UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE QUARTERLYSIX MONTHS PERIOD ENDED JANUARY 31, 20192020
☐TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to ____________________
Commission file number 333-199108
SUMMIT NETWORKS INC.
(Exact name of registrant as specified in its charter)
Nevada(State or other jurisdiction of incorporation or organization)
Room 710A, 7/F., Ho King Commercial Centre,
2-16 Fa Yuen Street, Mong Kok, Kowloon,
Hong Kong
(Address
Nevada | 35-2511257 | |
(State or other jurisdiction of | (IRS Employer |
205-1571 West 57th Avenue,
Vancouver, BC V6P 0H7, Canada
(Address of principal executive offices, including zip code.)
(852) 5106 3566(604) 269-4052
(Telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
None | None | None |
Check whether the issuer (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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 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 registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of "large“large accelerated filer, "accelerated” “accelerated filer," "non-accelerated filer,"” “smaller reporting company,” and "smaller reporting company"“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ]Accelerated filer [ ]
Large accelerated filer | ☐ | Accelerated filer | ☐ | |
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |
Emerging growth company | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Non-accelerated filer [ ]Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [ ]☒ NO [ X ]☐
State the number
As of March 16, 2020, there were 64,049,990 shares outstanding of each of the issuer's classes ofCompany’s common equity, as of the latest practicable date: 6,104,999 shares as of March 05, 2019.
-1-stock, par value $0.001 per share, issued and outstanding.
SUMMIT NETWORKS INC.
TABLE OF CONTENTS
CAUTIONARY NOTES REGARDING FORWARD-LOOKING STATEMENTS | ii |
PART I – FINANCIAL INFORMATION | |
Statements | |
Unaudited Consolidated Balance Sheets as of January 31, | |
2019 | |
Unaudited Consolidated Statements of Stockholders’ | |
2019 | |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
Item 3. Quantitative and Qualitative Disclosures About Market | 10 |
Item 4. Controls and Procedures | 10 |
PART II – OTHER INFORMATION | 12 |
Item 1. Legal Proceedings | 12 |
1A. Risk Factors | 12 |
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | |
i
SpecialCautionary Note Regarding Forward-Looking Statements
Information included in this Form 10-Q contains forward-looking statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 as amended (“Securities(the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange(the “Exchange Act”). This information may that are not historical facts, and involve knownrisks and unknown risks, uncertainties and other factors which maythat could cause the actual results performance or achievementsto differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the financial position, business strategy and the plans and objectives of management for future operations of Summit Networks Inc. (the “Company”), are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to be materially different fromidentify such forward-looking statements. Such forward-looking statements relate to future results,events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or achievements expressed or implied by anyresults to differ materially from the events, performance and results discussed in the forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptionsFor information identifying important factors that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will comecould cause actual results to pass. Actual results of the Company could differ materially from those expressed or implied byanticipated in the forward-looking statements, please refer to the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended July 31, 2019 filed with the U.S. Securities and Exchange Commission (the “SEC”) on December 9, 2019 and as amended on December 27, 2019. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website atwww.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason. This Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," "SNTW"new information, future events or “Icon” refers to Summit Networks Inc. otherwise.
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ii
ITEM 1. FINANCIAL STATEMENT STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS | |||
January 31, | July 31, | ||
2019 | 2018 | ||
Note | (Unaudited) | (Audited) | |
$ | $ | ||
Current Assets | |||
Cash & Cash Equivalents | 1,450 | 17,729 | |
Receivable - Escrow account | 4,556 | 4,556 | |
Total Current Assets | 6,006 | 22,285 | |
Property & Office Equipment, net | 4 | - | 11,172 |
TOTAL ASSETS | 6,006 | 33,457 | |
LIABILITIES & STOCKHOLDERS' DEFICIT | |||
Current Liabilities | |||
Due to related party | 5 | 21,192 | 21,192 |
Amount due to shareholders | 5 | 292,841 | 36,846 |
Loan from other parties | 25,090 | 23,167 | |
Accrued expenses | 9,645 | 15,011 | |
Total Liabilities | 348,768 | 96,216 | |
Stockholders' Equity (Deficit) | |||
Common stock, ($0.001 par value, 75,000,000 shares | |||
authorized; 6,104,999 and 6,104,999 shares issued | |||
and outstanding as of Jan 31, 2019 and July 31, 2018 | 6,105 | 6,105 | |
Additional Paid in Capital | 67,402 | 67,402 | |
Accumulated Deficit | (416,269) | (136,266) | |
Total Stockholders' Deficit | (342,762) | (62,759) | |
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT | 6,006 | 33,457 |
January 31, | July 31, | |||||||
2020 | 2019 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash & Cash Equivalents | $ | - | $ | 553 | ||||
Total Current Assets | - | 553 | ||||||
TOTAL ASSETS | $ | - | $ | 553 | ||||
LIABILITIES & STOCKHOLDERS’ DEFICIT | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued expenses | $ | 45,582 | $ | 34,252 | ||||
Due to related party | 78,073 | 52,642 | ||||||
Total Liabilities | 123,655 | 86,894 | ||||||
Stockholders’ Deficit | ||||||||
Common stock, $0.001 par value, 500,000,000 shares authorized; 64,049,990 and 61,049,990 shares issued and outstanding as of January 31, 2020, and July 31, 2019 | 64,050 | 61,050 | ||||||
Additional Paid in Capital | 361,867 | 364,867 | ||||||
Accumulated Deficit | (549,572 | ) | (512,258 | ) | ||||
Total Stockholders’ Deficit | (123,655 | ) | (86,341 | ) | ||||
TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT | $ | - | $ | 553 |
See accompanying notes to unaudited financial statements
1
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CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
From | |||||||||
For the Three Months Ending | For the Three Months Ending | For the Six Months Ending | For the Six Months Ending | July 8, 2014 (Inception) to | |||||
Jan 31, | Jan 31, | Jan 31, | Jan 31, | Jan 31, | |||||
2019 | 2018 | 2019 | 2018 | 2019 | |||||
$ | $ | $ | $ | $ | |||||
Sales | - | - | - | - | 223,910 | ||||
Cost of Goods | - | - | - | - | 163,257 | ||||
Gross Profit | - | - | - | - | 60,653 | ||||
Selling, General & Administrative Expenses | 42,498 | 11,131 | 280,003 | 64,583 | 478,400 | ||||
Income / (loss) from operations | (42,498) | (11,131) | (280,003) | (64,583) | (417,747) | ||||
Income before income taxes | (42,498) | (11,131) | (280,003) | (64,583) | (417,747) | ||||
Income tax benefit | - | - | - | - | 1,478 | ||||
Net Income/ (Loss) | (42,498) | (11,131) | (280,003) | (64583) | (416,269) | ||||
Basic earnings per share | (0.01) | (0.00) | (0.05) | (0.01) | |||||
Diluted earnings per share | (0.01) | (0.00) | (0.05) | (0.01) | |||||
Weighted average number of common shares outstanding | 6,104,499 | 5,176,630 | 6,104,499 | 5,088,315 | |||||
Diluted Weighted average number of common shares outstanding | 6,104,499 | 5,176,630 | 6,104,499 | 5,088,315 |
For the | For the | For the | For the | |||||||||||||
three months ended | three months ended | six months ended | six months ended | |||||||||||||
January 31, | January 31, | January 31, | January 31, | |||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Revenue | $ | - | $ | - | $ | - | $ | - | ||||||||
Operating Expenses | ||||||||||||||||
General and Administrative Expenses | 10,047 | 42,498 | 37,314 | 280,003 | ||||||||||||
Loss from operations | (10,047 | ) | (42,498 | ) | (37,314 | ) | (280,003 | ) | ||||||||
Income before provision for income taxes | (10,047 | ) | (42,498 | ) | (37,314 | ) | (280,003 | ) | ||||||||
Provision for Income tax | - | - | - | - | ||||||||||||
Net Loss | $ | (10,047 | ) | $ | (42,498 | ) | $ | (37,314 | ) | $ | (280,003 | ) | ||||
Basic earnings per share | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||
Diluted earnings per share | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00) | $ | (0.00 | ) | |||||
Weighted average number of common shares outstanding | 61,865,207 | 61,044,990 | 61,457,599 | 61,044,990 | ||||||||||||
Diluted Weighted average number of common shares outstanding | 61,865,207 | 61,044,990 | 61,457,599 | 61,044,990 |
See accompanying notes to unaudited financial statements
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
(Unaudited)
Additional | |||||||||
Common Stock | Paid-in | Accumulated | |||||||
Shares | Amount | Capital | Deficit | Total | |||||
$ | $ | $ | $ | ||||||
Balance, July 31, 2017 | 5,000,000 | 5,000 | 39,000 | (41,449) | 2,551 | ||||
Stock issued for cash on @ $0.03 per share | 250,000 | 250 | 7,250 | - | 7,500 | ||||
Stock issued for cash on @ $0.03 per share | 399,999 | 400 | 11,600 | - | 12,000 | ||||
Stock issued for cash on @ $0.03 per share | 455,000 | 455 | 13,195 | - | 13,650 | ||||
Loss on acquisition of Real Capital Limited | - | - | (3,643) | - | (3,643) | ||||
Net profit (loss) | - | - | - | (94,817) | (94,817) | ||||
Balance, July 31, 2018 | 6,104,999 | 6,105 | 67,402 | (136,266) | (62,759) | ||||
Net profit (loss) | - | - | - | (280,003) | (280,003) | ||||
Balance, January 31, 2019 | 6,104,999 | 6,105 | 67,402 | (416,269) | (342,762) |
Additional | ||||||||||||||||||||
Common Stock | Paid-in | Accumulated | ||||||||||||||||||
Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
Balance, July 31, 2019 | 61,049,990 | $ | 61,050 | $ | 364,867 | $ | (512,258 | ) | $ | (86,341 | ) | |||||||||
Net loss | - | - | - | (27,267 | ) | (27,267 | ) | |||||||||||||
Balance, October 31, 2019 | 61,049,990 | $ | 61,050 | $ | 364,867 | $ | (539,525 | ) | $ | (113,608 | ) | |||||||||
Issuance of common shares, in connection with acquisition | 3,000,000 | 3,000 | (3,000 | ) | - | - | ||||||||||||||
Net loss | - | - | - | (10,047 | ) | (10.047 | ) | |||||||||||||
Balance, January 31, 2020 | 64,049,990 | $ | 64,050 | $ | 361,867 | $ | (549,572 | ) | $ | (123,655 | ) |
Additional | ||||||||||||||||||||
Common Stock | Paid-in | Accumulated | ||||||||||||||||||
Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
Balance, July 31, 2018 | 61,049,990 | $ | 61,050 | $ | 12,457 | $ | (136,266 | ) | $ | (62,759 | ) | |||||||||
Net loss | - | - | - | (237,505 | ) | (237,505 | ) | |||||||||||||
Balance, October 31, 2018 | 61,049,990 | $ | 61,050 | $ | 12,457 | $ | (373,771 | ) | $ | (300,264 | ) | |||||||||
Net loss | - | - | - | (42,498 | ) | (42,498 | ) | |||||||||||||
Balance, January 31, 2019 | 64,049,990 | $ | 61,050 | $ | 364,867 | $ | (416,269 | ) | $ | (342,762 | ) |
See accompanying notes to unaudited financial statements
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3
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
For the Six Months Ended Jan 31, 2019 | For the Six Months Ended Jan 31, 2018 | From July 08, 2014 (Inception) Through Jan 31, 2019 | |||
$ | $ | $ | |||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||
Net income (loss) | (280,003) | (64,583) | (416,269) | ||
| |||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||
Depreciation Expense | - | 798 | 6,578 | ||
Impairment on PPE | 11,172 | 11,172 | |||
Provision (benefit) for deferred taxes | - |
| - | (1,478) | |
Changes in operating assets and liabilities: | |||||
Receivable - Escrow account | - | (62) | (4,556) | ||
Accounts payable | - | 43,822 | 12,238 | ||
Accrued expenses | (5,366) | 9,907 | 9,645 | ||
Net cash provided by (used in) operating activities | (274,197) | (10,118) | (382,670) | ||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||
Acquisition of Property & Equipment | - | - | (17,750) | ||
Investment in subsidiary | - | - | (3,643) | ||
Net cash (used in) investing activities | - | - | (21,393) | ||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||
Advance from related party | 257,918 | 2,618 | 328,364 | ||
Issuance of common stock | - | 7,500 | 77,150 | ||
Net cash provided by (used in) financing activities | 257,918 | 10,118 | 405,514 | ||
Net increase (decrease) in cash | (16,279) | - | 1,450 | ||
Cash at beginning of period | 17,729 | - | - | ||
Cash at end of period | 1,450 | - | 1,450 | ||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |||||
Cash paid during year for: | |||||
Interest | - | - | - | ||
Income Taxes | - | - | - |
For the | For the | |||||||
six months ended | six months ended | |||||||
January 31, | January 31, | |||||||
2020 | 2019 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net loss | $ | (37,314 | ) | $ | (280,003 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
Impairment | - | 11,172 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts payable and accrued expenses | 11,330 | (5,366 | ) | |||||
Net cash used in operating activities | (25,984 | ) | (274,197 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Advance from related party | 25,431 | 257,918 | ||||||
Net cash provided by financing activities | 25,431 | 257,918 | ||||||
Net decrease in cash | (553 | ) | (16,279 | ) | ||||
Cash at beginning of period | 553 | 17,729 | ||||||
Cash at end of period | $ | - | $ | 1,450 | ||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||||||||
Cash paid during year for: | ||||||||
Interest | $ | - | $ | - | ||||
Income Taxes | $ | - | $ | - |
See accompanying notes to unaudited financial statements
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NOTES TO UNAUDITEDCONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended January 31, 2019 and 2018(UNAUDITED)
NOTE 1.ORGANIZATION AND DESCRIPTION OF BUSINESS
NOTE 1. | ORGANIZATION AND DESCRIPTION OF BUSINESS |
Summit Networks Inc. (the(together with its subsidiary, the “Company”) was incorporated under the laws of the State of Nevada on July 8, 2014. TheOriginally, the Company was formed to engage in the development and operation of a business engaged in the distribution of glass craft products produced in China. We are also actively lookingOn May 8, 2018, we acquired Real Capital Limited, a Hong Kong company (“Real Capital”), to expand our business operations intoseek opportunities in the food and beverage industry,industry. On March 31, 2019, the Company entered into a Share Purchase Agreement (the “Real Capital SPA”) pursuant to which it sold its interests in Real Capital. The closing of the Real Capital SPA occurred on April 10, 2019.
On April 9, 2019, the Company entered into a Share Exchange Agreement (the “MoralArrival Share Exchange Agreement”) with MoralArrival Environmental and other possible opportunities viaBlockchain Technology Services Limited, a British Virgin Islands company (“MoralArrival”), and the beneficial owner of MoralArrival, which was Shuhua Liu. The acquisition of MoralArrival was with a related party as Ms. Liu, who controls the shares of MoralArrival, als controls The Hass Group, Inc., the Company’s largest stockholder, and it was accounted for as acquisition of entity under common control. Under the terms of the MoralArrival Share Exchange Agreement, the Company agreed to exchange 3,000,000 shares of its common stock for all the outstanding shares of common stock of MoralArrival. As a result of this transaction, MoralArrival has become a wholly-owned subsidiary of the Company. MoralArrival had no business activity as of the date of acquisition.
Currently, we are in the early stage of development of our new business plan involves acting as an international agent through our wholly-owned subsidiary, Real Capital Limited (a Hong Kong company) which was acquired on May 8, 2018.
The Company isMoralArrival, for a Chinese environmental company to market its environmental technologies, equipment and products and to develop projects utilizing its environmental technologies, equipment and products in the development stage. Itsworldwide markets. However, to date, our activities to date have been limited to capital formation, organization and development of itsa business plan and minimal sales. The Company has commenced limited operations. As such, the Company is subject to all risks inherent to the establishment of a start-up business enterprise.plan.
NOTE 2. BASIS OF PRESENTATIONOn July 17, 2019, the Company received FINRA approval to effect a 10-for-1 stock dividend to holders of its common stock as of June 1, 2019, the record date for the dividend. As a result, common stock figures, share capital, additional paid in capital, and earnings per share information have been retroactively adjusted to reflect the stock dividend.
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
The Company, on May 8, 2018, the Company acquired all the shares of Real Capital Limited, a Hong Kong registered company. The purchase consideration in cash for all the outstanding shares of Real Capital Limited is total of US$1,910 (HK$15,000). After the completion, Real Capital Limited is 100% wholly owned by the Company.
The accompanying consolidated financial statements includes the accounts of the company, and its wholly owned subsidiary Real Capital Limited. All inter-company balances and transactions have been eliminated on consolidation.
The Company has a July 31, year-end.
Going Concern
NOTE 2. | GOING CONCERN |
The accompanying financial statements and notes have been prepared assuming that the Company will continue as a going concern.
The Company had limited operations during the period from July 8, 2014 (date of inception) to January 31, 20192020, resulting in accumulated deficit of $416,269.$549,572 and has not generated any revenue. There is no guarantee that Company will continue to generate revenues.revenue and net income in the future.
At January 31, 2019,2020, the Company had $1,450 inno cash and there were outstanding liabilities of $348,768. This condition raises$123,655. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management does not believe that the company’s current cash position is sufficient to cover the expenses they will incur during the next twelve months.
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The Company actively looks for new business opportunities, and its operating expenses are solely relied on loans from the shareholders.
SUMMIT NETWORKS INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
For the three and six months ended January 31, 2019 and 2018
NOTE 3. | Summary of significant accounting policies |
NOTE 3.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
This summary of significant accounting policies is presented to assist in understanding the condensed consolidated interim financial statements. The condensed consolidated interim financial statements and notes are the representations of the Corporation’s management, who is responsible for their integrity and objectivity. The condensed consolidated interimaccompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 210 8-038 of Regulation S-X of the United States Securities and thereforeExchange Commission (the “SEC”). Accordingly, they do not includecontain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited financial statements contain all the informationadjustments necessary for a fair presentation(consisting only of normal recurring accruals) to present the financial position of the Company as of January 31, 2020, and the results of operations and cash flows in conformity with generally accepted accounting principles.for the periods presented. The results of operations for the three and six months ended January 31, 2020, are not necessarily indicative of the operating results for the full fiscal year or any future period. These condensedunaudited consolidated interim financial statements should be read in conjunction with the annual consolidated financial statements and footnotesnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended July 31, 2018 included in2019, filed with the Corporation’s filed Form 10-K.SEC on December 9, 2019 and as amended on December 27, 2019.
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All intercompany balances and transactions have been eliminated.
Use of Estimates
The preparation of condensed consolidated interim financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Recent Accounting Pronouncements
The Company adopts new pronouncements relating to generally accepted accounting principles applicable to the Company as they are issued, which may be in advance of their effective date. The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
NOTE 4. PROPERTY AND EQUIPMENT
During the period ended January 31, 2019, the Company has made impairment of $11,172 for the property consisting of an office and shop located in Latvia and office equipment thereof due to no revenue being generated from the operation.
NOTE 5.RELATED PARTY TRANSACTIONS
The director of the Company, Mr. Riggs Cheung, may, in the future, become involved in other business opportunities as they become available, he may face a conflict in selecting between the Company and his other business opportunities. The Company has not formulated a policy for the resolution of such conflicts.
NOTE 4. | RELATED PARTY TRANSACTIONS |
As of January 31, 2019,2020, amount due to the directorsMrs. Shuhua Liu, a director and shareholder of the Company, was $21,192, and amount due to shareholders was $292,841,$78,073, which were unsecured, non-interest bearing with no specific repayment terms. The amount has been increased from $52,642 since July 31, 2019.
During
On April 9, 2019, the three-month period endedCompany entered into MoralArrival Share Exchange Agreement with MoralArrival, a British Virgin Islands company, and the shareholder of MoralArrival. The acquisition of MoralArrival was with a related party, as Ms. Liu controls The Hass Group, Inc., the Company’s largest stockholder and it was accounted for as acquisition of entity under common control. Under the terms of that MoralArival Share Exchange Agreement, the Company agreed to exchange 3,000,000 shares of its common stock for all the outstanding shares of common stock of MoralArrival. As a result of this transaction, MoralArrival has become a wholly-owned subsidiary of the Company. The Company issued 3,000,000 shares of common stock to Ms. Liu in January 31, 2019, and during the period from July 8, 2014 (date of inception), payroll expense of $15,000 and $81,000 were charged with respect to director fee respectively.2020.
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SUMMIT NETWORKS INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
For the three and six months ended January 31, 2019 and 2018
NOTE 6.STOCKHOLDERS’ EQUITY
NOTE 5. | STOCKHOLDERS’ EQUITY |
Transactions, other than employees’ stock issuance, are in accordance with ASC No. 505. Thus, issuances shall be accounted for based on the fair value of the consideration received. Transactions with employees’ stock issuance are in accordance with ASC No. 718. These issuances shall be accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, or whichever is more readily determinable.
As of August 1, 2017, the stockholders’ equity section of the Company contains Common stock, $ 0.001 par value: 75,000,000 shares authorized; 5,000,000 shares issued and outstanding.
On November 28, 2017July 8, 2019, the Company filed an Amended and on March 15, 2018,Restated Articles of Incorporation (the “Restated Charter”) with the Secretary of State of the State of Nevada. Pursuant to the Restated Charter, the Company’s capital stock consists of 510,000,000 shares, of which 500,000,000 are designated common stock and 10,000,000 are designated as preferred stock.
On July 17, 2019, the Company received FINRA approval to effect a 10-for-1 stock dividend to holders of its common stock as of June 1, 2019, the record date for the dividend. As a result, common stock figures, share capital, additional paid in capital, and earnings per share information have been retroactively adjusted to reflect the stock dividend.
In connection with the MoralArrival Share Exchange Agreement, the Company issued a total of 649,9993,000,000 shares of common stock to one independent investorMs. Liu on January 7, 2020. See Note 1 and two shareholders for cash consideration totally of $19,500. The purchase price for the common stocks was $0.03 per common share.
On July 24, 2018, the Company issued a total of 455,000 shares of common stock to one independent investor and two shareholders for cash consideration totally of $13,650. The purchase price for the common stocks was $0.03 per common share.Note 4 above.
As of January 31, 2019, and July 31, 2018,2020, the Company had 6,104,99964,049,990 shares of common stock issued and outstanding, respectively.outstanding.
NOTE 6. | Subsequent events |
On March 9, 2020, Mr. Chi Ming Tso, the Company’s Chief Executive Officer, tendered his resignation from his positions as a director and executive officer of the Company, effective immediately. On March 9, 2020, Ms. Shuhua Liu, a director of the Company, was appointed Chief Executive Officer and Chairman of the board of directors.
NOTE 7.WARRANTS AND OPTIONSOn March 9, 2020, Mr. Fat Kwong Chan tendered his resignation as Treasurer and Secretary of the Company, effective immediately. On March 9, 2020, Ms. Chao Long (Charlene) Huang, the Company’s Chief Financial Officer, was appointed Treasurer and Secretary of the Company.
There are no warrants or options outstandingOn March 9, 2020, Mses. Fengming Su and Yaha Zhang and Mr. Xiang Yang Chang tendered their resignation as directors of the Company. As a result, the board of directors took action to acquire any additional sharesreduce the size of common.the board of directors from five to two. Ms. Chao Long (Charlene) Huang was appointed to fill the remaining vacancy on the board of directors.
NOTE 8.COMMITMENTS AND CONTINGENCIES
The Company has no commitments and contingencies liabilities to be disclosed.
NOTE 9.LEGAL MATTERS
The Company has no known legal issues pending.
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ITEM 2. MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
References to the “Company,” “our,” “us” or “we” refer to Summit Networks Inc. References to our “management” or our “management team” refer to our officers and directors. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this report. Certain information contained in this report, includingthe discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
General Overview
Summit Networks Inc. (together with its subsidiary, the “Company”) was incorporated under the laws of the State of Nevada on July 8, 2014. Originally, the Company was formed to engage in the documents incorporated by referencedevelopment and operation of a business engaged in the distribution of glass craft products produced in China. On May 8, 2018, we acquired Real Capital Limited, a Hong Kong company (“Real Capital”), to seek opportunities in the food and beverage industry. On March 31, 2019, the Company entered into a Share Purchase Agreement (the “Real Capital SPA”) pursuant to which it sold its interests in Real Capital. The closing of the Real Capital SPA occurred on April 10, 2019.
On April 9, 2019, the Company entered into a Share Exchange Agreement (the “MoralArrival Share Exchange Agreement”) with MoralArrival Environmental and Blockchain Technology Services Limited, a British Virgin Islands company (“MoralArrival”), and the beneficial owner of MoralArrival, which was Shuhua Liu. The acquisition of MoralArrival was with a related party as Ms. Liu, who controls the shares of MoralArrival, als controls The Hass Group, Inc., the Company’s largest stockholder, and it was accounted for as acquisition of entity under common control. Under the terms of the MoralArrival Share Exchange Agreement, the Company agreed to exchange 3,000,000 shares of its common stock for all the outstanding shares of common stock of MoralArrival. As a result of this report, includes some statements thattransaction, MoralArrival has become a wholly-owned subsidiary of the Company. MoralArrival had no business activity as of the date of acquisition.
Currently, we are not purely historicalin the early stage of development of our new business plan involves acting as an international agent through our wholly-owned subsidiary, MoralArrival, for a Chinese environmental company to market its environmental technologies, equipment and that are “forward-looking statements.” Such forward-looking statements include, but are notproducts and to develop projects utilizing its environmental technologies, equipment and products in worldwide markets. However, to date, our activities to have been limited to statements regarding our Companycapital formation, organization and management’s expectations, hopes, beliefs, intentions or strategies regarding the future, including our financial condition, resultsdevelopment of operations, and financial performance. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “possible,” “potential,” “predicts,” “projects,” “seeks,” “should,” “will,” “would” and similar expressions, or the negatives of such terms, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
The forward-looking statements contained in this report are based on current expectations and beliefs concerning future developments and the potential effects on the parties and the transaction. There can be no assurance that future developments actually affecting us will be those anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the parties’ control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.business plan.
On July 17, 2019, the Company received FINRA approval to effect a 10-for-1 stock dividend to holders of its common stock as of June 1, 2019, the record date for the dividend. As a result, common stock figures, share capital, additional paid in capital, and earnings per share information have been retroactively adjusted to reflect the stock dividend.
Results of Operations
We have generated $223,910 in revenues since our inception on July 8, 2014. Our cost of goods sold was $163,257 resulting in a gross profit of $60,653. During the period from inception tosix months ended January 31, 2020 and 2019, ourwe generated no revenues. Our operating expenses for the same six-month periods were comprised of selling, general and administrative expenses of $478,400. With$37,314 and $280,003, respectively, resulting in net loss of $37,314 for the provision for income tax benefits of $1,478, resultedsix months ended January 31, 2020 compared to a net loss of $416,269.$280,003 for the six months ended January 31, 2019. Our selling, general and administrative expenses consistfor the period consisted of mainly professional fees, impairment for property and equipment, and depreciation expenses.fees.
During the three months ended January 31, 20192020 and 2018,2019, we generated revenues of $Nil and $Nil, with cost of goods sold being $Nil and $Nil, resulting in gross profits of $Nil and $Nil, respectively.no revenues. Our operating expenses for the same three-month periods were comprised of selling, general and administrative expenses of $42,498$10,047 and $11,131,$42,498, respectively, resulting in net loss of $10,047 for the three months ended January 31, 2020 compared to a net loss of $42,498 and $11,131, respectively.for the three months ended January 31, 2019. Our selling, general and administrative expenses for the period consisted of mainly professional fees, impairment for property and equipment, and depreciation expenses.
During the six months ended January 31, 2019 and 2018, we generated revenues of $Nil and $Nil, with cost of goods sold being $Nil and $Nil, resulting in gross profits of $Nil and $Nil, respectively. Our operating expenses for the same six-month periods were comprised of selling, general and administrative expenses of $280,003 and $64,583, respectively, resulting in net loss of $280,003 and $64,583, respectively. Our selling, general and administrative expenses for the period consisted of mainly professional fees, impairment for property and equipment, and depreciation expenses.fees.
Our total assets as at January 31, 20192020 were $6,006, which was $1,450 in cash, and $4,556 in receivable of escrow account. $0.
We currently anticipate that our legal and accounting fees over the next 12 months, as result of being a reporting company with the SEC and more capital financing activities occurred, will be approximately $50,000.
On November 28, 2017, March 15, 2018 and July 24, 2018,April 9, 2019, the Company entered into the MoralArrival Share Exchange Agreement. Under the terms of the MoralArrival Share Exchange Agreement, the Company issued a total of 1,104,9993,000,000 shares of common stock to independent investors and shareholders for cash consideration totally of $33,150. The purchase price for the Securities was $0.03 per common share.Ms. Liu on January 7,2020.
As of January 31, 20192020 and July 31, 2018, the Company had 6,104,999 shares of common stock issued and outstanding.
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As of January 31, 2019, and July 31, 2018, there is a total of $314,033$78,073 and $58,038$52,642 in amount due to related parties and shareholders, respectively, owed by the company for expenses that had paid on behalf of the company. The amounts were interest free, unsecured and payable on demand.
Plan of Operation for the next 12 months
Because we were not able to raise sufficient capital to execute our full business plan, we are now engaged in discussions with third parties regarding alternative directions for the Company that could enhance shareholder value. As of the date of filing this Quarterly Report on Form 10Q, we have not entered into any definitive agreement to change our direction. The business plan of our company assumes that we will continue with our business as originally planned. However, as mentioned above, we are in discussions that could lead to another direction for the Company.
Even if we are able to obtain sufficient number of service agreements at the end of the twelve months’ period, there is no guarantee that we will be able to attract and more importantly retain enough customers to justify our expenditures. If we are unable to generate a significant amount of revenue and to successfully protect ourselves against those risks, then it would materially affect our financial condition.
Based on our current operating plan, we believe that we cannot guarantee for any increase in our revenue from selling our glass craft products in the next quarter and coming twelve months. We may need to obtain additional financing to operate our business for the next twelve months. Additional financing, whether through public or private equity or debt financing, arrangements with the security holder or other sources to fund operations, may not be available, or if available, may be on terms unacceptable to us.
Liquidity and Capital Resources
AtThe Company’s financial statements have been prepared on a going-concern basis which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company’s liquidity and capital needs relate primarily to working capital and other general corporate requirements. The Company’s operations do not currently provide cash flow. To date, the Company has funded its operations [with the issuance of debt to related parties]. The business will require significant amounts of capital in the near term to sustain operations and make the investments it needs to continue operations and execute its longer term business plan of acquiring an operating business or assets. As at January 31, 20192020 we had $1,450 in cash of $0 and there were outstanding liabilities of $348,768.$123,655. As at July 31, 2018,2019, we had $17,729$553 in cash and the outstanding liabilities were $96,216.$86,894. The working capital deficits were negative $342,762$123,655 and $73,931,$86,341, for January 31, 20192020 and July 31, 2018,2019, respectively. OneThese factors raise substantial doubt about our ability to continue as a going concern. The Company will be unable to conduct its planned operations unless we obtain financing in the near term to meet the needs of our directors has verbally agreedon-going operations, generate future revenue from operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. In order to implement its business plan and become cash flow positive, management’s plan includes raising capital by equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. If we issue equity or equity equivalents to raise additional funds, our existing stockholders will experience substantial dilution and the new holders of securities may have rights, preferences and privileges senior to those of our existing stockholders. Management also cannot provide any assurance that unforeseen circumstances will not increase the need for the Company to raise additional capital on an immediate basis. There can be no assurance that we will be able to continue to loanraise funds if at all, or on terms acceptable to the company funds for operating expensesCompany in a limited scenario, but he has no legal obligationwhich case the Company may be unable to do so. continue its operations or to meet its obligations. If adequate capital is not available when needed, we will be required to significantly modify our business model or cease operations.
Off-Balance Sheet Arrangements
We do not have any 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 is material to investors.
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ITEM 3. QUANTITATIVE AND QUALITAIVEQUALITATIVE DISCLOSURE ABOUT MARKET RISK
Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
ITEM 4. CONTROLS AND PROCEDURES.PROCEDURES
Evaluation of Disclosure Controls and ProceduresProcedures:
Management maintains “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
In connection with the preparation of this quarterly report on Form 10-Q,We conducted an evaluation was carried out by management, with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2019. This evaluation was carried out under the Exchange Act)supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of January 31, 2019.
Based on that evaluation, management concluded, as of the end of the period covered by this report, that2020, our disclosure controls and procedures were not effective due to the presence of material weaknesses in recording, processing, summarizing,internal control over financial reporting.
Material Weakness in Internal Control Over Financial Reporting
A material weakness is a deficiency, or a combination of 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. Management has identified the following material weaknesses which have caused management to conclude that, as of January 31,2020, our disclosure controls and procedures were not effective: (i) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (ii) inadequate segregation of duties consistent with control objectives; and (iii) ineffective controls over period end financial disclosure and reporting information required to be disclosed, within the time periods specifiedprocesses. Because a material weakness in the SecuritiesCompany’s internal controls over financial reporting existed as of January 31, 2020 and Exchange Commission’s ruleshas not been remediated, the Company’s disclosure controls and forms.procedures were not effective as of January 31, 2020.
In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we plan to initiate, the following series of measures in connection with identifying an operating business to acquire and when funds are available to us:
1. | We plan to appoint one or more outside directors to our board of directors who would be appointed to an audit committee resulting in a fully functioning audit committee who will undertake oversight in the establishment and monitoring of required internal controls and procedures. |
2. | We plan to create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function. |
3. | We plan to prepare written policies and procedures for accounting and financial reporting to establish a formal process to close our books monthly on an accrual basis and account for all transactions, including equity and debt transactions. |
We anticipate that we will, at least partially, begin to implement these initiatives in the current fiscal year.
Changes in Internal Controls over Financial Reporting
As of the end of the period covered by this report, there have been no changes in the internal controls over financial reporting during the quarter ended January 31, 2019,2020, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting subsequent to the date of management’s last evaluation.
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To the best knowledge of the Company’s directors and officers, the Company is currently not a party to any material pending legal proceeding.
Not applicable asAs a smaller“smaller reporting company.company”, we are not required to provide the information required by this Item.
ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.PROCEEDS
None
ITEM 3: DEFAULTS UPON SENIOR SECURITIES.SECURITIES
None
ITEM 4: MINE SAFETY DISCLOSURES
Not applicable
None
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The following exhibits are included with this quarterly filing:
Exhibit No.
Exhibit No. | Description | |
31.1* | Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) | |
31.2* | Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) | |
32.1** | Certification of the Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350 | |
32.2** | Certification of the Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350 | |
101 | Interactive data files pursuant to Rule 405 of Regulation S-T |
Description
* | Filed herewith. |
** | Furnished herewith. |
Sec. 302 Certification of Chief Executive Officer and Chief Financial Officer
Sec. 906 Certification of Chief Executive Officer and Chief Financial Officer
101
Interactive data files pursuant to Rule 405 of Regulation S-T
SIGNATURES
Pursuant to 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.
Summit Networks Inc. | ||
Registrant | ||
Date: March 23, 2020 | By | /s/ Shuhua Liu |
Shuhua Liu | ||
Chief Executive Officer | ||
Principal Executive Officer | ||
Date: March 23, 2020 | By | /s/Chao Long Huang |
Chao Long Huang | ||
Chief Financial Officer | ||
Principal Financial Officer and Principal Accounting Officer |
Registrant
Date: March 5, 201913
By /s/ Riggs Cheung
__________________________
Riggs Cheung
Chief Executive Officer and Chief Financial Officer
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