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 month period ended January 31, 2023, revenue was $492,119 compared to $477,179 for the same period in 2022. Revenue increased for the three month period ended January 31, 2023 over the same period in 2022 by 3.1%. The increase in revenue for the three month period ended January 31, 2023 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 $625,964 for the three month period ended January 31, 2023 compared to $577,290 for the same period in 2022. The increase in general and administrative expenses for the three month period ended January 31, 2023 over the same period in 2022, resulted from increased expenditures primarily in salaries and payroll of $12,197, Advertising of $7,696, and other general and administrative of $25,873.

For the three month period ended January 31, 2023, the Company reported an operating loss of $133,845 compared to operating loss of $100,111 for the same periods in 2022. The increase of operating loss during the three month period ended January 31, 2023 over the same period in 2022 is attributable to higher marketing. consulting and general and administrative costs in the period ended January 31, 2023 as compared to the same period in 2022.

Other income and expense for the three month period ended January 31, 2023, was other expense of $13,261 compared to other income of $25,947 for the same periods in 2022. The amount of change in both periods was due to the effect of currency exchange.






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Net loss before and after income taxes of $147,206 was reported for the three month period ended January 31, 2023, compared to a net loss before and after income taxes of $74,164 for the same period in 2022. The higher net loss for the three month period in 2023 can be attributed to higher operating expenses in 2023 compared to 2022. Revenue increased in the three months period ending January 31, 2023 over the same period in 2022 but was not significant enough to offset the increase in expenses in that period.

Net loss to common shareholders was $150,111 for the three month period ended January 31, 2023 compared to $77,069 for the same period in 2022. The loss includes the expense of dividends for preferred shareholders of $2,905 being accrued for the periods ended January 31, 2023 and 2022.

The Company reported comprehensive loss of $144,627 for the three month period ended January 31, 2023 compared to a comprehensive loss of $93,618 for the same period in 2022. The comprehensive loss is an adjustment to net loss with foreign currency translation adjustments.

LIQUIDITY AND CAPITAL RESOURCES

At January 31, 2023, Skkynet had current assets of $1,011,112 and current liabilities of $424,451, resulting in working capital of $586,661. Accumulated deficit, as of January 31, 2023, was $6,599,396 with total shareholders' equity of $578,252.

Net cash provided by operating activities for the three month period ended January 31, 2023, was $36,690 compared to net cash used in operating activities of $144,538 for the same period in 2022.

The positive change in cash in operating activities for the three month period ended January 31, 2023 over the same period in 2022 was primarily due to a positive net change in accounts receivable of $217,935.

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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