SKKY 10-Q Quarterly Report July 31, 2014

SKKYNET CLOUD SYSTEMS, INC.

10-Ks and 10-Qs

10-Q	Quarter ended July 31, 2025
10-Q	Quarter ended April 30, 2025
10-Q	Quarter ended Jan. 31, 2025
10-K	Fiscal year ended Oct. 31, 2024
10-Q	Quarter ended July 31, 2024
10-Q	Quarter ended April 30, 2024
10-Q	Quarter ended Jan. 31, 2024
10-K	Fiscal year ended Oct. 31, 2023
10-Q	Quarter ended July 31, 2023
10-Q	Quarter ended April 30, 2023
10-Q	Quarter ended Jan. 31, 2023
10-K	Fiscal year ended Oct. 31, 2022
10-Q	Quarter ended July 31, 2022
10-Q	Quarter ended April 30, 2022
10-Q	Quarter ended Jan. 31, 2022
10-K	Fiscal year ended Oct. 31, 2021
10-Q	Quarter ended July 31, 2021
10-Q	Quarter ended April 30, 2021
10-Q	Quarter ended Jan. 31, 2021
10-K	Fiscal year ended Oct. 31, 2020
10-Q	Quarter ended July 31, 2020
10-Q	Quarter ended April 30, 2020
10-Q	Quarter ended Jan. 31, 2020
10-K	Fiscal year ended Oct. 31, 2019
10-Q	Quarter ended July 31, 2019
10-Q	Quarter ended April 30, 2019
10-Q	Quarter ended Jan. 31, 2019
10-K	Fiscal year ended Oct. 31, 2018
10-Q	Quarter ended July 31, 2018
10-Q	Quarter ended April 30, 2018
10-Q	Quarter ended Jan. 31, 2018
10-K	Fiscal year ended Oct. 31, 2017
10-Q	Quarter ended July 31, 2017
10-Q	Quarter ended April 30, 2017
10-Q	Quarter ended Jan. 31, 2017
10-K	Fiscal year ended Oct. 31, 2016
10-Q	Quarter ended July 31, 2016
10-Q	Quarter ended April 30, 2016
10-Q	Quarter ended Jan. 31, 2016
10-K	Fiscal year ended Oct. 31, 2015
10-Q	Quarter ended July 31, 2015
10-Q	Quarter ended April 30, 2015
10-Q	Quarter ended Jan. 31, 2015
10-K	Fiscal year ended Oct. 31, 2014
10-Q	Quarter ended July 31, 2014
10-Q	Quarter ended April 30, 2014
10-Q	Quarter ended Jan. 31, 2014
10-K	Fiscal year ended Oct. 31, 2013
10-Q	Quarter ended July 31, 2013
10-Q	Quarter ended April 30, 2013
10-Q	Quarter ended Jan. 31, 2013
10-K	Fiscal year ended Oct. 31, 2012

10-Q 1 skky_10q.htm FORM 10-Q skky_10q.htm

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 July 31, 2014

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

For the transition period from ___________ to ____________.

Commission File Number 000-54747

SKKYNET CLOUD SYSTEMS INC.

(Exact name of registrant as specified in its charter)

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

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

(Address of principal executive offices)

20 Bay Street – Suite 1100, Toronto, Ontario, Canada M5J 2N8

(Former Address)

(888) 628-2028

(Issuer's telephone number)

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

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

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

Large accelerated filer	o	Accelerated filed	o
Non-accelerated filer	o	Smaller reporting company	x

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

As of September 10, 2014 there were 50,642,500 shares of Common Stock of the issuer outstanding.

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	4
	Consolidated Balance Sheets as of July 31, 2014 (Unaudited) and October 31, 2013		4
	Consolidated Statements of Operations for the Three and Nine months Ended July 31, 2014 and 2013 (Unaudited)		5
	Consolidated Statements of Cash Flows for the Nine Months Ended July 31, 2014 and 2013 (Unaudited)		6
	Notes to Consolidated Financial Statements (Unaudited)		7

Item 2.	Management’s Discussion and Analysis and Plan of Operation		10

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		12

Item 4.	Controls and Procedures		12

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings		13

Item 1A.	Risk Factors		13

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		13

Item 3.	Defaults upon Senior Securities		13

Item 4.	Mine Safety Information		13

Item 5.	Other Information		13

Item 6.	Exhibits		14

Signatures			15

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 identify and develop a network of physicians, the Company’s ability to establish a global market, clinical trial results, 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.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SKKYNET CLOUD SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	July 31, 2014			October 31, 2013
ASSETS
Current Assets:
Cash and cash equivalents	$	404,872		$	365,415
Accounts receivable		81,590			88,806
Total current assets		486,462			454,221

Property and equipment, net of accumulated depreciation of $68,062 and $70,484 respectively		4,628			5,398
Intangible assets		1,648			1,648
Total Assets	$	492,738		$	461,267

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts payable and accrued expenses	$	2,515		$	34,567
Accounts payable – related parties		-			52,432
Accrued liabilities – related party		195,302			143,872
Notes payable – related parties		158,092			-
Deferred income		63,230			59,312
Total current liabilities		419,139			290,183

Notes payable to related parties		-			197,434
Total liabilities		419,139			487,617

Stockholders’ Deficit:
Preferred stock; $0.001 par value, 5,000,000 shares authorized, 5,000 shares issued and outstanding		5			5
Common stock; $0.001 par value, 70,000,000 shares authorized, 49,844,000 and 49,334,000 shares issued and outstanding, respectively		49,844			49,334
Additional paid-in capital		1,160,835			555,773
Accumulative other comprehensive income (loss)		26,274			12,603
Accumulated deficit		(1,163,359	)		(644,065	)
Total stockholders’ equity (deficit)		73,599			(26,350	)
Total Liabilities and Stockholders’ Equity	$	492,738		$	461,267

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

SKKYNET CLOUD SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended July 31,						Nine Months Ended July 31,
	2014			2013			2014			2013
Revenue	$	209,578		$	198,801		$	744,925		$	601,328
Direct material costs		1,116			2,300			2,571			6,008

Operating Expenses:
General & administrative		458,884			220,307			1,264,706			730,621
Depreciation		428			447			1,238			1,329
Loss from operations		(250,850	)		(24,253	)		(523,590	)		(136,630	)

Other Income (Expenses):
Tax refund		--			--			--			86,236
Gain on debt forgiveness		--			--			11,982			--
Other Expense		--			(4	)		--			(8	)
Interest expense		(2,418	)		(3,026	)		(7,686	)		(9,250	)
Total other income (expenses)		(2,418	)		(3,030	)		4,296			76,978
Net loss	$	(253,268	)	$	(27,283	)	$	(519,294	)	$	(59,652	)

Foreign currency translation adjustment		(6,908	)		(6,209	)		(13,671	)		(5,416	)

Comprehensive (loss)	$	(260,176	)	$	(33,492	)	$	(532,965	)	$	(65,068	)

Net loss per common share attributable to common stockholders (basic and diluted)	$	(0.01	)	$	(0.00	)	$	(0.01	)	$	(0.00	)

Weighted average common shares outstanding (basic and diluted)		49,844,000			49,334,000			49,703,890			49,334,000

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

SKKYNET CLOUD SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended July 31,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(519,294	)	$	(59,652	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation expense		1,238			1,329
Option based compensation		235,822			--
Gain on debt forgiveness		(11,982	)		--
Changes in operating assets and liabilities:
Accounts receivable		7,216			7,020
Accounts payable and accrued expenses		(11,843	)		36,377
Accrued liabilities – related parties		(1,002	)		270,331
Taxes payable		(8,227	)		(1,720	)
Deferred Income		3,918			--
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(304,154	)		253,685

CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for the purchase of fixed assets		(2,020	)		(984	)
NET CASH USED IN INVESTING ACTIVITIES		(2,020	)		(984	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the sale of common stock		369,750			--
Payments on notes payable –related parties		(39,342	)		(6,086	)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		330,408			(6,086	)

Effect of exchange rate changes on cash		15,223			995

Net increase in cash		39,457			247,610
Cash, beginning of period		365,415			122,053
Cash, end of period	$	404,872		$	369,663

SUPPLEMENTAL CASH FLOWS INFORMATION
Interest paid	$	21,007		$	260
Income taxes paid	$	--		$	--

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

SKKYNET CLOUD SYSTEMS, INC.

NOTES TO UNAUDITED 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 subsidiary Cogent Real-Time Systems, Inc. (Cogent). Skkynet was formed primarily for the purpose of taking the existing business lines of Cogent and its current and future customers and integrating these businesses with Cloud based systems.

The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (SEC), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s October 31, 2013 Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year end October 31, as reported on Form 10-K, have been omitted.

NOTE 2 – RELATED PARTY TRANSACTIONS

On July 31, 2012, Andrew Thomas, Shizuka Thomas and Paul Benford converted the salary they had accrued through our subsidiary through July 31, 2012 to notes payable due from that subsidiary. The notes mature on April 29, 2015 and bear an interest rate of 6% per annum on the outstanding balance. Interest payments are due quarterly commencing October 30, 2012. As of July 31, 2014 the outstanding amounts on the notes payable were $158,092 as noted below:

Note balance as of:	July 31, 2014		October 31, 2013
Andrew Thomas	$	47,938	$	59,572
Paul Benford	$	77,922	$	97,545
Shizuka Thomas	$	32,232	$	40,317
Total	$	158,092	$	197,434

On January 1, 2012 and April 15, 2012 the Company and its subsidiary entered into employment agreements with four of its officers and directors. As a result of these agreements the Company has accrued compensation for each of the individuals. As of July 31, 2014 the accrued liability for compensation was $190,559.

As of July 31, 2014 and October 31, 2013 the Company had the following outstanding accrued liabilities due to related parties:

As of	July 31, 2014		October 31, 2013
Accrued salaries		161,957		90,808
Accrued interest		4,745		18,064
Accounts payable		--		52,432
Consulting fees		28,600		35,000
Total accrued liabilities		195,302		196,304

NOTE 3 – EQUITY

On January 14, 2014 the Company sold 510,000 shares of restricted common stock to eight individuals with a value of $0.725 per share for $369,750 in cash.

NOTE 4 – OPTIONS

The Company under its 2012 option plan issues option to various officers, directors and consultants. The options vest in equal annual installments over a five year period with the first 20% vested when the options were granted. All of the options are exercisable at a purchase price based on the last trading price of the Company’s common stock.

On November 1, 2013 the Company issued 185,000 options with an exercise price of $0.55 per share to an officer of the Company. Computed volatility of 397.88% and a discount rate of 2.65 were used in calculating the fair value of the option of $101,750.

On December 14, 2013 the Company issued 15,000 options with an exercise price of $0.85 per share to two independent directors and a consultant of the Company. Computed volatility of 371.40% and a discount rate of 2.89 were used in calculating the fair value of the option of $12,750.

On January 13, 2014 the Company issued 580,000 options with an exercise price of $0.88 per share to four officers of the Company. Computed volatility of 360.15% and a discount rate of 2.84 were used in calculating the fair value of the option of $510,400.

On May 12, 2014 the Company issued 90,000 options with an exercise price of $1.40 per share to one employee and two consultants. Computed volatility of 360.15% and a discount rate of 2.66 were used in calculating the fair value of the option of $126,000.

The Company has elected to expense the options over the life of the option as stock based compensation. The expense is calculated with a Black Scholes model to reach the fair value over the length of each option. The total value calculated for option expense above is $750,900. As of July 31, 2014 the Company expensed $235,822 for the nine months period ended July 31, 2014. The unrecognized future balance to be expensed over the term of the options is $515,077.

The following sets forth the options granted and outstanding as of July 31, 2014:

Options as of October 31, 2013	Options Granted	Options as of July 31, 2014	Number Exercisable	Number Exercised	Aggregate Intrinsic Value

3,055,000	870,000	3,925,000	1,996,000	--	$	4,052,600

NOTE 5 – DEFERRED REVENUE

The Company receives part of its revenue from the sale of software support. The revenue received is for one year of support from the date of the support sale. The Company defers the revenue for the future periods in which it is obligated to perform the support service. As of July 31, 2014 the Company had deferred revenue of $63,230.

NOTE 6 – ACCOUNTS PAYABLE

During the year to date period ending July 31, 2014 the Company negotiated payments with three vendors resulting in a gain on debt settlement of $11,982.

NOTE 7 – SUBSEQUENT EVENT

On August 15, 2014 the Company sold 798,500 shares of restricted common stock at $1.10 per share to 19 individuals for $878,350 in cash.

On August 22, 2014, the Company issued 275,000 options to 5 employees with exercise price of $1.20. 20% of the option will vest immediately, the additional 20% to vest on August 22 of each successive year.

On August 22, 2014, the Company issued 1,015,000 options to 2 employees with exercise price of $1.20. The option will vest on August 22, 2024. The vesting of the options may accelerate at the rate of 200,000 options for each $1,000,000 of annual audited sale above the first $1,000,000 of sales up to 815,000 options and 50,000 options for every $1,000,000 of annual audited sales up to 200,000 options.

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

The Company operates its business through its wholly-owned subsidiary Cogent Real-Time Systems, Inc. (Cogent). The Company has taken the existing business lines of Cogent and integrated these with Cloud based systems.

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 where requested by a client, our web based assets, this gives clients and their customers (to the extent relevant) 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 nine month periods ending July 31, 2014, revenues were $209,578 and $744,925 compared to $198,801 and $601,328 for the same period in 2013, respectively. Revenue increased for the nine month period ending July 31, 2014 over the nine month period ended July 31, 2013 are the result of increased sales to customers and the addition of new customers. The Company hired two full time marketing employees to concentrate on the marketing of its software plus commenced a marketing program including channeled advertising and trade show presentations.

General and administrative expense increased to $458,884 and $1,264,706 for the three and nine months ended July 31, 2014 from $220,307 and $730,621 for the same period in 2013, respectively. The increase in general and administrative expenses for the nine months ended July 31, 2014 included options expensed of $235,822, compared to none in 2013, increased consulting, the opening of a new office plus added marketing expenses in the business growth.

For the three and nine month periods ending July 31, 2014 the Company posted an operating loss of $250,850 and $523,590 compared to an operation loss of $24,253 and $136,630 for the same periods in 2013, respectively. The increase in operating loss is attributable to increased expenses in consulting, salaries, and office opening expenses plus the stock based compensation booked for the option expenses of $235,822. The increase in sales offset some of the additional expense incurred during the nine month period ended July 31, 2014.

Other income and expenses for the three and nine month periods ending July 31, 2014 included expense of $2,418 and income of $4,296 for the three and nine month periods ended July 31, 2014 compared to other expense of $3,030 and other income of $76,978 for the same periods in 2013. During the nine month period ended July 31, 2014 other income was attributed to gain on the settlement of debt of $11,982 offset by interest expense of $7,686, compared to a tax refund of $86,236 offset by interest expense of $9,250 and other expense of $8 for the same period in 2013.

A net loss of $253,268 and $519,294 was recorded for the three and nine month periods ending July 31, 2014 compared to a net loss of $27,283 and $59,652 for the same periods in 2013. The loss can be attributed to added employee costs and increased marketing activity in 2014 compared to 2013.

LIQUIDITY AND CAPITAL RESOURCES

At July 31, 2014, Skkynet had current assets of $486,462 and current liabilities of $419,139, resulting in working capital of $67,323 and a current ratio of 1.16:1. Accumulated deficit as of July 31, 2014 was $1,163,359 with total shareholder equity of $73,599.

Net cash used in operations for the nine months ending July 31, 2014 was $304,154 compared to net cash provided of $253,685 for the same period in 2013. Net cash used in operations increased primarily due to an increase in the net loss of $459,642, an increase in accounts payable and accrued expense of $21,072. These were offset by stock based compensation for valuing options of $235,822, decrease in accounts receivable of $7,216 and deferred revenue of $3,918.

Cash used in investing activities in the nine month periods ended July 31, 2014 and 2013 were $2,020 and $984, respectively.

Net cash provided in financing activities during the nine months ended July 31, 2014 was $330,408 compared to net cash used of $6,086 for the same period in 2013. The change was due to the sale of common stock of $369,750 offset by the reduction of notes payable to related parties of $39,342.

Our existing capital may not be sufficient to meet Skkynet‘s cash needs, however our shareholders deficit as of October 31, 2013 improved to shareholders equity of $73,599 as of July 31, 2014 and our cash on hand increased from $365,415 as of October 31, 2013 to $404,872 at quarter end of July 31, 2014. In addition our working capital increased as of July 31, 2014 to $67,323 from negative working capital of $33,396 as of October 31, 2013 or an increase of $100,719. The comparison of year end October 31, 2013 to the nine month period ended July 31, 3014 is affected by the re-classing of long term notes payable in the amount of $158,092 to short term notes payable due to their maturity date. In addition as of August 15, 2014, the Company completed a sale of common stock for $878,350 in cash.

OFF-BALANCE SHEET ARRANGEMENTS

We have no significant 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 July 31, 2014. 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.

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, 2013.

ITEM 2. SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On January 14, 2014 the Company sold 510,000 shares of restricted common stock to eight individuals with a value of $0.725 per share for $369,750 in cash.

On August 15, 2014 the Company sold 798,500 share of restricted common stock to nineteen individuals with a value of $1.10 per share for $878,350 in cash.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None

ITEM 4. MINE SAFETY INFORMATION

None

ITEM 5. OTHER INFORMATION.

None

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

_____________

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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: September 10, 2014	By:	/s/ Andrew Thomas
	Name:	Andrew Thomas
	Title:	Chief Executive Officer (Duly Authorized, Principal Executive Officer)

Date: September 10, 2014	By:	/s/ Lowell Holden
	Name:	Lowell Holden
	Title:	Chief Financial Officer (Duly Authorized Principal Financial Officer)

SKKY 10-Q Quarter ended July 31, 2014