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, 2019

OR

¨ TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934

For the transition period from ___________ to ____________.

Commission File Number 000-54747

SKKYNET CLOUD SYSTEMS INC.

(Exact name of registrant as specified in its charter)

Nevada	45-3757848
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

  

2233 Argentia Road Suite 306. Mississauga, Ontario, Canada L5N 2X7

(Address of principal executive offices)

 (888) 628-2028

(Issuer's telephone number)

 

Indicate by check mark whether the Company (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes: x No: ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes: x No: ¨

Indicate by check mark whether the Company is a large accelerated filer, an accelerated file, non-accelerated filer, or a smaller reporting company.

Large accelerated filer	¨	Accelerated filed	¨
Non-accelerated filer	x	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. ¨

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

As June 18, 2019, there were 51,488,022 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, 2019 (Unaudited) and October 31, 2018	4
	Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Month Periods Ended April 30, 2019 and 2018 (Unaudited)	5
	Consolidated Statements of Stockholders’ Equity for the Six Month Periods Ended April 30, 2019 and 2018 (Unaudited)	6
	Consolidated Statements of Cash Flows for the Six Month Periods Ended April 30, 2019 and 2018 (Unaudited)	7
	Notes to Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	15
Item 4.	Controls and Procedures	15
PART II: OTHER INFORMATION
Item 1.	Legal Proceedings	16
Item 1A.	Risk Factors	16
Item 2.	Sales of Equity Securities and Use of Proceeds	16
Item 3.	Defaults upon Senior Securities	16
Item 4.	Mine Safety Information	16
Item 5.	Other Information	16
Item 6.	Exhibits	17
Signatures		18

2

FORWARD LOOKING STATEMENTS

Statements made in this Form 10-Q that are not historical or current facts are forward-looking statements. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “approximate” or “continue,” or the negative thereof. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. Among the factors that could cause actual results to differ materially from the forward-looking statements are the following: the Company’s ability to obtain necessary capital, the Company’s ability to meet anticipated development timelines, the Company’s ability to protect its proprietary technology and knowhow, the Company’s ability to establish a global market, the Company’s ability to successfully consummate future acquisitions and such other risk factors identified from time to time in the Company’s reports filed with the Securities and Exchange Commission, including those filed with this Form 10-Q quarterly report. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

3

PART I

ITEM 1: FINANCIAL STATEMENTS

SKKYNET CLOUD SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

	April 30, 2019			October 31, 2018
	(Unaudited)
ASSETS
Current Assets:
Cash	$	617,353		$	677,303
Accounts receivable		144,163			203,052
Inventory		2,372			2,319
Prepaid		36,654			7,431
Total current assets		800,542			890,105
Property and equipment, net of accumulated depreciation of $84,147 and $81,713 respectively		8,494			6,060
Other assets		6,143			7,221
Total Assets	$	815,179		$	903,386
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	123,023		$	74,701
Accrued liabilities – related party		26,435			84,210
Deferred revenue		75,667			88,386
Total current liabilities		225,125			247,297
Total liabilities		225,125			247,297
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 shares authorized, 193,661 issued and 193,661 outstanding, respectively		193,661			193,661
Common stock; $0.001 par value, 70,000,000 shares authorized, 51,488,022 and 51,363,022 shares issued and outstanding, respectively		51,489			51,364
Additional paid-in capital		6,168,928			5,832,725
Accumulative other comprehensive loss		(43,822	)		(74,643	)
Accumulated deficit		(5,780,207	)		(5,347,023	)
Total shareholders’ equity		590,054			656,089
Total Liabilities and Stockholders’ Equity	$	815,179		$	903,386

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						Six Months
	2019			2018			2019			2018
Revenue	$	408,068		$	307,911		$	701,197		$	693,817
Cost of goods sold		4,160			10,622			10,314			24,736
Gross Profit		403,908			297,289			690,883			669,081
Operating Expenses:
General & administrative		681,724			538,923			1,129,328			1,060,566
Depreciation and amortization		119			125			239			251
Loss from operations		(277,935	)		(241,759	)		(438,684	)		(391,736	)
Other Income (Expenses):
Other income		--			--			1			--
Loss on settlement of liabilities		(11,233	)		(39,193	)		(11,233	)		(39,193	)
Other expense		(2,100	)		--			(2,100	)		--
Currency exchange		12,396			20,233			18,832			227
Total other income (expenses)		(937	)		(18,960	)		5,500			(39,420	)
Net loss		(278,872	)		(260,719	)		(433,184	)		(431,156	)
Preferred dividends		(2,905	)		(2,905	)		(5,810	)		(5,810	)
Net loss to common shareholders		(281,777	)		(263,624	)		(438,994	)		(436,966	)
Foreign currency translation adjustment		39,567			27,763			30,821			64,088
Comprehensive (loss)	$	(242,210	)	$	(235,861	)	$	(408,173	)	$	(372,878	)
Net loss per common share attributable to common stockholders (basic and diluted)	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.01	)
Weighted average common shares outstanding (basic and diluted):		51,364,396			51,318,229			51,363,709			51,302,714

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

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SKKYNET CLOUD SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

SIX MONTHS ENDED APRIL 30, 2019 AND 2018

																		Accumulated			Total
									Series B Preferred				Additional					Other			Stockholders’
	Common Stock				Preferred Stock				Convertible Stock				Paid-In		Accumulated			Comprehensive			Equity
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Loss			(Deficit)
Balance as of October 31, 2017		51,287,366	$	51,288		5,000	$	5		193,661	$	193,661	$	5,240,833	$	(4,856,180	)	$	(60,487	)		569,120
Common stock issued for accrued compensation to related parties		30,684		30		--		--		--		--		12,270		--			--			12,300
Stock options issued for accrued liabilities- related parties		--		--		--		---		--		--		55,114		--			--			55,114
Stock option expense		--		----		--		--		--		--		102,912		--			--			102,912
Change due to currency translation		--		--		-		--		--		--		--		--			36,325			36,325
Net loss																(169,102	)					(169,102	)
Balance at January 31, 2018		51,317,950		51,318		5,000		5		193,661		196,661		5,411,129		(5,025,282	)		(24,162	)		606,669
Common stock issued for accrued compensation to related parties		25,361		26	--		--		--			--		19,502		--			--			19,528
Stock options issued for accrued liabilities- related parties		--		--		--		--		--		--		84,947		--			--			84,947
Stock option expense		--		--		--		--		--		--		102,185		--			--			102,185
Changes due to currency translations		--		--		--		--		--		--		--		--			27,763			27,763
Net loss		--		--		--		--		---		--		--		(262,054	)		--			(262,054	)
Balance as of April 30, 2018		51,343,311	$	51,344		5,000	$	5		193,661	$	193,661	$	5,617,763	$	(5,287,336	)	$	3,601		$	579,038
Balance at October 31, 2018		51,363,022		51,364		5,000		5		193,661		193,661		5,832,725		(5,347,023	)		(74,643	)		656,089
Stock option expense		--		--		--		--		--		--		59,844					--			59,844
Change due to currency translation		--		--		--		--		--		--		--		--			(8,746	)		(8,746	)
Net loss		--		--		--		--		--		--		--		(154,312	)		--			(154,312	)
Balance at January 31, 2019		51,363,022	$	51,364		5,000	$	5		193,661	$	193,661	$	5,892,569	$	(5,501,335	)	$	(83,389	)	$	552,875
Common stock issued for conversion of options		125,000		125	--		--			--		--		4,950		--			--			5,075
Stock option expense		--		--		--		--		--		--		215,476		--			--			215,476
Stock options issued for accrued liabilities- related parties		--		--		--		--		--		--		55,933		--			--			55,933
Changes due to currency translation		--		--		--		--		--		--		--		--			39,567			39,567
Net loss		--		--		--		--		--		--		--		(278,872	)		--			(278,872	)
Balance at April 30, 2019		51,488,022	$	51,489		5,000	$	5		193,661	$	193,661	$	6,168,928	$	(5,780,207	)	$	(43,822	)	$	590,054

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

6

SKKYNET CLOUD SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Unaudited)

	Six Months Ended April 30,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(433,184	)	$	(431,156	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense		239			251
Option based compensation		275,320			205,097
Loss on settlement of accrued liabilities		11,233			39,193
Changes in operating assets and liabilities:
Accounts receivable		58,889			(110,113	)
Accounts payable and accrued expenses		48,322			29,122
Inventory		(53	)		(108	)
Accrued liabilities – related parties		(13,075	)		136,081
Prepaid and other assets		(28,145	)		(21,360	)
Deferred income		(12,719	)		48,042
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(93,173	)		(104,951	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the exercise of options		5,075			--
NET CASH PROVIDED BY FINANCING ACTIVITIES		5,075			-
Effect of exchange rate changes on cash		28,148			60,095
Net increase (decrease) in cash		(59,950	)		(44,856	)
Cash, beginning of period		677,303			582,671
Cash, end of period	$	617,353			537,815
SUPPLEMENTAL CASH FLOWS INFORMATION
Interest paid	$	--		$	--
Income taxes paid	$	--		$	--
NON-CASH INVESTING AND FINANCING
Conversion of accrued compensation to equity- related parties	$	44,700		$	132,696

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

7

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 Skkynet Japan (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 Skkynet Japan 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 $433,184 to $438,994 for the six month period ended April 30, 2019.

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, 2018 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, 2018 as reported on Form 10-K, have been omitted.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Reclassification of Prior Year Presentation

Certain prior year amounts have been reclassified for consistency in presentation with the current year presentation to better present this year’s grouping. The footnotes were added to present the sales by geographic area and line of business. These reclassifications had no effect on the reported results of operations.

Recently Adopted Accounting Pronouncements

In April 2016, the FASB issued ASU 2016–10 Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. Topic 606 includes implementation guidance on (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). The amendments are intended to render more detailed implementation guidance with the expectation to reduce the degree of judgement necessary to comply with Topic 606.

8

ASC Topic 606 prescribes a new five-step model entities should follow in order to recognize revenue in accordance with the core principle. These five steps are:

1.	Identify the contract(s) with a customer.
2.	Identify the performance obligations in the contract.
3.	Determine the transaction price.
4.	Allocate the transaction price to the performance obligations in the contract.
5.	Recognize revenue when (or as) the entity satisfied the performance obligations.

The Company has five revenue streams, each of which the revenue is recognized in accordance to the five steps included in topic 606. The revenue streams are:

1.	Sale of software direct to the end customer
2.	Sale of software through distributors and channel partners
3.	Maintenance support services
4.	Cloud services
5.	Hardware sales (Skkynet Japan only)

Effective November 1, 2018, the Company implemented the transition using the modified retrospective method of transition. Under this method the determination date of open contracts which could affect any adjustments was November 1, 2018. The open contracts at the time period are the unfulfilled portions of the maintenance contracts. Based on the cut off treatment of the recognition of revenue on the open contracts being determined at the end of the previous period and being no changes in the open obligation requirements, the Company has determined that there are no adjustments in the value of the revenue recognized from these contracts.

As part of the revenue recognition reporting, the Company reports revenue by product line and geographic area.  During the six month periods ended April 30, 2019 and 2018 the revenue by product line was as follows:

Category	2019		2018
Product sales	$	499,463	$	495,340
Support		183,691		168,763
Other		18,043		29,714
Total	$	701,197	$	693,817

The Company sells its products on a worldwide basis.  During the six month periods ended April 30, 2019 and 2018 the Company’s revenue resulted in the following amounts geographically:

Area	Percentage			2019		2018
North America		39	%	$	269,858	$	242,603
Europe		36	%		252,293		216,029
Asia		17	%		121,900		163,639
Middle East-Africa		7	%		46,870		31,999
South America		1	%		10,276		39,547
Total		100	%	$	701,197	$	693,817

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NOTE 3- RELATED PARTY TRANSACTIONS

Sakura Software, a corporation owned by our CEO and Chairman of the Board of Directors, Andrew S. Thomas, and Benford Consultancy, a corporation owned by our COO and a member of our Board of Directors, Paul Benford, own, respectively, 72.34% and 27.66% of the issued and outstanding shares of Real Innovations International LLC, (“Real Innovations”) a corporation organized under the laws of Nevis, West Indies. In March 2012, Cogent, our operating subsidiary, assigned all of its intellectual property including the pending patent applications for its real-time data transmission and display technology (the “IP”) to Real Innovations under an assignment of intellectual property agreement (the “Assignment Agreement”). In return for the assignment Real Innovations required a one-time payment of $30,000 to Cogent. Cogent elected to forgo the payment allowing Real Innovations to offset future expenses against the payment. There is no ongoing royalty payment or other form of compensation from Real Innovations to Cogent under the Assignment Agreement.

Real Innovations, in turn, entered into a master intellectual property license agreement (the “License Agreement”) with Cogent for all of the same IP. Under the License Agreement Real Innovations granted a royalty-free license in perpetuity to Cogent for the use and exploitation of the IP in return for which Cogent agreed to: (i) pay all operating expenses of Real Innovations incurred in connection with the continued prosecution of pending patent applications and others that may be prepared; (ii) prosecute all claims for infringement of the IP; (iii) defend and indemnify Real Innovations from and against all claims of infringement of the IP asserted by third parties against Real Innovations, Cogent or our Company; (iv) purchase liability insurance in favor of Real Innovations for this purpose. Under the termination provision of the licenses agreement, there is no unilateral right of termination. Termination may occur by mutual consent of the parities, the Company ceasing doing business, by breach by the Company or by the Company failing to maintain the license and the support to prosecute and protect the license under applicable laws.

Under the License Agreement, Messrs. Andrew S. Thomas and Paul Benford will benefit indirectly from their indirect ownership of all of the shares of Real Innovations to the extent of any such payments or other undertakings by Cogent on behalf of Real Innovations, but the exact amount of these benefits cannot be determined at this time.

During the six months periods ended April 30, 2019 and 2018, the Company recognized but did not pay dividends of $5,810 and $5,810, respectively.

As of April 30, 2019, and October 31, 2018, the Company had the following outstanding accrued liabilities due to related parties:

As of	April 30, 2019		October 31, 2018
Accrued Commissions	$	26,435	$	36,772
Accrued compensation	$	--	$	47,438
Total accrued liabilities and accrued expense	$	26,435	$	84,210

10

During the six months ended April 30, 2019, three officers of the Company elected to forgo their accrued compensation for the six months ended April 30, 2019 in exchange for options. The $44,700 of accrued compensation was exchanged for 199,800 options granted with a fair value of $55,933 with the difference  of $11,233 expensed as a loss on liabilities.

	Accrued compensation		Options Issued for accrued compensation
Andrew Thomas	$	20,860		93,200
Paul Benford	$	11,920		53,300
Paul Thomas	$	11,920		53,300
Total	$	44,700		199,800

On March 2, 2019, the Company issued 7,500 options to three independent directors. (See Note 5 -Options)

On April 29, 2019, an officer and a director exercised 125,000 options for 125,000 common shares of the Company, 50,000 options were exercised and $0.10 per share by the officer and 75,000 options were exercised at $0.001 per share by the director for a total value of $5,075.

NOTE 4 – EQUITY

On January 31, 2018, the Company issued 30,750 shares of common stock at $0.40 per share to an officer and director of the Company for their conversion of accrued compensation to equity with a fair value of $12,300.

On April 30, 2018, the Company issued 25,361 shares of common stock at $0.77 per share to an officer and director of the Company for their conversion of accrued compensation to equity with a fair value of $19,528 for the settlement of a liability of $12,309 which resulted in a loss of $7,219 which was expensed at settlement.

On April 29, 2019, an officer and a director exercised 125,000 options for 125,000 common shares of the Company. The officer exercised 50,000 options at $0.10 per share and the director exercised 75,000 options at $0.001 per share for a total value of $5,075.

NOTE 5 – 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 11, 2018, the Company modified the conversion price of 815,000 options which had been granted to Vice President of Marketing and Sales on August 22, 2014. The modification extended the term of the options 10 years, reduced the conversion price per option from $1.20 to $0.40 per share and increased the fair value of the options by $3,720 to be amortized over the term of the option with no changes to the vesting of the options.

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On January 31, 2018, the company issued 138,000 options to two independent directors and three officers with exercise price of $0.001 for accrued compensation contributed to capital. The options have a fair value using the Black Sholes valuation of $55,114 with computed volatility of 206% and a discount rate of 2.72%. The options were vested upon issuance.

On March 27, 2018, the company issued 215,000 options to various employees and consultants with an exercise price of $0.38. The options have a fair value using the Black Sholes valuation of $105,270 with computed volatility of 208% and a discount rate of 2.82%. The options are vested at 20% upon issuance and 20% each annual anniversary thereafter.

On April 30, 2018, the company issued 110,500 options to two independent directors and three officers with exercise price of $0.001 for accrued compensation contributed to capital. The options have a fair value using the Black Sholes valuation of $84,947 with computed volatility of 207% and a discount rate of 2.95%.The liability for which the options were issued was $52,973 with a loss recognized at settlement of $31,974 which was expensed. The options were vested upon issuance.

On March 2, 2019, the Company modified 3,148,700 options to an exercise price of $0.21 per share upon conversion.  The modified options vest in five years and expire in 10 years. The fair value of the modified options was calculated using the Black Scholes method with a 10 year expiration, stock measurement price of $0.20, volatility of 196.31% and discount rate of 3.00%. The total value calculated to be $628,638. The modified options were calculated and the difference between the calculation before modification was subtracted from the calculation of the modified options. The incremental value of the options is $38,162. The modified options have an unamortized expense of $796,286, therefore fair value is $834,448. As of April 30, 2019, $268,547 of option expense was recorded.

On March 2, 2019, the Company issued 130,000  options to four consultants and 7,500 options to three independent directors all with an exercise price of $0.21 per share upon conversion.  The options vest in five years and expire in 10 years. The fair value of the options was calculated using the Black Scholes method with a 10 year expiration, stock measurement price of $0.20, volatility of 196.31% and discount rate of 3.00%. the total value calculated to be $27,754 of which $6,863 of option expense was recorded on April 30, 2019.

On April 30, 2019, the company issued 199,800 options to three officers with exercise price of $0.001 for accrued compensation contributed to capital. The options have a fair value using the Black Sholes valuation of $55,933 with computed volatility of 197.12% and a discount rate of 3.00%.The liability for which the options were issued was $44,700 with a loss recognized at settlement of $11,233. The options were vested upon issuance.

On April 29, 2019, 125,000 options were converted into common stock, 50,000 at $0.10 per share with a value of $5,000 and 75,000 at $0.001 with a value of $75 for a total conversion value of $5,075.

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. During the six month period ended April 30, 2019, the Company expensed $275,320 for options. The unrecognized future balance to be expensed over the term of the options is $646,427.

12

The following sets forth the options granted and outstanding as of April 30, 2019:

	Options			Weighted Average Exercise price		Weighted Average Remaining Contract Life		Granted Options Exercisable		Intrinsic value
Outstanding at October 31, 2018		7,772,200			0.34		5.27		6,317,750		2,241,496
Granted		337,300			0.09		9.75		--		--
Exercised		(125,000	)		--		--		--		--
Forfeited/Expired by termination		(20,000	)		--		--		--		--
Outstanding at April 30, 2019		7,964,500			0.13		7.68		5,470,540		1,084,178

NOTE 6– COMMITMENTS AND CONTINGENCIES

The Company leases office space located at 2233 Argentia Road Suite 306 Mississauga, Ontario Canada L5N 2X7.

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:

Fiscal Year
2019	$	24,582
2020	$	49,164
2021	$	49,164
2022	$	36,873
Total	$	159,783

13

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 Skkynet Japan Corporation (“formally 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”.

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, 2019, revenue was $408,068 and $701,197 compared to $307,911 and $693,817 for the same periods in 2018. Revenue increased for the three and six month periods ending April 30, 2019 over same period  ended April 30, 2018 by 2.4%.  The increase in revenue for the three and six month periods ended April 30, 2019 is attributed to higher sales by the Cogent offset by lower sales by Skkynet Japan division.

General and administrative expense was $681,724 and $1,129,328 for the three and six month periods ended April 30, 2019 compared to $538,923 and $1,060,566 for the same periods in 2018. The increase in general and administrative expenses for the three and six  month periods ended April 30, 2019, was a result of higher operating expense  in 2019 over 2018.

For the three and six month periods ending April 30, 2019, the Company posted an operating loss of $277,935 and $438,684 compared to operating loss of $241,759 and $391,736 for the same periods in 2018. The increase in operating loss during the three and six month periods is attributable to higher  option expense in the 2019 periods over the same periods in 2018 and decreased expenses in consulting, salaries, and office expenses.

Other income and expense for the three and six month periods ending April 30, 2019, was expense of $937and income of $5,500 compared to other expense of $18,960 and $39,420 for the same periods in 2018 due to currency changes.

Net loss before income taxes of $278,872 and $433,184  was recorded for the three and six month periods ending April 30, 2019, compared to a net loss before income taxes of $260,719 and $431,156 for the same periods in 2018. The losses for the three and six month periods in 2019 can be attributed to higher general and administrative expenses and other income in  in 2019 compared to other expense for the same periods in 2018.

The Company incurred a comprehensive loss of $242,210 and $408,173 for the three and six month periods ended April 30, 2019 compared to a comprehensive loss of $235,861 and $372,878 for the same periods in 2018. The comprehensive loss is an adjustment to net loss with accrued preferred stock dividends and foreign currency translation adjustments along with taxes taken into account.

14

LIQUIDITY AND CAPITAL RESOURCES

At April 30, 2019, Skkynet had current assets of $800,542 and current liabilities of $225,125, resulting in working capital of $575,417. Accumulated deficit, as of April 30, 2019, was $5,780,207 with total shareholders’ equity of $590,054.

Net cash used in operations for the six months ending April 30, 2019, was $93,173 compared to net cash used of $104,951 for the same period in 2018.

Net cash used in operations decreased $11,778 primarily due to a decrease in net loss in 2019 over 2018 along with lower option-based compensation and a positive change in account receivable.

Net cash provided from financing activities, during the six month period ended April 30, 2019 was $5,075 attributed to options being exercised and for the same period in 2018 was $0.

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.

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, 2019. 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.

15

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, 2018.

ITEM 2: SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On April 29, 2019 an officer and director exercised 125,000 options for 125,000 common shares of the Company. 50,000 options were exercised and $0.10 per share and 75,000 options were exercised at $0.001 per share for a total value of $5,075.

ITEM 3: DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4: MINE SAFETY INFORMATION

None.

ITEM 5: OTHER INFORMATION

None.

16

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

17

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 18, 2019	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)

18

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 18, 2019	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 18, 2019	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, 2019 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 18, 2019	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, 2019 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 Company.

Dated: June 18, 2019	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 Company 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, 2019	Jun. 18, 2019
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, 2019
Amendment Flag	false
Current Fiscal Year End Date	--10-31
Entity's Reporting Status Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		51,488,022
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2019
Entity Emerging Growth Company	true
Entity Small Business	true
Entity Ex Transition Period	false
Entity Shell Company	false

XML

CONSOLIDATED BALANCE SHEETS - USD ($)	Apr. 30, 2019	Oct. 31, 2018
Current Assets:
Cash	$ 617,353	$ 677,303
Accounts receivable	144,163	203,052
Inventory	2,372	2,319
Prepaid	36,654	7,431
Total current assets	800,542	890,105
Property and equipment, net of accumulated depreciation of $84,147 and $81,713 respectively	8,494	6,060
Other assets	6,143	7,221
Total Assets	815,179	903,386
Current Liabilities:
Accounts payable and accrued expenses	123,023	74,701
Accrued liabilities - related party	26,435	84,210
Deferred revenue	75,667	88,386
Total current liabilities	225,125	247,297
Total liabilities	225,125	247,297
Stockholders' Equity:
Preferred stock value	5	5
Common stock; $0.001 par value, 70,000,000 shares authorized, 51,488,022 and 51,363,022 shares issued and outstanding, respectively	51,489	51,364
Additional paid-in capital	6,168,928	5,832,725
Accumulative other comprehensive loss	(43,822)	(74,643)
Accumulated deficit	(5,780,207)	(5,347,023)
Total shareholders' equity	590,054	656,089
Total Liabilities and Stockholders' Equity	815,179	903,386
Series B preferred stock [Member]
Stockholders' Equity:
Preferred stock value	$ 193,661	$ 193,661

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Apr. 30, 2019	Oct. 31, 2018
ASSETS
Property and equipment, Accumulated depreciation	$ 84,147	$ 81,713
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
Common stock, Par value	$ 0.001	$ 0.001
Common stock, Authorized	70,000,000	70,000,000
Common stock, Issued	51,488,022	51,363,022
Common stock, Outstanding	51,488,022	51,363,022
Series B preferred stock [Member]
Stockholders' Deficit:
Preferred stock, Par value	$ 0.001	$ 0.001
Preferred stock, Authorized	500,000	500,000
Preferred stock, Issued	193,661	193,661
Preferred stock, Outstanding	193,661	193,661

XML

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Apr. 30, 2019	Apr. 30, 2018	Apr. 30, 2019	Apr. 30, 2018
Consolidated Statements Of Operations And Other Comprehensive Income Loss
Revenue	$ 408,068	$ 307,911	$ 701,197	$ 693,817
Cost of goods sold	4,160	10,622	10,314	24,736
Gross Profit	403,908	297,289	690,883	669,081
Operating Expenses:
General & administrative	681,724	538,923	1,129,328	1,060,566
Depreciation and amortization	119	125	239	251
Loss from operations	(277,935)	(241,759)	(438,684)	(391,736)
Other Income (Expenses):
Other income			1
Loss on settlement of liabilities	(11,233)	(39,193)	(11,233)	(39,193)
Other expense	(2,100)		(2,100)
Currency exchange	12,396	20,233	18,832	227
Total other income (expense)	(937)	(18,960)	5,500	(39,420)
Net loss	(278,872)	(260,719)	(433,184)	(431,156)
Preferred dividends	(2,905)	(2,905)	(5,810)	(5,810)
Net loss to common shareholders	(281,777)	(263,624)	(438,994)	(436,966)
Foreign currency translation adjustment	39,567	27,763	30,821	64,088
Comprehensive (loss)	$ (242,210)	$ (235,861)	$ (408,173)	$ (372,878)
Net loss per common share attributable to common stockholders (basic and diluted)	$ (0.01)	$ (0.01)	$ (0.01)	$ (0.01)
Weighted average common shares outstanding (basic and diluted):	51,364,396	51,318,229	51,363,709	51,302,714

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (Unaudited) - USD ($)	Common Stock	Preferred Stock	Series B Preferred Convertible Stock	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Loss	Total
Beginning Balance, Shares at Oct. 31, 2017	51,287,366	5,000	193,661
Beginning Balance, Amount at Oct. 31, 2017	$ 51,288	$ 5	$ 193,661	$ 5,240,833	$ (4,856,180)	$ (60,487)	$ 569,120
Common stock issued for accrued compensation to related parties, Shares	30,684
Common stock issued for accrued compensation to related parties, Amount	$ 30			12,270			12,300
Stock options issued for accrued liabilities- related parties				55,114			55,114
Stock option expense				102,912			102,912
Change due to currency translation						36,325	36,325
Net loss					(169,102)		(169,102)
Ending Balance, Shares at Jan. 31, 2018	51,317,950	5,000	193,661
Ending Balance, Amount at Jan. 31, 2018	$ 51,318	$ 5	$ 196,661	5,411,129	(5,025,282)	(24,162)	606,669
Beginning Balance, Shares at Oct. 31, 2017	51,287,366	5,000	193,661
Beginning Balance, Amount at Oct. 31, 2017	$ 51,288	$ 5	$ 193,661	5,240,833	(4,856,180)	(60,487)	569,120
Net loss							(431,156)
Ending Balance, Shares at Apr. 30, 2018	51,343,311	5,000	193,661
Ending Balance, Amount at Apr. 30, 2018	$ 51,344	$ 5	$ 193,661	5,617,763	(5,287,336)	3,601	579,038
Beginning Balance, Shares at Jan. 31, 2018	51,317,950	5,000	193,661
Beginning Balance, Amount at Jan. 31, 2018	$ 51,318	$ 5	$ 196,661	5,411,129	(5,025,282)	(24,162)	606,669
Common stock issued for accrued compensation to related parties, Shares	25,361
Common stock issued for accrued compensation to related parties, Amount	$ 26			19,502			19,528
Stock options issued for accrued liabilities- related parties				84,947			84,947
Stock option expense				102,185			102,185
Change due to currency translation						27,763	27,763
Net loss					(262,054)		(260,719)
Ending Balance, Shares at Apr. 30, 2018	51,343,311	5,000	193,661
Ending Balance, Amount at Apr. 30, 2018	$ 51,344	$ 5	$ 193,661	5,617,763	(5,287,336)	3,601	579,038
Beginning Balance, Shares at Oct. 31, 2018	51,363,022	5,000	193,661
Beginning Balance, Amount at Oct. 31, 2018	$ 51,364	$ 5	$ 193,661	5,832,725	(5,347,023)	(74,643)	656,089
Stock option expense				59,844			59,844
Change due to currency translation						(8,746)	(8,746)
Net loss					(154,312)		(154,312)
Ending Balance, Shares at Jan. 31, 2019	51,363,022	5,000	193,661
Ending Balance, Amount at Jan. 31, 2019	$ 51,364	$ 5	$ 193,661	5,892,569	(5,501,335)	(83,389)	552,875
Beginning Balance, Shares at Oct. 31, 2018	51,363,022	5,000	193,661
Beginning Balance, Amount at Oct. 31, 2018	$ 51,364	$ 5	$ 193,661	5,832,725	(5,347,023)	(74,643)	656,089
Net loss							(433,184)
Ending Balance, Shares at Apr. 30, 2019	51,488,022	5,000	193,661
Ending Balance, Amount at Apr. 30, 2019	$ 51,489	$ 5	$ 193,661	6,168,928	(5,780,207)	(43,822)	590,054
Beginning Balance, Shares at Jan. 31, 2019	51,363,022	5,000	193,661
Beginning Balance, Amount at Jan. 31, 2019	$ 51,364	$ 5	$ 193,661	5,892,569	(5,501,335)	(83,389)	552,875
Stock options issued for accrued liabilities- related parties				55,933			55,933
Stock option expense				215,476			215,476
Change due to currency translation						39,567	39,567
Common stock issued for conversion of options, Shares	125,000
Common stock issued for conversion of options, Amount	$ 125			4,950			5,075
Net loss					(278,872)		(278,872)
Ending Balance, Shares at Apr. 30, 2019	51,488,022	5,000	193,661
Ending Balance, Amount at Apr. 30, 2019	$ 51,489	$ 5	$ 193,661	$ 6,168,928	$ (5,780,207)	$ (43,822)	$ 590,054

XML

CONSOLDIATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Apr. 30, 2019	Apr. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (433,184)	$ (431,156)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense	239	251
Option based compensation	275,320	205,097
Loss on settlement of accrued liabilities	11,233	39,193
Changes in operating assets and liabilities:
Accounts receivable	58,889	(110,113)
Accounts payable and accrued expense	48,322	29,122
Inventory	(53)	(108)
Accrued liability-related party	(13,075)	136,081
Prepaid and other assets	(28,145)	(21,360)
Deferred income	(12,719)	48,042
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	(93,173)	(104,951)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the exercise of options	5,075
NET CASH PROVIDED BY FINANCING ACTIVITIES	5,075
Effect of exchange rate changes on cash	28,148	60,095
Net increase (decrease) in cash	(59,950)	(44,856)
Cash, beginning of period	677,303	582,671
Cash, end of period	617,353	537,815
SUPPLEMENTAL CASH FLOWS INFORMATION
Interest paid
Income taxes paid
NON-CASH INVESTING AND FINANCING
Conversion of accrued compensation to equity- related parties	$ 44,700	$ 132,696

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ORGANIZATION AND BASIS OF PRESENTATION

6 Months Ended

Apr. 30, 2019

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 Skkynet Japan (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 Skkynet Japan 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 $433,184 to $438,994 for the six month period ended April 30, 2019.

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, 2018 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, 2018 as reported on Form 10-K, have been omitted.

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SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Apr. 30, 2019

Notes to Financial Statements

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Reclassification of Prior Year Presentation

Certain prior year amounts have been reclassified for consistency in presentation with the current year presentation to better present this year’s grouping. The footnotes were added to present the sales by geographic area and line of business. These reclassifications had no effect on the reported results of operations.

Recently Adopted Accounting Pronouncements

In April 2016, the FASB issued ASU 2016–10 Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. Topic 606 includes implementation guidance on (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). The amendments are intended to render more detailed implementation guidance with the expectation to reduce the degree of judgement necessary to comply with Topic 606.

ASC Topic 606 prescribes a new five-step model entities should follow in order to recognize revenue in accordance with the core principle. These five steps are:

1.	Identify the contract(s) with a customer.
2.	Identify the performance obligations in the contract.
3.	Determine the transaction price.
4.	Allocate the transaction price to the performance obligations in the contract.
5.	Recognize revenue when (or as) the entity satisfied the performance obligations.

The Company has five revenue streams, each of which the revenue is recognized in accordance to the five steps included in topic 606. The revenue streams are:

1.	Sale of software direct to the end customer
2.	Sale of software through distributors and channel partners
3.	Maintenance support services
4.	Cloud services
5.	Hardware sales (Skkynet Japan only)

Effective November 1, 2018, the Company implemented the transition using the modified retrospective method of transition. Under this method the determination date of open contracts which could affect any adjustments was November 1, 2018. The open contracts at the time period are the unfulfilled portions of the maintenance contracts. Based on the cut off treatment of the recognition of revenue on the open contracts being determined at the end of the previous period and being no changes in the open obligation requirements, the Company has determined that there are no adjustments in the value of the revenue recognized from these contracts.

As part of the revenue recognition reporting, the Company reports revenue by product line and geographic area.  During the six month periods ended April 30, 2019 and 2018 the revenue by product line was as follows:

Category	2019		2018
Product sales	$	499,463	$	495,340
Support		183,691		168,763
Other		18,043		29,714
Total	$	701,197	$	693,817

The Company sells its products on a worldwide basis.  During the six month periods ended April 30, 2019 and 2018 the Company’s revenue resulted in the following amounts geographically:

Area	Percentage			2019		2018
North America		39	%	$	269,858	$	242,603
Europe		36	%		252,293		216,029
Asia		17	%		121,900		163,639
Middle East-Africa		7	%		46,870		31,999
South America		1	%		10,276		39,547
Total		100	%	$	701,197	$	693,817

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RELATED PARTY TRANSACTIONS

6 Months Ended

Apr. 30, 2019

Notes to Financial Statements

NOTE 3 - RELATED PARTY TRANSACTIONS

Sakura Software, a corporation owned by our CEO and Chairman of the Board of Directors, Andrew S. Thomas, and Benford Consultancy, a corporation owned by our COO and a member of our Board of Directors, Paul Benford, own, respectively, 72.34% and 27.66% of the issued and outstanding shares of Real Innovations International LLC, (“Real Innovations”) a corporation organized under the laws of Nevis, West Indies. In March 2012, Cogent, our operating subsidiary, assigned all of its intellectual property including the pending patent applications for its real-time data transmission and display technology (the “IP”) to Real Innovations under an assignment of intellectual property agreement (the “Assignment Agreement”). In return for the assignment Real Innovations required a one-time payment of $30,000 to Cogent. Cogent elected to forgo the payment allowing Real Innovations to offset future expenses against the payment. There is no ongoing royalty payment or other form of compensation from Real Innovations to Cogent under the Assignment Agreement.

Real Innovations, in turn, entered into a master intellectual property license agreement (the “License Agreement”) with Cogent for all of the same IP. Under the License Agreement Real Innovations granted a royalty-free license in perpetuity to Cogent for the use and exploitation of the IP in return for which Cogent agreed to: (i) pay all operating expenses of Real Innovations incurred in connection with the continued prosecution of pending patent applications and others that may be prepared; (ii) prosecute all claims for infringement of the IP; (iii) defend and indemnify Real Innovations from and against all claims of infringement of the IP asserted by third parties against Real Innovations, Cogent or our Company; (iv) purchase liability insurance in favor of Real Innovations for this purpose. Under the termination provision of the licenses agreement, there is no unilateral right of termination. Termination may occur by mutual consent of the parities, the Company ceasing doing business, by breach by the Company or by the Company failing to maintain the license and the support to prosecute and protect the license under applicable laws.

Under the License Agreement, Messrs. Andrew S. Thomas and Paul Benford will benefit indirectly from their indirect ownership of all of the shares of Real Innovations to the extent of any such payments or other undertakings by Cogent on behalf of Real Innovations, but the exact amount of these benefits cannot be determined at this time.

During the six months periods ended April 30, 2019 and 2018, the Company recognized but did not pay dividends of $5,810 and $5,810, respectively.

As of April 30, 2019, and October 31, 2018, the Company had the following outstanding accrued liabilities due to related parties:

As of	April 30, 2019		October 31, 2018
Accrued Commissions	$	26,435	$	36,772
Accrued compensation	$	--	$	47,438
Total accrued liabilities and accrued expense	$	26,435	$	84,210

During the six months ended April 30, 2019, three officers of the Company elected to forgo their accrued compensation for the six months ended April 30, 2019 in exchange for options. The $44,700 of accrued compensation was exchanged for 199,800 options granted with a fair value of $55,933 with the difference  of $11,233 expensed as a loss on liabilities.

	Accrued compensation		Options Issued for accrued compensation
Andrew Thomas	$	20,860		93,200
Paul Benford	$	11,920		53,300
Paul Thomas	$	11,920		53,300
Total	$	44,700		199,800

On March 2, 2019, the Company issued 7,500 options to three independent directors. (See Note 5 -Options)

On April 29, 2019, an officer and a director exercised 125,000 options for 125,000 common shares of the Company, 50,000 options were exercised and $0.10 per share by the officer and 75,000 options were exercised at $0.001 per share by the director for a total value of $5,075.

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EQUITY

6 Months Ended

Apr. 30, 2019

Notes to Financial Statements

Note 4 - EQUITY

On January 31, 2018, the Company issued 30,750 shares of common stock at $0.40 per share to an officer and director of the Company for their conversion of accrued compensation to equity with a fair value of $12,300.

On April 30, 2018, the Company issued 25,361 shares of common stock at $0.77 per share to an officer and director of the Company for their conversion of accrued compensation to equity with a fair value of $19,528 for the settlement of a liability of $12,309 which resulted in a loss of $7,219 which was expensed at settlement.

On April 29, 2019, an officer and a director exercised 125,000 options for 125,000 common shares of the Company. The officer exercised 50,000 options at $0.10 per share and the director exercised 75,000 options at $0.001 per share for a total value of $5,075.

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OPTIONS

6 Months Ended

Apr. 30, 2019

Notes to Financial Statements

NOTE 5 - 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 11, 2018, the Company modified the conversion price of 815,000 options which had been granted to Vice President of Marketing and Sales on August 22, 2014. The modification extended the term of the options 10 years, reduced the conversion price per option from $1.20 to $0.40 per share and increased the fair value of the options by $3,720 to be amortized over the term of the option with no changes to the vesting of the options.

On January 31, 2018, the company issued 138,000 options to two independent directors and three officers with exercise price of $0.001 for accrued compensation contributed to capital. The options have a fair value using the Black Sholes valuation of $55,114 with computed volatility of 206% and a discount rate of 2.72%. The options were vested upon issuance.

On March 27, 2018, the company issued 215,000 options to various employees and consultants with an exercise price of $0.38. The options have a fair value using the Black Sholes valuation of $105,270 with computed volatility of 208% and a discount rate of 2.82%. The options are vested at 20% upon issuance and 20% each annual anniversary thereafter.

On April 30, 2018, the company issued 110,500 options to two independent directors and three officers with exercise price of $0.001 for accrued compensation contributed to capital. The options have a fair value using the Black Sholes valuation of $84,947 with computed volatility of 207% and a discount rate of 2.95%.The liability for which the options were issued was $52,973 with a loss recognized at settlement of $31,974 which was expensed. The options were vested upon issuance.

On March 2, 2019, the Company modified 3,148,700 options to an exercise price of $0.21 per share upon conversion.  The modified options vest in five years and expire in 10 years. The fair value of the modified options was calculated using the Black Scholes method with a 10 year expiration, stock measurement price of $0.20, volatility of 196.31% and discount rate of 3.00%. The total value calculated to be $628,638. The modified options were calculated and the difference between the calculation before modification was subtracted from the calculation of the modified options. The incremental value of the options is $38,162. The modified options have an unamortized expense of $796,286, therefore fair value is $834,448. As of April 30, 2019, $268,547 of option expense was recorded.

On March 2, 2019, the Company issued 130,000  options to four consultants and 7,500 options to three independent directors all with an exercise price of $0.21 per share upon conversion.  The options vest in five years and expire in 10 years. The fair value of the options was calculated using the Black Scholes method with a 10 year expiration, stock measurement price of $0.20, volatility of 196.31% and discount rate of 3.00%. the total value calculated to be $27,754 of which $6,863 of option expense was recorded on April 30, 2019.

On April 30, 2019, the company issued 199,800 options to three officers with exercise price of $0.001 for accrued compensation contributed to capital. The options have a fair value using the Black Sholes valuation of $55,933 with computed volatility of 197.12% and a discount rate of 3.00%.The liability for which the options were issued was $44,700 with a loss recognized at settlement of $11,233. The options were vested upon issuance.

On April 29, 2019, 125,000 options were converted into common stock, 50,000 at $0.10 per share with a value of $5,000 and 75,000 at $0.001 with a value of $75 for a total conversion value of $5,075.

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. During the six month period ended April 30, 2019, the Company expensed $275,320 for options. The unrecognized future balance to be expensed over the term of the options is $646,427.

The following sets forth the options granted and outstanding as of April 30, 2019:

	Options			Weighted Average Exercise price		Weighted Average Remaining Contract Life		Granted Options Exercisable		Intrinsic value
Outstanding at October 31, 2018		7,772,200			0.34		5.27		6,317,750		2,241,496
Granted		337,300			0.09		9.75		--		--
Exercised		(125,000	)		--		--		--		--
Forfeited/Expired by termination		(20,000	)		--		--		--		--
Outstanding at April 30, 2019		7,964,500			0.13		7.68		5,470,540		1,084,178

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Apr. 30, 2019

Notes to Financial Statements

NOTE 6 - COMMITMENTS AND CONTINGENCIES

The Company leases office space located at 2233 Argentia Road Suite 306 Mississauga, Ontario Canada L5N 2X7.

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:

Fiscal Year
2019	$	24,582
2020	$	49,164
2021	$	49,164
2022	$	36,873
Total	$	159,783

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Apr. 30, 2019

Significant Accounting Policies Policies

Reclassification of Prior Year Presentation

Certain prior year amounts have been reclassified for consistency in presentation with the current year presentation to better present this year’s grouping. The footnotes were added to present the sales by geographic area and line of business. These reclassifications had no effect on the reported results of operations.

Recently Adopted Accounting Pronouncements

In April 2016, the FASB issued ASU 2016–10 Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. Topic 606 includes implementation guidance on (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). The amendments are intended to render more detailed implementation guidance with the expectation to reduce the degree of judgement necessary to comply with Topic 606.

ASC Topic 606 prescribes a new five-step model entities should follow in order to recognize revenue in accordance with the core principle. These five steps are:

1.	Identify the contract(s) with a customer.
2.	Identify the performance obligations in the contract.
3.	Determine the transaction price.
4.	Allocate the transaction price to the performance obligations in the contract.
5.	Recognize revenue when (or as) the entity satisfied the performance obligations.

The Company has five revenue streams, each of which the revenue is recognized in accordance to the five steps included in topic 606. The revenue streams are:

1.	Sale of software direct to the end customer
2.	Sale of software through distributors and channel partners
3.	Maintenance support services
4.	Cloud services
5.	Hardware sales (Skkynet Japan only)

Effective November 1, 2018, the Company implemented the transition using the modified retrospective method of transition. Under this method the determination date of open contracts which could affect any adjustments was November 1, 2018. The open contracts at the time period are the unfulfilled portions of the maintenance contracts. Based on the cut off treatment of the recognition of revenue on the open contracts being determined at the end of the previous period and being no changes in the open obligation requirements, the Company has determined that there are no adjustments in the value of the revenue recognized from these contracts.

As part of the revenue recognition reporting, the Company reports revenue by product line and geographic area.  During the six month periods ended April 30, 2019 and 2018 the revenue by product line was as follows:

Category	2019		2018
Product sales	$	499,463	$	495,340
Support		183,691		168,763
Other		18,043		29,714
Total	$	701,197	$	693,817

The Company sells its products on a worldwide basis.  During the six month periods ended April 30, 2019 and 2018 the Company’s revenue resulted in the following amounts geographically:

Area	Percentage			2019		2018
North America		39	%	$	269,858	$	242,603
Europe		36	%		252,293		216,029
Asia		17	%		121,900		163,639
Middle East-Africa		7	%		46,870		31,999
South America		1	%		10,276		39,547
Total		100	%	$	701,197	$	693,817

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SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Apr. 30, 2019

Significant Accounting Policies

Schedule of revenue by product lines and geographic areas

Category	2019		2018
Product sales	$	499,463	$	495,340
Support		183,691		168,763
Other		18,043		29,714
Total	$	701,197	$	693,817

Area	Percentage			2019		2018
North America		39	%	$	269,858	$	242,603
Europe		36	%		252,293		216,029
Asia		17	%		121,900		163,639
Middle East-Africa		7	%		46,870		31,999
South America		1	%		10,276		39,547
Total		100	%	$	701,197	$	693,817

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RELATED PARTY TRANSACTIONS (Tables) - Related Party [Member]

6 Months Ended

Apr. 30, 2019

Schedule of outstanding accrued liabilities due to related parties

As of	April 30, 2019		October 31, 2018
Accrued Commissions	$	26,435	$	36,772
Accrued compensation	$	--	$	47,438
Total accrued liabilities and accrued expense	$	26,435	$	84,210

Schedule of options issued for accrued compensation

	Accrued compensation		Options Issued for accrued compensation
Andrew Thomas	$	20,860		93,200
Paul Benford	$	11,920		53,300
Paul Thomas	$	11,920		53,300
Total	$	44,700		199,800

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OPTIONS (Tables)

6 Months Ended

Apr. 30, 2019

Options Tables

Options granted and outstanding

	Options			Weighted Average Exercise price		Weighted Average Remaining Contract Life		Granted Options Exercisable		Intrinsic value
Outstanding at October 31, 2018		7,772,200			0.34		5.27		6,317,750		2,241,496
Granted		337,300			0.09		9.75		--		--
Exercised		(125,000	)		--		--		--		--
Forfeited/Expired by termination		(20,000	)		--		--		--		--
Outstanding at April 30, 2019		7,964,500			0.13		7.68		5,470,540		1,084,178

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COMMITMENTS AND CONTINGENCIES (Tables)

6 Months Ended

Apr. 30, 2019

Commitments And Contingencies Tables

Lease obligations

Fiscal Year
2019	$	24,582
2020	$	49,164
2021	$	49,164
2022	$	36,873
Total	$	159,783

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ORGANIZATION AND BASIS OF PRESENTATION (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended
	Jul. 30, 2015	Apr. 30, 2019	Apr. 30, 2018	Apr. 30, 2019	Apr. 30, 2018	Oct. 31, 2018
State of incorporation				Nevada
Date of Incorporation				Aug. 31, 2011
Preferred stock, authorized		5,000,000		5,000,000		5,000,000
Preferred stock, par value		$ 0.001		$ 0.001		$ 0.001
Preferred dividends		$ (2,905)	$ (2,905)	$ (5,810)	$ (5,810)
Series B preferred stock [Member]
Preferred stock, authorized	500,000	500,000		500,000		500,000
Preferred stock, par value	$ 0.001	$ 0.001		$ 0.001		$ 0.001
Preferred stock, issued value	1.00
Conversion price per share	$ 1.35
Dividend rate	6.00%
Series B preferred stock [Member] | Three Related Parties [Member]
Preferred stock, issued for debt conversion	193,661
Debt instrument converted amount	$ 193,661
Description of change in loss due to dinidend	Increases the loss to common shareholders from $433,184 to $438,994 for the sixmonth period ended April 30, 2019.
Preferred dividends	$ (5,810)

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SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	3 Months Ended		6 Months Ended
	Apr. 30, 2019	Apr. 30, 2018	Apr. 30, 2019	Apr. 30, 2018
Significant Accounting Policies Details Abstract
Product sales			$ 499,463	$ 495,340
Support			183,691	168,763
Other			18,043	29,714
Total	$ 408,068	$ 307,911	$ 701,197	$ 693,817

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SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($)	3 Months Ended		6 Months Ended
	Apr. 30, 2019	Apr. 30, 2018	Apr. 30, 2019	Apr. 30, 2018
Total revenue	$ 408,068	$ 307,911	$ 701,197	$ 693,817
Revenue percentage			100.00%
North America [Member]
Total revenue			$ 269,858	242,603
Revenue percentage			39.00%
Europe [Member]
Total revenue			$ 252,293	216,029
Revenue percentage			36.00%
Asia [Member]
Total revenue			$ 121,900	163,639
Revenue percentage			17.00%
Middle East [Member]
Total revenue			$ 46,870	31,999
Revenue percentage			7.00%
South America [Member]
Total revenue			$ 10,276	$ 39,547
Revenue percentage			1.00%

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RELATED PARTY TRANSACTIONS (Details) - USD ($)	Apr. 30, 2019	Oct. 31, 2018
Related Party Transactions Details
Accrued liabilities related parties	$ 26,435	$ 36,772
Accrued commissions		47,438
Total accrued liabilities and accrued expense	$ 26,435	$ 84,210

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RELATED PARTY TRANSACTIONS (Details 1)	Apr. 30, 2019 USD ($) shares
Accrued compensation | $	$ 44,700
Options Issued for accrued compensation | shares	199,800
Andrew Thomas [Member]
Accrued compensation | $	$ 20,860
Options Issued for accrued compensation | shares	93,200
Paul Benford [Member]
Accrued compensation | $	$ 11,920
Options Issued for accrued compensation | shares	53,300
Paul Thomas [Member]
Accrued compensation | $	$ 11,920
Options Issued for accrued compensation | shares	53,300

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RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)		1 Months Ended			3 Months Ended		6 Months Ended
	Mar. 02, 2019	Apr. 29, 2019	Apr. 30, 2018	Jan. 31, 2018	Apr. 30, 2019	Apr. 30, 2018	Apr. 30, 2019	Apr. 30, 2018
Preferred dividends					$ (2,905)	$ (2,905)	$ (5,810)	$ (5,810)
One time payment to be made by Real Innovations in return of assignment to Cogent					30,000		30,000
Accrued compensation					$ 44,700		$ 44,700
Options Issued for accrued compensation					199,800		199,800
Fair value of the option							$ 55,933
Loss on settlement of accrued liabilities							11,233
Option exercised		125,000
Proceeds from the exercise of options		$ 5,075					$ 5,075
Officer [Member]
Option exercised		50,000
Price per share		$ 0.10
Proceeds from the exercise of options		$ 5,000
Independent Director [Member]
Options issued	7,500
Option exercised		75,000
Price per share		$ 0.001
Proceeds from the exercise of options		$ 75
Oficer And Director [Member]
Option exercised		125,000
Shares issued during the period		125,000	25,361	30,750
Price per share			$ 0.77	$ 0.40
Proceeds from the exercise of options		$ 5,075
Andrew Thomas [Member]
Ownership percentage in Real Innovations hold by related parties					72.34%		72.34%
Accrued compensation					$ 20,860		$ 20,860
Options Issued for accrued compensation					93,200		93,200
Paul Benford [Member]
Ownership percentage in Real Innovations hold by related parties					27.66%		27.66%
Accrued compensation					$ 11,920		$ 11,920
Options Issued for accrued compensation					53,300		53,300

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EQUITY (Details Narrative) - USD ($)	1 Months Ended			3 Months Ended		6 Months Ended
	Apr. 29, 2019	Apr. 30, 2018	Jan. 31, 2018	Apr. 30, 2018	Jan. 31, 2018	Apr. 30, 2019	Apr. 30, 2018
Option exercised	125,000
Proceeds from the exercise of options	$ 5,075					$ 5,075
Common stock issued for accrued compensation to related parties, Amount				$ 19,528	$ 12,300
Oficer And Director [Member]
Option exercised	125,000
Shares issued during the period	125,000	25,361	30,750
Price per share		$ 0.77	$ 0.40
Proceeds from the exercise of options	$ 5,075
Common stock issued for accrued compensation to related parties, Amount		$ 19,528	$ 12,300
Settlement of liability amount		12,309
Loss on settlement		$ 7,219
Independent Director [Member]
Option exercised	75,000
Price per share	$ 0.001
Proceeds from the exercise of options	$ 75
Officer [Member]
Option exercised	50,000
Price per share	$ 0.10
Proceeds from the exercise of options	$ 5,000

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OPTIONS (Details)	6 Months Ended
	Apr. 30, 2019 USD ($) $ / shares shares
Stock Options
Shares outstanding	7,772,200
Shares granted	337,300
Shares exercised	(125,000)
Forfeited/expired by termination	(20,000)
Shares outstanding	7,964,500
Weighted Average Exercise Price
Weighted average exercise price of share outstanding | $ / shares	$ 0.34
Weighted average exercise price of share granted | $ / shares	0.09
Weighted average exercise price of share exercised | $ / shares
Weighted average exercise price of share forfeited/expired by termination | $ / shares
Weighted average exercise price of share outstanding | $ / shares	$ 0.13
Weighted Average Remaining Contractual Terms
Weighted average remaining contractual terms of share outstanding	5 years 3 months 8 days
Weighted average remaining contractual terms of share granted	9 years 9 months
Weighted average remaining contractual terms of share outstanding	7 years 8 months 5 days
Shares outstanding	6,317,750
Shares granted
Shares exercised
Share forfeited/expired by termination
Shares outstanding	5,470,540
Intrinsic Value
Aggregate intrinsic value of share outstanding | $	$ 2,241,496
Aggregate intrinsic value of share outstanding | $	$ 1,084,178

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OPTIONS (Details Narrative) - USD ($)			1 Months Ended				3 Months Ended		6 Months Ended
	Mar. 02, 2019	Jan. 11, 2018	Apr. 30, 2019	Apr. 29, 2019	Apr. 30, 2018	Mar. 27, 2018	Apr. 30, 2019	Apr. 30, 2018	Apr. 30, 2019	Apr. 30, 2018	Aug. 22, 2014
Stock option vested term	5 years
Stock option expiration term	10 years
Stock measurement price	$ 0.20
Computed volatility	196.31%
Stock option discount rate	$ 3.00
Fair value of stock option									$ 55,933
Stock option expense			$ 275,320				$ 275,320		275,320
Unrecognized future balance			$ 646,427				646,427		646,427
Description of stock option vested	The fair value of the options was calculated using the Black Scholes method with a 10 year expiration
Stock option issued, Value	$ 27,754								6,863
Loss on settlement of liability							11,233	$ 39,193	11,233	$ 39,193
Option exercised				125,000
Proceeds from the exercise of options				$ 5,075					5,075
Vice President [Member]
Increase in fair value of stock option		$ 3,720
Stock option granted for upon conversion		815,000
Conversion price per option		$ 0.40									$ 1.20
Stock option extended term period		10 years
Independent Director [Member]
Stock option issued	7,500
Option exercised				75,000
Price per share				$ 0.001
Proceeds from the exercise of options				$ 75
Officer [Member]
Option exercised				50,000
Price per share				$ 0.10
Proceeds from the exercise of options				$ 5,000
Three Officers [Member]
Stock option issued			199,800
Exercise price			$ 0.001
Computed volatility			197.12%
Stock option discount rate			$ 3.00
Fair value of stock option			$ 55,933
Stock option issued, Value			44,700
Loss on settlement of liability			11,233
Three Independent Directors [Member]
Stock option issued	7,500
Exercise price	$ 0.21
Four Consultants [Member]
Stock option issued	130,000
Exercise price	$ 0.21
Two independent directors and three officers [Member]
Stock option issued					110,500
Exercise price					$ 0.001
Computed volatility					207.00%
Stock option discount rate					$ 2.95
Fair value of stock option					$ 84,947
Stock option issued, Value					52,973
Loss on settlement of liability					$ 31,974
Various employees and consultants [Member]
Stock option issued						215,000
Exercise price						$ 0.38
Computed volatility						208.00%
Stock option discount rate						$ 2.82
Fair value of stock option						$ 105,270
Description of stock option vested						The options are vested at 20% upon issuance and 20% each annual anniversary thereafter.
Option [Member]
Stock option issued	3,148,700
Exercise price	$ 0.21
Stock option vested term	5 years
Stock option expiration term	10 years
Stock measurement price	$ 0.20
Computed volatility	196.31%
Stock option discount rate	$ 3.00
Fair value of stock option	$ 834,448
Increase in fair value of stock option	38,162
Stock option unamortized expense	$ 796,286
Stock option expense			$ 268,547				$ 268,547		$ 268,547
Description of stock option vested	The fair value of the modified options was calculated using the Black Scholes method with a 10 year expiration ,
Stock option issued, Value	$ 628,638

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COMMITMENTS AND CONTINGENCIES (Details)	Apr. 30, 2019 USD ($)
Commitments And Contingencies
2019	$ 24,582
2020	49,164
2021	49,164
2022	36,873
Total	$ 159,783

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COMMITMENTS AND CONTINGENCIES (Details Narrative) - August 1, 2017 through July 31, 2022 [Member]	1 Months Ended
	May 31, 2017 USD ($) Integer
Office space lease | Integer	2,210
Monthly rental expense | $	$ 4,097
Lease expiration	Jul. 31, 2022
Lease Term	5 years