<PAGE>   1
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
                [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                                       or

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

                          COMMISSION FILE NO. 333-48675

                     SUMMIT ENVIRONMENTAL CORPORATION, INC.
                 (Name of small business issuer in its charter)

             Texas                                         73-1537206
 ------------------------------                   ----------------------------
    (state of incorporation)                        (IRS Employer I.D. Number)

                                521 Delia Street
                               Longview, TX 75601
                     ---------------------------------------
                      (Address principal executive offices)

                     Issuer's telephone number: 800-522-7841

         Securities registered under Section 12(b) of the Exchange Act:

                           Title of each class: None.

                Name of each exchange on which registered: None.

         Securities registered under Section 12(g) of the Exchange Act:

                         Common Stock, $0.001 par value
                      -------------------------------------
                                (Title of class)

         Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 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 [ ]

         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 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]


<PAGE>   2



State issuer's revenues for its most recent fiscal year:  $80,184.

         State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within the past 60 days: $2,580,211 computed by
reference to the $0.38 average of the bid and asked price of the company's
Common Stock on March 14, 2001.

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of March 19, 2001: 12,352,994 shares of Common Stock,
$0.001 par value.

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; (3) 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 list 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 [ ] No [X]


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<PAGE>   3


                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                               Page
                                                                               ----
<S>       <C>                                                                  <C>
Item 1.   Description of Business.............................................   5

          Business Development ...............................................   5
          Principal Products..................................................   5
          Distribution Methods ...............................................   7
          Competition ........................................................   7
          Raw Materials and Suppliers    .....................................   8
          Dependence on Major Customers ......................................   8
          Patents, Trademarks and Licenses ...................................   8
          Government Approval of Principal Products...........................   9
          Seasonality.........................................................   9
          Research and Development............................................   9
          Environmental Controls..............................................   9
          Number of Employees.................................................   9

Item 2.   Properties..........................................................  10

          Facilities..........................................................  10

Item 3.   Legal Proceedings...................................................  10

Item 4.   Submission of Matters to a Vote of Security Holders.................  10

Item 5.   Market for Common Equity and Related Stockholder Matters............  10

Item 6.   Management's Discussion and Analysis................................  11

          Overview............................................................  11
          Results of operations...............................................  14
          Sales...............................................................  14
          Gross margin........................................................  15
          Operating expenses..................................................  15
          Net income (loss)...................................................  16
          Liquidity and capital resources.....................................  16
          Outlook.............................................................  16

Item 7.   Financial Statements................................................  19

Item 8.   None

Item 9.   Directors, Executive Officers, Promoters and Control Persons;
                   Compliance with Section 16(a) of the Exchange Act..........  32

Item 10.  Executive Compensation..............................................  35

Item 11.  Security Ownership of Certain Beneficial Owners and Management......  35
</TABLE>


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<PAGE>   4

<TABLE>
<S>                                                                            <C>
Item 12.  Certain Relationships and Related Transactions......................  37

          Parents of the Company..............................................  37

Item 13.  Exhibits and Reports on Form 8-K....................................  38

          Signatures..........................................................  39
</TABLE>




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<PAGE>   5


ITEM 1.  DESCRIPTION OF BUSINESS.

         BUSINESS DEVELOPMENT

         The company is affiliated with Moonlighting Distribution Corporation, a
closely held Texas corporation ("Moonlighting"). Moonlighting is under the 52.5
percent ownership and control of B. Keith Parker and his spouse, Paula Parker,
who are directors and, respectively, the chief executive officer and vice
president for shareholder relations of the company. Originally, Moonlighting
developed and marketed health and well-being products designed to improve the
quality of an individual's life and also marketed other industrial cleaners,
chemicals and fire suppression agents.

         In 1993, before the company was organized, the Parkers and Moonlighting
began to assess several products developed by BioGenesis Enterprises, Inc. of
Springfield, Virginia ("BioGenesis"). BioGenesis develops and manufactures
industrial products that are environmentally safe - generally, products that are
biodegradable and nontoxic. By middle 1997, the Parkers and Moonlighting
concluded that BioGenesis' products merited commercial exploitation. A trip to
the Philippines was planned to determine if a fire suppressant product of
BioGenesis' could be marketed there through personal contacts of the Parkers. A
license was obtained from BioGenesis to market the fire suppressant. The named
licensee was "B. Keith Parker and Moonlighting Distribution Corporation dba
Moonlighting International." Moonlighting International was a trade name to be
used by Moonlighting for any overseas marketing business.

         The trip to the Philippines resulted in the organization by local
businessmen there of Moonlighting International Philippines, a company not
affiliated with the Parkers' company, Moonlighting Distribution Corporation.
Moonlighting determined that the scope of activities that should be undertaken
for the fire suppressant product exceeded the capabilities or business plan of
Moonlighting. A company named Summit Technologies, Inc. (with whom the company
merged on December 2, 1998) was incorporated in August 1997 to organize,
finance, and direct the marketing of BioGenesis' fire suppressant product and
other products for which exclusive marketing licenses could be obtained and for
which marketing expenses could be raised.

         After the organization of Summit Technologies, Moonlighting licensed to
Summit Technologies the exclusive right to market products newly developed by
Moonlighting and tested for marketing, STRESSEX(TM) and PANNACHE(TM), and the
non-exclusive right to market BioGenesis' fire suppressant products, FIREPOWER
911(TM) and FLAMEOUT(R), for which Moonlighting had earlier obtained certain
exclusive distribution rights. Later, in April 1998, Summit Technologies entered
into an agreement with Dr. Mohsen C. Amiran, the formula's inventor, and his
company, BioGenesis, that would enable Summit Technologies to obtain ownership
of all patent and other intellectual property rights associated with the fire
suppressant upon the payment of $1 million cash and 750,000 shares of Common
Stock of Summit Technologies. Then, on November 2, 1998, BioGenesis assigned to
Summit Technologies the fire suppressant's patent and other intellectual
property rights. The parties agreed for the company to complete payment of its
obligation to BioGenesis by December 1, 1999. The company completed the funding
of this obligation on December 1, 1999.

         On December 2, 1998, Summit Technologies was merged into the company.

PRINCIPAL PRODUCTS

         The company distributes and markets or has initiated activities to
distribute and market the following proprietary products. All of the products
are manufactured exclusively for the company.



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<PAGE>   6


         FIREPOWER 911(TM) and FLAMEOUT(R)

         These products are fire suppressants and retardants manufactured by the
company. FLAMEOUT(R) was developed by Dr. Mohsen C. Amiran and his company,
BioGenesis, to be a replacement for Halon 1211. Halon 1211 was a widely used
fire suppression and explosion protection agent. It was applied primarily as a
wetting agent and was the fire-extinguishing agent of choice for many uses, such
as most fire extinguishers. Its production was halted in 1994 by actions taken
at the 1992 Geneva Peace Conference primarily because Halon 1211 has one of the
higher ozone depletion potentials of any compound. Halon 1211 is still approved
for certain limited mission-critical uses (such as ship- and shore-based crash,
fire and rescue), but existing installations of Halon 1211 that are not mission
critical must switch to an approved, acceptable alternative. The company is
engaged with International Aero in accordance with the Federal Aviation
Administration minimum performance initiative to find acceptable replacements
for the onboard Halon fire extinguishers on commercial aircraft.

         In March 1994, Surfactant Blend A was certified by the USEPA-SNAP
(Significant New Alternative Policy) which had been submitted by Dr. Mohsen C.
Amiran. This was the first alternative to Halon 1211.

         The EPA has now approved at least ten other certified replacements for
Halon 1211. Three of these are water, foam and carbon dioxide. In addition to
these three, BioGenesis' Surfactant Blend A is approved for all wetting agent
uses for both residential and commercial use. Some of the replacements were
approved only for a limited time and then were phased out. Surfactant Blend
A--FLAMEOUT(R) was listed in May 1997 by Underwriter Laboratories (listing
number 7P21).

         FLAMEOUT(R) is marketed at one to three percent strength for use in
extinguishing Class A fires (wood, cloth, paper, rubber and plastics) and is
marketed at three to six percent strength for suppression of Class B fires
(combustible liquids, gases and greases). Surfactant Blend A-- FLAMEOUT(R) is
also effective at ten percent strength in suppressing Class D fires (metals),
but has not yet been submitted to Underwriters Laboratory for certification for
Class D fire suppression.

         FLAMEOUT(R) reduces toxic smoke by encapsulating poisonous
hydrocarbons, reduces heat approximately 70 percent faster than water, prevents
reflash, is safe to store and handle, leaves virtually no residue, is
biodegradable, and otherwise is environmentally safe. It is nontoxic, but may
irritate the eyes. It stores at between 25 degrees and 120 degrees Fahrenheit
for prolonged periods.

         FIREPOWER 911(TM) contains Surfactant Blend A--FLAMEOUT(R) formula.
FIREPOWER 911(TM) and FLAMEOUT(R) suppress and extinguish fires quickly. State
fire codes prohibit products from being marketed as fire extinguishers without
proper testing, listing, and rating. The company has what it believes is the
only aerosol fire suppressant in the worldwide marketplace that has obtained a
fire extinguisher listing and rating. Having the only such product is believed
by the company to be significant for the company's long-term marketing
prospects. A new Non-Halon certification, with regard to residential fire
extinguisher sales, leaves FIREPOWER 911(TM) in a class of its own.

         INDUSTRIAL CHEMICALS AND CLEANERS

         The company distributes industrial chemicals and cleaners under the
private label ULTIMATE CLEAN. The products were developed by Dr. Amiran and
BioGenesis. BioGenesis concentrates its


                                       6
<PAGE>   7

activities on developing, and then manufacturing for marketing by other
companies, industrial-use products that are environmentally safe. The company
markets industrial chemicals and cleaners that it has introduced into its line
of products.

         Due to perceived market demands, the company, through Dr. Amiran,
developed a turbine cleaner for jet engines. The original formula, ULTIMATE
CLEAN 668(TM), was developed for Solar Turbines, a company owned by Caterpillar.
Due to the capabilities realized by ULTIMATE CLEAN 668(TM), the company, through
International Aero, is introducing 668(TM) to the aviation industry and the
United States Military.

         ULTIMATE CLEAN 668(TM) was submitted to the officially licensed testing
agency in order to obtain a Quality Products Listing under military
specification number MIL-PRF-85704C. This initiative, when completed, will meet
Federal Aviation Administration guidelines for usage on commercial aircraft,
United States Naval Warfare Center Aircraft Division and United States
Department of Defense criteria for usage on U. S. military aircraft with a
Quality Products Listing for both Type II and Type III (water-based) cleaners.

         DISTRIBUTION METHODS

         The company markets products primarily through the development of
strategic alliances, the first of which was with International Aero, Inc., for
the aviation industry, the U. S. Military and the United States Gulf Coast
petroleum industry. International Aero is the world's largest re-configuration
and retrofit contractor for the aviation industry. Other alliances made by the
company for specific industries include e-commerce, catalogue sales, roofing,
plumbing, heating and air conditioning, building materials, and retail mass
merchandisers and convenience stores. The company is preparing to launch sales
efforts through infomercials and through direct television advertising.
Internationally, the company markets products through exclusive distribution
agreements with revenue sharing clauses.

         Exclusive distribution agreements which the company has entered into
include the Philippines, England and the European Union, Scandinavia, Australia,
New Zealand, Hong Kong, Singapore, Japan, Mexico, Argentina, Brazil, Chile,
Uruguay, Paraguay, Venezuela, Peru, Ecuador, Columbia, Bolivia, Puerto Rico, the
Dominican Republic, South Africa and Canada.

         COMPETITION

         The company owns the patent and intellectual property rights to
Surfactant Blend A--FLAMEOUT(R) and currently markets under that name only.
Surfactant Blend A--FLAMEOUT(R) was the first formula approved under USEPA-SNAP
guidelines after the global banning of Halon 1211. Its approval is for both
commercial and residential use.

         The demise of the former fire suppressant of choice, Halon 1211, is a
consequence of the 1992 Geneva Peace Conference, which mandated the phase out of
Halon 1211 in all United Nations countries participating in the Conference. The
banning is now global in scope.

         The company believes that FLAMEOUT(R) is the finest fire suppressant in
existence and that FIREPOWER 911(TM) is the only rated and listed fire
extinguisher in an aerosol can in the marketplace today.


                                       7
<PAGE>   8


         RAW MATERIALS AND SUPPLIERS

         The raw materials for the company's products are in abundant supply.
The company, by virtue of its purchase of the patent and intellectual property
rights, retained Dr. Amiran and his company, BioGenesis, to formulate and
package the company's products on a cost-plus-10 percent basis.

         DEPENDENCE ON MAJOR CUSTOMERS

         The company's markets are not dependent on one or a few major
customers.

         PATENTS, TRADEMARKS AND LICENSES

         In mid-1997, Moonlighting and B. Keith Parker obtained a nearly
worldwide license from BioGenesis for its fire suppressant products and
improvements. See "Description of Summit Technologies' Business--Business
Development." The excepted countries were most Arabic countries and the
Scandinavian countries. On May 1, 1997, both of these areas, then under
exclusive license to other companies, became available due to the existing
licensees' failure to meet periodic sales quotas, and Parker and Moonlighting
acquired licenses in these areas pursuant to the terms of their agreement with
BioGenesis.

         In October 1997, this exclusive license from BioGenesis was assigned to
Summit Technologies (which company was merged into the company on December 2,
1998) in exchange for the payment to Moonlighting of $10,000, the issuance to
Moonlighting of 350,000 shares of common stock of Summit Technologies, and the
obligation to pay to Moonlighting a royalty of $0.50 for each 16 ounce can of
FIREPOWER 911(TM) and $0.50 for each gallon of FLAMEOUT(R). Subsequently, the
company developed a new version of FIREPOWER 911(TM) in a one-liter can. This
product bears an obligation of $.35 per can payable to Moonlighting.

         On November 2, 1998, BioGenesis assigned to Summit Technologies all
patents and intellectual property rights associated with the fire suppressant
products. See "Business Development" above. The obligation to pay licensing fees
to BioGenesis merged with the acquisition of the patent rights and, accordingly,
was extinguished. The obligation to pay the above-described royalties to
Moonlighting, however, did not so merge and will continue in effect during the
term of the exclusive license obtained from Moonlighting. The company completed
the purchase of the patent and intellectual property rights on December 1, 1999.

         Summit Technologies paid $30,000 for a perpetual license from its
affiliated company, Moonlighting, for its STRESSEX(TM), PANNACHE(TM) and
TRIM-AWAY(TM) products. The license has no sales quota. Moonlighting receives a
9 percent royalty on the lowest wholesale price for which the company sells the
product. The company deals directly with the laboratories manufacturing these
products.

         The company has the right to private label its industrial chemicals and
cleaning products formulated by Dr. Mohsen C. Amiran. The company has agreements
to obtain these products at the lowest wholesale cost less 10 percent to 15
percent. The company has determined the wholesale, dealer, and retail pricing
schematic. The company and Dr. Amiran have a prearranged formula for percentage
splits on other products, which are developed on a case-by-case basis by Keith
Parker, the company's Chief Executive Officer.


                                       8
<PAGE>   9


GOVERNMENT APPROVAL OF PRINCIPAL PRODUCTS

         BioGenesis obtained EPA approval in 1994 and Underwriter Laboratories
listing in May 1997 for FLAMEOUT(R) (Listing No. 7P21). The previous approvals
and listings have been registered in the company's name.

         The company's ULTIMATE CLEAN line has received the appropriate U.S.
Government approvals for the industrial chemical and cleaning products.

         The fire suppressant products the company distributes are subject to
government regulation in most countries of the world. The existence of this
regulation is of benefit to the company. The company's fire suppressants are
qualified substitutes for Halon 1211, the fire suppressant of choice in most of
the world prior to the 1992 Geneva Peace Conference that implemented what today
is a global banning of Halon 1211. The company obtained a rating and listing for
FIREPOWER 911(TM) as a fire extinguisher in February 1999. FIREPOWER 911(TM) was
tested to ANSI/UL8 and ANSI/UL711 according to NFPA standard 10. During 2000,
state fire marshals' offices began removing "copycat" products, which were not
listed and rated accordingly, from retail establishments via cease and desist
removal orders.

         SEASONALITY

         There is no known seasonal aspect to the company's business.

         RESEARCH AND DEVELOPMENT

         The company has agreements with several companies and countries that
are conducting research and testing to produce new fire-fighting tools and new
products.

         International Aero, Inc., the world's largest reconfigurator of
commercial aircraft, has several projects underway. One is the development of an
approved fire suppression agent, tested to the new minimum performance standards
established by the FAA, that will be a replacement agent for the fire
extinguishers in bathrooms and galleys on board all commercial aircraft which
now contain Halon 1211. The Halon 1211 fire extinguishers are no longer (as of
March 1999) protected for continued use under the classification of Mission
Critical.

         Also, a non-toxic, biodegradable turbine cleaner has been developed by
the company for International Aero and for Solar Turbines, owned by Caterpillar,
for the scheduled periodic cleanings required of jet engines. While there are a
couple of cleaners available, Solar Turbines and International Aero cannot find
an acceptable cleaner. The company has been involved in a U. S. Department of
Defense and U. S. Navy, EPA directed test on ULTIMATE CLEAN 668(TM) for
non-corrosion and non-toxicity to military specification number MIL-PRF-85704C.
The company, through International Aero, Inc., has several of the major airlines
(United, Continental, Northwest, Delta and Eastern) as customers desiring to buy
ULTIMATE CLEAN 668(TM).

         ENVIRONMENTAL CONTROLS

         The company is subject to no environmental controls or restrictions
that require the outlay of capital or the obtaining of a permit in order to
engage in business operations.

         NUMBER OF EMPLOYEES

         On December 31, 2000, the company employed eight persons full time and
no persons part time.


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<PAGE>   10

ITEM 2.  PROPERTIES

         The company owns no plants or real property. It leases space for its
offices and for storing inventory.

         FACILITIES

         The company leases 5,000 square feet of space in Longview, Texas for
its offices and for inventory storage at $1,300 per month. Additional space is
available for leasing should more storage space be required for inventory. The
company believes all space requirements can be met at its present location for
at least the next year.

ITEM 3.  LEGAL PROCEEDINGS

         On January 27, 2000, the company received a citation, Cause No.
CC-00-934-A, Infinity Broadcasting Corporation of Dallas d/b/a KLUV 98.7 FM and
1190 AM vs. Summit Environmental Corporation, Inc., which involves a
disagreement as to the billing of radio advertising cost. The amount of the case
is $58,346. It was the opinion of company management and counsel that this case
had no merit. The company challenged the validity of the claim. A settlement was
reached for $24,000. On advice from counsel management agreed to the settlement
versus the cost of litigating a cross-action for deceptive trade practices.

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

         None

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Summit's Common Stock presently trades on the OTC Bulletin Board, having been
added to the OTC Bulletin Board on April 5, 1999. The high and low bid and asked
prices, as reported by the OTC Bulletin Board, are as follows for 2000. The
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions.

<TABLE>
<CAPTION>
                                     High            Low
                                     ----            ---
<S>               <C>               <C>             <C>
         1999:
                  2nd Qtr.          1.875           0.0
                  3rd Qtr.          0.875           0.3125
                  4th Qtr.          0.96875         0.375

         2000:
                  1st Qtr.          2.94            0.56
                  2nd Qtr.          3.75            0.75
                  3rd Qtr.          1.06            0.44
                  4th Qtr.          0.53            0.13
</TABLE>

         Holders. Based on information provided by our transfer agent, the
company had 624 shareholders of record of its common stock on March 19, 2001.


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         Dividends. The company has declared no dividends on its 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 it has no plans to pay
dividends in the foreseeable future and intends to use earnings for the
expansion of its business.

         Recent Sales of Unregistered Securities. Subsequent to the
effectiveness of the merger between the company and Summit Technologies, Inc.,
the company sold 283,854 shares of Common Stock in December 1998 and 121,800
shares of Common Stock from January 1999 through April 1999 to investors in an
offering exempt from registration pursuant to the provisions of Regulation D,
Rule 506. No underwriter or broker-dealer was used. The shares were all sold for
cash at $2.50 a share. Each of the purchasers was personally known to the
company and its directors prior to the offer made by the company to sell such
securities.

         On October 30, 1999, the company made a private placement offering of
3,000,000 shares of Common Stock at $0.50 per share with purchase warrants of
one warrant per 2 shares purchased. The warrants are exercisable through June
30, 2002 at $1.00 per share of Common Stock. The company sold 1,964,000 of these
shares during November and December 1999. In December 1999, the company
transferred 875,000 of the shares of Common Stock to BioGenesis Enterprises,
Inc. in partial fulfillment of the company's obligation to BioGenesis
Enterprises, Inc. for patent rights and intellectual property to various fire
suppression products.

         In January through April, 2000, the remaining 1,533,000 shares of the
private placement were sold. In March and April 2000, options covering 140,000
shares of the company's common stock previously granted to consultants were
exercised. In December 2000, 62,500 shares of stock were granted to The Video
Agency ("TVA") in exchange for services rendered.

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. It is
qualified in its entirety by the foregoing and by more detailed financial
information appearing elsewhere.

         OVERVIEW

         During 2000, the company moved some of the venues established by the
previous year's direction toward finalizing some of the distribution
negotiations and product certifications. Its vision continues to be marketing
the company's products through strategic alliances.

         Management has held fast to the theme of establishing a sound retail
pricing structure for FIREPOWER 911(TM). Early on (July 1998 to March 1999), the
company was successful in getting FIREPOWER 911(TM) approved by Wal-Mart on a
regional basis, first, and then elevated to full category status. Existing
purchase orders were in hand.

         However, management was not comfortable on issues such as the terms for
continuing fulfillment, insufficient timing for completion of orders based on
manufacturing criteria unique to FIREPOWER 911(TM), and the possibility of
delayed payments regardless Of contractual terms. When the discounting of
FIREPOWER 911(TM) was taken into consideration, management was not willing to
jeopardize long-term success for short-term gain. Therefore, an agenda was
developed to first introduce FIREPOWER 911(TM) through marketing venues where
discount pricing was not the primary negotiating factor.


                                       11
<PAGE>   12

         The company set out to place FIREPOWER 911(TM) into a retail
environment where pricing was not an issue to its success. When initial sales
were made to grocery supply companies, grocery stores and convenience stores,
there was no effective marketing/merchandising follow-up network in place to
facilitate the in-store service requirement held by the large store chains
across the country. The existing agreement with Convenience Service Group did
not meet the criteria and was terminated in order that the company could take a
new direction with FIREPOWER 911(TM).

         Still believing in the uniqueness of an aerosol product providing
safety and ease of use for all consumers, the company negotiated an agreement
with a firm, Triple-S Marketing, to provide the in-store service required by
some of the nation's larger retailers. The company focused on Triple-S because
of its emphasis on home improvement stores. One such national chain has approved
FIREPOWER 911(TM) for its stores, scheduled to appear in July/August 2001. The
store and its locations will be made public when the appropriate time occurs.

         The company is also in the negotiation stage for the sale of FIREPOWER
911(TM) for placement in military base stores, which should occur in early
second quarter 2001.

         During 2000, the first shipment of FIREPOWER 911(TM) was packaged for
international sales with foreign language labels. Initial first market shipments
ranging from 2,000 cans to 5,000 cans went to Chile, Hong Kong and Japan. A
government-sponsored purchase is expected in early 2001 for Chile.

         In December 2000, the company was notified by a direct home product
television sales channel that FIREPOWER 911(TM) would be part of its programming
in the second quarter of 2001.

         In 1999, an agreement was executed with a strategic alliance partner,
International Aero, Inc. International Aero is the world's largest
reconfiguration company for commercial aircraft. The company and International
Aero began working on the minimum performance standards requirements established
by the Federal Aviation Administration during 1999. Heretofore, the handheld
fire extinguishers onboard all commercial aircraft contained Halon 1211. The
Geneva Peace Conference banning of Halon 1211 included a catastrophic exposure
clause called Mission Critical that allowed the airline industry an extension of
time before these extinguishers faced mandated replacement. The testing protocol
for selecting the replacement agent has been published by the FAA. FLAMEOUT(R)
meets all of the technical criteria required by the performance standards.
During 2000, the actual Gross Volume Production Tests of FLAMEOUT(R) on jet fuel
and heptane were conducted. The initial performance tests will be conducted at
International Aero's new licensed fire testing facility. During 2001, the FAA
project will be accelerated.

         International Aero's distribution rights extend to the aviation
industry, the United States Military, and the United States Gulf Coast petroleum
industry. In conjunction with the research department at International Aero, the
company is developing an alternative to another fire-fighting agent, AFFF. AFFF,
used primarily for petroleum fires, is a known cancer-causing agent. The
company's intent with International Aero is to develop a non-toxic,
non-corrosive, biodegradable alternative for AFFF. During April of 2000,
FLAMEOUT II(TM) was tested at the Ansul fire test facility in Marinette,
Wisconsin. The foam stability test was very successful. Additionally, FLAMEOUT
II(TM) was the only product tested to pass the UL162 encapsulation and
emulsification test. This new formula is being tested by Jockel Manufacturing in
Germany and by the National State Fire Department and Testing Agency in Brazil.

         The company has developed a non-toxic, biodegradable turbine cleaner
for use on jet engines. In only fifteen minutes, ULTIMATE CLEAN 668(TM) can
remove enough residue from jet engine blades that the next flight would
experience fuel savings sufficient To pay for the expense of the cleaning. The
cleaning


                                       12
<PAGE>   13

of the engines on planes is required as regular periodic maintenance. When fuel
savings are considered, this means savings for the airlines. Currently used
products produce a run-off residue with contamination by metal particles that
find their way into the ground water. The first in a series of required tests
began in November 1999, for the purpose of establishing ULTIMATE CLEAN 668(TM)
as non-corrosive regarding eight different metals. With the completion of the
corrosive metals tests, actual onboard tests will begin in order for the company
to obtain a military specification number for ULTIMATE CLEAN 668(TM). The
protocol under which ULTIMATE CLEAN 668(TM) is now being tested is for multiple
applications and is expected to culminate in a military specification number.
The use of this product will allow commercial airline companies to be in
compliance with the newly mandated EPA Water Runoff Quality Standards. The
alternatives for the airlines are very costly measures that would affect every
department of their operations. Continued use of the corrosive cleaners would
require the cleanings to be performed in designated cleaning areas, away from
the airlines' operations.

         Additionally, the Department of Defense ("DOD") is also involved with
this testing and approval. The original direction of ULTIMATE CLEAN 668(TM) was
for the commercial airline industry. The DOD's involvement has increased the
company's potential market By another 50 percent from the original projections
based on International Aero's customer base.

         Also incorporated into the test of the company's Type III concentrate
was the addition of Type II concentrate and Type II ready-to-use tests for
additional approvals. These additional approvals also increase the size of the
market for the product and the amounts of product to be used.

         The company concedes that this testing process has been very tedious
and time-consuming. The reward for the company will be a head start in the
market. Even though there have been unknowns to be dealt with, the company and
its product have not experienced any setbacks and are moving closer to an
expected final Quality Products Listing in early second quarter of 2001.

         Through our South American alliance partner, we submitted material,
product, and previous certifications to the authorities in Chile and Argentina
in order to obtain the appropriate approvals and ratings with each country. Our
existing certifications on both FIREPOWER 911(TM) and FLAMEOUT(R) have been
accepted. During January 2000, the actual state fire department tests began
taking place.

         As a result of these tests, FLAMEOUT(R) is positioned to become
officially approved in Brazil by the end of the first quarter of 2001. This
approval will also be accepted in the other Mercosur Pact countries--Argentina,
Uruguay and Paraguay.

         FIREPOWER 911(TM) was successfully tested in Chile. The first product
was shipped in September 2000 for the initial test market, under the Spanish
label "FIREPOWER LIQUIDO 911(TM)." The first commercial wholesale order is
expected in late first quarter 2001.


                                       13
<PAGE>   14

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, 2000 and 1999:

<TABLE>
<CAPTION>
Year ended December 31                  2000         1999
<S>                                    <C>          <C>
Sales                                  100.0%       100.0%
Cost of Sales                           49.1         35.6
                                      ------       ------
Gross Margin                            50.9         64.4
                                      ------       ------
Operating Expenses                    1537.5        789.6
Other Income and Expenses, Net         (20.4)        88.0
                                      ------       ------
                                      1517.1        877.6
                                      ------       ------
Net income (loss)                    (1466.2)%     (813.3)%
                                      ======       ======
</TABLE>

SALES

         Sales for 2000 decreased $41,706 or 34% from the prior year. Management
devoted considerable attention during 2000 to certain organizational matters:

o        The time and money invested by the company in developing FIREPOWER
         911(TM) as the world's only listed and rated fire extinguisher in an
         aerosol can met an unforeseen detour. When marketing began, the buyers
         were uneducated regarding listings and ratings. They were purchasing on
         price only. Other "copycat" products found their way in front of these
         buyers. With the word fire extinguisher on the front of these
         "copycats," buyers were looking at what they perceived the public would
         pay. However, when an adult sees a product demonstration for FIREPOWER
         911(TM) knock out a skillet fire, a flaming lawn mower, or a blazing
         Christmas tree before their eyes in only a matter of seconds, they
         realize that there is a degree of ease and safety for children and the
         elderly not afforded by other products. Thus a $20.00 purchase price
         for security is no longer an obstacle.


         With the buyers not being knowledgeable of the state fire codes which
         prohibit illegal sales of these "copycats," the company took the
         posture during 2000 of notifying the state fire marshals of the stores
         who offered such "copycat" products. This is a slow process, but the
         company has no other choice than to protect its investment and unique
         product by encouraging the state fire marshals' offices to issue cease
         and desist orders to companies violating the state fire codes by
         selling "copycats" which do not have the validations and listings of
         FIREPOWER 911(TM). This slow-down has resulted in knowledge to the
         buyers and pre-approvals By one of the nation's largest building
         materials superstores. The company expects to make an announcement of
         this company's initial order for its stores in the second quarter of
         2001, with product delivery during the third quarter of 2001.

o        The company, through its Strategic Alliance Partner, J and S Sales and
         Marketing, presented FIREPOWER 911(TM) to Army-Air Force Exchange
         Services ("AAFES") for sale in the military base PX stores worldwide.
         Initial approval has been received. The product was submitted to
         Quality Analysis in January 2001 and final approval came on March 14,
         2001. Shipment of orders will begin in April and our product should be
         in all 160 stores by June 1, 2001.

         The principals of J and S have a combined 52 years experience of taking
         products into the large merchandisers and building materials stores. A
         preliminary approval has been received for one of the nation's largest
         building supply chains. Official announcement will be made mid-summer
         2001.


                                       14
<PAGE>   15

o        In November 2000, the company submitted FLAMEOUT(R) to the United
         States Forestry Service for Qualification Testing as an approved
         wetting agent under the category of Wildland Fire Chemical.

o        The company introduced its super absorbent, ULTIMATE ABSORB 1103(TM),
         into the marketplace through its convenience store customers initially.
         The company began testing this super absorbent at several world-wide
         industrial companies toward the end of 2000. Some anticipated approvals
         are expected in second quarter 2001.

o        The company introduced its natural botanical skin care cosmetic line
         through the production of an infomercial and e-commerce business to
         customer programs in late 2000. Scheduled test marketing and links for
         the e-commerce began during first quarter 2001.

o        FLAMEOUT II(TM) was successfully tested at the Ansul Fire Test Facility
         in Marinette, Wisconsin. Additional preparatory tests for future U. S.
         Naval testing was conducted at International Aero's fire test facility.
         Jockel Manufacturing began tests on the product in December 2000. Tests
         were also completed in Brazil in March 2001. Formal certification will
         occur on March 29-30, 2001.

o        Summit Environmental Europe, BV was established in the Netherlands.
         While Summit Europe is effectively a distributor for Summit USA, the
         company negotiated a 40 percent revenue share of the BV profits after
         the stipulated and regulated expenses are deducted from each quarter's
         sales.

o        The National Roofing Sales Campaign, through the company's strategic
         alliance partner, Proformance Marketing, got underway in November 2000
         and began providing consistent orders for both FIREPOWER 911(TM) and
         FLAMEOUT(R) in December 2000.

o        The company expanded the tests for ULTIMATE CLEAN 668(TM) from Type III
         concentrate to include Type II concentrate and Type II ready-to-use
         certifications in order to increase the market potential and gain an
         additional approval from the United States Department of Defense.

o        International agreements negotiated and executed expanded the prospects
         for the company's products to India, Sri Lanka, South Africa, Poland,
         Scandinavia and the Middle East.

o        Contracts for retail marketing and distribution were terminated with
         the company's existing partner and a new nationally based merchandiser
         was contracted to continue the retail efforts.

         GROSS MARGIN

         Gross margin in 2000 decreased to 50.9 percent of sales from 64.4
percent of sales in 1999. Sales have not yet reached a level to reflect a gross
margin percentage with accuracy.

         OPERATING EXPENSES

         Operating expenses for 2000 increased by $270,377 over 1999's operating
expenses of $962,490. Audit fees increased in 2000 by $10,850 over 1999, due
primarily to the SEC's new requirement of obtaining auditor's review of interim
financial statements included in Forms 10-QSB in addition to auditor expense for
the annual Form 10-KSB. Bad debt expense was reduced in 2000 by $10,469 over
1999. Commissions increased by $9,770 in 2000 over 1999 as a result of sales to
the convenience store market. Marketing expenses increased by $92,341 in 2000
over 1999. Licenses and permits dropped significantly in 2000, to $651 over
1999's $5,118. Officer compensation increased by $33,544 in 2000

                                       15
<PAGE>   16

due to the addition of a new officer to the staff. Professional fees increased
to $21,278 in 2000 over $9,760 in 1999. Rent was down in 2000 by $9,245 over
1999. Repairs rose by $21,428 in 2000 over 1999. Research and development
increased to $18,575 in 2000 over $4,504 in 1999. SEC expense, which includes
the costs of preparing and filing through EDGAR all required reports, rose to
$35,238 in 2000 over $24,769 in 1999. Set up costs of $8,248 and start up costs
of $9,491 were incurred in 2000 in starting up the Pannache line of skin care
products and the related web site. Travel and entertainment expense was up to
$75,057 in 2000 from $56,128 in 1999. Warranty expense was drastically reduced
in 2000 to $518 over $17,891 in 1999.

         "Cumulative effect on prior years of the change in accounting
principle," $119,594. See "Recent Accounting Pronouncements" in "NOTES TO
FINANCIAL STATEMENTS." This represents organizational cost paid in 1998
classified as an asset and amortized in 1998 and required to be written off in
1999.

         NET INCOME (LOSS)

         The company had a net loss of $1,175,650 during 2000, as compared to a
net loss of $991,274 during 1999. The years 2000 and 1999 were years of product
and marketing organization, as reflected in the acquisition of all rights
related to the company's fire suppressant products and in the efforts exerted to
introduce the fire suppressant products to major purchasers and distributors of
these products. These efforts, while properly accounted for as expenses,
represent major investments by the company in the future marketing of its fire
suppressant products.

         LIQUIDITY AND CAPITAL RESOURCES

         The company had negative cash flow from operations of $929,793 in 2000
and negative cash flow from operations of $1,263,755 in 1999. Major contributor
to the 2000 negative cash flow from operations was the $1,175,650 net loss from
operations. Major contributors to the 1999 negative cash flow from operations
were the $991,274 net loss from operations, $330,123 in additions to inventory,
and $250,000 increase in prepaid royalties.

         The company had negative cash flow from investing activities of $41,720
and $4,523 in 2000 and 1999, respectively. The major components of both years'
negative cash flow from investing activities were acquisitions of property and
equipment.

         The company was able to stay liquid only from the sale of $822,500 of
its common stock during 2000 and $1,1334,500 of its common stock during 1999. At
year-end 2000, the company had $428,478 cash on hand.

         The company has received indications from several prospective buyers of
its fire suppressant and industrial cleaner products that a considerable market
for these products will develop during 2001. See "Outlook" below.

         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.

         The company believed that, with the approval, listing and rating of
FIREPOWER 911(TM) as a fire extinguisher, a niche market could be created. This
was supported by actions taken by the USEPA, which has been mentioned
previously, and actions of the Connecticut State Fire Marshal's Office and the



                                       16
<PAGE>   17

California State Fire Marshal's Office. In 2000, the company sought additional
enforcement by other state fire marshals' offices.

         The formula for FIREPOWER 911(TM) and FLAMEOUT(R) is one of only a few
suppressing agents certified by the EPA as a replacement for the globally banned
fire agent, Halon 1211. Initially, the Connecticut State Fire Marshal's Office
notified the company that its aerosol fire suppressant, FIREPOWER 911(TM), was
to be removed from the shelves of Home Depot, because it was not listed and
rated as a fire extinguisher. All other aerosol can products representing that
they were fire extinguishers were also to receive the same notification. While
the company was not marketing FIREPOWER 911(TM) as a fire extinguisher at that
time, the other aerosol fire suppressors subject to this action were touting
their products to be fire extinguishers.

         Due to the capabilities of FLAMEOUT(R), the company applied for the
minimum fire extinguisher rating in order to establish FIREPOWER 911(TM) as a
fire extinguisher and satisfy the State Fire Codes. The specific fire code is
ANSI/UL8 and ANSI/UL711, set forth in the NFPA Standard 10. NFPA 10 establishes
the requirements for listing and rating portable fire extinguishers.

         In February 1999, the company completed the listing and rating
requirements, placing FIREPOWER 911(TM) in a class of its own, the only listed
and rated fire extinguisher in an aerosol can available in the global
marketplace. In March 1999, the company received a letter from the Connecticut
State Fire Marshal's Office certifying that the company's FIREPOWER 911(TM) had
satisfied their fire code requirements.

         The California State Fire Marshal's Office notified the company in July
1999 that California had a unique legislative requirement in addition to the
NFPA and ANSI/UL standards for portable fire extinguishers. This is a new area,
termed Non-Halon Certification, and means that any portable fire extinguisher
whose marketing intent is directed to the residential and individual use market
must contain a formula that has been certified as Non-Halon. FLAMEOUT(R) is the
first of seven permanent listed and certified replacements for Halon 1211. It is
the only product that can meet this requirement due to the type of approval for
FLAMEOUT(R). The approval is for residential as well as commercial use. All
other products are approved for commercial use only. Applied Research
Laboratories has completed the application process on behalf of the company,
meeting the California Non-Halon requirements.

         With these requirements, approvals, listings, certifications, and
confirmations, the company has positioned FIREPOWER 911(TM) to become the only
product that can be sold in the retail residential market in California. The
completion of this certification will place FIREPOWER 911(TM) as the only
product that has survived this process, according to the California State Fire
Marshal's Office.

         In other states where Non-Halon certification has not become effective
to date, there is still the NFPA 10 requirement that all aerosol cans must be
tested, listed, and rated as a fire extinguisher. FIREPOWER 911(TM) is the only
product that possesses the validated listing and rating for an aerosol fire
extinguisher. During 2000, the company sought additional enforcement action
where the company became aware of "copycat" products of FIREPOWER 911(TM). Mass
merchandisers and direct response television companies were forced to remove
products from their programs. After months of pursuing requested enforcement
action, the company made significant stride in establishing commitments from
marketing and merchandising groups.

         Several issues have slowed down the marketing of FIREPOWER 911(TM). Its
formula is FLAMEOUT(R), a technology for fire suppression, not merely soap in an
aerosol can. A specific type of aluminum is required for the container to meet
the ANSI/UL8 portion of the validation and listing tests.


                                       17
<PAGE>   18

The size and type of can required to hold the FLAMEOUT(R) by the very rigid
standard for fire extinguishers is not manufactured in the United States. The
company must bring the empty shells in from Madrid, Spain.

         These production issues, plus the manufacturing efforts to produce a
product with a five-year shelf life, and royalties paid to the testing
laboratory calculated on each unit are examples of the unique requirements for
the pricing of the company's fire extinguishers.

         When attempts to market a product like FIREPOWER 911(TM) are met with
"copycats" which have not passed the scrutiny of the validations, listings and
ratings, an education issue is created which must be carried out at the buyers'
level. For this education effort to have meaningful effect, enforcement action
is required by the state fire marshals' offices. These enforcement actions are
public record. The company now has its marketing and merchandising
representatives equipped with information showing the buyers that there are
issues other than the cheapest product in an aerosol can.

         Presenting the information in this format in late October and November
2000, the company negotiated an agreement with a national marketing and
merchandising company, Triple S Marketing, that places the products they
represent into two of the largest home building products stores in the country.
FIREPOWER 911(TM) has been approved by the senior buyer for one of these chains
OF stores. A redesign of the home safety products section is scheduled to begin
in May 2001. Currently, FIREPOWER 911(TM) is scheduled to appear in July 2001 in
these stores.

         Another nationwide marketing company that merchandises products into
military base stores and does "in and outs" with the large mass merchandisers, J
and S Sales and Marketing, presented FIREPOWER 911(TM) in January and February
of 2001, after receiving initial approvals and submitting FIREPOWER 911(TM) for
quality analysis with two companies. On March 14, 2001, FIREPOWER 911(TM) was
approved with AAFES to go into 160 military PX stores worldwide.

         The marketing of FIREPOWER 911(TM) in the roofing industry by the
company's strategic alliance partner, Proformance Marketing, began a nationwide
campaign in November of 2000. The initial roofing supply company taking
FIREPOWER 911(TM) into all of its 82 distribution centers is Bradco. It is one
of the three largest roofing product distributors in the United States. Similar
campaigns will be initiated with the other two largest companies after
Proformance Marketing completes implementation and training of Bradco's
personnel.

         FLAMEOUT(R) has been submitted to the United States Forestry Service
through its technology development program in order to satisfy the requirements
for qualification testing as a Wildland Fire Chemical. This test protocol will
be ongoing for eighteen months. The company will be in line to secure the
approval of FLAMEOUT(R) in mid-second quarter 2002.

         FLAMEOUT(R) will be tested as a wetting agent and fire suppression
foam. When approved, FLAMEOUT(R) can be used in catastrophic wildfires that
occur every year. The company's product, in unofficial tests, has outperformed
every product with which it has been compared. Management knows this first-hand
from being on the actual fire lines in Florida during June and July of 1998.
This will become a large venue for product sales beginning with the 2002 fire
season.

         The company was also notified by a major home shopping channel that
FIREPOWER 911(TM) had been approved for programming beginning the second quarter
of 2001.

         The company's test for securing the military specification number
MIL-PRF-85704C, which will enable the company's ULTIMATE CLEAN 668(TM) jet
engine cleaner to be listed with the Department of


                                       18
<PAGE>   19

Defense Quality Products Listing, has proceeded into classification tests for
Type II concentrates and Type II ready-to-use. The testing for this
non-corrosive approval has resulted in some adjustments that had to be made to
the formula for the test on ceramic and acrylic finishes. This test is also
being done in the "water soluble" category. To the company's knowledge, there
are no other products that are aqueous-based which can accomplish the cleaning
requirements of the test protocol or the actual engine cleanings. The expanding
from the initial Type III approvals to include the two categories of Type II
greatly increased the market potential for ULTIMATE CLEAN 668(TM). Final stages
and certification are expected in second quarter 2001. The company, through its
strategic alliance partner, International Aero, has initial sales to be made to
major airlines such as United, Continental, Delta, Northwest and Eastern
airlines.

         International marketing agreements were negotiated and executed during
2000. A key element of these agreements is the revenue sharing clause that
provides the company profit sharing from the tools, devices or mechanisms into
which FLAMEOUT(R) is introduced for resale. Global agreements reached during
2000 included the formation of Summit Environmental Europe, BV, South Africa and
Canada. The company spent all of 2000 assisting its distributor partners with
necessary testing, listing, ratings and certification in order to complete the
registration process in each of these countries. Official private and
governmental approvals occurred in Chile, Brazil and Canada. FLAMEOUT(R) is
undergoing testing with Jockel Manufacturing in Germany.

         The company's development of ULTIMATE ABSORB 1103(TM) has led to a
large major corporation's approving the product's use in its manufacturing
process. The company is negotiating a corporate-wide purchasing agreement that
could be announced in the second quarter 2001.

         A company manufacturing a home fire extinguishing unit in Canada has
approved FLAMEOUT(R) over fifteen other products as the product of choice to be
utilized in its system. The Canadian company has completed securing of five
separate patents on the system. The company will be supplying FLAMEOUT(R) for
the Canadian sales and will handle distribution of the units through its other
strategic alliance partners. Initial sales will begin in second quarter 2001.

         The company's 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: inability of the company to obtain needed
additional capital, loss of personnel - particularly chief executive officer B.
Keith Parker - 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 the company's fire
suppressant or is able to discover the additives to the company's 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.

ITEM 7.  FINANCIAL STATEMENTS



                                       19
<PAGE>   20

Report of Independent Certified Public Accountants



Board of Directors and Stockholders
Summit Environmental Corporation, Inc.
Longview, Texas


We have audited the accompanying balance sheet of Summit Environmental
Corporation, Inc. (a development stage company) as of December 31, 2000 and the
related statements of operations, changes in stockholders' equity and cash flows
for each of the two years in the period ended December 31, 2000 and the period
from August 14, 1997 (date of incorporation) to December 31, 2000. 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 audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 audits provide 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 Summit Environmental
Corporation, Inc. as of December 31, 2000, and the results of its operations and
its cash flows for each of the two years in the period ended December 31, 2000
and the period from August 14, 1997 (date of incorporation) to December 31,
2000, in conformity with generally accepted accounting principles.

As described in Note 1 to the financial statements, the company changed its
method of accounting for organization costs in 1999.

/s/ Lane Gorman Trubitt, L.L.P.

LANE GORMAN TRUBITT, L.L.P.



Dallas, Texas
January 19, 2001



                                       20
<PAGE>   21

                     SUMMIT ENVIRONMENTAL CORPORATION, INC.
                          (A Development Stage Company)
                                  BALANCE SHEET
                                December 31, 2000

<TABLE>
<CAPTION>
                                     ASSETS

<S>                                                          <C>
CURRENT ASSETS
 Cash and cash equivalents                                   $   428,478
 Accounts receivable, less allowance of $44,000                   52,961
 Note receivable - related party                                  36,231
 Inventory                                                       795,857
 Prepaid insurance                                                 3,858
                                                             -----------
     Total current assets                                      1,317,385
                                                             -----------

PROPERTY AND EQUIPMENT - AT COST
 Automobiles                                                      52,145
 Office furniture and equipment                                   45,504
 Leasehold improvements                                            7,216
 Accumulated depreciation and amortization                       (15,042)
                                                             -----------
     Net property and equipment                                   89,823
                                                             -----------

OTHER ASSETS
 Prepaid royalties                                               514,000
 Patent and licenses                                           2,435,000
 Accumulated amortization on patent and licenses                (348,466)
                                                             -----------
     Total other assets                                        2,600,534
                                                             -----------

     Total assets                                            $ 4,007,742
                                                             ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
 Accounts payable                                            $    59,186
 Accrued payroll                                                  23,428
 Note payable - current portion                                    3,128
                                                             -----------
     Total current liabilities                                    85,742
                                                             -----------

LONG-TERM OBLIGATIONS
 Note payable - less current portion                              45,611
                                                             -----------

STOCKHOLDERS' EQUITY
 Preferred stock, par value $.001; 10,000,000 shares
  authorized; no shares issued                                        --
 Common stock, par value $.001; 40,000,000 shares
  authorized; 12,092,994 shares issued and outstanding            12,094
 Additional paid-in capital                                    6,637,135
 Deficit accumulated in development stage                     (2,772,840)
                                                             -----------
     Total stockholders' equity                                3,876,389
                                                             -----------

     Total liabilities and stockholders' equity              $ 4,007,742
                                                             ===========
</TABLE>


The accompanying notes are an integral part of these statements.

                                       21
<PAGE>   22

                     SUMMIT ENVIRONMENTAL CORPORATION, INC.
                          (A Development Stage Company)
                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                              Year Ended December 31,       Period from
                                                          ----------------------------  August 31, 1997 to
                                                               2000         1999         December 31, 2000
                                                          ------------    ------------  -------------------
<S>                                                       <C>             <C>           <C>
SALES                                                     $     80,184    $    121,890    $    457,305

COST OF SALES                                                   39,353          43,402         140,200
                                                          ------------    ------------    ------------

     Gross profit                                               40,831          78,488         317,105
                                                          ------------    ------------    ------------

OPERATING EXPENSES
 Advertising                                                     4,345             946          16,557
 Amortization                                                  162,348         162,326         358,163
 Audit fees                                                     30,170          19,320          66,065
 Automobile expenses                                            28,890          28,135          78,809
 Bad debt expense                                                3,983          14,452          48,435
 Consulting fees                                                 7,500              --          37,494
 Contract services                                               3,272           1,482           6,617
 Commissions                                                    12,770           3,000          32,003
 Contributions                                                   1,585           1,045           3,765
 Depreciation                                                   19,667           7,973          29,582
 Dues and subscriptions                                          1,739           7,081           8,820
 Insurance                                                      32,102          22,428          69,305
 Marketing                                                     231,768         139,427         610,954
 Miscellaneous                                                  10,192           8,774          27,158
 Licenses and permits                                              651           5,118          28,194
 Office expenses                                                25,376          20,168          69,437
 Officer compensation                                          188,747         155,203         457,190
 Payroll taxes                                                  24,734          21,673          60,236
 Postage and delivery                                           30,900          21,460          68,461
 Press releases                                                 18,824          14,191          34,691
 Printing and reproduction                                       3,082             251           8,525
 Professional fees                                              21,278           9,760          33,138
 Rent                                                           41,963          51,208         127,419
 Repairs                                                        25,884           4,456          35,381
 Research and development                                       18,575           4,504          23,079
 Royalties                                                       3,944           5,780           9,724
 Salaries - office                                             110,728          97,740         268,374
 SEC expense                                                    35,238          24,769          74,208
 Set up costs                                                    8,248              --           8,248
 Start up costs                                                  9,491              --           9,491
 Taxes                                                             190           4,879           7,418
 Telephone and utilities                                        39,108          30,922          90,131
 Travel and entertainment                                       75,057          56,128         178,617
 Warranty expense                                                  518          17,891          18,409
                                                          ------------    ------------    ------------
     Total operating expenses                                1,232,867         962,490       3,004,098
                                                          ------------    ------------    ------------

Net loss from operations                                    (1,192,036)       (884,002)     (2,686,993)

OTHER INCOME (EXPENSE)
 Interest income                                                30,053           9,237          44,329
 Interest expense                                               (7,704)         (3,145)        (10,849)
 Loss on sale of assets                                         (8,477)             --          (8,477)
 Miscellaneous                                                   2,514           6,230           8,744
                                                          ------------    ------------    ------------
                                                                16,386          12,322          33,747
                                                          ------------    ------------    ------------

Net loss before income tax                                  (1,175,650)       (871,680)     (2,653,246)

 Income taxes                                                       --              --              --
                                                          ------------    ------------    ------------

Net loss before cumulative effect of the
change in accounting principle                              (1,175,650)       (871,680)     (2,653,246)

 Cumulative effect on prior years of change in
 accounting principle, net of tax                                   --        (119,594)       (119,594)
                                                          ------------    ------------    ------------
NET LOSS                                                  $ (1,175,650)   $   (991,274)   $ (2,772,840)
                                                          ============    ============    ============

NET LOSS PER SHARE before
cumulative effect of the change in accounting principle   $      (0.10)   $      (0.11)   $      (0.35)

 Cumulative effect on prior years of the change in
 accounting principle                                               --           (0.02)          (0.02)
                                                          ------------    ------------    ------------
NET LOSS PER SHARE                                        $      (0.10)   $      (0.13)   $      (0.37)
                                                          ============    ============    ============

WEIGHTED AVERAGE SHARES                                     11,728,336       7,611,845       7,616,064
</TABLE>

The accompanying notes are an integral part of these financial statements.


                                       22
<PAGE>   23

                     SUMMIT ENVIRONMENTAL CORPORATION, INC.
                         (A Development Stage Company)
                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
            For the period from August 14, 1997 to December 31, 2000

<TABLE>
<CAPTION>
                                                                                                     Deficit
                                                                                                   Accumulated
                                                           Common Stock                                in
                                                      --------------------------    Additional     Development
                                                        Shares         Amount     Paid-in Capital     Stage          Total
                                                      -----------    -----------  ---------------  -----------    -----------
<S>                                                   <C>            <C>          <C>              <C>            <C>
Balances, August 14, 1997                                      --    $        --    $        --    $        --    $        --

Issued for cash ($.46 per share)                          100,000          1,000         45,000             --         46,000
Net earnings                                                   --             --             --         40,762         40,762
                                                      -----------    -----------    -----------    -----------    -----------

Balances, December 31, 1997                               100,000          1,000         45,000         40,762         86,762

Adjustment for 33.6-for-1 stock split                   3,260,000          2,360         (2,360)            --             --
Sale of 500,000 shares ($.20 per share)                   500,000            500         99,500             --        100,000
Sale of 1,000,000 shares ($.29 per share)               1,000,000          1,000        289,000             --        290,000
Summit Environmental Corporation Inc.
  Merger 750,000 shares (.001 per share)                  750,000            750           (750)            --             --
Sale of 250,000 shares ($.60 per share)                   250,000            250        149,750             --        150,000
Sale of 384,840 shares ($2.50 per share)                  384,840            385        961,715             --        962,100
122,000 shares issued for services ($.14 per share)       122,000            122         17,372             --         17,494
750,000 shares issued for patent ($2.50 per share)        750,000            750      1,874,250             --      1,875,000
Sale of 289,854 shares ($2.49 per share)                  289,854            289        721,346             --        721,635
Net loss                                                       --             --             --       (646,678)      (646,678)
                                                      -----------    -----------    -----------    -----------    -----------

Balances, December 31, 1998                             7,406,694          7,406      4,154,823       (605,916)     3,556,313

Sale of 123,000 shares ($2.50 per share)                  123,000            123        307,377             --        307,500
Sale of 1,704,000 shares ($.50 per share)               1,704,000          1,704        850,296             --        852,000
Return of 10,000 shares ($2.50 per share)                 (10,000)           (10)       (24,990)            --        (25,000)
Conversion of long-term debt to 260,000
  shares ($0.50 per share)                                260,000            260        129,740             --        130,000
Correction of shares outstanding                           (1,200)            --             --             --             --
Issuance of 875,000 shares ($.40 per share) as
   satisfaction for related party note payable            875,000            875        349,125             --        350,000
Net loss                                                       --             --             --       (991,274)      (991,274)
                                                      -----------    -----------    -----------    -----------    -----------

Balances, December 31, 1999                            10,357,494         10,358      5,766,371     (1,597,190)     4,179,539

Sale of 1,533,000 shares ($.50 per share)               1,533,000          1,533        764,967             --        766,500
Issuance of 140,000 shares upon exercise
 of stock options ($.40 per share)                        140,000            140         55,860             --         56,000
62,500 shares issued for services ($.80 per share)         62,500             63         49,937             --         50,000
Net loss                                                       --             --             --     (1,175,650)    (1,175,650)
                                                      -----------    -----------    -----------    -----------    -----------

Balances, December 31, 2000                            12,092,994    $    12,094    $ 6,637,135    $(2,772,840)   $ 3,876,389
                                                      ===========    ===========    ===========    ===========    ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.


                                       23
<PAGE>   24


                     SUMMIT ENVIRONMENTAL CORPORATION, INC.
                          (A Development Stage Company)
                            STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                             Year Ended December 31,      Period from
                                                            -------------------------  August 31, 1997 to
                                                               2000            1999    December 31, 2000
                                                            -----------    ----------- ------------------
<S>                                                         <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                                  $(1,175,650)   $  (991,274)   $(2,772,840)
  Adjustments to reconcile net loss to cash
   used in operating activities
     Amortization                                               162,348        162,326        358,163
     Bad debt expense                                             3,983         14,452         48,435
     Cumulative effect of change in accounting principle             --        119,594        119,594
     Depreciation                                                19,667          7,973         29,582
     Loss on sale of assets                                       8,477             --          8,477
     Common stock issued for services                            50,000             --         67,494
     Change in assets and liabilities:
       Accounts receivable                                       28,245          7,584       (137,627)
       Inventory                                                (66,673)      (330,124)      (795,857)
       Prepaid expenses                                         (14,686)      (253,172)      (517,858)
       Refundable income taxes                                       --          7,252             --
       Accounts payable                                          47,785         (7,800)        59,186
       Accrued liabilities                                        6,711           (566)        23,428
                                                            -----------    -----------    -----------
          Net cash used in operating activities                (929,793)    (1,263,755)    (3,509,823)
                                                            -----------    -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
  Acquisition of property and equipment                         (41,720)        (4,523)       (67,446)
  Organization costs                                                 --             --       (129,291)
  Acquisition of licenses                                            --             --        (60,000)
                                                            -----------    -----------    -----------
     Net cash used in investing activities                      (41,720)        (4,523)      (256,737)
                                                            -----------    -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES
  Loan proceeds                                                      --        130,000          6,554
  Loan principal repayments                                      (8,366)        (5,069)       (18,251)
  Loan principal repayments - related party                          --       (150,000)      (150,000)
  Proceeds from sale of stock                                   822,500      1,134,500      4,356,735
                                                            -----------    -----------    -----------
     Net cash provided by financing activities                  814,134      1,109,431      4,195,038
                                                            -----------    -----------    -----------

NET INCREASE (DECREASE) IN CASH                                (157,379)      (158,847)       428,478

Cash - Beginning of period                                      585,857        744,704             --
                                                            -----------    -----------    -----------

Cash - End of period                                        $   428,478    $   585,857    $   428,478
                                                            ===========    ===========    ===========

SUPPLEMENTAL INFORMATION
  Cash paid for interest                                    $     7,704    $     3,145    $    11,572
  Cash paid for income taxes                                         --             --          7,252
  Issuance of common stock for patent                                --             --      1,875,000
  Issuance of note payable for patent                                --             --        500,000
  Issuance of notes payable to purchase equipment                50,795         51,766        102,561
  Conversion of notes payable to common stock                        --        350,000        350,000
  Conversion of long-term debt to common stock                       --        130,000        130,000
  Conversion of accounts receivable to note receivable           36,231             --         36,231
</TABLE>


The accompanying notes are an integral part of these financial statements.


                                       24
<PAGE>   25

                     Summit Environmental Corporation, Inc.
                          NOTES TO FINANCIAL STATEMENTS

1.       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.

         The company markets fire suppression materials, environmentally safe
         cleaning chemicals and natural, botanical cosmetic products. The
         products are proprietary or are under exclusive license. Marketing
         efforts include "infomercials" and other television and radio
         promotion, videotapes, and personal demonstrations. Products are
         marketed domestically and internationally.

         Recent Accounting Pronouncements

         During 1999, the company changed its method of accounting for
         organizational costs to conform with new requirements of the American
         Institute of Certified Public Accountants Statement of Position 98-5.
         The effect of this change was to increase the net loss for 1999 by
         $93,736 ($0.01 per share). The cumulative effect of the change of
         $119,594 ($0.01 per share) is shown as a one-time charge to operations
         in the 1999 statement of operations.

         The Financial Accounting Standards Board has released FAS 138,
         "Accounting for Certain Derivative Instruments and Certain Hedging
         Activities" (An amendment of FASB Statement No. 133), FAS 139,
         "Rescission of FASB Statement No. 53 and amendments to FASB Statements
         No. 63, 89 and 121," and FAS 140, "Accounting for Transfers and
         Servicing of Financial Assets and Extinguishments of Liabilities" (A
         replacement of FASB Statement No. 125). The company believes that the
         impact of these new standards will not have a material effect on the
         company's consolidated financial position, results of operations or
         disclosures.

         Revenue Recognition

         Revenues from sales of materials and products are recorded at the time
         the goods are shipped or when title passes.

         Cash

         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.

         For purposes of the statement of cash flows, the company considers all
         highly liquid investments with a maturity of three months or less when
         purchased to be cash equivalents.

         Inventory

         Inventory is recorded at the lower of cost or market, with cost being
         determined by the first-in, first-out method.

         Intangible Assets

         Patents and licenses are recorded at cost. Amortization is computed on
         the straight-line method over fifteen years.


                                       25
<PAGE>   26

                     Summit Environmental Corporation, Inc.
                          NOTES TO FINANCIAL STATEMENTS


1.       SIGNIFICANT ACCOUNTING POLICIES (continued)

         Income Taxes

         Deferred income taxes are determined using the liability method under
         which deferred tax assets and liabilities are determined based upon
         differences between financial accounting and tax bases of assets and
         liabilities.

         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.

         Leasehold improvements are amortized over the lives of the respective
         leases or the service lives of the improvements, whichever is shorter.

         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.

         The estimated service lives used in determining depreciation and
         amortization are:

<TABLE>
<CAPTION>
              Description                                Estimated Service Life
              -----------                                ----------------------
<S>                                                      <C>
              Automobiles                                         5 years
              Office furniture and equipment                    5 - 7 years
              Leasehold improvements                              4 years
</TABLE>

         Advertising and Marketing

         Advertising and marketing costs are expensed as incurred, which totaled
         $254,937 and $154,564 for 2000 and 1999, respectively.

         Use of Estimates

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect certain reported amounts and disclosures.
         Accordingly, actual results could differ from those estimates.

         Per Share Information

         Per share information is based on the weighted average number of common
         stock and common stock equivalent shares outstanding. Only basic
         earnings per share are shown, as there are no dilutive items.

2.       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 $500,000 and 875,000 shares of
         common stock of the company to be issued and delivered to BioGenesis
         Enterprises, Inc.


                                       26

<PAGE>   27

                     Summit Environmental Corporation, Inc.
                          NOTES TO FINANCIAL STATEMENTS


3.       LICENSES

         Licenses for exclusive marketing rights to various products have been
         acquired for fees totaling $60,000 from a related party. The company is
         the manufacturer/supplier of the products.

4.       LEASES

         The company is obligated under various operating leases for equipment,
         vehicles, and office and warehouse space. Management expects that, in
         the normal course of business, leases that expire will be renewed by
         other leases; thus it is anticipated that future minimum lease
         commitments will not be less than the amount shown for the year ending
         December 31, 2000. Rent expense for all operating leases was
         approximately $61,317 and $70,400 for 2000 and 1999, respectively.

         At December 31, 2000, approximate rental commitments under all
         noncancellable leases having terms in excess of one year are as
         follows:

<TABLE>
<CAPTION>
              Year Ending
              December 31,
              ------------
<S>                                                          <C>
                  2001                                       $ 8,177
                  2002                                           541
                  2003                                            --
                                                             -------
              Total minimum lease payments                   $ 8,718
                                                             =======
</TABLE>

5.       COMMON STOCK

         Common Stock Options

         The sole director 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 will 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.

         In September 1999, the Board of Directors granted options to purchase
         350,000 shares of common stock to employees and directors pursuant to
         the Plan.


                                       27
<PAGE>   28


                     Summit Environmental Corporation, Inc.
                          NOTES TO FINANCIAL STATEMENTS


5.       COMMON STOCK (continued)

         The following schedule summarizes the changes in the Plan for the two
         years ended December 31, 2000:

         Options

<TABLE>
<CAPTION>
                                                                               Option Price
                                                                         ------------------------
                                                     Number of Shares    Per Share    Total Price
                                                     ----------------    ---------    -----------
<S>                                                  <C>                 <C>          <C>
        Outstanding at December 31, 1998                      --           $  --         $     --


        For the year ended December 31, 1999:
             Granted                                     350,000            1.00          350,000
             Exercised                                        --              --               --
                                                        --------        --------         --------

        Outstanding at December 31, 1999                 350,000            1.00          350,000

        For the year ended December 31, 2000:
             Granted                                          --              --               --
             Exercised                                        --              --               --
             Expired                                     (85,000)           1.00          (85,000)
                                                        --------        --------         --------

        Outstanding at December 31, 2000
             (127,500 exercisable)                       265,000        $   1.00         $265,000
                                                        ========        ========         ========
</TABLE>


         Warrants

         During 2000 and 1999, the company issued warrants to acquire 766,500
         and 982,000 shares, respectively, for $1.00 per share through June 30,
         2002 in connection with a private placement.

         Stock Options

         In compliance with Statement of Financial Accounting Standards No. 123,
         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:

<TABLE>
<CAPTION>
                                       2000                              1999
                          ------------------------------    ------------------------------
                           As Reported       Pro forma       As Reported      Pro forma
                          -------------    -------------    -------------    -------------
<S>                       <C>              <C>              <C>              <C>
         Net loss         $   1,175,647    $   1,198,942    $    (991,274)   $  (1,036,560)
         Loss per share   $        (.10)   $        (.10)   $       (0.13)   $       (0.14)
</TABLE>


         The fair value of all options and warrants are estimated using the
         Black-Scholes option-pricing model with the following weighted-average
         assumptions: risk free interest rate 6.78%, expected life 10 years;
         expected volatility 162%; dividend yield 0%; and an exercise price of
         $1.00. 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.


                                       28
<PAGE>   29

                     Summit Environmental Corporation, Inc.
                          NOTES TO FINANCIAL STATEMENTS


5.       COMMON STOCK (continued)

         Contingency Regarding Some Shares

         During the proposed merger period with Summit Technologies, Inc., the
         company filed a registration statement with the Securities and Exchange
         Commission ("the Commission") on March 26, 1998 related to the proposed
         merger, naming Summit Technologies, Inc. as the entity proposed to be
         merged into the company. Summit Technologies, Inc. subsequently sold
         810,840 shares of its common stock in an offering intended to be exempt
         from registration pursuant to the provisions of Section 4(2) of the
         Securities Act of 1933 and of Regulation D, Rule 506 of the Commission.

         It is possible, but not certain, that the filing of the registration
         statement by the company and the manner in which Summit Technologies,
         Inc. conducted the sale of the 810,840 shares of common stock
         constituted "general advertising or general solicitation" by the
         company. General advertising and general solicitation are activities
         that are prohibited when conducted in connection with an offering
         intended to be exempt from registration pursuant to the provision of
         Regulation D, Rule 506 of the Commission. The company does not concede
         that there was no exemption from registration available for this
         offering. Nevertheless, should the aforementioned circumstances have
         constituted general advertising or general solicitation, the company
         would be denied the availability of Regulation D, Rule 506 as an
         exemption from the registration requirements of the Securities Act of
         1933 when it sold the 810,840 shares of common stock after March 26,
         1998. Should no exemption from registration have been available with
         respect to the sale of these shares, the persons who bought them would
         be entitled, under the Securities Act of 1933, to the return of their
         subscription amounts if actions to recover such monies should be filed
         within one year after the sales in question. Through December 31, 1999,
         the company had refunded 10,000 shares. The refund period has expired
         and no further refunds are required.

6.       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.

         Sales totaling $6,003 and $60,114 were made to related parties in 2000
         and 1999, respectively.

         At December 31, 2000, accounts receivables from related parties totaled
         $11,850 and a note receivable from a related party totaled $36,231.

         The company acquired a patent from BioGenesis Enterprises, Inc. on
         November 2, 1998 (see Note 2). The purchase agreement requires the
         company to pay BioGenesis a periodic royalty of $.50 per 16-oz. can and
         an equivalent (approximately 7 percent) on all other product categories
         using the fire suppressant technology. 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 30th of each month based upon invoiced sales through the close
         of the preceding month. The company has prepaid royalties to BioGenesis
         totaling $499,000 as of December 31, 2000.

         During 1998, the company purchased a license for various products from
         an entity with common shareholders and management members of the
         company, and paid $60,000 for such costs.

7.       CONCENTRATIONS

         Approximately 63 percent and 35 percent of sales were made to three
         customers in 2000 and 1999, respectively. The three customers were
         different for each of the two years. Accounts receivable from those
         three customers of 2000 were $1,920.


                                       29
<PAGE>   30

                     Summit Environmental Corporation, Inc.
                          NOTES TO FINANCIAL STATEMENTS


8.       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.

         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:

<TABLE>
<CAPTION>
                                              2000        1999
                                           ---------    ---------
<S>                                        <C>          <C>
         Deferred tax assets:
         Deferred tax asset - current      $  14,960    $  14,960
         Deferred tax asset - noncurrent     939,073      530,389
         Valuation allowance                (949,198)    (542,766)
                                           ---------    ---------
           Deferred tax assets, net            4,835        2,583
                                           ---------    ---------

         Deferred tax liabilities:
         Current                                  --        2,583
         Noncurrent                            4,835           --
                                           ---------    ---------
                                               4,835        2,583
                                           ---------    ---------
                                           $      --    $      --
                                           =========    =========
</TABLE>

         The valuation allowance was established to reduce the deferred tax
         asset for the amounts that will more likely than 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
         carryforward. The valuation allowance increased $406,432 and $344,866
         in 2000 and 1999, respectively. The company has a net operating loss
         carryforward of approximately $2,690,000 of which $605,000 expires in
         2018, $882,000 expires in 2019 and $1,203,000 expires in 2020.

9.       NOTE PAYABLE

         As of December 31, 2000, the company was obligated under a note
         payable, described as follows:

<TABLE>
<CAPTION>
                                                                Interest    Monthly
               Creditor          Collateral       Maturity        Rate      Payment     Total
               --------          ----------     -------------   --------    --------    -------
<S>                              <C>            <C>             <C>         <C>         <C>
         Austin Bank             Motor home     April 7, 2005     9.00%       $644      $48,739
         Less current portion                                                            (3,128)
                                                                                        -------
                                                                                        $45,611
                                                                                        =======
</TABLE>

         Interest costs incurred and charged to expense for 2000 and 1999 were
         $7,704 and $3,145, respectively.

         The aggregate maturities of notes payable for each of the five years
         subsequent to December 31, 2000 are as follows:

<TABLE>
<S>                                            <C>
                  2001                         $ 3,128
                  2002                           3,843
                  2003                           4,204
                  2004                           4,598
                  2005                          32,966
                                               -------
                                               $48,739
                                               =======
</TABLE>


                                       30
<PAGE>   31

                     Summit Environmental Corporation, Inc.
                          NOTES TO FINANCIAL STATEMENTS


10.      LEGAL PROCEEDINGS

         On January 27, 1999, the company received a citation, Cause No.
         CC-00-934-A, Infinity Broadcasting Corporation of Dallas d/b/a KLUV
         98.7 FM and 1190 AM vs. Summit Environmental Corporation, Inc., which
         involved a disagreement as to the billing of radio advertising cost.
         Subsequent to year end, this suit was settled for $24,000. This
         liability is included in accounts payable at December 31, 2000.

11.      SUBSEQUENT EVENT (UNAUDITED)

         In February 2001, the Board approved a private placement offering of
         250,000 shares at $0.50 per share. Funding has been received for
         200,000 of these shares.


                                       31
<PAGE>   32



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

         Set forth below are the names and terms of office of each of the
directors, executive officers and significant employees of the company and a
description of the business experience of each.

<TABLE>
<CAPTION>
                                                               OFFICE HELD   TERM OF
           NAME                         OFFICE                    SINCE      OFFICE
           ----                         ------                 -----------   -------
<S>                             <C>                            <C>           <C>
B. Keith Parker, 52             Chief Executive Officer and        1997        4-01
                                Director

Don Hendon, 58                  President, Chief Financial         1997        4-01
                                Officer and Director

Paula Parker, 47                Vice President, Secretary          1997        4-01
                                And Director

Dean Haws, 31                   Director                           1997        4-01

John Brooks, 53                 Director                           1999        4-01

James J. Roach, 53              Director                           1997        4-01

Thomas J. Kenan, 69             Director                           1997        4-01

Mohsen Amiran, 51               Director                           1999        4-01

Wilton Dennis Stripling, 59     Director                           2000        4-01
</TABLE>

KEITH PARKER, CHAIRMAN, CEO

         Mr. Parker graduated from Texas A & M University at Commerce and
pursued graduate studies in tax law, estate planning and philosophy at Southern
Methodist University and Southwest Texas State University. He began a career in
financial and tax planning in 1973, is a licensed financial planner and has
earned numerous industry awards for production. In 1995, he and Paula Parker,
his spouse, organized Moonlighting Distribution Corporation and began the
distribution of more than 30 products, many of which they developed themselves.
In August 1997, they organized Summit Technologies, Inc.

DON HENDON, PRESIDENT, CFO

         Mr. Hendon has thirty-five years in public accounting in the areas of
taxation and litigation. He is a member of the Texas Society of Certified Public
Accountants and East Texas Chapter of Certified Public Accountants. He was a
member and worked in the development of the Texas Society of Certified Public
Accountants Litigation Conference and Litigation Services Member Section
steering committee.

         He is a graduate of Sam Houston State University with a degree in
Business Administration. He received his CPA Certificate in 1971.


                                       32
<PAGE>   33

PAULA B. PARKER, VICE PRESIDENT SHAREHOLDER AND PUBLIC RELATIONS

         Ms. Parker is a former runway model, an accomplished businesswoman, and
a strong competitor. She was responsible for developing the first freestanding
ATM program in conjunction with the American Bankers Association in the state of
Texas. She also developed a successful franchise program for Great American
Foods and facilitated its growth from three units to nearly 50 in five states in
24 months. During this time, Ms. Parker worked with then Arkansas Secretary of
State Bill McQuen and Governor Bill Clinton as the liaison between the governor
and the restaurant industry. In late 1995, Ms. Parker put her marketing skills
to the test by combining efforts with Keith Parker to form Summit Environmental
Corporation.

         Ms. Parker is extensively involved in her community and has served as
Chamber of Commerce President, has been a United Way Board Member and an
American Red Cross Board Member. She has served on the education committee of
the Miss Texas Scholarship Pageant Association. A graduate of the University of
Colorado - Bank Marketing Association, Ms. Parker earned Marketing and Finance
degrees from the Association.

DEAN HAWS, DIRECTOR

         Mr. Haws has been the owner and operator of a satellite dish sales and
installation company, Gilmer Satellites of Gilmer, Texas, for the last ten
years. He has also been active in the oil field service business and the ostrich
business.

JAMES J. ROACH, DIRECTOR

         Mr. Roach is currently the President of Electrical Generation
Technologies, which specializes in the development and installation of network
communications. He is a retired Connecticut State Police sergeant and owns a
private detective and security company. His clients include many insurance
companies and the State of Connecticut.

JOHN BROOKS, DIRECTOR

         Mr. Brooks is a retired Naval Aviation Maintenance Officer with
twenty-five years of active naval service. In 1993, he joined Mach II Aviation,
an FAA repair station, directing the development of global positioning system
(GPS) applications. He was responsible for developing differential corrected GPS
as an alternative to existing instrument landing systems, for the approval of
SCAT-1 systems under FAA order 8400.11. He managed the first installation and
approval of supplementary GPS receivers for oceanic navigation. In 1995, he
joined International Aero, Inc. as director of purchasing. In 1997, he was
reassigned as its director of research in its fire protection laboratory. He
began focusing on aerospace applications of encapsulated micro aerosol agents
and pyrotechnic gas generators. His recent research has concentrated on
aerospace fire protection and suppression systems testing, aimed at developing
alternative systems to replace existing Halon 1301 and 1211 installations.

THOMAS J. KENAN, DIRECTOR

         Mr. Kenan has practiced securities and corporation law in Oklahoma
City, Oklahoma for the last 35 years. He is presently affiliated with Fuller,
Tubb, Pomeroy & Stokes in an "of counsel" capacity.

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


                                       33
<PAGE>   34

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 Khameni, 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.

         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.

DR. WILTON DENNIS STRIPLING, DIRECTOR

         Dr. Stripling is an orthopaedic surgeon in the Dallas area and has been
practicing medicine since 1968. He is a member of the Dallas County Medical
Society, Texas Medical Society, American Academy of Orthopaedic Surgeons, and
American Society for Surgery of the Hand. He is currently the President-elect of
Presbyterian Hospital of Dallas Medical Staff, Chair of Quality and Resource
Management Committee and a member of numerous committees for Presbyterian
Hospital of Dallas.


                                       34
<PAGE>   35



ITEM 10. EXECUTIVE COMPENSATION

         Mr. Parker, the chief executive officer of Summit Environmental
Corporation, receives a salary of $5,000 a month. Mr. Hendon, the president,
receives a salary of $3,500 a month. Mrs. Parker, vice president, receives a
salary of $4,000 a month.

         Pursuant to the Corporation's 1998 Stock Option Plan, on September 21,
1999, the officers issued options to purchase shares of Common Stock of the
Corporation at $1.00 a share to the following persons in the amounts and subject
to the vesting conditions set forth opposite their names:

<TABLE>
<CAPTION>
                                                Incentive Stock     Non-Qualified Stock
       Grantee                  Position            Options              Options              Service Date
       -------                  --------        ---------------     -------------------       ------------
<S>                          <C>                 <C>                 <C>                      <C>
Don Hendon (1)               Officer-Director        50,000                                     12-14-97
Jennifer Woolbert (2)        Employee                10,000                                     08-14-97
Nicole Parker (2)            Employee                10,000                                     01-04-99
Ann Graff (2)                Employee                10,000                                     05-12-98
Laurie Grigsby (2)           Employee                10,000                                     07-10-98
Val Allen (2)                Employee                10,000                                     06-01-99
Dean Haws (1)                Director                                     40,000
Jim Roach (1)                Director                                     40,000
Thomas J. Kenan (1)          Director                                     40,000
Chuck Wilde (1)              Director                                     40,000
John Brooks (1)              Director                                     40,000
Mohsen Amiran (1)            Consultant                                   25,000
Tom Rouse (1)                Consultant                                   25,000
</TABLE>

(1) 25% vests the day granted. 25% vests on each of 1-1-2000, 1-1-2001, and
    1-1-2002 if the grantee is still an officer or director of the company.

(2) 25% vests on the first, second, third and fourth anniversaries of the date
    of initial employment.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table shows information as of December 31, 2000 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:

<TABLE>
<CAPTION>
                                                    NO. OF         % OF
         SUMMIT ENVIRONMENTAL CORP.                 SHARES         CLASS
         --------------------------                 ------         -----
<S>                                              <C>               <C>
         B. Keith Parker                         2,296,805(1)       19.4
         521 Delia
         Longview, TX 75601

         Don Hendon                                223,740           1.9
         521 Delia
         Longview, TX 75601
</TABLE>


                                       35
<PAGE>   36


<TABLE>
<S>                                              <C>               <C>
         Paula Parker                              446,000(2)        3.7
         521 Delia
         Longview, TX 75601

         Moonlighting Distribution                 350,000(3)        2.9
         Corporation
         521 Delia
         Longview, TX 75601

         Dean Haws                                 337,100           2.8
         P. O. Box 1071
         Gilmer, TX 75644

         John Brooks                                35,000           0.3
         11817 Westar Lane
         Burlington, WA  98233

         James J. Roach                             30,000           0.2
         1255 Middlebury Road
         Middlebury, CT  06762

         Thomas J. Kenan                           190,620(4)        1.6
         212 NW 18th Street
         Oklahoma City, OK  73103

         BioGenesis Enterprises, Inc.            1,075,000(5)       12.1
         7420 Alban Station, Ste. B-208
         Springfield, VA  22150

         Mohsen Amiran                           1,275,700(5)       12.3
         7420 Alban Station, Ste. B-208
         Springfield, VA  22150

         Wilton Dennis Stripling                   675,000           5.5
         5230 Walnut Hill Lane, Ste. 306
         Dallas, TX  75231

         Officers and Directors                  5,302,965          42.2
         as a group (7 persons)
</TABLE>


(1) Mr. Parker directly owns 1,850,805 shares of common stock. He is attributed
the beneficial ownership of 51,500 shares owned by a minor son, Casey Joe Parker
and 44,500 shares owned by a daughter, Leslie Nicole Parker. He beneficially
owns an additional 350,000 shares through his controlling stock ownership and
position as a director of Moonlighting Distribution Corporation, which directly
owns such 350,000 shares. These same 446,000 shares are attributed to Paula
Parker. See footnote (2).

(2) Mrs. Parker, who is the spouse of B. Keith Parker, is attributed 350,000
shares through her controlling stock ownership and position as a director of
Moonlighting Distribution Corporation, the record owner of the shares. She is
attributed the beneficial ownership of 51,500 shares owned by a minor son, Casey
Joe Parker and 44,500 shares owned by a daughter, Leslie Nicole Parker. These
same 446,000 shares are attributed to Mr. Parker.


                                       36
<PAGE>   37


(3) Some 52.5 percent of the stock of Moonlighting Distribution Corporation is
owned by B. Keith Parker and Paula Parker, husband and wife, who also are
directors of such company. These 350,000 shares are also attributed to Mr. and
Mrs. Parker by reason of their controlling stock ownership of such company and
their positions as directors of it.

(4) These shares are owned by the Marilyn C. Kenan Trust, which trust is under
the control of Marilyn C. Kenan, its sole trustee and beneficiary for her life.
Mrs. Kenan is the spouse of Mr. Kenan. Mr. Kenan disclaims any beneficial
interest in shares of capital stock of Summit Environmental Corporation owned by
this trust.

(5) Dr. Amiran directly owns 200,000 shares of common stock. He beneficially
owns another 1,075,000 shares through his controlling stock ownership and
position as a director of BioGenesis Enterprises, Inc., which directly owns such
1,075,000 shares.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Summit Technologies, prior to its merger with the company, paid $30,000
to Moonlighting Distribution Corporation for the exclusive license to distribute
products manufactured by Moonlighting Distribution Corporation - STRESSEX(TM),
PANNACHE(TM), and TRIM-AWAY(TM). B. Keith Parker and his spouse, Paula Parker,
who were officers and directors of Summit Technologies, own 52.5 percent of the
capital stock of Moonlighting. Summit Environmental will pay royalties to
Moonlighting for the exclusive licensing rights to the products from
Moonlighting.

         Summit Technologies' and, now, this company's distribution rights to
BioGenesis's fire suppression products were acquired not from BioGenesis, but,
rather, from Moonlighting Distribution Corporation, which had acquired these
rights before Summit Technologies was formed. In exchange for the transfer of
these rights to Summit Technologies, it issued 350,000 shares of its common
stock to Moonlighting Distribution Corporation, paid $10,000 to Moonlighting,
and will pay to Moonlighting a royalty of $0.50 for each 16-ounce can of
FIREPOWER 911(TM), $0.35 for each 1-liter can of FIREPOWER 911(TM), and $0.50
for each gallon of FLAMEOUT(R).

         On November 2, 1998, BioGenesis assigned to Summit Technologies all
patents and intellectual property rights associated with the fire suppressant
products. Because of the company's merger with Summit Technologies, these rights
are now owned by the company. The obligation to pay licensing fees to BioGenesis
merged with the acquisition of the patent rights and, accordingly, was
extinguished. The obligation to pay the above-described annual royalties to
Moonlighting, however, did not so merge and will continue in effect during the
term of the exclusive license obtained from Moonlighting.

         PARENTS OF THE COMPANY

         Moonlighting Distribution Corporation ("Moonlighting") is affiliated
with the company through the common control of it and the company by B. Keith
Parker and Paula Parker, husband and wife, who are directors of each
corporation, own 52.5 percent of the capital stock of Moonlighting (which itself
owns 2.9 percent of the capital stock of the company) and own of record 19.4
percent of the capital stock of the company.


                                       37
<PAGE>   38


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)      EXHIBITS

         The following exhibits are filed, by incorporation by reference, as
part of this Form 10-KSB:


         2.1   --   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.*

        10.1   --   1998 Stock Option Plan adopted by Summit Environmental
                    Corporation, Inc.*

        10.3   --   Limited Exclusive Marketing Bilateral Agreement Between
                    Moonlighting Distribution Corporation-USA and Summit
                    Technologies, Inc. (Poder Sexual, Ultimate Stressex and/or
                    Poder 24)*

        10.4   --   Limited Exclusive Marketing Bilateral Agreement among B.
                    Keith Parker, individually and as Chairman of the Board and
                    CEO of Moonlighting Distribution Corporation-USA, d/b/a
                    Moonlighting International, and Summit Technologies, Inc.
                    (FireKare, FIREPOWER 911(TM), Super Cold Fire, and FLAME
                    OUT(R))*

        10.6   --   Exclusive Marketing Bilateral Agreement between Moonlighting
                    Distribution Corporation-USA and Summit Technologies, Inc.
                    (Trim-Away)**

        10.7   --   November 2, 1998 Amendment to April 27, 1998 Letter of
                    Intent between BioGenesis Enterprises, Inc. and Summit
                    Technologies, Inc., and April 27, 1998 Letter of Intent.***

        27     --   Financial Data Schedule

          *    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 Amendment No. 5 to Form SB-2; Commission
               File No. 333-48675 incorporated herein.

(b)      REPORTS ON FORM 8-K

         None


                                       38
<PAGE>   39

                                   SIGNATURES


         In accordance with Section 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                     SUMMIT ENVIRONMENTAL CORPORATION, INC.


Date:  March 23, 2001                       By /s/ B. Keith Parker
                                               ----------------------------
                                               B. Keith Parker, Chief
                                               Executive Officer

         In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.



Date:  March 23, 2001                       By /s/ Don Hendon
                                               ----------------------------
                                               Don Hendon, Chief Financial
                                               Officer and Director



Date:  March 23, 2001                       By /s/ B. Keith Parker
                                               ----------------------------
                                               B. Keith Parker, Chief
                                               Executive Officer and Director



Date:  March 23, 2001                       By /s/ Paula Parker
                                               ----------------------------
                                               Paula Parker, Director



Date:  March 23, 2001                       By /s/ Dean Haws
                                               ----------------------------
                                               Dean Haws, Director



Date:  March 23, 2001                       By /s/ Thomas J. Kenan
                                               ----------------------------
                                               Thomas J. Kenan, Director



Date:  March 23, 2001                       By /s/ James J. Roach
                                               ----------------------------
                                               James J. Roach, Director



Date:  March 23, 2001                       By /s/ John Brooks
                                               ----------------------------
                                               John Brooks, Director

                                       39
<PAGE>   40


Date:  March 23, 2001                       By /s/ Mohsen Amiran
                                               ----------------------------
                                               Mohsen Amiran, Director



Date:  March 23, 2001                       By /s/ Wilton Dennis Stripling
                                               ----------------------------
                                               Wilton Dennis Stripling,
                                               Director



                                       40
<PAGE>   41
                                 EXHIBIT INDEX


      EXHIBIT
      NUMBER                      DESCRIPTION
      ------                      -----------

        27     --   Financial Data Schedule