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 six months periods ended April 30, 2020, revenue was $419,482 and $838,525 compared to $447,972 and $886,038 for the same periods in 2021. Revenue increased for the six month period ended April 30 , 2021 over the same period in 2020 by 5.67%. The increase in revenue for the six months period ended April 30, 2021 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, including depreciation, was $400,906 and $832,659 for the three and six month periods ended April 30, 2020 compared to $415,747 and $864,394 for the same periods in 2021. The increase in general and administrative expenses for the three and six month periods ended April 30, 2021 resulted from increased employment expenditures over the same period in 2020.

For the three and six month periods ended April 30, 2020, the Company reported an operating income of $18,137 and $5,866 compared to operating income of $32,225 and $21,644 for the same periods in 2021. The increase of operating income during the three and six month periods ended April 30, 2021 over the same periods in 2020 is attributable to higher revenue in 2021 compared to 2020.

Other income and expense for the three and six month periods ended April 30, 2020, was other income of $42,516 and $46,306 compared to other loss of $23,310 and $54,441 for the same periods in 2021. The amount of change in both periods was due to the effect of currency exchange.

Net income before and after income taxes of $60,653 and $52,172 was reported for the three and six month periods ended April 30, 2020, compared to net income before and after income taxes of $8,915 and net loss of $32,797 for the same periods in 2021. The higher net loss for the three month period in 2021 can be attributed primarily to the change in currency from a gain of $42,515 to a loss of $31,497 or a negative change of $74,012.

The Company reported comprehensive income of $38,509 and $21,474 for the three and six month periods ended April 30, 2020 compared to a comprehensive income of $26,373 and comprehensive loss of $9,608 for the same periods in 2021. 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.






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LIQUIDITY AND CAPITAL RESOURCES

At April 30, 2021, Skkynet had current assets of $950,238 and current liabilities of $371,441, resulting in working capital of $578,797 for a current ratio of 2.56 to 1. Accumulated deficit, as of April 30, 2021, was $6,267,007 with total shareholders' equity of $563,022.

Net cash provided from operating activities for the six months period ended April 30, 2020, was $45,712 compared to net cash used in operating activities of $288,962 for the same period in 2021.

The increase in cash used in operating activities for the six months period ended April 30, 2021 over the same period in 2020 was primarily due to an increase in accounts receivable of $168,374, reduction in accounts payable and accrued expenses of $43,812 plus a large reduction of $222,603 in accrued liabilities to related parties.

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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