This report contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Skkynet's actual results could differ materially from those set forth on the forward-looking statements as a result of the risks set forth in Skkynet's filings with the Securities and Exchange Commission, general economic conditions, and changes in the assumptions used in making such forward looking statements.





OVERVIEW

Skkynet is a Nevada corporation headquartered in Mississauga, Canada. Skkynet operates three different lines of business through its wholly owned subsidiaries Cogent Real-Time Systems, Inc. ("Cogent"), Skkynet, Inc. ("Skkynet (USA)"), and Skkynet Corp. ("Skkynet (Canada. Skkynet was established to enhance Cogent's existing business lines through the integration of Cloud-based systems, and to deliver a Software-as-a-Service ("SaaS") product targeting the Industrial Internet of Things ("IoT") market, now referred to by the terms "Industry 4.0" and "Industrial Internet Consortium."

The Company provides software and related systems and facilities to collect, process, and distribute real-time information over a network. This capability allows the customers to both locally and remotely manage, supervise, and control industrial processes and financial information systems. By using this software and, when requested by a client, our web based assets, our clients and their customers (to the extent relevant) are given the ability and the tools to observe and interact with these processes and services in real-time as they are underway and to give them the power to analyze, alter, stop, or otherwise influence these activities to conform to their plans.





RESULTS OF OPERATIONS

For the three and nine month periods ended July 31, 2022, revenue was $530,075 and $1,547,347 compared to $497,375 and $1,383,414 for the same periods in 2021. Revenue increased for the nine month period ended July 31, 2022 over the same period in 2021 by 11.8%. The increase in revenue for the nine-month period is attributed to higher sales by Cogent. The Company is benefiting from its prior investment in sales and marketing and market recognition which has contributed to the increase in Cogent's sales.

General and administrative expense was $503,419 and $1,673,138 for the three and nine month periods ended July 31, 2022 compared to $482,482 and $1,345,590 for the same periods in 2021. The increase in general and administrative expenses for the three and the nine month periods ended July 31, 2022 over the same periods in 2021, resulted from increased expenditures primarily in legal and accounting, hired consulting services, and advertising and promotion.

For the three and nine month periods ended July 31, 2022, the Company reported an operating income of $26,015 and operating loss of $127,734 compared to operating income of $14,202 and $35,846 for the same periods in 2021. The operating loss during the nine-month periods ended July 31, 2022 compared to the operating income for same periods in 2021 is attributable to higher general and administrative costs in the period ended July 31, 2022, as noted in the above paragraph compared to 2021.

Other income and expense for the three and nine month periods ended July 31, 2022, was other expense of $7,649 and other income of $14,614 compared to other expense of $55,587 and $110,028 for the same periods in 2021. The amount of change in the period ended July 31, 2022 was due to other income of $6.398 and gain on currency of $8,216 compared to the accrual of dividends on the preferred shares of $69,720 and loss on currency of $65,707, offset by other income of $25,399 for the same period in 2021.






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Net income after income taxes of $18,366 and net loss of $73,753 was reported for the three and nine month periods ended July 31, 2022, compared to a net loss after income taxes of $15,490 and $48,387 for the same periods in 2021. The net income for the three month period in 2022 can be attributed higher revenue in 2022 compared to the same period in 2021. The loss for the nine month period ended July 31, 2022 of $73,753 was higher than the net loss of $48,387 for the same period in 2021.This was due to other income of $14,614 in 2022 compared to other expense of $110,028 in 2021, an improvement of $124,642 in 2022 which was offset by loss from operations of $127,734 in 2022 compared to operating income of $35,846 in 2021.

Net income to common stockholders was $15,461 and net loss of $82,468 for the three and nine month periods ended July 31, 2022, compared to net loss of $18,395 and $57,002 for the same periods in 2021. The expense include dividends for preferred stockholders of $8,715 being accrued for the nine month period ended both in July 31, 2022 and 2021.

The Company reported comprehensive income of $17,280 and loss of $62,715 for the three and nine month periods ended July 31, 2022 compared to a comprehensive loss of $24,695 and $34,348 for the same periods in 2021. The comprehensive loss is an adjustment to net loss with foreign currency translation adjustments.

LIQUIDITY AND CAPITAL RESOURCES

At July 31, 2022, Skkynet had current assets of $935,896 and current liabilities of $414,401 resulting in working capital of $521,495. Accumulated deficit, as of July 31, 2022, was $6,552,891. Total stockholders' equity was $501,361, an improvement in equity from $452,567 at October 31, 2021 of $48,794.

Net cash used in operating activities for the nine month period ended July 31, 2022, was $87,510 compared to net cash used in operating activities of $103,559 for the same period in 2021, an improvement of $16,049.

The decrease in cash used in operating activities for the nine-month period ended July 31, 2022 over the same period in 2021 was primarily due to a decrease in accounts receivable and deferred revenue offset by a decrease of accounts payable and due related parties.

Net cash used in financing activities was $18,571 consisting of cash provided by exercise of options of $1,568 offset by repayment of loan of $20,139.

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

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