Financial Analysis

NOTE 4 INCOME TAXES The Company follows Accounting Standards Codification 740, Accounting for Income Taxes. During 2009, there was a change in control of the Company. Under section 382 of the Internal Revenue Code such a change in control negates much of the tax loss carry forward and deferred income tax. Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes, and (b) net operating loss carry forwards. For federal income tax purposes, the Company uses the accrual basis of accounting, the same that is used for financial reporting purposes. The Companys deferred tax assets for the U.S. parent company and its US subsidiary consisted of the following as of October 31, 2025, and 2024: 2025 2024 Income/(Loss) Before Income Taxes $ 372,505 $ 347,249 Income Tax Expense 78,226 72,922 Valuation Allowance (78,226 ) (72,922 ) Net Amount $ - $ - Net Operating Losses $ 1,288,248 $ 1,660,753 Tax Rate 21 % 21 % Deferred Tax Assets 270,532 348,779 Valuation Allowance (270,532 ) (348,779 ) Net Deferred Tax Assets $ - $ - The US companies had a net income of $372,505 and $347,249 for the years ended October 31, 2025 and 2024, respectively. As of October 31, 2025, the US Companies had a net operating loss carry forward of $1,288,248, which can be used to offset future taxable income. Beginning December 31, 2022, 80% of the qualifie …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13 Financial Instruments-Credit Losses, which replaces the incurred impairment methodology to reflect expected credit losses. The amendments requires the measurement of all expected credit losses for financial assets held at the reporting due to the performance based on historical experience, current conditions and reasonable supportable forecasts. ASU 2016-13 is effective for annual and interim periods beginning after December 31, 2022. The Company adopted the standard on October 31, 2024. The adoption did not have a material impact on the Companys consolidated financial statements. In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No 2023-07 Segment Reporting This amendment is an update on all public entities that are required to report segment information in accordance with Topic 280 Segment Reporting. The amendment improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The ASU on an annual and interim bases requires disclosure of significant revenue and expenses on segmented basis. In addition to the measurements that are most consistent with the measurement principles under generally accepted accounting principles (GAAP), a public entity is not precluded from reporting additional measures of a segments profit or loss that are used by the …

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NOTE 6 RELATED PARTY TRANSACTIONS Sakura Software, a corporation owned by our Chief Technology Officer and Director, 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 pr …

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NOTE 10 SEGMENT REPORTING ASC Topic 280, Segment Reporting establishes the standards for reporting information about operating segments on a basis consistent with the Companys 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 Companys chief operating decision maker (CODM), represented by the Companys 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. …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 2 CRITICAL AND SIGNIFICANT ACCOUNTING POLICIES 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 Companys cash deposits at times may exceed the insured amount, leaving the Company exposed to a credit risk on its deposits. Revenue Recognition In April 2016, the FASB issued ASU 201610 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 implement …

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NOTE 9 EQUITY The Companys authorized shares of common stock is 70,000,000 with a par value of $0.001. As of October 31, 2025 the total shares outstanding were 53,143,822. The Companys authorized shares of preferred stock is 5,000,000 with a par value of $0.001. On March 31, 2012, the Company issued 5,000 shares of Series A preferred stock at $0.001 per share with a value of $5 as founders to two related parties. The preferred shares contained certain voting rights allowing the holders of the shares to elect a majority of the Board of Directors until December 31, 2016 at which time the voting rights expired. On July 30, 2015, the Company designated 500,000 shares of the preferred stock as Series B Convertible preferred. The Series B shares have a par value of $0.001 and issue value of $1.00 per share. Series B is convertible by the holder into common stock at $1.32 per share. The Company may, any time at its option, redeem the Series B shares at their stated value. The Series B preferred shares hold a 6% per annum accumulative dividend. During the years ended October 31, 2025 and 2024 the Company recognized but did not pay dividends of $11,620 each year. As of the year ended October 31, 2025, the total amount of dividends due to the preferred shareholders was $119,105. …

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NOTE 11 SUBSEQUENT EVENTS On December 2, 2025 the Company granted 100,000 options to a new director with a conversion price of $0.48 per share. On December 8, 2025 the Company granted 900,000 options to the new Chief Executive Officer with a conversion price of $0.45 per share. On December 15, 2025 the Company granted 435,000 options to 11 employees with a conversion price of $0.40 per share. On December 18, 2025, the Company received a $1.9 million Industrial AI Product Development Initiative funding through FedDev Ontarios 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 an interest-free repayable loan after the Project completion. On January 7, 2026 the Company granted 160,000 options to 10 individuals with a conversion price of $0.33 per share. The Company has evaluated subsequent events to determine events occurring after October 31, 2025 through the filing of this report that would have a material impact on the Companys financial results or require disclosure and have determined none exist. …

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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 Ontarios 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. …

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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 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

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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 Companys common stock. 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 e …

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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 Companys 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 Companys 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 Companys credit-l …

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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 applic …

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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 Companys 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 Companys chief operating decision maker (CODM), represented by the Companys 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. …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

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 Companys 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 Apr …

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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 Companys financial results or require disclosure and have determined none exist other than noted above . …

SubsequentEventsTextBlock · excerpt; the full note is in the filing