Summit Networks Inc 8-K, filed Mar 30, 2021
Summit Networks Inc. (SNTW)
About this 8-K
Summit Networks Inc filed this 8-K on March 30, 2021, reporting on events of March 29, 2021.
Items reported
- Item 1.02: Ended a material agreement
- Item 2.01: Completed an acquisition or sale of assets
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): March 30, 2021 (March 29, 2021)
SUMMIT NETWORKS INC.
(Exact name of registrant as specified in its charter)
| Nevada | 333-199108 | 35-2511257 | ||
| (State or other jurisdiction of incorporation or organization) |
(Commission File Number) | (IRS Employer Identification No.) |
Changning Road North, Economic and Technological Development Zone
Hengshui, Hebei, China 053000
(Address of principal executive offices)
(86) 0318-2683220
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered or to be registered pursuant to Section 12(b) of the Act.
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | None | None |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
Item 1.02 Termination of a Material Definitive Agreement.
As previously reported, on January 20, 2021, Beijing Asian League Wins Technology Co., Ltd (“Beijing ALW”), an indirectly wholly owned subsidiary of Summit Networks Inc. (the “Company”, “we” or “us”), entered into a series of contractual arrangements, including certain Equity Pledge Agreement, Exclusive Technology Development, Consulting and Services Agreement, Exclusive Option Agreement and Spousal Consent and Irrevocable Power of Attorney (collectively, the “VIE Agreements”) with Hengshui Jingzhen Environmental Company Limited (“Hengshui Jingzhen”) and Hengshui Jingzhen’s shareholders named therein, pursuant to which Beijing ALW gained control over Hengshui Jingzhen (the “VIE Arrangement”).
As a result of the change of the Company’s business, on March 29, 2021, the Company’s board of directors (the “Board”) and a majority of holders of the Company’s outstanding shares of common stock approved the termination of the VIE Arrangement and the VIE Agreements. On the same date, Beijing ALW, Hengshui Jingzhen, and Hengshui Jingzhen’s shareholders entered into a Termination Agreement (the “Termination Agreement”) to terminate the VIE Agreements and the VIE Arrangement, effectively immediately. As such, Beijing ALW no longer has the control rights and rights to the assets, property and revenue of Hengshui Jingzhen.
The translation of the Termination Agreement is qualified in its entirety by reference to the complete text of the translation of the Termination Agreement, which is filed hereto as Exhibit 10.1.
Item 2.01. Completion of Acquisition or Disposition of Assets.
Reference is made to the disclosure set forth under Item 1.01 above, which disclosures are incorporated herein by reference.
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| ITEM 9.01 | FINANCIAL STATEMENTS AND EXHIBITS |
| (a) | Pro Forma Financial Information |
The unaudited pro forma combined financial information of our Company including the unaudited pro forma combined balance sheet as of December 31, 2020, the unaudited pro forma combined statement of comprehensive income for the three months ended December 31, 2020, unaudited pro forma combined statement of comprehensive income for the year ended September 30, 2020 and the notes related thereto are filed as Exhibit 99.1 and are incorporated herein by reference.
(d) Exhibits
The following exhibits are filed herewith:
| Exhibit No. | Description | |
| 10.1 | Translation of Termination Agreement, dated March 29, 2021 | |
| 99.1 | Unaudited Pro Forma Combined Financial Information. |
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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. | ||
| Date: March 30, 2021 | By | /s/ Shuhua Liu |
| Shuhua Liu | ||
| Chief Executive Officer | ||
| Principal Executive Officer | ||
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EXHIBIT INDEX
| Exhibit No. | Description | |
| 10.1 | Translation of Termination Agreement, dated March 29, 2021 | |
| 99.1 | Unaudited Pro Forma Combined Financial Information. |
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Exhibit 10.1
TERMINATION AGREEMENT
This TERMINATION AGREEMENT (this “Agreement”) is entered into on March 29, 2021 by and among:
Party A:
Beijing Asian League Wins Technology Co., Ltd
Registered Address: 1162, 1/F, 15 Xiaoyun Road, Chaoyang District, Beijing, PRC;
Party B:
Hengshui Jingzhen Environmental Company Limited
Registered Address: North Side of Changning Road, Economic and Technological Development Zone, Hengshui City,
Hebei Province, PRC;
Party C:
Shuhua Liu (Identity Card Number:
Beijing Chuang Jia Lian Zi Xun Co., Ltd. (Unified Social Credit Code: 91110105MA01RLQ67P).
WHEREAS:
| 1. | Party A and Party B entered into the exclusive technology development, consulting and services agreement on January 20, 2021; |
| 2. | Party A, Party B and Party C entered into the exclusive option agreement on January 20, 2021; |
| 3. | Party A, Party B and Party C entered into the equity pledge agreement on January 20, 2021; |
| 4. | Each of Party C executed the power of attorney to Party A on January 20, 2021; |
| 5. | Shuhua Liu's spouse executed a commitment letter to Party A on January 20, 2021. |
THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties agree as follows:
| 1. | Party A and Party B agree to terminate the exclusive technology development, consulting and services agreement entered into on January 20, 2021. From the effective date of this Agreement, the exclusive technology development, consulting and services agreement shall terminate and all the rights and obligations thereunder shall have no effect automatically. |
| 2. | Party A, Party B and Party C agree to terminate the exclusive option agreement entered into on January 20, 2021. From the effective date of this Agreement, the exclusive option agreement shall terminate and all the rights and obligations thereunder shall have no effect automatically. |
| 3. | Party A, Party B and Party C agree to terminate the equity pledge agreement entered into on January 20, 2021. From the effective date of this Agreement, the equity pledge agreement shall terminate and all the rights and obligations thereunder shall have no effect automatically. |
| 4. | Each of Party C hereby confirms that the power of attorney executed on January 20, 2021 shall be terminated concurrently with the termination of the exclusive option agreement entered into by Party A, Party B and Party C on January 20, 2021. |
| 5. | The commitment letter executed by Shuhua Liu's spouse on January 20, 2021 shall be terminated from the effective date of this Agreement. |
| 6. | This Agreement shall take effect upon the execution of this Agreement by the parties. |
| 7. | This Agreement is governed by laws of the PRC. |
| 8. | This Agreement shall be executed in four copies. Each party shall have one copy. |
[Signature Page]
Party A: Beijing Asian League Wins Technology Co., Ltd (Seal)
| By: | /s/ Shuhua Liu |
| Name: | Shuhua Liu |
| Title: | Legal Representative |
Party B: Hengshui Jingzhen Environmental Company Limited (Seal)
| By: | /s/ Jianwei Zhang |
| Name: | Jianwei Zhang |
| Title: | Legal Representative |
Party C:
| /s/ Shuhua Liu | |
| Shuhua Liu | |
Beijing Chuang Jia Lian Zi Xun Co., Ltd. (Seal)
| By: | /s/ Shuhua Liu |
| Name: | Shuhua Liu |
| Title: | Legal Representative |
SIGNATURE PAGE TO TERMINATION AGREEMENT
Exhibit 99.1
SUMMIT NETWORKS INC.
Unaudited Pro Forma Combined Financial Information
Index to Pro Forma Financial Information:
SUMMIT NETWORKS INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
On March 29, 2021, the board of directors and a majority shareholder of Summit Networks Inc. (the “Company”) approved the termination of the VIE Agreements with Hengshui Jingzhen Environmental Company Limited (“Hengshui Jingzhen”). On the same date, Beijing Asian League Wins Technology Co., Ltd. (“Beijing ALW”), Hengshui Jingzhen, and Hengshui Jingzhen’s shareholders entered into a Termination Agreement (the “Termination Agreement”) to terminate all existing VIE Agreements which include the Equity Pledge Agreement, Exclusive Technology Development, Consulting and Services Agreement, Exclusive Option Agreement, and Irrevocable Power of Attorney (collectively, the “VIE Agreements”), dated January 20, 2021.
Upon the termination of the VIE agreements, the Company no longer has the control of Hengshui Jingzhen. Accordingly, the Company accounts for the Hengshui Jingzhen’s business as discontinued operations and deconsolidates Hengshui Jingzhen’s financial statements in the Company’s combined financial statements.
The following unaudited pro forma combined balance sheet and statement of comprehensive income give effect to the deconsolidation of Hengshui Jingzhen.
F-1
SUMMIT NETWORKS INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF DECEMBER 31, 2020
| Summit Networks Inc. and Subsidiaries and VIE (Combined) | Notes | Pro Forma Adjustments | Pro Forma | |||||||||||||
| Assets | ||||||||||||||||
| Current assets: | ||||||||||||||||
| Cash and cash equivalents | $ | 4,575,642 | {f} | (4,333,946 | ) | $ | 241,696 | |||||||||
| Accounts receivable | 5,019,058 | {f} | (5,019,058 | ) | 0 | |||||||||||
| Prepaid expenses | 4,220 | 4,220 | ||||||||||||||
| Prepaid VAT | 439,393 | {f} | (439,393 | ) | 0 | |||||||||||
| Notes receivable | 664,528 | {f} | (664,528 | ) | 0 | |||||||||||
| Advance to suppliers | 189,653 | {f} | (189,653 | ) | 0 | |||||||||||
| Amounts due from related parties | 1,201,402 | {f} | (1,201,402 | ) | 0 | |||||||||||
| Other receivable and current assets | 136,003 | {f} | (136,003 | ) | 0 | |||||||||||
| Total current assets | 12,229,899 | (11,983,983 | ) | 245,916 | ||||||||||||
| Property, plant, and equipment, net | 11,078,316 | {f} | (11,078,316 | ) | 0 | |||||||||||
| Intangible assets, net | 4,034,680 | {f} | (4,034,680 | ) | 0 | |||||||||||
| Deferred tax asset | 232,474 | {f} | (232,474 | ) | 0 | |||||||||||
| Total assets | $ | 27,575,369 | $ | (27,329,453 | ) | $ | 245,916 | |||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||
| Current liabilities: | ||||||||||||||||
| Accounts payable | $ | 2,865,847 | {f} | $ | (2,848,818 | ) | 17,029 | |||||||||
| Deferred revenue | 3,533,141 | {f} | (3,533,141 | ) | 0 | |||||||||||
| Due to related party | 518,607 | 518,607 | ||||||||||||||
| Tax payable | 234,557 | {f} | (234,557 | ) | 0 | |||||||||||
| Other payable and current liabilities | 393,399 | {f} | (393,399 | ) | 0 | |||||||||||
| Total current liabilities | 7,545,551 | (7,009,915 | ) | 535,636 | ||||||||||||
| Stockholders’ equity | ||||||||||||||||
| Common Stock | 64,050 | - | 64,050 | |||||||||||||
| Additional Paid in capital | 13,143,470 | 13,143,470 | ||||||||||||||
| Accumulated profit (deficit) | 6,301,917 | {g} | 1,614,163 | (13,497,240 | ) | |||||||||||
| {h} | (21,413,320 | ) | ||||||||||||||
| Accumulated other comprehensive income | 520,381 | {h} | (520,381 | ) | - | |||||||||||
| Total stockholders’ equity | 20,029,818 | (20,319,538 | ) | (289,720 | ) | |||||||||||
| Total liabilities and stockholders’ equity | $ | 27,575,369 | $ | (27,329,453 | ) | $ | 245,916 | |||||||||
See accompanying notes to unaudited pro forma combined financial statements.
F-2
SUMMIT NETWORKS INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31, 2020
| Summit Networks Inc. and Subsidiaries and VIE (Combined) | Notes | Por Forma Adjustments | Por Forma | |||||||||||||
| Revenue | $ | 3,853,136 | {a} | $ | (3,853,136 | ) | $ | - | ||||||||
| Cost of revenue | 1,436,519 | {a} | (1,436,519 | ) | - | |||||||||||
| Gross profit | 2,416,617 | (2,416,617 | ) | - | ||||||||||||
| Selling expense | 402,960 | {b} | (402,960 | ) | - | |||||||||||
| General and administrative expenses | 290,139 | {b} | (218,285 | ) | 71,854 | |||||||||||
| Total operating expenses | 693,099 | (621,245 | ) | 71,854 | ||||||||||||
| Income (Loss) from operations | 1,723,518 | (1,795,372 | ) | (71,854 | ) | |||||||||||
| Other income, net | 42,343 | {c} | (42,343 | ) | - | |||||||||||
| Interest income | 5,452 | {c} | (5,452 | ) | - | |||||||||||
| Income (Loss) before tax | 1,771,313 | (1,843,167 | ) | (71,854 | ) | |||||||||||
| Income tax expense | 229,004 | {d} | (229,004 | ) | - | |||||||||||
| Net Income (Loss) | 1,542,309 | 1,614,163 | ) | (71,854 | ) | |||||||||||
| Other Comprehensive Income: | ||||||||||||||||
| Foreign currency translation adjustment | 803,676 | {e} | (803,676 | ) | - | |||||||||||
| Comprehensive income (loss) | $ | 2,345,985 | $ | (2,417,839 | ) | $ | (71,854 | ) | ||||||||
| Net Income (Loss) Per Common Share: | ||||||||||||||||
| Net income (loss) per common share - basic and diluted | $ | 0.02 | $ | (0.00 | ) | |||||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic and diluted | 64,049,990 | 64,049,990 | ||||||||||||||
See accompanying notes to unaudited pro forma combined financial statements.
F-3
SUMMIT NETWORKS INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED SEPTEMBER 30, 2020
| Summit Networks Inc. and Subsidiaries and VIE (Combined) | Notes | Por Forma Adjustments | Por Forma | |||||||||||||
| Revenue | $ | 9,454,431 | {a} | $ | (9,454,431 | ) | $ | - | ||||||||
| Cost of revenue | 4,214,046 | {a} | (4,214,046 | ) | - | |||||||||||
| Gross profit | 5,240,385 | (5,240,385 | ) | - | ||||||||||||
| Selling expense | 867,351 | {b} | (867,351 | ) | - | |||||||||||
| General and administrative expenses | 1,537,135 | {b} | (1,405,610 | ) | 131,525 | |||||||||||
| Total operating expenses | 2,404,486 | (2,272,961 | ) | 131,525 | ||||||||||||
| Income (Loss) from operations | 2,835,899 | (2,967,424 | ) | (131,525 | ) | |||||||||||
| Other income, net | 34,671 | {c} | (34,671 | ) | - | |||||||||||
| Interest income | 5,494 | {c} | (5,494 | ) | - | |||||||||||
| Income (Loss) before tax | 2,876,064 | (3,007,589 | ) | (131,525 | ) | |||||||||||
| Income tax expense | 246,993 | {d} | (246,993 | ) | - | |||||||||||
| Net Income (Loss) | 2,629,071 | (2,760,596 | ) | (131,525 | ) | |||||||||||
| Other Comprehensive Income: | ||||||||||||||||
| Foreign currency translation adjustment | 656,122 | {e} | (656,122 | ) | - | |||||||||||
| Comprehensive income (loss) | $ | 3,285,193 | $ | (3,416,718 | ) | $ | (131,525 | ) | ||||||||
| Net Income (Loss) Per Common Share: | ||||||||||||||||
| Net income (loss) per common share - basic and diluted | $ | 0.04 | $ | (0.00 | ) | |||||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic and diluted | 62,738,515 | 62,738,515 | ||||||||||||||
See accompanying notes to unaudited pro forma combined financial statements.
F-4
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
1. Basis of Presentation
The unaudited pro forma combined balance sheet as of December 31, 2020 deconsolidates the assets and liabilities attributable to Hengshui Jinzhen from the combined balance sheet of the Company and VIE which combines the historical consolidated balance sheet of the Company as of October 31, 2020 and consolidated balance sheet of Hengshui Jinzhen as of December 31, 2020.
The unaudited pro forma combined statement of comprehensive income for the three months ended December 31, 2020 deconsolidates the operations of Hengshui Jingzhen from the combined statement of comprehensive income which combines the historical consolidated statements of operations of the Company for the quarter ended October 31, 2020 and the consolidated statement of comprehensive income of Hengshui Jingzhen for the quarter ended December 31, 2020.
The unaudited pro forma consolidated statement of comprehensive income for the year ended September 30, 2020 deconsolidates the operations of Hengshui Jingzhen from the combined statement of comprehensive income which combines the historical consolidated statements of operations of the Company for the year ended July 31, 2020 and the consolidated statement of comprehensive income of Hengshui Jingzhen for the year ended September 30, 2020.
The unaudited pro forma combined financial statements have also been adjusted to give effect to pro forma events that are directly attributable to the deconsolidation of Hengshui Jingzhen, factually supportable and expected to have a continuing impact on the Company’s financial statements.
The pro forma combined financial statements should be read in conjunction with a reading of the Company’s historical financial statements and accompanying notes included in the Annual Report on Form 10-K for the year ended July 31, 2020 and Quarterly Report on Form 10-Q for the three months ended October 31, 2020, the Company’s Form 8-K filed on January 26, 2021, and the Form 8-K/A filed on February 16, 2021.
The preliminary unaudited pro forma information is presented solely for informational purposes and is not necessarily indicative of the consolidated results of operations or financial position that might have been achieved for the periods or dates indicated, nor is it necessarily indicative of the future results of the deconsolidation of the VIE.
2. Pro Forma Adjustments
The following adjustments were made in the preparation of the unaudited pro forma combined balance sheet and unaudited pro forma combined statements of comprehensive income:
{a} This adjustment reflects the elimination of revenues and cost of goods sold of Hengshui Jinzhen's business.
{b} This adjustment reflects the elimination of selling and general and administrative expenses of Hengshui Jingzhen.
{c} This adjustment reflects the elimination of non-operating incomes of Hengshui Jingzhen.
{d} This adjustment reflects the elimination of income tax expense of Hengshui Jingzhen.
{e} This adjustment reflects the elimination of foreign currency translation gain of Hengshui Jingzhen.
{f} This adjustment reflects the elimination of assets and liabilities attributable to Hengshui Jinzhen.
{g} This adjustment reflects the elimination of income (net of income tax) of Hengshui Jinzhen's business.
{h} This adjustment reflects the loss on deconsolidation of Hengshui Jinzhen. This estimated net loss has not been reflected in the pro forma consolidated statement of operations as it is considered to be nonrecurring in nature.
F-5