10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2021

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: ☒     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: ☒     No: ☐

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

Large accelerated filer	☐	Accelerated filed	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

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 ☒

As June 14, 2021, there were 51,576,122 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, 2021 (Unaudited) and October 31, 2020	4
	Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended April 30, 2021 and 2020 (Unaudited)	5
	Consolidated Statements of Changes in Shareholders’ Equity for the Six Months Ended April 30, 2021 and 2020 (Unaudited)	6
	Consolidated Statements of Cash Flows for the Six Months Ended April 30, 2021 and 2020 (Unaudited)	7
	Notes to Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	13
Item 4.	Controls and Procedures	13
PART II: OTHER INFORMATION
Item 1.	Legal Proceedings	14
Item 1A.	Risk Factors	14
Item 2.	Sales of Equity Securities and Use of Proceeds	14
Item 3.	Defaults upon Senior Securities	14
Item 4.	Mine Safety Information	14
Item 5.	Other Information	14
Item 6.	Exhibits	15
Signatures		16

2

FORWARD LOOKING STATEMENTS

Statements made in this Form 10-Q that are not historical or current facts are forward-looking statements. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “approximate” or “continue,” or the negative thereof. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. Among the factors that could cause actual results to differ materially from the forward-looking statements are the following: the Company’s ability to obtain necessary capital, the Company’s ability to meet anticipated development timelines, the Company’s ability to protect its proprietary technology and knowhow, the Company’s ability to 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 to subsequently 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, 2021			October 31, 2020
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	574,428		$	816,798
Accounts receivable		362,637			194,263
Receivable related parties		1,829			6,264
Prepaid expenses		11,344			17,916
Total current assets		950,238			1,035,241
Property and equipment, net of accumulated depreciation of $84,215 and $82,919 respectively		12,036			12,165
Right of use asset		28,313			40,883
Total Assets	$	990,587		$	1,088,289
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	57,993		$	156,668
Accrued liabilities – related party		54,863			222,603
Deferred revenue		237,605			168,728
Current portion of operating lease liability		20,980			20,980
Total current liabilities		371,441			568,980
Loan payable		48,791			30,032
Operating lease liability- net of current portion		7,333			19,903
Total liabilities		427,565			618,913
Commitments and contingencies		--			--
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 outstanding, respectively		194			194
Common stock; $0.001 par value, 70,000,000 shares authorized, 51,576,122 shares issued and outstanding, respectively		51,577			51,577
Additional paid-in capital		6,692,824			6,595,380
Accumulative other comprehensive income		85,429			56,430
Accumulated deficit		(6,267,007	)		(6,234,210	)
Total stockholders’ equity		563,022			469,376
Total Liabilities and Stockholders’ Equity	$	990,587		$	1,088,289

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 THE THREE AND SIX MONTHS PERIODS ENDING APRIL 30, 2021 AND 2020

(Unaudited)

	Three Months						Six Months
	2021			2020			2021			2020
Revenue	$	447,972		$	419,043		$	886,038		$	838,525
Operating Expenses:
General & administrative expenses		415,092			400,306			863,098			831,432
Depreciation		655			600			1,296			1,227
Income (loss) from operations		32,225			18,137			21,644			5,866
Other Income: (expense)
Other income (expense)		8,187			1			19,809			4
Currency exchange		(31,497	)		42,515			(74,250	)		46,302
Total other income		(23,310	)		42,516		(54,441		)		46,306
Income (loss) before taxes		8,915			60,653			(32,797	)		52,172
Income refund		--			16,002			--			16,002
Net income (loss)		8,915			76,655			(32,797	)		68,174
Preferred dividends		(2,905	)		(2,905	)		(5,810	)		(5,810	)
Net income (loss) to common shareholders		6,010			73,750			(38,607	)		62,364
Foreign currency translation adjustment		20,363			(35,241	)		28,999			(40,890	)
Comprehensive income (loss)	$	26,373		$	38,509		$	(9,608	)	$	21,474
Net income (loss) per share to common shareholders-basic	$	0.00		$	0.00		$	(0,00	)	$	0.00
Net income (loss) per share to common shareholders-diluted	$	0.00		$	0.00		$	(0.00	)	$	0.00
Weighted average common shares outstanding -basic		51,576,122			51,576,122			51,576,122			51,576,122
Weighted average common shares outstanding diluted		59,493,772			59,493,772			51,576,122			59,493,772

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

5

SKKYNET CLOUD SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED APRIL 30, 2021 AND 2020

(Unaudited)

	Common				Preferred				Series B Preferred				Additional					Accumulated Other			Total
	Stock				Stock				Convertible Stock				Paid-In		Accumulated			Comprehensive			Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Loss (Income)			Equity
Balance at October 31, 2019		51,576,122	$	51,577		5,000	$	5		193,661	$	193,661	$	6,192,476	$	(5,922,877	)	$	65,472		$	580,314
Stock option expense		--		---		--		--		--		--		67,285		--			--			67,285
Change due to currency translation		--		--		--		--		--		--		--		--			(5,649	)		(5,649	)
Net loss	----			--		---		--		--		--		--		(8,481	)		--			(8,481	)
Balance at January 31, 2020		51,576,122		51,577		5,000		5		193,661		193,661		6,259,761		(5,931,358	)		59,823			633,469
Stock option expense														47,384								47,384
Change due to currency translation																			(35,241	)		(35,241	)
Net loss																76,655						76,655
Balance at April 30, 2020		51,576,122	$	51,577		5,000	$	5		193,661	$	193,661	$	6,307,145	$	(5,854,703	)	$	24,582		$	722,267
Balance at October 31, 2020		51,576,122	$	51,577		5,000	$	5		193,661	$	194	$	6,595,380	$	(6,234,210	)	$	56,430		$	469,376
Stock option expense		--		--		---		--		--		--		48,703		--			--			48,703
Change due to currency translation		--		--		--		--	----					--		--			8,636			8,636
Net Loss		--		--		--		--		--		--		--		(41,712	)		--			(41,712	)
Balance at January 31, 2021		51,576,122		51,577		5,000		5		193,661		194		6,644,083		(6,275,922	)		65,066			485,003
Stock option expense		--		--		--		--		--		--		48,741		--			--			48,741
Change due to currency translation		--		--		--		--		--		--		--		--			20,363			20,363
Net loss		--		--		--		--		--		--		--		8,915			--			8,915
Balance at April 30, 2021		51,576,122	$	51,577		5,000	$	5		193,661	$	194	$	6,692,824	$	(6,267,007	)	$	85,429		$	563,022

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

6

SKKYNET CLOUD SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Six Months Ended April 30,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(32,797	)	$	68,174
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		1,296			1,227
Option based compensation		97,444			114,669
Non-cash lease expense		12,570			14,619
Changes in operating assets and liabilities:
Accounts receivable		(168,374	)		(8,012	)
Accounts payable and accrued expenses	(98,675		)		(44,364	)
Accrued liabilities – related parties		(167,740	)		(76,821	)
Prepaid expenses and other assets		11,007			8,987
Operating lease liability		(12,570	)		(12,020	)
Deferred income		68,877			(20,747	)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(288,962	)		45,712
NET CASH USED IN INVESTING ACTIVITIES
Cash paid for the purchase of fixed assets		--			(6,023	)
NET CASH USED IN INVESTING ACTIIVITIES		--			(6,023	)
CASH FLOWS FROM FINANCING ACTIVITY
Proceeds from Canadian loan activity		15,678			28,717
NET CASH PROVIDED BY FINANCING ACTIVITY		15,678			28,717
Effect of exchange rate changes on cash and cash equivalents		30,914			(43,042	)
Net increase (decrease) in cash and cash equivalents		(242,370	)		25,364
Cash and cash equivalents, beginning of period		816,798			700,410
Cash and cash equivalents, end of period	$	574,428		$	725,774
SUPPLEMENTAL CASH FLOWS INFORMATION
Interest paid	$	--		$	--
Income taxes paid	$	--		$	--
NONCASH INVESTING AND FINANCING ACTIVITIES:
Capitalization of right to use asset and operating liability	$	--		$	68,584

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) and Skkynet, Inc. (USA). 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.

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, 2020 Annual Report on form 10-K filed with the SEC. 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 consolidated financial statements for the most recent fiscal year end October 31, 2020 as reported on Form 10-K, have been omitted.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)”. The amendments in this ASU revise the accounting related to lessee accounting. Under the new guidance, lessees are required to recognize a lease liability and a right-of-use asset for all leases. The new lease guidance also simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2018 and are to be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. The Company has adopted the new accounting pronouncement and recorded a right to use asset and operating lease liability of $68,584 as of November 1, 2019. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to carry forward the historical lease classification. The adoption of the policy did not have a cumulative impact on retained earnings.

NOTE 3- REVENUE RECOGNITION

As part of the revenue recognition reporting, the Company reports revenue by product line and geographic area. During the six months periods ended April 30, 2021 and 2020, the revenue by product line is as follows:

Category	Percentage			2021		Percentage			2020
Product sales		70	%		619,312		71	%		597,528
Support		28	%		252,419		28	%		231,804
Cloud & Other		1	%		14,307		2	%		9,193
Total		100	%		886,038		100	%		838,525

8

The Company sells its products on a worldwide basis. During the six months periods ended April 30, 2021 and 2020 the Company’s geographic concentration of revenue is as follows:

Area	Percentage			2021		Percentage			2020
North America		37	%		329,836		40	%		332,451
Europe		40	%		353,243		32	%		264,641
Asia		9	%		81,807		13	%		109,015
South America		3	%		25,430		4	%		37,269
Other		11	%		95,972		11	%		95,149
Total		100	%		886,038		100	%		838,525

NOTE 4- 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. No payments have been made as of April 30, 2021.

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 December 12, 2020, the Company issued 41,250 options of which 11,250 options were issued to three independent directors and 30,000 options were issued to three consultants. The options are exercisable into common stock of the Company at $0.64 per share. The Company calculated a fair value of the options of $27,190 using the Black Scholes option pricing model with computed volatility of 201.22%, risk-free interest rate of 2%, expected dividend yield 0%, stock price at measurement date of $0.64 and the expected term of ten years. The options are expensed over a five year period with 20% upon issuance and 20% for the first and each subsequent year.

9

During the six month period ended April 30, 2021, the Company recognized $97,444 of option expense. The unrecognized future balance to be expensed over the term of the options is $229,866.

The following sets forth the options granted and outstanding as of April 30, 2021:

	Options		Weighted Average Exercise price		Weighted Average Remaining Contract Life		Granted Options Exercisable		Intrinsic value
Outstanding at October 31, 2019		7,581,400		0.13		7.19		5,470,540	$	1,827,117
Granted		336,250		0.56		9.50		--		--
Exercised		--		--		--		--		--
Forfeited/Expired by termination		--		--		--		--		-
Outstanding at October 31, 2020		7,917,650		0.15		6.16	$	5,765,680	$	3,627,845
Granted		41,250		0.64		9.63		--		--
Exercised		--		--		--		--		--
Forfeited/Expired by termination		--		--		--		--		--
Outstanding at April 30, 2021		7,958,900		0.17		5.56		6,005,750	$	10,033,110

NOTE 6- LEASES

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 base monthly rental cost including common area charges of $2,369.

The yearly rental obligations including the lease agreements are as follows:

Fiscal Year
2021	$	10,660
2022	$	21,321
Total lease payments	$	31,981
Less present value discount		(3,668	)
		28,313
Less operating lease short term		(20,980	)
Operating lease liability, long term	$	7,333

Under the new standards the lease has been determined to be a right to use operating lease and is recognized based on the present value of the lease payments over the lease term at the commencement date which upon adoption of ASC 842 the value was determined to be $68,584 which is presented in the balance sheet as an asset labeled “right to use lease” offset by a liability labeled “lease liability”. The rate was determined as a fair value of the lease over a 30 month period using an 8% interest rate for the present value calculation. During the six months ended April 30, 2021 the asset was amortized by $12,570 and liability was reduced by $12,570.

10

NOTE 7 – MAJOR CUSTOMERS

The Company sells to their end-user customers both directly and through resellers. Four resellers accounted for 49% of revenue in the three-month period ended April 30, 2020, and three resellers accounted for 49% of revenue in the same period in 2021. Four resellers accounted for 48% of revenue in the six-month period ended April 30, 2020, and four resellers accounted for 48% of revenue in the same period in 2021. In the three-month period ended April 30, 2020, two end user customers were each responsible for more than 10% of revenue. In the same period in 2021 two end user customers were each responsible for more than 10% of revenue. In the six-month period ended April 30, 2020, no end user customers were responsible for more than 10% of our revenues. In the same period in 2021, no end user customers were responsible for more than 10% of our sales. The Company maintains all the information on their end user customers, and should a reseller discontinue operations, the Company can sell directly to the end user.

NOTE 8 – LOANS PAYABLE

On April 30, 2020, the Company’s subsidiary Cogent Systems issued a two year note for US$15,678 (CDN $20,000) under the Canadian Emergency Business Account (CEBA). The CEBA provides interest free loans to small businesses to help cover operating costs during a period when their revenues may have been reduced due to the impact of COVID-19. The loan is subject to zero interest and 25% of the amount will be forgiven if 75% of the loan amount is repaid on or before December 31, 2022. The Company has the option to extend the term of the loan for another 3 years subject to an annual interest of 5% on any balance remaining.

On December 15, 2020, the Company’s subsidiary Cogent Systems issued a two year note for US$30,032 (CDN $40,000) under the Canadian Emergency Business Account (CEBA). The CEBA provides interest free loans to small businesses to help cover operating costs during a period when their revenues may have been reduced due to the impact of COVID-19. The loan is subject to zero interest and 25% of the amount will be forgiven if 75% of the loan amount is repaid on or before December 31, 2022. The Company has the option to extend the term of the loan for another 3 years subject to an annual interest of 5% on any balance remaining

NOTE 9 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events to determine events occurring after April 30, 2021 through June 14, 2021 that would have a material impact on the Company’s financial results or require disclosure and have determined none exist.

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ITEM2: 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)”), and Skkynet Corp. (“Skkynet (Canada. 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 months periods ended April 30, 2020, revenue was $419,482 and $838,525 compared to $447,972 and $886,038 for the same periods in 2021. Revenue increased for the six month period ended April 30 , 2021 over the same period in 2020 by 5.67%. The increase in revenue for the six months period ended April 30, 2021 is attributed to higher sales by Cogent. The Company is benefiting from its prior investment in sales and marketing and market recognition, which has contributed to the increase in Cogent’s sales.

General and administrative expense, including depreciation, was $400,906 and $832,659 for the three and six month periods ended April 30, 2020 compared to $415,747 and $864,394 for the same periods in 2021. The increase in general and administrative expenses for the three and six month periods ended April 30, 2021 resulted from increased employment expenditures over the same period in 2020.

For the three and six month periods ended April 30, 2020, the Company reported an operating income of $18,137 and $5,866 compared to operating income of $32,225 and $21,644 for the same periods in 2021. The increase of operating income during the three and six month periods ended April 30, 2021 over the same periods in 2020 is attributable to higher revenue in 2021 compared to 2020.

Other income and expense for the three and six month periods ended April 30, 2020, was other income of $42,516 and $46,306 compared to other loss of $23,310 and $54,441 for the same periods in 2021. The amount of change in both periods was due to the effect of currency exchange.

Net income before and after income taxes of $60,653 and $52,172 was reported for the three and six month periods ended April 30, 2020, compared to net income before and after income taxes of $8,915 and net loss of $32,797 for the same periods in 2021. The higher net loss for the three month period in 2021 can be attributed primarily to the change in currency from a gain of $42,515 to a loss of $31,497 or a negative change of $74,012.

The Company reported comprehensive income of $38,509 and $21,474 for the three and six month periods ended April 30, 2020 compared to a comprehensive income of $26,373 and comprehensive loss of $9,608 for the same periods in 2021. 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.

12

LIQUIDITY AND CAPITAL RESOURCES

At April 30, 2021, Skkynet had current assets of $950,238 and current liabilities of $371,441, resulting in working capital of $578,797 for a current ratio of 2.56 to 1. Accumulated deficit, as of April 30, 2021, was $6,267,007 with total shareholders’ equity of $563,022.

Net cash provided from operating activities for the six months period ended April 30, 2020, was $45,712 compared to net cash used in operating activities of $288,962 for the same period in 2021.

The increase in cash used in operating activities for the six months period ended April 30, 2021 over the same period in 2020 was primarily due to an increase in accounts receivable of $168,374, reduction in accounts payable and accrued expenses of $43,812 plus a large reduction of $222,603 in accrued liabilities to related parties.

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.

Our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of April 30, 2021 using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework- 2013. Based on its evaluation, our management concluded that there are material weaknesses in our internal control over financial reporting. We lack full time personnel in accounting and financial staff to sufficiently monitor and process financial transactions in an efficient and timely manner. Our history of losses has severely limited our budget to hire and train enough accounting and financial personnel needed to adequately provide this function. Consequently, we lacked sufficient technical expertise, reporting standards and written policies and procedures along with a lack of a formal review process which includes multiple layers of review. A material weakness is a deficiency, or a combination of control deficiencies, in internal 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.

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.

13

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 ended October 31, 2020.

ITEM 2: SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3: DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4: MINE SAFETY INFORMATION

None.

ITEM 5: OTHER INFORMATION

None.

14

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

15

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SKKYNET CLOUD SYSTEMS INC.
Date: June 14, 2021	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)

16

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF

PRINCIPAL EXECUTIVE OFFICER

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

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

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

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

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

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

Date: June 14, 2021
By:	/s/ Andrew Thomas
Name:	Andrew Thomas
Title:	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF

PRINCIPAL FINANCIAL OFFICER

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

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

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

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

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

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

Date: June 14, 2021
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, 2021 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.

/s/ Andrew Thomas

Andrew Thomas

Chief Executive Officer

(Duly Authorized Principal Executive Officer)

Dated: June 14, 2021

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, 2021 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.

/s/ Lowell Holden

Lowell Holden

Chief Financial Officer

(Duly Authorized Principal Financial Officer)

Dated: June 14, 2021

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

Cover - shares	6 Months Ended
	Apr. 30, 2021	Jun. 14, 2021
Cover [Abstract]
Entity Registrant Name	SKKYNET CLOUD SYSTEMS, INC.
Entity Central Index Key	0001546853
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--10-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Apr. 30, 2021
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2021
Entity Common Stock Shares Outstanding		51,576,122
Document Quarterly Report	true
Document Transition Report	false
Entity Interactive Data Current	Yes

XML

CONSOLIDATED BALANCE SHEETS - USD ($)	Apr. 30, 2021	Oct. 31, 2020
Current Assets:
Cash and cash equivalents	$ 574,428	$ 816,798
Accounts receivable	362,637	194,263
Receivable related parties	1,829	6,264
Prepaid expenses	11,344	17,916
Total current assets	950,238	1,035,241
Property and equipment, net of accumulated depreciation of $84,215 and $82,919 respectively	12,036	12,165
Right of use asset	28,313	40,883
Total Assets	990,587	1,088,289
Current Liabilities:
Accounts payable and accrued expenses	57,993	156,668
Accrued liabilities - related party	54,863	222,603
Deferred revenue	237,605	168,728
Current portion of operating lease liability	20,980	20,980
Total current liabilities	371,441	568,980
Loan payable	48,791	30,032
Operating lease liability- net of current portion	7,333	19,903
Total liabilities	427,565	618,913
Commitments and contingencies	0	0
Stockholders' Equity:
Preferred stock value	5	5
Common stock; $0.001 par value, 70,000,000 shares authorized, 51,576,122 shares issued and outstanding, respectively	51,577	51,577
Additional paid-in capital	6,692,824	6,595,380
Accumulative other comprehensive income	85,429	56,430
Accumulated deficit	(6,267,007)	(6,234,210)
Total stockholders' equity	563,022	469,376
Total Liabilities and Stockholders' Equity	990,587	1,088,289
Series B Preferred convertible stock [Member]
Stockholders' Equity:
Preferred stock value	$ 194	$ 194

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Apr. 30, 2021	Oct. 31, 2020
Property and equipment, net of accumulated depreciation	$ 84,215	$ 82,919
Stockholders' Equity:
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	51,576,122	51,576,122
Common stock, Outstanding	51,576,122	51,576,122
Series B Preferred convertible stock [Member]
Stockholders' Equity:
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, 2021	Apr. 30, 2020	Apr. 30, 2021	Apr. 30, 2020
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)
Revenue	$ 447,972	$ 419,043	$ 886,038	$ 838,525
Operating Expenses:
General & administrative expenses	415,092	400,306	863,098	831,432
Depreciation	655	600	1,296	1,227
Income (loss) from operations	32,225	18,137	21,644	5,866
Other Income: (expense)
Other income (expense)	8,187	1	19,809	4
Currency exchange	(31,497)	42,515	(74,250)	46,302
Total other income	(23,310)	42,516	(54,441)	46,306
Income (loss) before taxes	8,915	60,653	(32,797)	52,172
Income refund	0	16,002	0	16,002
Net income (loss)	8,915	76,655	(32,797)	68,174
Preferred dividends	(2,905)	(2,905)	(5,810)	(5,810)
Net income (loss) to common shareholders	6,010	73,750	(38,607)	62,364
Foreign currency translation adjustment	20,363	(35,241)	28,999	(40,890)
Comprehensive income (loss)	$ 26,373	$ 38,509	$ (9,608)	$ 21,474
Net income (loss) per share to common shareholders-basic	$ 0.00	$ 0.00	$ (0.00)	$ 0.00
Net income (loss) per share to common shareholders-diluted	$ 0.00	$ 0.00	$ (0.00)	$ 0.00
Weighted average common shares outstanding -basic	51,576,122	51,576,122	51,576,122	51,576,122
Weighted average common shares outstanding diluted	59,493,772	59,493,772	51,576,122	59,493,772

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (Unaudited) - USD ($)	Total	Series B convertible preferred stock [Member]	Common Stock [Member]	Preferred Stock [Member]	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Loss (Income)
Balance, shares at Oct. 31, 2019		193,661	51,576,122	5,000
Balance, amount at Oct. 31, 2019	$ 580,314	$ 193,661	$ 51,577	$ 5	$ 6,192,476	$ (5,922,877)	$ 65,472
Stock option expense	67,285	0	0	0	67,285	0	0
Net loss	(8,481)					(8,481)
Change due to currency translation	(5,649)	$ 0	$ 0	$ 0	0	0	(5,649)
Balance, shares at Jan. 31, 2020		193,661	51,576,122	5,000
Balance, amount at Jan. 31, 2020	633,469	$ 193,661	$ 51,577	$ 5	6,259,761	(5,931,358)	59,823
Balance, shares at Oct. 31, 2019		193,661	51,576,122	5,000
Balance, amount at Oct. 31, 2019	580,314	$ 193,661	$ 51,577	$ 5	6,192,476	(5,922,877)	65,472
Net loss	68,174
Balance, shares at Apr. 30, 2020		193,661	51,576,122	5,000
Balance, amount at Apr. 30, 2020	722,267	$ 193,661	$ 51,577	$ 5	6,307,145	(5,854,703)	24,582
Balance, shares at Jan. 31, 2020		193,661	51,576,122	5,000
Balance, amount at Jan. 31, 2020	633,469	$ 193,661	$ 51,577	$ 5	6,259,761	(5,931,358)	59,823
Stock option expense	47,384				47,384
Net loss	76,655					76,655
Change due to currency translation	(35,241)						(35,241)
Balance, shares at Apr. 30, 2020		193,661	51,576,122	5,000
Balance, amount at Apr. 30, 2020	722,267	$ 193,661	$ 51,577	$ 5	6,307,145	(5,854,703)	24,582
Balance, shares at Oct. 31, 2020		193,661	51,576,122	5,000
Balance, amount at Oct. 31, 2020	469,376	$ 194	$ 51,577	$ 5	6,595,380	(6,234,210)	56,430
Stock option expense	48,703				48,703
Net loss	(41,712)	$ 0		$ 0	0	(41,712)	0
Change due to currency translation	8,636						8,636
Balance, shares at Jan. 31, 2021		193,661	51,576,122	5,000
Balance, amount at Jan. 31, 2021	485,003	$ 194	$ 51,577	$ 5	6,644,083	(6,275,922)	65,066
Balance, shares at Oct. 31, 2020		193,661	51,576,122	5,000
Balance, amount at Oct. 31, 2020	469,376	$ 194	$ 51,577	$ 5	6,595,380	(6,234,210)	56,430
Net loss	(32,797)
Balance, shares at Apr. 30, 2021		193,661	51,576,122	5,000
Balance, amount at Apr. 30, 2021	563,022	$ 194	$ 51,577	$ 5	6,692,824	(6,267,007)	85,429
Balance, shares at Jan. 31, 2021		193,661	51,576,122	5,000
Balance, amount at Jan. 31, 2021	485,003	$ 194	$ 51,577	$ 5	6,644,083	(6,275,922)	65,066
Stock option expense	48,741	0	0	0	48,741	0	0
Net loss	8,915	0		0	0	8,915	0
Change due to currency translation	20,363	$ 0	$ 0	$ 0	0	0	20,363
Balance, shares at Apr. 30, 2021		193,661	51,576,122	5,000
Balance, amount at Apr. 30, 2021	$ 563,022	$ 194	$ 51,577	$ 5	$ 6,692,824	$ (6,267,007)	$ 85,429

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Apr. 30, 2021	Apr. 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ (32,797)	$ 68,174
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	1,296	1,227
Option based compensation	97,444	114,669
Non-cash lease expense	12,570	14,619
Changes in operating assets and liabilities:
Accounts receivable	(168,374)	(8,012)
Accounts payable and accrued expenses	(98,675)	(44,364)
Accrued liabilities - related parties	(167,740)	(76,821)
Prepaid expenses and other assets	11,007	8,987
Operating lease liability	(12,570)	(12,020)
Deferred income	68,877	(20,747)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	(288,962)	45,712
NET CASH USED IN INVESTING ACTIVITIES
Cash paid for the purchase of fixed assets	0	(6,023)
NET CASH USED IN INVESTING ACTIIVITIES	0	(6,023)
CASH FLOWS FROM FINANCING ACTIVITY
Proceeds from Canadian loan activity	15,678	28,717
NET CASH PROVIDED BY FINANCING ACTIVITY	15,678	28,717
Effect of exchange rate changes on cash and cash equivalents	30,914	(43,042)
Net increase (decrease) in cash and cash equivalents	(242,370)	25,364
Cash and cash equivalents, beginning of period	816,798	700,410
Cash and cash equivalents, end of period	574,428	725,774
SUPPLEMENTAL CASH FLOWS INFORMATION
Interest paid	0	0
Income taxes paid	0	0
NONCASH INVESTING AND FINANCING ACTIVITIES:
Capitalization of right to use asset and operating liability	$ 0	$ 68,584

XML

ORGANIZATION AND BASIS OF PRESENTATION

6 Months Ended

Apr. 30, 2021

ORGANIZATION AND BASIS OF PRESENTATION

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) and Skkynet, Inc. (USA). 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.

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, 2020 Annual Report on form 10-K filed with the SEC. 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 consolidated financial statements for the most recent fiscal year end October 31, 2020 as reported on Form 10-K, have been omitted.

XML

SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Apr. 30, 2021

SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)”. The amendments in this ASU revise the accounting related to lessee accounting. Under the new guidance, lessees are required to recognize a lease liability and a right-of-use asset for all leases. The new lease guidance also simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2018 and are to be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. The Company has adopted the new accounting pronouncement and recorded a right to use asset and operating lease liability of $68,584 as of November 1, 2019. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to carry forward the historical lease classification. The adoption of the policy did not have a cumulative impact on retained earnings.

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REVENUE RECOGNITION

6 Months Ended

Apr. 30, 2021

REVENUE RECOGNITION

NOTE 3 - REVENUE RECOGNITION

As part of the revenue recognition reporting, the Company reports revenue by product line and geographic area. During the six months periods ended April 30, 2021 and 2020, the revenue by product line is as follows:

Category	Percentage			2021		Percentage			2020
Product sales		70	%		619,312		71	%		597,528
Support		28	%		252,419		28	%		231,804
Cloud & Other		1	%		14,307		2	%		9,193
Total		100	%		886,038		100	%		838,525

The Company sells its products on a worldwide basis. During the six months periods ended April 30, 2021 and 2020 the Company’s geographic concentration of revenue is as follows:

Area	Percentage			2021		Percentage			2020
North America		37	%		329,836		40	%		332,451
Europe		40	%		353,243		32	%		264,641
Asia		9	%		81,807		13	%		109,015
South America		3	%		25,430		4	%		37,269
Other		11	%		95,972		11	%		95,149
Total		100	%		886,038		100	%		838,525

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RELATED PARTY TRANSACTIONS

6 Months Ended

Apr. 30, 2021

RELATED PARTY TRANSACTIONS

NOTE 4 - 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. No payments have been made as of April 30, 2021.

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OPTIONS

6 Months Ended

Apr. 30, 2021

OPTIONS

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 December 12, 2020, the Company issued 41,250 options of which 11,250 options were issued to three independent directors and 30,000 options were issued to three consultants. The options are exercisable into common stock of the Company at $0.64 per share. The Company calculated a fair value of the options of $27,190 using the Black Scholes option pricing model with computed volatility of 201.22%, risk-free interest rate of 2%, expected dividend yield 0%, stock price at measurement date of $0.64 and the expected term of ten years. The options are expensed over a five year period with 20% upon issuance and 20% for the first and each subsequent year.

During the six month period ended April 30, 2021, the Company recognized $97,444 of option expense. The unrecognized future balance to be expensed over the term of the options is $229,866.

The following sets forth the options granted and outstanding as of April 30, 2021:

	Options		Weighted Average Exercise price		Weighted Average Remaining Contract Life		Granted Options Exercisable		Intrinsic value
Outstanding at October 31, 2019		7,581,400		0.13		7.19		5,470,540	$	1,827,117
Granted		336,250		0.56		9.50		--		--
Exercised		--		--		--		--		--
Forfeited/Expired by termination		--		--		--		--		-
Outstanding at October 31, 2020		7,917,650		0.15		6.16	$	5,765,680	$	3,627,845
Granted		41,250		0.64		9.63		--		--
Exercised		--		--		--		--		--
Forfeited/Expired by termination		--		--		--		--		--
Outstanding at April 30, 2021		7,958,900		0.17		5.56		6,005,750	$	10,033,110

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LEASES

6 Months Ended

Apr. 30, 2021

LEASES

NOTE 6 - LEASES

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 base monthly rental cost including common area charges of $2,369.

The yearly rental obligations including the lease agreements are as follows:

Fiscal Year
2021	$	10,660
2022	$	21,321
Total lease payments	$	31,981
Less present value discount		(3,668	)
		28,313
Less operating lease short term		(20,980	)
Operating lease liability, long term	$	7,333

Under the new standards the lease has been determined to be a right to use operating lease and is recognized based on the present value of the lease payments over the lease term at the commencement date which upon adoption of ASC 842 the value was determined to be $68,584 which is presented in the balance sheet as an asset labeled “right to use lease” offset by a liability labeled “lease liability”. The rate was determined as a fair value of the lease over a 30 month period using an 8% interest rate for the present value calculation. During the six months ended April 30, 2021 the asset was amortized by $12,570 and liability was reduced by $12,570.

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MAJOR CUSTOMERS

6 Months Ended

Apr. 30, 2021

MAJOR CUSTOMERS

NOTE 7 - MAJOR CUSTOMERS

The Company sells to their end-user customers both directly and through resellers. Four resellers accounted for 49% of revenue in the three-month period ended April 30, 2020, and three resellers accounted for 49% of revenue in the same period in 2021. Four resellers accounted for 48% of revenue in the six-month period ended April 30, 2020, and four resellers accounted for 48% of revenue in the same period in 2021. In the three-month period ended April 30, 2020, two end user customers were each responsible for more than 10% of revenue. In the same period in 2021 two end user customers were each responsible for more than 10% of revenue. In the six-month period ended April 30, 2020, no end user customers were responsible for more than 10% of our revenues. In the same period in 2021, no end user customers were responsible for more than 10% of our sales. The Company maintains all the information on their end user customers, and should a reseller discontinue operations, the Company can sell directly to the end user.

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LOANS PAYABLE

6 Months Ended

Apr. 30, 2021

LOANS PAYABLE

NOTE 8 - LOANS PAYABLE

On April 30, 2020, the Company’s subsidiary Cogent Systems issued a two year note for US$15,678 (CDN $20,000) under the Canadian Emergency Business Account (CEBA). The CEBA provides interest free loans to small businesses to help cover operating costs during a period when their revenues may have been reduced due to the impact of COVID-19. The loan is subject to zero interest and 25% of the amount will be forgiven if 75% of the loan amount is repaid on or before December 31, 2022. The Company has the option to extend the term of the loan for another 3 years subject to an annual interest of 5% on any balance remaining.

On December 15, 2020, the Company’s subsidiary Cogent Systems issued a two year note for US$30,032 (CDN $40,000) under the Canadian Emergency Business Account (CEBA). The CEBA provides interest free loans to small businesses to help cover operating costs during a period when their revenues may have been reduced due to the impact of COVID-19. The loan is subject to zero interest and 25% of the amount will be forgiven if 75% of the loan amount is repaid on or before December 31, 2022. The Company has the option to extend the term of the loan for another 3 years subject to an annual interest of 5% on any balance remaining

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SUBSEQUENT EVENTS

6 Months Ended

Apr. 30, 2021

SUBSEQUENT EVENTS

NOTE 9 - SUBSEQUENT EVENTS

The Company has evaluated subsequent events to determine events occurring after April 30, 2021 through June 14, 2021 that would have a material impact on the Company’s financial results or require disclosure and have determined none exist.

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Apr. 30, 2021

SIGNIFICANT ACCOUNTING POLICIES

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)”. The amendments in this ASU revise the accounting related to lessee accounting. Under the new guidance, lessees are required to recognize a lease liability and a right-of-use asset for all leases. The new lease guidance also simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2018 and are to be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. The Company has adopted the new accounting pronouncement and recorded a right to use asset and operating lease liability of $68,584 as of November 1, 2019. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to carry forward the historical lease classification. The adoption of the policy did not have a cumulative impact on retained earnings.

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REVENUE RECOGNITION (Tables)

6 Months Ended

Apr. 30, 2021

REVENUE RECOGNITION

Schedule of revenue by product line and geographic area

Category	Percentage			2021		Percentage			2020
Product sales		70	%		619,312		71	%		597,528
Support		28	%		252,419		28	%		231,804
Cloud & Other		1	%		14,307		2	%		9,193
Total		100	%		886,038		100	%		838,525

Schedule of geographic concentration of revenue

Area	Percentage			2021		Percentage			2020
North America		37	%		329,836		40	%		332,451
Europe		40	%		353,243		32	%		264,641
Asia		9	%		81,807		13	%		109,015
South America		3	%		25,430		4	%		37,269
Other		11	%		95,972		11	%		95,149
Total		100	%		886,038		100	%		838,525

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OPTIONS (Tables)

6 Months Ended

Apr. 30, 2021

OPTIONS

Schedule of Options granted and outstanding

	Options		Weighted Average Exercise price		Weighted Average Remaining Contract Life		Granted Options Exercisable		Intrinsic value
Outstanding at October 31, 2019		7,581,400		0.13		7.19		5,470,540	$	1,827,117
Granted		336,250		0.56		9.50		--		--
Exercised		--		--		--		--		--
Forfeited/Expired by termination		--		--		--		--		-
Outstanding at October 31, 2020		7,917,650		0.15		6.16	$	5,765,680	$	3,627,845
Granted		41,250		0.64		9.63		--		--
Exercised		--		--		--		--		--
Forfeited/Expired by termination		--		--		--		--		--
Outstanding at April 30, 2021		7,958,900		0.17		5.56		6,005,750	$	10,033,110

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LEASES (Tables)

6 Months Ended

Apr. 30, 2021

LEASES

Schedule of rental obligations

Fiscal Year
2021	$	10,660
2022	$	21,321
Total lease payments	$	31,981
Less present value discount		(3,668	)
		28,313
Less operating lease short term		(20,980	)
Operating lease liability, long term	$	7,333

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SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	Apr. 30, 2021	Oct. 31, 2020
Right to use asset and operating lease liability	$ 28,313	$ 40,883
November 1, 2019 [Member]
Right to use asset and operating lease liability	$ 68,584

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REVENUE RECOGNITION (Details) - USD ($)	3 Months Ended		6 Months Ended
	Apr. 30, 2021	Apr. 30, 2020	Apr. 30, 2021	Apr. 30, 2020
Total Revenue	$ 447,972	$ 419,043	$ 886,038	$ 838,525
Revenue percentage			100.00%	100.00%
Product Sales [Member]
Total Revenue			$ 619,312	$ 597,528
Revenue percentage			70.00%	71.00%
Support [Member]
Total Revenue			$ 252,419	$ 231,804
Revenue percentage			28.00%	28.00%
Cloud & Other [Member]
Total Revenue			$ 14,307	$ 9,193
Revenue percentage			1.00%	2.00%

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REVENUE RECOGNITION (Details 1) - USD ($)	3 Months Ended		6 Months Ended
	Apr. 30, 2021	Apr. 30, 2020	Apr. 30, 2021	Apr. 30, 2020
Total revenue	$ 447,972	$ 419,043	$ 886,038	$ 838,525
Revenue percentage			100.00%	100.00%
North America [Member]
Total revenue			$ 329,836	$ 332,451
Revenue percentage			37.00%	40.00%
Europe [Member]
Total revenue			$ 353,243	$ 264,641
Revenue percentage			40.00%	32.00%
Asia [Member]
Total revenue			$ 81,807	$ 109,015
Revenue percentage			9.00%	13.00%
Other [Member]
Total revenue			$ 95,972	$ 95,149
Revenue percentage			11.00%	11.00%
South America [Member]
Total revenue			$ 25,430	$ 37,269
Revenue percentage			3.00%	4.00%

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RELATED PARTY TRANSACTIONS (Details Narrative)	Apr. 30, 2021 USD ($)
One Time Payment Payable Under Agreement	$ 30,000
Andrew Thomas [Member]
Ownership percentage	72.34%
Paul Benford [Member]
Ownership percentage	27.66%

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OPTIONS (Details) - USD ($)	6 Months Ended	12 Months Ended
	Apr. 30, 2021	Oct. 31, 2020
Options
Beginning balance, options	7,917,650	7,581,400
Option granted	41,250	336,250
Ending balance, options	7,958,900	7,917,650
Weighted Average Exercise Price
Weighted average exercise price of shares outstanding beginning balance	$ 0.15	$ 0.13
Weighted average exercise price of share granted	0.64	0.56
Weighted average exercise price of share exercised	0.00	0.00
Weighted average exercise price of share forfeited	0.00	0.00
Weighted average exercise price of shares outstanding ending balance	$ 0.17	$ 0.15
Weighted Average Remaining Contractual Terms
Weighted average remaining contractual terms of share outstanding, beginning	6 years 1 month 28 days	7 years 2 months 9 days
Weighted average remaining contractual terms of share granted	9 years 7 months 17 days	9 years 5 months 30 days
Weighted average remaining contractual terms of share outstanding, ending	5 years 6 months 22 days	6 years 1 month 28 days
Granted Options Exercisable
Option exercisable, beginning balance	5,765,680	5,470,540
Option exercisable, ending balance	6,005,750	5,765,680
Intrinsic Value
Aggregate intrinsic value of share outstanding beginning balance	$ 3,627,845	$ 1,827,117
Aggregate intrinsic value of share outstanding ending balance	$ 10,033,110	$ 3,627,845

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OPTIONS (Details Narrative) - USD ($)		6 Months Ended		12 Months Ended
	Dec. 12, 2020	Apr. 30, 2021	Apr. 30, 2020	Oct. 31, 2020
Unrecognized future balance		$ 229,866
Option based compensation		$ 97,444	$ 114,669
Granted		41,250		336,250
Exercise price		$ 0.00		$ 0.00
Option [Member]
Computed volatility	201.22%
Risk free, interest rate	2.00%
Expected divident yield	0.00%
Stock measurment Excercise price, per share	$ 0.64
Exercise price	$ 0.64
Fair value of stock option	$ 27,190
Expected term	10 years
Description of stock option	The options are expensed over a five year period with 20% upon issuance and 20% for the first and each subsequent year.
Option [Member] | Three directors [Member]
Granted	11,250
Total option issued	41,250
Three Consultants [Member] | Option [Member]
Granted	30,000

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LEASES (Details) - USD ($)	Apr. 30, 2021	Oct. 31, 2020
LEASES
2021	$ 10,660
2022	21,321
Total lease payments	31,981
Less present value discount	(3,668)
Total balance	28,313
Less operating lease short term	(20,980)
Operating lease liability, long term	$ 7,333	$ 19,903

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LEASES (Details Narrative)	6 Months Ended
	Apr. 30, 2021 USD ($) ft²
LEASES
Lease liability	$ 68,584
Lease area | ft²	2,210
Lease rental expense, monthly	$ 2,369
Lease expiration	Jul. 31, 2022
Lease Term	5 years
Amortization of assets	$ 12,570
Accrued liablility, Decrease	$ 12,570
Operating Lease, Discount Rate	8.00%
Description of Operating Lease	The rate was determined as a fair value of the lease over a 30 month period using an 8% interest rate for the present value calculation.

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MAJOR CUSTOMERS (Details Narrative)	3 Months Ended		6 Months Ended
	Apr. 30, 2021	Apr. 30, 2020	Apr. 30, 2021	Apr. 30, 2020
Revenue [Member]
Concentration risk percentage of revenue, description			No end user customers were responsible for more than 10% of our sales	No end user customers were responsible for more than 10% of our revenues
Sales [Member] | Two end user customers [Member]
Concentration risk percentage of revenue, description	Two end user customers were each responsible for more than 10% of revenue	Two end user customers were each responsible for more than 10% of revenue
Sales [Member] | Resellers Four [Member]
Concentration risk, percentage		49.00%	48.00%	48.00%
Sales [Member] | Resellers Three [Member]
Concentration risk, percentage	49.00%

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LOANS PAYABLE (Details Narrative) - Cogent Systems [Member] - USD ($)		1 Months Ended
	Dec. 15, 2020	Apr. 30, 2020
Description of loan payable	The loan is subject to zero interest and 25% of the amount will be forgiven if 75% of the loan amount is repaid on or before December 31, 2022.	The loan is subject to zero interest and 25% of the amount will be forgiven if 75% of the loan amount is repaid on or before December 31, 2022.
Interest rate	5.00%	5.00%
Extended term of note	3 years	3 years
Notes payable	$ 30,032	$ 15,678