts tied to convertible debt and related debt inducements and a non-recurring intangible asset impairment charge associated with our decision to discontinue our investor center software solution.

During the year ended December 31, 20242025 and 2023,2024, there was no provision for income taxes as we had a net operating losses. In 2023,2024, we placed a full valuation allowance on net deferred tax assets of approximately $2,129,650.$2,253,862.

Cash provided by operating activities provides an indication of our ability ability to generate sufficient cash flow from our recurring business activities. For the year ended December 31, 2024,2025, net cash used in operations operations was approximately $361,875$89,807 driven by current year operating loss, partially offset by original issue discount amortization, stock compensation.compensation and deferral of suppler payments. For the year ended December 31, 2023,2024, net cash used in operations was $603,658approximately $361,875 driven primarily by current year operating loss and accrued liabilities,loss, partially offset by non-cash expenses including debt discount amortization, intangible asset impairment and stock-basedstock compensation.

At our core we are a full service digital marketing firm that delivers cutting-edge marketing solutions to identify and market in real-time to potential customers who are actively in the buying cycle. Our digital marketing solutions focus on B2B and B2C consumer markets and give small and medium sized businesses a fair chance to capture online traffic. Our underlying technology solution utilizes BiToS and MAIDs to build audiences, effectively eliminating bot traffic and ad waste and produces real-time messaging opportunities to reach target audiences more efficiently than broad based market messaging platforms. We also implement intuitive ad sequencing, audience ID technology, AI integration, saturation modeling, conversion funneling, CRM integration, traffic resolution, and comprehensive analytics reporting.

Results of Operations – Three Months Ended Ended MarchJune 31,30, 2026, as compared to MarchJune 31,30, 2025

ForRevenue increased $55,719, or 20.9%, to $322,019 for the three months ended MarchJune 31,30, 2026,2026 total revenuefrom decreased$266,300 approximately 20% to $243,850 as compared to $298,050in the same period last year,year. principallyThe dueincrease was primarily attributable to a large new customer who decidedproject toduring pausethe marketingquarter. servicesRevenue tomay allowfluctuate thembetween timeperiods to catch upbased on lead generation from our services. The Company's revenue may fluctuate from year to year depending on the customerscustomers’ digital marketing requirements. Customers are generally permitted tomay pause future marketing servicesservices, which could materially affect the timing of expected revenues. revenue. In theaddition, ordinarylarge, course of our business, largenonrecurring marketing campaigns forassociated with specific events or promotions thatmay arecause nonrecurringquarterly inrevenue nature could create some variability in our revenues quarter to quarter.fluctuations.

For the three month period ended MarchJune 31,30, 2026 cost of revenues increased to $163,458$203,583 as compared to $154,776$154,929 in the same period last year. The increase in cost of revenues was dueprimarily attributable to additional staff personnel and higherthe qualityuse andof higherhigher-quality, costhigher-cost digital marketing data sources and related platform costs platforms to manageserve our client base.clients.

Operating expenses include sales and marketing, capital raise promotion costs, general and administrative, share-based compensation and depreciation and amortization. The primary drivers of operating expenses are salesSales and marketing and general and administrative expenses (are the principal components of whichoperating expenses, with professional fees representrepresenting more than 50% of the total costs).operating Forexpenses. Operating expenses increased to $180,775 for the three month periodmonths ended MarchJune 30, 31,2026, 2026from $178,664 for the prior-year period. The increase was primarily attributable to higher legal fees associated with the issuance of a convertible note and higher sales commissions. We expect operating expenses decreased to $212,396 as compared to $270,990 in the same period last year primarily driven by lower administrative labor costs, lower legal, accounting and advisory fees. We anticipate higher operating expenses as we continue to rise over timeincrease as we support sales growth initiatives and capital-raising capital market equity raise activity.activities.

ForOther expenses increased to $58,906 for the three month periodmonths ended MarchJune 31,30, 2026 other2026, expenses increased to $50,393 as compared tofrom $12,500 infor the same period last year,year. The increase was primarily dueattributable to tothe amortization of original issue discount and additional interest expense associated with the issuance of a convertible note.

ForWe the three month period ended March 31, 2026 there wasrecorded no provision for income taxes asfor wethe hadthree continuingmonths ended June 30, 2026, due to our continued net operating losses. We placedmaintained a full valuation allowance onagainst our net deferred tax assets.

For the three month period ended MarchJune 31,30, 2026 our net loss increased to $182,397$121,245 as compared to $140,216$79,793 in the same period last year. The increase in quarterly net loss was primarily due to lowerinterest netcosts revenuesassociated amidwith macrothe level market factors outsideissuance of oura controlconvertible which delayed client marketing launches.note.

At MarchJune 31,30, 2026, we had a net working capital deficit of approximately $1,261,364$1,331,173 compared to a net working capital deficit of $1,259,042 at December 31, 2025. Our immediate sources of liquidity include cash and cash equivalents and accounts receivable; however, these cashflows from operations at this stage of our development will not sustain our operations. As shown in our audited financial statements, we have, since inception, financed operations and limited capital expenditures through the sale of stock and convertible notes and working capital funded debt. We relied on proceeds from customer payments and financing activities from the sale of common stock to fund our business operations and growth plans. Management does not believe that current capital resources from operations alone will be sufficient to fund operations for the next twelve months.

Cash provided by (used in) providedoperating by operatingactivities activities provides an indication of our ability to generate sufficient cash flow from our recurring business activities. For the three six month period ended MarchJune 31,30, 2026, net cash used in operations was $90,558$94,352 driven primarily by current period net loss and higher interest expense. For the threesix month period ended MarchJune 31,30, 2025, net cash provided by operations was $12,777$14,980 driven primarily by conversion of outstanding accounts payable due to service provider in exchange for common stock, which preserved our operating cash flow.

For the threesix month period ended MarchJune 31,30, 20262026, the or Company capitalized computer equipment totaling $1,550. For the six month period ended June 30, 2025, there were no inflows or outflows for investing activities.

Cash provided by (used in) financing activities provides provides an indication of our debt financing and proceeds from capital raise transactions. For the threesix month period ended MarchJune 31,30, 2026, net net cash provided by financing activities was $92,030,$104,229, primarily due to convertible debt issued, Strata equity raise and shareholder loans loans to provide short term operating capital, partially offset by repayments of convertible debt and shareholder loans. For the threesix month period ended March 31,June 30, 2025, net cash used in financing activities was $16,190,$10,885, primarily due to repayments of workingshareholder capitalloans, fundingpartially offset advancesby proceeds from specialty lendersStrata and shareholderprivate loans.placement of common stock.