Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Jan. 31, 2015 | Mar. 20, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | Skkynet Cloud Systems, Inc. | |
Entity Central Index Key | 1546853 | |
Document Type | 10-Q | |
Document Period End Date | 31-Jan-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -21 | |
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 | 50,795,500 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2015 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Jan. 31, 2015 | Oct. 31, 2014 |
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 |
Intangible Assets | 57,410 | 2,248 |
Other assets | 5,726 | |
Total Assets | 942,041 | 1,069,956 |
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' 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, 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 stockholders' equity (deficit) | 355,365 | 564,590 |
Total Liabilities and Stockholders' Equity | $942,041 | $1,069,951 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Jan. 31, 2015 | Oct. 31, 2014 |
ASSETS | ||
Net of accumulated depreciation | $70,911 | $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 | 50,795,500 | 50,642,500 |
Common stock, Outstanding | 50,795,500 | 50,642,500 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) (USD $) | 3 Months Ended | |
Jan. 31, 2015 | Jan. 31, 2014 | |
Consolidated Statements Of Operations And Comprehensive Loss | ||
Revenue | $231,864 | $287,049 |
Direct material costs | 2,687 | 82 |
Operating Expenses: | ||
General and 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 |
Weighted average common shares outstanding (basic and diluted): | 50,763,610 | 49,428,239 |
CONSOLDIATED_STATEMENTS_OF_CAS
CONSOLDIATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) | 3 Months Ended | |
Jan. 31, 2015 | Jan. 31, 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 |
ORGANIZATION_AND_BASIS_OF_PRES
ORGANIZATION AND BASIS OF PRESENTATION | 3 Months Ended |
Jan. 31, 2015 | |
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. |
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. |
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended | ||||||||
Jan. 31, 2015 | |||||||||
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 January 31, 2015 the outstanding amounts on the notes payable were $135,746 as noted below: | ||||||||
Note balance as of: | January 31, | October 31, | |||||||
2015 | 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 | |||||||||
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, | October 31, | |||||||
2015 | 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. |
EQUITY
EQUITY | 3 Months Ended |
Jan. 31, 2015 | |
Notes to Financial Statements | |
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. |
OPTIONS
OPTIONS | 3 Months Ended | ||||||||||||||||||||
Jan. 31, 2015 | |||||||||||||||||||||
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 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. | |||||||||||||||||||||
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 | 8.4 | 2,452,200 | 5,181,470 |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended | ||||
Jan. 31, 2015 | |||||
Notes to Financial Statements | |||||
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 |
DEFERRED_REVENUE
DEFERRED REVENUE | 3 Months Ended |
Jan. 31, 2015 | |
Notes to Financial Statements | |
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. |
ACQUISITION
ACQUISITION | 3 Months Ended | ||||
Jan. 31, 2015 | |||||
Notes to Financial Statements | |||||
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. | |||||
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 ould 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 | |||||
31-Jan-14 | |||||
(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. |
SUBSEQUENT_EVENT
SUBSEQUENT EVENT | 3 Months Ended |
Jan. 31, 2015 | |
Notes to Financial Statements | |
NOTE 8 - SUBSEQUENT EVENT | 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. |
RELATED_PARTY_TRANSACTIONS_Tab
RELATED PARTY TRANSACTIONS (Tables) | 3 Months Ended | ||||||||
Jan. 31, 2015 | |||||||||
Related Party Transactions Tables | |||||||||
Summary of notes payable related party | Note balance as of: | January 31, | October 31, | ||||||
2015 | 2014 | ||||||||
Andrew Thomas | $ | 41,162 | $ | 46,570 | |||||
Paul Benford | $ | 66,908 | $ | 75,698 | |||||
Shizuka Thomas | $ | 27,676 | $ | 31,312 | |||||
Total | $ | 135,746 | $ | 153,580 | |||||
Outstanding accrued liabilities due to related parties | As of | January 31, | October 31, | ||||||
2015 | 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 |
OPTIONS_Tables
OPTIONS (Tables) | 3 Months Ended | ||||||||||||||||||||
Jan. 31, 2015 | |||||||||||||||||||||
Options Tables | |||||||||||||||||||||
Options granted and outstanding | 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 | 8.4 | 2,452,200 | 5,181,470 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended | ||||
Jan. 31, 2015 | |||||
Commitments And Contingencies Tables | |||||
Lease obligations | 2015 | $ | 49,175 | ||
2016 | $ | 70,567 | |||
2017 | $ | 61,538 | |||
2018 | $ | 0 | |||
2029 | $ | 0 | |||
thereafter | $ | 0 | |||
Total | $ | 181,280 |
ACQUISITION_Tables
ACQUISITION (Tables) | 3 Months Ended | ||||
Jan. 31, 2015 | |||||
Acquisition Tables | |||||
Estimated fair values of the assets acquired and liabilities | 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 | |||
Consolidated pro forma information | Three Month Period | ||||
31-Jan-14 | |||||
(Unaudited) | |||||
Revenues | $ | 412,116 | |||
Operating Expenses | (448,596 | ) | |||
Other expense | (3,088 | ) | |||
Net Loss | $ | (39,568 | ) |
RELATED_PARTY_TRANSACTIONS_Det
RELATED PARTY TRANSACTIONS (Details) (USD $) | Jan. 31, 2015 | Oct. 31, 2014 |
Total notes payable related parties | $135,746 | $153,580 |
Andrew Thomas [Member] | ||
Total notes payable related parties | 41,162 | 46,570 |
Paul Benford [Member] | ||
Total notes payable related parties | 66,908 | 75,698 |
Shizuka Thomas [Member] | ||
Total notes payable related parties | $27,676 | $31,312 |
RELATED_PARTY_TRANSACTIONS_Det1
RELATED PARTY TRANSACTIONS (Details 1) (USD $) | Jan. 31, 2015 | Oct. 31, 2014 |
Related Party Transactions Details 1 | ||
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 |
RELATED_PARTY_TRANSACTIONS_Det2
RELATED PARTY TRANSACTIONS (Details Narrative) (USD $) | Jan. 31, 2015 | Oct. 31, 2014 |
Related Party Transactions Details Narrative | ||
Outstanding amounts on the notes payable | $135,746 | $153,580 |
Accrued liability for compensation | $290,185 |
OPTIONS_Details
OPTIONS (Details) (USD $) | 3 Months Ended |
Jan. 31, 2015 | |
Options Details | |
Outstanding options, Beginning | 5,270,000 |
Options, Granted | 106,000 |
Options, Exercised | |
Outstanding options, Ending | 5,376,000 |
Weighted Average Exercise price, Beginning | $0.51 |
Weighted Average Exercise price, Granted | $1.32 |
Weighted Average Exercise price, Exercised | |
Weighted Average Exercise price, Ending | $0.52 |
Weighted Average Remaining Contract Life, Beginning | 8 years 8 months 9 days |
Weighted Average Remaining Contract Life, Granted | 9 years 9 months 4 days |
Weighted Average Remaining Contract Life, Ending | 8 years 4 months 24 days |
Number of Options Exercisable, Beginning | 2,218,000 |
Number of Options Exercisable, Granted | 234,200 |
Number of Options Exercisable, Exercised | |
Number of Options Exercisable, Ending | 2,452,200 |
Aggregate Intrinsic Value, Beginning | $5,164,900 |
Aggregate Intrinsic Value, Ending | $5,181,470 |
OPTIONS_Details_Narrative
OPTIONS (Details Narrative) (USD $) | 3 Months Ended | |
Jan. 31, 2015 | Jan. 31, 2014 | |
Options Details Narrative | ||
Option based compensation | $125,826 |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | Jan. 31, 2015 |
Commitments And Contingencies Details | |
2015 | $49,175 |
2016 | 70,567 |
2017 | 61,538 |
2018 | 0 |
2019 | 0 |
thereafter | 0 |
Total | $181,280 |
DEFERRED_REVENUE_Details_Narra
DEFERRED REVENUE (Details Narrative) (USD $) | Jan. 31, 2015 | Oct. 31, 2014 |
Deferred Revenue Details Narrative | ||
Deferred revenue | $61,112 | $44,845 |
ACQUISITION_Details
ACQUISITION (Details) (USD $) | Jan. 31, 2015 |
Acquisition Details | |
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 |
ACQUISITION_Details_1
ACQUISITION (Details 1) (USD $) | 3 Months Ended |
Jan. 31, 2015 | |
Acquisition Details 1 | |
Revenues | $412,116 |
Operating Expenses | -448,596 |
Other expense | -3,088 |
Net Loss | ($39,568) |