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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2026

☐ TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934

For the transition period from ___________ to ____________.

Commission File Number: 000-54747

SKKYNET CLOUD SYSTEMS, INC.
(Exact name of registrant as specified in its charter)

Nevada		45-3757848
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

2233 Argentia Road Suite 302. Mississauga, Ontario, Canada L5N 2X7
(Address of principal executive offices)

(888) 702-7851
(Issuer’s telephone number)

Indicate by check mark whether the Company: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes: ☒ No: ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes: ☒ No: ☐

Indicate by check mark whether the Company is a large accelerated filer, an accelerated file, non-accelerated filer, or a smaller reporting company.

Large accelerated filer	☐	Accelerated filed	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Company is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As June 16, 2026 there were 53,143,822 shares of Common Stock and 193,661 shares of series B preferred of the issuer outstanding.

		Page
PART I: FINANCIAL INFORMATION

Item 1. Financial Statements		4
Condensed Consolidated Balance Sheets as of April 30, 2026 (Unaudited) and October 31, 2025 (Audited)		4
Condensed Consolidated Statements of Operations and Comprehensive Income for the Three and Six Months Ended April 30, 2026 and 2025 (Unaudited)		5
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Six Months Ended April 30, 2026 and 2025 (Unaudited)		6
Condensed Consolidated Statements of Cash Flows for the Six Months Ended April 30, 2026 and 2025 (Unaudited)		7
Notes to Condensed Consolidated Financial Statements (Unaudited)		8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		14

Item 3. Quantitative and Qualitative Disclosures About Market Risk		15

Item 4. Controls and Procedures		15

PART II: OTHER INFORMATION

Item 1. Legal Proceedings		17

Item 1A. Risk Factors		17

Item 2. Sales of Equity Securities and Use of Proceeds		17

Item 3. Defaults upon Senior Securities		17

Item 4. Mine Safety Information		17

Item 5. Other Information		17

Item 6. Exhibits		18

Signatures		19

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FORWARD LOOKING STATEMENTS

Statements made in this Form 10-Q that are not historical, or current facts are forward-looking statements. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “approximate” or “continue,” or the negative thereof. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. Among the factors that could cause actual results to differ materially from the forward-looking statements are the following: the Company’s ability to obtain necessary capital, the Company’s ability to meet anticipated development timelines, the Company’s ability to protect its proprietary technology and knowhow, the Company’s ability to establish a global market, the Company’s ability to successfully consummate future acquisitions, and such other risk factors identified from time to time in the Company’s reports filed with the Securities and Exchange Commission, including those filed with this Form 10-Q quarterly report. We disclaim any obligation to subsequently revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

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PART I

ITEM 1: FINANCIAL STATEMENTS

SKKYNET CLOUD SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	April 30, 2026			October 31, 2025
	(Unaudited)			(Audited)
ASSETS
Current Assets:
Cash and cash equivalents	$	1,339,191		$	1,427,321
Accounts receivable		579,612			376,830
Prepaid expenses		18,309			26,863
Total current assets		1,937,112			1,831,014
Total Assets	$	1,937,112		$	1,831,014

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	192,828		$	209,901
Accrued liabilities – related party		263,714			245,712
Deferred revenue		476,797			347,686
Total current liabilities		933,339			803,299

Long term liabilities
Loan payable		166,773			-
Total Liabilities		1,100,112			803,299

Commitments and contingencies		-			-

Stockholders’ Equity:
Preferred stock: $0.001 par value, 5,000,000 shares authorized, 5,000 shares issued and outstanding, respectively		5			5
Series B Preferred convertible stock: $0.001 par value, 500,000 shares authorized, 193,661 issued and outstanding, respectively		194			194
Common stock; $0.001 par value, 70,000,000 shares authorized, 53,143,822 shares issued and outstanding, respectively		53,145			53,145
Additional paid-in capital		7,474,231			7,348,775
Accumulative other comprehensive income		98,712			73,172
Accumulated deficit		(6,789,287	)		(6,447,576	)
Total stockholders’ equity		837,000			1,027,715
Total Liabilities and Stockholders’ Equity	$	1,937,112		$	1,831,014

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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SKKYNET CLOUD SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

	As of April 30,
	Three Months						Six Months
	2026			2025			2026			2025
Revenue	$	606,106		$	585,712		$	1,155,499		$	1,414,764

Operating Expenses:
Depreciation		-			581			-			1,161
Salaries and wages		488,196			431,936			657,702			660,295
Advertising		110,607			79,919			213,568			188,479
Consultants and directors		170,420			131,874			290,134			227,447
General & administrative expenses		106,752			136,095			481,088			338,838
Operating expenses		875,975			780,405			1,642,492			1,411,220

Income (loss) from operations		(269,896	)		(194,693	)		(486,993	)		3,544

Other income (expense):
Other income		13,285			8,357			24,969			18,109
Bad debt expense		-			(13,474	)		-			(13,474	)
Currency exchange		(2,948	)		(26,673	)		(20,109	)		(5,599	)
Total other income (expense)		(10,337	)		(31,790	)		4,860			(964	)

Income (loss) before taxes		(259,532	)		(226,483	)		(482,133	)		2,580

Income taxes refund (expense)		150,140			(1,240	)		146,232			(1,240	)

Net income (loss)		(109,392	)		(227,723	)		(335,901	)		1,340

Preferred dividends		(2,905	)		(2,905	)		(5,810	)		(5,810	)

Income (loss) to common stockholders		(112,297	)		(230,628	)		(341,711	)		(4,470	)

Foreign currency translation adjustment		19,427			(4,674	)		25,540			(9,347	)

Comprehensive income (loss)	$	(92,870	)	$	(235,302	)	$	(316,171	)	$	(13,817	)

Net income per share to common stockholders- basic and diluted	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.00	)
Weighted average common shares outstanding -basic and diluted		53,143,822			53,143,822			53,143,822			53,143,822

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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SKKYNET CLOUD SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED APRIL 30, 2026 AND 2025

(Unaudited)

																		Accumulated
									Series B Preferred				Additional					Other			Total
	Common Stock				Preferred Stock				Convertible Stock				Paid-In		Accumulated			Comprehensive			Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Income (loss)			Equity

Balance at October 31, 2024		53,143,822	$	53,145		5,000	$	5		193,661	$	194	$	7,226,547	$	(6,471,307	)	$	80,946		$	889,530
Change due to currency translation		-		-		-		-		-		-		-		-			(4,673	)		(4,673	)
Dividend accrued on series B preferred shares		-		-		-		-		-		-		-		(2,905	)		-			(2,905	)
Stock option expense		-		-		-		-		-		-		32,098		-			-			32,098

Net income		-		-		-		-		-		-		-		229,063			-			229,063

Balance at January 31, 2025		53,143,822		53,145		5,000		5		193,661		194		7,258,645		(6,245,149	)		76,273			1,143,113
Change due to currency translation		-		-		-		-		-		-		-		-			(4,674	)		(4,674	)
Dividend accrued on series B preferred shares		-		-		-		-		-		-		-		2,905						2,905
Stock option expense		-		-		-		-		-		-		22,539		-			-			22,539

Net income (loss)		-		-		-		-		-		-		-		(227,723	)		-			(227,723	)

Balance at April 30, 2025		53,143,822		53,145		5,000		5		193,661		194		7,281,184		(6,475,777	)		71,599			(30,350

Balance at October 31, 2025		53,143,822		53,145		5,000		5		193,661		194		7,348,775		(6,447,576	)		73,172			1,027,715
Change due to currency translation		-		-		-		-		-		-		-		-			6,113			6,113
Dividend accrued on series B preferred shares		-		-		-		-		-		-		-		(2,905	)		-			(2,905	)
Stock option expense		-		-		-		-		-		-		64,429		-			-			64,429

Net income (loss)		-		-		-		-		-		-		-		(226,509	)		-			(226,509	)

Balance at January 31, 2026		53,143,822		53,145		5,000		5		193,661		194		7,413,204		(6,676,990	)		79,285			868,843
Change due to currency translation		-		-		-		-		-		-		-		-			19,427			19,427
Dividends accrued on series B preferred shares		-		-		-		-		-		-		-		2,905			-			2,905
Stock option expense		-		-		-		-		-		-		61,027		-			-			61,027

Net income (loss)		-		-		-		-		-		-		-		(109,392	)		-			(109,392

Balance at April 30, 2026		53,143,822	$	53,145		5,000	$	5		193,661	$	194	$	7,474,231	$	(6,789,287	)	$	98,712		$	837,000

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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SKKYNET CLOUD SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For Six Months Ended April 30,
	2026			2025
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(335,901	)	$	1,340
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		-			1,161
Stock based compensation		125,456			54,637
Changes in operating assets and liabilities:
Accounts receivable		(202,782	)		(72,882	)
Accounts payable and accrued expenses		(17,073	)		(25,077	)
Accrued liabilities – related parties		12,192			44,427
Prepaid expenses and other assets		8,554			9,843
Deferred revenue		129,111			73,693
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(280,443	)		100,616

NET CASH FROM FINANCING ACTIVITIES
Proceeds from long term loan		166,773			-
NET CASH PORVIDIED BY FINANCING ACTIVITIES		166,773

Effect of exchange rate changes on cash and cash equivalents		25,540			(9,330	)

Net increase (decrease) in cash and cash equivalents		(88,130	)		91,286

Cash and cash equivalents, beginning of period		1,427,321			1,158,225
Cash and cash equivalents, end of period	$	1,339,191		$	1,249,541

SUPPLEMENTAL CASH FLOWS INFORMATION
Interest paid	$	-		$	-
Income taxes paid	$	-		$	-

NON CASH INVESTING AND FINANCING ACTIVITIES
Dividends accrued on Series B preferred shares	$	5,810		$	5,810

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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SKKYNET CLOUD SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

Skkynet Cloud Systems, Inc. (“Skkynet” or “the Company”) is a Nevada corporation formed on August 31, 2011 and headquartered in Toronto, Canada. Skkynet operates its business through its wholly owned subsidiaries Cogent Real-Time Systems, Inc. (“Cogent”), Skkynet Corp. (Canada) and Skkynet, Inc. (USA). Skkynet was formed primarily for the purpose of taking the existing business lines of Cogent and its current and future customers and integrating these businesses with Cloud based systems. We also intend to expand the areas of business activity to which the kinds of products and services we provide are applied.

The accompanying unaudited condensed interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (the “SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s October 31, 2025 Annual Report on form 10-K filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the consolidated financial statements for the most recent fiscal year end October 31, 2025 as reported on Form 10-K, have been omitted.

Certain prior period amounts were reclassified to conform to the manner of presentation in the current period. The reclassifications have no effect on the net loss or stockholders’ equity.

NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POICIES

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the balance sheet. Actual results could differ from those estimates.

Principles of Consolidation

The consolidated financial statements of the Company include the Company and its wholly owned subsidiaries Cogent Real Time Systems, Inc. (Canada), Skkynet Corp. (Canada) and Skkynet Inc (US). All material intercompany balances and transactions have been eliminated.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Cash deposits are insured up to US$250,000 in US banks and CDN$100,000 in Canadian banks. The concentration of the Company’s cash deposits at times may exceed the insured amount, leaving the Company exposed to a credit risk on its deposits.

Income tax

The Company accounts for income taxes under ASC 740. Current tax expense (benefit) is recognized for taxes payable for the period; deferred tax assets and liabilities are recognized for temporary differences between financial and tax bases of assets and liabilities.

The Company, through its subsidiary Cogent Data Systems, received a tax refund of $146,232during the six months period ending April 30, 2026. The refund qualified under the SR:ED program which grants the refunds for the cost of development of the Companies software and product development.

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Basic and Diluted Earnings Per Share

Basic earnings per share (EPS) is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if dilutive securities, such as stock options and convertible preferred shares, were exercised or converted to common stock. The treasury method is used to calculate the effect of options, and if the converted method is used for convertible preferred shares. Securities that are antidilutive are excluded from the computation of diluted EPS.

Recent adopted accounting standards

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07 Segment Reporting The change in this announcement requires more detailed profit and loss reporting by business segments used by the Company to determine the allocation of assets. ASU 2016-07 is effective for annual periods beginning after December 15, 2023 and interim periods within the fiscal years beginning December 15, 2024. The Company adopted the standard on October 31, 2025. The adoption did not have a material impact on the Company’s consolidated financial statements.

In July 2025, the FASB issued ASU 2025‑05, which provides a practical expedient for estimating expected credit losses on current accounts receivable and current contract assets arising from revenue transactions within the scope of ASC 606. The expedient allows entities to assume that current conditions as of the balance sheet date remain unchanged over the remaining life of the asset when developing reasonable and supportable forecasts. Public business entities are not permitted to elect the optional accounting policy to consider subsequent cash collections The Company adopted ASU 2025‑05 on January 1, 2026, on a prospective basis. The adoption did not have a material impact on the Company’s consolidated financial statements. Upon adoption, the Company elected the practical expedient for current accounts receivable and current contract assets. No other changes were made to the Company’s credit‑loss estimation methodologies.

The Company adopted ASU 2023‑09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, in the quarter ended January 31, 2026 consistent with the effective date for public business entities (annual periods beginning after December 15, 2024). The Company applied the amendments on a prospective basis to the condensed consolidated financial statements for the current reporting period. Impact on financial statements and disclosures — Adoption of ASU 2023‑09 did not affect the Company’s measurement of income tax expense, deferred tax assets or liabilities, or its effective tax rate.

Accounts receivable

Accounts Receivable are carried at face value less any provisions for uncollectible accounts considered necessary. Accounts receivable includes receivables from customers that have received software and support from the Company. Credit losses is a recognition of uncollectable receivables based on past years’ experience and management’s estimate of likely losses for the year. No allowance for bad debt was considered necessary for the three and six months ended April 30, 2026 and 2025, respectively.

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NOTE 3- REVENUE RECOGNITION

In April 2016, the FASB issued ASU 2016–10 Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. Topic 606 includes implementation guidance on (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). The amendments are intended to render more detailed implementation guidance with the expectation to reduce the degree of judgement necessary to comply with Topic 606.

ASC Topic 606 prescribes a new five-step model entities should follow in order to recognize revenue in accordance with the core principle. These five steps are:

	1.	Identify the contract(s) with a customer.
	2.	Identify the performance obligations in the contract.
	3.	Determine the transaction price.
	4.	Allocate the transaction price to the performance obligations in the contract.
	5.	Recognize revenue when (or as) the entity satisfied the performance obligations.

The Company has four revenue streams, each of which the revenue is recognized in accordance to the five steps included in Topic 606. The revenue streams are:

	1.	Sale of software direct to the end customer
	2.	Sale of software through distributors and channel partners
	3.	Maintenance support services
	4.	Cloud services

Revenue for the sale of software both directly to end users and through the distributor and channel partners is recognized upon delivery of the software and code required for the customer to install the software.

Maintenance support services are recognized as revenue on a straight-line basis over the service period of the arrangement.

Revenue from cloud services is recognized over time (typically, on a monthly basis) as service is provided.

Payments received in advance of services being rendered are recorded as deferred revenue and recognized to revenue when earned. During the six months period ended April 30, 2026, $375,271 of sales was classified as deferred revenue and $295,377 of deferred revenue was reported as sales. As of April 30, 2026 and October 31, 2025 the deferred revenue was $476,797 and $347,686, respectively.

Payments for subscription revenue was 15% of sales in the six months period ending April 30, 2026 compared to 11.8% in the same period in 2025. The move to subscription revenue from perpetual revenue impacts the Company’s revenue reported as subscription licenses pay over a three year period while perpetual licenses are paid, in full, on the purchase of the license.

As part of the revenue recognition reporting, the Company reports revenue by product line and geographic area. During the six month periods ended April 30, 2026, and 2025 the revenue by product line is as follows:

Category	Percentage			2026		Percentage			2025
Product sales		65	%		724,143		69	%		974,251
Support		36	%		421,198		28	%		400,689
Cloud & Other		1	%		10,158		3	%		39,824
Total		100	%		1,155,499		100	%		1,414,764

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The Company sells its products on a worldwide basis. During the six month periods ended April 30, 2026, and 2025 the Company’s geographic concentration of revenue is as follows:

Area	Percentage			2026		Percentage			2025
Europe		36	%		417,244		39	%		554,798
North America		50	%		573,657		37	%		517,146
Asia Pacific		8	%		93,797		11	%		161,436
Middle East Africa/Other		6	%		65,126		12	%		168,436
South America		-			5,675		1	%		13,283
Total		100	%	$	1,155,499		100	%	$	1,414,764

NOTE 4- RELATED PARTY TRANSACTIONS

Sakura Software, a corporation owned by our CTO, Andrew S. Thomas, and Benford Consultancy, a corporation owned by our COO and a member of our Board of Directors, Paul Benford, own, respectively, 72.34% and 27.66% of the issued and outstanding shares of Real Innovations International LLC, (“Real Innovations”) a corporation organized under the laws of Nevis, West Indies. In March 2012, Cogent, our operating subsidiary, assigned all of its intellectual property including the pending patent applications for its real-time data transmission and display technology (the “IP”) to Real Innovations under an assignment of intellectual property agreement (the “Assignment Agreement”). In return for the assignment Real Innovations required a one-time payment of $30,000 to Cogent. Cogent elected to forgo the payment allowing Real Innovations to offset future expenses against the payment. There is no ongoing royalty payment or other form of compensation from Real Innovations to Cogent under the Assignment Agreement.

Real Innovations, in turn, entered into a master intellectual property license agreement (the “License Agreement”) with Cogent for all of the same IP. Under the License Agreement Real Innovations granted a royalty-free license in perpetuity to Cogent for the use and exploitation of the IP in return for which Cogent agreed to: (i) pay all operating expenses of Real Innovations incurred in connection with the continued prosecution of pending patent applications and others that may be prepared; (ii) prosecute all claims for infringement of the IP; (iii) defend and indemnify Real Innovations from and against all claims of infringement of the IP asserted by third parties against Real Innovations, Cogent or our Company; (iv) purchase liability insurance in favor of Real Innovations for this purpose. Under the termination provision of the licenses agreement, there is no unilateral right of termination. Termination may occur by mutual consent of the parties, the Company ceasing doing business, by breach by the Company or by the Company failing to maintain the license and the support to prosecute and protect the license under applicable laws.

Under the License Agreement, Messrs. Andrew S. Thomas and Paul Benford will benefit indirectly from their indirect ownership of all of the shares of Real Innovations to the extent of any such payments or other undertakings by Cogent on behalf of Real Innovations, but the exact amount of these benefits cannot be determined at this time. No payments have been made as of April 30, 2026.

As of April 30, 2026, the amount due to related parties was $263,714 compared to $245,712 as of October 31, 2025. As of April 30, 2026, the amount consisted of accrued dividends of $124,915, and accrued liabilities of $62,442.

NOTE 5 – OPTIONS

The Company, under its 2012 Stock Option Plan, issues options to various officers, directors, and consultants. The options vest in equal annual installments over a five year period with the first 20% vested when the options are granted. All of the options are exercisable at a purchase price based on the last trading price of the Company’s common stock.

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During the six months period ended April 30, 2025 the Company issued 631,250 options to 18 individuals. The options are exercisable into common stock of the Company at $0.41 per share. The Company calculated the fair value of the outstanding options of $53,128 using the Black Scholes option pricing model with computed volatility of 128.00%, risk-free interest rate of 4.5%, expected dividend yield 0%, stock price at measurement date of $0.51 and the expected term of ten years. The options are expensed over a five year period with 20% upon issuance and 20% for the first and each subsequent year.

During the six months period ended April 30, 2026 the Company issued 1,595,000 options to 19 individuals. The options are exercisable into common stock of the Company at $0.33-$0.48 per share. The Company calculated a fair value for the outstanding options as of April 30, 2026 of $125,456 using the Black Scholes option pricing model with computed volatility of 142%, risk-free interest rate of 4.5%, expected dividend yield 0%, stock price at measurement date of $0.33-$0.48 and the expected term of ten years. The options are expensed over a five year period with 20% upon issuance and 20% for the first and each subsequent year.

As of April 30, 2026 the total number of options was 10,332,200 with 7,315,450 exercisable and 3,016,750 not exercisable.

During the six month period ended April 30, 2026, the Company recognized $125,456 of option expense. The unrecognized future balance to be expensed over the term of the options is $870,704.

The following sets forth the options granted and outstanding as of April 30, 2026:

	Options		Weighted Average Exercise price		Weighted Average Remaining Contract Life		Granted Options Exercisable		Intrinsic value
Outstanding at October 31, 2025		8,737,200	$	0.20		3.10		7,068,450	$	3,575,987
Granted		1,595,000		0.43		9.75		-		-
Exercised		-		-		-		-		-
Forfeited/Expired by termination		-		-		-		-		-
Outstanding as April 30, 2026		10,332,200		0.24		4.33		7,315,450	$	1,033,267
Exercisable and vested at April 30, 2026		7,315,450		0.17		2.10		-		-

NOTE 6 – MAJOR CUSTOMERS

The Company sells to their end-user customers both directly and indirectly, through resellers. In the six months ended April 30, 2026, six resellers accounted for 51% of sales, of which one reseller accounted for 30% of sales. In the six months ended April 30th, 2025, seven resellers accounted for 51% of sales, of which one reseller accounted for more than 10%, representing 22% of sales. The Company maintains all the information on their end user customers, and should a reseller discontinue operations, the Company can sell directly to the end user. No reseller has exclusivity in their territory. In the six months ended April 30, 2026, no end user customers were responsible for more than 10% of gross revenue and 23 end user customers were responsible for approximately 50% of gross revenue. In the six months ended April 30, 2025, no end user customer was responsible for 10% gross revenue, and 14 end user customers were responsible for approximately 50% of gross revenue.

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NOTE 7 -SEGMENT REPORTING

ASC Topic 280, “Segment Reporting” establishes the standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about services categories, business segments and major customers in financial statements. The Company is managed as one operating unit, rather than multiple reporting units, for internal reporting purposes and for internal decision-making and discloses its operating results in a single reportable segment. The Company’s chief operating decision maker (“CODM”), represented by the Company’s Chief Executive Officer, reviews financial information and assesses the operations of the Company in order to make strategic decisions such as allocation of resources and assessing operating performance.

NOTE 8 – INITIATIVE LOAN

On December 18, 2025, the Company received a commitment for up to $1.9 million of Industrial AI Product Development Initiative funding through FedDev Ontario’s Regional Artificial Intelligence Initiative. The Company and FedDev Ontario entered into a loan agreement whereby up to $750,000 will be provided to the Company over the Project period in the form of a none interest repayable loan after the Project completion. The loan repayment commences on April 30, 2030 and is repayable on a month basis over a five year period. As of April 30, 2026 the Company received $166,773 from the loan agreement.

NOTE 9 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events to determine events occurring after April 30, 2026 through the filing of this report that would have a material impact on the Company’s financial results or require disclosure and have determined none exist other than noted above .

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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.

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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.

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, Skkynet is not required to provide information required under this Item.

ITEM 4: CONTROLS AND PROCEDURES

This report includes the certifications of our Chief Executive Officer and Chief Financial Officer required by Rule 13a-14 under the Securities Exchange Act of 1934 (the “Exchange Act”). See Exhibits 31.1 and 31.2. This Item 4 includes information concerning the controls and control evaluations referred to in those certifications.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the Principal Executive Officer and the Principal Financial Officer, to allow timely decisions regarding required disclosures.

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Our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of April 30, 2026 using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework- 2013. Based on its evaluation, our management concluded that there are material weaknesses in our internal control over financial reporting. We lack full time personnel in accounting and financial staff to sufficiently monitor and process financial transactions in an efficient and timely manner. Our history of losses has severely limited our budget to hire and train enough accounting and financial personnel needed to adequately provide this function. Consequently, we lacked sufficient technical expertise, reporting standards and written policies and procedures along with a lack of a formal review process which includes multiple layers of review. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our most recent quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our management believes that the Unaudited Financial Statements included herein present, in all material respects, the Company’s financial condition, results of operations and cash flows for the periods presented.

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PART II – OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

ITEM 1A: RISK FACTORS

There have been no material changes to the Company’s risk factors as previously disclosed in our most recent 10-K filing for the year ended October 31, 2025.

ITEM 2: SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3: DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4: MINE SAFETY INFORMATION

None.

ITEM 5: OTHER INFORMATION

None.

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ITEM 6: EXHIBITS

EXHIBIT 31.1		Certification of Principal Executive Officer of the Registrant pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

EXHIBIT 31.2		Certification of Principal Financial Officer of the Registrant pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

EXHIBIT 32.1		Certification of Principal Executive Officer of the Registrant pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

EXHIBIT 32.2		Certification of Principal Financial Officer of the Registrant pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SKKYNET CLOUD SYSTEMS INC.

Date: June 17, 2026	By:	/s/ Gary Tillery
		Gary Tillery, Chief Executive Officer (Duly Authorized, Principal Executive Officer)

	By:	/s/ Lowell Holden
		Lowell Holden, Chief Financial Officer
		(Duly Authorized Principal Financial Officer)

Skkynet Cloud Systems, Inc. 10-Q