10-Q

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

 

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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.

 

4

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.

 

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 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.

 

7

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.

 

8

 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.

 

10

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.

 

11

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.

 

12

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

 

14

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

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF

PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Andrew Thomas, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Skkynet Cloud Systems Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusion about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change to the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 14, 2017	By:	/s/ Andrew Thomas
	Name:	Andrew Thomas
	Title:	Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF

PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Lowell Holden, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Skkynet Cloud Systems Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusion about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change to the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 14, 2017	By:	/s/ Lowell Holden
	Name:	Lowell Holden
	Title:	Chief Financial Officer (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Skkynet Cloud Systems Inc. (the “Company”) on Form 10-Q for the period ended April 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Andrew Thomas, Principal Executive Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Dated: June 14, 2017	By:	/s/ Andrew Thomas
		Andrew Thomas
		Chief Executive Officer (Duly Authorized Principal Executive Officer)

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Skkynet Cloud Systems Inc. (the “Company”) on Form 10-Q for the period ended April 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Lowell Holden, Principal Financial Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Skkynet.

Dated: June 14, 2017	By:	/s/ Lowell Holden
		Lowell Holden
		Chief Financial Officer (Duly Authorized Principal Financial Officer)

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Skkynet for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

XML

Document and Entity Information - shares	6 Months Ended
	Apr. 30, 2017	Jun. 14, 2017
Document And Entity Information
Entity Registrant Name	Skkynet Cloud Systems, Inc.
Entity Central Index Key	0001546853
Document Type	10-Q
Document Period End Date	Apr. 30, 2017
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		51,164,200
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2017

XML

CONSOLIDATED BALANCE SHEETS - USD ($)	Apr. 30, 2017	Oct. 31, 2016
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
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

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Apr. 30, 2017	Oct. 31, 2016
ASSETS
Property and equipment, Accumulated depreciation	$ 77,372	$ 78,807
Stockholders' Deficit:
Preferred stock, Par value	$ 0.001	$ 0.001
Preferred stock, Authorized	5,000,000	5,000,000
Preferred stock, Issued	5,000	5,000
Preferred stock, Outstanding	5,000	5,000
Series B Preferred convertible stock, Par value	$ 0.001	$ 0.001
Series B Preferred convertible stock, Authorized	500,000	500,000
Series B Preferred convertible stock, Issued	193,661	193,661
Series B Preferred convertible stock, Outstanding	193,661	193,661
Common stock, Par value	$ 0.001	$ 0.001
Common stock, Authorized	70,000,000	70,000,000
Common stock, Issued	51,164,200	50,931,266
Common stock, Outstanding	51,164,200	50,931,266

XML

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Apr. 30, 2017	Apr. 30, 2016	Apr. 30, 2017	Apr. 30, 2016
Consolidated Statements Of Operations And Comprehensive Loss
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

XML

CONSOLDIATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Apr. 30, 2017	Apr. 30, 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

XML

ORGANIZATION AND BASIS OF PRESENTATION

6 Months Ended

Apr. 30, 2017

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 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.

XML

RELATED PARTY TRANSACTIONS

6 Months Ended

Apr. 30, 2017

Notes to Financial Statements

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.

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).

XML

EQUITY

6 Months Ended

Apr. 30, 2017

Notes to Financial Statements

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.

XML

OPTIONS

6 Months Ended

Apr. 30, 2017

Notes to Financial Statements

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.

 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

XML

COMMITMENTS AND CONTINGENCIES

6 Months Ended

Apr. 30, 2017

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 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

XML

DEFERRED REVENUE

6 Months Ended

Apr. 30, 2017

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 April 30, 2017, the Company had deferred revenue of $140,097.

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SUBSEQUENT EVENT

6 Months Ended

Apr. 30, 2017

Notes to Financial Statements

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.

XML

RELATED PARTY TRANSACTIONS (Tables)

6 Months Ended

Apr. 30, 2017

Related Party Transactions Tables

Outstanding accrued liabilities due to related parties

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).

XML

OPTIONS (Tables)

6 Months Ended

Apr. 30, 2017

Options Tables

Options granted and outstanding

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

XML

COMMITMENTS AND CONTINGENCIES (Tables)

6 Months Ended

Apr. 30, 2017

Commitments And Contingencies Tables

Lease obligations

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

XML

ORGANIZATION AND BASIS OF PRESENTATION (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended
	Jul. 30, 2015	Apr. 30, 2017	Apr. 30, 2016	Apr. 30, 2017	Apr. 30, 2016	Oct. 31, 2016
Organization And Basis Of Presentation Details Narrative
State or country of incorporation				Nevada
Incorporation date				Aug. 31, 2011
Series B Preferred convertible stock, Par value	$ 0.001	$ 0.001		$ 0.001		$ 0.001
Series B Preferred convertible stock, Shares designated	500,000	500,000		500,000		500,000
Series B Preferred convertible stock, Issued	193,661	193,661		193,661		193,661
Sale of stock price per share	$ 1.00
Conversion price	$ 1.35
Series B convertible preferred stock, Dividend percentage	6.00%
Notes payable and accrued interest	$ 193,661
Net loss		$ (164,222)	$ (301,687)	$ (409,784)	$ (670,881)
Net loss to common shareholders		(167,127)	(304,592)	(415,594)	(676,691)
Preferred dividends		$ (2,905)	$ (2,905)	$ (5,810)	$ (5,810)

XML

RELATED PARTY TRANSACTIONS (Details) - USD ($)		Apr. 30, 2017	Oct. 31, 2016
Related Party Transactions Details
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] (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).

XML

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	Apr. 30, 2017	Oct. 31, 2016
Related Party Transactions Details Narrative
Accrued compensation per month	$ 2,500
Accrued liabilities - related party	$ 157,389	$ 49,984

XML

EQUITY (Details Narrative) - USD ($)	Mar. 07, 2017	Jul. 30, 2015
Sale of stock price per share		$ 1.00
Individual [Member]
Common stock shares issued at $1.10 per share, Shares	233,000
Common stock shares issued at $1.10 per share, Amount	$ 256,300
Sale of stock price per share	$ 1.10

XML

OPTIONS (Details)	6 Months Ended
	Apr. 30, 2017 USD ($) $ / shares shares
Options Details
Outstanding options, Beginning	6,263,200
Options, Granted	492,700
Options, Exercised
Options, Forfeited by termination of employment	(50,000)
Outstanding options, Ending	6,705,900
Weighted Average Exercise price, Beginning | $ / shares	$ 0.54
Weighted Average Exercise price, Granted | $ / shares	0.42
Weighted Average Exercise price, Exercised | $ / shares
Weighted Average Exercise price, Forfeited/Expired by termination | $ / shares	(1.14)
Weighted Average Exercise price, Ending | $ / shares	$ 0.52
Weighted Average Remaining Contract Life, Beginning	62 months 16 days
Weighted Average Remaining Contract Life, Ending	55 months 8 days
Granted Options Exercisable, Beginning	4,308,600
Granted Options Exercisable, Granted
Granted Options Exercisable, Exercised
Granted Options Exercisable, Ending	4,938,240
Intrinsic Value, Beginning | $	$ 2,857,703
Intrinsic Value, Ending | $	$ 2,778,666

XML

OPTIONS (Details Narrative)		6 Months Ended
	Apr. 07, 2017 USD ($) Integer $ / shares shares	Apr. 30, 2017 USD ($)	Apr. 30, 2016 USD ($)	Jan. 06, 2016 Integer $ / shares shares
Description of option vested		In equal annual installments over a five year period with the first 20% vested when the options are granted.
Stock issued | shares	418,200			509,500
Exercise price of shares issued | $ / shares	$ 0.50			$ 1.02
Number of officers, directors, employees and consultants | Integer	14			14
Net calculated value of options expensed		$ 2,661,593
Option based compensation		258,037	$ 348,417
Unrecognized future balance		$ 1,595,939
Employee [Member]
Stock issued | shares	74,500
Exercise price of shares issued | $ / shares	$ 0.00
Number of officers, directors, employees and consultants | Integer	1
Fair value stock option	$ 35,392

XML

COMMITMENTS AND CONTINGENCIES (Details)	Apr. 30, 2017 USD ($)
Commitments And Contingencies Details
2017	$ 30,531
2018	49,166
2019	49,166
2020	49,166
2021	49,166
2022	38,583
Total	$ 265,778

XML

COMMITMENTS AND CONTINGENCIES (Details Narrative)	1 Months Ended	6 Months Ended
	May 31, 2017 USD ($) ft²	Apr. 30, 2017 USD ($) ft²
July 1, 2014 to July 31, 2017 [Member]
Office space lease | ft²		2,810
Monthly rental expense | $		$ 6,700
Lease expiration		Jul. 31, 2017
August 1, 2017 through July 31, 2022 [Member] | Subsequent Event [Member]
Office space lease | ft²	2,210
Monthly rental expense | $	$ 4,097
Lease Term	5 years

XML

DEFERRED REVENUE (Details Narrative) - USD ($)	Apr. 30, 2017	Oct. 31, 2016
Deferred Revenue Details Narrative
Deferred revenue	$ 140,097	$ 94,711

XML

SUBSEQUENT EVENT (Details Narrative) - Subsequent Event [Member] - August 1, 2017 through July 31, 2022 [Member]	1 Months Ended
	May 31, 2017 USD ($) ft²
Office space lease | ft²	2,210
Monthly rental expense | $	$ 4,097
Lease Term	5 years