Summit Networks Inc. - Quarter Report: 2019 April (Form 10-Q)

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

FORM 10-Q

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)

3A, Kingswell Commercial Tower,

171-173 Lockhard Road, Wanchai, Hong Kong

 (Address of principal executive offices, including zip code.)

 (852) 3910 6020
(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 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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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 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 May 25, 2019.

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SUMMIT NETWORKS INC.

TABLE OF CONTENTS

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS 

SUMMIT NETWORKS INC.

CONSOLIDATED BALANCE SHEETS

See accompanying notes to unaudited financial statements

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SUMMIT NETWORKS INC.

CONSOLIDATED STATEMENT OF OPERATIONS 

(Unaudited)

See accompanying notes to unaudited financial statements

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SUMMIT NETWORKS INC.

STATEMENT OF STOCKHOLDERS’ DEFICIT

(Unaudited)

See accompanying notes to unaudited financial statements

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SUMMIT NETWORKS INC.

CONSOLIDATED STATEMENT OF CASH FLOWS 

(Unaudited)

See accompanying notes to unaudited financial statements

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SUMMIT NETWORKS INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

For the three and nine months ended April 30, 2019 and 2018

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.  Originally, 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.

On April 11, 2019, after selling its wholly subsidiary, Real Capital Limited, the Company acquired MoralArrival Environmental and Blockchain Technology Services Limited ("MoralArrival"), a corporation incorporated under the laws of the British Virgin Islands. As a result of this transaction, MoralArrival has become a wholly owned subsidiary of the Company. MoralArrival is a recently formed start-up company with nominal assets and no history of operations.  MoralArrival is in the business of acting as an international agent for a Chinese environmental company, Hengshui Jingzhen Environmental Technology Company Limited of Hebei, China.

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”).

On April 11, 2019, the Company acquired all the shares of MoralArrival in exchange for 300,000 shares of its common stock. As a result of this transaction, MoralArrival has become a wholly owned subsidiary of the Company.  

The accompanying consolidated financial statements includes the accounts of the company, and its wholly owned subsidiary, MoralArrival. All inter-company balances and transactions have been eliminated on consolidation.

The Company has a July 31, year-end.

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 April 30, 2019 resulting in accumulated deficit of $90,083.  There is no guarantee that Company will continue to generate revenues.

At April 30, 2019, the Company had $nil in cash and there were outstanding liabilities of $12,933. This condition raises 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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 SUMMIT NETWORKS INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

For the three and nine months ended April 30, 2019 and 2018

NOTE 3.-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 210 8-03 of Regulation S-X, and therefore do not include all the information necessary for a fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles.  These condensed consolidated interim financial statements should be read in conjunction with the annual consolidated financial statements and footnotes for the year ended February 28, 2018 included in the Corporation’s filed Form 10-K.

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.- DISPOSAL OF SUBSIDIARY

On March 31, 2019 the Company entered into a Share Purchase Agreement with Hang Dennis Cheung, wherein the Company sold 100 ordinary shares of its wholly owned subsidiary, Real Capital Limited (“Real Capital”), for a nominal consideration of One US Dollar (US$1.00).  The 100 ordinary shares represent all of the issued and outstanding shares of Real Capital.  Real Capital has had no sales revenue for the past three years and a net assets value of US$19,685 as of the closing date of the Share Purchase Agreement.

The closing of the Share Purchase Agreement occurred on April 10, 2019.  This transaction is not considered a “significant transaction” as that term is defined in the Exchange Act.  

Carrying amount of net assets of Real Capital:

Loss on disposal:

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SUMMIT NETWORKS INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

For the three and nine months ended April 30, 2019 and 2018

NOTE 5.- BUSINESS COMBINATION

On April 9, 2019 Summit Networks, Inc. (the "Company") entered into a Share Exchange Agreement with MoralArrival Environmental and Blockchain Technology Services Limited ("MoralArrival"), a British Virgin Islands company and the shareholder of MoralArrival. Under the terms of that Share Exchange Agreement, the Company agreed to exchange 300,000 shares of its common stock for all the outstanding shares of common stock of MoralArrival. As a result of this transaction, MoralArrival will become a wholly owned subsidiary of the Company. MoralArrival is a recently formed startup company with nominal assets and no history of operations.  This transaction is not considered a “significant transaction” as that term is defined in the Exchange Act.

NOTE 6.- ROPERTY 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 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 April 30, 2019, amount due to related parties was $9,078, which were unsecured, non-interest bearing with no specific repayment terms.

During the three-month period ended April 30, 2019, the Company recognized debt forgiveness of $348,767.  Of this amount, $21,192 and 292,841 were due to related parties and shareholders, respectively.

During the three-month period ended April 30, 2019, and during the period from July 8, 2014 (date of inception), payroll expense of $nil and $81,000 were charged with respect to director fee respectively.

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SUMMIT NETWORKS INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

For the three and nine months ended April 30, 2019 and 2018

NOTE 8.- 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 April 30, 2019, and July 31, 2018, the Company had 6,104,999 shares of common stock issued and outstanding, respectively.

NOTE 9.- WARRANTS AND OPTIONS

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

NOTE 10.- COMMITMENTS AND CONTINGENCIES

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

NOTE 11.- LEGAL MATTERS

The Company has no known legal issues pending.

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ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY STATEMENT 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.                       

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 April 30, 2019, our operating expenses were comprised of selling, general and administrative expenses of $495,889. With a loss on disposal of subsidiary of $5,092 and a gain on debt forgiven of $348,767, and the provision for income tax benefits of $1,478, resulted to a net loss of $90,083. Our selling, general and administrative expenses consist of mainly professional fees, impairment for property and equipment, and depreciation expenses.

During the three months ended April 30, 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 three-month periods were comprised of selling, general and administrative expenses of $17,489 and $15,720, respectively. We had a loss on disposal of subsidiary of $5,092 and a gain on debt forgiven of $348,767, resulting in net income of $326,186 for the three months ended April 30, 2019 compared to a net loss of $15,720 for the three months ended April 30, 2018. Our selling, general and administrative expenses for the period consisted of mainly professional fees, impairment for property and equipment, and depreciation expenses.

During the nine months ended April 30, 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 nine-month periods were comprised of selling, general and administrative expenses of $297,492 and $80,077, respectively. We had a loss on disposal of subsidiary of $5,092 and a gain on debt forgiven of $348,767, resulting in net income of $46,183 during the nine months ended April 30, 2019 compared to a net loss of $80,077 for the nine months ended April 30, 2018. 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 as at April 30, 2019 were $Nil.  

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 April 9, 2019 Summit Networks, Inc. (the "Company") entered into a Share Exchange Agreement with MoralArrival Environmental and Blockchain Technology Services Limited ("MoralArrival"), a British Virgin Islands company and the shareholder of MoralArrival. Under the terms of that Share Exchange Agreement, the Company agreed to exchange

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300,000 shares of its common stock for all the outstanding shares of common stock of MoralArrival. As a result of this transaction, MoralArrival will become a wholly owned subsidiary of the Company.  As of the date of this Quarterly Report, these shares have not been formally issued.

Excluding the 300,000 shares for the acquisition MoralArrival, the Company had 6,104,999 shares of common stock issued and outstanding as of April 30, 2019.

As of April 30, 2019 and July 31, 2018, there is a total of $9,078 and $58,038 in amount due to related parties and shareholders, respectively, 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

As at April 30, 2019 we had no cash and there were outstanding liabilities of $12,933. As at July 31, 2018, we had $17,729 in cash and the outstanding liabilities were $96,216. The working capital deficits were negative $12,933 and $73,931, for April 30, 2019 and July 31, 2018, respectively.

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 April 30, 2019.

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 April 30, 2019, 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.

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

As a “smaller reporting company”, we are not required to provide the information required by this Item.

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ITEM 2:  UNREGISTERED 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

ITEM 6.     EXHIBITS

The following exhibits are included with this quarterly filing:

Exhibit No.

Description

31.1

Sec. 302 Certification of Chief Executive Officer

31.2

Sec. 302 Certification of Chief Financial Officer

32.1

Sec. 906 Certification of Chief Executive Officer

32.2

Sec. 906 Certification of Chief Financial Officer

101      

Interactive data files pursuant to Rule 405 of Regulation S-T

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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:  May 25, 2019

By /s/ Chi Ming Tso

__________________________

Chi Ming Tso

Chief Executive Officer

Principal Executive Officer

Date:  May 25, 2019

By /s/ Chao Long Huang

__________________________

Chao Long Huang

Chief Financial Officer

Principal Financial Officer and Principal Accounting Officer

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Exhibit 31.1

CERTIFICATION

I, Chi Ming Tso, certify that:

Date: May 25, 2019

/s/ Chi Ming Tso
Chi Ming Tso
Chief Executive Officer  

Principal Executive Officer

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Exhibit 31.2

CERTIFICATION

I, Chao Long Huang, certify that:

Date: May 25, 2019

/s/ Chao Long Huang
Chao Long Huang
Chief Financial Officer

Principal Financial Officer and Principal Accounting Officer

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Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Summit Networks Inc. (the “Company”) on Form 10-Q for the period ending April 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Chi Ming Tso, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)     The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)     The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

IN WITNESS WHEREOF, the undersigned has executed this certification as of the 25^th day of May, 2019.

 

/s/ Chi Ming Tso
Chi Ming Tso

Chief Executive Officer

Principal Executive Officer

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Exhibit 32.2

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Summit Networks Inc. (the “Company”) on Form 10-Q for the period ending April 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Chao Long Huang, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)     The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)     The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

IN WITNESS WHEREOF, the undersigned has executed this certification as of the 25^th day of May, 2019.

/s/ Chao Long Huang
Chao Long Huang

Chief Financial Officer

Principal Financial Officer and Principal Accounting Officer

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