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EX-32.1 - Shengda Network Technology, Inc.ex32-1.htm
EX-31.2 - Shengda Network Technology, Inc.ex31-2.htm
EX-31.1 - Shengda Network Technology, Inc.ex31-1.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

Mark One

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2020

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____ to _____

 

Commission File No. 333-227526

 

SHENGDA NETWORK TECHNOLOGY, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   35-2606208

(State or other jurisdiction

of incorporation or Organization

 

(IRS Employment

Identification No.)

 

Floor 6, Building 6    
LuGang WebMall Town, Chou Jiang, YiWu    
Jinhau City, Zhejiang Province China   322000
(Address of principal executive offices)   (Zip Code)

 

1-702-979-5606

(Registrant’s telephone number, including area code)

 

n/a

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of exchange on which registered
Common Stock   SOLQ   N/A

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such fling requirements for the past 90 days. Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer. [  ]   Accelerated filer. [  ]
Non-accelerated filer [  ]   Smaller reporting company [X]   Emerging growth company [X]

 

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. [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [  ] No [  ]

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date

 

Class   Outstanding as of April 9, 2021
Common Stock: $0.001   14,009,945

 

 

 

 
 

 

TABLE OF CONTENTS

 

PART 1 – FINANCIAL INFORMATION  
   
Item 1. – Financial Statements (unaudited) F-1
   
Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of Operations 3
   
Item 3. – Quantitative and Qualitative Disclosures about Market Risk 6
   
Item 4. – Controls and Procedures 6
   
PART 2 – OTHER INFORMATION  
   
Item 1. – Legal Proceedings 7
   
Item 2. – Unregistered Sales of Equity Securities and Use of Proceeds 7
   
Item 3. – Default upon Senior Securities 7
   
Item 4. – Mine Safety Disclosures 7
   
Item 5. – Other Information 7
   
Item 6. – Exhibits 7

 

2
 

 

Shengda Network Technologies Inc. and Subsidiaries

 

INDEX

 

PART I - FINANCIAL INFORMATION

 

Item1. Financial Statements (Unaudited)

 

Contents Page(s)
   
Condensed Consolidated Balance Sheets as of December 31, 2020 and June 30, 2020 F-2
   
Condensed Consolidated Statement of Operations for the Three and Six Months ended December 31, 2020 and 2019 F-3
   
Condensed Consolidated Statements of Shareholders Equity for the Three and Six Months Ended December 31, 2020 and 2019 F-4
   
Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2020 and 2019 F-5
   
Notes to Condensed Consolidated Financial Statements F-6

 

F-1

 

 

SHENGDA NETWORK TECHNOLOGY INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

   December 31, 2020   June 30, 2020 
         
ASSETS          
           
Current Assets          
Cash and cash equivalents  $721,589   $4,271,326 
Account receivable   3,121,049    - 
Advance to suppliers   1,295,041    - 
Loan receivable   8,275,862    - 
Prepaid expense   627    4,129 
Total Current Assets   13,414,168    4,275,455 
           
Property And Equipment, Net   75,300    - 
           
Total Assets  $13,489,468   $4,275,455 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)          
           
Current Liabilities          
Accounts payable  $658,694   $47,085 
Related party loans   19,974    19,974 
Accrued expenses and other payables   575,126    28,942 
Advances and deposits   -    3,972,500 
Advances and deposits - Related party   2,000    302,000 
Other payable - Related party   -    1,330 
Total Liabilities   1,255,794    4,371,831 
           
Stockholders’ Equity (deficit)          
Preferred Stock, $0.001 par value, 20,000,000 shares authorized;   -    - 
Common Stock, $0.001 par value, 1,000,000,000 shares authorized; 14,009,945 and 6,960,000 shares issued and outstanding at December 31, 2020 and June 30, 2020, respectively   14,010    6,960 
Additional paid-in capital   10,513,985    16,310 
Retained earnings (Accumulated loss)   899,713    (80,130)
Accumulated other comprehensive income (loss)   805,966    (39,516)
Total stockholders’ equity (deficit)   12,233,674    (96,376)
Total Liabilities and Stockholders’ Equity  $13,489,468   $4,275,455 

 

The accompanying notes are an integral part of unaudited condensed consolidated financial statements.

 

F-2

 

 

SHENGDA NETWORK TECHNOLOGY INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME (LOSS)

 

   For the three months ended December 31,   For the six months ended December 31, 
   2020   2019   2020   2019 
                 
Revenue  $2,590,594   $-   $7,734,172   $- 
Cost of Revenue   2,153,856    -    6,310,137    - 
Gross Profit   436,738    -    1,424,035    - 
                     
Expenses                    
Professional expenses   19,375    12,952    34,675    17,252 
General and administrative expenses   33,018    33    60,165    137 
Total expenses   52,393    12,985    94,840    17,389 
                     
Income (loss) from operations   384,345    (12,985)   1,329,195    (17,389)
                     
Other income (expense)                    
Interest income   5,061    -    20,413    - 
Bank charges   (319)   -    (712)   - 
Other income, net   4,742    -    19,701    - 
                     
Income (loss) before income taxes   389,087    (12,985)   1,348,896    (17,389)
                     
Income Tax Expense   369,053    -    369,053    - 
                     
Net income (loss) after tax  $20,034   $(12,985)  $979,843   $(17,389)
                     
Other comprehensive income                    
Foreign currency translation gain   461,222    -    845,482    - 
                     
Total Comprehensive Income (loss)  $481,256   $(12,985)  $1,825,325   $(17,389)
                     
Basic and diluted net income (loss) per common share  $0.00   $(0.00)  $0.11   $(0.00)
                     
Weighted-average number of common shared outstanding   11,481,160    6,960,000    9,220,580    6,960,000 

 

The accompanying notes are an integral part of unaudited condensed consolidated financial statements.

 

F-3

 

 

SHENGDA NETWORK TECHNOLOGY INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

 

Three Months Ended at  Common Stock    Additional Paid-in   Retained   Accumulated Other Comprehensive   Total Stockholders’ 
December 31, 2020  Shares   Amount   Capital   Earnings   Income   Equity 
                         
Balance at September 30, 2020   6,960,000   $6,960   $16,310   $879,678   $344,744   $1,247,692 
                               
Issuance of common shares for cash   7,049,945    7,050    10,497,675    -    -    10,504,725 
Net income   -    -    -    389,087    -    389,087 
Foreign currency translation adjustment   -    -    -    -    461,222    461,222 
                               
Balance at December 31, 2020   14,009,945   $14,010   $10,513,985   $1,268,765   $805,966   $12,602,726 

 

Six Months Ended at   Common Stock     Additional Paid-in     Retained     Accumulated Other Comprehensive     Total
Stockholders’
 
December 31, 2020   Shares     Amount     Capital     Earnings     Income     Equity  
                                     
Balance at June 30, 2020     6,960,000     $ 6,960     $ 16,310     $ (80,130 )   $ (39,516 )   $ (96,376 )
                                                 
Issuance of common shares for cash     7,049,945       7,050       10,497,675       -       -       10,504,725  
Net income     -       -       -       979,843       -       979,843  
Foreign currency translation adjustment     -       -       -       -       845,482       845,482  
                                                 
Balance at December 31, 2020     14,009,945     $ 14,010     $ 10,513,985     $ 899,713     $ 805,966     $ 12,233,674  

 

Three Months Ended at  Common Stock   Additional Paid-in   Accumulated   Accumulated Other Comprehensive   Total
Stockholders’
 
December 31, 2019  Shares   Amount   Capital   Deficit   Income   Equity 
                         
Balance at September 30, 2019   6,960,000   $6,960   $17,640   $(27,531)  $            -   $          (2,931)
                               
Net loss   -    -    -    (12,985)   -    (12,985)
                               
Balance at December 31, 2019   6,960,000   $6,960   $17,640   $(40,516)  $-   $(15,916)

 

Six Months Ended at  Common Stock   Additional Paid-in   Accumulated    Accumulated Other Comprehensive    Total
Stockholders’
 
December 31, 2019  Shares   Amount   Capital   Deficit   Income   Equity 
                         
Balance at June 30, 2019   6,960,000   $6,960   $17,640   $(23,127)  $          -   $    1,473 
                               
Issuance of common shares for cash   -    -    -    -    -    - 
Net loss   -    -    -    (17,389)      (17,389)
                               
Balance December 31, 2019   6,960,000   $6,960   $17,640   $(40,516)  $-   $(15,916)

 

The accompanying notes are an integral part of unaudited condensed consolidated financial statements.

 

F-4

 

 

SHENGDA NETWORK TECHNOLOGY INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

  

For the six months ended

December 31,

 
   2020   2019 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net income (loss)  $979,843   $(17,389)
Adjustments to reconcile net cash provided by operating activities          
Depreciation   3,617    - 
Changes in Operating Assets and Liabilities:          
Account receivable   (3,006,281)   - 
Advance to suppliers   (1,247,419)   - 
Prepaid expenses   3,629    - 
Accounts payable   588,337    (755)
Accrued expenses and other payables   527,757    - 
Other payable - Related party   (1,330)   - 
Net cash used in operating activities   (2,151,847)   (18,144)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Loan receivable   (7,971,539)   - 
Acquisition of plant and equipment   (76,148)   - 
Net cash used in investing activities   (8,047,686)   - 
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Related party loan   -    5,000 
Proceeds from sales of common stock to related party   2,000    - 
Proceeds from sales of common stock   6,230,225    - 
Net cash provided by financing activities   6,232,225    5,000 
           
Effect of exchange rate fluctuation on cash and cash equivalents   417,571    - 
           
Net increase (decrease) in cash   (3,549,737)   (13,144)
           
Cash, beginning of period   4,271,326    17,202 
           
Cash, end of period  $721,589   $4,058 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:          
Cash paid during the period for:          
Income tax  $-   $- 
Interest  $-   $- 

 

The accompanying notes are an integral part of unaudited condensed consolidated financial statements.

 

F-5

 

 

SHENGDA NETWORK TECHNOLOGY INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Note 1 – Organization and Operations

 

Shengda Network Technology Inc. (formerly known as “Soltrest Inc.” or the “Company”), was incorporated on March 14, 2018 under the laws of the State of Nevada. The Company’s principal business is the development of internet and personal computer security software products. The Company is engaged in E- Commerce business.

 

On April 20, 2020, the Company purchased 10,000 shares of common stock of Peaker International Trade Group Limited (“Peaker”) for a total consideration of $1,330. These shares comprised of 100% of the then issued and outstanding shares of common stock of Peaker. Peaker was formed in 2018 in Hongkong.

 

On May 15, 2020, Peaker set up a Company Zhejiang Jingmai Electronic Commerce Ltd., in China of which, Peaker is the sole shareholder.

 

Risk and Uncertainty Concerning COVID-19 Pandemic

 

In December 2019, an outbreak of a novel strain of coronavirus (COVID-19). On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic. The Company is currently monitoring the outbreak of COVID-19 and the related business and travel restrictions and changes to behavior intended to reduce its spread. While the Company’s operations are principally located outside the United States, we utilize various consultants located in the United States, we participate in a global supply chain, and the existence of a worldwide pandemic, the fear associated with COVID-19, or any, pandemic, and the reactions of governments around the world in response to COVID-19, or any, pandemic, to regulate the flow of labor and products and impede the travel of personnel, may impact our ability to conduct normal business operations, which could adversely affect our results of operations and liquidity. Disruptions to our supply chain and business operations, or to our suppliers’ or customers’ supply chains and business operations, could include disruptions from the closure of supplier and manufacturer facilities, interruptions in the supply of raw materials and components, personnel absences, or restrictions on the shipment of our or our suppliers’ or customers’ products, any of which could have adverse ripple effects on our manufacturing output and delivery schedule. Any of these uncertainties could have a material adverse effect on our business, financial condition or results of operations.

 

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies

 

Basis of Presentation

 

The unaudited condensed consolidated financial statements included herein have been prepared by Shengda Network Technology Inc. and Subsidiaries, including its consolidated subsidiaries, the “Company”, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2020, filed with the SEC on November 13, 2020.

 

The unaudited condensed consolidated financial statements included herein reflect all adjustments (consisting of normal, recurring adjustments) which are, in the opinion of management, necessary to state fairly the results for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the fiscal year.

 

F-6

 

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (1) the reported amounts of assets; (2) liabilities and disclosure of contingent assets and liabilities at the date of the financial statements; and (3) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates

 

Principle of Consolidation

 

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Peaker International Trade Group Limited or “Peaker” and Peaker’s wholly owned subsidiary Zhejiang Jingmai Electronic Commerce Ltd., in China. All significant inter-company accounts and transactions have been eliminated in consolidation.

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash deposited with banks. Substantially all of the Company’s cash is held in bank accounts in the PRC and is not protected by FDIC insurance or any other similar insurance.

 

The Company’s bank account in the United States is protected by FDIC insurance. As of December 31, 2020 and June 30, 2020, the Company’s bank account in the United States had no balances exceeding FDIC insurance of $250,000.

 

The Company’s bank account in PRC is protected by FSD insurance. As of December 31, 2020 and June 30, 2020, the Company’s bank account in PRC had $641,404 and $4,269,349, respectively, exceeding FSD insurance of RMB 500,000 as of December 31, 2020.

 

Major Customer

 

The Company has one major customer that accounted for 66% of revenues totaling $5,088,266 for the six months ended December 31, 2020. The Company has one major customer that accounted for 57% of revenues totaling $1,472,062 for the three months ended December 31, 2020.

 

Major Vendor

 

The Company has two major vendors that accounted for 100% of cost of sales totaling $6,299,955 for the six months ended December 31, 2020. The Company has two major vendors that accounted for 100% of cost of sales totaling $2,143,674 for the three months ended December 31, 2020.

 

Cash Equivalents

 

The Company considers all highly liquid debt instruments and other short-term investments with maturities of three months or less, when purchased, to be cash equivalents.

 

Revenue Recognition

 

The Company recognizes revenues when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. In that determination, under ASC 606, the Company follows a five-step model that includes: (1) determination of whether a contract, an agreement between two or more parties that creates legally enforceable rights and obligations, exists; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when (or as) the performance obligation is satisfied.

 

F-7

 

 

Fair Value Measurements

 

The Company has established a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

 

Level 1 – inputs are based upon unadjusted quoted prices for identical instruments in active markets.
   
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.
   
Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

 

Our other current financial assets and current financial liabilities have fair values that approximate their carrying values.

 

Leases

 

The Company determines if an arrangement is a lease or contains a lease at inception. Operating lease right-of-use assets and lease liabilities are recognized at commencement based on the present value of lease payments over the lease term. As the implicit rate is typically not readily determinable in the Company’s lease agreements, the Company uses its incremental borrowing rate as of the lease commencement date to determine the present value of the lease payments. The incremental borrowing rate is based on the Company’s specific rate of interest to borrow on a collateralized basis, over a similar term and in a similar economic environment as the lease. Lease expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recognized on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Additionally, the Company accounts for lease and non-lease components as a single lease component for its identified asset classes. As of December 31, 2020, the Company doesn’t have any finance lease.

 

Commitment and Contingencies

 

None

 

Income Tax

 

Income tax returns are filed in federal, state, local and foreign jurisdictions as applicable. Provisions for current income tax liabilities are calculated and accrued on income and expense amounts expected to be included in the income tax returns for the current year. Income taxes reported in earnings also include deferred income tax provisions and provisions for uncertain tax positions. 

 

F-8

 

 

Deferred income tax assets and liabilities are computed on differences between the financial statement bases and tax bases of assets and liabilities at the enacted tax rates. Changes in deferred income tax assets and liabilities associated with components of other comprehensive income are charged or credited directly to other comprehensive income. Otherwise, changes in deferred income tax assets and liabilities are included as a component of income tax expense. The effect on deferred income tax assets and liabilities attributable to changes in enacted tax rates are charged or credited to income tax expense in the period of enactment. Valuation allowances are established for certain deferred tax assets when realization is less than more likely than not.

 

Liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions, in our judgment, do not meet a more-likely-than-not threshold based on the technical merits of the positions. Additionally, liabilities may be established for uncertain tax positions when, in our judgment, the more-likely-than-not threshold is met, but the position does not rise to the level of highly certain based upon the technical merits of the position. Estimated interest and penalties related to uncertain tax positions are included as a component of income tax expense.

 

Currency Translation

 

The assets and liabilities of the Company’s subsidiaries outside the U.S. are translated into U.S. dollars at the rates of exchange in effect at the balance sheet dates, primarily from RMB. Income and expense items are translated at the average exchange rates prevailing during the period. Gains and losses resulting from currency transactions are recognized currently in income and those resulting from translation of consolidated financial statements are included in accumulated other comprehensive income (loss).

 

Note 3 - Loan Receivable

 

Loan receivable amounted $8,275,862 and $0 as of December 31, 2020 and 2019, respectively. On October 25, 2020, the Company signed an agreement with the Company’s major customer. . The Company agreed to loan the $9,195,402 (RMB60,000,000) at an annual interest rate of 7.2%. The actual loan amount shall prevail within the total amount. The loan is guaranteed by the Company’s supplier and due on October 25, 2021. The Borrower is required to pay all the principal and the relevant interest in full amount on the repayment date.

 

The Company assessed the implication on Revenue Recognition, ASC 606 and determined that the terms of the loan are on Fair Market Value and does not impact the revenue recognition of the Company.

 

Note 4 – Leases

 

The Company has an operating lease for the rental of office space. Rent expense for the operating lease for the six months ended December 31, 2020 and 2019, was $3,321 and $0, respectively. The Company has paid rent up until December 10, 2020, the Company will not renew this lease. On January 5, 2021, the Company leases new office in Zhejiang China.

 

Note 5 – Advances and Deposits

 

Advances and deposits amounted to $2,000 and $4,274,500, as of December 31, 2020 and June 30, 2020, respectively, of which $2,000 and $302,000 pertains to a related party (See Note 8).

   

F-9

 

 

Note 6 – Accrued Expenses And Other Payables

 

As of December 31, 2020 and June 30, 2020, accrued expenses and other payables amounted to $575,126 and $30,272, respectively. Other payable as of June 30, 2020 includes $1,330 payable to related party (See Note 8). In September 2020, $1,330 payable to related party has been repaid.

 

Note 7 – Stockholders’ Equity

 

Shares Authorized

 

On March 30, 2020, the Company filed a Certificate of Amendment with the State of Nevada, increasing the number of authorized shares to 1,020,000,000 par value $0.001; comprising of 1,000,000,000 common stock and 20,000,000 preferred stock.

 

Common Stock

 

On March 14, 2018 the Company exchanged 5,000,000 shares of common stock to the former President in return of her services valued at $5,000.

 

Pursuant to a Form S-1 Registration Statement, in June, 2020, the Company sold 1,960,000 shares of Common Stock, par value of $0.001 per share, for the total aggregate proceeds of $19,600.

 

On November 2, 2020, the Company issued 7,049,945 shares of common stock at the sale price range from $0.06 to $2 per share, to 436 unrelated and 1 related parties.

 

As a result of all common stock issuances, the total issued and outstanding shares of common stock were 14,009,945 and 6,960,000 as of December 31, 2020 and June 30, 2020, respectively.

 

Note 8 – Related Party Transactions

 

Related parties with whom the Company had transactions are:

 

Related Parties   Relationship
HangJin Chin   President/CEO/CFO/Secretary/Director
Youcheng Chin   Father of CEO HangJin Chin
Li Weiwei   President/CEO/CFO/Secretary/Director (Former)

 

On June 16, 2020, the Company issued 300,000 shares of common stock to a related party (the Company’s CEO’s father) at $1.00 per share which was subsequently cancelled on June 30, 2020. The consideration of $300,000 is recorded as advances and deposits under current liabilities in the consolidated balance sheets. On November 2, 2020, these common stock have been issued.(Note 7)

 

On June 20, 2020, the Company issued 10,000,000 shares of common stock to HangJin Chin, the Company’s CEO at $0.0002 per share which were subsequently cancelled on June 30, 2020. The consideration of $2,000 is recorded as advances and deposits under current liabilities in the consolidated balance sheets. (Note 7)

 

On July 1, 2020, the Company received a deposit of $2,000 from a related party Youcheng Chin. This deposit is recorded as advances and deposits under current liabilities. On November 2, 2020, the Company issued 33,333 shares of common stock at the sale price $0.06 per share to a related party Youcheng Chin. (Note 7)

 

Loan from related party represent the advances to the Company by former President and Director in the amount of $19,974 as of December 31, 2020 and June 30, 2020, respectively. The loan is unsecured, non-interest bearing and due on demand. The Company has not recorded any imputed interest expense for the six months ended December 31, 2020 and 2019.

 

Note 9 – Subsequent Events

 

In accordance with ASC 855-10, the Company has analyzed its operations subsequent to December 31, 2020 to the date these financial statements were issued.

 

On January 5, 2021, Zhejiang Jingmai Electronic Commerce Ltd. leases new office in Zhejiang, China. The lease term of the office space is from January 5, 2021 to April 5, 2022, and the rent-free period is from January 5, 2021 to April 5, 2021. The monthly rent is approximately $398 (RMB 2,600).

 

Other than the above stated Subsequent Event, the Company has evaluated the existence of events and transactions subsequent to the balance sheet date through the date the consolidated financial statements were issued and has determined that there were no significant subsequent events or transactions that would require recognition or disclosure in the financial statements.

 

F-10

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

 

FORWARD LOOKING STATEMENTS

 

Statements made in this Form 10-Q that are not historical or current facts are “forward-looking statements” made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the “Act”) and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “approximate” or “continue,” or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

 

Overview of the Business

 

The Company was incorporated on March 14, 2018 under the laws of the State of Nevada. The Company’s principal business is the development of internet and PC security software products.

 

Results of Operations

 

Three Months Ended December 31, 2020 Compared to December 31

 

The following table summarizes the results of our operations during the three months ended December 31, 2020 and 2019, respectively, and provides information regarding the dollar and percentage increase or (decrease) from the current three-month period to the prior three-month period:

 

Line Item  12/31/20   12/31/19   Increase (Decrease)   Percentage Increase (Decrease) 
                 
Revenues  $2,590,394   $-   $2,590,394    n/a  
Operating expenses   52,393    12,985    39,408    5.12%
Net income (loss)   389,087    (12,985)   402,072    3,096%
Income (Loss) per share of common stock   0.00    (0.00)   -    n/a  

 

We recorded net income of $389,087 for the three months ended December 31, 2020 as compared with a net loss of $12,985 for the three months ended December 31, 2021 due primarily to the ramp-up of operations in the relevant period.

 

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Six Months Ended December 31, 2020 Compared to December 31

 

The following table summarizes the results of our operations during the six months ended December 31, 2020 and 2019, respectively, and provides information regarding the dollar and percentage increase or (decrease) from the current three-month period to the prior three-month period:

 

Line Item  12/31/20   12/31/19   Increase
(Decrease)
   Percentage
Increase
(Decrease)
 
                 
Revenues  $7,734,172   $-   $2,590,394    n/a 
Operating expenses   94,840    17,389    77,451    4.45%
Net income (loss)   1,348,896    (17,389)   1,366,285    7,637%
Income (Loss) per share of common stock   0.11    (0.00)   -    Inf. 

 

We recorded net income of $1,348,896 for the six months ended December 31, 2020 as compared with a net loss of $17,389 for the six months ended December 31, 2021 due primarily to the ramp-up of operations in the relevant period.

 

Liquidity and Capital Resources

 

As of December 31, 2020, we had total assets of $13,489,468, working capital of $12,158,374 and an accumulated stockholders’ equity of $12,233,674. Our operating activities used $2,151,847 in cash for the six months ended December 31, 2020, while our operations used $18,144 cash in the six months ended December 31, 2019. We had $7,734,172 in revenues in the six months ended December 31, 2020, while we had no revenues in the three months ended December 31, 2019.

 

Management believes that the Company’s cash on hand will be sufficient to fund all Company obligations and commitments for the next twelve months. Historically, we have depended on loans from our principal shareholders and their affiliated companies to augment our working capital as required. There is no guarantee that such funding will be available when required and there can be no assurance that our stockholders, or any of them, will continue making loans or advances to us in the future.

 

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At December 31, 2020, the Company had loans and advances from a related party shareholder in the aggregate amount of $2,000, which represents amounts loaned to the Company to pay the Company’s expenses of operation. These advances are payable on demand.

 

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 or capital expenditures or capital resources that is material to an investor in our securities.

 

Seasonality

 

Our operating results are not affected by seasonality.

 

Inflation

 

Our business and operating results are not affected in any material way by inflation.

 

Critical Accounting Policies

 

The Securities and Exchange Commission issued Financial Reporting Release No. 60, “Cautionary Advice Regarding Disclosure About Critical Accounting Policies” suggesting that companies provide additional disclosure and commentary on their most critical accounting policies. In Financial Reporting Release No. 60, the Securities and Exchange Commission has defined the most critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and operating results and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. The nature of our business generally does not call for the preparation or use of estimates. Due to the fact that the Company does not have any operating business, we do not believe that we do not have any such critical accounting policies.

 

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), as of December 31, 2020. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are not effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that our disclosure and controls are not designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; (3) ineffective controls over period end financial disclosure and reporting processes and (4) lack of timely communications with vendors and proper accrual of expenses.

 

Management believes that the material weaknesses set forth in items (2), (3) and (4) above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

 

Changes in Internal Control Over Financial Reporting

 

There were no changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls over financial reporting that occurred during the three months ended September 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

6
 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

No report required.

 

Item 3. Default Upon Senior Securities

 

No report required.

 

Item 4. Mine Safety Disclosures

 

No report required.

 

Item 5. Other Information

 

No report required.

 

Item 6. Exhibits

 

Exhibit

Number

  Description of Exhibit
     
31.1   Certification of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley act of 2002
     
31.2   Certification of Chief Financial Officer Pursuant To 18 U.S.C. Section 1350 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002
     
32.1   Certification of Chief Executive Officer and Chief Financial Officer Pursuant Section 906 of the Sarbanes-Oxley Act

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Beijing, China on April 19, 2021.

 

  SHENGDA NETWORK TECHNOLOGY, INC.
     
  By: /s/ HangJin Chin
  Name: HangJin Chin
  Title: President, Secretary and Director
   

(Principal Executive, Financial and Accounting

Officer)

 

In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and on the dates stated.

 

Signature   Title   Date
         
/s/ HangJin Chin        
HangJin Chin  

President, Secretary and Director

(Principal Executive, Financial and

Accounting Officer)

  April 19, 2021 

 

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