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EXCEL - IDEA: XBRL DOCUMENT - Skkynet Cloud Systems, Inc.Financial_Report.xls

 

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 January 31, 2015

 

OR

 

¨ 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: ¨

 

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: ¨

 

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

x

 

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

 

As of March 20, 2015 there were 50,795,500 shares of Common Stock of the issuer outstanding.

 

 

 

    Page  

PART I: FINANCIAL INFORMATION

   
     

Item 1. 

Financial Statements (Unaudited)

   

 

Consolidated Balance Sheets as of January 31, 2015 (Unaudited) and October 31, 2014

 

4

 

 

Consolidated Statements of Operations for the Three months Ended January 31, 2015 and 2014 (Unaudited)

   

5

 

 

Consolidated Statements of Cash Flows for the Three Months Ended January 31, 2015 and 2014 (Unaudited)

   

6

 

 

Notes to Consolidated Financial Statements (Unaudited)

   

7

 
       

Item 2. 

Management’s Discussion and Analysis and Plan of Operation

   

11

 
       

Item 3. 

Quantitative and Qualitative Disclosures About Market Risk

   

12

 
       

Item 4. 

Controls and Procedures

   

12

 
       

PART II: OTHER INFORMATION

       
       

Item 1. 

Legal Proceedings

   

14

 
       

Item 1A. 

Risk Factors

   

14

 
       

Item 2. 

Unregistered Sales of Equity Securities and Use of Proceeds

   

14

 
       

Item 3. 

Defaults upon Senior Securities

   

14

 
       

Item 4. 

Mine Safety Information

   

14

 
       

Item 5. 

Other Information

   

14

 
       

Item 6. 

Exhibits

   

15

 
       

Signatures

 

16

 

 

 
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 identify and develop a network of physicians, the Company’s ability to establish a global market, clinical trial results, 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.

 

 
3

 

PART I

 

ITEM 1: FINANCIAL STATEMENTS

 

SKKYNET CLOUD SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

    January 31,
2015
    October 31,
2014
 

ASSETS

 

Current Assets:

       

Cash and cash equivalents

 

$

760,399

   

$

977,688

 

Accounts receivable

   

102,788

     

86,564

 

Inventory

   

6,643

     

--

 

Prepaid

   

6,357

     

--

 

Total current assets

   

876,187

     

1,064,252

 
               

Property and equipment, net of accumulated depreciation of $70,911 and $70,484 respectively

   

2,718

     

3,456

 

Intangibles -net

   

57,410

     

2,248

 

Other assets

   

5,726

     

--

 

Total Assets

 

$

942,041

   

$

1,069,956

 
               

LIABILITIES AND STOCKHOLDERS’ EQUITY(DEFICIT)

 

Current Liabilities:

               

Accounts payable and accrued expenses

 

$

82,376

   

$

58,104

 

Accrued expense – related parties

   

8,144

     

6,911

 

Accrued liabilities – related party

   

299,298

     

241,926

 

Notes payable – related parties

   

135,746

     

153,580

 

Deferred income

   

61,112

     

44,845

 

Total current liabilities

   

586,676

     

505,366

 
               

Total liabilities

   

586,676

     

505,366

 
               

Stockholders’ Equity:

               

Preferred stock; $0.001 par value, 5,000,000 shares authorized, 5,000 shares issued and outstanding

   

5

     

5

 

Common stock; $0.001 par value, 70,000,000 shares authorized, 50,795,500 and 50,642,500 shares issued and outstanding, respectively

   

50,796

     

50,643

 

Additional paid-in capital

   

2,543,848

     

2,206,424

 

Accumulative other comprehensive income (loss)

   

4,881

     

10,846

 

Accumulated deficit

 

(2,244,165

)

 

(1,703,328

)

Total shareholders’ equity

   

355,365

     

564,590

 

Total Liabilities and Stockholders’ Equity

 

$

942,041

   

$

1,069,951

 

 

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

 

 
4

 

SKKYNET CLOUD SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

 

  Three Months Ended
January 31,
 
 

2015

   

2014

 
               

Revenue

 

$

231,864

   

$

287,049

 

Direct material costs

   

2,687

     

82

 
               

Operating Expenses:

               

General & administrative

   

762,389

     

383,362

 

Depreciation and amortization

   

5,617

     

440

 

Loss from operations

   

(538,825

 

(96,835

)

               

Other Income (Expenses):

               

Other Expense

 

(4

)

    --  

Interest expense

 

(2,008

)

 

(3,088

)

Total other income (expenses)

   

(2,012

 

(3,088

)

               

Net loss

 

$

(540,837

)

 

$

(99,923

)

               

Foreign currency translation adjustment

   

36,479

   

(18,301

)

               

Comprehensive (loss)

 

$

(504,358

)

 

(118,224

)

               

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

 

$

(0.01

)

 

$

(0.00

)

               

Weighted average common shares outstanding (basic and diluted):

   

50,763,610

     

49,428,239

 

 

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

 

 
5

 

SKKYNET CLOUD SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Unaudited)

 

  Three Months Ended
January 31,
 
    2015       2014  

CASH FLOWS FROM OPERATING ACTIVITIES

         

Net loss

 

$

(540,837

)

   

$

(99,923

)

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

                 

Depreciation and amortization expense

   

5,617

       

440

 

Option based compensation

   

125,826

       

--

 

Stock based compensation

   

37,250

       

--

 

Changes in operating assets and liabilities:

                 

Accounts receivable

   

20,865

     

(103,633

)

Accounts payable and accrued expenses

 

(2,971

)

   

(64,482

)

Inventory

   

533

       

--

 

Accrued liabilities – related parties

   

47,818

       

(52,432

)

Prepaid

 

(1,172

)

     

--

 

Deferred Income

   

12,454

       

6,734

 

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

 

(294,617

)

   

(173,872

)

                 

CASH FLOWS FROM INVESTING ACTIVITIES

                 

Cash received, net of cash paid for NiC

 

(1,118

)

     

--

 

NET CASH USED IN INVESTING ACTIVITIES

 

(1,118

)

     

--

 
                 
                 

CASH FLOWS FROM FINANCING ACTIVITIES

                 

Proceeds from the sale of common stock

   

100,000

       

337,125

 

Payments on notes payable –related parties

   

--

     

(35,904

)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

   

100,000

       

301,221

 
                 

Effect of exchange rate changes on cash

 

(21,554

)

     

18,416

 
                 

Net increase (decrease) in cash

 

(217,289

)

     

145,765

 

Cash, beginning of period

   

977,688

       

365,415

 

Cash, end of period

 

$

760,399

     

$

511,180

 
                 

SUPPLEMENTAL CASH FLOWS INFORMATION

                 

Interest paid

 

$

--

     

$

21,920

 

Income taxes paid

 

$

--

     

$

--

 
                 

Non-Monetary Transactions

                 

Assets acquired in acquisition through stock issuance

 

$

74,500

     

$

--

 

 

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

 

 
6

 

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 subsidiary Cogent Real-Time Systems, Inc. (Cogent). 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.

 

On November 1, 2014 the Company acquired Nic Corporation as a wholly owned subsidiary. On February 1, 2015 the Company formed a wholly owned US subsidiary Skkynet, Inc. (See Note 7 Acquisitions)

 

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 (SEC), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s October 31, 2014 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, 2014 as reported on Form 10-K, have been omitted.

 

Inventory

 

Inventory consists of hardware used to embed software and is stated at the lower of cost or market.

 

NOTE 2 – RELATED PARTY TRANSACTIONS

 

On July 31, 2012, Andrew Thomas, Shizuka Thomas and Paul Benford converted the salary they had accrued through our subsidiary through July 31, 2012 to notes payable due from that subsidiary. The notes mature on April 29, 2015 and bear an interest rate of 6% per annum on the outstanding balance. Interest payments are due quarterly commencing October 30, 2012. As of January 31, 2015 the outstanding amounts on the notes payable were $135,746 as noted below:

 

Note balance as of:

  January 31,
2015
    October 31,
2014
 

Andrew Thomas

 

$

41,162

   

$

46,570

 

Paul Benford

 

$

66,908

   

$

75,698

 

Shizuka Thomas

 

$

27,676

   

$

31,312

 

Total

 

$

135,746

   

$

153,580

 

 

On January 1, 2012 and April 15, 2012 the Company and its subsidiary 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 January 31, 2015 the accrued liability for compensation was $290,185

 

 
7

  

As of January 31, 2015 and October 31, 2014 the Company had the following outstanding accrued liabilities due to related parties:

 

As of

  January 31,
2015
    October 31,
2014
 

Accrued salaries

 

$

231,098

   

$

201,026

 

Accrued interest

 

$

8,144

   

$

6,911

 

Director fees

 

$

30,000

   

$

7,500

 

Consulting fees

 

$

38,200

   

$

33,400

 

Total accrued liabilities

 

$

307,442

   

$

248,837

 

 

On December 4, 2014 the Company issued 78,000 shares of common stock a $1.282 per share to a related party for $ 100,000 in cash.

 

NOTE 3 – EQUITY

 

On November 1, 2014 the Company issued 50,000 shares of common stock to three individuals with a value of $74,500 for the acquisition of Nic Corporation. (See Note 7 Acquisition)

 

On November 10, 2014 the Company issued 25,000 shares of common stock to one entity with a value of $37,250 for services.

 

On December 4, 2014 the Company issued 78,000 shares of common stock a $1.282 per share to a related party for $ 100,000 in cash.

 

NOTE 4 – OPTIONS

 

The Company under its 2012 option plan issues option 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 were 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 19, 2015 the Company issued 106,000 options under the 2012 option plan to 4 employees with an exercise price of $1.32 per share.

 

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 $2,388,844. During the period ended January 31, 2015 the Company expensed $125,826 for options. The unrecognized future balance to be expensed over the term of the options is $1,293,196.

 

 
8

  

The following sets forth the options granted and outstanding as of January 31, 2015:

 

    Options     Weighted Average Exercise price     Weighted Average Remaining Contract Life     Number of Options Exercisable     Intrinsic
value
 

Outstanding at October 31, 2014

 

5,270,000

   

0.51

   

8.69

   

2,218,000

   

5,164,900

 

Granted

   

106,000

     

1.32

     

9.76

     

234,200

     

--

 

Exercised

           

--

     

--

     

--

     

--

 

Outstanding at January 31, 2015

   

5,376,000

     

0.52

     

8.40

     

2,452,200

     

5,181,470

 

 

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, 2017. Under the terms of the lease the gross monthly rental cost including common area charges is $6,700 per month. The lease terminates on July, 31, 2017. The yearly rental obligations under the lease agreement are as follows:

 

2015

 

$

49,175

 

2016

 

$

70,567

 

2017

 

$

61,538

 

2018

 

$

0

 

2029

 

$

0

 

thereafter

 

$

0

 

Total

 

$

181,280

 

 

 

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 January 31, 2015 the Company had deferred revenue of $61,112

 

NOTE 7 – ACQUISITION

 

On November 1, 2014 the Company acquired all the outstanding shares of Nic Corporation, based in Japan, for $110,000 in cash plus 50,000 share of common stock. The Company determined in accordance with ASC 805-10-25-6 that the 50,000 shares of common stock was valued at the closing price on the date of purchase at $1.49 for a total value of $74,500. In accordance with purchase acquisition accounting, the company initially allocated the consideration to the net tangible and identifiable intangible assets, based on their estimated fair values as of the date of acquisition. Customer Lists represents the excess of the purchase price over the fair value of the underlying net tangible and identifiable intangible assets.

 

The Company estimates the useful life to the customer list to be three years and thus it is being amortized over a three year period. The amortization for the three month period that was recorded is $5,190.

 

 
9

  

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date. The company has not finalized its purchase price allocation and this is preliminary.

 

Cash and cash equivalents

 

$

108,882

 

Accounts receivable

   

37,089

 

Inventory

   

7,175

 

Prepaid

   

4,726

 

Intangible Asset

   

62,285

 

Other assets

   

6,185

 

Total Assets

   

226,342

 
       

Accounts payable

 

$

31,874

 

Deposits

   

3,813

 

Taxes payable

   

6,155

 

Total Liabilities

 

$

41,842

 
       

Total Purchase Price

 

$

184,500

 

 

The following unaudited consolidated pro forma information gives effect to the NIC Corporation acquisition as if this transaction had occurred at the beginning of the period presented. The following unaudited pro forma information is presented for illustration purposes only and is not necessarily indicative of the results that would have been attained had the acquisition of this business been completed at the beginning of each period presented, nor are they indicative of results that may occur in any future periods. 

 

 

  Three Month Period
January 31, 2014
(Unaudited)
 

Revenues

 

$

412,116

Operating Expenses

 

(448,596

)

Other expense

 

(3,088

)

Net Loss

 

$

(39,568

)

 

On January 30, 2015 the Company formed a wholly owned subsidiary receiving 5,000,000 shares for $5,000 in cash.

 

NOTE 8 – SUBSEQUENT EVENTS

 

On February 10, 2015, the Company issued 10,000 options to one consultant with exercise price of $1.30. 20% of the option will vest immediately, the additional 20% to vest on February 10 of each successive year.

 

 
10

  

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

 

The Company operates its business through its wholly-owned subsidiary Cogent Real-Time Systems, Inc. (Cogent). The Company has taken the existing business lines of Cogent and integrated these with Cloud based systems.

 

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 where requested by a client, our web based assets, this gives clients and their customers (to the extent relevant) 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 month periods ending January 31, 2015, revenues were $231,864 compared to $287,049 for the same period in 2014. Revenue decrease for the three month period ending January 31, 2015 over the three month period ended January 31, 2014 are the result of higher deferred revenue in 2015 over 2014 plus slower sales to customers during the respective periods. The Company has concentrated on launching the cloud services which in the long term should result in dramatic increased sales.

 

General and administrative expense increased to $762,389 for the three months ended January 31, 2015 from $383,362 for the same period in 2014. The increase in general and administrative expenses for the three months ended January 31, 2015 included options expensed of $125,826, compared to $139,424 in 2014, increased consulting, the opening of a new office plus added marketing expenses in the business growth.

 

For the three month periods ending January 31, 2015 the Company posted an operating loss of $538,825 compared to an operation loss of $96,835 for the same periods in 2014. The increase in operating loss is attributable to increased expenses in consulting, salaries and office opening expenses plus the stock compensation of $37,250, amortization of intangibles of $5,190 and option expenses of $125,826.

 

Other income and expenses for the three month periods ending January 31, 2015 included interest expense of $2,012 compared to other expense of $3,088 for the same periods in 2014. The result was other income of $2,012 in 2015 compared to other expense of $3,088 for the same period in 2014.

 

A net loss of $540,837 was recorded for the three months period ending January 31, 2015 compared to a net loss of $99,923 for the same periods in 2014. The loss can be attributed to added employee costs and increased marketing activity in 2015 compared to 2014.

 

 
11

  

LIQUIDITY AND CAPITAL RESOURCES

 

At January 31, 2015, Skkynet had current assets of $867,187 and current liabilities of $586,676, resulting in working capital of $280,511 and a current ratio of 1.47:1. Accumulated deficit as of January 31, 2015 was $2,213,650 with total shareholders’ equity of $355,365.

 

Net cash used in operations for the three months ending January 31, 2015 was $294,617 compared to net cash used of $173,872 for the same period in 2014. Net cash used in operations increased primarily due to an increase in the net loss of $540,837, an increase in related party accrued expense of $47,818. These were offset by stock based compensation of $37,250, stock option based compensation of $125,826 and accounts payable and accrued expenses of $2,971 increase in accounts receivable of $20,865 and deferred revenue of $12,454.

 

Cash used in investing activities in the three months period ended January 31, 2015 and 2014 were $1,118 and zero. The investing activity in 2015 included the acquisition of Nic Corporation for $110,000 in cash, offset by cash received of $108,882, plus stock of $74,500.

 

Net cash provided in financing activities during the three months ended January 31, 2015 was $100,000 compared to net cash provided of $301,221 for the same period in 2014. The difference was due to the sale of common stock of $337,125 offset by the reduction of notes payable to related parties of $35,904 in 2014 compared to the sale of common stock for cash of $100,000 in the same period in 2015.

 

OFF-BALANCE SHEET ARRANGEMENTS

 

We have no significant 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.

 

 
12

  

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 January 31, 2015. 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, 2014.

 

ITEM 2: SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

On November 1, 2014 the Company issued 50,000 shares of common stock to three individuals with a value of $74,500 for the acquisition of Nic Corporation.

 

On November 10, 2014 the Company issued 25,000 shares of common stock with a value of $37,250 for services.

 

On December 4, 2014 the Company issued 78,000 shares of common stock a $1.282 per share to a related party for $100,000 in 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: March 20, 2015 By: /s/ Andrew Thomas  
    Andrew Thomas  
    Chief Executive Officer
(Duly Authorized, Principal Executive Officer)
 

 

 

 

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