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 Companys ability to continue as a going concern. Management does not believe that the companys 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 Corporations 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 Corporations 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:
|
|
Cash and cash equivalents
|
1,450
|
Loan to shareholder
|
18,235
|
Net Assets
|
19,685
|
Loss on disposal:
|
|
Consideration Received
|
1
|
Net Asset of Real Capital
|
(19,685)
|
Loan from Real Capital
|
18,235
|
Loss recognized in APIC
|
(3,643)
|
Loss on disposal
|
(5,092)
|
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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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