SKKY 10-Q
Skkynet Cloud Systems, Inc. (SKKY)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from ___________ to ____________.
Commission File Number
(Exact name of registrant as specified in its charter) |
| ||
(State or other jurisdiction of incorporation or organization) |
| (IRS Employer Identification No.) |
(Address of principal executive offices)
(
(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:
Indicate by check mark whether the registrant has submitted electronically and posted it 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).
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 | ☐ |
☒ | Smaller reporting company | ||
Emerging growth company |
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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
As June 13, 2025, there were
| 2 |
| Table of Contents |
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 |
| Table of Contents |
PART I
ITEM 1: FINANCIAL STATEMENTS
SKKYNET CLOUD SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
|
| April 30, 2025 |
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| October 31, 2024 |
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| (Unaudited) |
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| (Audited) |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
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Accounts receivable |
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Prepaid expenses |
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Total current assets |
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Property and equipment, net of accumulated depreciation of $ |
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Total Assets |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current Liabilities: |
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Accounts payable and accrued expenses |
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Accrued liabilities – related party |
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Deferred revenue |
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Total current liabilities |
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Total Liabilities |
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Commitments and contingencies |
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Stockholders’ Equity: |
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Preferred stock: $ |
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Series B Preferred convertible stock: $ |
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Common stock; $ authorized, |
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Additional paid-in capital |
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Accumulative other comprehensive income |
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Accumulated deficit |
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Total stockholders’ equity |
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Total Liabilities and Stockholders’ Equity |
| $ |
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| $ |
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The accompanying notes are an integral part of the unaudited consolidated financial statements.
| 4 |
| Table of Contents |
SKKYNET CLOUD SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
|
| As of April 30, |
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| 2025 |
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Revenue |
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Operating Expenses: |
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Depreciation |
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Salaries and wages |
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Advertising |
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Stock compensation |
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General & administrative expenses |
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Operating expenses |
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Income (loss) from operations |
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Other income (expense): |
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Other income |
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Bad debt expense |
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Currency exchange |
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Total other income (expense) |
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Income (loss) before taxes |
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Income taxes refund (expense) |
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Net income (loss) |
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Preferred dividends |
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Income (loss) to common stockholders |
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Foreign currency translation adjustment |
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Comprehensive income (loss) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
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Net income per share to common stockholders- basic and diluted |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Weighted average common shares outstanding -basic and diluted |
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The accompanying notes are an integral part of the unaudited consolidated financial statements.
| 5 |
| Table of Contents |
SKKYNET CLOUD SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE AND SIX MONTHS ENDED APRIL 30, 2025 AND 2024
(Unaudited)
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| Accumulated |
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| Series B Preferred |
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| Additional |
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| Other |
| Total |
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| Common Stock |
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| Preferred Stock |
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| Convertible Stock |
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| Paid-In |
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| Accumulated |
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| Comprehensive |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Capital |
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| Deficit |
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| Income (Loss) |
| Equity |
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Balance at October 31, 2023 |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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| $ |
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Change due to currency translation |
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| - |
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| - |
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| - |
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Dividend accrued on series B preferred shares |
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| - |
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| - |
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| - |
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Stock option expense |
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| - |
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| - |
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| - |
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Net income |
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| - |
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| - |
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| - |
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Balance at January 31, 2024 |
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Change due to currency translation |
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| - |
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| - |
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| - |
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Dividend accrued on series B preferred shares |
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| - |
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| - |
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| - |
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Stock option expense |
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| - |
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| - |
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| - |
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| - |
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| - |
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| - |
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| - |
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Net loss |
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| - |
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| - |
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| - |
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Balance at April 30, 2024 |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
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Balance at October 31, 2024 |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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Change due to currency translation |
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| - |
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| - |
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| - |
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Dividend accrued on series B preferred shares |
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| - |
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| - |
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| - |
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Stock option expense |
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| - |
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| - |
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| - |
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Net income |
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| - |
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| - |
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| - |
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Balance at January 31, 2025 |
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Change due to currency translation |
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| - |
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| - |
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| - |
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Dividend accrued on series B preferred shares |
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| - |
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| - |
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| - |
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Stock option expense |
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| - |
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| - |
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| - |
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Net loss |
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| - |
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| - |
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| - |
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Balance at April 30, 2025 |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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| $ |
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The accompanying notes are an integral part of the unaudited consolidated financial statements
| 6 |
| Table of Contents |
SKKYNET CLOUD SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
| For the Six Months Ended April 30, |
| |||||
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| 2025 |
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| 2024 |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES |
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| ||
Net income (loss) |
| $ |
| $ | ( | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation |
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Stock based compensation |
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Bad debt expense |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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Accounts payable and accrued expenses |
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Accrued liabilities – related parties |
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Prepaid expenses and other assets |
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Deferred revenue |
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NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |
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Effect of exchange rate changes on cash and cash equivalents |
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Net increase in cash and cash equivalents |
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Cash and cash equivalents, beginning of period |
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| ||
Cash and cash equivalents, end of period |
| $ |
|
| $ |
| ||
|
|
|
|
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SUPPLEMENTAL CASH FLOWS INFORMATION |
|
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Interest paid |
| $ |
|
| $ |
| ||
Income taxes paid |
| $ |
|
| $ |
| ||
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NON CASH INVESTING AND FINANCING ACTIVITIES |
|
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Dividends accrued on Series B preferred shares |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
| 7 |
| Table of Contents |
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, 2024 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, 2024 as reported on Form 10-K, have been omitted.
Certain prior period amounts were reclassified to conform to the manner of presentation in the current period. The reclassifications have no effect on the net loss or stockholders’ equity.
NOTE 2- SIGNIFICANT ACCOUNTING POLICIES
Recent adopted accounting standards
In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13 Financial Instruments- Credit Losses, which replaces the incurred impairment methodology to reflect expected credit losses. The amendments requires the measurement of all expected credit losses for financial assets held at the reporting due to the performance based on historical experience, current conditions and reasonable supportable forecasts. ASU 2016-13 is effective for annual and interim periods beginning after December 31, 2022. The Company adopted the standard on October 31, 2024. The adoption did not have a material impact on the Company’s consolidated financial statements.
In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07 Segment Reporting The change in this announcement requires more detailed profit and loss reporting by business segments used by the Company to determine the allocation of assets. ASU 2016-07 is effective for annual periods beginning after December 15, 2023 and interim periods within the fiscal years beginning after December 15, 2024. The Company is evaluating the adoption of the standard but believe it will not have a material impact on the Company’s consolidated financial statements.
Accounts Receivable are carried at face value less any provisions for uncollectible accounts considered necessary. Accounts receivable include receivables from customers that have received software and support from the Company. Credit losses is a recognition of uncollectable receivables based on past years’ experience and management’s estimate of likely losses for the year. No allowance for bad debt was considered necessary for the six months ended April 30, 2025 and the year ended October 31, 2024, respectively. However, the Company expensed $
| 8 |
| Table of Contents |
Basic and Diluted Net Loss Per Share
Basic and diluted net income per share calculations are calculated on the basis of the weighted average number of common shares outstanding during the year. They include the dilutive effect of common stock equivalents in years with net income. For the six months ended April 30, 2025 and 2024,
NOTE 3- REVENUE RECOGNITION
In April 2016, the FASB issued ASU 2016–10 Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. Topic 606 includes implementation guidance on (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). The amendments are intended to render more detailed implementation guidance with the expectation to reduce the degree of judgement necessary to comply with Topic 606.
ASC Topic 606 prescribes a new five-step model entities should follow in order to recognize revenue in accordance with the core principle. These five steps are:
| 1. | Identify the contract(s) with a customer. |
| 2. | Identify the performance obligations in the contract. |
| 3. | Determine the transaction price. |
| 4. | Allocate the transaction price to the performance obligations in the contract. |
| 5. | Recognize revenue when (or as) the entity satisfied the performance obligations. |
The Company has four revenue streams, each of which the revenue is recognized in accordance to the five steps included in Topic 606. The revenue streams are:
| 1. | Sale of software direct to the end customer |
| 2. | Sale of software through distributors and channel partners |
| 3. | Maintenance support services |
| 4. | Cloud services |
Revenue for the sale of software both directly to end users and through the distributor and channel partners is recognized upon delivery of the software and code required for the customer to install the software.
Maintenance support services are initially classified as deferred revenue and are recognized as revenue on a straight-line basis over the service period of the arrangement which is normally one year.
Revenue from cloud services is recognized over time (typically, on a monthly basis) as service is provided.
Payments received in advance of services being rendered are recorded as deferred revenue and recognized to revenue when earned. During the six month period ended April 30, 2025, $
| 9 |
| Table of Contents |
As part of the revenue recognition reporting, the Company reports revenue by product line and geographic area. During the six month periods ended April 30, 2025, and 2024 the revenue by product line is as follows:
Category |
| Percentage |
|
| 2025 |
|
| Percentage |
|
| 2024 |
| ||||
Product sales |
|
| % |
| $ |
|
|
| % |
| $ |
| ||||
Support |
|
| % |
|
|
|
|
| % |
|
|
| ||||
Cloud & Other |
|
| % |
|
|
|
|
| % |
|
|
| ||||
Total |
|
| % |
|
|
|
|
| % |
| $ |
| ||||
The Company sells its products on a worldwide basis. During the six month periods ended April 30, 2025, and 2024 the Company’s geographic concentration of revenue is as follows:
Area |
| Percentage |
|
| 2025 |
|
| Percentage |
|
| 2024 |
| ||||
Europe |
|
| % |
|
|
|
|
| % |
|
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| ||||
North America |
|
| % |
|
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| % |
|
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Asia Pacific |
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| % |
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|
| % |
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Middle East Africa/Other |
|
| % |
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|
| % |
|
|
| ||||
South America |
|
| % |
|
|
|
|
| % |
|
|
| ||||
Total |
|
| % |
| $ |
|
|
| % |
| $ |
| ||||
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,
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 license’s agreement, there is no unilateral right of termination. Termination may occur by mutual consent of the parties, 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, 2025.
| 10 |
| Table of Contents |
As of April 30, 2025, the amount due to related parties was $
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.
During the six month period ended April 30, 2025 the Company issued
As of April 30, 2025 the total number of options was
During the six month period ended April 30, 2025, the Company recognized $
The following sets forth the options granted and outstanding as of April 30, 2025:
|
| Options |
|
| Weighted Average Exercise price |
|
| Weighted Average Remaining Contract Life |
|
| Granted Options Exercisable |
|
| Intrinsic value |
| |||||
Outstanding at October 31, 2024 |
|
|
|
| $ |
|
|
|
|
|
|
|
| $ |
| |||||
Granted |
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
| |||
Exercised |
|
| - |
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
| |
Forfeited/Expired by termination |
|
| ( | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Outstanding as April 30, 2025 |
|
|
|
| $ |
|
|
|
|
|
|
|
| $ |
| |||||
NOTE 6 – MAJOR CUSTOMERS
The Company sells to their end-user customers both directly and indirectly, through resellers. In the six months ended April 30, 2024, 7 resellers accounted for
| 11 |
| Table of Contents |
NOTE 7 – EQUITY
On July 30, 2015, the Company designated
NOTE 8 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events to determine events occurring after April 30, 2025 through the filing of this report that would have a material impact on the Company’s financial results or require disclosure and have determined none exist other than noted above .
| 12 |
| Table of Contents |
ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This report contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Skkynet’s actual results could differ materially from those set forth on the forward-looking statements as a result of the risks set forth in Skkynet’s filings with the Securities and Exchange Commission, general economic conditions, and changes in the assumptions used in making such forward looking statements.
OVERVIEW
Skkynet is a Nevada corporation headquartered in Mississauga, Canada. Skkynet operates three different lines of business through its wholly owned subsidiaries Cogent Real-Time Systems, Inc. (“Cogent”), Skkynet, Inc. (“Skkynet (USA)”), 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 relevant customers are given the ability and the tools to observe and interact with these processes and services in real-time as they are underway and to give them the power to analyze, alter, stop, or otherwise influence these activities to conform to their plans.
RESULTS OF OPERATIONS
For the three and six month periods ended April 30, 2025, revenue was $585,712 and $1,414,764 compared to $601,806 and $1,232,342 for the same periods in 2024. Revenue increased for the six month period ended April 30, 2025 over the same period in 2024 by 14.8%. The increase in revenue for the six month period is attributed to benefiting from its prior investment in sales and marketing, which has contributed to the increase in sales. As Company sales increases, revenue from quarter to quarter is dependent on the timing of orders placed by its customers. Additionally, as larger customers place orders, the revenue volume can fluctuate significantly. During the quarter ending April 30, 2025, the Company had 14% fewer individual software orders compared to the first quarter ending January 31, 2025 resulting in 32% less revenue in the second quarter. The Company cannot determine if there were any significant external factors in the marketplace that impacted the results.
Operating expense was $780,405 and $1,411,220 for the three and six month periods ended April 30, 2025 compared to $803,998 and $1,396,168 for the same periods in 2024. The decrease in advertising expenses of $45,532 was offset by an increase in stock based compensation of $14,859 due to added options issued plus an increase in salaries and wages of $45,128 for the six month period ended April 30, 2025 over the same periods in 2024, resulted in an increase in the six month expenses in 2025 over the same period in 2024. Salaries and wages expense increased in the six months ended April 30, 2025 due to new hires plus increased bonus payments during that period.
For the three and six month periods ended April 30, 2025, the Company reported an operating loss of $194,693 and operating income of $3,544 compared to operating losses of $202,182 and $163,826 for the same periods in 2024. The operating income during the six month period ended April 30, 2025 over the operating loss for same period in 2024 is attributable to higher revenues offsetting the increased expenses in the six month period ended April 30, 2025, versus the same period in 2024.
| 13 |
| Table of Contents |
Other expenses for the three and six month periods ended April 30, 2025 was $31,790 and $964, consisting of other income of $8,357 and $18,109, currency loss of $26,673 and $5,599 plus a bad debt expense of $13,474. This compared to other income of $7,296 for the three months and other loss of $9,676 during the six months period ended April 30, 2024. Other income and expense consisted of other income of $5,008 and $7,995, currency income of $2,288 and currency loss of $17,671 for the same periods in 2024. The amount of change in both periods was due to the effect of currency exchange plus bad debt expense of $13,474.
Net loss before taxes of $226,483 and net income before taxes of $2,580, was reported for the three and six month periods ended April 30, 2025, compared to net loss of $194,886 and $173,502 for the same periods in 2024. Net loss after tax for the three months periods ended April 30, 2025 was $227,723 and net income after taxes for the six months period was $1,340 compared to net loss of $166,503 and $145,119 for the same periods in 2024. These amounts reflect tax payments and refunds during the six month periods.
Net loss to common stockholders was $230,628 and $4,470 for the three and six month periods ended April 30, 2025, compared to net loss of $169,408 and $150,929 for the same periods in 2024. Net income to common shareholders includes the expense of dividend for preferred stockholders of $2,905 and $5,810 being accrued for the three and six month periods ended April 30, 2025 and 2024.
The Company reported comprehensive losses of $235,302 and $13,817 for the three and six month periods ended April 30, 2025 compared to a comprehensive loss of $174,713 and $161,706 for the same periods in 2024. Comprehensive income is an adjustment to net gain or loss with foreign currency translation adjustments.
LIQUIDITY AND CAPITAL RESOURCES
At April 30, 2025, the Company had current assets of $1,689,159 and current liabilities of $758,809, resulting in working capital of $930,350. Accumulated deficit, as of April 30, 2025, was $6,475,777 with total stockholders’ equity of $930,350.
Net cash provided by operating activities for the six month period ended April 30, 2025, was $100,616 compared to net cash provided by operating activities of $107,487 for the same period in 2024. The cash provided by operating activities for the six month period ended April 30, 2025 compared to the net cash provided in operating activities over the same period in 2024 was primarily due to a reduction of the net loss of $138,875 in the same period of 2025 over 2024.
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.
| 14 |
| Table of Contents |
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, 2025 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.
| 15 |
| Table of Contents |
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 the Company’s risk factors as previously disclosed in our most recent 10-K filing for the year ended October 31, 2024.
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.
| 16 |
| Table of Contents |
ITEM 6: EXHIBITS
| ||
|
|
|
| ||
|
|
|
| ||
|
|
|
| ||
|
|
|
101.INS |
| XBRL Instance Document |
101.SCH |
| XBRL Taxonomy Extension Schema Document |
101.CAL |
| XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF |
| XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB |
| XBRL Taxonomy Extension Label Linkbase Document |
101.PRE |
| XBRL Taxonomy Extension Presentation Linkbase Document |
| 17 |
| Table of Contents |
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. | |||
| 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) | |||
Date: June 13, 2025
| 18 |