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 months periods ended July 31, 2021, revenue was $497,375 and $1,383,414 compared to $316,918 and $1,155,443 for the same periods in 2020. Revenue increased for the nine month period ended July 31 2020 over the same period in 2020 by 19.7%. The increase in revenue for the nine months period ended July 31, 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, excluding depreciation, was $482,482 and $1,345,590 for the three and nine month periods ended July 31, 2021 compared to $371,006 and $1,201,131 for the same periods in 2020. The increase in general and administrative expenses for the three and nine month periods ended July 31, 2021 resulted from increased employment expenditures over the same period in 2020. Depreciation for the three and nine months ended July 31, 2021 were $691 and $1,978 compared to $604 and $1,831 for the same periods in 2020.

For the three and nine month periods ended July 31, 2021, the Company reported an operating income of $14,202 and $35,846 compared to operating losses of $54,692 and $48,733 for the same periods in 2020. The increase of operating income during the three and nine month periods ended July 31, 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 nine month periods ended July 31, 2021, was other loss of $55,587 and $110,028 compared to other loss of $6,092 and other income of $40,210 for the same periods in 2020. The amount of change in both periods was due to the effect of currency exchange along with an accrual of $69,720 in dividends during the three and nine months period in July 31, 2021.






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Net loss before income taxes of $15,490 and $48,287, respectively, was reported for the three and nine month periods ended July 31, 2021, compared to net loss before and after income taxes of $60,784 and net income of $7,390, respectively, for the same periods in 2020. The higher net income for the three and nine month periods in 2021 can be attributed primarily to increased revenue in 2021 over 2020

The Company reported comprehensive losses of $24,695 and $34,303, respectively, for the three and nine month periods ended July 31, 2021, respectively, compared to a comprehensive losses of $34,503 and $13,029 for the same periods in 2020. The comprehensive income and loss is an adjustment to net income and loss with the preferred stock dividends and foreign currency translation adjustments along with taxes taken into account during the respective periods.

LIQUIDITY AND CAPITAL RESOURCES

At July 31, 2021, Skkynet had current assets of $1,032,873 and current liabilities of $426,740, resulting in working capital of $606,133 for a current ratio of 2.42 to 1. Accumulated deficit, as of July 31, 2021, was $6,212,777 with total shareholders' equity of $589,973.

Net cash used in operating activities for the nine months period ended July 31, 2021, was $103,559 compared to net cash provided from operating activities of $84,388 for the same period in 2020. The increase in cash used in operating activities for the nine months period ended July 31, 2021 over the same period in 2020 was primarily due to an increase in accounts receivable of $65,742, reduction in accounts payable and accrued expenses of $85,566 plus a reduction of $22,280 in accrued liabilities to related parties.

Net cash received in financing activities was US$15,708 (CDN$20,000) received from the Canadian Emergency Business Account.

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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