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Summit Networks Inc. - Quarter Report: 2018 October (Form 10-Q)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X]

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 2018

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 of principal executive offices, including zip code.)


 (852) 5106 3566
(Telephone number, including area code)

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. See the definitions of "large accelerated filer, "accelerated filer," "non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

          Large accelerated filer   [   ]         Accelerated filer   [   ]

                          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 of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:  6,104,999 shares as of December 24, 2018.

 

-1-


SUMMIT NETWORKS INC.

TABLE OF CONTENTS


PART I – FINANCIAL INFORMATION

3
  

Item 1.  Financial Statement (Unaudited)

3

              Unaudited Consolidated Balance Sheets as of October 31, 2018, and July 31, 2018

3

              Unaudited Consolidated Statements of Operations for the Three Months Ended October 31, 2018 and 2017

4

              Unaudited Consolidated Statements of Stockholders' Equity

5

              Unaudited Consolidated Statements of Cash Flows for the Three Months Ended,October 31, 2018 and 2017

6

              Notes to Unaudited Consolidated Financial Statements

7
  

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

12
  

Item 3. Quantitative and Qualitative Disclosures About Market Risks

14
  

Item 4. Controls and Procedures

14
  

PART II – OTHER INFORMATION

15
  

Item 1. Legal Proceedings

15
  

Item 1A. Risk Factors

15
  

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

15
  

Item 3. Default upon Senior Securities

15
  

Item 4. Mine Safety Disclosures

15
  

Item 5. Other Information

15
  

Item 6. Exhibits

16
  

SIGNATURES

16


Special Note Regarding Forward-Looking Statements

Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Summit Networks Inc. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any 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 assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements 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" or “Icon” refers to Summit Networks Inc.                            


-2-


PART I. FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENT 

SUMMIT NETWORKS INC.

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

 

Notes

October 31, 2018

 

July 31, 2018

ASSETS

 

 

(Unaudited)

 

 

(Audited) 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

5,297

 

$

17,729

Receivable- Escrow account

 

4,556

4,556

Total current assets

 

 

9,853

22,285

Non-current assets

 

  Property & Office Equipment, net

10

$

-

$

11,172

  Deferred Tax Asset

 

-

-

Total non-current assets

 

-

11,172

TOTAL ASSETS

 

$

9,853

 

$

33,457

 

LIABILITIES

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

Accounts payable

 

$

-

 

$

-

Amount due to related party

7

 

21,192

 

 

21,192

Amount due to shareholders

7

256,682

36,846

Loan from other parties

 

23,167

23,167

Accrued expenses

 

 

9,076

 

 

15,011

Total current liabilities

 

 

310,117

 

 

96,216

TOTAL LIABILITIES

 

$

310,117

 

 $

96.216

  

Stockholders’ equity

 

 

 

 

 

Common stock, $0.001 par value, 75,000,000 shares authorized; 6,104,999 and 6,104,999 shares issued and outstanding, as at October 31, 2018 and July 31, 2018

 

$

 

 

6,105

 

6,105

Additional paid-in capital

 

 

67,402

 

 

67,402

(Accumulated deficit) during development stage

 

 

(373,771)

 

 

(136,266)

TOTAL STOCKHOLDERS’ EQUITY

 

 

(300,264)

 

 

(62,759)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

9,853

 

$

33,457

 

See accompanying notes to unaudited financial statements

-3- 



SUMMIT NETWORKS INC.

(A Development Stage Company)

CONSOLIDATED STATEMENT OF OPERATIONS 

(Unaudited)

   

For the Three Months Ended October 31, 2018

  

For the Three Months Ended October 31, 2017

  

From July 8, 2014 (Inception) to October 31, 2018

 
 

Sales

$

-

 

$

-

 

$

223,910

 
 

Cost of sales

 

-

  

-

  

163,257

 
 

Gross Profit

 

-

  

-

  

60,653

 
           
 

Selling, General & Administrative Expenses

 

237,505

  

53,452

  

435,902

 

 

          
 

(Loss)/ Income from operations

 

(237,505)

  

(53,452)

  

(375,249)

 
           
 

Other income / (expenses)

 

-

  

-

  

-

 
           
 

(Loss)/ Income before income taxes

 

(237,505)

  

(53,452)

  

(375,249)

 
           
 

Income tax benefit

 

-

  

-

  

1,478

 
           
 

Net Loss

 

(237,505)

  

(53,452)

  

(373,771)

 
           
 

Basic and diluted earnings (loss) per share of common stock

$

(0.04)

 

$

(0.01)

    
           
 

Weighted average number of common shares outstanding

 

6,104,499

  

5,000,000

    
           

 

See accompanying notes to unaudited financial statements



-4-


SUMMIT NETWORKS INC.

(A Development Stage Company)

STATEMENT OF STOCKHOLDERS’ EQUITY 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

Common stock

 

Additional

 

Deficit during

 

 

 

Total

 

Shares

 

Amount

 

paid-in

 

Development

 

Subscription

 

stockholders'

 

outstanding

 

 

 

capital

 

Stage

 

Receivable

 

equity/(deficit)

 

 

 

 

 

 

 

 

 

 

 

 

Balance, July 8, 2014

Dec 31, 2015

-

 $

-

 $

-

 $

-

 $

-

 $

-

            

Stock issued on July 23, 2014 

 

 

 

 

 

 

 

 

 

 

 

@$0.001 per share

4,000,000

 

4,000

 

-

 

-

 

-

 

4,000

Net profit, July 31, 2014

 

 

 

 

 

 

5,090

 

-

 

5,090   

 

 

 

 

 

 

 

 

 

 

 

 

Balance, July 31, 2014

Dec 31, 2016

4,000,000

$

4,000

$

-

$

5,090

$

-

$

9,090   

            

Stock issued on Jan 29, 2015 

 

 

 

 

 

 

 

 

 

 

 

@$0.04 per share

1,000,000

 

1,000

 

39,000

 

-

 

-

 

40,000

Net (loss), July 31, 2015

 

 

 

 

 

 

(22,902)

 

 

 

(22,902)

            

Balance, July 31, 2015

 5,000,000

$

5,000

 $

39,000 

 $

(17,812)

 $

-  

 $

26,188 

            

Net (loss), July 31, 2016 

 

 

 

 

 

 

(9,447)

 

-

 

 (9,447)

            

Balance, July 31, 2016

 5,000,000

$

5,000

 $

39,000 

 $

(27,259)

 $

-

 $

16,741 

            

Net (loss), July 31, 2017

 

 

 

 

 

 

(14,190)

 

 

 

(14,190)

            

Balance, July 31, 2017

 5,000,000

$

5,000

 $

39,000 

 $

(41,449)

 $

-  

 $

2,551 

            

Stock issued on Nov 28, 2017 

           

@$0.001 per share

250,000

 

250

 

7,250

 

-

 

-

 

7,500

Stock issued on March 15, 2018 

           

@$0.001 per share

399,999

 

400

 

11,600

 

-

 

-

 

12,000

Stock issued on March 15, 2018 

           

@$0.001 per share

455,000

 

455

 

13,195

 

-

 

-

 

13,650

Loss on acquisition of Real Capital Ltd

    

(3,643)

 

-

 

-

 

 (3,643)

Net (loss), July 31, 2018 

 

 

 

 

 

 

(94,817)

 

-

 

 (94,817)

            

Balance, July 31, 2018

 6,104,999

$

6,105

 $

67,402

 $

(136,266)

 $

-

 $

(62,759)

            

Net (loss), October 31, 2018

-

 

-

 

-

 

(237,505)

 

-

 

 (237,505)

            

Balance, October 31, 2018

 6,104,999

$

6,105

 $

67,402

 $

(373,771)

 $

-

 $

(300,264)

            
            


See accompanying notes to unaudited financial statements


-5-



CONSOLIDATED STATEMENT OF CASH FLOWS 

(Unaudited)

  

 

  

From Inception

 

 

For the Three Months Ended

 

July 08, 2014 to (inception)

Through

 

 

Oct 31, 2018

 

Oct 31, 2017

 

Oct 31, 2018

Cash flows from operating activities:

 

 

 

 

 

  

Net (loss) income

 

$

(237,505)

$

(53,452)

$

(373,771)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

  

Depreciation

 

 

-

 

399

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

  

-

-

(4,556)

Accounts payable

 

 

-

 

43,822

12,238

Accrued expenses

 

 

(5,935)

 

7,213

9,076

Net cash (used in) provided by operating activities

 

 

(232,268)

 

(2,018)

 

(340,741)

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:

 

 

 

    Issuance of common stock

  

-

-

77,150

Amount due to related party

  

-

2,018

-

Amount due to shareholders

  

219,836

-

290,282

Net cash (used in) provided by financing activities

 

 

219,836

 

2,018

367,432

 

 

 

 

 

Net increase (decrease) in cash

 

 

(12,432)

 

-

5,297

Cash – beginning of period

 

 

17,729

 

-

-

Cash – end of period

 

$

5,297

$

-

$

5,297

Supplemental disclosures of cash flow information:

 

 

 

Interest paid

 

$

-

$

-

$

-

Income taxes

 

$

-

$

-

$

-


See accompanying notes to unaudited financial statements


-6-

SUMMIT NETWORKS INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.

ORGANIZATION AND DESCRIPTION OF BUSINESS

Summit Networks Inc. (the “Company”) was incorporated under the laws of the State of Nevada on July 8, 2014.  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 looking to expand our business operations into the food and beverage industry, and other possible opportunities via our new subsidiary Real Capital Limited (a Hong Kong company) which was acquired on May 8, 2018.

The Company is in the development stage. Its activities to date have been limited to capital formation, organization, development of its 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.


NOTE 2.

BASIS OF PRESENTATION

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.


NOTE 3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. There were no significant estimates in the current reporting period.

Due to the limited level of operations, the Company has not had to make material assumptions or estimates other than the assumption that the Company is a going concern.

b.

Fair value of financial instruments

ASC 825, “Disclosures about Fair Value of Financial Instruments”, requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of October 31, 2018.

Fair values were assumed to approximate carrying values of on-balance-sheet financial instruments since they are short term in nature. These financial instruments include cash and related party loan payable.


-7-


SUMMIT NETWORKS INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

c.

Earnings per Share

ASC No. 260, “Earnings Per Share”, specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common stock.   The Company has adopted the provisions of ASC No. 260.  

Basic net loss per share amounts is computed by dividing the net loss by the weighted average number of common shares outstanding.  Diluted earnings per share are the same as basic earnings per share due to the lack of dilutive items in the Company.

d.

Cash and cash equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

e.

 Income Taxes

Income taxes are provided in accordance with ASC No. 740, Accounting for Income Taxes.  A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all of the deferred tax assets will be realized.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

f.

Revenue Recognition

The Company will recognize revenue in accordance with ASC topic 605 “Revenue Recognition” - when all goods and services have been performed and delivered, the amounts are readily determinable, and collection is reasonably assured.  The Company has generated $223,910 in revenue since its inception.

g.

Cost of Sales

Amounts that will be recorded as cost of sales relate to direct expenses incurred in order to fulfill orders of our customers. Such costs are recorded and allocated as incurred. Our cost of sales will consist primarily of the cost of product and shipping expenses.

h.

Advertising

The Company expenses its advertising when incurred. There has been $12,498 in advertising expense since inception.

i.

Fixed Assets

Fixed assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, (if any). The Company utilizes straight-line depreciation over the estimated useful life of the asset.


Property – 40 years

Office Equipment – 7 years



-8-


SUMMIT NETWORKS INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

j.

Recently Issued Accounting Guidance

The Company has evaluated all the recent accounting pronouncements through the date the financial statements were issued and filed with the Securities and Exchange Commission and believe that none of them will have a material effect on the company’s financial statements.


NOTE 4.

CONCENTRATIONS

Initial sales are concentrated with limited client. Sales are made without collateral and the credit-related losses are insignificant or non-existent. Accordingly, there is no provision made to include an allowance for doubtful accounts.


NOTE 5.

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 October 31, 2018 resulting in net loss of $373,771.  There is no guarantee that Company will continue to generate revenues. At October 31, 2018, Company had $5,297 in cash and there were outstanding liabilities of $310,117. This condition raises substantial doubt about the Company’s ability to continue as a going concern. Even though the Company is currently in the development stage, management does not believe that the company’s current cash of $5,297 is sufficient to cover the expenses they will incur during the next twelve months.


NOTE 6.

WARRANTS AND OPTIONS

There are no warrants or options outstanding to acquire any additional shares of common.


NOTE 7.

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.

As of October 31, 2018, amount due to the directors of the Company was $21,192, and amount due to shareholders was $256,682, which were unsecured, non-interest bearing with no specific repayment terms.

During the three months period ended October 31, 2018, and during the period from July 8, 2014 (date of inception), payroll expense of $15,000 and $51,000 were charged with respect to director fee, respectively.



-9-


SUMMIT NETWORKS INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 8.

INCOME TAXES

We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.

ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.

There was no income tax expense for the nine months period ended October 31, 2018 and 2017. The rate was as follow:


   

October 31, 2018

October 31, 2017

 

US Federal Statutory Tax Rate *

21.0%

15.0%

 

Nevada State & Local Tax Rate

0.0%

0.0%

 

Net Operating Loss Carryforward

(0.0)%

(0.0)%

 

Effective Tax Rate

21.0%

15.0%

 
      

*for the Financial year 2018 and onward will reduce to 21%



-10-

SUMMIT NETWORKS INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 9.

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, 2017 and on March 15, 2018, the Company issued a total of 649,999 shares of common stock to one independent investor 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.

As of October 31, 2018, and July 31, 2018, the Company had 6,104,999 shares of common stock issued and outstanding, respectively.


NOTE 10.

PROPERTY AND EQUIPMENT

During the period ended October 31, 2018, 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 11.

COMMITMENTS AND CONTINGENCIES

The Company has no commitments and contingencies liabilities to be disclosed.


NOTE 12.

LEGAL MATTERS

The Company has no known legal issues pending.


NOTE 13.

SUBSEQUENT EVENTS

The Company has evaluated events subsequent through the date these financial statements have been issued to assess the need for potential recognition or disclosure in this report. Such events were evaluated through the date these financial statements were available to be issued. Based upon this evaluation, except the issued disclosed above, it was determined that no other subsequent events occurred that require recognition or disclosure in the financial statements.  


-11-


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The information contained in this report, including in the documents incorporated by reference into this report, includes some statements that are not purely historical and that are “forward-looking statements.” Such forward-looking statements include, but are not limited to, statements regarding our Company and management’s expectations, hopes, beliefs, intentions or strategies regarding the future, including our financial condition, results 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.


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 to October 31, 2018, our operating expenses were comprised of selling, general and administrative expenses of $435,902. With the provision for income tax benefits of $1,478, resulted to a net loss of $373,771. Our selling, general and administrative expenses consist of mainly professional fees, impairment for property and equipment, and depreciation expenses.

 

During the three months ended October 31, 2018 and 2017, 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 three month periods were comprised of selling, general and administrative expenses of $237,505 and $53,452, respectively, resulting in net loss of $237,505 and $53,452, respectively. Our selling, general and administrative expenses for the period consisted of mainly professional fees, impairment for property and equipment, and depreciation expenses.

 

Our total assets October 31, 2018 were $9,853, which was $5,297 in cash, and $4,556 in receivable of escrow account.  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, the Company issued a total of 1,104,999 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.

 

As of October 31, 2018 and July 31, 2018, the Company had 6,104,999 shares of common stock issued and outstanding.


As of October 31, 2018 and July 31, 2018, there is a total of $277,874 and $58,038 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.


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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 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

 

At October 31, 2018 we had $5,297 in cash and there were outstanding liabilities of $310,117. As at July 31, 2018, we had $17,729 in cash and the outstanding liabilities were $96,216. The working capital deficits were negative $300,264 and $73,931, for October 31, 2018 and July 31, 2018, respectively. Our director has verbally agreed to continue to loan the company funds for operating expenses in a limited scenario, but he has no legal obligation to do so.  

 

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 QUALITAIVE 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.

Evaluation of Disclosure Controls and Procedures

 

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, an evaluation was carried out by management, with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of October 31, 2018.

 

Based on that evaluation, management concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

 

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 October 31, 2018, 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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PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

 

To the best knowledge of the Company’s directors and officers, the Company is currently not a party to any material pending legal proceeding.

 

ITEM 1A:  RISK FACTORS

 

Not applicable as a smaller reporting company.

 

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

 

None

 

ITEM 3:  DEFAULTS UPON SENIOR SECURITIES.

 

None

 

ITEM 4:  MINE SAFETY DISCLOSURES

 

Not applicable

 

ITEM 5.  OTHER INFORMATION

 

None


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ITEM 6.     EXHIBITS.


The following exhibits are included with this quarterly filing:


Exhibit No.

Description

31.1

Sec. 302 Certification of Chief Executive Officer and Chief Financial Officer

32.1

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:  December 24, 2018

By: /s/ Riggs Cheung

Riggs Cheung

Chief Executive Officer and

Chief Financial Officer

        


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