10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended April 30, 2015

OR

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

For the transition period from ___________ to ____________.

Commission File Number 000-54747

SKKYNET CLOUD SYSTEMS INC.

(Exact name of registrant as specified in its charter)

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

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

(Address of principal executive offices)

(888) 628-2028

(Issuer's telephone number)

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

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

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

Large accelerated filer	¨	Accelerated filed	¨
Non-accelerated filer	¨	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 ¨ No x

As of June 15, 2015 there were 50,795,500 shares of Common Stock of the issuer outstanding.

		Page
PART I: FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets as of April 30, 2015 (Unaudited) and October 31, 2014		4
	Consolidated Statements of Operations and Comprehensive Loss for the Three and Six months Ended April 30, 2015 and 2014 (Unaudited)		5
	Consolidated Statements of Cash Flows for the Six Months Ended April 30, 2015 and 2014 (Unaudited)		6
	Notes to Consolidated Financial Statements (Unaudited)		7
Item 2.	Management’s Discussion and Analysis and Plan of Operation		11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		12
Item 4.	Controls and Procedures		13
PART II: OTHER INFORMATION
Item 1.	Legal Proceedings		14
Item 1A.	Risk Factors		14
Item 2.	Unregistered 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 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.

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PART I

ITEM 1: FINANCIAL STATEMENTS

SKKYNET CLOUD SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	April 30, 2015			October 31, 2014
ASSETS
Current Assets:
Cash and cash equivalents	$	493,618		$	977,688
Accounts receivable		230,972			86,564
Inventory		6,581			--
Prepaid		26,737			--
Total current assets		757,908			1,064,252
Property and equipment, net of accumulated depreciation of $70,911 and $70,484 respectively		3,332			3,456
Intangibles -net		51,906			2,248
Other assets		5,672
Total Assets	$	818,818		$	1,069,956
LIABILITIES AND STOCKHOLDERS’ EQUITY(DEFICIT)
Current Liabilities:
Accounts payable and accrued expenses	$	62,332		$	58,104
Accrued expense – related parties		10,730			6,911
Accrued liabilities – related party		377,358			241,926
Notes payable – related parties		142,976			153,580
Deferred income		121,892			44,845
Total current liabilities		715,288			505,366
Total liabilities		715,288			505,366
Stockholders’ Equity:
Preferred stock; $0.001 par value, 5,000,000 shares authorized, 5,000 shares issued and outstanding		5			5
Common stock; $0.001 par value, 70,000,000 shares authorized, 50,795,500 and 50,642,500 shares issued and outstanding, respectively		50,796			50,643
Additional paid-in capital		2,636,757			2,206,424
Accumulative other comprehensive income (loss)		(33,965	)		10,846
Accumulated deficit		(2,550,063	)		(1,703,328	)
Total shareholders’ equity		103,530			564,590
Total Liabilities and Stockholders’ Equity	$	818,818		$	1,069,956

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

(Unaudited)

	Three Months Ended April 30,						Six Months Ended April 30,
	2015			2014			2015			2014
Revenue	$	309,886		$	248,298		$	541,750		$	535,347
Direct material costs		24,458			1,373			27,145			1,455
Operating Expenses:
General & administrative		583,601			422,460			1,345,986			805,822
Depreciation and amortization		5,609			370			11,226			810
Loss from operations		(303,782	)		(175,905	)		(842,607	)		(272,740	)
Other Income (Expenses):
Other income		172			--			168			--
Gain on debt forgiveness		--			11,982			--			11,982
Interest expense		(2,288	)		(2,180	)		(4,296	)		(5,268	)
Total other income (expenses)		(2,116	)		9,802			(4,128	)		6,714
Net loss	$	(305,898	)	$	(166,103	)		(846,735	)	$	(266,026	)
Foreign currency translation adjustment		(50,777	)		(11,538	)		(44,812	)		(6,763	)
Comprehensive (loss)	$	(356,675	)	$	(154,565	)	$	(891,547	)	$	(272,789	)
Net loss per common share attributable to common stockholders (basic and diluted)	$	(0.01	)	$	(0.00	)	$	(0.02	)	$	(0.01	)
Weighted average common shares outstanding (basic and diluted):		50,795,500			49,844,000			50,779,555			49,632,674

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

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SKKYNET CLOUD SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Unaudited)

	Six Months Ended
	April 30,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(846,735	)	$	(266,026	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense		11,226			810
Option based compensation		218,736			172,582
Stock based compensation		37,250
Gain on debt forgiveness		--			(11,982	)
Changes in operating assets and liabilities:
Accounts receivable		(107,319	)		(111,075	)
Accounts payable and accrued expenses		(33,801	)		(9,624	)
Inventory		595			--
Accrued liabilities – related parties		139,251			(58,336	)
Taxes payable		--			(7,168	)
Prepaid		(21,498	)		--
Deferred Income		73,234			34,038
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(529,061	)		(256,781	)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for purchase of fixed assets		--			(735	)
Cash received, net of cash paid for NiC		(1,118	)		--
NET CASH USED IN INVESTING ACTIVITIES		(1,118	)		(735	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the sale of common stock		100,000			369,750
Payments on notes payable –related parties		--			(41,083	)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		100,000			328,667
Effect of exchange rate changes on cash		(53,891	)		7,126
Net increase (decrease) in cash		(484,070	)		78,277
Cash, beginning of period		977,688			365,415
Cash, end of period	$	493,618		$	443,692
SUPPLEMENTAL CASH FLOWS INFORMATION
Interest paid	$	--		$	21,920
Income taxes paid	$	--		$	--
Non-Monetary Transactions
Assets acquired in acquisition through stock issuance	$	74,500		$	--

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

6

SKKYNET CLOUD SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

Skkynet Cloud Systems, Inc. (“Skkynet” or “the Company”) is a Nevada corporation formed on August 31, 2011 and headquartered in Toronto, Canada. Skkynet operates its business through its wholly-owned subsidiary Cogent Real-Time Systems, Inc. (“Cogent”). Skkynet was formed primarily for the purpose of taking the existing business lines of Cogent and its current and future customers and integrating these businesses with Cloud based systems.

On November 1, 2014 the Company acquired Nic Corporation as a wholly owned subsidiary. On February 1, 2015 the Company formed a wholly owned US subsidiary Skkynet, Inc. (See Note 7 Acquisitions)

The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (the “SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s October 31, 2014 Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year end October 31, 2014 as reported on Form 10-K, have been omitted.

Inventory

Inventory consists of hardware used to embed software and is stated at the lower of cost or market.

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 April 30, 2015 the outstanding amounts on the notes payable were $142,976 as noted below plus accrued interest of $10,730:

Note balance as of:	April 30, 2015		October 31, 2014
Andrew Thomas	$	43,354	$	46,570
Paul Benford	$	70,471	$	75,698
Shizuka Thomas	$	29,151	$	31,312
Total	$	142,976	$	153,580

On January 1, 2012 and April 15, 2012 the Company and its subsidiary entered into employment agreements with four of its officers and directors. As a result of these agreements the Company has accrued compensation for each of the individuals. In addition the Company is accruing director compensation at the rate of $2,500 per director per month. As of April 30, 2015 the accrued liability for compensation was $377,358.

7

As of April 30, 2015 and October 31, 2014 the Company had the following outstanding accrued liabilities due to related parties:

As of	April 30, 2015		October 31, 2014
Accrued salaries	$	277,475	$	201,026
Director fees	$	52,500	$	7,500
Consulting fees	$	43,000	$	33,400
Accrued liabilities	$	372,975	$	241,926
Accrued expense	$	10,730	$	6,911
Total accrued liabilities and accrued expense	$	383,705	$	248,837

On December 4, 2014 the Company issued 78,000 shares of common stock a $1.282 per share to a related party for $ 100,000 in cash.

NOTE 3 –EQUITY

On November 1, 2014 the Company issued 50,000 shares of common stock to three individuals with a value of $74,500 for the acquisition of Nic Corporation. (See Note 7 Acquisition)

On November 10, 2014 the Company issued 25,000 shares of common stock to one entity with a value of $37,250 for services.

On December 4, 2014 the Company issued 78,000 shares of common stock a $1.282 per share to a related party for $ 100,000 in cash.

NOTE 4 – OPTIONS

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

On January 19, 2015 the Company issued 106,000 options under the 2012 option plan to 4 employees with an exercise price of $1.32 per share.

On February 10, 2015, the Company issued 10,000 options to one consultant with exercise price of $1.30. 20% of the option will vest immediately, the additional 20% to vest on February 10 of each successive year.

The Company has elected to expense the options over the life of the option as stock based compensation. The expense is calculated with a Black Scholes model to reach the fair value over the length of each option. The total value calculated for option expense is $2,459,889. During the period ended April 30, 2015 the Company expensed $218,376 for options. The unrecognized future balance to be expensed over the term of the options is $1,167,891.

8

The following sets forth the options granted and outstanding as of April 30, 2015:

	Options		Weighted Average Exercise price		Weighted Average Remaining Contract Life		Number of Options Exercisable		Intrinsic value
Outstanding at October 31, 2014		5,270,000		0.51		8.69		2,218,000		5,164,900
Granted		116,000		1.32		9.76		854,200		--
Exercised				--		--		--		--
Outstanding at April 30, 2015		5,386,000		0.52		8.71		3,072,200		4,416,520

NOTE 5 - COMMITMENTS AND CONTINGENCIES

The Company leases office space located at 2233 Argentia Road Suite 306 Mississauga, Ontario Canada L5N 2X7. The offices contain approximately 2,810 square feet of office space and are leased from July 1, 2014 through July, 2017. Under the terms of the lease the gross monthly rental cost including common area charges is $6,700 per month. The lease terminates on July, 31, 2017. The yearly rental obligations under the lease agreement are as follows:

2015	$	29,075
2016	$	70,567
2017	$	61,538
2018	$	0
2029	$	0
thereafter	$	0
Total	$	161,180

NOTE 6 – DEFERRED REVENUE

The Company receives part of its revenue from the sale of software support. The revenue received is for one year of support from the date of the support sale. The Company defers the revenue for the future periods in which it is obligated to perform the support service. As of April 30, 2015 the Company had deferred revenue of $121,892.

9

NOTE 7 – ACQUISITION

On November 1, 2014 the Company acquired all the outstanding shares of Nic Corporation, based in Japan, for $110,000 in cash plus 50,000 share of common stock. The Company determined in accordance with ASC 805-10-25-6 that the 50,000 shares of common stock was valued at the closing price on the date of purchase at $1.49 for a total value of $74,500. In accordance with purchase acquisition accounting, the company initially allocated the consideration to the net tangible and identifiable intangible assets, based on their estimated fair values as of the date of acquisition. Customer Lists represents the excess of the purchase price over the fair value of the underlying net tangible and identifiable intangible assets.

The Company estimates the useful life to the customer list to be three years and thus it is being amortized over a three year period. The amortization for the three month period that was recorded is $5,190.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date. The company has not finalized its purchase price allocation and this is preliminary.

Cash and cash equivalents	$	108,882
Accounts receivable		37,089
Inventory		7,175
Prepaid		4,726
Intangible Asset		62,285
Other assets		6,185
Total Assets		226,342
Accounts payable		31,874
Deposits		3,813
Taxes payable		6,155
Total Liabilities		41,842
Total Purchase Price	$	184,500

The following unaudited consolidated pro forma information gives effect to the Nic Corporation acquisition as if this transaction had occurred at the beginning of the period presented. The following unaudited pro forma information is presented for illustration purposes only and is not necessarily indicative of the results that would have been attained had the acquisition of this business been completed at the beginning of each period presented, nor are they indicative of results that may occur in any future periods.

As of April 30, 2015 (Unaudited)	Three Months Period			Six Months Period
Revenue	$	501,358		$	910,930
Operating expense	$	548,037		$	996,283
Other income(expense)	$	9,801		$	6,720
Net income (loss)	$	(36,864	)	$	(78,633	)

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ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Skkynet’s actual results could differ materially from those set forth on the forward looking statements as a result of the risks set forth in Skkynet’s filings with the Securities and Exchange Commission, general economic conditions, and changes in the assumptions used in making such forward looking statements.

OVERVIEW

The Company operates its business through its wholly-owned subsidiary Cogent Real-Time Systems, Inc. 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 six month periods ending April 30, 2015, revenues were $309,886 and $541,750 compared to $248,298 and $535,347 for the same period in 2014. Revenue increased for the three and six month period ending April 30, 2015 over the three and six month period ended April 30, 2014 plus higher deferred revenue in 2015 over 2014 confirmed higher sales to customers during 2015. The Company has concentrated on launching the cloud services which in the long term should result in increased sales.

General and administrative expense increased to $583,601 and $1,345,986 for the three and six months ended April 30, 2015 from $422,460 and $805,822 for the same periods in 2014. The increase in general and administrative expenses for the three and six months ended April 30, 2015 included options expensed of $218,376 compared to $172,582 in 2014, increased consulting, the opening of a new office plus added marketing expenses to propel business growth.

For the three and six month periods ending April 30, 2015 the Company posted an operating loss of $303,782 and $842,607 compared to an operation loss of $175,905 and $272,740 for the same periods in 2014. The increase in operating loss is attributable to increased expenses in consulting, salaries and office opening expenses plus the stock compensation of $37,250, depreciation of $11,226 and option expenses of $218,636.

Other income and expenses for the three and six month periods ending April 30, 2015 was a loss of $2,116 and $4,128 compared to other income of $9,802 and $6,714 for the same periods in 2014. Interest expense, plus the gains and losses on currency exchange and gains on debt forgiveness, made up the other income and expenses for the three and six month’s periods in both 2015 and 2014.

A net loss of $305,898 and $846,735 was recorded for the three and six months period ending April 30, 2015 compared to a net loss of $166,103 and $266,026 for the same periods in 2014. The loss can be attributed to added employee costs and increased marketing activity in 2015 compared to 2014.

11

LIQUIDITY AND CAPITAL RESOURCES

At April 30, 2015, Skkynet had current assets of $757,908 and current liabilities of $715,288, resulting in working capital of $42,620. Accumulated deficit as of April 30, 2015 was $2,550,063 with total shareholders’ equity of $103,530.

Net cash used in operations for the six months ending April 30, 2015 was $529,061 compared to net cash used of $256,781 for the same period in 2014. Net cash used in operations increased primarily due to an increase in the net loss of $846,735 and an increase in accounts payable of $107,319. These were offset by stock based compensation of $37,250, stock option based compensation of $218,736, accrued liabilities to related parties of $139,251, and deferred revenue of $73,234.

Cash used in investing activities in the six months period ended April 30, 2015 and 2014 were $1,118 and $735. The investing activity in 2015 included the acquisition of Nic Corporation for $110,000 in cash, offset by cash received of $108,882, plus stock of $74,500.

Net cash provided in financing activities during the six months ended April 30, 2015 was $100,000 compared to net cash provided of $328,667 for the same period in 2014. The difference was due to the sale of common stock of $337,125 offset by the reduction of notes payable to related parties of $35,904 in 2014 compared to the sale of common stock for cash of $100,000 in the same period in 2015.

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.

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ITEM 4: CONTROLS AND PROCEDURES

This report includes the certifications of our Chief Executive Officer and Chief Financial Officer required by Rule 13a-14 under the Securities Exchange Act of 1934 (the "Exchange Act"). See Exhibits 31.1 and 31.2. This Item 4 includes information concerning the controls and control evaluations referred to in those certifications.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the Principal Executive Officer and the Principal Financial Officer, to allow timely decisions regarding required disclosures.

In connection with the preparation of this report, our management, under the supervision and with participation of our Principal Executive Officer and Principal Financial Officer (the “Certifying Officers”) conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of April 30, 2015. 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.

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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, 2014.

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

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 February 10, 2015, the Company issued 10,000 options to one consultant with exercise price of $1.30. 20% of the option will vest immediately, the additional 20% to vest on February 10 of each successive year.

ITEM 3: DEFAULTS UPON SENIOR SECURITIES.

None

ITEM 4: MINE SAFETY INFORMATION

None

ITEM 5: OTHER INFORMATION.

None

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ITEM 6: EXHIBITS

EXHIBIT 31.1	Certification of Principal Executive Officer of the Registrant pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
EXHIBIT 31.2	Certification of Principal Financial Officer of the Registrant pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
EXHIBIT 32.1	Certification of Principal Executive Officer of the Registrant pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
EXHIBIT 32.2	Certification of Principal Financial Officer of the Registrant pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

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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 15, 2015	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)

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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 15,  2015	By:	/s/ Andrew Thomas
		Andrew Thomas
		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 15, 2015	By:	/s/ Lowell Holden
		Lowell Holden
		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 from ended April 30, 2015 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.

Date: June 15, 2015	By:	/s/ Andrew Thomas
		Andrew Thomas
		Chief Executive Officer
		(Duly Authorized Principal Executive Officer)

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

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Skkynet Cloud Systems Inc. (the “Company”) on Form 10-Q for the period from ended April 30, 2015 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.

Date: June 15, 2015	By:	/s/ Lowell Holden
		Lowell Holden
		Chief Financial Officer
		(Duly Authorized Principal Financial Officer)

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

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ACQUISITION (Details 1) (USD $)	3 Months Ended	6 Months Ended
	Apr. 30, 2015	Apr. 30, 2015
Acquisition Details 1
Revenues	$ 501,358	$ 910,930
Operating Expenses	548,037	996,283
Other expense	9,801	6,720
Net Loss	$ (36,864)	$ (78,633)

XML

OPTIONS

6 Months Ended

Apr. 30, 2015

Notes to Financial Statements

NOTE 4 - OPTIONS

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

On January 19, 2015 the Company issued 106,000 options under the 2012 option plan to 4 employees with an exercise price of $1.32 per share.

On February 10, 2015, the Company issued 10,000 options to one consultant with exercise price of $1.30. 20% of the option will vest immediately, the additional 20% to vest on February 10 of each successive year.

The Company has elected to expense the options over the life of the option as stock based compensation. The expense is calculated with a Black Scholes model to reach the fair value over the length of each option. The total value calculated for option expense is $2,459,889. During the period ended April 30, 2015 the Company expensed $218,376 for options. The unrecognized future balance to be expensed over the term of the options is $1,167,891.

The following sets forth the options granted and outstanding as of April 30, 2015:

	Options		Weighted Average Exercise price		Weighted Average Remaining Contract Life		Number of Options Exercisable		Intrinsic value
Outstanding at October 31, 2014		5,270,000		0.51		8.69		2,218,000		5,164,900
Granted		116,000		1.32		9.76		854,200		--
Exercised				--		--		--		--
Outstanding at April 30, 2015		5,386,000		0.52		8.71		3,072,200		4,416,520

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EQUITY

6 Months Ended

Apr. 30, 2015

Notes to Financial Statements

NOTE 3 - EQUITY

On November 1, 2014 the Company issued 50,000 shares of common stock to three individuals with a value of $74,500 for the acquisition of Nic Corporation. (See Note 7 Acquisition)

On November 10, 2014 the Company issued 25,000 shares of common stock to one entity with a value of $37,250 for services.

On December 4, 2014 the Company issued 78,000 shares of common stock a $1.282 per share to a related party for $ 100,000 in cash.

XML

CONSOLIDATED BALANCE SHEETS (USD $)	Apr. 30, 2015	Oct. 31, 2014
Current Assets:
Cash and cash equivalents	$ 493,618	$ 977,688
Accounts receivable	230,972	86,564
Inventory	6,581
Prepaid	26,737
Total current assets	757,908	1,064,252
Property and equipment, net of accumulated depreciation of $70,911 and $70,484 respectively	3,332	3,456
Intangible Assets	51,906	2,248
Other assets	5,672
Total Assets	818,818	1,069,956
Current Liabilities:
Accounts payable and accrued expenses	62,332	58,104
Accrued expense - related parties	10,730	6,911
Accrued liabilities - related party	377,358	241,926
Notes payable - related parties	142,976	153,580
Deferred income	121,892	44,845
Total current liabilities	715,288	505,366
Total liabilities	715,288	505,366
Stockholders' Deficit:
Preferred stock; $0.001 par value, 5,000,000 shares authorized, 5,000 shares issued and outstanding	5	5
Common stock; $0.001 par value, 70,000,000 shares authorized, 50,795,500 and 50,642,500 shares issued and outstanding, respectively	50,796	50,643
Additional paid-in capital	2,636,757	2,206,424
Accumulative other comprehensive income (loss)	(33,965)	10,846
Accumulated deficit	(2,550,063)	(1,703,328)
Total stockholders' equity (deficit)	103,530	564,590
Total Liabilities and Stockholders' Equity	$ 818,818	$ 1,069,956

XML

ORGANIZATION AND BASIS OF PRESENTATION

6 Months Ended

Apr. 30, 2015

Notes to Financial Statements

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

Skkynet Cloud Systems, Inc. (“Skkynet” or “the Company”) is a Nevada corporation formed on August 31, 2011 and headquartered in Toronto, Canada. Skkynet operates its business through its wholly-owned subsidiary Cogent Real-Time Systems, Inc. (“Cogent”). Skkynet was formed primarily for the purpose of taking the existing business lines of Cogent and its current and future customers and integrating these businesses with Cloud based systems.

On November 1, 2014 the Company acquired Nic Corporation as a wholly owned subsidiary. On February 1, 2015 the Company formed a wholly owned US subsidiary Skkynet, Inc. (See Note 7 Acquisitions)

The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (the “SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s October 31, 2014 Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year end October 31, 2014 as reported on Form 10-K, have been omitted.

Inventory

Inventory consists of hardware used to embed software and is stated at the lower of cost or market.

XML

COMMITMENTS AND CONTINGENCIES (Details) (USD $)	Apr. 30, 2015
Commitments And Contingencies Details
2015	$ 29,075
2016	70,567
2017	61,538
2018	0
2019	0
thereafter	0
Total	$ 161,180

XML

ACQUISITION (Details) (USD $)	Apr. 30, 2015
Acquisition Details
Cash and cash equivalents	$ 108,882
Accounts receivable	37,089
Inventory	7,175
Prepaid	4,726
Intangible Asset	62,285
Other assets	6,185
Total Assets	226,342
Accounts payable	31,874
Deposits	3,813
Taxes payable	6,155
Total Liabilities	41,842
Total Purchase Price	$ 184,500

XML

RELATED PARTY TRANSACTIONS

6 Months Ended

Apr. 30, 2015

Notes to Financial Statements

NOTE 2 - RELATED PARTY TRANSACTIONS

On July 31, 2012, Andrew Thomas, Shizuka Thomas and Paul Benford converted the salary they had accrued through our subsidiary through July 31, 2012 to notes payable due from that subsidiary. The notes mature on April 29, 2015 and bear an interest rate of 6% per annum on the outstanding balance. Interest payments are due quarterly commencing October 30, 2012. As of April 30, 2015 the outstanding amounts on the notes payable were $142,976 as noted below plus accrued interest of $10,730:

Note balance as of:	April 30, 2015		October 31, 2014
Andrew Thomas	$	43,354	$	46,570
Paul Benford	$	70,471	$	75,698
Shizuka Thomas	$	29,151	$	31,312
Total	$	142,976	$	153,580

On January 1, 2012 and April 15, 2012 the Company and its subsidiary entered into employment agreements with four of its officers and directors. As a result of these agreements the Company has accrued compensation for each of the individuals. In addition the Company is accruing director compensation at the rate of $2,500 per director per month. As of April 30, 2015 the accrued liability for compensation was $377,358.

As of April 30, 2015 and October 31, 2014 the Company had the following outstanding accrued liabilities due to related parties:

As of	April 30, 2015		October 31, 2014
Accrued salaries	$	277,475	$	201,026
Director fees	$	52,500	$	7,500
Consulting fees	$	43,000	$	33,400
Accrued liabilities	$	372,975	$	241,926
Accrued expense	$	10,730	$	6,911
Total accrued liabilities and accrued expense	$	383,705	$	248,837

On December 4, 2014 the Company issued 78,000 shares of common stock a $1.282 per share to a related party for $ 100,000 in cash.

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Apr. 30, 2015	Oct. 31, 2014
ASSETS
Net of accumulated depreciation	$ 70,911	$ 70,484
Stockholders' Deficit:
Preferred stock, Par value	$ 0.001	$ 0.001
Preferred stock, Authorized	5,000,000	5,000,000
Preferred stock, Issued	5,000	5,000
Preferred stock, Outstanding	5,000	5,000
Common stock, Par value	$ 0.001	$ 0.001
Common stock, Authorized	70,000,000	70,000,000
Common stock, Issued	50,795,500	50,642,500
Common stock, Outstanding	50,795,500	50,642,500

XML

RELATED PARTY TRANSACTIONS (Details) (USD $)	Apr. 30, 2015	Oct. 31, 2014
Total notes payable related parties	$ 142,976	$ 153,580
Andrew Thomas [Member]
Total notes payable related parties	43,354	46,570
Paul Benford [Member]
Total notes payable related parties	70,471	75,698
Shizuka Thomas [Member]
Total notes payable related parties	$ 29,151	$ 31,312

XML

Document and Entity Information	6 Months Ended
	Apr. 30, 2015	Jun. 15, 2015
Document And Entity Information
Entity Registrant Name	Skkynet Cloud Systems, Inc.
Entity Central Index Key	0001546853
Document Type	10-Q
Document Period End Date	Apr. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--10-31
Entity a Well-known Seasoned Issuer	No
Entity a Voluntary Filer	No
Entity's Reporting Status Current	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		50,795,500
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2015

XML

RELATED PARTY TRANSACTIONS (Details 1) (USD $)	Apr. 30, 2015	Oct. 31, 2014
Related Party Transactions Details 1
Accrued salaries	$ 277,475	$ 201,026
Director fees	52,500	7,500
Consulting fees	43,000	33,400
Accrued liabilities	372,975	241,926
Accrued expense	10,730	6,911
Total accrued liabilities	$ 383,705	$ 248,837

XML

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Apr. 30, 2015	Apr. 30, 2014	Apr. 30, 2015	Apr. 30, 2014
Consolidated Statements Of Operations And Comprehensive Loss
Revenue	$ 309,886	$ 248,298	$ 541,750	$ 535,347
Direct material costs	24,458	1,373	27,145	1,455
Operating Expenses:
General and administrative	583,601	422,460	1,345,986	805,822
Depreciation and amortization	5,609	370	11,226	810
Loss from operations	(303,782)	(175,905)	(842,607)	(272,740)
Other Income (Expenses):
Other Expense	172		168
Gain on debt forgiveness		11,982		11,982
Interest expense	(2,288)	(2,180)	(4,296)	(5,268)
Total other income (expenses)	(2,116)	9,802	(4,128)	6,714
Net loss	(305,898)	(166,103)	(846,735)	(266,026)
Foreign currency translation adjustment	(50,777)	(11,538)	(44,812)	(6,763)
Comprehensive (loss)	$ (356,675)	$ (154,565)	$ (891,547)	$ (272,789)
Net loss per common share attributable to common stockholders (basic and diluted)	$ (0.01)	$ 0.00	$ (0.02)	$ (0.01)
Weighted average common shares outstanding (basic and diluted):	50,795,500	49,844,000	50,779,555	49,632,674

XML

ACQUISITION

6 Months Ended

Apr. 30, 2015

Notes to Financial Statements

NOTE 7 - ACQUISITION

On November 1, 2014 the Company acquired all the outstanding shares of Nic Corporation, based in Japan, for $110,000 in cash plus 50,000 share of common stock. The Company determined in accordance with ASC 805-10-25-6 that the 50,000 shares of common stock was valued at the closing price on the date of purchase at $1.49 for a total value of $74,500. In accordance with purchase acquisition accounting, the company initially allocated the consideration to the net tangible and identifiable intangible assets, based on their estimated fair values as of the date of acquisition. Customer Lists represents the excess of the purchase price over the fair value of the underlying net tangible and identifiable intangible assets.

The Company estimates the useful life to the customer list to be three years and thus it is being amortized over a three year period. The amortization for the three month period that was recorded is $5,190.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date. The company has not finalized its purchase price allocation and this is preliminary.

Cash and cash equivalents	$	108,882
Accounts receivable		37,089
Inventory		7,175
Prepaid		4,726
Intangible Asset		62,285
Other assets		6,185
Total Assets		226,342
Accounts payable		31,874
Deposits		3,813
Taxes payable		6,155
Total Liabilities		41,842
Total Purchase Price	$	184,500

The following unaudited consolidated pro forma information gives effect to the Nic Corporation acquisition as if this transaction had occurred at the beginning of the period presented. The following unaudited pro forma information is presented for illustration purposes only and is not necessarily indicative of the results that would have been attained had the acquisition of this business been completed at the beginning of each period presented, nor are they indicative of results that may occur in any future periods.

As of April 30, 2015 (Unaudited)	Three Months Period			Six Months Period
Revenue	$	501,358		$	910,930
Operating expense	$	548,037		$	996,283
Other income(expense)	$	9,801		$	6,720
Net income (loss)	$	(36,864	)	$	(78,633	)

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DEFERRED REVENUE

6 Months Ended

Apr. 30, 2015

Notes to Financial Statements

NOTE 6 - DEFERRED REVENUE

The Company receives part of its revenue from the sale of software support. The revenue received is for one year of support from the date of the support sale. The Company defers the revenue for the future periods in which it is obligated to perform the support service. As of April 30, 2015 the Company had deferred revenue of $121,892.

XML

DEFERRED REVENUE (Details Narrative) (USD $)	Apr. 30, 2015	Oct. 31, 2014
Deferred Revenue Details Narrative
Deferred revenue	$ 121,892	$ 44,845

XML

RELATED PARTY TRANSACTIONS (Details Narrative) (USD $)	Apr. 30, 2015	Oct. 31, 2014
Related Party Transactions Details Narrative
Outstanding amounts on the notes payable	$ 142,976	$ 153,580
Accrued liabilities - related party	377,358	241,926
Accrued expense - related parties	$ 10,730	$ 6,911

XML

COMMITMENTS AND CONTINGENCIES (Tables)

6 Months Ended

Apr. 30, 2015

Commitments And Contingencies Tables

Lease obligations

2015	$	29,075
2016	$	70,567
2017	$	61,538
2018	$	0
2029	$	0
thereafter	$	0
Total	$	161,180

XML

RELATED PARTY TRANSACTIONS (Tables)

6 Months Ended

Apr. 30, 2015

Related Party Transactions Tables

Summary of notes payable related party

Note balance as of:	April 30, 2015		October 31, 2014
Andrew Thomas	$	43,354	$	46,570
Paul Benford	$	70,471	$	75,698
Shizuka Thomas	$	29,151	$	31,312
Total	$	142,976	$	153,580

Outstanding accrued liabilities due to related parties

As of	April 30, 2015		October 31, 2014
Accrued salaries	$	277,475	$	201,026
Director fees	$	52,500	$	7,500
Consulting fees	$	43,000	$	33,400
Accrued liabilities	$	372,975	$	241,926
Accrued expense	$	10,730	$	6,911
Total accrued liabilities and accrued expense	$	383,705	$	248,837

XML

OPTIONS (Tables)

6 Months Ended

Apr. 30, 2015

Options Tables

Options granted and outstanding

	Options		Weighted Average Exercise price		Weighted Average Remaining Contract Life		Number of Options Exercisable		Intrinsic value
Outstanding at October 31, 2014		5,270,000		0.51		8.69		2,218,000		5,164,900
Granted		116,000		1.32		9.76		854,200		--
Exercised				--		--		--		--
Outstanding at April 30, 2015		5,386,000		0.52		8.71		3,072,200		4,416,520

XML

ACQUISITION (Tables)

6 Months Ended

Apr. 30, 2015

Acquisition Tables

Estimated fair values of the assets acquired and liabilities

Cash and cash equivalents	$	108,882
Accounts receivable		37,089
Inventory		7,175
Prepaid		4,726
Intangible Asset		62,285
Other assets		6,185
Total Assets		226,342
Accounts payable		31,874
Deposits		3,813
Taxes payable		6,155
Total Liabilities		41,842
Total Purchase Price	$	184,500

Consolidated pro forma information

As of April 30, 2015 (Unaudited)	Three Months Period			Six Months Period
Revenue	$	501,358		$	910,930
Operating expense	$	548,037		$	996,283
Other income(expense)	$	9,801		$	6,720
Net income (loss)	$	(36,864	)	$	(78,633	)

XML

OPTIONS (Details Narrative) (USD $)	6 Months Ended
	Apr. 30, 2015	Apr. 30, 2014
Options Details Narrative
Option based compensation	$ 218,376	$ 172,582

XML

CONSOLDIATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)	6 Months Ended
	Apr. 30, 2015	Apr. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (846,735)	$ (266,026)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense	11,226	810
Option based compensation	218,376	172,582
Stock based compensation	37,250
Gain on debt forgivenes		(11,982)
Changes in operating assets and liabilities:
Accounts receivable	(107,319)	(111,075)
Accounts payable and accrued expenses	(33,801)	(9,624)
Inventory	595
Accrued liabilities - related parties	139,251	(58,336)
Taxes payable		(7,168)
Prepaid	(21,498)
Deferred Income	73,234	34,038
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	(529,061)	(256,781)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for purchase of fixed assets		(735)
Cash received, net of cash paid for NiC	(1,118)
NET CASH USED IN INVESTING ACTIVITIES	(1,118)	(735)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the sale of common stock	100,000	369,750
Payments on notes payable - related parties		(41,083)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	100,000	328,667
Effect of exchange rate changes on cash	(53,891)	7,126
Net increase (decrease) in cash	(484,070)	78,277
Cash, beginning of period	977,688	365,415
Cash, end of period	493,618	443,692
SUPPLEMENTAL CASH FLOWS INFORMATION
Interest paid		21,920
Income taxes paid
Non-Monetary Transactions
Assets acquired in acquisition through stock issuance	$ 74,500

XML

COMMITMENTS AND CONTINGENCIES

6 Months Ended

Apr. 30, 2015

Notes to Financial Statements

NOTE 5 - COMMITMENTS AND CONTINGENCIES

The Company leases office space located at 2233 Argentia Road Suite 306 Mississauga, Ontario Canada L5N 2X7. The offices contain approximately 2,810 square feet of office space and are leased from July 1, 2014 through July, 2017. Under the terms of the lease the gross monthly rental cost including common area charges is $6,700 per month. The lease terminates on July, 31, 2017. The yearly rental obligations under the lease agreement are as follows:

2015	$	29,075
2016	$	70,567
2017	$	61,538
2018	$	0
2029	$	0
thereafter	$	0
Total	$	161,180

XML

OPTIONS (Details) (USD $)	6 Months Ended
	Apr. 30, 2015
Options Details
Outstanding options, Beginning	5,270,000
Options, Granted	116,000
Options, Exercised
Outstanding options, Ending	5,386,000
Weighted Average Exercise price, Beginning	$ 0.51
Weighted Average Exercise price, Granted	$ 1.32
Weighted Average Exercise price, Exercised
Weighted Average Exercise price, Ending	$ 0.52
Weighted Average Remaining Contract Life, Beginning	8 years 8 months 9 days
Weighted Average Remaining Contract Life, Granted	9 years 9 months 4 days
Weighted Average Remaining Contract Life, Ending	8 years 8 months 16 days
Number of Options Exercisable, Beginning	2,218,000
Number of Options Exercisable, Granted	854,200
Number of Options Exercisable, Exercised
Number of Options Exercisable, Ending	3,072,200
Aggregate Intrinsic Value, Beginning	$ 5,164,900
Aggregate Intrinsic Value, Ending	$ 4,416,520