The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
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.
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.
The Company had short-term investments of
$2,665 and $Nil 0
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.
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:
Schedule of fixed assets | |
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 0 and $Nil, 0 respectively.
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.
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:
Schedule of reconciliation of income tax benefit | |
| | | |
| | |
| |
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.