Quarterly Report for Quarter Ending April 30, 2026 (Form 10-Q)

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 relevant customers 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, 2026, revenue was $606,106 and $1,155,499 compared to $583,712 and $1,414,674 for the same period in 2025. Revenue increased for the three months in 2026 by 4% and decreased for the six months period ended April 30, 2026 over the same period in 2025 by 18%. The decrease in the six months revenue in 2026 is attributed to lower sales by Cogent along with the move by the Company from perpetual to subscription licenses.

Operating expense was $875,975 and $1,642,493 for the three month and six months periods ended April 30, 2026 compared to $780,405 and $1,411,220 for the same periods in 2025. The increase in operating expenses was impacted by an increase in advertising of $25,273 and general and administrative expenses of $139,113 during the six months ended April 30, 2026. General and administrative costs increased during the six months ended April 30, 2026 due to additional staff added.

For the three and six month periods ended April 30, 2026, the Company reported an operating loss of $269,896 and $486,993 compared to operating loss of $194,693 and operating income of $3,544 for the same period in 2025. The operating loss during the six month period ended April 30, 2026 over the operating income for same period in 2025 is attributable to $259,265 in lower revenues plus increased expenses of $231,273 in the six month period ended April 30, 2026, versus the same period in 2025.

Other income (expense) for the three and six months period ended April 30, 2026 was other expense of $10,337 and income of $4,860, consisting of other income of $13,285 and $24,969 and a currency loss of $2,948 and $20,109. This compared to other expenses of $31,790 and $964 consisting of other income of $8,357 and $18,109, bad debt expense of $13,474 and a currency loss of $26,673 and $5,599 for the same period in 2025. The significant changes in the six months period ending April 30, 2026 over 2025 was the increase in other income from interest earned and the bad debt write off of $13,474 in 2026 verses none in 2025.

Net loss after income taxes of $109,392 and $335,901, was reported for the three month and six months periods ended April 30, 2026, compared to net loss after income taxes of $227,723 and net income of $1,340 for the same period in 2025. The net loss for the three month period in 2026 can be attributed to $278,659 of lower revenue during that period in 2026 versus the same period in 2025. Additionally, the operating expenses for the three month period ended April 30, 2026 was $136,753 more than the same period in 2025.This was offset by a tax refund of $146,232 in the six months period ended April 30, 2026.

Net loss to common stockholders was $112,297 and $341,711 for the three and six month periods ended April 30, 2026, compared to net loss of $230,628 and $4,470 for the same periods in 2025. Net income to common shareholders includes the expense of dividend for preferred stockholders of $2,905 being accrued for the three and six month periods ended April 30, 2026 and 2025.

The Company reported comprehensive loss of $131,724 and $367,251 for the three and six month periods ended April 30, 2026 compared to a comprehensive loss of $235,302 and $13,817 for the same periods in 2025. The comprehensive income is an adjustment to net gain or loss with foreign currency translation adjustments.

LIQUIDITY AND CAPITAL RESOURCES

At April 30, 2026, the Company had current assets of $1,937,112 and current liabilities of $933,339, resulting in working capital of $1,003,773. Accumulated deficit, as of April 30, 2026, was $6,789,287 with total stockholders' equity of $837,000. This compares to current assets of $1,831,014 and current liabilities of $803,299 with working capital of $1,027,715 as of October 31, 2025. Accumulated deficit as of October 31, 2025 was $6,447,576 with shareholders' equity of $1,027,715.

Net cash used in operating activities for the six month period ended April 30, 2026, was $280,443 compared to net cash provided by operating activities of $100,616 for the same period in 2025. The change in cash used in operating activities for the six month period ended April 30, 2026 compared to the cash provided by operating activities over the same period in 2025 was due to a combination of decreased revenue $259,265 and increased operating expenses of $231,272 in 2026 compared to 2025 . These two factors caused a variance of $490,537 during the six months period in 2026 compared to the same period in 2025.

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.