Attached files
| file | filename |
|---|---|
| EX-99.1 - FORM10-Q DISCLOSURE OF HENGSHUI JINGZHEN ENVIRONMENTAL COMPANY LIMITED FOR THE T - Summit Networks Inc. | ea135456ex99-1_summitnet.htm |
| 8-K/A - AMENDMENT NO. 1 TO FORM 8-K - Summit Networks Inc. | ea135456-8ka1_summitnet.htm |
Exhibit 99.2
SUMMIT NETWORKS INC.
Unaudited Pro Forma Combined Financial Statements
Index to Pro Forma Financial Information:
i
SUMMIT NETWORKS INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
On January 20, 2021, Beijing Asian League Wins Technology Co., Ltd (“Beijing ALW”), a wholly foreign-owned enterprise (“WFOE”) in the PRC and a wholly owned subsidiary of Green Energy (HK) Limited, a Hong Kong company that is a wholly-owned subsidiary of Smith Barney Enterprises Limited, a British Virgin Islands company that is a wholly-owned subsidiary of Summit Networks Inc. (the “Company”, “we” “us” or “our”), entered into a series of contractual arrangements, including Equity Pledge Agreement, Exclusive Technology Development, Consulting and Services Agreement, Exclusive Option Agreement, and Irrevocable Power of Attorney (collectively, the “VIE Agreements”) with Hengshui Jingzhen Environmental Company Limited (“Hengshui Jingzhen”, or the “VIE”), whereby Beijing ALW gained control over Hengshui Jingzhen, a P.R. China company, which provides integrated hazardous waste management services, including collecting, transferring, disposing, and recycling of hazardous waste, primarily in Hebei, China.
On January 26, 2021, the Company filed a Current Report on Form 8-K with the Securities and Exchange Commission (“SEC”), announcing the completion of a business combination between the Company and Hengshui Jingzhen, in accordance with the terms of the VIE Agreements. As a result of the transaction, the Company and its subsidiaries gained control over Hengshui Jingzhen through a series of VIE agreements. The acquisition was accounted for as a recapitalization effected by VIE agreements, wherein Hengshui Jingzhen is considered the acquirer for accounting and financial reporting purposes. The assets and liabilities of the acquired entity have been brought forward at their book value and no goodwill has been recognized.
The following unaudited pro forma combined financial statements give effect to the reverse merger transaction (the “Transaction”) between the Company and Hengshui Jingzhen.
F-1
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF DECEMBER 31, 2020
| Summit Networks Inc. and Subsidiaries | Hengshui Jinzhen Environmental Company Limited and Subsidiary | Notes | Pro Forma Adjustments | Pro Forma Combined | ||||||||||||||
| Assets | ||||||||||||||||||
| Current assets: | ||||||||||||||||||
| Cash and cash equivalents | $ | 241,696 | $ | 4,333,946 | $ | 4,575,642 | ||||||||||||
| Accounts receivable | - | 5,019,058 | 5,019,058 | |||||||||||||||
| Prepaid expenses | 4,220 | - | 4,220 | |||||||||||||||
| Prepaid VAT | 439,393 | 439,393 | ||||||||||||||||
| Notes receivable | - | 664,528 | 664,528 | |||||||||||||||
| Advance to suppliers | - | 189,653 | 189,653 | |||||||||||||||
| Amounts due from related parties | - | 1,201,402 | 1,201,402 | |||||||||||||||
| Other receivable and current assets | - | 136,003 | 136,003 | |||||||||||||||
| Total current assets | 245,916 | 11,983,983 | - | 12,229,899 | ||||||||||||||
| Property, plant, and equipment, net | - | 11,078,316 | 11,078,316 | |||||||||||||||
| Intangible assets, net | - | 4,034,680 | 4,034,680 | |||||||||||||||
| Deferred tax asset | - | 232,474 | 232,474 | |||||||||||||||
| Total assets | $ | 245,916 | $ | 27,329,453 | $ | - | $ | 27,575,369 | ||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||
| Current liabilities: | ||||||||||||||||||
| Accounts payable | 17,029 | 2,848,818 | 2,865,847 | |||||||||||||||
| Deferred revenue | - | 3,533,141 | 3,533,141 | |||||||||||||||
| Due to related party | 518,607 | - | 518,607 | |||||||||||||||
| Tax payable | - | 234,557 | 234,557 | |||||||||||||||
| Other payable and current liabilities | - | 393,399 | 393,399 | |||||||||||||||
| Total current liabilities | 535,636 | 7,009,915 | - | 7,545,551 | ||||||||||||||
| Stockholders’ equity | ||||||||||||||||||
| Common Stock | 64,050 | 64,050 | ||||||||||||||||
| Additional Paid in capital | 361,867 | {a} | (715,637 | ) | 13,143,470 | |||||||||||||
| {b} | 13,497,240 | - | ||||||||||||||||
| Paid in capital | 13,497,240 | {b} | (13,497,240 | ) | - | |||||||||||||
| Accumulated profit (deficit) | (715,637 | ) | 6,301,917 | {a} | 715,637 | 6,301,917 | ||||||||||||
| Accumulated other comprehensive income | - | 520,381 | 520,381 | |||||||||||||||
| Total stockholders’ equity | (289,720 | ) | 20,319,538 | - | 20,029,818 | |||||||||||||
| Total liabilities and stockholders’ equity | $ | 245,916 | $ | 27,329,453 | $ | - | $ | 27,575,369 | ||||||||||
See accompanying notes to unaudited pro forma combined financial statements.
F-2
UNAUDITED PRO FORMA COMBINED STATEMENT OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31, 2020
Summit Networks Inc. and Subsidiaries | Hengshui Jinzhen Environmental Company Limited and Subsidiary | Notes | Por Forma Adjustments | Por Forma Combined | ||||||||||||||
| Revenue | $ | - | $ | 3,853,136 | $ | - | $ | 3,853,136 | ||||||||||
| Cost of revenue | - | 1,436,519 | 1,436,519 | |||||||||||||||
| Gross profit | - | 2,416,617 | - | 2,416,617 | ||||||||||||||
| Selling expense | 402,960 | 402,960 | ||||||||||||||||
| General and administrative expenses | 71,854 | 218,285 | 290,139 | |||||||||||||||
| Total operating expenses | 71,854 | 621,245 | - | 693,099 | ||||||||||||||
| Income (Loss) from operations | (71,854 | ) | 1,795,372 | - | 1,723,518 | |||||||||||||
| Other income, net | 42,343 | 42,343 | ||||||||||||||||
| Interest income | - | 5,452 | 5,452 | |||||||||||||||
| Income (Loss) before tax | (71,854 | ) | 1,843,167 | - | 1,771,313 | |||||||||||||
| Income tax expense | 229,004 | 229,004 | ||||||||||||||||
| Net Income (Loss) | (71,854 | ) | 1,614,163 | - | 1,542,309 | |||||||||||||
| Other Comprehensive Income: | ||||||||||||||||||
| Foreign currency translation adjustment | - | 803,676 | 803,676 | |||||||||||||||
| Comprehensive income (loss) | $ | (71,854 | ) | $ | 2,417,839 | $ | - | $ | 2,345,985 | |||||||||
| Net Income (Loss) Per Common Share: | ||||||||||||||||||
| Net income (loss) per common share - basic and diluted | $ | 0.00 | $ | 0.02 | ||||||||||||||
| 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
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
1. Basis of Presentation
The unaudited pro forma combined balance sheet as of December 31, 2020 combines the historical balance sheet of the Company as of October 31, 2020 and Hengshui Jingzhen as of December 31, 2020 as if the Transactions had occurred on December 31, 2020.
The unaudited pro forma combined statement of comprehensive income for the three months ended December 31, 2020 combine the historical consolidated statement 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 combined financial statements have also been adjusted to give effect to pro forma events that are directly attributable to the Transaction, factually supportable and expected to have a continuing impact on the combined results.
The pro forma combined financial statements should be read in conjunction with a reading of the Company’s historical financial statements and accompanying notes of the Company included in the Quarterly Report on Form 10-Q for the three months ended October 31, 2020 and of Hengshui Jingzhen included in this Form 8-K/A for the three months ended December 31, 2020.
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 combined company.
2. Pro Forma Adjustment
The unaudited combined pro forma balance sheet as of December 31, 2020, gives effect to a) the reclassification of Summit Network’s accumulated deficit to paid-in capital as a result of recapitalization as if the merger occurred on December 31, 2020, b) to reclassify Hengshui Jingzhen paid in capital to additional paid in capital.
F-4