OVERVIEW

The Company was incorporated on August 31, 2011 in the State of Nevada. On March 26, 2012, the Company acquired Cogent Real-Time Systems, Inc.

Skkynet is an evolution of Cogent, an established financial and industrial middleware software vendor. Cogent's specialization has focused on providing connectivity and data acquisition to a wide variety of industrial and office hardware and software products, and then making that data available over a network using industry-standard protocols. The architecture of Cogent's software naturally suits it for use both as a data aggregation platform at the process level, and as a data server at the Cloud level. By marrying these two capabilities together, Skkynet can effectively and securely offer the Cloud as an extension to any local process.

Cogent's market has been primarily in industrial automation. With little advertising, Cogent has also acquired a number of financial trading companies as clients, due to the fact that Cogent's software is both source and content agnostic. High-speed trading and high-speed industrial automation behave very similarly at the level of abstraction that Cogent's software uses. Recently, Cogent has been working with Japanese companies to penetrate the lucrative embedded device manufacturing world. Japan is one of the largest producers of consumer and business electronics devices, more and more of which contain small embedded computers. Cogent has been working with partners in Japan to establish a name and presence in this world, with the aim of having Cogent's software installed directly on the electronic devices, allowing the manufacturers to instantly make them network-accessible.

The Company believes that deploying its product in a Cloud environment will increase the potential applications for customers and broaden its usage and expansion into various markets including Cloud industrial middleware, Cloud financial services, home monitoring, fleet tracking, and energy usage monitoring. New applications that may not exist today but will through the new Cloud platform may also open new markets unknown to Skkynet today. However, management will carefully monitor the growth in new markets and manage each opportunity to maximize its return and minimize risks. This includes selecting specific markets with known trends to introduce its products and services and maintain a controlled release until the market has been understood and sales in the market have become significant to the Company. Only then will the Company risk new markets for its product. We must also include additional staffing at the senior management level with proven experiences and business records in the Company's environment to implement these markets.

The expansion into new markets will require additional cash resources from sources other than those available to the Company today. Only after the Company has secured specific amounts of financing it believes is required for development of each market application enumerated above will Skkynet begin its marketing efforts.

The additional staffing will not begin until Skkynet has funded itself to finance both the staff increase and the required capital to carry out its marketing plan. If the Company is not successful in obtaining the required additional capital, it believes the present business operation will be able to sustain Skkynet's additional costs as a public company at a minimal level.






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RESULTS OF OPERATIONS

The following table sets forth selected statement of operations data as a percentage of total revenue for the periods indicated:





                                              For Years Ended October 31,
                                           2022                          2021
Revenue                          $ 2,156,880          100 %    $ 1,830,459          100 %
Operating expenses:
General operating expense          2,214,765       (102.8 )%     1,983,596       (108.5 )%
Depreciation                           2,563          0.0 %          2,624        (0.00 )%

Income (loss) from operations (60,448 ) (3.0 )% (155,761 ) (8.5 )% Other income (expense)

                54,463          2.5 %        (33,728 )       (1,8 )%
Net income (loss) before taxes        (5,985 )       (0.5 )%      (189,489 )      (10.3 )%
Tax refund                            38,743          1.8 %         25,901          1.4 %
Net income (loss)                     32,758          1.5 %    $  (163,588 )       (8.9 )%

Revenue: For the year ended October 31, 2022, the Company had revenues of $2,156,880 compared to $1,830,459 of revenue for the year ended October 31, 2021. This reflects an increase of $326,421 from 2021 to 2022. Revenue increases can be attributed to the increase of sales in the Cogent subsidiary. During the year ended October 31, 2022, the Company's deferred revenue was $281,615 compared to a deferred revenue balance of $204,961 as of October 31, 2021, an increase of $76,654. Deferred revenue consists of services billed but not yet provided to the customer and reflects revenues that will be recognized in the future.

Operating Expenses: Total operating expenses, excluding depreciation, increased to $2,214,765 in the year ended October 31, 2022 from $1,983,596 for the same period in 2021. This was an increase of $231,169 and as a percent of revenue G&A decreased to 102.8% in 2022 from 108.5% in 2021. The decrease as a percentage is attributed to higher sales in the Cogent subsidiary in 2022 over 2021.

Depreciation and Amortization: The Company had depreciation of $2,563 in the year ended October 31, 2022 compared to $2,624 in the same period in 2021.

Other Income (Expense): Other income totaled $54,463 during the year ended October 31, 2022 compared to other expense of $33,728 during the same period in 2021. The currency exchange in 2022 of $ 46,675 was a positive change of $120,046 in currency exchange from the same period in 2021. This was the primary reason for the other income in the year ended October 31, 2022 verses other expense in the same period in 2021.

Income Tax: During the years ended October 31, 2022 and 2021 the Company and its subsidiary incurred no tax. The subsidiary filed tax returns as a foreign corporation. During the year ended October 31, 2022 the subsidiary received a tax refund of $38,743 compared to $25,901 for the same period in 2021.

Net Income (Loss): The Company recorded net income of $32,758 for the year ended October 31, 2022 compared to net loss of $163,588 in 2021, a net positive variance of $196,346. The increase in sales in the Cogent subsidiary was the key element in the result of net income in 2022 over the net loss in 2021.

LIQUIDITY AND CAPITAL RESOURCES

The Company's liquidity and capital has been dependent on the revenue generated internally by the Company's subsidiaries, by loans from its officers and directors and by deferral of accrued salaries. There are no agreements or understandings with regard to future loans by or with the officers, directors, principals, affiliates or shareholders of the Company. In the past, officers and directors of the Company have lent or advanced monies to the Company to fund operations, but there are no formal agreements or arrangements for them to continue to do so.






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The Company anticipates continually expanding its business through the planned expansion of the Company's marketing of venues in expanded markets. The Company's plans will be limited, however, by its ability to finance such a proposed expansion of its business. If the revenues generated are not sufficient to finance these proposed operations, then the Company will have to scale back its proposed operations. The Company's ultimate success will be based upon whether or not there continues to be a demand for the services that the Company anticipates providing, which is also very dependent on the economy. There can be no assurance that there will be a demand for the Company's services in the future or that the Company will become profitable in providing these services. As the Company's expands its operations, the revenues received, in addition to paying current expenses may increase the Company's capital requirements.

The Company is attempting to secure additional capital from independent sources in the form of equity and debt. The success and ability to meet its capital needs is highly dependent on its success in generating additional revenue and profitability now and in the future.

Working Capital: At October 31, 2022, the Company had working capital of $682,644 with current assets of $1,137,936 and current liabilities of $455,292 with a current ratio of 2.50 to 1. The current assets consisted of cash of $729,936, account receivable of $377,491, accounts receivable from related parties of $4,776 and prepaid expense and other receivable of $25,733. The current liabilities of the Company at October 31, 2022 are composed primarily of accounts payable and accrued expenses of $58,202, accrued liabilities to related party of $115,475, deferred revenue of $281,615, plus an operating lease liability of zero.

Operating Activities: Net cash used in operating activities during the year ended October 31, 2022 was $36,021 compared to net cash used of $60,985 for the same period in 2021. This represents a positive change of $24,964. The change in cash flow from operating activities is significant from 2022 to 2021 and due primary to increased sales resulting in net income of $32,758 in 2022 over a net loss of $163,588 in 2021.

Financing Activities: Net cash used in financing was $27,747 for the year ended October 31, 2022 compared to net cash provided by financing activities of $15,678 in 2021. The change results from the proceeds of the Canadian emergency loans in 2021 of $15,678 compared to loan payback of $29,315 in 2022.

As of October 31, 2022, the Company had total assets of $1,144,994 and total liabilities of $474,398 compared to $1,103,947 and $651,380, respectively in the same period in 2021. Stockholders' equity as of October 31, 2022 was $670,596 compared to stockholder's equity of $452,567 at October 31, 2021, an increase of $218,029 or 48.2%.

NEED FOR ADDITIONAL FINANCING

The Company's existing capital is sufficient to meet the Company's cash needs if the Company continues to operate its ongoing business as presently conducted through revenues generated from operations of our subsidiary for the next twelve months. The Company may from time to time seek additional equity or debt financing as it feels is required to continue the growth of the Company.

Off-Balance Sheet Arrangements

We currently have no off-balance sheet arrangements.

Critical Accounting Policies and Recent Accounting Pronouncements

The accounting policies and pronouncements are discussed in the financial footnotes of the Company and should be referenced therein. (See Note -2 Significant Accounting Policies)






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