U.S.
      SECURITIES AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





**AMENDMENT
        NO. 1 TO FORM 10-KSB**


x
      ANNUAL REPORT UNDER
      SECTION 13 OR 15(d)


OF
      THE
      SECURITIES EXCHANGE ACT OF 1934


For
      the
      fiscal year ended December 31, 2006





OR





o
      TRANSITION UNDER
      SECTION 13 OR 15(d)


OF
      THE
      SECURITIES EXCHANGE ACT OF 1934


For
      the
      transition period from ________ to ________





**Summit
      Environmental Corporation, Inc.**


(Exact
      name of registrant as specified in its charter)




Texas
              (state
                of
              incorporation)
            333-48659
              (Commission
                File Number)
            73-1537206
              (IRS
                Employer
              I.D.
                Number)




12264
      El
      Camino Real #400, San Diego, CA 92130


Telephone
      (800) 522-7841


(Address
      and telephone number of registrant's principal


executive
      offices and principal place of business)





210
      South
      Green. Longview, TX 75601


800-522-7841


(Former
      address and telephone number of registrant's principal


executive
      offices and principal place of business)








Securities
      registered under Section 12(b) of the Exchange Act: None





Securities
      registered under Section 12(g) of the Exchange Act: None





Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. o





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or 15(d) of the Securities Exchange Act during the past twelve months (or for
      such shorter period that the registrant was required to file such reports),
      and
      (2) has been subject to such filing requirements for the past 90 days. Yes
x No o





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B is not contained in this form, and no disclosure will be
      contained, to the best of the registrant’s knowledge, in definitive proxy or
      information statements incorporated by reference in Part III of this Form 10-KSB
      or any amendment to this Form 10-KSB. x





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





State
        issuer’s revenues for its most recent fiscal year: $353,511





State
      the
      aggregate market value of the 16,739,144 voting and non-voting common equity
      held by non-affiliates computed by reference to the $0.095 average bid and
      asked
      price of such common equity, as of April 10, 2007: $1,590,219.





As
      of
      February 22, 2007, there were 30,536,001 shares of the Registrant's Common
      Stock, par value $0.001 per share, outstanding.





DOCUMENTS
      INCORPORATED BY REFERENCE





If
      the
      following documents are incorporated by reference, briefly describe them and
      identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into which
      the document is incorporated: (1) any annual report to security holders; (2)
      any
      proxy or information statement; and (3) any prospectus filed pursuant to Rule
      424(b) or (c) of the Securities Act of 1933 (“Securities Act”). The listed
      documents should be clearly described for identification purposes (e.g., annual
      report to security holders for fiscal year ended December 24, 1990).
      None





Transitional
      Small Business Disclosure Format (check one): Yes o No x







**TABLE
      OF CONTENTS**


PageItem
                      1
                  Description
                      of Business
                  
                  1Business
                      Development
                  
                  1Recent
                      Developments
                  
                  1Principal
                      Products
                  
                  2Distribution
                      Methods
                  
                  3Competition
                  
                  3Raw
                      Materials and Suppliers
                  
                  3Dependence
                      on Major Customers or SuppliersPatents,
                      Trademarks and Licenses
                  
                  3Government
                      Approval of Principal ProductsSeasonality
                  
                  3Research
                      and DevelopmentEnvironmental
                      Controls
                  
                  3Number
                      of Employees
                  
                  4Item
                      2
                  Description
                      of Property
                  
                  4Item
                      3
                  Legal
                      Proceedings
                  
                  4Item
                      4
                  Submission
                      of Matters to a Vote of Security Holders
                  
                  5Item
                      5
                  Market
                      for Common Equity and Related Stockholder Matters
                  
                  5Recent
                    Sales of
                    Unregistered Securities
                  
                  6Item
                      6
                  Management’s
                      Discussion and Analysis
                  
                  6Results
                      of operations
                  
                  6Sales
                  
                  6Gross
                      Margin
                  
                  7Operating
                      Expenses
                  
                  7Net
                      Loss
                  
                  7Liquidity
                      and Capital Resources
                  
                  7Outlook
                  
                  8Off-Balance
                      Sheet Arrangements
                  
                  9Contractual
                      obligations
                  
                  9Item
                      7
                  Financial
                      Statements
                  
                  10Item
                      8
                  Changes
                      In and Disagreements With Accountants on Accounting and Financial
                      Disclosure
                  
                  27Item
                      8A(T)
                  Controls
                      and Procedures
                  
                  27Item
                      8B
                  Other
                      Information
                  
                  27Item
                      9
                  Directors,
                      Executive Officers, Promoters and Control Persons;Compliance
                      with Section 16(a) of the Exchange Act
                  
                  27Audit
                      Committee and Audit Committee Financial Expert
                  
                  30Code
                      of Ethics
                  
                  30Compliance
                      with Section 16(a) of the Exchange Act
                  
                  31Item
                      10
                  Executive
                      Compensation
                  
                  31Compensation
                      of Directors
                  
                  32Employment
                      Contracts
                  
                  32Stock
                      Options
                  
                  32Item
                      11
                  Security
                      Ownership of Certain Beneficial Ownersand
                      Management
                  
                  33Item
                      12
                  Certain
                      Relationships and Related Transactions
                  
                  34Item
                      13
                  Exhibits
                  
                  34Item
                      14
                  Principal
                      Accountant Fees and Services
                  
                  36Signatures
                  
                  38
 
 ii




**ITEM
      1.**  **DESCRIPTION
      OF BUSINESS.**





**Business
      Development**





Our
      company, Summit Environmental Corporation, Inc., markets products manufactured
      for us by unaffiliated companies. We either own the patent and other
      intellectual property rights to our products, or we have licenses from the
      owners of the intellectual property rights to our products.





Our
      principal product is a non-toxic, biodegradable firefighting foam called **FlameOut** TM.





We
      have
      not been successful in achieving profits or positive cash flow.





**Recent
      Developments** .
      After
      the third quarter last year, our company severely changed direction. Our chief
      financial officer, Chris Dellinges, resigned in October. Our chief executive
      officer, Keith Parker, resigned in November. A new chief executive, Doug Cox,
      an
      experienced businessman, took over the top management of our company as our
      new
      Chief Executive Officer. A new chief financial officer and president, Don
      Jordan, also an experienced businessman and CPA, joined us as our new Chief
      Financial Officer and President. We cut our paid staff down to zero. Both Cox
      and Jordan have their own staffs that are presently providing, at no direct
      cost
      to Summit, the necessary staff work for the company.





The
      board
      of directors approved a stock and salary compensation plan for CEO Cox and
      CFO
      Jordan. The plan calls for 4,000,000 shares of common stock to be issued to
      Cox
      and 2,000,000 to be issued to Jordan. In addition, the plan specifies certain
      shares to be issued and cash compensation to be paid contingent upon certain
      future targets being reached.





The
      directors approved the outline of a new business plan. We are postponing or
      dropping all efforts on promoting the array of products we have and will
      concentrate on promoting our best and core product - our fire suppression and
      retardant products.





We
      have
      moved our corporate offices to San Diego, California, where CEO Doug Cox
      maintains his staffed offices. CFO Don Jordan will maintain his staffed office
      in Dallas, Texas.





When
      Doug
      Cox, our new CEO, took the role as CEO in late November 2006, his initial goals
      were to determine the financial status of the company, evaluate the company’s
      products, and position the company for immediate sales revenue.





His
      initial findings were quite disturbing. The company’s financial position was
      deeply in the red with little to no sales revenue looking forward. F urther,
      the FlameOut aerosol extinguisher, our focused revenue product at the time,
      was
      under a cease-and-desist order that provided that we could not manufacture
      this
      product until we modified it to meet new certification standards. We
      also
      found that, beyond the patent for the FlameOut chemical formula, Summit had
      no
      other proprietary product ownership because the licensing agreements with
      BioGenesis were terminated due to a breach of agreement by Summit.




1





For
      the
      reasons above, our new management and our directors determined that focusing
      solely on the company’s environmentally friendly fire-fighting products offered
      the best opportunities for both domestic and global business growth and
      increased shareholder value. Since the aerosol extinguisher needed to be
      redesigned and reformulated, a focused attention then was given to our FlameOut
      bulk product.





As
      a
      result, we spent a substantial amount of time deeply evaluating all areas of
      Summit’s FlameOut bulk product, its certifications, competition and
      opportunities. We discovered that our FlameOut bulk product lacked a few
      certification requirements which limited its marketability within parts of
      the
      forestry, military and governmental markets. We are presently in the process
      of
      obtaining these certifications to position ourselves for sales opportunities
      in
      these markets.





To
      help
      determine the immediate sales and business opportunities for this product,
      we
      acquired some outside professional consulting advice. We concluded that our
      early sales success would come from fire departments in the Western Region
      of
      the country, specifically California, where they use more foam than in any
      other
      region. Since our corporate office was now located in Southern California,
      it
      was a natural place to start. It’s encouraging to note that many of the fire
      departments we have spoken with have been unaware of FlameOut and its
      capabilities, and yet they are open to its uniqueness. Thus, we believe the
      market potential for our FlameOut bulk product, specifically within the Western
      Region, is vast.





As
      a
      result, our marketing and sales strategy for 2007 is to minimize expenses and
      focus on the FlameOut bulk product sales to municipal fire departments. Our
      immediate sales will be slow, but in the third quarter of 2007 we expect to
      see
      a significant increase in sales which should stabilize the company’s
      financial position. Also in the third quarter, additional
      product certification procedures should be completed, providing Summit with
      sales and marketing opportunities within the forestry, industrial and
      governmental markets.





We
      will
      continue to learn from firefighting professionals and build strategic alliances
      to bring awareness to our company and product. We are also investing in research
      and development to strengthen our product and broaden our FlameOut product
      line.





With
      our
      new focused attention, team of consultants and the support of our product
      developer, Dr. Mohsen Amiran, we have the opportunity to be a significant player
      in the fire-suppressant and fire-retardant market.





**Principal
      Products.**





*FlameOut
      Bulk Product*





FlameOut â  is
      an
      effective, efficient and environmentally responsible firefighting foam. It's
      listed with UL as a wetting agent for extinguishing Class A and B fires. It’s
      also listed by the USDA Forest Service as a Class A foam. Some other features
      include:





·
            Encapsulates
                the fuel source, cools the fire, and smothers
                oxygen




2
 
 ·
              Safe
                  to store, handle and use  ·
                100%
                    readily biodegradable


·
            Non-corrosive
                to firefighting apparatuses





·
            Non-toxic





*FlameOut
      Aerosol Fire Extinguisher*





In
      March
      2006, we were advised by Applied Research Laboratories (“ARL”) that our aerosol
      products needed recertification. New standards had been adopted, and we were
      told to cease manufacturing containers stamped with ARL until recertification
      had been obtained. We are, however, allowed to sell all aerosol containers
      filled prior to March 16, 2006, and we are not required to recall any product
      on
      the retailers’ shelves. This product is currently under evaluation.





**Distribution
      Methods**





We
      market
      our bulk firefighting products both through strategic alliances and directly
      to
      the end user.





**Competition**





We
      own
      the patent and intellectual property rights to Surfactant Blend A -
      FlameOut â .





**Raw
      Materials and Suppliers**





The
      raw
      materials for our products are in abundant supply. Summit Environmental, by
      virtue of our purchase of the patent and intellectual property rights to
      Surfactant Blend A, has retained Dr. Amiran and his company, BioGenesis, to
      formulate and package our products on a cost-plus-10 percent basis.





**Patents,
      Trademarks and Licenses**





We
      own **** all
      patents and intellectual property rights associated with the firefighting
      products we market.





**Seasonality**





There
      is
      no known seasonal aspect to our business; however, summer fire season typically
      generates more activity.





**Environmental
      Controls**





We
      are
      not subject to environmental controls or restrictions that require the outlay
      of
      capital or the obtaining of a permit in order to engage in business
      operations.




3





**Number
      of Employees**





As
      of
      March 15, 2007, we employed no persons full time and no persons part time.
      Our
      new management, Doug Cox and Don Jordan, each have staffs that are performing
      our staff duties at no cost to our company. In addition, we are using specialty
      independent contractors to assist in the developmental growth of the
      company.





**ITEM
      2.**  **DESCRIPTION
      OF PROPERTY.**





**FACILITIES**





In
        October 2005 we purchased for $250,000 a 1.76-acre tract in Longview, Texas
        upon
        which there are an office and warehouse building of 12,800 square feet, which
        includes 2,500 square feet of warehousing, and two out buildings of
        approximately 500 square feet each. We closed the acquisition with a bridge
        loan
        from Wells Fargo Bank Division, Pacific Business Capital with payment terms
        of
        $8,500 a month, including interest. On August 22, 2006 we refinanced the
        $250,000 loan with a loan from a non-affiliated shareholder in the principal
        amount of $560,000, five-year term at 13% interest, with monthly principal
        and
        interest payments of $6,563.





We
        have
        failed to make all monthly payments beginning November 1, 2006. By letter
        dated
        April 12, 2007 the lender-mortgagee demanded immediate payment within 30
        days of
        all monthly payments in arrears.





**ITEM
      3.**  **LEGAL
      PROCEEDINGS.**





In
      March
      2003 we were sued by Lady Burd Exclusive Cosmetics, Inc. for $43,000 in a
      collection lawsuit, *Lady
      Burd Exclusive Cosmetics, Inc. v. Summit Environmental
      Corporation* ,
      Case
      No. 104268/03, Supreme Court of the State of New York, County of New York.
      We
      filed a cross-petition against Lady Burd for breach of contract and unpaid
      commissions, in the amount of $45,000. In April we settled the New York suit
      by
      paying Lady Burd what we had said we owed all along but significantly less
      than
      what it claimed. We paid $22,550 for invoices. All other claims of debt in
      this
      suit were dismissed.





In
      March,
      2003, we filed an action against Lady Burd Exclusive Cosmetics, Inc., Case
      Number 2003-589-A in the 188 th District
      Court, Gregg County, Texas, for fraud and misrepresentation regarding our
      earlier purchase of patent rights to a “permanent” lipstick we sell under the
      name “Sugar Kiss Lip” collection. After paying $50,000 and 500,000 shares of our
      common stock to Lady Burd we discovered that Lady Burd had never filed for
      a
      patent. After agreeing to a settlement through both our New York and Texas
      counsel, Lady Burd refused to perform as agreed. This led to our appearing
      in
      court in New York as mentioned above. We did not dismiss our Texas patent fraud
      suit. Roberta Burd, President and CEO of Lady Burd Exclusive Cosmetics was
      deposed on May 10, 2006, in Longview, Texas. In June 2006, we agreed to a mutual
      settlement due to continued cost of litigation. We have received the formulas
      for the liquid lip color and have established a relationship with a new
      laboratory for the products production.




4




No
      director, officer or affiliate of the company, and no owner of record or
      beneficial owner of more than 5.0% of the securities of the company, or any
      associate of any such director, officer or security holder is a party adverse
      to
      the company or has a material interest adverse to the Company in reference
      to
      any litigation.





**ITEM
      4.**  **SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS.**





The
      only
      matter submitted to a vote of the stockholders of our company during 2006
      through the solicitation of proxies or otherwise was the annual election of
      directors at the January 2006 annual meeting of shareholders.





**ITEM
      5.**  **MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.**





Summit’s
        Common Stock was previously traded on the OTC Bulletin Board (symbol “SEVT”),
        having been added to the OTC Bulletin Board on April 5, 1999. Because we
        filed
        our 2006 annual report with the S.E.C. on Form 10-KSB without the independent
        auditor’s report, such being the third time in 24 months that we failed to
        timely file our annual or quarterly reports, our listing for the Common Stock
        was removed from quotation on the Bulletin Board effective at the open of
        business on May 1, 2007 as reported in Form 8-K April 23, 2007 filed on April
        27, 2007.





The
        reasons we failed three times to timely file reports were (1) our auditors
        were
        one day late in reviewing a quarterly report, (2) new management had just
        joined
        the company when a quarterly report was due, and they could not sign the
        certificates required by law until they completed their due diligence, and
        (3)
        our auditors were unable to deliver their opinion prior to the filing deadline.
        The report is now included as page 11 of this amendment.





The
        stock
        is now quoted on the Pink Sheets. Prior to delisting, the high and low bid
        and
        asked prices, as reported by the OTC Bulletin Board, were as follows for
        2005
        and 2006. The quotations reflect inter-dealer prices, without retail mark-up,
        mark-down or commission and may not represent actual
        transactions.


High
              
              Low2005:1stQtr.
              
              
              0.32
              
              
              0.182ndQtr.
              
              
              0.46
              
              
              0.173rdQtr.
              
              
              1.09
              
              
              0.314thQtr.
              
              
              0.94
              
              
              0.842006:1stQtr.
              
              
              1.24
              
              
              0.722ndQtr.
              
              
              0.88
              
              
              0.523rdQtr.
              
              
              0.60
              
              
              0.354thQtr.
              
              
              0.38
              
              
              0.10
  5


Holders .
      Based
      on information provided by our transfer agent, we had 632 shareholders of record
      of our common stock on February 22, 2007.





Dividends .
      We have
      declared no dividends on our Common Stock. There are no restrictions that would
      or are likely to limit the ability of the company to pay dividends on its Common
      Stock, but we have no plans to pay dividends in the foreseeable future and
      intend to use earnings for the expansion of its business.





**Recent
      Sales of Unregistered Securities.**





There
      were no issuances of our common stock during 2006 not previously reported in
      Forms 10-QSB as transactions exempt from registration pursuant to the provisions
      of Regulation D, Rule 506:





**ITEM
      6.**  **MANAGEMENT’S
      DISCUSSION AND ANALYSIS.**





*The
      following discussion and analysis should be read in conjunction with the
      financial statements and the accompanying notes thereto and is qualified in
      its
      entirety by the foregoing and by more detailed financial information appearing
      elsewhere. See “Financial Statements.”*





**RESULTS
      OF OPERATIONS**





The
      following table presents, as a percentage of sales, certain selected financial
      data for each of the two years in the periods ended December 31, 2005 and
      2006:


Year
                    ended December 31
                
                2006
                
                2005Sales
                
                
                100.0
                %
                
                100.0
                %Cost
                    of Sales
                
                
                365.0
                
                
                59.0Gross
                    Margin
                
                
                (265.0
                )
                
                41.0Operating
                    Expenses
                
                
                986.0
                
                
                99.0Other
                    Income and Expenses, Net
                
                
                92.0
                
                
                2.0Net
                    income (loss)
                
                
                (1343
                )%
                
                (61.0
                )%


**SALES**





Our
        sales
        decreased from $1,793,502 in 2005 to $353,511 in 2006 - a decrease of 80
        percent.





The
      amount of sales, by product segment, for 2005 and 2006, were as
      follows:





**Product**
              
              **2006**
              
              **2005**Fire
                  Suppressants
              
              $
              346,773
              
              $
              1,331,314Ultimate
                  Clean® Chemicals
              
              
              2,347
              
              
              2,661Cosmetics
              
              
              4,227
              
              
              10,787Energy
                  Drinks(1)
              
              
              164
              
              
              422Remediation
                  Chemicals
              
              
              0
              
              
              448,318


(1)
              In
                  late 2003 we began test marketing an energy drink, similar to the
                  Gatorade-like drinks, that was developed by Dr. Amiran, a director
                  of our
                  company and the inventor of all our products. No plans have been
                  made to
                  devote significant efforts to the promotion of this
                  product.


6




The
      substantial decrease in sales of our fire suppressant products is attributed
      to
      the failure of prior management to fully grasp and pursue sales opportunities
      available to the company.





**GROSS
      MARGIN**





Our
      cost
      of sales in 2006 was 3.7 times the amount of sales and is primarily attributable
      to write-down of obsolete inventory of $981,940.





**OPERATING
      EXPENSES**




Our
        operating expenses increased from $1,782,565 in 2005 to $3,485,231 in 2006
        - an
        increase of $1,702,666 despite a 80% decrease in sales to $353,511 in 2006
        The
        increase in operating expenses is primarily due to non-cash compensation
        to
        officers and consultants equaling $1,539,499 and excessive overhead related
        to
        the management of the business. The $1,539,499 is added back to stockholder’s
        equity in the balance sheet.





**NET
      LOSS**




Our
        net
        loss increased from$1,088,943 in 2005 to $4,747,721 in 2006 - a 336% increase
        in
        net loss attributable to our 80% decrease in sales accompanied by substantial
        increases in costs as described above.





**LIQUIDITY
      AND CAPITAL RESOURCES**




We
        ended
        the year with current assets of $136,376, current liabilities of $1,292,524
        and
        a virtual collapse in revenue from sales. This performance cannot be sustained.
        Our principal executives resigned during the fourth quarter and were replaced
        with Doug Cox as CEO and Don Jordan as President and CFO. Overhead was cut
        to
        the bone - we now have no paid employees, and our new management provides
        a
        staff for the company at their expense. We have been able to raise $647,996
        during the first quarter and April of 2007 through the sale of stock, an
        amount
        we anticipate will carry us to the third quarter when we anticipate our new
        business strategy will result in positive cash flow.




7





**Notes
      Payable**





We
        are
        obligated on three notes payable totaling $725,624, as
        follows:





·
              $555,156
                  to Paul and Gloria Burke, secured by the land and building described
                  in
                  Item 2 and the guaranty of one of our former officers. Terms of
                  the note
                  require monthly payments of $6,561 including interest at 13%. The
                  note has
                  a maturity date of August 2011. The note is now in default. See
                  “Description of Property”
above.





·
              $123,087
                  to Austin Bank, secured by the personal guaranty of one of our
                  directors.
                  Interest at 9.25% is payable monthly, with a balloon payment due
                  in June
                  2007.





·
            $47,381
                to Pacific Business Capital Corporation, secured by our accounts
                receivable, inventory, property and equipment and the guaranty of
                one of
                our former officers. This note is due on demand, and interest is
                computed
                based on the accounts receivable purchase discount rate of 1.5% plus
                an
                additional .1% per day for past-due
                accounts.





**OUTLOOK**





*The
      statements made in this Outlook are based on current plans and expectations.
      These statements are forward looking, and actual results may vary considerably
      from those that are planned.*





In
      2007,
      we are committed to focus on bulk firefighting products. We have contracted
      with
      top industry and technical experts to help guide our efforts. Below are some
      of
      our current strategies:





·
            Focus
                on generating interest and sales of our FlameOut bulk product within
                municipal fire departments and forestry services in the Western Region.
                Product samples have been delivered to various departments and group
                demonstrations are planned. A distribution and customer service plan
                is
                being defined. Strategic alliances with companies are being pursued.
                Summit intends to repeat this template as efforts are expanded to
                other
                regions and market opportunities.





·
            Summit
                is spending time and money in research and development to enhance
                our
                existing product and to develop new related products. Summit is also
                pursuing additional certifications that will lead to new markets
                and
                additional sales.





·
            Summit
                is committed to being environmentally responsible. We want to help
                firefighters save lives and protect property by developing and marketing
                firefighting foams, retardants and other products that pose the smallest
                possible threat to the environment, firefighters, the communities
                they
                protect and the environment upon which we all depend. Further, we
                will
                strive to become a truly “green” company in all of our corporate
                activities.





·
            Focus
                on generating interest and sales of our FlameOut bulk product within
                the
                U.S. government and military utilizing strategic alliances.




8




·
            Review
                all domestic and international opportunities and pursue substantial
                opportunities that are a good fit.





**Off-Balance
      Sheet Arrangements**





Our
      company has not entered into any transaction, agreement or other contractual
      arrangement with an entity unconsolidated with us under which we have





·
            an
                obligation under a guarantee
                contract,


·
            a
                retained or contingent interest in assets transferred to the
                unconsolidated entity or similar arrangement that serves as credit,
                liquidity or market risk support to such entity for such
                assets,


·
            an
                obligation, including a contingent obligation, under a contract that
                would
                be accounted for as a derivative instrument,
                or


·
            an
                obligation, including a contingent obligation, arising out of a variable
                interest in an unconsolidated entity that is held by, and material
                to, us
                where such entity provides financing, liquidity, market risk or credit
                risk support to, or engages in leasing, hedging, or research and
                development services with, us.





**Contractual
      obligations**





The
      following table sets forth, as of the end of the latest fiscal year-end balance
      sheet, information with respect to our known contractual
      obligations.





**Payments
                  Due-by Period****Contractual**
                **Obligations**
              
              **Total**
              
              **Less
                  Than**
                **1
                  Year**
              
              **1-3
                  Years**
              
              **3-5
                  Years**
              
              **More
                  Than**
                **5
                  Years**Long-Term
                  Debt Obligations
              
              $
              725,624
              
              $
              725,624Capital
                  Lease Obligations
              
              $
              0Operating
                  Lease Obligations
              
              $
              0Other
                  Long-Term Liabilities Reflected on Our Balance Sheet under
                  GAAP
              
              $
              0Total
              
              $
              725,624
              
              $
              725,624





*Our
      future results of operations and the other forward-looking statements contained
      in this Outlook involve a number of risks and uncertainties. Among the factors
      that could cause actual results to differ materially are the following: the
      inability of the company to obtain needed additional capital, loss of personnel,
      particularly chief executive officer Doug Cox or chief financial officer and
      president, Don Jordan, as a result of accident or for health reasons,
      interruptions in the supply of inventory from manufacturers of the inventory,
      the development of a competing fire suppressant by a well-capitalized competitor
      that either is able to develop a new product with the same attributes as our
      fire suppressant or is able to discover the additives to our fire suppressant
      that give it its unique and superior qualities, and an accident involving life
      or serious bodily harm that fairly or unfairly would bring into question the
      safety of using the company’s fire suppressant products.*




9





**ITEM
      7.**  **FINANCIAL
      STATEMENTS.**


**Page**Report
                      of Independent Certified Public Accountants
                  
                  11Balance
                      Sheet December 31, 2006
                  
                  12Statements
                      of Operations Years Ended December 31, 2006 and 2005
                  
                  13Statements
                      of Changes in Stockholders’ Equity for the Years EndedDecember
                      31, 2006 and 2005
                  
                  14Statements
                      of Cash Flows Years Ended December 31, 2006 and 2005
                  
                  15Notes
                      to Financial Statements
                  
                  16


10




**INDEPENDENT
          AUDITORS' REPORT**
   **To
          the Board of Directors and Stockholders**
 **Summitt
          Environmental Corporation, Inc.**
 **Dallas,
          Texas**
  We
          have
          audited the accompanying balance sheet of Summitt Environmental Corporation,
          Inc. as of December 31, 2006, and the related statements of operations,
          of
          changes in stockholders' equity and of cash flows for the year then ended.
          These
          financial statements are the responsibility of the Company’s management. Our
          responsibility is to express an opinion on these financial statements based
          on
          our audit.
 
 We
          conducted our audit in accordance with the standards of the Public Company
          Accounting Oversight Board (United States). Those standards require that
          we plan
          and perform the audit to obtain reasonable assurance about whether the
          financial
          statements are free of material misstatement. An audit includes examining,
          on a
          test basis, evidence supporting the amounts and disclosures in the financial
          statements. An audit also includes assessing the accounting principles
          used and
          significant estimates made by management, as well as evaluating the overall
          financial statement presentation. We believe that our audit provides a
          reasonable basis for our opinion.
 
 In
          our
          opinion, the financial statements referred to above present fairly, in
          all
          material respects, the financial position of Summitt Environmental Corporation,
          Inc. as of December 31, 2006, and the results of its operations and its
          cash
          flows for the year then ended, in conformity with accounting principles
          generally accepted in the United States of America.
 
 The
          accompanying financial statements have been prepared assuming that the
          Company
          will continue as a going concern. As discussed in Note 12 to the financial
          statements, the Company has suffered recurring losses from operations.
          This
          raises substantial doubt about the Company's ability to continue as a going
          concern. Management's plans in regard to these matters are also described
          in
          Note 12. The financial statements do not include any adjustments that might
          result from the outcome of this uncertainty.
  **PHILIP
                    VOGEL & CO. PC*****/s/
                  Philip Vogel & Co. PC*****Certified
                    Public Accountants**
 
 **Dallas,
          Texas**
 
 **April
          30, 2007**
  11
 **SUMMIT
                      ENVIRONMENTAL CORPORATION, INC.****BALANCE
                      SHEET****DECEMBER
                      31, 2006**
  **Assets****Current
                      Assets**Cash
                      and Cash Equivalents
                  
                  $
                  5,530Accounts
                      Receivable, less allowance for doubtfulaccounts
                      of $55506
                  
                  
                  44,606Note
                      receivable - related party, less allowance of $20,496
                  
                  
                  -Inventory
                  
                  
                  54,193Prepaid
                      Expenses
                  
                  
                  32,047Total
                      Current Assets
                  
                  
                  136,376**Property
                      and Equipment at Cost**Property
                      and Equipment
                  
                  
                  362,392Accumulated
                      Depreciation and Amortization
                  
                  
                  (108,695
                  )Net
                      Property and Equipment
                  
                  
                  253,697**Other
                      Assets**Prepaid
                      Royalties
                  
                  
                  451,938Deposits
                  
                  
                  2,118Patents
                      - net of accumulated amortizationof
                      $1,286,501
                  
                  
                  968,252Licenses
                      - net of accumulated amortizationof
                      $48,800
                  
                  
                  203,493Total
                      Other Assets
                  
                  
                  1,625,801**Total
                      Assets**
                  
                  $
                  2,015,874**Liabilities
                      and Stockholders' Equity****Current
                      Liabilities**Accounts
                      Payable
                  
                  $
                  358,314Advances
                      From Officers
                  
                  
                  115,311Accrued
                      Expenses
                  
                  
                  93,275Notes
                      Payable
                  
                  
                  725,624Total
                      Current Liabilities
                  
                  
                  1,292,524Commitments
                      and contingencies (Notes 6, 8, 10, 11 and 12)**Stockholders'
                      Equity**Preferred
                      stock, par value $.001; 10,000,000shares
                      authorized, no shares issued
                  
                  
                  -Common
                      stock, par value $.001; 40,000,000shares
                      authorized, 26,036,001 shares issued
                  
                  
                  26,037Additional
                      Paid in Capital
                  
                  
                  13,775,640Accumulated
                      Deficit
                  
                  
                  (13,053,327
                  )Treasury
                      Stock - 10,000 shares
                  
                  
                  (25,000
                  )Total
                      Stockholders' Equity
                  
                  
                  723,350**Total
                      Liabilities and Stockholders' Equity**
                  
                  $
                  2,015,874
 *The
            accompanying notes are an integral part of these financial
            statements.*
  12
 **SUMMIT
                      ENVIRONMENTAL CORPORATION, INC.****STATEMENTS
                      OF OPERATIONS****FOR
                      THE YEARS ENDED DECEMBER 31, 2006 AND
                      2005**
  **2006**
                  
                  **2005****Sales**
                  
                  $
                  353,601
                  
                  $
                  1,793,502**Returns
                      and Allowances**
                  
                  
                  (90
                  )
                  
                  -**Net
                      Sales**
                  
                  
                  353,511
                  
                  
                  1,793,502**Cost
                      of Sales**Cost
                      of sales (including impairment charge of $981,940 in 2006)
                  
                  
                  1,289,101
                  
                  
                  1,064,677**Gross
                      Profit**
                  
                  
                  (935,590
                  )
                  
                  728,825**Operating
                      Expenses**Selling,
                      general, and administrative expenses
                  
                  
                  3,282,496
                  
                  
                  1,588,098Amortization
                  
                  
                  180,048
                  
                  
                  180,013Depreciation
                  
                  
                  22,687
                  
                  
                  14,454Total
                      operating expense
                  
                  
                  3,485,231
                  
                  
                  1,782,565**Earnings
                      (Loss) from Operations**
                  
                  
                  (4,420,821
                  )
                  
                  (1,053,740
                  )**Other
                      Income (Expense)**Interest
                      income
                  
                  
                  6,652
                  
                  
                  5,587Interest
                      expense
                  
                  
                  (120,706
                  )
                  
                  (40,654
                  )Royalty
                      income
                  
                  
                  3,681
                  
                  
                  1,599Loss
                      on impairments and disposals
                  
                  
                  (184,531
                  )
                  
                  (4,168
                  )Miscellaneous
                  
                  
                  (31,996
                  )
                  
                  2,433Total
                      other income (expense)
                  
                  
                  (326,900
                  )
                  
                  (35,203
                  )**Net
                      Loss**
                  
                  $
                  (4,747,721
                  )
                  $
                  (1,088,943
                  )**Net
                      Earnings (Loss) per Share**
                  
                  $
                  (0.18
                  )
                  $
                  (0.05
                  )**Weighted
                      Average Shares**
                  
                  
                  25,851,704
                  
                  
                  23,945,019
  *The
            accompanying notes are an integral part of these financial
            statements.*
  13
  **SUMMIT
                      ENVIRONMENTAL CORPORATION, INC.****STATEMENTS
                      OF CHANGES IN STOCKHOLDERS' EQUITY****FOR
                      THE YEARS ENDED DECEMBER 31, 2006 AND
                      2005**
  Additional
                  
                  SubscriptionCommon
                      Stock
                  
                  Paid-In
                  
                  to
                  
                  Accumulated
                  
                  TreasuryShares
                  
                  Amount
                  
                  Capital
                  
                  Capital
                  
                  Deficit
                  
                  Stock
                  
                  TotalBalances
                      December 31, 2003
                  
                  
                  16,899,194
                  
                  $
                  16,900
                  
                  $
                  8,329,609
                  
                  $
                  300,800
                  
                  $
                  (6,079,880
                  )
                  $
                  (25,000
                  )
                  $
                  2,542,429Sale
                      of stock
                  
                  
                  3,346,250
                  
                  
                  3,346
                  
                  
                  965,904
                  
                  
                  (207,000
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  762,250Stock
                      issued for services
                  
                  
                  271,900
                  
                  
                  272
                  
                  
                  109,108
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  109,380Stock
                      issued for warrants exercised
                  
                  
                  2,602,000
                  
                  
                  2,602
                  
                  
                  645,698
                  
                  
                  (93,800
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  554,500Stock
                      issued for options exercised
                  
                  
                  100,000
                  
                  
                  100
                  
                  
                  38,125
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  38,225Exercise
                      of options for 94,292 shares of stock($.20
                      per share) - shares not issued as ofDecember
                      31, 2004
                  
                  
                  -
                  
                  
                  -
                  
                  
                  55,939
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  55,939Net
                      loss
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (1,136,783
                  )
                  
                  -
                  
                  
                  (1,136,783
                  )Balances
                      December 31, 2004
                  
                  
                  23,219,344
                  
                  $
                  23,220
                  
                  $
                  10,144,383
                  
                  $
                  -
                  
                  $
                  (7,216,663
                  )
                  $
                  (25,000
                  )
                  $
                  2,925,940Sale
                      of stock
                  
                  
                  964,000
                  
                  
                  964
                  
                  
                  384,636
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  385,600Stock
                      issued for services
                  
                  
                  360,686
                  
                  
                  361
                  
                  
                  296,261
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  296,622Stock
                      issued for license
                  
                  
                  240,000
                  
                  
                  240
                  
                  
                  149,760
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  150,000Stock
                      issued for warrants exercised
                  
                  
                  556,435
                  
                  
                  556
                  
                  
                  175,444
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  176,000Stock
                      issued for options exercised
                  
                  
                  12,500
                  
                  
                  13
                  
                  
                  1,988
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  2,001Exercise
                      of options issued for services
                  
                  
                  342,888
                  
                  
                  343
                  
                  
                  147,078
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  147,421Sale
                      of stock - shares not issued as ofDecember
                      31, 2005
                  
                  
                  -
                  
                  
                  -
                  
                  
                  14,400
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  14,400Exercise
                      of warrants for 352,500 shares of stock($.50
                      per share) - shares not issued as ofDecember
                      31, 2005
                  
                  
                  -
                  
                  
                  -
                  
                  
                  176,250
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  176,250Net
                      Loss
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (1,088,943
                  )
                  
                  -
                  
                  
                  (1,088,943
                  )Balance,
                      December 31, 2005
                  
                  
                  25,695,853
                  
                  $
                  25,697
                  
                  $
                  11,490,200
                  
                  $
                  -
                  
                  $
                  (8,305,606
                  )
                  $
                  (25,000
                  )
                  $
                  3,185,291Stock
                      issued for services
                  
                  
                  340,148
                  
                  
                  340
                  
                  
                  214,283
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  214,623Stock
                      issued for services - 6,100,000 shares
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  -shares
                      not issued as of December 31, 2006
                  
                  
                  
                  
                  
                  
                  
                  
                  694,000
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  694,000Sale
                      of stock - 1,066,669 shares
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  -shares
                      not issued as of December 31, 2006
                  
                  
                  
                  
                  
                  
                  
                  
                  639,501
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  639,501Options
                      issued for services - 261,534
                  
                  
                  
                  
                  
                  
                  
                  
                  231,100
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  231,100Options
                      issued for services - 440,000
                  
                  
                  
                  
                  
                  
                  
                  
                  400,116
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  400,116Exercise
                      of options for 380,123 shares of stock
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  -shares
                      not issued as of December 31, 2006
                  
                  
                  
                  
                  
                  
                  
                  
                  106,440
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  106,440Net
                      Loss
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (4,747,721
                  )
                  
                  
                  
                  
                  (4,747,721
                  )Balance,
                      December 31, 2006
                  
                  
                  26,036,001
                  
                  $
                  26,037
                  
                  $
                  13,775,640
                  
                  $
                  -
                  
                  $
                  (13,053,327
                  )
                  $
                  (25,000
                  )
                  
                  723,350
  *The
            accompanying notes are an integral part of these financial
            statements.*
  14
  **SUMMIT
                      ENVIRONMENTAL CORPORATION, INC.****STATEMENTS
                      OF CASH FLOWS****FOR
                      THE YEARS ENDED DECEMBER 31, 2006 AND
                      2005**
  **2006**
                  
                  **2005****Cash
                      Flows from Operating Activities**Net
                      loss
                  
                  $
                  (4,747,721
                  )
                  $
                  (1,088,943
                  )Adjustments
                      to reconcile net earnings (loss) to cashused
                      in operating activitiesAmortization
                  
                  
                  180,048
                  
                  
                  180,013Bad
                      debt expense
                  
                  
                  (113,811
                  )
                  
                  (3,361
                  )Provision
                      for inventory losses
                  
                  
                  913,209
                  
                  
                  -Depreciation
                  
                  
                  22,687
                  
                  
                  14,454Impairments
                      and disposals
                  
                  
                  184,531
                  
                  
                  4,168Common
                      stock and options issued for services
                  
                  
                  1,539,839
                  
                  
                  359,177Change
                      in assets and liabilitiesAccounts
                      receivable
                  
                  
                  425,634
                  
                  
                  (289,589
                  )Inventory
                  
                  
                  89,488
                  
                  
                  (704,782
                  )Prepaid
                      expenses and deposits
                  
                  
                  94,363
                  
                  
                  69,218Accounts
                      payable
                  
                  
                  87,836
                  
                  
                  129,348Accrued
                      liabilities
                  
                  
                  8,229
                  
                  
                  47,001Net
                      cash used in operating activities
                  
                  
                  (1,315,668
                  )
                  
                  (1,283,296
                  )**Cash
                      Flows from Investing Activities**Acquisition
                      of property and equipment
                  
                  $
                  (2,429
                  )
                  $
                  (29,327
                  )Net
                      cash used in investing activities
                  
                  
                  (2,429
                  )
                  
                  (29,327
                  )**Cash
                      Flows from Financing Activities**Loan
                      proceeds
                  
                  $
                  686,259
                  
                  $
                  762,950Loan
                      principal repayments
                  
                  
                  (475,371
                  )
                  
                  (382,903
                  )Restricted
                      cash
                  
                  
                  50,000
                  
                  
                  (50,000
                  )Proceeds
                      from sale of stock
                  
                  
                  745,941
                  
                  
                  839,117Net
                      cash provided by financing activities
                  
                  
                  1,006,829
                  
                  
                  1,169,164**Net
                      Increase (Decrease) in Cash**
                  
                  
                  (311,268
                  )
                  
                  (143,459
                  )Cash
                      - Beginning of Period
                  
                  
                  316,798
                  
                  
                  460,257Cash
                      - End of Period
                  
                  $
                  5,530
                  
                  $
                  316,798**Supplemental
                      cash flow information**Issuance
                      of common stock for licenses
                  
                  $
                  -
                  
                  $
                  150,000Cash
                      paid for interest
                  
                  $
                  107,410
                  
                  $
                  40,654Purchase
                      of property and equipment with note payable
                  
                  $
                  -
                  
                  $
                  250,000
  *The
            accompanying notes are an integral part of these financial
            statements.*
  15




Summit
        Environmental Corporation, Inc.
 NOTES
          TO
          FINANCIAL STATEMENTS
 SIGNIFICANT
                  ACCOUNTING POLICIES
 
 Business
        Activity
 
 Summit
        Environmental Corporation, Inc. (the “Company”) was organized in accordance with
        the Business Corporation Act of the State of Texas on February 2, 1998, for
        the
        purpose of merging (the “Merger”) with Summit Technologies, Inc., a Texas
        corporation. The Company continued to exist as the surviving corporation
        under
        its present name pursuant to the provisions of the Texas Business Corporation
        Act. The Merger was effected on December 2, 1998 as a tax-free reorganization
        accounted for as a pooling of interests.
  Under
        new
        management, the Company has developed a Strategic Plan for years 2007 and
        2008
        that will focus on the sale of the Company’s core product, FlameOut bulk. The
        Strategic Plan focuses initially on the Western Region of the United States
        and
        ultimately into all regions of the United States by the middle of 2008. The
        Plan
        also includes establishing the Company as the “green solution” in all areas of
        fire fighting with a focus on saving lives and property. Targeted customers
        include municipal fire departments, forestry services, the military and other
        Federal government agencies.
 
 Revenue
        Recognition
 
 The
        Company follows the provisions of SEC Staff Accounting Bulletin (SAB) No.
        104, *"Revenue Recognition"* which
        was issued in December 2003, and recognizes revenues when its products are
        shipped to customers (terms are FOB shipping point), at which time evidence
        of a
        completed transaction and customer acceptance exists and when title passes.
        Appropriate provisions for estimated returns of product and other allowances
        have been made in the accompanying financial statements. SAB No. 104 codified,
        revised and rescinded certain sections of Staff Accounting Bulletin (SAB)
        No.
        101, *"Revenue Recognition in Financial Statements",* in order
        to make this interpretive guidance consistent with current authoritative
        accounting guidance and SEC rules and regulations.
 
 Revenues
        earned under royalty agreements are recognized when the respective products
        are
        sold and the royalty amounts attributable to the Company have been
        determined.
 
 The
        Company provides a reserve for sales returns and allowances in the same period
        as the related revenues are recognized, based on individual circumstances
        and
        historical experience. At December 31, 2006, no reserve was considered
        necessary.
 
 The
        amount of sales by product segment, for the years ended December 31, 2006
        and
        2005, were as follows:
 
 **Product**
                
                **2006**
                
                **2005**Fire
                    Suppressants
                
                $
                346,773
                
                $
                1,331,314Ultimate
                    Clean® Chemicals
                
                
                2,347
                
                
                2,661Cosmetics
                
                
                4,227
                
                
                10,787Remediation
                    Chemicals
                
                
                0
                
                
                448,318Energy
                    Drinks(1)
                
                
                164
                
                
                422Total
                    revenue
                
                $
                353,511
                
                $
                1,793,502
 
 Cash
        and cash equivalents
 
 The
        Company maintains cash balances at a financial institution located in Longview,
        Texas, which at times may exceed federally insured limits. The Company has
        not
        experienced any losses in such accounts and believes it is not exposed to
        any
        significant credit risk on cash and cash equivalents.
 
 The
        Company considers all highly liquid investments with a maturity of three
        months
        or less when purchased to be cash equivalents. Cash restricted as collateral
        or
        for other purposes is reported separately from cash and cash
        equivalents.
  16
 Summit
          Environmental Corporation, Inc.
 NOTES
            TO
            FINANCIAL STATEMENTS
 Accounts
        Receivable
 
 The
        Company records accounts receivable at net realizable value. This value includes
        an appropriate allowance for estimated uncollectible accounts to reflect
        any
        loss anticipated on the accounts receivable balances and charged
        to the provision for doubtful accounts. The Company calculates this allowance
        based on historical write-offs, level of past due accounts and relationships
        with and economic status of the customers.
 
 Inventories
 
 Inventories,
        which consists of raw materials and products held for resale, are recorded
        at
        the lower of cost or market, with cost being determined by the first-in,
        first-out method. At December 31, 2006, fire suppression inventory was $54,193,
        .
 
 The
          Company periodically reviews inventory to determine which products, if
          any, are
          no longer marketable. The Company establishes a reserve for obsolete inventory
          to reduce its cost to management’s estimate of its net realizable value based on
          forecasts of sales for ensuing years and other factors. At December 31,
          2006, no
          reserve was considered necessary; however, an impairment loss of $981,940
          was
          recognized during 2006 due to obsolescence and abandonment of product
          lines.
 
 Intangible
        Assets
 
 Patents
          and licenses are recorded at cost. Amortization is computed on the straight-line
          method over the identifiable lives of the patent and licenses. The Company
          has
          adopted the provisions of Statement of Financial Accounting Standards (SFAS)
          No.
          142, *Goodwill and Other Intangible Assets,* effective
          for periods beginning January 1, 2002, and thereafter. SFAS 142 addresses
          financial accounting and reporting for acquired goodwill and other intangible
          assets and supersedes APB Opinion No. 17, *Intangible
          Assets* .
          Specifically, the statement addresses how intangible assets that are acquired
          should be accounted for in financial statements upon their acquisition,
          as well
          as how goodwill and other intangible assets should be accounted for after
          they
          have been initially recognized in the financial statements. The statement
          requires intangible assets to be reviewed for impairment whenever events
          or
          changes in circumstances indicate that their carrying amounts may not be
          recoverable and that a loss shall be recognized if the carrying amount
          of an
          intangible exceeds its fair value. The Company tested its intangible assets
          for
          impairment as of December 31, 2006, using internally developed projections
          and
          cash flow analyses, as well as appropriate discount factors. It was determined
          that the Company's intangible assets had suffered impairment and an impairment
          loss of $133,674 was recognized at December 31, 2006.
 
 Income
        Taxes
 
 The
        Company provides for income taxes under the asset and liability method. Under
        the asset and liability method, deferred tax assets and liabilities are
        recognized for the future tax consequences attributable to differences between
        the financial statement carrying amounts of existing assets and liabilities
        and
        their respective tax bases. Deferred tax assets and liabilities are measured
        using enacted tax rates expected to apply to taxable income in the years
        in
        which those temporary differences are expected to be recorded or settled.
        The
        effect on deferred tax assets and liabilities of a change in tax rates is
        recognized in income in the period that includes the enactment date. Valuation
        allowances are recognized to limit recognition of deferred tax assets where
        appropriate. Such allowances may be reversed when circumstances provide evidence
        that the deferred tax assets will more likely than not be realized.
 
 Property
        and Equipment
 
 Depreciation
        and amortization are provided in amounts sufficient to relate the cost of
        depreciable assets to operations over their estimated service lives by the
        straight-line method.
 
 Major
        repairs or replacements of property and equipment are capitalized. Maintenance,
        repairs and minor replacements are charged to operations as
        incurred.
 
 When
        units of property are retired or otherwise disposed of, their cost and related
        accumulated depreciation are removed from the accounts and any resulting
        gain or
        loss is included in operations.
 
 17
 Summit
          Environmental Corporation, Inc.
 NOTES
            TO
            FINANCIAL STATEMENTS
 The
        estimated service lives used in determining depreciation and amortization
        are:
 Description
                
                Estimated
                    Service LifeOffice
                    furniture and equipment
                
                
                5
                    - 7 yearsBuilding
                    and improvements
                
                
                39
                    yearsLeasehold
                    improvements
                
                
                4
                    years
  Advertising
        and Marketing
 
 Advertising
        and marketing costs are expensed as incurred, which totaled $439,124 and
        $217,281 for 2006 and 2005, respectively.
 
 Shipping
        and handling costs
  The
          Company has changed its policies and now includes shipping and handling
          costs in
          "Cost of Sales" rather than “Selling, general and administrative expenses” for
          purposes of income statement presentation. Shipping and handling costs
          were
          approximately $45,000 and $55,000, for the years ended December 31, 2006
          and
          2005, respectively.
 
 Research
        and development costs
 
 The
        costs
        associated with research and development activities are expensed as incurred.
        Total research and development costs were approximately $42,000 and $10,000,
        for
        the years ended December 31, 2006 and 2005, respectively.
 
 Use
        of
        Estimates
 
 The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States of America requires management to
        make
        estimates and assumptions that affect certain reported amounts and disclosures.
        Significant estimates include accruals for services, establishing an allowance
        for doubtful accounts receivable and the valuation allowance for deferred
        income
        taxes, determining the depreciable lives and usage of property and equipment
        and
        intangible assets, and assessing the potential impairment of intangible and
        other assets. Actual results could differ from those estimates and the impact
        of
        those differences on gross profit and results of operations could be
        material.
 
 Per
        Share Information
  The
          Company has adopted the provisions of Statement of Financial Accounting
          Standards (SFAS) No. 128, " *Earnings
          per Share* ."
          SFAS
          No. 128 requires the presentation of basic earnings (loss) per share (EPS)
          and
          diluted EPS. Basic EPS is calculated by dividing net income or loss (available
          to common stockholders) by the weighted average number of common shares
          outstanding for the period. Diluted EPS reflects the potential dilution
          that
          could occur if securities or other contracts to issue common stock, such
          as
          stock options, warrants, convertible preferred stock and convertible debentures,
          were exercised or converted into common stock. Potential dilutive securities
          (stock warrants, stock options) have not been considered since the Company
          reported a net loss and, accordingly, their effects would be
          antidilutive.
 
 Financial
        Instruments
  The
        Company’s financial instruments recorded on the balance sheet include cash and
        cash equivalents, accounts receivable, accounts payable and notes payable.
        The
        carrying amounts approximate fair value because of the short-term nature
        of
        these items.
  Stock
        based compensation
 
 The
          Company has adopted the provisions of Financial
          Accounting Standards Board (SFAS)
          Statement No. 123R, *"Share-Based Payment,"* which is
          a revision of SFAS No. 123, *"Accounting
          for Stock-Based Compensation,"* and
          supersedes APB No. 25, *"Accounting
          for Stock Issued to Employees."* This
          Statement requires the Company to recognize compensation costs related
          to
          stock-based payment transactions (i.e. granting of stock options and warrants)
          in the financial statements. With limited exceptions, the amount of compensation
          cost will be measured based on the grant-date fair value of the equity
          or
          liability instruments issued. In addition, liability awards will be remeasured
          each reporting period. Compensation cost will be recognized over the period
          that
          an employee provides services in exchange for the award. This new standard
          is
          effective for awards that are granted, modified or settled in cash in interim
          and annual financial periods beginning after December 15, 2005.
  18
 Summit
          Environmental Corporation, Inc.
 NOTES
            TO
            FINANCIAL STATEMENTS
 The
        Company recognizes and measures compensation costs related to the Employee
        Plan
        utilizing the intrinsic value based method. Accordingly, no compensation
        cost
        has been recorded. Had compensation expense been determined on the fair value
        of
        awards granted, net loss and loss per share would have been as
        follows:
 2006
                    
                    2005As
                        Reported
                    
                    Pro
                        forma
                    
                    As
                        Reported
                    
                    Pro
                        formaStock-based
                        employee compensation cost
                    
                    $
                    1,539,839
                    
                    $
                    1,539,839
                    
                    $
                    296,622
                    
                    $
                    455,365Net
                        loss
                    
                    $
                    (4,747,721
                    )
                    $
                    (4,747,721
                    )
                    $
                    (1,088,943
                    )
                    $
                    (1,247,686
                    )Loss
                        per share
                    
                    $
                    (.18
                    )
                    $
                    (.18
                    )
                    $
                    (.05
                    )
                    $
                    (.05
                    )
 
 The
          fair
          value of all options and warrants are estimated using the Black-Scholes
          option-pricing model with the following weighted-average assumptions,
          respectively: risk free interest rate of 2.98% and 4.02% for 2006 and 2005,
          expected life of 1 - 10 years; expected volatility of 156% and 156% for
          2006 and
          2005; dividend yield of 0%; and an exercise price of $0.92 and $0.42 for
          2006
          and 2005. The fair values generated by the Black-Scholes model may not
          be
          indicative of the future benefit, if any, which may be received by the
          holders.
  The
        Company has adopted the Modified Prospective Application method of accounting
        and disclosing transition to this new accounting policy. Under this method,
        this
        statement applies to new awards and to awards modified, repurchased, or
        cancelled after January 1, 2006. Additionally, compensation cost for the
        portion
        of awards for which the requisite service has not been rendered that are
        outstanding as of January 1, 2006, would be recognized as the requisite service
        is rendered after 2005. The compensation cost for those earlier awards would
        be
        attributed to periods beginning after 2005. The Company did not have any
        options
        outstanding as of January 1, 2006, for which the requisite service had not
        been
        performed.
 
 The
          amount of compensation expense related to options issued for services during
          the
          twelve months ended December 31, 2006, and recognized in the financial
          statements, was $1,539,839.
 
 Recent
        Accounting Pronouncements
 
 In
          November 2004, the Financial
          Accounting Standards Board issued
          SFAS No. 151, *"Inventory
          Costs - an amendment of ARB No. 43, Chapter 4."* This
          Statement amends the guidance in ARB No. 43, Chapter 4, *"Inventory
          Pricing,"* to
          clarify the accounting for abnormal amounts of idle facility expense, freight,
          handling costs, and wasted material (spoilage). Paragraph 5 of ARB No.
          43,
          Chapter 4, previously stated that "...under some circumstances, items such as idle
          facility expense, excessive spoilage, double freight, and rehandling costs
          may
          be so abnormal as to require treatment as current-period charges..." This
          Statement requires that those items be recognized as current-period charges
          regardless of whether they meet the criterion of "so abnormal." In addition,
          the
          Statement requires that allocation of fixed production overheads to the
          costs of
          conversion be based on the normal capacity of the production facilities.
          This
          statement is effective for inventory costs incurred during the fiscal years
          beginning after June 15, 2005. Management does not believe the adoption
          of this
          Statement has had any material impact on the Company.
 
 In
          December 2004, the Financial
          Accounting Standards Board issued
          SFAS No. 153, *"Exchanges of Non-monetary Assets an amendment of APB No. 29."* This
          Statement amends APB Opinion No. 29, *"Accounting
          for Non-monetary Transactions"* to
          clarify the accounting for non-monetary exchanges of similar productive
          assets
          and replaces it with a general exception from fair value accounting for
          exchanges of non-monetary assets that do not have commercial substance.
          A
          non-monetary exchange has commercial substance if the future cash flows
          of the
          Company are expected to change significantly as a result of the exchange.
          This
          Statement will be applied prospectively and is effective for non-monetary
          asset
          exchanges occurring in fiscal periods beginning after June 15, 2005. Management
          does not believe adoption of this Statement has had a material impact on
          the
          Company's financial position or results of operations.
  19
 Summit
          Environmental Corporation, Inc.
 NOTES
            TO
            FINANCIAL STATEMENTS
 In
          May
          2005, the Financial
          Accounting Standards Board issued
          SFAS No. 154, *"Accounting Changes and Error Corrections - a replacement of APB Opinion
          No. 20
          and FASB Statement No. 3."* This
          Statement changes the requirements for the accounting for and reporting
          of a
          change in accounting principle, including voluntary changes. Rather than
          reporting voluntary changes in accounting principles in net income of the
          current period, this Statement requires retrospective application to prior
          periods unless it is impracticable to do so. This Statement also requires
          that a
          change in depreciation and amortization be accounted for as a change in
          accounting estimate effected by a change in accounting principle. This
          Statement
          will be effective for accounting changes and corrections of errors made
          in
          fiscal periods beginning after December 15, 2005. Management does not believe
          adoption of this Statement has had a material impact on the Company's financial
          position or results of operations.
  In
          March
          2006, the EITF reached a tentative consensus on Issue No. 06-03, *How
          Sales Taxes Collected from Customers and Remitted to Governmental Authorities
          Should Be Presented in the Income Statement (That Is, Gross Versus Net
          Presentation)* (“EITF
          06-03”). EITF 06-03 addresses income statement classification and disclosure
          requirements of externally-imposed taxes on revenue-producing transactions.
          EITF
          06-03 is effective for periods beginning after December 15, 2006. Management
          is
          currently evaluating the effect implementation of EITF 06-03 will have
          on the
          Company's financial position, results of operations and cash
          flows.
 
 1.
              ACCOUNTS
                  RECEIVABLE
 
 As
        of
        December 31, 2006, the Company has financed, with recourse, certain accounts
        receivable. The related credit facilities are subject to recourse in that
        the
        Company is obligated to pay amounts due to the participating financial
        institution in the event the customer fails to pay. The outstanding balance
        on
        such receivables at December 31, 2006, was $35,321. Fees associated with
        these
        transactions are recorded as interest expense in the statement of operations.
        The agreement allows the Company to finance an aggregate amount of $1,000,000.
 
 2.
              INVENTORY
 
 Inventory
        is made up of the following as of December 31, 2006:
 Finished
                    goods
                
                $
                54,193Raw
                    materials
                
                
                0$
                54,193
 
 3.
              PATENT
 
 On
          November 2, 1998, the Company purchased via issuance of common stock and
          a note
          payable, patent rights and intellectual property to various fire suppression
          products for a purchase price of $2,375,000. This purchase required cash
          payments of $150,000 and 1,625,000 shares of common stock of the Company
          to be
          issued and delivered to BioGenesis Enterprises, Inc. On January 14, 1999,
          750,000 shares were issued as a down payment for the patent rights. On
          February,
          2, 1999, $150,000 in cash was paid, and in December, 1999, we issued 875,000
          shares in full satisfaction of any further amounts due. The estimated aggregate
          amortization expense of patent rights for each of the five succeeding years
          is
          $158,333 per year. Amortization expense was $158,368 and $158,333 for the
          years
          ended December 31, 2006 and 2005, respectively. In addition, an impairment
          loss
          of $120,247 was recognized as a charge to income for the year ended December
          31,
          2006.
 
 4.
              LICENSES
 
 Prior
        to
        2005, licenses for exclusive marketing rights to various products have been
        acquired for fees totaling $175,200 from related parties. The prices paid
        were
        demanded by the seller. The Company is the manufacturer/supplier of the
        products.
 
 During
        2005, the Company purchased a license for exclusive marketing and development
        rights to certain proprietary trade secret chemical formulations. The license
        was acquired for 240,000 shares of common stock and was valued at $150,000
        based
        on the stock price at that time.
  20
 Summit
          Environmental Corporation, Inc.
 NOTES
            TO
            FINANCIAL STATEMENTS
 The
          licenses owned by the Company do not have finite lives and will expire
          only upon
          the event the related products are no longer sold by the Company. Management
          has
          estimated useful lives for each of the licenses based upon its expectations
          of
          the viability of the specific products and is recording amortization of
          those
          licenses over those periods. The estimated aggregate amortization expense
          of
          licenses for each of the five succeeding years is expected to be $17,680
          per
          year. The weighted-average amortization period for licenses is 15 years.
          Amortization expense was $21,680 and $21,716 for the years ended December
          31,
          2006 and 2005, respectively. In addition, an impairment loss of $13,427
          was
          recognized as a charge to income for the year ended December 31,
          2006.
 
 Subsequent
        to December 31, 2006, management determined that the license purchased from
        Moonlighting, a related party, is invalid. Therefore, an impairment loss
        of
        $24,000 was recognized as of December 31, 2006, leaving the licenses for
        exclusive marketing rights to various products having been acquired for fees
        totaling $115,720.
 5.
                ACCRUED EXPENSES
 
 Accrued
        expenses are made up of the following as of December 31, 2006:
 Other
                  
                  $
                  4,709Taxes
                  
                  
                  18,437Royalties
                  
                  
                  34,208Interest
                  
                  
                  35,921$
                  93,275
  6.
              NOTES
                  PAYABLE
 
 As
                  of December 31, 2006, notes payable consisted of the
                  following:
 Note
                      payable, to Paul and Gloria Burke, due in monthlyInstallments
                      of $6,561, including interest at 13%. TheAmortization
                      period is 20 years and the maturity date isAugust
                      2011. Secured by the building and the guarantyof
                      one of its officers. This note is past-due and currentlyconsidered
                      due on demand for financial statement purposes.
                  
                  $
                  555,156Note
                      payable, Austin Bank, interest is payable monthly at9.25%,
                      with a balloon payment due June 2007. Secured bythe
                      personal guaranty of a stockholder.
                  
                  
                  123,087Note
                      payable, Pacific Business Capital Corporation, dueon
                      demand. Interest is computed based on the accountsreceivable
                      purchase discount rate of 1.5% plus an additional.1%
                      per day for past-due accounts. Secured by the Company’saccounts
                      receivable, inventory, property and equipment and theguaranty
                      of one of its officers.
                  
                  
                  47,381725,624Less
                      current maturities
                  
                  
                  725,624Non-current
                      maturities
                  
                  $
                  0
  7.
              INCOME
                  TAXES
 
 Deferred
        tax assets and liabilities are determined based on the difference between
        the
        financial statement and tax bases of assets and liabilities as measured by
        the
        currently enacted tax rates. Deferred tax expense or benefit is the result
        of
        the changes in deferred tax assets and liabilities.
  21
 Summit
          Environmental Corporation, Inc.
 NOTES
            TO
            FINANCIAL STATEMENTS
 Deferred
        income taxes and liabilities arise principally from the temporary differences
        between financial statement and income tax recognition of depreciation and
        amortization, bad debts and net operating losses.
 
 The
        deferred tax assets include the following components:
 Deferred
                      tax assets:Current
                  
                  $
                  18,870Noncurrent
                  
                  
                  4,445,400Valuation
                      allowance
                  
                  
                  (4,464,270
                  )Deferred
                      tax assets, net
                  
                  
                  -Deferred
                      tax liabilities:Current
                  
                  
                  -Noncurrent
                  
                  
                  --$
                  -
  The
          valuation allowance was established to reduce the deferred tax asset for
          the
          amounts that more likely than not will not be realized. This reduction
          is
          primarily necessary due to the uncertainty of the Company’s ability to utilize
          all of the net operating loss carryforwards. The valuation allowance increased
          $1,617,370 and $385,860 in 2006 and 2005, respectively. The Company has
          a net
          operating loss carryforward of approximately $13,047,000 of which $605,000
          expires in 2018, $882,000 expires in 2019, $1,200,000 expires in 2020,
          $819,000
          expires in 2021, $1,240,000 expires in 2022, $1,190,000 expires in 2023,
          $1,174,000 expires in 2024, $1,084,000 expires in 2025, and 4,853,000 expires
          in
          2026.
 
 8.
              COMMITMENTS
                  AND CONTINGENCIES
 
 Leases
 
 The
        Company is obligated under various operating leases for equipment, and office
        and warehouse space. Rent expense for all operating leases was approximately
        $29,072 and $65,404 for 2006 and 2005, respectively, which includes related
        party rent expense of $-0- and $-0-, respectively.
  Litigation
 
 The
        Company is involved in various claims and legal actions arising in the ordinary
        course of business. These lawsuits are in various stages and a determination
        as
        to the outcome of these lawsuits and their effect on the financial statements
        is
        not determinable. The Company intends to vigorously defend its positions
        in
        regards to these lawsuits. In the opinion of management, the ultimate
        disposition of these matters will not have a material adverse effect on the
        Company’s results of operations and cash flows.
 
 9.
              COMMON
                  STOCK
 
 Private
        placement
 During
              the first quarter of 2006, 1,066,669 shares of common stock were sold
              in a
              private placement at $.60 per share. .As noted below, warrants to acquire
              additional shares were issued along with the shares under the private
              placements. Also, during the first quarter of 2006 warrants representing
              380,123
              shares of stock were exercised for $106,440.
 
 During
        the third quarter of 2005, 772,500 shares of common stock were sold in a
        private
        placement at $.40 per share. During the fourth quarter of 2005, 227,500 shares
        of common stock were sold in a private placement at $.40 per share. As noted
        below, warrants to acquire additional shares were issued along with the shares
        under the private placements.
  22
 Summit
          Environmental Corporation, Inc.
 NOTES
            TO
            FINANCIAL STATEMENTS
 Warrants
 
 During
          2003 and 2004, the Company issued warrants to acquire 2,256,500 and 1,354,000
          shares of common stock, respectively, for a price of $.25 per share through
          an
          extended date of October 2004, in connection with private placement offerings.
          During 2004, 2,097,000 of these warrants were exercised and 1,333,500 expired.
          During 2005 the Company reinstated the 1,333,500 expired warrants at an
          exercise
          price of $.50 per share expiring in December 2006. During 2006, the expiration
          date of these warrants was extended to January 31, 2007. In addition, during
          2005, the Company issued additional warrants to one of the warrant holders
          to
          acquire 5,000 shares of common stock for $.50 per share through August
          2006.
          During 2005, 95,000 of these warrants were exercised. As of December 31,
          2006,
          1,423,500 of these warrants were still outstanding. The business purpose
          for
          reinstating the warrants was to encourage additional investment in the
          Company.
          There is no additional expense related to the reinstatement as the warrants
          were
          issued in connection with private placement offerings.
 
 During
          2004, the Company issued warrants to acquire 1,321,250 shares of common
          stock
          for $0.50 per share through January 30, 2005, in connection with private
          placement offerings. 460,000 of these warrants were exercised during 2004.
          During 2006, the expiration date of these warrants was extended to January
          31,
          2007. The business purpose for extending the expiration date of the warrants
          was
          to make it more likely they would be exercised, as the warrants were not
“in the
          money” at the time of the extension. There is no additional expense related to
          the extension of the expiration date as the warrants were issued in connection
          with private placement offerings. During 2005, the exercise price was
          temporarily reduced to $.35 per share, at which price 367,143 of these
          warrants
          were exercised. The exercise price was then readjusted to $.50 per share,
          at
          which price 150,000 shares were exercised. As of December 31, 2006, 344,107of
          these warrants were still outstanding.
 
 During
          2004, the Company issued warrants to acquire 1,000,000 shares of common
          stock
          for $1.00 per share through May 7, 2005, in connection with private placement
          offerings. During 2006, the expiration date of these warrants was extended
          to
          January 31, 2007 and the exercise price was reduced to $.50 per share.
          The
          business purpose for extending the warrants and reducing the exercise price
          was
          to make it more likely they would be exercised, as the warrants were not
“in the
          money” at the time of the extension. There is no additional expense related to
          the extension of the expiration date as the warrants were issued in connection
          with private placement offerings. During 2005, none of these warrants were
          exercised. As of December 31, 2006, all of these warrants were still
          outstanding.
 
 During
          2005, the Company issued warrants to acquire 1,000,000 shares of common
          stock
          for $.50 per share through December 31, 2005, in connection with private
          placement offerings. During 2006, the expiration date of these warrants
          was
          extended to January 31, 2007. The business purpose for extending the warrants
          was to make it more likely they would be exercised, as the warrants were
          not “in
          the money” at the time of the extension. There is not additional expense related
          to the extension of the expiration date as the warrants were issued in
          connection with private placement offerings. During 2005, 202,500 of these
          warrants were exercised. As of December 31, 2006, 797,500 of these warrants
          were
          still outstanding.
 
 During
          2006, the Company issued warrants to acquire 1,061,669 shares of common
          stock
          for $.05 per share through March 3, 2007, in connection with private placement
          offerings. If not exercised by January 31, 2007, the exercise price reverts
          to
          $2.00 per share As of December 31, 2006, all of these warrants were still
          outstanding.
 
 In
          December of 2006 the Board of Directors voted to change the exercise price
          of
          all the outstanding warrants to $.05 per share and extend the expiration
          date
          until January 31, 2007.
  Common
        Stock Options
  1998
        Plan
  During
          1998 the directors and stockholders approved the 1998 Stock Option Plan
          (the
“Plan”) of the Company whereby, at the discretion of the directors or of a Stock
          Option Committee appointed by the board of directors, invited employees
          of the
          Company or directors of the Company or consultants to the Company to have
          the
          option of subscribing to common shares of the Company based on a price
          determined by the directors or Stock Option Committee. The number of shares
          subject to the Plan is 500,000. As of December 31, 2006,385,000 of these
          options
          are exercisable; all with an exercise price of $.30 per share. The
          weighted-average remaining
          contractual life of the outstanding options under this Plan at December
          31,
          2006, was 4.5 years.
  23
 Summit
          Environmental Corporation, Inc.
 NOTES
            TO
            FINANCIAL STATEMENTS
 The
        following schedule summarizes the changes in the Plan for the two years ended
        December 31, 2006:
 Option
                    PriceWeighted
                
                TotalNumber
                    of
                
                Average
                
                OptionShares
                
                Per
                    Share
                
                PriceOutstanding
                    at December 31, 2004
                
                
                395,000
                
                $
                0.30
                
                $
                118,500(395,000
                    exercisable)For
                    the year ended December 31, 2005:Granted
                
                
                -
                
                
                -
                
                
                -Exercised
                
                
                (10,000
                )
                $
                0.30
                
                
                (3,000
                )Expired
                
                
                -
                
                
                -
                
                
                -Outstanding
                    at December 31, 2005
                
                
                385,000
                
                $
                0.30
                
                $
                115,500(395,000
                    exercisable)For
                    the year ended December 31, 2006:Granted
                
                
                -
                
                
                -
                
                
                -ExercisedExpired
                
                
                -
                
                
                -
                
                
                -Outstanding
                    at December 31, 2006
                
                
                385,000
                
                $
                0.30
                
                $
                115,500
  During
        2002, the Company reduced the exercise price for all stock options from $1.00
        per share to $0.30 per share.
 
 2004
        Plan
 
 During
          2004, the board of directors approved the 2004 Stock Option Plan (the “Plan”) of
          the Company whereby, at the discretion of the directors or of a Stock Option
          Committee appointed by the board of directors, invited employees of the
          Company
          or directors of the Company or consultants to the Company to have the option
          of
          subscribing to common shares of the Company based on a price determined
          by the
          directors or Stock Option Committee. The number of shares subject to the
          Plan is
          1,000,000. As of December 31, 2006, 1,220,000 of these options are exercisable;
          with exercise prices ranging from $.16 to $.92 per share. The weighted-average remaining
          contractual life of the outstanding options under this Plan at December
          31,
          2006, was 8.3 years. The weighted-average grant-date fair value of options
          issued under this Plan during 2006 and 2005 was $.91 and $.42,
          respectively.
  24
 Summit
          Environmental Corporation, Inc.
 NOTES
            TO
            FINANCIAL STATEMENTS
 The
        following schedule summarizes the changes in the Plan for the two years ended
        December 31, 2006:
 Option
                    PriceNumber
                      of
                
                
                
                Total
                    OptionShares
                
                Per
                    Share
                
                PriceFor
                    the year ended December 31, 2005:Granted
                
                
                380,000
                
                $
                0.42
                
                $
                159,600Exercised
                
                
                (82,500
                )
                
                (.16
                )
                
                (13,200
                )Expired
                
                
                -
                
                
                -
                
                
                -Outstanding
                    at December 31, 2005 (482,500 exercisable)
                
                
                780,000
                
                $
                0.29
                
                $
                223,600For
                    the year ended December 31, 2006:Granted
                
                
                440,000
                
                
                0.92
                
                
                404,800ExercisedExpired
                
                
                -
                
                
                -
                
                
                -Outstanding
                    at December 31, 2006
                
                
                1,220,000
                
                $
                0.52
                
                $
                628,400
  Outside
        of Plan
  During
        2001, the Company issued options outside the Plan to purchase 250,000 shares
        of
        common stock at $0.50 to a strategic alliance partner. During 2004, the Company
        reduced the exercise price to $0.40 and extended the expiration of these
        options
        to June 30, 2005. During January 2005, the expiration date of these options
        was
        extended to February 12, 2006. During 2005, 50,000 of these stock options
        were
        exercised. As of December 31, 2006, 200,000 of these stock options are
        exercisable.  According
        to SFAS 123, *Accounting
        for Stock-Based Compensation* ,
        additional expense is to be recognized if the modification of the terms causes
        the new award to be more valuable than the original award. The Company
        determined that no additional expense is to be recognized as the value of
        the
        new awards is less than the value of the original award.
 
 During
          2004, the Company issued options to purchase 188,584 shares of common stock
          at
          $0.20 per share to a consultant offering investment and marketing advice.
          During
          2004, 94,292 of these options were exercised, with the remainder being
          exercised
          during 2005. During 2005, 94,292 of the remaining 2004 issued options were
          exercised at $.20 per share. Also, During 2005, the Company issued additional
          options to this consultant to purchase 237,192 shares of common stock at
          $.28
          per share of which 118,596 of those shares were exercised in 2005. As of
          December 31, 2005, 118,596 of these options were exercisable. During 2006,
          the
          Company issued additional options to this consultant to purchase 261,534
          shares
          of common stock at $.28 per share. All of the outstanding options issued
          to this
          consultant were exercised during 2006. $231,100 and $62,555 has been recognized
          in expense in connection with services provided under this option contract,
          respectively.
 
 Common
        Stock Issued for Services Rendered
 
 During
          2006, the Company issued 6,440,148 shares of stock ranging from $0.11 to
          $1.02
          per share to officers and employees of the Company for services rendered.
          During
          2005, the Company issued 259,882 shares of stock ranging from $0.20 to
          $1.36 per
          share to officers of the Company for services rendered.
 
 During
        2005, the Company issued 100,804 shares of stock ranging from $0.40 to $1.30
        per
        share, for services rendered by outside parties.
  10.
              RELATED
                  PARTY TRANSACTIONS
 
 The following
          transactions occurred between the Company and related
          parties:
 
 The
        Company and another business with common shareholders share office space
        and the
        related expenses.
  25
 Summit
          Environmental Corporation, Inc.
 NOTES
            TO
            FINANCIAL STATEMENTS
 Accounts
        receivables from related parties totaled $55,506 all of which was reserved
        for
        at December 31, 2006.
 
 The
        Company acquired a patent from BioGenesis Enterprises, Inc. (BioGenesis)
        on
        November 2, 1998 (see Note 2), pursuant to which advanced royalty fees totaling
        $500,000 were paid. The purchase agreement requires the Company to pay
        BioGenesis a periodic royalty of $.50 per 16-oz. can and an equivalent
        (approximately 7%) on all other product categories using the fire suppressant
        technology. During 2004, BioGenesis reduced the periodic royalty to $.40
        per
        16-oz can. One-half of all periodic royalty fees due to BioGenesis will be
        credited against the advance royalty fee (until fully recovered) and one-half
        will be paid to BioGenesis in cash on the 30 th of each
        month based upon invoiced sales through the close of the preceding month.
        The
        Company has prepaid royalties to BioGenesis totaling $451,938 as of December
        31,
        2006. Included in accrued expenses is $ 34,208 due to BioGenesis at December
        31,
        2006, for royalties due. Included in accounts payable is $  4,258
        due
        to BioGenesis at December 31, 2006, for goods received. We credited against
        the
        advance royalties $8,416 in 2006 and $29,737 in 2005. The product certification
        process that the Company was subjected to took 5-1/2 years to complete before
        it
        was allowed to begin test marketing, which first occurred in 2004.
 
 During
          2005, the Company purchased a license for various products from an entity
          with
          common shareholders of the Company, and issued 240,000 shares of common
          stock at
          $.625 per share for such license.
 
 11.
              CONCENTRATIONS
 
 Approximately
        58% of sales were made to one customer in 2006 and 78% of sales were made
        to
        four customers in 2005, respectively. Accounts receivable from the customers
        was
        $35,321 and $255,193 in 2006 and 2005,
        respectively .
 
 12.
              FINANCIAL
                  RESULTS AND LIQUIDITY
 
 The
          accompanying financial statements have been prepared on a going concern
          basis,
          which contemplates the realization of assets and the satisfaction of liabilities
          in the normal course of business. As shown in the accompanying financial
          statements, the Company has incurred net losses of $4,648,053 and $1,088,943
          for
          the years ended December 31, 2006 and 2005, respectively, and has incurred
          losses of $12,953,292 since inception. The Company also has negative cash
          flows
          from operations of $1,315,668 and $1,283,296 for the years ended December
          31,
          2006 and 2005, respectively, and has used cash in operations of $8,807,039
          since
          inception. These factors, among others, may indicate that the Company will
          be
          unable to continue as a going concern for a reasonable period of time.
          The
          financial statements do not include any adjustments relating to the
          recoverability and classification of recorded assets, or the amounts and
          classification of liabilities that might be necessary in the event the
          Company
          cannot continue in existence.
 
 Despite
          its negative cash flow, the Company has been able to secure financing to
          support
          its operations to date. The Company believes that the capital raised in
          fiscal
          2007 will be sufficient to support the Company’s liquidity requirements through
          September 30, 2007, depending on operating results. Management believes
          that,
          despite the financial hurdles, it has under development a Strategic Plan,
          that
          if successfully executed, can significantly improve operating results and
          provide working capital that will enable the Company to meet its liquidity
          requirements through December 31, 2007.
 
 13.
              SUBSEQUENT
                  EVENTS
 
 In
        January 2007 shareholders executed warrants for 3,019,917 shares of stock
        receiving $150,996 of capital. In March 2007 the Company received $485,000
        for
        9,700,000 shares of preferred stock. The preferred stock has all the same
        attributes as the existing common stock.
 
 In
          April
          2007 the Company received a demand notice from the lien holder of the note
          relating to the Company’s building, due to past due payments. The notice allows
          for a cure period that runs through May 12, 2007.
  26




**ITEM
      8.**  **CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE.**





During
      the two most recent fiscal years or any later interim period, our principal
      independent accountant has not resigned, declined to stand for reelection or
      been dismissed.





**ITEM
      8A(T).**  **CONTROLS
      AND PROCEDURES.**




**Evaluation
      of disclosure controls and procedures** .
      The
      Company carried out an evaluation, under the supervision and with the
      participation of the Company's management, including the Company's Chief
      Executive Officer and Chief Financial Officer, of the effectiveness of the
      design and operation of the Company's disclosure controls and procedures as
      of
      the end of the period covered by this report. Based upon that evaluation, the
      Chief Executive Officer and Chief Financial Officer concluded that the Company's
      disclosure controls and procedures are effective and provide reasonable
      assurances that the information the Company is required to disclose in the
      reports it files or submits under the Securities Exchange Act of 1934 is
      recorded, processed, summarized and reported within the time period required
      by
      the Commission's rules and forms. Further, the Company’s officers
      concluded that its disclosure controls and procedures are also effective to
      ensure that information required to be disclosed in the reports that it files
      or
      submits under the Exchange Act is accumulated and communicated to its
      management, including its chief executive officer and chief financial officer,
      to allow timely decisions regarding required disclosure.  There
      were no significant changes in the Company's internal control over financial
      reporting during the period covered by this report that have materially
      affected, or are reasonably likely to materially affect our internal controls
      over financial reporting.





**ITEM
      8B.**  **OTHER
      INFORMATION**





There
      is
      no information that was required to be disclosed on Form 8-K during the fourth
      quarter of 2006 that was not reported.





**ITEM
      9.**  **DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE WITH SECTION
      16(A)
      OF THE EXCHANGE ACT.**





**Directors,
      Officers and Significant Employees** **.**





The
      following table shows information as of April 13, 2007 with respect to each
      of
      the officers and directors of the company individually and as a
      group:


TERM
                  OFOFFICE
                  HELD
              
              OFFICENAME
              
              OFFICE
              
              SINCE
              
              EXPIRESDoug
                  Cox, 56
              
              CEO,
                  Chairman and Director
              
              2006
              
              10-07Don
                  Jordan, 58
              
              CFO,
                  President and Director
              
              2005
              
              10-07Dean
                  Haws, 35
              
              Director
              
              1998
              
              10-07James
                  J. Roach, 60
              
              Director
              
              1998
              
              10-07Thomas
                  J. Kenan, 75
              
              Director
              
              1998
              
              10-07Mohsen
                  Amiran, 55
              
              Director
              
              1999
              
              10-07Wilton
                  Dennis Stripling, 63
              
              Director
              
              2000
              
              10-07




27




**Doug
      Cox, CEO, President and Chairman of the Board of Directors**




Born
      in
      Toronto, Canada, Mr. Cox began his career in 1976 selling life insurance door
      to
      door. Within a few years he was one of the leading sales professionals in the
      insurance industry. He soon established his own brokerage firm, which latter
      became recognized as one of the most prominent insurance/financial planning
      firms in the Toronto Region. In 1988, Mr. Cox expanded his firm to the United
      States where he continued to build, develop and sell his successful companies
      for other opportunities. Mr. Cox has been recognized as one of the most
      entrepreneurial and successful business people in the insurance industry. Along
      the way, he has invested, mentored, managed and influenced many other businesses
      in various industries to achieve success. Mr. Cox’s most recent company,
      Cox-Leadership was established in early 2006 to help other businesses grow
      and
      aspire to greater levels of success, but because of a prior investment in Summit
      Environmental and its need for leadership, Mr. Cox committed in November 2006
      to
      assume the role of CEO of Summit. His objective is to put Summit on the right
      path for recognized success. Today, he resides in San Diego where Summit’s
      corporate office will also be located.





**J.
      Don Jordan, Chief Financial Officer, President and
      Director**





Mr.
      Jordan began his public accounting career in 1970 and graduated from the
      University of North Texas in 1971 with a Bachelor of Business
      Administration-Accounting degree. He was licensed by the State of Texas as
      a CPA
      in 1974 and is a member of the American Institute of Certified Public
      Accountants and the Texas Society of Public Accountants. Mr. Jordan founded
      his
      own public accounting firm in 1977, and later acquired his former employer
      in
      1989 creating Jordan, Donohoe & Company, LLP. Mr. Jordan has specific
      expertise in manufacturing, restaurant, retail and construction industries
      with
      over 35 years experience which includes auditing privately held companies.
      During his career, Mr. Jordan has served at various times on boards of private
      companies and in an advisory capacity to various private boards. He has also
      served as the CFO of a privately owned retail chain. He will devote to the
      business of Summit whatever time is required for him to carry out his
      responsibilities as chief financial officer and president.




28





**Dean
      Haws, Director**





Mr.
      Haws
      was the owner and operator of a satellite dish sales and installation company,
      Gilmer Satellites of Gilmer, Texas, from 1988 to 2001. He has also been active
      in the oil field service business and the ostrich business. In 2001 he was
      employed for three months as an administrative staff member for Summit
      Environmental. During 2002 he was employed by Mike Craig Ford Mercury in Gilmer,
      Texas, as a car salesman. In 2003 he became the manager of car sales for that
      company and still is so employed. He has been a director of our company since
      1998.





**James
      J. Roach, Director**





Mr.
      Roach
      is a retired Connecticut State Police sergeant and owned a private detective
      and
      security company in Connecticut for over 12 years. His clients included many
      insurance companies and the State of Connecticut. He is presently retired and
      living in the State of Florida. He has been a director of our company since
      1998.





**Thomas
      J. Kenan, Director**





Mr.
      Kenan
      has practiced securities and corporation law in Oklahoma City, Oklahoma for
      the
      last 40 years. He was affiliated with Fuller, Tubb, Pomeroy & Stokes in an
“of counsel” capacity from May 1, 1993 until October 1, 2006 when he became
      affiliated with Fuller Tubb, PLLC in an “of counsel” capacity. He has been a
      director and outside corporate counsel of Summit Environmental since
      1998.





**Dr.
      Mohsen Amiran, Director**





Dr.
      Amiran grew up with a passion for the environment. While attending a UK
      University, his two thesis papers on organic chemistry received national
      attention. He was viewed as one of the brilliant minds in his field. He was
      then
      invited by the Shah of Iran to set up a new technical university in Tehran
      to do
      research and development for both military and civilian causes. The operation
      quickly grew into the largest research facility in the Middle East. His work
      on
      solvents for cleaning oil spills and other environmentally safe cleaning
      solvents was historic. Subsequently, the Shah of Iran presented him with three
      awards, including a gold medal, the country’s highest honor.





Soon
      after, the Islamic revolution took place and a new government took over. For
      a
      two-month period, Dr. Amiran lived a life of torment and feared for his life.
      The new regime destroyed the laboratory, burned his equipment and destroyed
      all
      his research. Eventually, Ayatollah Khomeini, the new leader, stepped in and
      asked Dr. Amiran to become an advisor and help industry and the military to
      get
      back on their feet. After a short time, Dr. Amiran managed to escape with his
      wife and son to London. The news that one of Iran’s leading minds had defected
      caused much turmoil in Iran. Fearing that Dr. Amiran was working with the CIA,
      his possessions were seized and family members tormented, tortured or killed.
      He
      came to the United States and became a professor at Northwestern University.
      He
      later founded BioGenesis, where he again began working on his environment-saving
      fire suppressants and cleaning agents.




29





Dr.
      Amiran received his undergraduate degree in Organic Chemistry from Areya Mehr
      University in Tehran, Iran and his Ph.D. from the University of Essex in
      England. He has been employed the last five years as the CEO of BioGenesis
      and a
      director of our company since 1999.





**Dr.
      Wilton Dennis Stripling, Director**





Dr.
      Stripling is an orthopedic surgeon specializing in hand, wrist and forearm
      surgery in the Dallas area and has been practicing medicine there since 1968.
      He
      is board certified in Orthopedic Surgery. He is a member of the Dallas County
      Medical Society, Texas Medical Society, American Academy of Orthopedic Surgeons,
      and American Society for Surgery of the Hand. He has a certificate in finance
      from the Cox Business School at SMU and a certificate in Medical Management
      from
      Carnegie Mellon University. He has been a director of our company since
      2000.





No
      executive officer, director, person nominated to become a director, promoter
      or
      control person of our company has been involved in legal proceedings during
      the
      last five years such as





·
            bankruptcy,





·
            criminal
                proceedings (excluding traffic violations and other minor offenses),
                or





·
            proceedings
                permanently or temporarily enjoining, barring, suspending or otherwise
                limiting his involvement in any type of business, securities or banking
                activities.





·
            Nor
                has any such person been found by a court of competent jurisdiction
                in a
                civil action, or the Securities and Exchange Commission or the Commodity
                Futures Trading Commission to have violated a federal or state securities
                or commodities law.





**Audit
      Committee and Audit Committee Financial Expert**





We
      have
      an audit committee. There is no audit committee financial expert serving on
      the
      audit committee. However, the audit committee has the authority to hire a
      financial expert any time it has the need for expert financial
      advice.





**Code
      of Ethics**





We
      have
      adopted a Code of Ethics that applies to our chief executive officer, chief
      financial officer, and - should we acquire such - principal accounting officer
      or controller or persons performing similar functions. A copy of the Code of
      Ethics is filed as an exhibit to the Form 10-KSB annual report FYE
      12-31-04.




30


**Compliance
        With Section 16(a) of the Exchange Act** **.**
 
 Our
        securities are not registered with the Securities and Exchange Commission
        under
        Section 12(b) or 12(g) of the Exchange Act. Accordingly, our officers, directors
        and beneficial owners of 10 percent or more of any class of stock are not
        subject to Section 16(a) of the Exchange Act.
 
 **ITEM
        10.**  **EXECUTIVE
        COMPENSATION.**
 
 The
        following information concerns the compensation of the named executive officers
        for each of the last two completed fiscal years:
 
 SUMMARY
        COMPENSATION TABLE
 
 **Name
                  and Principal Position**
              
              **Year**
              
              **Salary**
              
              **Bonus**
              
              **Common**
                **Stock**
                **Awards**
              
              **Total**B.
                  Keith Parker, CEO
              
              
              2006
                2005
              
              $
                $
              82,500
                90,000
              
              
              
              
              
              42,750
                60,187
              
              
              125,250
                150,187Paula
                  Parker, Vice President and
                Secretary
              
              
              2006
                2005
              
              $
                $
              45,000
                60,000
              
              
              
              
              
              28,500
                40,125
              
              
              73,500
                100,125
 
 OUTSTANDING
        EQUITY AWARDS AT FISCAL YEAR-END
 
 The
        following information concerns unexercised stock options, stock that has
        not
        vested, and equity incentive plan awards for each named officer outstanding
        at
        the end of the last fiscal year:
 
 Option
                  Awards
              
              Stock
                  AwardsName
              
              Number
                  of
                Securities
                Underlying
                Unexercised
                Options
                  (#)
                Exercisable
              
              Number
                  of
                Securities
                Underlying
                Unexercised
                Options
                  (#)
                Unexercisable
              
              Equity
                Incentive
                Plan
                Awards:
                Number
                  of
                Securities
                Underlying
                Unexercised
                Unearned
                Options
                  (#)
              
              Option
                Exercise
                Price
                ($)
              
              Option
                Expiration
                Date
              
              Number
                of
                  Shares
                or
                  Units
                of
                  Stock
                That
                Have
                  Not
                Vested
                  (#)
              
              Market
                Value
                  of
                Shares
                  or
                Units
                  of
                Stock
                That
                Have
                  Not
                Vested
                  ($)
              
              Equity
                Incentive
                Plan
                Awards:
                Number
                of
                Unearned
                Shares,
                Units
                  or
                Other
                Rights
                That
                Have
                  Not
                Vested
                  (#)
              
              Equity
                Incentive
                Plan
                Awards:
                Market
                  or
                Payout
                Value
                  of
                Unearned
                Shares,
                Units
                  or
                Other
                Rights
                That
                Have
                  Not
                Vested
                  ($)Doug
                  Cox, CEO
              
              
              866,667
              
              
              
              
              
              
              
              
              0.05
              
              
              1-31-2007
              
              
              
              
              
              
              
              
              8,000,000Don
                  Jordan, Pres.
                and
                  CFO
              
              
              300,000
                20,000
                60,000
              
              
              
              
              
              
              
              
              0.05
                0.42
                0.92
              
              
              1-31-2007
                8-31-2015
                1-18-2016
              
              
              
              
              
              
              
              
              4,000,000
  31
 **Compensation
        of Directors**
 
 The
        directors of Summit Environmental Corporation, Inc. and its subsidiaries
        received the following compensation in 2006 for their services as
        directors.
 
 DIRECTOR
        COMPENSATION
 
 **Name**
              
              **Fees**
                **Earned**
                **or
                  Paid**
                **in
                  Cash**
                **($)**
              
              **Stock**
                **Awards**
                **($)**
              
              **Option**
                **Awards**
                **($)**
              
              **Non-Equity**
                **Incentive**
                **Plan**
                **Compensa-**
                **tion
                  ($)**
              
              **Nonqualified**
                **Deferred**
                **Compensation**
                **Earnings
                  ($)**
              
              **All
                  Other**
                **Compensa-**
                **tion
                  ($)**
              
              **Total**
                **($)**Dean
                  Haws
              
              
              0
              
              
              0
              
              
              54,600
              
              
              0
              
              
              0
              
              
              0
              
              
              0James
                  J. Roach
              
              
              0
              
              
              0
              
              
              54,600
              
              
              0
              
              
              0
              
              
              0
              
              
              0Thomas
                  J. Kenan
              
              
              0
              
              
              0
              
              
              54,600
              
              
              0
              
              
              0
              
              
              0
              
              
              0Mohsen
                  Amiran
              
              
              0
              
              
              0
              
              
              54,600
              
              
              0
              
              
              0
              
              
              0
              
              
              0W.
                  Dennis Stripling
              
              
              0
              
              
              0
              
              
              54,600
              
              
              0
              
              
              0
              
              
              0
              
              
              0Chris
                  Dellinges
              
              
              0
              
              
              0
              
              
              54,600
              
              
              0
              
              
              0
              
              
              0
              
              
              0J.
                  Don Jordan
              
              
              0
              
              
              0
              
              
              54,600
              
              
              0
              
              
              0
              
              
              0
              
              
              0
 
 (1)
                Options
                    to purchase 60,000 shares of common stock at $0.92 a share were
                    awarded to
                    these directors on January 19, 2006. The stock closed that day
                    at $0.97 a
                    share. On May 1, 2007 the stock closed at $0.035 a
                    share.
 
 **Employment
        Contracts** **.**
 
 We
        have
        no employment agreements.
 
 **Stock
        Options** **.**
 
 We
        have
        two stock option plans. The major provisions of the plans are as
        follows:
 
 Options
        granted under the 1998 Plan or the 2004 Plan may be "employee incentive stock
        options" as defined under Section 422 of the Internal Revenue Code or
        non-qualified stock options, as determined by the option committee of the
        board
        of directors at the time of grant of an option. The 1998 and 2004 plans enable
        the option committee of the board of directors to grant, respectively, up
        to
        500,000 and 1,000,000 stock options to employees and consultants from time
        to
        time.
 
 32
  **ITEM
        11.**  **SECURITY
        OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.**
 
 The
        following table shows information as of April 13, 2007 with respect to each
        beneficial owner of more than 5 percent of each class of voting stock of
        the
        company and to each of the officers and directors of the company individually
        and as a group. There are 30,536,001 shares of common stock of the company
        outstanding.
 NO.
                    OF
                
                %
                    OFSUMMIT
                    ENVIRONMENTAL CORP.
                
                SHARES
                
                CLASSDoug
                    Cox
                
                
                6,038,884
                (1)
                
                19.812264
                    El Camino Real #400San
                    Diego, CA 92130J.
                    Don Jordan
                
                
                2,
                    811,370
                (2)
                
                9.216610
                    Dallas Parkway, Suite 2100Dallas,
                    TX 75248B.
                    Keith Parker
                
                
                2,175,905
                (3)
                
                7.1P.O.
                    Box 3402Longview,
                    TX 75606Paula
                    Parker
                
                
                2,175,905
                (4)
                
                7.1P.O.
                    Box 3402Longview,
                    TX 75606Dean
                    Haws
                
                
                780,000
                (5)
                
                2.6P.
                    O. Box 1071Gilmer,
                    TX 75644James
                    J. Roach
                
                
                281,300
                (6)
                
                *5107
                    SE Sweetbriar TerraceHobe
                    Sound, FL 33455Thomas
                    J. Kenan
                
                
                296,753
                (7)
                
                *212
                    NW 18th StreetOklahoma
                    City, OK 73103Mohsen
                    Amiran
                
                
                1,576,000
                (8)
                
                5.27420
                    Alban Station, Ste. B-208Springfield,
                    VA 22150Wilton
                    Dennis Stripling
                
                
                2,012,550
                (9)
                
                4.38230
                    Walnut Hill Lane, Ste. 2212Dallas,
                    TX 75231Officers
                    and Directors
                
                
                13,796,857
                
                
                45.2as
                    a group (7 persons)
 
 *  Less
        than
        1 percent.
  33
  (1)
              Mr.
                  Cox owns directly 5,172,167shares of common stock and is attributed
                  the
                  ownership of an additional 866,667 shares that underlie presently
                  exercisable stock purchase
                  warrants.
 
 (2)
              Mr.
                  Jordan owns directly 2,431,370 shares of stock and is attributed
                  the
                  ownership of (i) 80,000 shares of stock that underlie presently
                  exercisable stock options and (ii) 300,000 shares of stock that
                  underlie
                  presently exercisable stock purchase
                  warrants.
 
 (3)
              Mr.
                  Parker directly owns 496,875 shares of common stock. He is attributed
                  the
                  beneficial ownership of 1,237,155 shares owned by a family limited
                  partnership. He is also attributed the beneficial ownership of
                  441,875
                  shares owned by his spouse, Paula Parker. All these same shares
                  are
                  attributed to Paula Parker. See footnote
                  (4).
 
 (4)
              Mrs.
                  Parker, who is the spouse of B. Keith Parker, is attributed the
                  beneficial
                  ownership of the same shares attributed to Mr. Parker. See footnote
                  (3).
 
 (5)
              These
                  shares include 280,000 shares that underlie stock options that
                  are
                  presently exercisable.
 
 (6)
              Mr.
                  Roach owns directly 1,300 shares of common stock, and he is attributed
                  280,000 shares that underlie presently exercisable stock
                  options.
 
 (7)
              Mr.
                  Kenan is attributed 280,000 shares that underlie presently exercisable
                  stock options. He is also attributed the ownership of 16,753 shares
                  owned
                  by the Marilyn C. Kenan Trust, the trustee of which is Mr. Kenan’s spouse,
                  Marilyn C. Kenan.
 
 (8)
              Dr.
                  Amiran owns directly 1,311,000 shares and is attributed the ownership
                  of
                  265,000 shares that underlie presently exercisable stock
                  options.
 
 (9)
              Dr.
                  Stripling owns 1,669,050 shares held in his IRA account, is attributed
                  the
                  ownership of 13,500 shares held in a family limited partnership
                  of which
                  his spouse is a general partner, and is also attributed the ownership
                  of
                  240,000 shares that underlie stock options and 90,000 shares that
                  underlie
                  common stock purchase warrants.
 
 **CERTAIN
        RELATIONSHIPS AND RELATED TRANSACTIONS**
 
 Summit
        Technologies early received an assignment from Moonlighting Distribution
        Corporation to the distribution rights to BioGenesis’s fire suppression
        products. Summit paid $10,000 to Moonlighting, and initially paid to
        Moonlighting a royalty of $0.50 for each 16-ounce can of **FirePower
        911** **Ô** **,** $0.35
        for
        each 1-liter can of **FirePower** **Ô** **,** and
        $0.50 for each gallon of **FlameOut** **â** .
        As of
        January 2005, the royalties for **FirePower** **Ô** and **FlameOut** **â** in
        aerosol form are now reduced to $0.25 a can. Moonlighting was and still is
        under
        the control of B. Keith Parker and his spouse, Paula Parker, who were both
        directors and officers of Summit until recently.
 
 Our
        new
        management is researching the issue of whether Moonlighting had perfected
        its
        title to the distribution rights at the time that it purportedly transferred
        these rights to Summit Technologies.
 
 34
  **ITEM
        13.**  **EXHIBITS.**
 
 The
        following exhibits are filed, by incorporation by reference, as part of this
        Form SB-2 Registration Statement:
 Exhibit
                    No.
                
                
                
                Description2.1
                
                -
                
                Agreement
                    of Merger of July 14, 1998, between Summit Environmental Corporation,
                    Inc.
                    and Summit Technologies, Inc.**3.1
                
                -
                
                Articles
                    of Incorporation of Summit Environmental Corporation,
                    Inc.*3.1.1
                
                -
                
                Amendment
                    to Articles of Incorporation of Summit Environmental Corporation,
                    Inc.**3.2
                
                -
                
                Bylaws
                    of Summit Environmental Corporation, Inc.*5
                
                -
                
                Opinion
                    of Thomas J. Kenan, Esquire, on the legality of the securities
                    being
                    registered.+++10.1
                
                -
                
                1998
                    Stock Option Plan adopted by Summit Environmental Corporation,
                    Inc.*10.4
                
                -
                
                2004
                    Stock Option Plan adopted by Summit Environmental Corporation,
                    Inc.+10.5
                
                -
                
                Royalty
                    Agreement between BioGenesis Enterprises, Inc. and Summit Environmental
                    Corporation, Inc.+*10.6
                
                -
                
                License
                    Agreement - Consumer Chemicals and Proprietary Remediation Technology,
                    executed 02-01-06 by BioGenesis Enterprises, Inc. and Summit
                    Environmental
                    Corporation, Inc.+++10.7
                
                -
                
                Service
                    Agreement by and between SMG and Summit Environmental Corporation
                    dated
                    September 25, 2005.**+10.8
                
                -
                
                Advisory
                    Services Agreement between AmBiz Associates, L.L.C. and Summit
                    Environmental Corporation, Inc. dated February 25,
                    2004.**+10.9
                
                -
                
                Distribution,
                    and Sales Agreement between Summit Environmental Corporation
                    and VASA,
                    Ltd. dated September 1, 2004.**+14
                
                -
                
                Code
                    of Ethics for the Chief Executive officer and Senior Financial
                    Officers.*+31
                
                -
                
                Certification
                    of Chief Executive Officer pursuant to 18 U.S.C. Section 1350,
                    as adopted
                    pursuant to Section 302 of the Sarbanes-Oxley Act of
                    2002.31.1
                
                -
                
                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
                
                -
                
                Certification
                    of Chief Executive Officer pursuant to 18 U.S.C. Section 1350,
                    as adopted
                    pursuant to Section 906 of the Sarbanes-Oxley Act of
                    2002.
  35
  32.1
                
                -
                
                Certification
                    of Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
                    as adopted
                    pursuant to Section 906 of the Sarbanes-Oxley Act of
                    2002.*
                
                Previously
                    filed with Form SB-2; Commission File No. 333-48675 incorporated
                    herein.**
                
                Previously
                    filed with Amendment No. 1 to Form SB-2; Commission File No.
                    333-48675
                    incorporated herein.+
                
                Previously
                    filed with Form 10-KSB Annual Report FYE 12-31-03, Commission
                    File No.
                    333-48675 incorporated herein.+++
                
                Being
                    filed with Form SB-2 Am 1, Commission File No. 333-122402 incorporated
                    herein.+*
                
                Previously
                    filed with Amendment No. 2 to Form 10-KSB 12-31-04, Commission
                    File No.
                    333-48675 incorporated herein.*+
                
                Previously
                    filed with Form 10-KSB Annual Report FYE 12-31-04, Commission
                    File No.
                    333-48675 incorporated herein.**+
                
                Being
                    filed with Form SB-2 Am 2, Commission File No. 333-122402 incorporated
                    herein.
 
 **ITEM
        14.**  **PRINCIPAL
        ACCOUNTANT FEES AND SERVICES.**
 
 **Audit
        Fees** .
        Our
        principal independent accountant billed us, for each of the last two fiscal
        years, the following aggregate fees for its professional services rendered
        for
        the audit of our annual financial statements and review of financial statements
        included in our Form 10-QSB reports or other services normally provided in
        connection with statutory and regulatory filings or engagements for those
        two
        fiscal years:
 Fiscal
                    Year ended December 31, 2006
                
                $
                64,000.00Fiscal
                    Year ended December 31, 2005
                
                $
                49,000.00
  **Audit-Related
          Fees.** Our
          principal independent accountant billed us, for each of the last two fiscal
          years, the following aggregate fees for assurance and related services
          reasonably related to the performance of the audit or review of our financial
          statements and not reported above under “Audit Fees”:
 
 Fiscal
                    Year ended December 31, 2006
                
                $
                0Fiscal
                    Year ended December 31, 2005
                
                $
                0
 
 **Tax
          Fees** .
          Our
          principal independent accountant billed us, for each of the last two fiscal
          years, the following aggregate fees for professional services rendered
          for tax
          compliance, tax advice and tax planning:
 
 Fiscal
                    Year ended December 31, 2006
                
                $
                0Fiscal
                    Year ended December 31, 2005
                
                $
                0
  36
  **All
          Other Fees** .
          Our
          principal independent accountant billed us, for each of the last two fiscal
          years, the following aggregate fees for products and services provided
          by it,
          other than the services reported in the above three categories:
 
 Fiscal
                    Year ended December 31, 2006
                
                $
                0Fiscal
                    Year ended December 31, 2005
                
                $
                0
 
 **Pre-Approval
        of Audit and Non-Audit Services.**  The
        Audit
        Committee charter requires that the committee pre-approve all audit, review
        and
        attest services and non-audit services before such services are
        engaged.
 
 37
  **SIGNATURES**
 
 In
        accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused
        this report to be signed on its behalf by the undersigned, thereunto duly
        authorized.
  Date:
                  May 7, 2007
                SUMMIT ENVIRONMENTAL CORPORATION,
                  INC.By:
                */s/
                    Doug Cox*Doug
                    Cox, Chief Executive Officer,
                  and
                    individually as a Director
 
 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:
  */s/
                      Don Jordan*Date:
                      May 7, 2007
                  Don
                      Jordan, Chief Financial Officer,Principal
                      Accounting Officer, Presidentand
                      individually as a Director*/s/
                      Dean Haws*Date:
                      May 7, 2007
                  Dean
                      Haws, Director*/s/
                      James J. Roach*Date:
                      May 7, 2007
                  James
                      J. Roach, Director*/s/
                      Thomas J. Kenan*Date:
                      May 7, 2007
                  Thomas
                      J. Kenan, Director*/s/
                      Mohsen Amiran*Date:
                      May 7, 2007
                  Mohsen
                      Amiran, Director*/s/
                      Wilton Dennis Stripling*Date:
                      May 7, 2007
                  Wilton
                      Dennis Stripling, Director
  38
 **Summit
        Environmental Corporation, Inc.**
 Commission
        File No. 333-48659
 
 **EXHIBIT
        INDEX**
 
 **AMENDMENT
          NO. 1 TO FORM 10-KSB**
 **For
        the year ended December 31, 2006**
 
 The
        following exhibits are filed, by incorporation by reference, as part of this
        Form 10-KSB-Annual Report:
  Exhibit
                    No.
                
                
                
                Description2.1
                
                -
                
                Agreement
                    of Merger of July 14, 1998, between Summit Environmental Corporation,
                    Inc.
                    and Summit Technologies, Inc.**3.1
                
                -
                
                Articles
                    of Incorporation of Summit Environmental Corporation,
                    Inc.*3.1.1
                
                -
                
                Amendment
                    to Articles of Incorporation of Summit Environmental Corporation,
                    Inc.**3.2
                
                -
                
                Bylaws
                    of Summit Environmental Corporation, Inc.*5
                
                -
                
                Opinion
                    of Thomas J. Kenan, Esquire, on the legality of the securities
                    being
                    registered.+++10.1
                
                -
                
                1998
                    Stock Option Plan adopted by Summit Environmental Corporation,
                    Inc.*10.4
                
                -
                
                2004
                    Stock Option Plan adopted by Summit Environmental Corporation,
                    Inc.+10.5
                
                -
                
                Royalty
                    Agreement between BioGenesis Enterprises, Inc. and Summit Environmental
                    Corporation, Inc.+*10.6
                
                -
                
                License
                    Agreement - Consumer Chemicals and Proprietary Remediation Technology,
                    executed 02-01-06 by BioGenesis Enterprises, Inc. and Summit
                    Environmental
                    Corporation, Inc.+++10.7
                
                -
                
                Service
                    Agreement by and between SMG and Summit Environmental Corporation
                    dated
                    September 25, 2005.**+10.8
                
                -
                
                Advisory
                    Services Agreement between AmBiz Associates, L.L.C. and Summit
                    Environmental Corporation, Inc. dated February 25,
                    2004.**+
 1
 10.9
                  
                  -
                  
                  Distribution,
                      and Sales Agreement between Summit Environmental Corporation
                      and VASA,
                      Ltd. dated September 1, 2004.**+14
                  
                  -
                  
                  Code
                      of Ethics for the Chief Executive officer and Senior Financial
                      Officers.*+31
                  
                  -
                  
                  Certification
                      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350,
                      as adopted
                      pursuant to Section 302 of the Sarbanes-Oxley Act of
                      2002.31.1
                  
                  -
                  
                  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
                  
                  -
                  
                  Certification
                      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350,
                      as adopted
                      pursuant to Section 906 of the Sarbanes-Oxley Act of
                      2002.32.1
                  
                  -
                  
                  Certification
                      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
                      as adopted
                      pursuant to Section 906 of the Sarbanes-Oxley Act of
                      2002.*
                  
                  Previously
                      filed with Form SB-2; Commission File No. 333-48675 incorporated
                      herein.**
                  
                  Previously
                      filed with Amendment No. 1 to Form SB-2; Commission File No.
                      333-48675
                      incorporated herein.+
                  
                  Previously
                      filed with Form 10-KSB Annual Report FYE 12-31-03, Commission
                      File No.
                      333-48675 incorporated herein.+++
                  
                  Being
                      filed with Form SB-2 Am 1, Commission File No. 333-122402 incorporated
                      herein.+*
                  
                  Previously
                      filed with Amendment No. 2 to Form 10-KSB 12-31-04, Commission
                      File No.
                      333-48675 incorporated herein.*+
                  
                  Previously
                      filed with Form 10-KSB Annual Report FYE 12-31-04, Commission
                      File No.
                      333-48675 incorporated herein.**+
                  
                  Being
                      filed with Form SB-2 Am 2, Commission File No. 333-122402 incorporated
                      herein.++*
                  
                  Filed
                      with Form 8-K March 3, 2006, Commission file No. 333-48659
                      incorporated
                      herein.
 
 2