SKKYNET CLOUD SYSTEMS, INC. : MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-Q)

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 in the forward-looking statements due to risks set forth in Skkynet’s filings with the Security and Exchange Commissiongeneral economic conditions and changes in the assumptions used to make these forward-looking statements.

OVERVIEW

Skkynet is a Nevada company headquartered in Mississauga, Canada. Skkynet operates three different business segments through its wholly owned subsidiaries
Cogent Real-Time Systems, Inc. (“Convincing”), Skkynet, Inc. (“Skynet (UNITED STATES)”), and
Skkynet Corp. (“Skynet (Canada. Skkynet was created to enhance Cogent’s existing business lines through the integration of cloud-based systems, and to provide a Software-as-a-Service (“SaaS”) product targeting the Internet market. industrial objects (“IoT”), now referred to by the terms “Industry 4.0” and “Industrial Internet Consortium“.

The Company provides software and related systems and facilities for collecting, processing and distributing real-time information over a network. This capability enables customers to locally and remotely manage, supervise and control industrial processes and financial information systems. By using this software and, at the request of a customer, our web assets, our customers and their customers (to the extent possible) have the opportunity and the tools to observe and interact with these processes and services in time real as they are in progress and to empower them to analyze, modify, stop or influence these activities so that they conform to their plans.

RESULTS OF OPERATIONS

For the periods of three and six months ended April 30, 2022income was $540,093
and $1,017,272 compared to $447,972 and $886,038 for the same periods in 2021. Revenue increased for the six-month periods ended April 30, 2022 over the same period in 2021 by 14.8%. The increase in revenue for the six-month period is attributed to higher Cogent sales. The Company is benefiting from its previous sales and marketing investments and market recognition which have contributed to Cogent’s increased sales.

General and administrative expenses were $593,080 and $1,169,719 for the three and six month periods ended April 30, 2022 compared to $415,092 and $863,098 for the same periods in 2021. The increase in general and administrative expenses for the three and six-month periods ended April 30, 2022 compared to the same periods in 2021, resulted from increased spending primarily in legal and accounting services, hired consulting services, and advertising and promotion.

For the periods of three and six months ended April 30, 2022the Company recorded an operating loss of $53,638 and $153,749 compared to the operating result of
$32,225 and $21,644 for the same periods in 2021. The operating loss during the three and six month periods ended April 30, 2022on operating profit for the same periods in 2021 is attributable to the increase in general and administrative expenses during the period ended April 30, 2022as indicated in the above paragraph compared to 2021.

Other income and expenses for the three and six month periods ended April 30, 2022was another expense of $3,684 and other income from $22,263 compared to other losses 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 the exchange rate.

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Net loss after tax of $17,955 and $92,119 was declared for the periods of three and six months ended April 30, 2022compared to net income before and after tax of $8,915 and net loss of $32,797 for the same periods in 2021. The higher net loss for the three and six month periods in 2022 can be attributed to higher general and administrative expenses in 2022 compared to the same period in 2021. During the period of three months over April 30, 2022 the Company received a tax refund for the development of $39,367.

The net loss to common shareholders was $20,860 and $97,929 for the three and six month periods ended April 30, 2022compared to the net result of $6,010 and net loss of $38,607 for the same periods in 2021. The loss includes the expense of the dividend for the preferred shareholders of $5,810 accumulated for the six-month period ended April 30, 2022.

The Company declared an overall loss of $19,475 and $79,995 for the three and six month periods ended April 30, 2022 compared to an overall result of
$26,373 and the total loss of $9,608 for the same periods in 2021. Comprehensive loss is an adjustment of net loss with currency translation adjustments.

CASH AND CAPITAL RESOURCES

To April 30, 2022Skkynet had current assets of $916,849 and the current liabilities of $494,898resulting in a working capital of $421,951. Accumulated deficit, at April 30, 2022has been $6,568,352 with total equity of
$435,378.

Net cash used in operating activities for the six-month period ended April 30, 2022has been $207,953 compared to the net cash used in operating activities of $288,962
for the same period in 2021.

The decrease in cash used in operating activities for the six-month period ended
April 30, 2022 compared to the same period in 2021 was mainly due to an increase in accounts receivable and deferred revenue offset by a decrease in accounts payable and related parties.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, income or expenses, results of operations, liquidity, expenses in fixed assets or our capital resources that are important to shareholders.

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