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.

The results of operations reflect the adjustments of the three and nine months periods in 2019 for discontinued operations. Discontinued operations are not part of the results of operations in this section.

The occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations. A pandemic typically results in social distancing, travel bans, and quarantine. This may limit access to our, customers, management, support staff and professional advisors. As the Company's operations, delivery of software and support has been virtual for years with delivery through the internet, we do not anticipate a significant impact on our operations or financial condition, except an initial reduction for the sale for our software.





RESULTS OF OPERATIONS

For the three and nine month periods ended July 31, 2020, revenue was $316,918 and $1,155,443 compared to $337,587 and $973,400 for the same period in 2019. Revenue increased for the nine month period ended July 31, 2020 over the same period in 2019 by 18.7%. The increase in revenue for the nine month period ended July 31, 2020 is attributed to higher sales by Cogent. The Company has recently increased its investment in sales and marketing which has contributed to the increase in Cogent's sales.

General and administrative expense was $371,006 and $1,201,131 for the three and nine month periods ended July 31, 2020 compared to $378,841 and $1,410,493 for the same period in 2019. The decrease in general and administrative expenses for the three and nine-month periods ended July 31, 2020 resulted from lower option expenses in 2020 over 2019 due to as well as reduced travel and conventions presenting the software.

For the three and nine month periods ended July 31, 2020, the Company reported an operating losses of $54,692 and $48,733 compared to operating losses from continuing operations of $41,694 and $427,727 for the same periods in 2019. The change in operating loss during the three- and nine-month periods ended July 31, 2019 was due to reduced expenses in 2020 compared to 2019.






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Other income and expense for the three and nine-month periods ended July 31, 2020, includes other expense of $6,092 and other income of $40,210 compared to other expense of $17,229 and $11,729 for the same periods in 2019. The amount in both periods were due primarily to the effect of currency exchange offset by other income of $29,671 in 2020.

Net loss of $60,784 and net income of $7,390 was reported for the three and nine month periods ended July 31, 2020, compared to a net loss from continuing operations of $28,479 and a loss from discontinued operations of $16,261 for the three month period and a net loss from continuing operations of $419,057 and a loss from discontinued operations of $58,867 in 2019 for the nine month period. The net income for the nine month periods in 2020 is attributed to higher sales in 2020 compared to the same period in 2019

The Company reported comprehensive loss of $33,916, and $13,029 for the three and nine month periods ended July 31, 2020 compared to a comprehensive loss of $24,517 and $432,690 for the same periods in 2019. The comprehensive loss is an adjustment to net loss with accrued preferred stock dividends and foreign currency translation adjustments along with taxes taken into account.

LIQUIDITY AND CAPITAL RESOURCES

At July 31, 2020, Skkynet had current assets of $939,737 and current liabilities of $205,527, resulting in working capital of $734,210. Accumulated deficit, as of July 31, 2020, was $5,915,487 with total shareholders' equity of $738,053.

Net cash provided by operating activities for the nine month period ended July 31, 2020, was $84,388 compared to net cash used in operating activities of $989 for the same period in 2019.

The increase in cash provided by operating activities for the nine month period ended July 31, 2020 over the same period in 2019 was primarily due to income of $7,390 for the nine months ended July 31, 2020 compared to a net loss of $477,924 for the same period in 2019.

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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