Quarterly Report (10-q)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

 

☒ Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2023

 

☐ Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

  For the transition period from                 to

 

Commission File Number: 333-211808

 

SUMMIT NETWORKS INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Nevada		35-2511257
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

 

S101-5289 Cambie street, Vancouver BC Canada		V5Z 0J5
(Address of principal executive offices)		(Zip Code)

 

+ 1-604-336-5353

(Registrant’s telephone number, including area code)

 

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		N/A		N/A

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 past 90 days. Yes  ☒  No  ☐

 

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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ☒  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.

 

	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.  ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ☐  No  ☒

 

The number of shares outstanding of each of the issuer’s classes of common stock, as of March 31, 2023 is as follows:

 

Class of Securities		Shares Outstanding
Common Stock, $0.001 par value		67,049,990

 

 

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SUMMIT NETWORKS INC.

TABLE OF CONTENTS

 

		PAGE
PART I
Item 1.	Condensed Consolidated Unaudited Financial Statements	2
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	13
Item 4.	Controls and Procedures	13
PART II
Item 1.	Legal Proceedings	15
Item 1A.	Risk Factors	15
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	15
Item 3.	Defaults Upon Senior Securities	15
Item 4.	Mining Safety Disclosures	15
Item 5.	Other Information	15
Item 6.	Exhibits	16
	Signatures	16

 

Cautionary Note Regarding Forward-Looking Statements

 

This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are not historical facts, and involve risks and uncertainties that could cause actual results to 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 identify such forward-looking statements. Such forward-looking statements relate to future 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 results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the “Risk Factors” section of the Company’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on December 5, 2022. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.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 new information, future events or otherwise.

 

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PART I

 

FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS.

 

SUMMIT NETWORKS INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

		March 31,				September 30,
		2023				2022
		(Unaudited)				(Audited)
ASSETS
Current Assets:
Cash & cash equivalents		$	151,570			$	8,829
Deposits			2,218				-
Total Current Assets			153,788				8,829
Non-Current Assets:
Fixed assets, net			-				-
Investments			2,665				-
Total Non-Current Assets			2,665				-
TOTAL ASSETS		$	156,453			$	8,829
LIABILITIES & STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable and accrued expenses		$	195,789			$	176,167
Accounts payable - related party			22,000				16,000
Due to related parties			579,000				579,000
Total Current Liabilities			796,789				771,167
Commitments and Contingencies			-				-
Stockholders’ Deficit:
Preferred stock, $0.001 par value, 10,000,000 shares authorized; 0 share issued and outstanding			-				-
Common stock, $0.001 par value, 500,000,000 shares authorized; 67,049,990 and 62,049,990 shares issued and outstanding as at March 31, 2023 and September 30, 2022			67,050				62,050
Additional paid-in capital			588,867				393,867
Accumulated deficit			(1,296,253	)			(1,218,255	)
Total Stockholders’ Deficit			(640,336	)			(762,338	)
TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT		$	156,453			$	8,829

 

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

 

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SUMMIT NETWORKS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 

 

		For three months ended								For six months ended
		March 31,				March 31,				March 31,				March 31,
		2023				2022				2023				2022
Revenue		$				$				$	-			$	-
Operating Expenses:
General and administrative expenses			51,648				54,491				79,833				130,695
Total operating expenses			51,648				54,491				79,833				130,695
Loss from operations			(51,648	)			(54,491	)			(79,833	)			(130,695	)
Other income
Interest income			1,080				-				1,080				-
Miscellaneous income			445				-				445				-
Rental income			310				-				310				-
Total other income			1,835				-				1,835				-
Loss from operation before income taxes			(49,813	)			(54,491	)			(77,998	)			(130,695	)
Income tax expenses			-				-				-				-
Net Loss		$	(49,813	)			(54,491	)		$	(77,998	)		$	(130,695	)
Basic Net loss per share		$	0.00				(0.00	)		$	0.00			$	(0.00	)
Diluted Net loss per share		$	0.00				(0.00	)		$	0.00			$	(0.00	)
Weighted average number of common shares outstanding			67,049,990				62,049,990				67,049,990				62,049,990
Diluted weighted average number of common shares outstanding			67,049,990				62,049,990				67,049,990				62,049,990

 

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

 

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SUMMIT NETWORKS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT

 

		Common Stock								Additional Paid-in				Accumulated
		Shares				Amount				Capital				Deficit				Total
Balance at September 30, 2022			62,049,990			$	62,050			$	393,867			$	(1,218,255	)		$	(762,338	)
Issuance of common stock			5,000,000				5,000				195,000				-				200,000
Net loss			-				-				-				(28,185	)			(28,185	)
Balance at December 31, 2022			67,049,990				67,050				588,867				(1,246,440	)			(590,523	)
Net loss			-				-				-				(49,813	)			(49,813	)
Balance at March 31, 2023			67,049,990			$	67,050			$	588,867			$	(1,296,253	)		$	(640,336	)
Balance at September 30, 2021			62,049,990			$	62,050			$	393,867			$	(1,110,050	)		$	(654,133	)
Net loss			-				-				-				(76,204	)			(76,204	)
Balance at December 31, 2021			62,049,990				62,050				393,867				(1,186,254	)			(730,337	)
Net loss			-				-				-				(54,491	)			(54,491	)
Balance at March 31, 2022			62,049,990			$	62,050			$	393,867			$	(1,240,745	)		$	(784,828	)

 

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

 

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SUMMIT NETWORKS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

		For six months ended
		March 31,
		2023				2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(77,998	)		$	(130,695	)
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation of fixed assets			-				1,869
Changes in operating assets and liabilities:
Deposits			(2,218	)			-
Accounts payable and accrued expenses			19,622				66,100
Accounts payable - related parties			6,000				12,000
Net cash used in operating activities			(54,594	)			(50,726	)
CASH FLOWS FROM INVESTING ACTIVITY:
Investment in mutual funds		$	(2,665	)			-
Net cash used in investing activity			(2,665	)			-
CASH FLOWS FROM FINANCING ACTIVITY:
Proceeds from issuance of common stock		$	200,000			$	-
Net cash generated from financing activity			200,000				-
Net increase/(decrease) in cash and cash equivalents			142,741				(50,726	)
Cash and cash equivalents at beginning of the period			8,829				80,878
Cash and cash equivalents at end of the period		$	151,570			$	30,152
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest		$	-			$	-
Income Taxes		$	-			$	-

 

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

 

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SUMMIT NETWORKS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

 

NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS

 

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 development and operation of a business engaged in the distribution of glass craft products produced in China. On May 8, 2018, the Company 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 May 8, 2020, Sumnet (Canada) Inc. (“Sumnet (Canada)”) was incorporated in Canada. Sumnet (Canada) issued all its ordinary shares to the Company so that Sumnet (Canada) became the wholly owned subsidiary of Company. On July 29, 2020, Smith Barney Enterprises Limited (“Smith Barney”) was incorporated in the British Virgin Islands. Smith Barney issued all its ordinary shares to the Company on July 29, 2020, so that Smith Barney became the wholly owned subsidiary of Company. On August 28, 2020, Green Energy (HK) Limited (“Green Energy”) was incorporated in Hong Kong. Green Energy issued all its ordinary shares to Smith Barney on August 28, 2020, so that Green Energy became the wholly owned subsidiary of Smith Barney. On September 27, 2020, Beijing Asian League Wins Technology Co., Ltd. (“Beijing ALW”) was incorporated in People’s Republic of China. Green Energy subscribed all capital stock of Beijing ALW on September 27, 2020, so that Beijing ALW became the wholly owned subsidiary of Green Energy. 

 

On November 30, 2022, Future Era Tech, Inc. (“FET”), a corporation incorporated and existing under the laws of British Columbia entered a contract with Summit Networks, Inc. Under the terms of the Agreement, FET will acquire 5,000,000 shares of common stock of SNTW for $200,000.00. FET will then be collaborating with Sumnet (Canada), Inc. (“Sumnet”), a Canadian corporation and a wholly owned subsidiary of SNTW, in the business of designing and selling clean energy equipment, such as flameless heaters and boilers. These products will be sold to the commercial and residential markets located primarily in Asia and Europe.

 

Currently, we are in the stage of implementation of our new business plan dividing into three phases. In the short term, we will perform post maintenance services and supply of spare parts for welding automation lines that have already been exported. The medium term will be the implementation of services for the supply of industrial materials for projects in the Asian region. The long term will be the sale of methanol boiler heating equipment and industrial intelligence products in North America.

 

In the future, the company also plans to develop intelligent agricultural production projects in North America.

 

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 NOTE 2. GOING CONCERN

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

 

The Company had limited operations and has not generated any revenue since its inception, July 8, 2014, resulting in accumulated deficit of $1,296,253 as of March 31, 2023. There is no guarantee that Company will generate revenue and net income in the future. Since a trial order on December 28, 2022, shows that the company has moved from no revenue to a functioning business model.

 

At March 31, 2023, the Company had a working capital deficiency of $643,001. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include adjustments that might result from the outcome of this uncertainty.

 

The ability of the Company to continue as a going concern is dependent on the undertaking of its shareholders to provide continuing financial support to enable the Company to meet its liabilities as and when they fall due.

 

The Company actively looks for new business opportunities, and its operating expenses are solely relied on loans from the shareholders.

 

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation and Consolidation

 

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (GAAP).

 

Use of Estimates

 

The preparation of condensed consolidated 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.

 

Cash and Cash Equivalents

 

Cash and cash equivalents are on deposit with financial institutions without any restrictions. As of March 31, 2023 and September 30, 2022, cash equivalents amounted to $151,170 and $8,829, respectively.

 

Fixed Assets

 

Property, plant and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related capitalized assets.

 

Short-term Investments

 

The Company’s short-term investments purchased from bank. The banks invest the Company’s fund in certain financial instruments including mutual funds. The carrying values of the Company’s short-term investments approximate fair value because of their short-term maturities. The interest earned is recognized in the consolidated statements of operations over the contractual term of these investments.

 

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The Company had short-term investments of $2,665 and $Nil as of March 31, 2023 and September 30, 2022, respectively. The Company recorded interest income of $1,080 and $Nil for the six months ended March 31, 2023 and 2022, respectively.

 

Related parties

 

Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence.

 

Income Taxes

 

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Accounting for Income Taxes”. The asset and liability method provide that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

 

ASC 740 provides guidance for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. If the Company determines that an uncertain tax position exists in which the Company could incur income taxes, the Company will evaluate whether there is a probability that the uncertain tax position taken would be sustained upon examination by the taxing authorities. A liability for uncertain tax positions would then be recorded if the Company determined it is more likely than not that a position would not be sustained upon examination or if a payment would have to be made to a taxing authority and the amount is reasonably estimable. The Company does not believe any uncertain tax positions exist that would result in the Company having a liability to the taxing authorities. The Company classifies interest and penalties related to unrecognized tax benefits, if and when required, as part of interest expense and other expense in the statements of operations. As of March 31, 2023, the Company did not have any amounts recorded pertaining to uncertain tax positions.

 

Net loss per share

 

The Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income per share is computed by dividing the net income by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar to basic income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.

 

Fair Value Measurements

 

The Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.

 

The carrying values of cash, accounts payable, and accrued liabilities approximate fair value. Pursuant to ASC 820 and 825, the fair value of cash is determined based on "Level 1" inputs, which consist of quoted prices in active markets for identical assets.

 

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ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

 

Level 1 — quoted prices in active markets for identical assets or liabilities

 

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable

 

Level 3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

 

The Company has no assets or liabilities valued at fair value on a recurring basis.

 

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. FIXED ASSETS

 

Fixed assets consisted of the following:  

 

		March 31, 2023				September 30, 2022
Office furniture		$	5,536			$	5,536
			5,536				5,536
Less: Accumulated depreciation			(5,536	)			(5,536	)
Property, plant, and equipment, net		$	-			$	-

 

Depreciation expense for the three months ended March 31, 2023 and 2022 were $Nil and $Nil, respectively.

 

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NOTE 5. RELATED PARTY BALANCES AND TRANSACTIONS

 

Related Party Balances

 

(i) Accounts payable – related party

 

On March 31, 2023 and September 30, 2022, accounts payable to related party of $22,000 and $16,000, respectively, pertains to payable in respect to the office facility rental paid by Zenox Enterprises Inc. ("Zenox Enterprises") on behalf of the Company. Zenox Enterprises is a Canadian company controlled by the Company's former CFO. The amounts which were unsecured, non-interest bearing with no specific repayment terms.

 

(ii) Amounts due to related parties:

 

As of March 31, 2023 and September 30, 2022, the amounts due to the shareholders of the Company, Shuhua Liu and Chiu Kin Wong, were $579,000 and $579,000, respectively, which were unsecured, non-interest bearing with no specific repayment terms. 

 

NOTE 6. STOCKHOLDERS’ EQUITY

 

On July 8, 2019, the Company filed an Amended and 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 for all periods presented to reflect the stock dividend.

 

On January 7, 2020, in connection with the MoralArrival Share Exchange Agreement, the Company issued 3,000,000 shares of common stock to Ms. Liu. On November 11, 2020, the Share Exchange Agreement with MoralArrival was terminated and the 3,000,000 shares issued to Ms. Liu were cancelled.

 

On February 3, 2021, the Company issued 500,000 shares of common stock to Catalpa Holdings, Inc., a third party, as compensation for its consulting services. The fair value of 500,000 was determined to be $15,000 and was recognized as stock- based compensation for the year ended September 30, 2021.

 

On May 13, 2021, the Company issued 500,000 shares of common stock to Mr. Jun Du, the Chief Operating Officer. The fair value of 500,000 was determined to be $15,000 and was recognized as stock-based compensation for the year ended September 30, 2021.

 

On December 31, 2022, in connecting with the Future Era Tech Ltd (“FET”) Stock Purchase Agreement, the Company issued 5,000,000 shares of common stock to the FET. See Note 1 above.

 

As of March 31, 2023, the Company had 67,049,990 shares of common stock issued and outstanding.

 

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NOTE 7 - INCOME TAXES

 

The reconciliation of income tax benefit at the U.S. statutory rate of 21% for six months ended March 31, 2023 and 2022 to the Company’s effective tax rate is as follows:

 

		Six Months Ended
		March 31,
		2023				2022
US statutory rate			21	%			21	%
Income tax benefit at statutory rate		$	(16,380	)		$	(27,446	)
Change in valuation allowance			16,380				27,446
Income tax expense		$	-			$	-

 

NOTE 8. SUBSEQUENT EVENTS

 

In accordance with FASB ASC 855-10 Subsequent Events, the Company has analyzed its operations subsequent to March 31, 2023, to the date these consolidated financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these consolidated financial statements, except as follow:

 

On April 13, 2023, the Company issued 30,000 shares of its common stock, par value $0.001 per share to Mr. Youyang (John) Cheng, the director.

 

On April 13, 2023, the Company issued 30,000 shares of its common stock, par value $0.001 per share to Mr. Jian Hua James Shu, the director.

 

On April 13, 2023, the Company issued 30,000 shares of its common stock, par value $0.001 per share to Mr. Weiwei (Ricky) Jiang, the director.

 

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

 

The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this Report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward- looking statements. Factors that could cause or contribute to such differences include but are not limited to those discussed below and elsewhere in this Report. Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

 

This section provides management’s discussion of the financial condition, changes in financial condition and results of operations of Summit Networks, Inc. with specific information on results of operations and liquidity and capital resources. It includes management’s interpretation of our financial results, the factors affecting these results, the major factors expected to affect future operating results and future investment and financing plans. This discussion should be read in conjunction with our consolidated financial statements and notes thereto.

 

Several factors exist that could influence our future financial performance and some of those are discussed below and elsewhere in this report. They should be considered in connection with evaluating forward-looking statements contained in this report or otherwise made by us or on our behalf since these factors could cause actual results and conditions to differ materially from those set out in such forward-looking statements.

 

Background

 

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 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.

 

Results of Operations

 

During the six months ended March 31, 2023 and 2022, we generated revenues. Our operating expenses for the same periods were comprised of general and administrative expenses of $77,998 and $130,695, respectively. Our general and administrative expenses consisted of mainly professional fees for the six months ended March 31, 2023 and 2022, respectively.

 

Our total assets as of March 31, 2023 were $156,453.

 

As of March 31, 2023, the Company had 67,049,990 shares of common stock issued and outstanding.

 

As of March 31, 2023 and September 30, 2022, there are a total of $579,000 and $579,000 in amounts respectively, due to related parties and shareholders were interest free, unsecured and payable on demand.

 

Based on our current operating plan, we may need to obtain additional financing to operate our business. Additional financing, whether through public or private equity or debt financing, or if available.

 

Liquidity and Capital Resources

 

The Company had a negative operating cash flow of $54,594 for the six months ended March 31, 2023, and a negative operating cash flow of $50,726 for the six months ended March 31, 2022. Such increase was primarily due to increase in general and administrative expenses in six months ended March 31, 2023 and 2022.

 

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The net cash generated from financing activity resulted from the proceeds from capital raising amounting to $200,000.

 

The Company’s financial statements have been prepared on a going-concern basis which contemplates the realization of an asset 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 currently provide cash flow. 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. As of March 31, 2023, we had $151,570 in cash. The working capital deficits were $643,001 and $762,338 for the six months ended March 31, 2023, and September 30, 2022, respectively. These factors raise confidence about our ability to continue as a going concern as discussed in the footnotes to our financial statements. The Company will be able to conduct its planned operations as we plan to obtain financing in the near term to meet the needs of our on-going operations, generate future revenue from operations and/or 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, 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 raise funds if at all, or on terms acceptable to the Company in which case the Company may be unable to 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.

 

On March 11, 2020 the World Health Organization declared the novel strain of coronavirus (COVID-19) a global pandemic and recommended containments and mitigation measures worldwide. The Company is monitoring this closely, and although operations have not been materially affected by the coronavirus outbreak to date, the ultimate severity of the outbreak is uncertain. Operations of the Company are ongoing. Further the uncertain nature of the spread of COVID-19 globally may impact our business operations due to the quarantine of employees, customers, and third-party service providers.

 

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.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not applicable.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

As required by Rule 13a-15 under the Exchange Act, our management has carried out an evaluation, with the participation and under the supervision of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2023. Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating and implementing possible controls and procedures.

 

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Material Weakness in Internal Control Over Financial Reporting

 

Management conducted its evaluation of disclosure controls and procedures under the supervision of our chief executive officer and our chief financial officer. Based upon, and as of the date of this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were ineffective as of March 31, 2023 due to the following material weaknesses that our management identified in our internal control over financial reporting as of March 31, 2023:

 

	1).	We do not have an Audit Committee — While not being legally obligated to have an audit committee, it is the management’s view that such a committee, including a financial expert member, is an utmost important entity level control over the Company’s financial statement. Currently the Board of Directors acts in the capacity of the Audit Committee and does not include a member that is considered to be independent of management to provide the necessary oversight over management’s activities.
	2).	We lack internal accounting personnel who possesses U.S GAAP knowledge and working experience.

 

Management has evaluated, and continues to evaluate, avenues for mitigating our internal controls weaknesses, but mitigating controls to completely mitigate internal control weaknesses have been deemed to be impractical and prohibitively costly, due to the size of our organization at the current time. Management expects to continue to use reasonable care in following and seeking improvements to effective internal control processes that have been and continue to be in use at the Company.

 

We plan to take steps to remediate this material weaknesses as soon as practicable by implementing a plan to improve our internal control over financial reporting including, but not limited to, hiring additional staff who has U.S. GAAP knowledge and working experience and/or maintaining outside consultants experienced in U.S. GAAP financial reporting as well as in SEC reporting requirements. Our management team will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements.

 

Evaluation of Changes in Internal Control over Financial Reporting

 

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Internal control over financial reporting is a process designed by, or under the supervision of, our president (our principal executive officer and our principal accounting officer and principal financial officer), to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of our company are being made only in accordance with authorizations of management and directors of our company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not provide absolute assurance that a misstatement of our financial statements would be prevented or detected. 

 

Further, the evaluation of the effectiveness of internal control over financial reporting was made as of a specific date, and continued effectiveness in future periods is subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

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Management has conducted, with the participation of our president (our principal executive officer, our principal accounting officer and our principal financial officer), an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2023 in accordance with the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control — Integrated Framework. Based on this assessment, management concluded that as of March 31, 2023, our company’s internal control over financial reporting was not effective for the reasons set forth above. Our Company is in the process of adopting specific internal control mechanisms. Future controls, among other things, will include more checks and balances and communication strategies between the management and the board to ensure efficient and effective oversight over company activities as well as more stringent accounting policies to track and update our financial reporting.

 

Changes in Internal Control over Financial Reporting

 

Except for the matter described above, there were no changes in our internal controls over financial reporting during the three months ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II

OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

Please see the “Legal Proceedings” in the current report on Form 8-K filed on January 26, 2021, which is incorporated herein by reference.

 

ITEM 1A. RISK FACTORS.

 

As a smaller reporting company, the Company is not required to provide this information.

 

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

 

There were no sales of unregistered securities of the Company during the quarter ended March 31, 2023.

 

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*		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*		XBRL Instance Document (XBRL tags are embedded within the Inline XBRL document)
104*		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

 

*	Filed herewith.

 

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.
Date: May 15, 2023	By:	/s/ Shuhua Liu
		Shuhua Liu
		Chief Executive Officer
		(Principal Executive Officer)

 

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