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.
General Overview
Our Company was incorporated in the State of Nevada on July 8, 2014 to engage in the development and operation of a business engaged in the distribution of glass craft products produced in China. Since inception, we have had limited operating activities. Our principal business activities from inception to 2018 were in the sale of glass craft products. We had supply agreements with three large and well-established suppliers and distributors of glass craft products in China. The term of these agreement began in 2014 and expired in 2018.
Currently, we are in the early stage of development of our new business plan in which we act as an international agent through our wholly owned subsidiary for a Chinese environmental company to market its environmental technologies, equipment and products and to develop projects utilizing its environmental technologies, equipment and products in worldwide markets. As well, we would seek for acquisition by the Chinese environmental company environmental technologies and equipment or technology and equipment integration methodologies.
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, 2019, our operating expenses were comprised of selling, general and administrative expenses of $596,564. With a loss on disposal of subsidiary of $5,092 and the provision for income tax benefits of $1,478, resulted to a net loss of $539,525. Our selling, general and administrative expenses consist of mainly professional fees, impairment for property and equipment, and depreciation expenses.
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During the three months ended October 31, 2019 and 2018, we generated revenues of $Nil and $Nil, with cost of goods sold being $Nil and $Nil, resulting in gross profits of $Nil and $Nil, respectively. Our operating expenses for the same three-month periods were comprised of selling, general and administrative expenses of $27,267 and $237,505, respectively, resulting in net loss of $27,267 for the three months ended October 31, 2019 compared to a net loss of $237,505 for the three months ended October 31, 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 October 31, 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 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.
The Company had 61,049,990 shares of common stock issued and outstanding as of October 31, 2019.
As of October 31, 2019 and July 31, 2019, there is a total of $68,026 and $52,642 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.
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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 October 31, 2019 we had no cash and there were outstanding liabilities of $113,608. As at July 31, 2019, we had $553 in cash and the outstanding liabilities were $86,894. The working capital deficits were negative $113,608 and $86,341, for October 31, 2019 and July 31, 2019, 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.
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, 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 Commissions rules and forms.
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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, 2019, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting subsequent to the date of managements last evaluation.