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Skkynet Cloud Systems, Inc. SEC Filing Form 10-Q Quartely report 2/2017, submited: 2017-06-14

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Form 10-Q

The SEC form 10-Q is a comprehensive report of a company's performance that must be submitted quarterly by all public companies to the Securities and Exchange Commission. In the 10-Q, firms are required to disclose relevant information regarding their financial position. The form must be submitted on time, and the information should be available to all interested parties.

The 10-Q is due 35 days (it used to be 45 days) after each of the first three fiscal quarters. There is no filing after the fourth quarter because that is when the 10-K is filed.

10-Q 1 skky_10q.htm FORM 10-Q skky_10q.htm

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended April 30, 2017

 

OR

 

o 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 306. Mississauga, Ontario, Canada L5N 2X7

(Address of principal executive offices)

 

(888) 628-2028

(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: x No: o

 

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: x No: o

 

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

o

Accelerated filed

o

Non-accelerated filer

o

Smaller reporting company

x

Emerging growth company

x

 

 

 

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. o

 

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

 

As June 14, 2017, there were 51,164,200 shares of Common Stock of the issuer outstanding.

 

 
 
 
 

 

 

 

Page

 

 

 

 

 

 

PART I: FINANCIAL INFORMATION

 

 

 

 

 

Item 1.

Financial Statements

4

 

 

Consolidated Balance Sheets as of April 30, 2017, (Unaudited) and October 31, 2016

 

4

 

 

Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Month Periods Ended April 30, 2017 and 2016 (Unaudited)

 

5

 

 

Consolidated Statements of Cash Flows for the Six Month Periods Ended April 30, 2017 and 2016 (Unaudited)

 

6

 

 

Notes to Consolidated Financial Statements (Unaudited)

 

7

 

 

 

 

Item 2.

Management’s Discussion and Analysis and Plan of Operation

 

10

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

11

 

 

 

 

Item 4.

Controls and Procedures

 

11

 

 

 

 

PART II: OTHER INFORMATION

 

 

 

 

 

Item 1.

Legal Proceedings

 

13

 

 

 

 

Item 1A.

Risk Factors

 

13

 

 

 

 

Item 2.

Sales of Equity Securities and Use of Proceeds

 

13

 

 

 

 

Item 3.

Defaults upon Senior Securities

 

13

 

 

 

 

Item 4.

Mine Safety Information

 

13

 

 

 

 

Item 5.

Other Information

 

13

 

 

 

 

Item 6.

Exhibits

 

14

 

 

 

 

Signatures

 

15

 

 

 
2
 
 

 

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 subsequently to 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.

CONSOLIDATED BALANCE SHEETS

 

 

 

April 30,
2017

 

 

October 31,
2016

 

 

 

(Unaudited)

 

 

 

ASSETS

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$ 502,949

 

 

$ 266,860

 

Accounts receivable

 

 

232,060

 

 

 

156,977

 

Inventory

 

 

3,817

 

 

 

4,079

 

Prepaid

 

 

3,045

 

 

 

11,492

 

Total current assets

 

 

741,871

 

 

 

439,408

 

 

 

 

 

 

 

 

 

 

Property and equipment, net of accumulated depreciation of $77,372 and $78,807 respectively

 

 

1,235

 

 

 

1,311

 

Other assets

 

 

18,369

 

 

 

9,352

 

Total Assets

 

$ 761,475

 

 

$ 450,071

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$ 70,901

 

 

$ 59,110

 

Accrued liabilities – related party

 

 

157,389

 

 

 

49,984

 

Deferred revenue

 

 

140,097

 

 

 

94,711

 

Total current liabilities

 

 

368,387

 

 

 

203,805

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

368,387

 

 

 

203,805

 

 

 

 

 

 

 

 

 

 

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 share authorized, 193,661 issued and 193,661 outstanding, respectively

 

 

193,661

 

 

 

193,661

 

Common stock; $0.001 par value, 70,000,000 shares authorized, 51,164,200 and 50,931,266 shares issued and outstanding, respectively

 

 

51,165

 

 

 

50,932

 

Additional paid-in capital

 

 

4,741,028

 

 

 

4,190,320

 

Accumulative other comprehensive income (loss)

 

 

(69,733 )

 

 

(75,398 )

Accumulated deficit

 

 

(4,523,038 )

 

 

(4,113,254 )

Total shareholders’ equity

 

 

393,088

 

 

 

246,266

 

Total Liabilities and Stockholders’ Equity

 

$ 761,475

 

 

$ 450,071

 

 

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

 

 
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SKKYNET CLOUD SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For Three and Six Months Ended April 30,

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$ 378,551

 

 

$ 285,422

 

 

$ 663,620

 

 

$ 561,366

 

Direct material costs

 

 

17,351

 

 

 

6,196

 

 

 

27,622

 

 

 

18,511

 

Gross Profit

 

 

361,200

 

 

 

279,226

 

 

 

635,998

 

 

 

542,855

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General & administrative

 

 

536,665

 

 

 

580,683

 

 

 

1,050,518

 

 

 

1,213,271

 

Depreciation and amortization

 

 

171

 

 

 

240

 

 

 

341

 

 

 

480

 

Loss from operations

 

 

(175,636 )

 

 

(301,697 )

 

 

(414,861 )

 

 

(670,896 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expenses):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

--

 

 

 

10

 

 

 

 

 

 

 

15

 

Currency exchange

 

 

11,589

 

 

 

--

 

 

 

7,084

 

 

 

 

 

Total other income (expenses)

 

 

11,589

 

 

 

10

 

 

 

7,084

 

 

 

15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss before taxes

 

 

(164,047 )

 

 

(301,687 )

 

 

(407,777 )

 

 

(670,881 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax

 

 

(175 )

 

 

--

 

 

 

(2,007 )

 

 

--

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss after tax

 

 

(164,222 )

 

 

(301,687 )

 

 

(409,784 )

 

 

(670,881 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred dividends

 

 

(2,905 )

 

 

(2,905 )

 

 

(5,810 )

 

 

(5,810 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss to common shareholders

 

 

(167,127 )

 

 

(304,592 )

 

 

(415,594 )

 

 

(676,691 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

5,245

 

 

 

54,091

 

 

 

5,665

 

 

 

48,038

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive (loss)

 

$ (161,882 )

 

$ (250,501 )

 

$ (409,929 )

 

$ (628,653 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share attributable to common stockholders (basic and diluted)

 

$ (0.00 )

 

$ (0.01 )

 

$ (0.01 )

 

$ (0.01 )

Weighted average common shares outstanding (basic and diluted):

 

 

50,969,607

 

 

 

50,876,600

 

 

 

50,949,123

 

 

 

50,876,600

 

 

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

 

 
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SKKYNET CLOUD SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Unaudited)

 

 

 

Six Months Ended

 

 

 

April 30,

 

 

 

2017

 

 

2016

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net loss

 

$ (409,784 )

 

$ (670,881 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

341

 

 

 

480

 

Option based compensation

 

 

258,037

 

 

 

348,417

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Increase in accounts receivable

 

 

(75,083 )

 

 

27,021

 

Increase (decrease) in accounts payable and accrued expenses

 

 

11,791

 

 

 

(55,771 )

Increase in inventory

 

 

262

 

 

 

(1,391 )

Increase in accrued liabilities – related parties

 

 

144,009

 

 

 

160,634

 

Increase in prepaid and other assets

 

 

(570 )

 

 

(9,037 )

Increase in Deferred Income

 

 

45,386

 

 

 

57,001

 

NET CASH (USED IN) OPERATING ACTIVITIES

 

 

(25,611 )

 

 

(143,527 )

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Common stock sold for cash

 

 

256,300

 

 

 

--

 

NET CASH FLOWS FROM FINANCING ACTIVITIES

 

 

256,300

 

 

 

--

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

 

5,400

 

 

 

47,402

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

 

236,089

 

 

 

(96,125 )

 

 

 

 

 

 

 

 

 

Cash, beginning of period

 

 

266,860

 

 

 

469,944

 

Cash, end of period

 

$ 502,949

 

 

$ 373,869

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOWS INFORMATION

 

 

 

 

 

 

 

 

Interest paid

 

$ --

 

 

$ --

 

Income taxes paid

 

$ --

 

 

$ --

 

 

 

 

 

 

 

 

 

 

NON-MONETARY TRANSACTIONS

 

 

 

 

 

 

 

 

Options granted for accrued commissions

 

$ 36,604

 

 

$ --

 

 

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

 

 
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SKKYNET CLOUD SYSTEMS, INC.

NOTES TO 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), Skkynet, Inc. (USA) and Nic Corporation (“NiC”) (Japan). 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.

 

On November 1, 2014, the Company acquired NiC as a wholly owned subsidiary. On February 1, 2015, the Company formed a wholly owned US subsidiary Skkynet, Inc., and a wholly owned Canadian subsidiary Skkynet Corp.

 

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. The series B is convertible by the holder into common stock at $1.35 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 cumulative dividend. On July 30, 2015, the Company issued 193,661 shares of Series B convertible preferred stock to three related parties in exchange for the outstanding notes payable and accrued interest of $193,661. Dividends are not paid. The Company has accounted for $5,810 in Series B dividends which increases the loss to common shareholders from $409,784 to $415,594 for the six month period ended April 30, 2017.

 

The accompanying unaudited 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, 2016 Annual Report filed with the SEC on Form 10-K. 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 audited financial statements for the most recent fiscal year end October 31, 2016 as reported on Form 10-K, have been omitted.

 

Inventory

 

Inventories are stated at the lower or cost of market using the first-in; first-out (FIFO) cost method of accounting. The inventory consists of switch boxes held by the Company’s subsidiary NiC programs for resale.

 

NOTE 2 – RELATED PARTY TRANSACTIONS

 

On January 1, 2012 and April 15, 2012, the Company and its subsidiary Cogent entered into employment agreements with four of its officers and directors. As a result of these agreements the Company has accrued compensation for each of the individuals. In addition, the Company is accruing director compensation at the rate of $2,500 per director per month. As of April 30, 2017, the accrued liability for compensation was $157,389.

 

 
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As of April 30, 2017, and October 31, 2016, the Company had the following outstanding accrued liabilities due to related parties:

 

As of

 

April 30,
2017

 

 

October 31,
2016

 

Accrued salaries

 

$ 70,280

 

 

$ --

 

Director fees

 

$ 45,000

 

 

$ --

 

Accrued Commissions (1)

 

$ 32,509

 

 

$ 49.984

 

Consulting fees

 

$ 9,600

 

 

$ --

 

Total accrued liabilities and accrued expense

 

$ 157,389

 

 

$ 49,984

 

_______________________

(1) An officer of the Company elected to take 74,500 zero cost options reducing the accrued commission by $36,604 (CDN $94,404 to CDN $44,404).

 

NOTE 3 – EQUITY

 

On March 7, 2017, the Company issued 233,000 shares of common stock to one individual at $1.10 per share with a value of $256,300 for cash.

 

NOTE 4 – 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.

 

On January 6, 2016, the Company issued 509,500 options with an exercise price of $1.02 per share to 14 officers, directors, employees and consultants of the Company.

 

On April 7, 2017, the Company issued 418,200 options with an exercise price of $0.50 per share to 14 officers, employees and consultants of the Company

 

On April 7, 2017, the Company issued 74,500 options with a zero exercise price to one employee for the reduction of $36,604 of accrued commissions (CDN $94,404 to CDN $44,404). The options have a fair value using the Black Sholes valuation of $35,392.

 

The Company has elected to expense the options over the life of the option as stock based compensation. The expense is calculated with a Black Scholes model to reach the fair value over the length of each option. The total value calculated for option expense is $2,661,593. During the six month period ended April 30, 2017, the Company expensed $258,037 for options. The unrecognized future balance to be expensed over the term of the options is $1,595,939.

 

 
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 The following sets forth the options granted and outstanding as of April 30, 2017:

 

 

 

Options

 

 

Weighted Average Exercise price

 

 

Weighted Average Remaining Contract Life

 

 

Granted Options Exercisable

 

 

Intrinsic
value

 

Outstanding at October 31, 2016

 

 

6,263,200

 

 

 

0.54

 

 

 

5.18

 

 

 

4,308,600

 

 

 

2,857,703

 

Granted

 

 

492,700

 

 

 

0.42

 

 

 

--

 

 

 

--

 

 

 

--

 

Exercised

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

Forfeited/Expired by termination

 

 

(50,000 )

 

 

(1.14 )

 

 

--

 

 

 

--

 

 

 

--

 

Outstanding at April 30, 2017

 

 

6,705,900

 

 

 

0.52

 

 

 

4.65

 

 

 

4,938,240

 

 

 

2,778,666

 

 

NOTE 5 – COMMITMENTS AND CONTINGENCIES

 

The Company leases office space located at 2233 Argentia Road Suite 306 Mississauga, Ontario Canada L5N 2X7. The offices contain approximately 2,810 square feet of office space and are leased from July 1, 2014 through July 31, 2017. Under the terms of the lease, the gross monthly rental cost including common area charges is $6,700. The lease terminates on July 31, 2017.

 

During May, 2017 the Company signed a new 5 year lease for the Company’s office being effective on August 1, 2017 through July 31, 2022. The lease is for approximately 2,210 square feet of office space with a gross monthly rental cost including common area charges of $4,097.

 

The yearly rental obligations including the lease agreements are as follows:

 

2017

 

$

30,531

 

2018

 

$ 49,166

 

2019

 

$ 49,166

 

2020

 

$ 49,166

 

2021

 

$ 49,166

 

2022

 

$ 38,583

 

Total

 

$ 265,778

 

 

NOTE 6 – DEFERRED REVENUE

 

The Company receives part of its revenue from the sale of software support. The revenue received is for one year of support from the date of the support sale. The Company defers the revenue for the future periods in which it is obligated to perform the support service. As of April 30, 2017, the Company had deferred revenue of $140,097.

 

NOTE 7 – SUBSEQUENT EVENT

 

During May, 2017 the Company signed a new 5 year lease for the Company’s office being effective on August 1, 2017 through July 31, 2022. The lease is for approximately 2,210 square feet of office space with a gross monthly rental cost including common area charges of $4,097.

 

 
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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)”), Skkynet Corp. (“Skkynet (Canada)”), and Nic Corporation (“NiC”). 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”. We will also expand the areas of business activity to which our products and services are applied.

 

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 six month periods ending April 30, 2017, revenues were $378,551 and $663,620 compared to $285,442 and $561,366 for the same periods in 2016. Revenue increased for the three and six month periods ending April 30, 2017 over the three and six month periods ended April 30, 2016 by 33% and 18.2%. The increase in revenue for the three and six month periods ended April 30, 2017 is attributed higher sales by the Cogent and NiC divisions on an international basis of the products of the Company

 

General and administrative expense was $536,665 and $1,050,518 for the three and six month periods ended April 30, 2017 compared to $580,683 and $1,213,271 for the same periods in 2016. The decrease in general and administrative expenses for the three and six month periods ended April 30, 2017, was a result of lower options expense along with lower payroll in 2017 over 2016.

 

For the three and six month periods ending April 30, 2017, the Company posted operating losses of $175,636 and $414,861 compared to operating losses of $301,697 and $670,896 for the same periods in 2016. The decrease in operating loss during the three and six month periods is attributable to higher sales in both periods of 2017 over 2016 and decreased expenses in consulting, salaries, and office expenses.

 

Other income for the three and six month periods ending April 30, 2017, was $11,589 and $7,084 compared to other income of $10 and $15 for the same periods in 2016.

 

Net loss before income taxes of $164,047 and $407,777 was recorded for the three and six month periods ending April 30, 2017, compared to a net loss before income taxes of $301,687 and $670,881 for the same periods in 2016. The lower loss for the three and six month periods in 2017 can be attributed to increased revenue, lower marketing, and general and administrative expenses in 2017 compared to 2016.

 

 
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Net loss after taxes of $164,222 and $409,784 was recorded for the three and six month periods ending April 30, 2017, compared to a net loss after taxes of $301,687 and $670,881 for the same periods in 2016.

 

The Company incurred a comprehensive loss of $161,882 and $409,929 for the three and six month periods ended April 30, 2017 compared to a comprehensive loss of $250,501 and $628,653 for the same periods in 2016. The comprehensive loss is an adjustment to net loss with accrued preferred stock dividends and foreign currency translation adjustments along taxes taken into account.

 

LIQUIDITY AND CAPITAL RESOURCES

 

At April 30, 2017, Skkynet had current assets of $741,871 and current liabilities of $368,387, resulting in working capital of $373,484. Accumulated deficit, as of April 30, 2017, was $4,523,038 with total shareholders’ equity of $393,088.

 

Net cash used in operations for the six months ending April 30, 2017, was $25,611 compared to net cash used of $143,527 for the same period in 2016. Net cash used in operations decreased primarily due to the decrease in option expense of $89,137 in 2017 over 2016 and accounts payable increase of $67,562. Accrued liabilities due to related parties decreased by $16,625, deferred revenue decreased by $11,615, and accounts receivable increased by $102,104.

 

Net cash provided from financing activities, during the six month period ended April 30, 2017 was $256,300 compared to zero in the same period in 2016. The increase was due to a sale of common stock to one individual.

 

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.

 

 
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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.

 

In connection with the preparation of this report, our management, under the supervision and with participation of our Principal Executive Officer and Principal Financial Officer (the “Certifying Officers”) conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of April 30, 2017. Based on that evaluation, our management concluded that there is a material weakness in our disclosure controls and procedures over financial reporting. The material weakness results from a lack of written procedures which effectively documents the proper procedures and descriptions of the duties of all persons involved in the disclosure controls of the Company. The Company hopes to implement plans to document the procedures and internal controls of the Company. A material weakness is a deficiency, or a combination of control deficiencies, in disclosure 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. This does not include an evaluation by the Company’s registered public accounting firm regarding the Company’s internal control over financial reporting.

 

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 Skkynet’s risk factors as previously disclosed in our most recent 10-K filing for the year ending October 31, 2016.

 

ITEM 2: SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

On March 7, 2017, the Company issued 233,000 shares of common stock to one individual at $1.10 per share with a value of $256,300 for cash.

 

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 14, 2017 By: /s/ Andrew Thomas

 

 

Andrew Thomas  
    Chief Executive Officer (Duly Authorized, Principal Executive Officer)  
       

 

By:

/s/ Lowell Holden

 

 

 

Lowell Holden

 

 

 

Chief Financial Officer (Duly Authorized Principal Financial Officer)

 

 

 

15

 

Skkynet Cloud Systems, Inc. Latest filings

Filing dateCompanyFormQuarterYear
2017-09-14Skkynet Cloud Systems, Inc.10-Q32017view
2017-06-22Skkynet Cloud Systems, Inc.322017view
2017-06-14Skkynet Cloud Systems, Inc.10-Q22017view
2017-03-14Skkynet Cloud Systems, Inc.10-Q12017view
2017-03-14Skkynet Cloud Systems, Inc.8-K12017view
2017-01-27Skkynet Cloud Systems, Inc.NT 10-K12017view
2016-09-13Skkynet Cloud Systems, Inc.10-Q32016view
2016-06-06Skkynet Cloud Systems, Inc.10-Q22016view
2016-03-16Skkynet Cloud Systems, Inc.10-Q12016view
2016-02-16Skkynet Cloud Systems, Inc.10-K12016view