Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Jul. 31, 2014 | Sep. 10, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'Skkynet Cloud Systems, Inc. | ' |
Entity Central Index Key | '0001546853 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Jul-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--10-31 | ' |
Entity a Well-known Seasoned Issuer | 'No | ' |
Entity a Voluntary Filer | 'No | ' |
Entity's Reporting Status Current | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 50,642,500 |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2014 | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Jul. 31, 2014 | Oct. 31, 2013 |
Current Assets: | ' | ' |
Cash and cash equivalents | $404,872 | $365,415 |
Accounts receivable | 81,590 | 88,806 |
Total current assets | 486,462 | 454,221 |
Property and equipment, net of accumulated depreciation of $68,062 and $70,484 respectively | 4,628 | 5,398 |
Intangible Assets | 1,648 | 1,648 |
Total Assets | 492,738 | 461,267 |
Current Liabilities: | ' | ' |
Accounts payable and accrued expenses | 2,515 | 34,567 |
Accounts Payable - related parties | ' | 52,432 |
Accrued liabilities - related party | 195,302 | 143,872 |
Notes payable - related parties | 158,092 | ' |
Deferred income | 63,230 | 59,312 |
Total current liabilities | 419,139 | 290,183 |
Notes payable to related parties | ' | 197,434 |
Total liabilities | 419,139 | 487,617 |
Stockholders' Deficit: | ' | ' |
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, 49,844,000 and 49,334,000 shares issued and outstanding, respectively | 49,844 | 49,334 |
Additional paid-in capital | 1,160,835 | 555,773 |
Accumulative other comprehensive income (loss) | 26,274 | 12,603 |
Accumulated deficit | -1,163,359 | -644,065 |
Total stockholders' equity (deficit) | 73,599 | -26,350 |
Total Liabilities and Stockholders' Equity | $492,738 | $461,267 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Jul. 31, 2014 | Oct. 31, 2013 |
ASSETS | ' | ' |
Net of accumulated depreciation | $68,062 | $70,484 |
Stockholders' Deficit: | ' | ' |
Preferred stock, Par value | $0.00 | $0.00 |
Preferred stock, Authorized | 5,000,000 | 5,000,000 |
Preferred stock, Issued | 5,000 | 5,000 |
Preferred stock, Outstanding | 5,000 | 5,000 |
Common stock, Par value | $0.00 | $0.00 |
Common stock, Authorized | 70,000,000 | 70,000,000 |
Common stock, Issued | 49,844,000 | 49,334,000 |
Common stock, Outstanding | 49,844,000 | 49,334,000 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2014 | Jul. 31, 2013 | Jul. 31, 2014 | Jul. 31, 2013 | |
Consolidated Statements Of Operations | ' | ' | ' | ' |
Revenue | $209,578 | $198,801 | $744,925 | $601,328 |
Direct material costs | 1,116 | 2,300 | 2,571 | 6,008 |
Operating Expenses: | ' | ' | ' | ' |
General and administrative | 458,884 | 220,307 | 1,264,706 | 730,621 |
Depreciation | 428 | 447 | 1,238 | 1,329 |
Loss from operations | -250,850 | -24,253 | -523,590 | -136,630 |
Other Income (Expenses): | ' | ' | ' | ' |
Tax refund | ' | ' | ' | 86,236 |
Gain on debt forgiveness | ' | ' | 11,982 | ' |
Other Expense | ' | -4 | ' | -8 |
Interest expense | -2,418 | -3,026 | -7,686 | -9,250 |
Total other income (expenses) | -2,418 | -3,030 | 4,296 | 76,978 |
Net loss | -253,268 | -27,283 | -519,294 | -59,652 |
Foreign currency translation adjustment | -6,908 | -6,209 | -13,671 | -5,416 |
Comprehensive (loss) | ($260,176) | ($33,492) | ($532,965) | ($65,068) |
Net loss per common share attributable to common stockholders (basic and diluted) | ($0.01) | $0 | ($0.01) | $0 |
Weighted average common shares outstanding (basic and diluted): | 49,844,000 | 49,334,000 | 49,703,890 | 49,334,000 |
CONSOLDIATED_STATEMENTS_OF_CAS
CONSOLDIATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) | 9 Months Ended | |
Jul. 31, 2014 | Jul. 31, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ' | ' |
Net income (loss) | ($519,294) | ($59,652) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ' | ' |
Depreciation expense | 1,238 | 1,329 |
Option based compensation | 235,822 | ' |
Gain on debt forgiveness | -11,982 | ' |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | 7,216 | 7,020 |
Accounts payable and accrued expenses | -11,843 | 36,377 |
Accrued liabilities - related parties | -1,002 | 270,331 |
Taxes payable | -8,227 | -1,720 |
Deferred Income | 3,918 | ' |
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | -304,154 | 253,685 |
CASH FLOWS FROM INVESTING ACTIVITIES | ' | ' |
Cash paid for the purchase of fixed assets | -2,020 | -984 |
NET CASH USED IN INVESTING ACTIVITIES | -2,020 | -984 |
CASH FLOWS FROM FINANCING ACTIVITIES | ' | ' |
Proceeds from the sale of common stock | 369,750 | ' |
Payments on notes payable - related parties | -39,342 | -6,086 |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 330,408 | -6,086 |
Effect of exchange rate changes on cash | 15,223 | 995 |
Net increase in cash | 39,457 | 247,610 |
Cash, beginning of period | 365,415 | 122,053 |
Cash, end of period | 404,872 | 369,663 |
SUPPLEMENTAL CASH FLOWS INFORMATION | ' | ' |
Interest paid | 21,007 | 260 |
Income taxes paid | ' | ' |
ORGANIZATION_AND_BASIS_OF_PRES
ORGANIZATION AND BASIS OF PRESENTATION | 9 Months Ended |
Jul. 31, 2014 | |
Notes to Financial Statements | ' |
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. | |
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, 2013 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, as reported on Form 10-K, have been omitted. |
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended | ||||||||
Jul. 31, 2014 | |||||||||
Notes to Financial Statements | ' | ||||||||
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 July 31, 2014 the outstanding amounts on the notes payable were $158,092 as noted below: | |||||||||
Note balance as of: | July | 31-Oct-13 | |||||||
31, 2014 | |||||||||
Andrew Thomas | $ | 47,938 | $ | 59,572 | |||||
Paul Benford | $ | 77,922 | $ | 97,545 | |||||
Shizuka Thomas | $ | 32,232 | $ | 40,317 | |||||
Total | $ | 158,092 | $ | 197,434 | |||||
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. As of July 31, 2014 the accrued liability for compensation was $190,559. | |||||||||
As of July 31, 2014 and October 31, 2013 the Company had the following outstanding accrued liabilities due to related parties: | |||||||||
As of | July | 31-Oct-13 | |||||||
31, 2014 | |||||||||
Accrued salaries | 161,957 | 90,808 | |||||||
Accrued interest | 4,745 | 18,064 | |||||||
Accounts payable | -- | 52,432 | |||||||
Consulting fees | 28,600 | 35,000 | |||||||
Total accrued liabilities | 195,302 | 196,304 |
EQUITY
EQUITY | 9 Months Ended |
Jul. 31, 2014 | |
Notes to Financial Statements | ' |
NOTE 3 - EQUITY | ' |
On January 14, 2014 the Company sold 510,000 shares of restricted common stock to eight individuals with a value of $0.725 per share for $369,750 in cash. |
OPTIONS
OPTIONS | 9 Months Ended | |||||||||||||||
Jul. 31, 2014 | ||||||||||||||||
Notes to Financial Statements | ' | |||||||||||||||
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 November 1, 2013 the Company issued 185,000 options with an exercise price of $0.55 per share to an officer of the Company. Computed volatility of 397.88% and a discount rate of 2.65 were used in calculating the fair value of the option of $101,750. | ||||||||||||||||
On December 14, 2013 the Company issued 15,000 options with an exercise price of $0.85 per share to two independent directors and a consultant of the Company. Computed volatility of 371.40% and a discount rate of 2.89 were used in calculating the fair value of the option of $12,750. | ||||||||||||||||
On January 13, 2014 the Company issued 580,000 options with an exercise price of $0.88 per share to four officers of the Company. Computed volatility of 360.15% and a discount rate of 2.84 were used in calculating the fair value of the option of $510,400. | ||||||||||||||||
On May 12, 2014 the Company issued 90,000 options with an exercise price of $1.40 per share to one employee and two consultants. Computed volatility of 360.15% and a discount rate of 2.66 were used in calculating the fair value of the option of $126,000. | ||||||||||||||||
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 above is $750,900. As of July 31, 2014 the Company expensed $235,822 for the nine months period ended July 31, 2014. The unrecognized future balance to be expensed over the term of the options is $515,077. | ||||||||||||||||
The following sets forth the options granted and outstanding as of July 31, 2014: | ||||||||||||||||
Options as of | Options Granted | Options as of | Number Exercisable | Number Exercised | Aggregate Intrinsic Value | |||||||||||
October | July | |||||||||||||||
31, 2013 | 31, 2014 | |||||||||||||||
3,055,000 | 870,000 | 3,925,000 | 1,996,000 | -- | $ | 4,052,600 | ||||||||||
DEFERRED_REVENUE
DEFERRED REVENUE | 9 Months Ended |
Jul. 31, 2014 | |
Notes to Financial Statements | ' |
NOTE 5 - 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 July 31, 2014 the Company had deferred revenue of $63,230. |
ACCOUNTS_PAYABLE
ACCOUNTS PAYABLE | 9 Months Ended |
Jul. 31, 2014 | |
Notes to Financial Statements | ' |
NOTE 6 - ACCOUNTS PAYABLE | ' |
During the year to date period ending July 31, 2014 the Company negotiated payments with three vendors resulting in a gain on debt settlement of $11,982. |
SUBSEQUENT_EVENT
SUBSEQUENT EVENT | 9 Months Ended |
Jul. 31, 2014 | |
Notes to Financial Statements | ' |
NOTE 7 - SUBSEQUENT EVENT | ' |
On August 15, 2014 the Company sold 798,500 shares of restricted common stock at $1.10 per share to 19 individuals for $878,350 in cash. | |
On August 22, 2014, the Company issued 275,000 options to 5 employees with exercise price of $1.20. 20% of the option will vest immediately, the additional 20% to vest on August 22 of each successive year. | |
On August 22, 2014, the Company issued 1,015,000 options to 2 employees with exercise price of $1.20. The option will vest on August 22, 2024. The vesting of the options may accelerate at the rate of 200,000 options for each $1,000,000 of annual audited sale above the first $1,000,000 of sales up to 815,000 options and 50,000 options for every $1,000,000 of annual audited sales up to 200,000 options. |
RELATED_PARTY_TRANSACTIONS_Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended | ||||||||
Jul. 31, 2014 | |||||||||
Related Party Transactions Tables | ' | ||||||||
Summary of notes payable related party | ' | ||||||||
. As of July 31, 2014 the outstanding amounts on the notes payable were $158,092 as noted below: | |||||||||
Note balance as of: | July | October | |||||||
31, 2014 | 31, 2013 | ||||||||
Andrew Thomas | $ | 47,938 | $ | 59,572 | |||||
Paul Benford | $ | 77,922 | $ | 97,545 | |||||
Shizuka Thomas | $ | 32,232 | $ | 40,317 | |||||
Total | $ | 158,092 | $ | 197,434 | |||||
Outstanding accrued liabilities due to related parties | ' | ||||||||
As of July 31, 2014 and October 31, 2013 the Company had the following outstanding accrued liabilities due to related parties: | |||||||||
As of | July | 31-Oct-13 | |||||||
31, 2014 | |||||||||
Accrued salaries | 161,957 | 90,808 | |||||||
Accrued interest | 4,745 | 18,064 | |||||||
Accounts payable | -- | 52,432 | |||||||
Consulting fees | 28,600 | 35,000 | |||||||
Total accrued liabilities | 195,302 | 196,304 |
OPTIONS_Tables
OPTIONS (Tables) | 9 Months Ended | |||||||||||||||
Jul. 31, 2014 | ||||||||||||||||
Options Tables | ' | |||||||||||||||
Options granted and outstanding | ' | |||||||||||||||
The following sets forth the options granted and outstanding as of July 31, 2014: | ||||||||||||||||
Options as of | Options Granted | Options as of | Number Exercisable | Number Exercised | Aggregate Intrinsic Value | |||||||||||
October | July | |||||||||||||||
31, 2013 | 31, 2014 | |||||||||||||||
3,055,000 | 870,000 | 3,925,000 | 1,996,000 | -- | $ | 4,052,600 |
RELATED_PARTY_TRANSACTIONS_Det
RELATED PARTY TRANSACTIONS (Details) (USD $) | Jul. 31, 2014 | Oct. 31, 2013 |
Total | $158,092 | $197,434 |
Andrew Thomas [Member] | ' | ' |
Total | 47,938 | 59,572 |
Paul Benford [Member] | ' | ' |
Total | 77,922 | 97,545 |
Shizuka Thomas [Member] | ' | ' |
Total | $32,232 | $40,317 |
RELATED_PARTY_TRANSACTIONS_Det1
RELATED PARTY TRANSACTIONS (Details 1) (USD $) | Jul. 31, 2014 | Oct. 31, 2013 |
Related Party Transactions Details 1 | ' | ' |
Accrued salaries | $161,957 | $90,808 |
Accrued interest | 4,745 | 18,064 |
Accounts payable | ' | 52,432 |
Consulting fees | 28,600 | 35,000 |
Total accrued liabilities | $195,302 | $196,304 |
RELATED_PARTY_TRANSACTIONS_Det2
RELATED PARTY TRANSACTIONS (Details Narrative) (USD $) | Jul. 31, 2014 | Oct. 31, 2013 |
Related Party Transactions Details Narrative | ' | ' |
Outstanding amounts on the notes payable | $158,092 | ' |
Accrued liability for compensation | $190,559 | ' |
EQUITY_Details_Narrative
EQUITY (Details Narrative) (USD $) | Jan. 14, 2014 |
Equity Details Narrative | ' |
Restricted common stock sold to to eight individuals | 510,000 |
Restricted common stock value | $369,750 |
Shares price | $0.73 |
OPTIONS_Details
OPTIONS (Details) (USD $) | 9 Months Ended |
Jul. 31, 2014 | |
Options Details | ' |
Options as of October 31, 2013 | 3,055,000 |
Options Granted | 870,000 |
Options as of July 31, 2014 | 3,925,000 |
Number Exercisable | 1,996,000 |
Number Exercised | ' |
Aggregate Intrinsic Value | $4,052,600 |
OPTIONS_Details_Narrative
OPTIONS (Details Narrative) (USD $) | 9 Months Ended | |
Jul. 31, 2014 | Jul. 31, 2013 | |
Options Details Narrative | ' | ' |
Options exercise price | $750,900 | ' |
Option based compensation | $235,822 | ' |
Unrecognized future balance to be expensed over the term of the options | $515,077 | ' |
DEFERRED_REVENUE_Details_Narra
DEFERRED REVENUE (Details Narrative) (USD $) | Jul. 31, 2014 | Oct. 31, 2013 |
Deferred Revenue Details Narrative | ' | ' |
Deferred revenue | $63,230 | $59,312 |
ACCOUNTS_PAYABLE_Details_Narra
ACCOUNTS PAYABLE (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2014 | Jul. 31, 2013 | Jul. 31, 2014 | Jul. 31, 2013 | |
Accounts Payable Details Narrative | ' | ' | ' | ' |
Gain on debt settlement | ' | ' | $11,982 | ' |