U.S.
      SECURITIES AND EXCHANGE COMMISSION


Washington,
      D.C. 20549







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




[X]
      ANNUAL REPORT UNDER SECTION 13 OR 15(d)


OF
      THE
      SECURITIES EXCHANGE ACT OF 1934


For
      the
      fiscal year ended December 31, 2004





OR





[
      ]
      TRANSITION UNDER SECTION 13 OR 15(d)


OF
      THE
      SECURITIES EXCHANGE ACT OF 1934


For
      the
      transition period from ________ to ________





**Summit
      Environmental Corporation, Inc.**


(Exact
      name of registrant as specified in its charter)




Texas
              (state
                of
              incorporation)
            333-122402
              (Commission
                File Number)
            73-1537206
              (IRS
                Employer
              I.D.
                Number)




133
      East
      Tyler Street


Longview,
      TX 75601


800-522-7841


____________________________________________________


(Address
      and telephone number of registrant's principal


executive
      offices and principal place of business)




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





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





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





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





State
      issuer’s revenues for its most recent fiscal year: $190,702










State
      the
      aggregate market value of the 16,917,686 voting and non-voting common equity
      held by non-affiliates computed by reference to the $0.195 average bid and
      asked
      price of such common equity, as of March 31, 2005: $3,298,949.





As
      of
      March 31, 2005, there were 23,759,344 shares of the Registrant's Common Stock,
      par value $0.001 per share, outstanding.





DOCUMENTS
      INCORPORATED BY REFERENCE





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





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


ii





**TABLE
      OF CONTENTS**




PageItem
                    1
                Description
                    of Business
                1Business
                    Development
                1Our
                    Business
                1Distribution
                    Methods
                4Competition
                4Raw
                    Materials and Suppliers
                4Dependence
                    on Major Customers or Suppliers
                5Patents,
                    Trademarks and Licenses
                5Government
                    Approval of Principal Products
                5Seasonality
                6Research
                    and Development
                6Environmental
                    Controls
                6Number
                    of Employees
                6Item
                    2
                Description
                    of Property
                6Item
                    3
                Legal
                    Proceedings
                7Item
                    4
                Submission
                    of Matters to a Vote of Security Holders
                7Item
                    5
                Market
                    for Common Equity and Related Stockholder Matters
                8Item
                    6
                Management’s
                    Discussion and Analysis
                9Results
                    of operations
                9Sales
                9Gross
                    Margin
                10Operating
                    Expenses
                10Net
                    Loss
                10Liquidity
                    and Capital Resources
                11Outlook
                12Off-Balance
                    Sheet Arrangements
                15Contractual
                    obligations
                15Item
                    7
                Financial
                    Statements
                16Item
                    8
                Changes
                    In and Disagreements With Accountants on Accountingand
                    Financial Disclosure
                35Item
                    8A
                Controls
                    and Procedures
                35Other
                    Information
                36
   iii
  Item
                      9
                  Directors,
                      Executive Officers, Promoters and Control Persons;Compliance
                      with Section 16(a) of the Exchange Act
                  36Audit
                      Committee and Audit Committee Financial Expert
                  39Code
                      of Ethics
                  39Compliance
                      with Section 16(a) of the Exchange Act
                  39Item
                      10
                  Executive
                      Compensation
                  40Employment
                      Contracts
                  40Stock
                      Options
                  40Item
                      11
                  Security
                      Ownership of Certain Beneficial Ownersand
                      Management
                  42Item
                      12
                  Certain
                      Relationships and Related Transactions
                  43Item
                      13
                  Exhibits
                  44Item
                      14
                  Principal
                      Accountant Fees and Services
                  46Signatures
                  
                  47


iv





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





**Business
      Development** **.**







We
      are
      incorporated in Texas and are 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 of both companies and, respectively, the chief
      executive officer and vice president for shareholder relations of the company.
      The Parkers also own 12.8 percent of the outstanding stock of our
      company.







Before
      our company was organized, the Parkers and Moonlighting became aware of several
      products developed by BioGenesis Enterprises of Springfield, Virginia
      (“BioGenesis”) that are environmentally safe - generally, products that are
      biodegradable and nontoxic. In 1997, the Parkers and Moonlighting obtained
      a
      license from BioGenesis to market a fire suppressant that BioGenesis had
      developed. Moonlighting soon determined that the 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 our 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 environmentally safe products for which exclusive marketing
      licenses could be obtained and for which marketing expenses could be
      raised.





Moonlighting
      licensed to Summit Technologies the non-exclusive right to market BioGenesis'
      fire suppressant products, **FirePower
      911** **Ô** and **FlameOut** **â** , **** and
      the
      exclusive right to market certain other products newly developed by Moonlighting
      and tested for marketing, **Stressex** **Ô** and a
      cosmetic line, **Pannache** **Ô** **.** Later,
      in December 1999 our company purchased from BioGenesis its patent and other
      intellectual property rights associated with the fire suppressant for $1 million
      cash and 750,000 shares of Common Stock of Summit Technologies.







On
      December 2, 1998, Summit Technologies was merged into our company, Summit
      Environmental Corporation, Inc.







**Our
      Business** **.**





**Principal
      Products**





Summit
      Environmental distributes and markets the following proprietary products. All
      of
      the products are manufactured exclusively for us.





**FirePower
      911** **Ô** and **FlameOut** **â**





These
      products are fire suppressants and fire retardants. **FlameOut** **â** 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 in 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 was still approved for certain
      limited mission-critical uses (such as ship- and shore-based crash, fire and
      rescue), but as of March 1999 Halon 1211 fire extinguishers are no longer
      approved for continued use even under the classification “mission
      critical.”




1





In
      March
      1994, Surfactant Blend A, which had been submitted by Dr. Mohsen C. Amiran
      of
      BioGenesis, was certified by the USEPA-SNAP (Significant New Alternative
      Policy). This was the first approved 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 - which is **FlameOut** **â** **-** was
      listed in May 1997 by Underwriter Laboratories (listing number 7P21).





In
      December 2001, **FlameOut** ®
      was
      approved by the United States Department of Transportation and Federal Aviation
      Administration as an acceptable replacement for Halon 1211 in commercial
      aircraft.





**FlameOut** **â** 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** **â** **-** 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** **â** -





·
            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,





·
            is
                environmentally safe,





·
            is
                nontoxic, but may irritate the eyes,
                and





·
            stores
                at between 25 degrees and 120 degrees Fahrenheit for prolonged
                periods.





2




In
      May
      2003 the United States Forestry Service approved FlameOut for listing on its
      Quality Products Listing. Commercial companies under contract with the U. S.
      Forest Service to fight forest fires can now purchase **Flameout** ®
      as
      their fire extinguishing agent.





**FlameOut®** is one
      of three products under evaluation by the U. S. Air Force for certification
      as
      an alternative replacement product for AFFF. AFFF is a fire fighting foam that
      is classified as a biohazard. It is suspected of being a possible cause of
      cancer, and fire fighters using AFFF wear biohazard suits when using AFFF.





Our **FirePower** **Ô** product
      also contains Surfactant Blend A - the **FlameOut** **â** formula. **FirePower** **Ô** and **FlameOut** **â** both
      suppress and extinguish fires quickly. State fire codes prohibit products from
      being marketed as fire extinguishers without proper testing, listing, and
      rating. **We
      believe it 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 us to be significant for our long-term
      marketing prospects. Its non-Halon certification, with regard to residential
      fire extinguisher sales, places **FirePower** **Ô** into a
      class of its own.





**Industrial
      Chemicals and Cleaners**





We
      distribute industrial chemicals and cleaners under the private label **Ultimate
      Clean** **’** .
      The
      products were developed by Dr. Amiran and BioGenesis. BioGenesis concentrates
      its activities on developing, and then manufacturing for marketing by other
      companies, industrial-use products that are environmentally safe.





Due
      to
      perceived market demands, through Dr. Amiran we have developed a turbine cleaner
      for jet engines. The original formula **,
      Ultimate Clean 668** **’** ,
      was
      developed for Solar Turbines, a company owned by Caterpillar. We are introducing **668** **’** to the
      aviation industry and the United States Military through our association with
      American Business Associates (AmBiz).





We
      have
      submitted **Ultimate
      Clean 668** **’** to an
      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. We are working toward a final formulation that will
      meet
      elemental salt testing.





**Pannache
      Natural Cosmetics**





Prior
      to
      the formation of Summit Technologies, Moonlighting (the original company formed
      by Keith and Paula Parker) was marketing Pannache Cosmetics in the Philippines.
      The products of this line are manufactured by Cosmetic Laboratories, Inc.,
      a
      large custom cosmetic manufacturer located in Irving, Texas. Cosmetic
      Laboratories is a 20 year member in good standing with the Cosmetic Toiletry
      and
      Fragrance Association (CTFA). The products contain the purest and best available
      ingredients available in the industry, according to the
      manufacturer.




3





We
      have
      developed a color line of products complementing the rest of the Pannache line.
      Our initial product is a cosmetic lipsticks; long-lasting, no smear,
      semi-permanent lip color. We introduced this product - **Sugar
      Kiss Lip** -
      in
      August 2001. Our website, www.pannache.com, displays the entire Pannache
      Cosmetics Product Line.





**Distribution
      Methods**





We
      market
      products primarily through the development of strategic alliances, most notably
      with AmBiz for the aviation industry and the U.S. Military. Our contacts with
      AmBiz, which can be reviewed at www.americanbusines s associates.com ,
      provide
      essential contacts for our initiatives. We have made other alliances for
      specific industries such as e-commerce, catalogue sales, roofing, plumbing,
      heating and air conditioning, building materials, and retail mass merchandisers
      and convenience stores. We sell **FirePowerTM** through
      periodic presentations on QVC. We are preparing to launch sales efforts through
      infomercials.





Internationally,
      we market products through exclusive distribution agreements with revenue
      sharing clauses. We have entered into distribution agreements that cover the
      Philippines, the Netherlands (for Europe and the former Eastern Bloc countries),
      Scandinavia, Australia, New Zealand, Mexico, Argentina, Brazil, Chile, Uruguay,
      Paraguay, Venezuela, Ecuador, Bolivia, and Canada.





**Competition**





We
      own
      the patent and intellectual property rights to Surfactant Blend A - **FlameOut** **â** and **FirePower** **Ô** .
      Surfactant Blend A 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. **FlameOut®** competes
      with established products owned by DuPont, 3M and Monsanto. However, **FlameOut®** is the
      only non-toxic fire suppression agent listed by the U.S. Forest Service. **FirePower** **Ô** has no
      competition. This is the only validated and listed portable fire extinguisher
      available in an aerosol can (like air freshener or hair spray).





We
      have
      compared our cosmetic product, **Sugar
      Kiss Lip,** to
      similar products manufactured by Revlon, Max Factor, Cover Girl, Avon and
      BeautiControl touting no smear and extended wear. These other products, in
      our
      opinion and according to the results of our tests, simply do not stay on the
      lips the length of time advertised. We initiated a direct sales campaign in
      January 2002 to high school drill teams, both for personal use and as a
      fund-raising tool. We have secured the endorsement for **Sugar
      Kiss Lip** from the
      world-famous Kilgore College Rangerettes.





**Raw
      Materials and Suppliers**





The
      raw
      materials for our products are in abundant supply. Summit Environmental, by
      virtue of our purchase of the patent and intellectual property rights to
      Surfactant Blend A, has retained Dr. Amiran and his company, BioGenesis, to
      formulate and package our products on a cost-plus-10 percent basis. We have
      had
      difficulties getting prompt delivery of the aluminum cans we use in our aerosol **FirePowerTM** fire
      extinguisher. One of the three facilities in the world that makes these cans
      to
      the required National Fire Protection Association and U.S. Department of
      Transportation requirements, went out of business recently. We are currently
      on
      a systematic inventory purchase order cycle with a facility in Monterey, Mexico
      that is one of two remaining suppliers of this required can. We have no current
      difficulties.




4





**Dependence
      on Major Customers**





Approximately
      35 percent and 68 percent of sales were made to two customers in 2003 and two
      customer in 2004, respectively. Approximately 68 percent of sales in the third
      quarter of 2004 were made to four customers and 68 percent of sales in the
      third
      quarter of 2003 were made to two customers. This concentration of sales is
      already being reduced in 2005 by our success this year in selling our **FirePower** **®** aerosol
      fire extinguishers through television’s QVC channel.





**Patents,
      Trademarks and Licenses**





We
      own **** all
      patents and intellectual property rights associated with the fire suppressant
      products. However, we are obligated to pay royalties to Moonlighting
      Distribution Corporation as follows: $0.40 for each 16 ounce can of **FirePower** **Ô** **,** $0.50
      for each gallon of **FlameOut** **â** **,** and
      $0.35
      for each one-liter can of **FirePower** TM **.** The
      obligation to pay the above mentioned royalties to Moonlighting, however, did
      not so merge and will continue in effect during the term of the exclusive
      license obtained from Moonlighting. Moonlighting views this license to be
      perpetual; therefore, the royalties are perpetual.





We
      have a
      perpetual license from our affiliated company, Moonlighting, for its **Pannache** **Ô** products. The license has no sales quota. We pay Moonlighting a 9 percent
      royalty on the lowest wholesale price for which we sell the product.





We
      have a
      non-exclusive license to **Ultimate
      Clean** **TM** **668** and
      other industrial chemicals and cleaning products formulated by Dr. Mohsen C.
      Amiran. We obtain these products at Dr. Amiran’s lowest wholesale price less 10
      percent to 15 percent.





**Governmental
      Approval of Principal Products**





Our
      fire
      suppressant products are subject to government regulation in most countries
      of
      the world. We have obtained government approvals in all countries and venues
      where we offer the products for sale.





Our **Ultimate
      Clean** **TM** line has
      received the appropriate U.S. Government approvals for the industrial chemical
      and cleaning products.





The
      manufacturer of our cosmetic products, Cosmetic Laboratories, Inc., is a 20-year
      plus member in good standing of the Cosmetic, Toiletry and Fragrance Association
      (CTFA).




5





**Seasonality**





There
      is
      no known seasonal aspect to our business.





**Research
      and Development**





We
      deal
      directly with SMI Laboratories in Miami, Florida for a U. S. military
      specification number for **Ultimate
      CleanTM 668** .





We
      are
      developing an approved fire suppression agent, tested to new minimum performance
      standards established by the FAA, that will be a replacement agent for the
      fire
      extinguishers that now contain Halon 1211 and are placed in bathrooms and
      galleys on board all commercial aircraft. The Halon 1211 fire extinguishers
      are
      no longer (as of March 1999) protected for continued use under the
      classification of Mission Critical.





We
      and
      Dr. Amiran have been jointly working on an advanced formula for **FlameOut** ®
      to be
      approved as a replacement for AFFF. Military specification tests with the United
      States Air Force for FlameOut® Foam began in April 2002.





Our
      non-toxic, biodegradable turbine cleaner, **Ultimate
      Clean 668TM** , **** was
      developed by us for the scheduled periodic cleanings required of jet engines.
      We
      are involved in a U. S. Department of Defense and U. S. Navy EPA-directed test
      on it for non-corrosion and non-toxicity to military specification number
      MIL-PRF-85704C.





**Environmental
      Controls**





We
      are
      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
      March
      23, 2005, we employed four persons full time and one person part
      time.





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





We
      own no
      plants or real property. We lease space for our offices and for storing
      inventory.





**FACILITIES**





We
      lease
      4,500 square feet of space in Longview, Texas for our offices and for inventory
      storage at $1,700 per month. Additional warehouse space of 5,000 square feet
      is
      leased for $1,300 a month for stored inventory. The lease for our office space
      extends through April 2005. The space for inventory storage is on a
      month-to-month lease. We believe all space requirements can be met at its
      present location for at least the next year. We intend to extend the lease
      on
      our office space.




6





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





On
      December 28, 2001, we filed a $46,000 collection lawsuit, Summit Environmental
      Corporation, Inc. v. Harry Bachelder III, dba Proformance Marketing , Inc.,
      Cause Number 2001-2667-B, 124 th District
      Court, Gregg County, Texas for non-performance on a guaranteed note payable
      and
      delinquent accounts. We later amended the petition to include a cause for an
      alleged unlawful removal of 21 pallets of FirePower 911TM from a bonded
      warehouse. We took a default judgement for approximately $186,000, which default
      judgment was awarded on November 8, 2002. We have not collected on this judgment
      but have hired counsel to file a collection lawsuit in New Jersey.


In
      April
      2002 we filed a $53,000 lawsuit, Cause Number 2002-93-B in the 124 th District
      Court, Gregg County, Texas, against a former staff employee and her spouse
      for
      credit card fraud and misappropriation of funds in the 124 th District
      Court in Longview, Gregg County, Texas. We were awarded $233,800 in damages
      and
      attorney’s fees. A settlement agreement has been entered into whereby the former
      employee and her spouse will pay to Summit $52,000 as settlement of all
      outstanding issues. The money should be paid to Summit within the next twenty
      days.







In
      March
      2003 we were sued by Lady Burd Exclusive Cosmetics, Inc. for $43,000 in a
      collection lawsuit, Lady Burd Exclusive Cosmetics, Inc v. Summit Environmental
      Corporation, Case No. 104268/03, Supreme Court of the State of New York, County
      of New York. We filed a cross-petition against Lady Burd for breach of contract
      and unpaid commissions, in the amount of $45,000





In
      March,
      2003, we filed an action against Lady Burd Exclusive Cosmetics, Inc., Case
      Number 2003-589-A in the 188 th District
      Court, Gregg County, Texas, for fraud and misrepresentation regarding our
      earlier purchase of patent rights to a “permanent” lipstick we sell under the
      name “Sugar Kiss Lip” collection. After paying $50,000 and 500,000 shares of our
      common stock to Lady Burd we discovered that Lady Burd had never filed for
      a
      patent. The two suits are being settled with the Company obtaining ownership
      of
      the formula (not patented) for a purchase price of 500,000 shares of stock
      and
      $62,000 instead of 500,000 shares of stock and $350,000.





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





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





There
      were no matters submitted to a vote of the stockholders of our company during
      2004 through the solicitation of proxies or otherwise.




7





**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 2003 and 2004. The
      quotations reflect inter-dealer prices, without retail mark-up, mark-down or
      commission and may not represent actual transactions.




High
                
                Low2003:1stQtr.
                
                
                0.27
                
                
                0.202ndQtr.
                
                
                0.35
                
                
                0.183rdQtr.
                
                
                0.26
                
                
                0.164thQtr.
                
                
                0.25
                
                
                0.142004:1stQtr.
                
                
                0.25
                
                
                0.1452ndQtr.
                
                
                0.72
                
                
                0.253rdQtr.
                
                
                0.59
                
                
                0.374thQtr.
                
                
                0.41
                
                
                0.242005:1st
                    Qtr.
                
                
                0.32
                
                
                0.182nd
                    Qtr.
                
                
                0.46
                
                
                0.17


Holders .
      Based
      on information provided by our transfer agent, we had 640 shareholders of record
      of our common stock on March 15, 2005.





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





**Securities
      Authorized for Issuance Under Equity Compensation Plans** **.**





Keith
      Parker, our president, Paula Parker, a vice president and the spouse of Keith
      Parker, and Chris Dellinges, our chief financial officer received the following
      shares of common stock during 2004 as part of their compensation:


Keith
                  Parker
              7,500
                  shares a month,Paula
                  Parker
              5,000
                  shares a month,Chris
                  Dellinges
              15,000
                  shares a quarter.


This
      arrangement continues today and is expected to continue until sufficient income
      is generated by the company to pay these officers an appropriate cash salary.
      In
      addition to the above common stock compensation, Mr. Parker receives a cash
      salary of $90,000 a year, and Mrs. Parker receives a cash salary of $60,000
      a
      year.




8





**Recent
      Sales of Unregistered Securities.**





Information
      regarding all securities we sold in the last three fiscal years without
      registering the securities under the Securities Act of 1933 is disclosed in
      Part
      II, Item 26 of our Amendment No. 1 to Form SB-2, Commission File No. 333-122402,
      and is incorporated herein by reference thereto.





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





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





**RESULTS
      OF OPERATIONS**





The
      following table presents, as a percentage of sales, certain selected financial
      data for each of the two years in the periods ended December 31, 2004 and
      2003:


Year
                  ended December 31
              
              2004
              
              2003Sales
              
              
              100.0
              %
              
              100.0
              %Cost
                  of Sales
              
              
              57.8
              
              
              (248
              )Gross
                  Margin
              
              
              42.2
              
              
              (148
              )Operating
                  Expenses
              
              
              (641
              )
              
              (510
              )Other
                  Income and Expenses, Net
              
              
              2.4
              
              
              2.3Net
                  income (loss)
              
              
              (596
              )%
              
              (656
              )%




**SALES**







Sales
      of
      $190,702 for 2004 increased by $10,015 or 5.5% from the prior year’s sales of
      $180,687. The increase was in sales of our **FirePower** **TM** and was
      a result of test market orders from QVC television advertising. The decrease
      in
      sales of cosmetics in 2004 was due to a QVC test in 2003 after which the
      cosmetic product was not continued by QVC.






The
      amount of sales, by product segment, for 2003 and 2004, were as
      follows:





**Product**
            
            **2003**
            
            **2004**Fire
                Suppressants
            
            $
            125,232
            
            $
            177,642Ultimate
                Clean® Chemicals
            
            
            1,818
            
            
            4,823Cosmetics
            
            
            53,228
            
            
            6,755Energy
                Drinks(1)
            
            
            409
            
            
            1,482





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





9




**GROSS
      MARGIN**







In
      2004
      we had a gross margin of $80,486, or 42.2 percent of sales. In 2003, because
      of
      a provision for inventory losses of $364,485 relating to faulty FirePower 911TM
      cans subject to litigation for being incorrectly manufactured by Pel Associates,
      Ultimate Absorb, and older Pannache skin care products, what would have been
      a
      gross margin of $96,306, or 53% of sales, was, instead, a total cost of sales
      of
      $448,866, which was 248% of sales in 2003. We have experienced increases in
      the
      cost of sales of several items steadily during the past few years. For instance,
      we have seen the cost of propellants for our aerosol cans increase from $1.80
      a
      pound in 1999 to $4.00 a pound today, the cost of aluminum cans increase from
      $1.02 to $1.37, and the cost of chemicals increase from $0.53 a can to $0.60
      a
      can.







**OPERATING
      EXPENSES**




Operating
      expenses of $1,221,861 for 2004 increased by $299,873, or 32.5 percent, from
      $921,988 in 2003. Advertising expenses increased in 2004 by $116,818 over 2003.
      Professional fees increased in 2004 by $30,363 over 2003. Expenses related
      to
      trade shows increased to $16,804 in 2004 from $4,399 in 2003. Repair and
      maintenance expense decreased by $700 from 2003 to 2004. Research and
      Development expenses decreased by $8,283 from 2003 to 2004. Office salaries
      decreased from $94,352 in 2003 to $83,237 in 2004 and officer compensation
      decreased by $32,275 from $205,400 in 2003 to $187,375 in 2004. Advertising
      and
      trade show expenses increased due to the demand for increased marketing efforts
      to retail the aerosol fire extinguisher which was successfully launched in
      2004.
      Professional fees, both legal and auditing, increased due to significantly
      higher charges for preparing Form 10-KSB and amending Form SB-2 to update
      financial information. Legal fees also increased due to proceeding in two
      lawsuits. Research and development decreased due to the certifications and
      listing for chemicals and products being completed. Inventory losses resulted
      from the write-off of 80,000 cans of **FirePower**  **911** that was
      not marketable due to loss of propellant through bad seals. The product had
      a
      five-year warranty which expired. Additionally, we wrote off unsold cosmetic
      inventory.







**NET
      LOSS**




We
      had a
      net loss of $1,136,783 during 2004, as compared to a net loss of $1,185,992
      during 2003. The years 2004 and 2003 were years of product and marketing
      organization, as reflected in the acquisition of all rights related to our
      fire
      suppressant products and in the efforts exerted to introduce the fire
      suppressant products to major purchasers and distributors of these products.
      Significant efforts in marketing and product research were introduced with
      regards to the company’s cosmetic division. These efforts, while properly
      accounted for as expenses, represent major investments by the company in the
      future marketing of its fire suppressant and cosmetic products.







10






**Accounting
      Policies Requiring Significant Estimates and Judgments.**





Our
      typical credit terms for domestic sales are net 30 days, 1.5% interest a month
      for payments after 30 days. These terms are identical for sales to related
      parties and external customers. There is no disparity between these credit
      terms
      and the amounts due us. We have a strict credit policy for retailers utilizing
      Dun and Bradstreet reports and credit references. For international shipments,
      50% of the sale price must be received before we manufacture the order, and
      the
      remaining 50% must be received before we release product for shipping. Inventory
      levels are no longer created by completed product. Components are purchased
      and
      warehoused and held in waiting. The product is filled and shipped to the
      customer upon receipt of purchase orders.





**LIQUIDITY
      AND CAPITAL RESOURCES**




We
      had
      negative cash flow from operations of $942,867 in 2004 and negative cash flow
      from operations of $514,786 in 2003. Major contributors to the 2004 negative
      cash flow from operations were the $1,136,783 net loss from operations and
      a
      $150,440 increase in our inventory. The major contributor to the 2003 negative
      cash flow from operations was the $1,185,992 net loss from operations.







We
      had
      negative cash flow from investing activities of $23,038 in 2004 and negative
      flow from investing activities of $2,722 in 2003. The major components of both
      years’ cash flow from investing activities were acquisitions of property and
      equipment in 2003 and 2004.







We
      were
      able to stay liquid from the sale of $1,351,608 of our common stock during
      2004,
      and from the sale of $396,300 of our common stock and loan proceeds of $39,500
      during 2003. At year-end 2004, we had $460,257 cash on hand. At year-end 2003,
      we had $114,054 cash on hand. It is more likely than not that we will offer
      shares for sale in 2005 to existing shareholders. We anticipate significant
      orders of our fire suppression products during 2005, and we must keep
      inventories available to fill those orders.




We
      successfully test marketed FirePowerTM on QVC in 2004. We began regular monthly
      programming in January 2005, and through March 2005 have had $256,917 in sales
      orders through completed programming. Several known retailers have indicated
      the
      purchase of FirePowerTM in the second quarter of 2005. Also to be purchased is
      our SafeTreeTM Christmas Tree Protectant.





Increased
      sales began in 2005 due to the successful launch of **FirePower** **TM** into
      regular monthly programming on QVC. This led to the development of a “twin
      sister” product named FlameOut Aerosol Fire Extinguisher to be sold to
      retailers. The initial launch occurred over the week of July 4, 2005 at the
      311
      Big 5 Sporting Goods Stores in the Western part of the United States. Production
      is under way from purchase orders received from Target Stores, CVS Pharmacy
      and
      Brooks Pharmacy for delivery on the shelves of these stores by September 2,
      2005. Additional orders for Rite Aid, Sports Chalet, Sports Authority and AAFES
      are currently in the vendor setup status for delivery in late September and
      early October (National Fire Prevention Month). We anticipate $1.5 million
      in
      sales for Q3 and Q4 in 2005. Securing financing from outside lenders is already
      under way. We have an active line of credit for **FirePower** **TM** from
      Austin Bank and applications are in process for inventory financing for
      components (shells, boxes and chemicals) to have the necessary materials on
      hand. Accounts receivables financing through Austin Bank is in the second phase
      of the financing package. This will be utilized once purchase orders are
      received. When the accounts receivable financing is initiated, 80% - less the
      financing fees and the corresponding deduction of cost-of-goods - will be
      advanced to the company repaying the inventory loan for the order. Reduction
      of
      expense is not likely to decrease as the company has moved from a research
      and
      development company to a marketing company.





11




**Sources
      of Liquidity**





The
      following table sets forth for 2005 our expected sources
      and uses of cash, significant capital expenditures, marketing expenses and
      product development expenses:





**Expected
                Product-Related Uses of Cash****Product**
            
            **Expected**
              **Source**
              **of
                Cash**
            
            **Expected**
              **Amount**
              **of
                Cash**
            
            **Significant**
              **Capital**
              **Expenditures**
            
            **Marketing**
              **Expenses**
            
            **Product**
              **Development**
              **Expenses**Fire
                Suppressants
            
            
            Warrants,
                line of credit
            
            
            Range
                of $0.25 to $0.50
              $349,920
                to $699,843
            
            $
            220,000
            
            $
            50,000
            
            $
            15,000Industrial
                Cleaning Products
            
            
            Sale
                of products
            
            
            
            
            
            0
            
            $
            10,000
            
            $
            5,000Cosmetics
            
            
            Sale
                of products
            
            
            
            
            
            0
            
            $
            10,000
            
            $
            5,000Energy
                Drinks
            
            
            Sale
                of products
            
            
            
            
            
            0
            
            $
            5,000
            
            
            0





**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.*





**Events
      and Trends** **.**





The
      following events and trends are expected to have a material impact on our
      business:





·
            Regular
                programming on QVC of our**FirePower****TM**aerosol fire extinguisher began in January 2005. On the first airing
                in
                January, 11,000 cans were sold in 8.5 minutes. On March 2, 2005,
                13,000
                cans were sold in 10 minutes. Airings are scheduled throughout 2005.
                As of
                March 18, 2005 we have recorded sales of $256,917 through QVC since
                2002.





·
            We
                are completing the preparations for retail sales of**FlameOut®**also as an aerosol-rated fire extinguisher.**FlameOut®**is
                offered primarily to franchise and mass marketing companies. A TV
                commercial will feature**FlameOut®**during the second quarter of 2005. FlameOut® Aerosol is being presented
                for first orders at the National Hardware Show in Chicago, March
                20-23,
                2005.





12




·
            **FlameOut®**and**FirePower****TM**aerosol fire extinguishers contain the same surfactant, FlameOut®.**FlameOut®**is
                sold in concentrate form. The logging industry is endorsing**FlameOut®**more and more on its insured heavy equipment. Three insurance companies
                -
                Bituminous, Lloyds of London and Santee - now require**FlameOut®**or
                a product like**FlameOut®**to
                be on all insured logging equipment for renewal purposes of existing
                fire
                coverage or on new equipment in order to bind fire coverage. There
                is no
                other product that has the various government approvals**FlameOut®**has, is non-toxic, is non-corrosive and is rapidly biodegradable.
                As of
                March 18, 2005, we have recorded sales of $35,290to the logging
                industry.





·
            **FlameOut®**has been submitted to the U.S. Government Services Administration
                (“GSA”)
                for a federal supply number (“FSN”) by our agent, GSA Awards, Inc.
                Completion is expected by June 2005. Possession of an FSN could lead
                to
                large supply contracts for U.S. Government Institutions, U.S. Forestry,
                State Forestry departments, Bureau of Land Management, and U.S. Parks
                and
                Wildlife.**FirePower****TM**and**FlameOut®**are now carried in W.S. Darley Company’s most recent fire products catalog
                published in February 2005. This catalog goes to every fire department
                in
                the U.S. and a number of fire departments in 23 foreign
                countries.





·
            Using
                our unique aerosol technology, a new product sold under the brand
                name**SafeTree®**for use with Christmas Trees will be introduced in various retail
                locations through the Christmas Season 2005. Sprayed on the tree,
                it not
                only guards against fire but extends the period when the needles
                stay
                green and do not drop. We have developed an alliance with Noble Mountain
                Tree Farms, one of the world’s premier Christmas tree growers and
                suppliers to companies such as Wal-Mart, Home Depot and Lowe’s. It also
                sells trees through a network of Noble Tree lots. During the fourth
                quarter of 2004 Noble supplied two-can samples of**SafeTree®**to
                more than 50 major retailers in the U.S. that yearly sell more than
                6
                million Noble trees and wreaths. We expect that this initiative with
                Noble
                will bear fruit during Christmas Season 2005.





·
            We
                will be changing in 2005 the propellant in our aerosol cans to nitrogen
                or
                a mix of 134A and nitrogen. This will reduce our cost of goods by
                approximately $1.20 a can.





**Material
      Commitments for Capital Expenditures** **.**





We
      have
      the following material commitments for capital expenditures during
      2005:





·
            Building
                of an inventory of aluminum cans for FirePowerTM/FlameOut® (1 Liter cans)





·
            Building
                of an inventory for SafeTreeTM (16 oz. cans)





·
            Building
                of an inventory of FlameOut® concentrate for ready deployment for
                wildland/wildfire emergency supply.





We
      expect
      we shall obtain the funds for such expenditures from -




13





·
            Exercise
                of some of the warrants by the 21 Selling Security Holders that hold
                common stock purchase warrants





·
            Revenues
                from sales of our**FirePower****TM**,**FlameOut®**and**SafeTree®**fire suppressants and





·
            Bank
                line of credit and/or purchase order
                financing.





**Important
      Factors** **.**





We
      work
      closely with American Business Associates (AmBiz). AmBiz assists with
      introductions into military, homeland security and emergency management venues,
      with retail development and introductions for some of our products and with
      development and financing for future retail projects. More about AmBiz can
      be
      found at www.americanbusinessassociates.com .
      Through
      AmBiz’s efforts, we submitted FlameOut® and FlameOut® Foam to the U. S. Air
      Force chemical testing center at Tyndal Air Force Base in Florida. The series
      of
      testing involves the protocol to find a new agent to suppress ground-based
      fuel
      fires. Our FlameOut® Foam (AFFF Replacement) and FlameOut® will undergo
      continued toxicity testing and efficacy tests during 2005. We also will
      introduce FlameOut® to the US Air Force testing center at Little Rock, Arkansas
      for use in the Air Force fleet of C-130 tankers in early 2005 for wildland,
      wildfire applications.





**FlameOut** **®** is not
      just a fire suppressant. It is non-toxic, biodegradable and has significant
      encapsulation features that surround and smother particles it contacts. We
      demonstrated its fire-fighting and fire-retardant qualities before FEMA,
      Homeland Security, Arizona State Emergency Management, the Office of Emergency
      Management and the Bureau of Land Management in July 2004. The demonstration
      consisted of using Evergreen Aviation’s 747 Supertanker to disperse **FlameOut** **®** as a
      compressed-air foam over a path 100 to 125 feet wide for 20,000 feet. The
      success of the demonstration has led us to consider **FlameOut** **®** as the
      carrying agent for additional products that address environmental issues. Dr.
      Amiran, one of our directors and the inventor of **FlameOut** **®** ,
      is
      addressing this expanded use of **FlameOut** **®** - uses
      such as treating toxic spills or chemical exposure, cleaning the air of free
      radicals in the event of terrorist attacks, and a fire retardant sealant to
      be
      sprayed on a structure prior to evacuating an area threatened by a wildfire.
      We
      have no revenues yet from such an expanded use of **FlameOut** **®** .
      Our
      relationship with Evergreen Aviation is not yet the subject of an executed
      contract.





**Ultimate
      Clean** **TM** **Products** **.**





Working
      with our distributor for **Ultimate
      Clean** **TM** chemicals and cleaners, Asah Terra, a Washington-based bioremediation
      contractor, we expect we will sell significant amounts of our chemicals and
      cleaners in the heavily contaminated petroleum production areas of
      Nigeria.





Asah
      Terra is working with the Nigerian Government and Shell Oil of Nigeria in
      providing consultation and products with specific applications for what is
      estimated at up to ten years of existing clean-up of contamination. One of
      the
      first sites that we will be cleaning is a stagnate lake that allows bacteria
      to
      grow. When it rains, the overflow provides such a large amount of toxic residue
      that this site has been linked to being a leading cause of the deaths of infants
      and young children in Nigeria. Dr. Amiran estimated from his preliminary studies
      that this initial project will probably last for up to two years.




14





Asah
      Terra sells some of our other **Ultimate
      Clean** **TM** products
      to clean the grease traps at restaurants, primarily in the Northwest United
      States.





**Off-Balance
      Sheet Arrangements**





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





·
            an
                obligation under a guarantee
                contract,


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


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


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





**Contractual
      obligations**





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


**Payments
                Due-by Period****Contractual**
              **Obligations**
            
            **Total**
            
            **Less
                Than**
              **1
                Year**
            
            **1-3
                Years**
            
            **3-5
                Years**
            
            **More
                Than**
              **5
                Years**Long-Term
                Debt Obligations
            
            $
            0Capital
                Lease Obligations
            
            $
            0Operating
                Lease Obligations
            
            $
            12,206.61
            
            $
            9,620
            
            $
            2,586.61Other
                Long-Term Liabilities Reflected on Our Balance Sheet under
                GAAP
            
            $
            0Total
            
            $
            12,206.61
            
            $
            9,620
            
            $
            2,586.61





*Our
      future results of operations and the other forward-looking statements contained
      in this Outlook involve a number of risks and uncertainties. Among the factors
      that could cause actual results to differ materially are the following: the
      inability of the company to obtain needed additional capital, loss of personnel,
      particularly chief executive officer 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 our fire suppressant or is able to discover the additives
      to our fire suppressant that give it its unique and superior qualities, and
      an
      accident involving life or serious bodily harm that fairly or unfairly would
      bring into question the safety of using the company’s fire suppressant
      products.*




15





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





**Page**Report
                of Independent Certified Public Accountants April 6, 2005
            17Report
                of Independent Registered Public Accounting Firm February 20,
                2004
            18Balance
                Sheet December 31, 2004
            19Statements
                of Opeations Year Ended December 31, 2004 and 2003and
                Period from August 14, 1997 to December 31, 2004
            20Statements
                of Changes in Stockholders’ Equity for the period fromAugust
                14, 1997 to December 31, 2004
            21Statements
                of Cash Flows Year Ended December 31, 2004 and 2003and
                Period from August 14, 1997 to December 31, 2004
            22Notes
                to Financial Statements
            23




16


**INDEPENDENT
        AUDITORS' REPORT**
  **To
        the Board of Directors and Stockholders**
 **Summitt
        Environmental Corporation, Inc.**
 **Longview,
        Texas**
  We
        have
        audited the balance sheet of Summitt Environmental Corporation, Inc. as of
        December 31, 2004, and the related statements of operations, of changes in
        stockholders' equity and of cash flows for the year then ended. These financial
        statements are the responsibility of the Company’s management. Our
        responsibility is to express an opinion on these financial statements based
        on
        our audit.
 
 We
        conducted our audit in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the financial
        statements are free of material misstatement. An audit includes examining,
        on a
        test basis, evidence supporting the amounts and disclosures in the financial
        statements. An audit also includes assessing the accounting principles used
        and
        significant estimates made by management, as well as evaluating the overall
        financial statement presentation. We believe that our audit provides a
        reasonable basis for our opinion.
 
 In
        our
        opinion, the financial statements referred to above present fairly, in all
        material respects, the financial position of Summitt Environmental Corporation,
        Inc. as of December 31, 2004, and the results of its operations and its cash
        flows for the year then ended, in conformity with accounting principles
        generally accepted in the United States of America.
 
 The
        accompanying financial statements have been prepared assuming that the Company
        will continue as a going concern. As discussed in Note 10 to the financial
        statements, the Company has suffered recurring losses from operations. This
        raises substantial doubt about the Company's ability to continue as a going
        concern. Management's plans in regard to these matters are also described
        in
        Note 10. The financial statements do not include any adjustments that might
        result from the outcome of this uncertainty.
 
 **PHILIP
                VOGEL & CO. PC**
                
                
                ***/s/
                  Philip Vogel & Co. PC***
                **Certified
                  Public Accountants**
  **Dallas,
        Texas**
 
 **April
        6, 2005**
 
 17


**Report
        of Independent Registered Public Accounting Firm**
 
 Board
        of
        Directors and Stockholders
 Summit
        Environmental Corporation, Inc.
 Longview,
        Texas
  We
        have
        audited the statements of operations, changes in stockholders’ equity, and cash
        flows of Summit Environmental Corporation, Inc. for the year ended December
        31,
        2003. These financial statements are the responsibility of the Company’s
        management. Our responsibility is to express an opinion on these financial
        statements based on our audit.
 
 We
        conducted our audit in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the financial
        statements are free of material misstatement. An audit includes examining,
        on a
        test basis, evidence supporting the amounts and disclosures in the financial
        statements. An audit also includes assessing the accounting principles used
        and
        significant estimates made by management, as well as evaluating the overall
        financial statement presentation. We believe that our audit provides a
        reasonable basis for our opinion.
 
 In
        our
        opinion, the financial statements referred to above present fairly, in all
        material respects, the results of operations and cash flows of Summit
        Environment Corporation, Inc. for the year ended December 31, 2003, in
        conformity with accounting principles generally accepted in the United States
        of
        America.
 
 The
        accompanying financial statements have been prepared assuming that the Company
        will continue as a going concern. As discussed in Note 10 to the financial
        statements, the Company has suffered recurring losses from operations. This
        raises substantial doubt about the Company’s ability to continue as a going
        concern. Management’s plans in regard to these matters are also described in
        Note 10. The financial statements do not include any adjustments that might
        result from the outcome of this uncertainty.
 
 
 */s/
        Lane Gorman Trubitt, L.L.P.*
 
 Dallas,
        Texas
 February
        20, 2004
  18
  **SUMMIT
                    ENVIRONMENTAL CORPORATION, INC.****BALANCE
                    SHEET****DECEMBER
                    31, 2004****Assets****Current
                    Assets**Cash
                    and Cash Equivalents
                
                $
                460,257Accounts
                    Receivable, less allowance for doubtfulaccounts
                    of $172,678
                
                
                63,479Inventory
                
                
                352,108Prepaid
                    Expenses
                
                
                157,409Total
                    Current Assets
                
                
                1,033,253**Property
                    and Equipment at Cost**Property
                    and Equipment
                
                
                80,636Leasehold
                    Improvements
                
                
                13,877Accumulated
                    Depreciation and Amortization
                
                
                (54,406
                )Net
                    Property and Equipment
                
                
                40,107**Other
                    Assets**Prepaid
                    Royalties
                
                
                490,095Deposits
                
                
                2,180Patents
                    - net of accumulated amortizationof
                    $969,800
                
                
                1,405,200Licenses
                    -net of accumulated amortizationof
                    $41,440
                
                
                134,280Total
                    Other Assets
                
                
                2,031,755**Total
                    Assets**
                
                $
                3,105,115**Liabilities
                    and Stockholders' Equity****Current
                    Liabilities**Accounts
                    Payable
                
                $
                141,130Accrued
                    Liabilities
                
                
                38,045Total
                    Current Liabilities
                
                
                179,175**Stockholders'
                    Equity**Preferred
                    stock, par value $.001; 10,000,000shares
                    authorized, no shares issuedCommon
                    stock, par value $.001; 40,000,000shares
                    authorized, 23,209,344 shares issued
                
                
                23,220Additional
                    Paid in Capital
                
                
                10,144,383Accumulated
                    Deficit
                
                
                (7,216,663
                )Treasury
                    Stock - 10,000 shares
                
                
                (25,000
                )Total
                    Stockholders' Equity
                
                
                2,925,940**Total
                    Liabilities and Stockholders' Equity**
                
                $
                3,105,115*The
                    accompanying notes are an integral part of this financial
                    statement*
  19


**SUMMIT
                  ENVIRONMENTAL CORPORATION, INC.****STATEMENTS
                  OF OPERATIONS****FOR
                  THE YEARS ENDED DECEMBER 31, 2004 AND 2003****2004**
              
              **2003****Sales**
              
              $
              237,952
              
              $
              180,687**Returns
                  and Allowances**
              
              
              (47,250
              )
              
              -**Net
                  Sales**
              
              
              190,702
              
              
              180,687**Cost
                  of Sales**Cost
                  of
                  sales
              
              
              102,190
              
              
              84,381Provision
                  for
                  inventory losses
              
              
              8,026
              
              
              364,485Total
                  cost of
                  sales
              
              
              110,216
              
              
              448,866**Gross
                  Profit**
              
              
              80,486
              
              
              (268,179
              )**Operating
                  Expenses**Selling,
                  general, and administrative expenses
              
              
              1,039,310
              
              
              744,029Amortization
              
              
              170,013
              
              
              168,093Depreciation
              
              
              12,538
              
              
              9,866Total
                  operating expense
              
              
              1,221,861
              
              
              921,988**Net
                  Earnings (Loss) from Operations**
              
              
              (1,141,375
              )
              
              (1,190,167
              )**Other
                  Income (Expense)**Interest
                  income
              
              
              4,176
              
              
              1,333Interest
                  expense
              
              
              (1,636
              )
              
              -Royalty
                  income
              
              
              2,052
              
              
              -Miscellaneous
              
              
              -
              
              
              2,842Total
                  other
                  income (expense)
              
              
              4,592
              
              
              4,175**Net
                  Loss**
              
              $
              (1,136,783
              )
              $
              (1,185,992
              )**Net
                  Earnings (Loss) per Share**
              
              $
              (0.05
              )
              $
              (0.07
              )**Weighted
                  Average Shares**
              
              
              20,772,163
              
              
              16,375,542*The
                  accompanying notes are an integral part of these financial
                  statements.*




20




**SUMMIT
                  ENVIRONMENTAL CORPORATION, INC.****STATEMENTS
                  OF CHANGES IN STOCKHOLDERS' EQUITY****FOR
                  THE YEARS ENDED DECEMBER 31, 2004 AND 2003**Common
                  Stock
              
              Additional
              
              Subscription
              
              Accumulated
              
              TreasuryShares
              
              Amount
              
              Paid-In
                  Capital
              
              to
                  Capital
              
              Deficit
              
              Stock
              
              TotalBalances
                  December 31, 2002
              
              
              15,657,194
              
              $
              15,658
              
              $
              7,997,721
              
              $
              60,000
              
              $
              (4,893,888
              )
              $
              (25,000
              )
              $
              3,154,491Sale
                  of
                  530,000 shares ($25 per share)
              
              
              530,000
              
              
              530
              
              
              131,970
              
              
              (60,000
              )
              
              -
              
              
              -
              
              
              72,500Issuance
                  of
                  92,000 shares upon exerciseof
                  warrants
                  ($.25 per share)
              
              
              92,000
              
              
              92
              
              
              22,908
              
              
              -
              
              
              -
              
              
              -
              
              
              23,00015,000
                  shares
                  issued for services ($.18 per share)
              
              
              15,000
              
              
              15
              
              
              2,685
              
              
              -
              
              
              -
              
              
              -
              
              
              2,700150,000
                  shares
                  issued for services ($.22 per share)
              
              
              150,000
              
              
              150
              
              
              32,850
              
              
              -
              
              
              -
              
              
              -
              
              
              33,00015,000
                  shares
                  issued for services ($.24 per share)
              
              
              15,000
              
              
              15
              
              
              3,585
              
              
              -
              
              
              -
              
              
              -
              
              
              3,60015,000
                  shares
                  issued for services ($.25 per share)
              
              
              15,000
              
              
              15
              
              
              3,735
              
              
              -
              
              
              -
              
              
              -
              
              
              3,75015,000
                  shares
                  issued for services ($.28 per share)
              
              
              15,000
              
              
              15
              
              
              4,185
              
              
              -
              
              
              -
              
              
              -
              
              
              4,20044,000
                  shares
                  issued for services ($.30 per share)
              
              
              44,000
              
              
              44
              
              
              13,156
              
              
              -
              
              
              -
              
              
              -
              
              
              13,200360,000
                  shares
                  issued for licenses ($32 per share)
              
              
              360,000
              
              
              360
              
              
              114,840
              
              
              -
              
              
              -
              
              
              -
              
              
              115,2006,000
                  shares
                  issued for services ($.33 per share)
              
              
              6,000
              
              
              6
              
              
              1,974
              
              
              -
              
              
              -
              
              
              -
              
              
              1,980Money
                  received
                  for a 2004 stock purchase
              
              
              -
              
              
              -
              
              
              -
              
              
              300,800
              
              
              -
              
              
              -
              
              
              300,800Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,185,992
              )
              
              -
              
              
              (1,185,992
              )Balances
                  December 31, 2003
              
              
              16,899,194
              
              
              16,900
              
              
              8,329,609
              
              
              300,800
              
              
              (6,079,880
              )
              
              (25,000
              )
              
              2,542,429Issuance
                  of
                  100,000 shares upon exerciseof
                  options
                  ($.16 per share)
              
              
              100,000
              
              
              100
              
              
              38,125
              
              
              -
              
              
              -
              
              
              -
              
              
              38,22512,500
                  shares
                  issued for services ($.16 per share)
              
              
              12,500
              
              
              13
              
              
              1,987
              
              
              -
              
              
              -
              
              
              -
              
              
              2,00012,500
                  shares
                  issued for services ($.17 per share)
              
              
              12,500
              
              
              12
              
              
              2,113
              
              
              -
              
              
              -
              
              
              -
              
              
              2,125Sale
                  of
                  2,346,250 shares ($.20 per share)
              
              
              2,346,250
              
              
              2,346
              
              
              466,904
              
              
              (207,000
              )
              
              -
              
              
              -
              
              
              262,25027,500
                  shares
                  issued for services ($.20 per share
              
              
              27,500
              
              
              28
              
              
              5,472
              
              
              -
              
              
              -
              
              
              -
              
              
              5,500Issuance
                  of
                  44,000 shares upon exerciseof
                  warrants
                  ($.20 per share)
              
              
              44,000
              
              
              44
              
              
              8,756
              
              
              (8,800
              )
              
              -
              
              
              -
              
              
              -Issuance
                  of
                  2,558,000 shares upon exerciseof
                  warrants
                  ($.25 per share)
              
              
              2,558,000
              
              
              2,558
              
              
              636,942
              
              
              (85,000
              )
              
              -
              
              
              -
              
              
              554,50012,500
                  shares
                  issued for services ($.27 per share)
              
              
              12,500
              
              
              13
              
              
              3,362
              
              
              -
              
              
              -
              
              
              -
              
              
              3,37525,000
                  shares
                  issued for services ($.31 per share)
              
              
              25,000
              
              
              25
              
              
              7,725
              
              
              -
              
              
              -
              
              
              -
              
              
              7,75015,000
                  shares
                  issued for services ($.34 per share)
              
              
              15,000
              
              
              15
              
              
              5,085
              
              
              -
              
              
              -
              
              
              -
              
              
              5,10012,500
                  shares
                  issued for services ($.35 per share)
              
              
              12,500
              
              
              12
              
              
              4,363
              
              
              -
              
              
              -
              
              
              -
              
              
              4,37574,400
                  shares
                  issued for services ($.45 per share)
              
              
              74,400
              
              
              74
              
              
              33,406
              
              
              -
              
              
              -
              
              
              -
              
              
              33,48037,500
                  shares
                  issued for services ($.48 per share)
              
              
              37,500
              
              
              38
              
              
              17,962
              
              
              -
              
              
              -
              
              
              -
              
              
              18,000Sale
                  of
                  1,000,000 shares ($.50 per share)
              
              
              1,000,000
              
              
              1,000
              
              
              499,000
              
              
              -
              
              
              -
              
              
              -
              
              
              500,00015,000
                  shares
                  issued for services ($.53 per share)
              
              
              15,000
              
              
              15
              
              
              7,935
              
              
              -
              
              
              -
              
              
              -
              
              
              7,95012,500
                  shares
                  issued for services ($.69 per share)
              
              
              12,500
              
              
              12
              
              
              8,613
              
              
              -
              
              
              -
              
              
              -
              
              
              8,62515,000
                  shares
                  issued for services ($.74 per share)
              
              
              15,000
              
              
              15
              
              
              11,085
              
              
              -
              
              
              -
              
              
              -
              
              
              11,100Exercise
                  of
                  options for 94,292 shares of stock($.20
                  per
                  share) - shares not issued as ofDecember
                  31,
                  2004
              
              
              
              
              
              
              
              
              55,939
              
              
              -
              
              
              -
              
              
              -
              
              
              55,939Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,136,783
              )
              
              -
              
              
              (1,136,783
              )Balances
                  December 31, 2004
              
              
              23,219,344
              
              $
              23,220
              
              $
              10,144,383
              
              $
              -
              
              $
              (7,216,663
              )
              $
              (25,000
              )
              $
              2,925,940*The
                  accompanying notes are an integral part of these financial
                  statements.*




21




**SUMMIT
                  ENVIRONMENTAL CORPORATION, INC.****STATEMENTS
                  OF CASH FLOWS****FOR
                  THE YEARS ENDED DECEMBER 31, 2004 AND 2003****2004**
              
              **2003****Cash
                  Flows from Operating Activities**Net
                  loss
              
              $
              (1,136,783
              )
              $
              (1,185,992
              )Adjustments
                  to reconcile net earnings (loss) to cashused
                  in operating activitiesAmortization
              
              
              170,013
              
              
              168,093Bad
                  debt expense
              
              
              6,357
              
              
              15,248Provision
                  for inventory losses
              
              
              8,026
              
              
              364,485Depreciation
              
              
              12,538
              
              
              9,866Common
                  stock and options issued for services
              
              
              168,686
              
              
              62,430Change
                  in assets and liabilitiesAccounts
                  receivable
              
              
              (40,392
              )
              
              (15,579
              )Inventory
              
              
              (150,440
              )
              
              24,314Prepaid
                  expenses and deposits
              
              
              (55,729
              )
              
              23,744Accounts
                  payable
              
              
              69,400
              
              
              17,573Accrued
                  liabilities
              
              
              5,457
              
              
              1,032Net
                  cash used in operating activities
              
              
              (942,867
              )
              
              (514,786
              )**Cash
                  Flows from Investing Activities**Acquisition
                  of property and equipment
              
              
              (22,518
              )
              
              (2,722
              )Acquisition
                  of licenses/patents
              
              
              (520
              )
              
              -Net
                  cash used in investing activities
              
              
              (23,038
              )
              
              (2,722
              )**Cash
                  Flows from Financing Activities**Loan
                  proceeds
              
              
              -
              
              
              39,500Loan
                  principal repayments
              
              
              (39,500
              )
              
              -Proceeds
                  from sale of stock
              
              
              1,351,608
              
              
              396,300Net
                  cash provided by financing activities
              
              
              1,312,108
              
              
              435,800**Net
                  Increase (Decrease) in Cash**
              
              
              346,203
              
              
              (81,708
              )Cash
                  - Beginning of Period
              
              
              114,054
              
              
              195,762Cash
                  - End of Period
              
              $
              460,257
              
              $
              114,054**Supplemental
                  cash flow information**Issuance
                  of common stock for licenses
              
              
              -
              
              
              115,200Cash
                  paid for interest
              
              
              1,636
              
              
              -*The
                  accompanying notes are an integral part of these financial
                  statements.*




22


Summit
        Environmental Corporation, Inc.
 
 NOTES
        TO
        FINANCIAL STATEMENTS


SIGNIFICANT
          ACCOUNTING POLICIES
  Business
        Activity
 
 Summit
        Environmental Corporation, Inc. (the “Company”) was organized in accordance with
        the Business Corporation Act of the State of Texas on February 2, 1998, for
        the
        purpose of merging (the “Merger”) with Summit Technologies, Inc., a Texas
        corporation. The Company continued to exist as the surviving corporation
        under
        its present name pursuant to the provisions of the Texas Business Corporation
        Act. The Merger was effected on December 2, 1998 as a tax-free reorganization
        accounted for as a pooling of interests.
 
 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.
 
 During
        2001, the Company began sales of a color cosmetic line to compliment the
        already
        developed skin care cosmetic line, Pannache. This product line is
        environmentally friendly and made with premium botanical and natural essential
        oils and vitamins.
 
 Management
        has determined that, effective January 1, 2004, the Company was no longer
        in the
        development stage as its planned principal operations had commenced and
        significant revenues were being derived therefrom. Until December 31, 2003,
        the
        Company reported the results of its operations and its cash flows as a
        Development Stage Company.
 
 Revenue
        Recognition
 
  The
        Company follows the provisions of SEC Staff Accounting Bulletin (SAB) No.
        104, *"Revenue Recognition"* which
        was issued in December 2003, and recognizes revenues when its products are
        shipped to customers (terms are FOB shipping point), at which time evidence
        of a
        completed transaction and customer acceptance exists and when title passes.
        Appropriate provisions for estimated returns of product and other allowances
        have been made in the accompanying financial statements. SAB No. 104 codified,
        revised and rescinded certain sections of Staff Accounting Bulletin (SAB)
        No.
        101, *"Revenue Recognition in Financial Statements",* in order
        to make this interpretive guidance consistent with current authoritative
        accounting guidance and SEC rules and regulations.
  Revenues
        earned under royalty agreements are recognized when the respective products
        are
        sold and the royalty amounts attributable to the Company have been
        determined.
   The
        Company provides a reserve for sales returns and allowances in the same period
        as the related revenues are recognized, based on individual circumstances
        and
        historical experience.
 
 23
  Summit
          Environmental Corporation, Inc.
 
 NOTES
          TO
          FINANCIAL STATEMENTS
 
 **Product**
              
              **2004**
              
              **2003**Fire
                  Suppressants
              
              $
              224,892
              
              $
              125,232Ultimate
                  Clean® Chemicals
              
              
              4,823
              
              
              1,818Cosmetics
              
              
              6,755
              
              
              53,228Energy
                  Drinks(1)
              
              
              1,482
              
              
              409Total
                  revenue
              
              $
              237,952
              
              $
              180,687
 
 Cash
        and cash equivalents
 
 The
        Company maintains cash balances at a financial institution located in Longview,
        Texas, which at times may exceed federally insured limits. The Company has
        not
        experienced any losses in such accounts and believes it is not exposed to
        any
        significant credit risk on cash and cash equivalents.
 
 The
        Company considers all highly liquid investments with a maturity of three
        months
        or less when purchased to be cash equivalents.
 
 Accounts
        Receivable
 
  The
        Company records accounts receivable at net realizable value. This value includes
        an appropriate allowance for estimated uncollectible accounts to reflect
        any
        loss anticipated on the accounts receivable balances and charged
        to the provision for doubtful accounts. The Company calculates this allowance
        based on historical write-offs, level of past due accounts and relationships
        with and economic status of the customers.
   
 Inventories
 
 Inventories,
        which consists of raw materials and products held for resale, are recorded
        at
        the lower of cost or market, with cost being determined by the first-in,
        first-out method. At December 31, 2004, fire suppression inventory was $286,612.
        Pannache inventory was $23,667, and consigned inventory was $41,829.
 
  The
        Company periodically reviews inventory to determine which products, if any,
        are
        no longer marketable. The Company establishes a reserve for obsolete inventory
        to reduce its cost to management’s estimate of its net realizable value based on
        forecasts of sales for ensuing years and other factors.
   Intangible
        Assets
 
 Patents
        and licenses are recorded at cost. Amortization is computed on the straight-line
        method over the identifiable lives of the patent and licenses. The Company
        has
        adopted the provisions of Statement of Financial Accounting Standards (SFAS)
        No.
        142, *Goodwill and Other Intangible Assets,* effective
        for periods beginning January 1, 2002, and thereafter. SFAS 142 addresses
        financial accounting and reporting for acquired goodwill and other intangible
        assets and supersedes APB Opinion No. 17, *Intangible
        Assets* .
        Specifically, the statement addresses how intangible assets that are acquired
        should be accounted for in financial statements upon their acquisition, as
        well
        as how goodwill and other intangible assets should be accounted for after
        they
        have been initially recognized in the financial statements. The statement
        requires intangible assets to be reviewed for impairment whenever events
        or
        changes in circumstances indicate that their carrying amounts may not be
        recoverable and that a loss shall be recognized if the carrying amount of
        an
        intangible exceeds its fair value. As of December 31, 2004, the Company has
        tested its intangible assets for impairment and does not believe these amounts
        to be impaired.
  24
 
 Summit
          Environmental Corporation, Inc.
 
 NOTES
          TO
          FINANCIAL STATEMENTS
 
 The
        Company provides for income taxes under the asset and liability method. Under
        the asset and liability method, deferred tax assets and liabilities are
        recognized for the future tax consequences attributable to differences between
        the financial statement carrying amounts of existing assets and liabilities
        and
        their respective tax bases. Deferred tax assets and liabilities are measured
        using enacted tax rates expected to apply to taxable income in the years
        in
        which those temporary differences are expected to be recorded or settled.
        The
        effect on deferred tax assets and liabilities of a change in tax rates is
        recognized in income in the period that includes the enactment date. Valuation
        allowances are recognized to limit recognition of deferred tax assets where
        appropriate. Such allowances may be reversed when circumstances provide evidence
        that the deferred tax assets will more likely than not be realized.
 
 Property
        and Equipment
 
 Depreciation
        and amortization are provided in amounts sufficient to relate the cost of
        depreciable assets to operations over their estimated service lives by the
        straight-line method.
 
 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:
 
 Description
              
              Estimated
                  Service LifeOffice
                  furniture and equipment
              
              5
                  -
                  7 yearsLeasehold
                  improvements
              
              4
                  years
  Advertising
        and Marketing
 
 Advertising
        and marketing costs are expensed as incurred, which totaled $141,701 and
        $24,883
        for 2004 and 2003, respectively.
 
 Shipping
        and handling costs
 
 The
        Company includes shipping and handling costs in “Selling, general and
        administrative expenses” for purposes of income statement presentation. Shipping
        and handling costs were approximately $42,000 and $19,000, for the years
        ended
        December 31, 2004 and 2003, respectively.
 
 Research
        and development costs
 
 The
        costs
        associated with research and development activities are expense as incurred.
        Total research and development costs were approximately $43,000 and $51,000,
        for
        the years ended December 31, 2004 and 2003, respectively.
 
 Use
        of
        Estimates
 
 The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States of America requires management to
        make
        estimates and assumptions that affect certain reported amounts and disclosures.
        Accordingly, actual results could differ from those estimates.
 25
  Summit
          Environmental Corporation, Inc.
 
 NOTES
          TO
          FINANCIAL STATEMENTS
  Per
        Share Information
  The
        Company has adopted the provisions of Statement of Financial Accounting
        Standards (SFAS) No. 128, " *Earnings
        per Share* ."
        SFAS
        No. 128 requires the presentation of basic earnings (loss) per share (EPS)
        and
        diluted EPS. Basic EPS is calculated by dividing net income or loss (available
        to common stockholders) by the weighted average number of common shares
        outstanding for the period. Diluted EPS reflects the potential dilution that
        could occur if securities or other contracts to issue common stock, such
        as
        stock options, warrants, convertible preferred stock and convertible debentures,
        were exercised or converted into common stock. Potential dilutive securities
        (stock warrants, stock options) have not been considered since the Company
        reported a net loss and, accordingly, their effects would be
        antidilutive.
 
 Financial
        Instruments
  The
        Company’s financial instruments recorded on the balance sheet include cash and
        cash equivalents, accounts receivable, accounts payable and notes payable.
        The
        carrying amounts approximate fair value because of the short-term nature
        of
        these items.
  Stock
        based compensation
 
 Accounting
        Principles Board (“APB”) Opinion No. 25, *Accounting
        for Stock Issued to Employees* ,
        and
        related interpretations require that compensation expense be recorded on
        the
        date of the grant of stock options and warrants only if the current market
        price
        of the underlying stock exceeded the exercise price. Alternatively, Statement
        of
        Financial Accounting Standards (SFAS) No. 123, *Accounting
        for Stock-Based Compensation* ,
        permits
        entities to recognize, as expense over the vesting period, the fair value
        of all
        stock-based awards on the date of grant. SFAS No. 123 allows entities to
        continue to apply the provisions of APB Opinion No. 25 and provide proforma
        net
        income and proforma earnings per share disclosures for employee stock option
        grants made in 1996 and future years as if the fair-valued-based method defined
        in SFAS No. 123 had been applied. However, under the provisions of SFAS 123,
        stock options and warrants granted to service providers are required to be
        recorded as expense over the service period at the fair value of the service
        received or the fair value of the instrument, whichever is more identifiable.
        The Company has elected to apply the provisions of APB Opinion No. 25 and
        provide the proforma disclosure provisions of SFAS No. 123 for stock options
        granted to employees.
 
 In
        addition, the Company has adopted the provisions of Financial Accounting
        Standards Board Interpretation (FIN) 44, *Accounting for Certain Transactions Involving Stock
        Compensation* ,
        which
        became effective July 1, 2000. FIN 44 clarifies the application of APB 25
        for
        certain issues. Among other issues, this interpretation clarifies the definition
        of an employee for purposes of applying APB 25, the criteria for qualification
        of a plan as compensatory, the consequences of modifications to the terms
        of a
        plan, and the treatment of stock compensation issued to service providers
        who
        are not employees. Certain modifications made to existing grants of options
        and
        warrants require a remeasurement of their fair value and potential expense
        to be
        recognized by the Company.
 In
        December 2002, the Financial Accounting Standards Board issued SFAS No.
        148, *Accounting for Stock-Based Compensation - Transition and
        Disclosure* ,
        which
        amends SFAS No. 123. SFAS No. 148 provides alternative methods of transition
        for
        a voluntary change to the fair value based method of accounting for stock-based
        compensation. In addition, SFAS No. 148 amends the disclosure requirements
        of
        SFAS No. 123 to require more prominent and more frequent disclosures in
        financial statements about the effects of stock-based compensation. The
        transition guidance and annual disclosure provisions were effective for years
        ending after December 15, 2002. The interim disclosure provisions were effective
        financial reports containing financial statements for interim periods beginning
        after December 15, 2002. The transition rules of this standard are not
        applicable since the Company continues to account for stock-based compensation
        under the guidance of APB Opinion 25. The other requirements of this standard
        have been adopted by the Company for periods beginning January 1, 2003.
        Disclosures required by this statement are in Note 7.
 
 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:
  26
 Summit
          Environmental Corporation, Inc.
 
 NOTES
          TO
          FINANCIAL STATEMENTS
  2004
                
                2003As
                    Reported
                
                Pro
                    forma
                
                As
                    Reported
                
                Pro
                      formaNet
                    loss
                
                $
                (1,136,783
                )
                $
                (1,213,754
                )
                $
                (1,185,992
                )
                $
                (1,188,394
                )Loss
                    per share
                
                $
                (.05
                )
                $
                (.06
                )
                $
                (.07
                )
                $
                (.07
                )
 
 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 of 4.10 - 4.22% for 2004 and 3.92% for 2003, expected life
        of 1 -
        10 years; expected volatility of 208% for 2004 and 128% for 2003; dividend
        yield
        of 0%; and an exercise price of $.0.16 for 2004 and an exercise price of
        $0.30
        for 2003. 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.
  
 Recent
        Accounting Pronouncements
 
 In
        November 2004, the Financial
        Accounting Standards Board issued
        SFAS No. 151, *"Inventory
        Costs - an amendment of ARB No. 43, Chapter 4."* This
        Statement amends the guidance in ARB No. 43, Chapter 4, *"Inventory
        Pricing,"* to
        clarify the accounting for abnormal amounts of idle facility expense, freight,
        handling costs, and wasted material (spoilage). Paragraph 5 of ARB No. 43,
        Chapter 4, previously stated that "...under some circumstances, items such as idle
        facility expense, excessive spoilage, double freight, and rehandling costs
        may
        be so abnormal as to require treatment as current-period charges..." This
        Statement requires that those items be recognized as current-period charges
        regardless of whether they meet the criterion of "so abnormal." In addition,
        the
        Statement requires that allocation of fixed production overheads to the costs
        of
        conversion be based on the normal capacity of the production facilities.
        This
        statement is effective for inventory costs incurred during the fiscal years
        beginning after June 15, 2005. Management does not believe the adoption of
        this
        Statement will have any immediate material impact on the Company.
 
 In
        December 2004, the Financial
        Accounting Standards Board issued
        SFAS No. 123, *"Share-Based Payment,"* which is
        a revision of SFAS No. 123, *"Accounting
        for Stock-Based Compensation,"* and
        supersedes APB No. 25, *"Accounting
        for Stock Issued to Employees."* This
        Statement will require the Company to recognize compensation costs related
        to
        stock-based payment transactions (i.e. granting of stock options and warrants)
        in the financial statements. With limited exceptions, the amount of compensation
        cost will be measured based on the grant-date fair value of the equity or
        liability instruments issued. In addition, liability awards will be remeasured
        each reporting period. Compensation cost will be recognized over the period
        that
        an employee provides services in exchange for the award. This new standard
        will
        be effective for awards that are granted, modified or settled in cash in
        interim
        and annual financial periods beginning after June 15, 2005. In addition,
        this
        new standard will apply to unvested options granted prior to the effective
        date.
        This standard will be adopted during the third quarter of 2005; however,
        management has not yet determined what impact this statement will have on
        the
        Company's financial position or results of operations.
 
 In
        December 2004, the Financial
        Accounting Standards Board issued
        SFAS No. 153, *"Exchanges of Non-monetary Assets an amendment of APB No. 29."* This
        Statement amends APB Opinion No. 29, *"Accounting
        for Non-monetary Transactions"* to
        clarify the accounting for non-monetary exchanges of similar productive assets
        and replaces it with a general exception from fair value accounting for
        exchanges of non-monetary assets that do not have commercial substance. A
        non-monetary exchange has commercial substance if the future cash flows of
        the
        Company are expected to change significantly as a result of the exchange.
        This
        Statement will be applied prospectively and is effective for non-monetary
        asset
        exchanges occurring in fiscal periods beginning after June 15, 2005. Management
        does not believe adoption of this Statement will have a material impact on
        the
        Company's financial position or results of operations.
 
 1.
              INVENTORY
 
 Inventory
        is made up of the following as of December 31, 2004:
 
 Finished
                  goods
              
              $
              132,344Raw
                  materials
              
              
              219,764$
              352,108
 
 27
 Summit
          Environmental Corporation, Inc.
 
 NOTES
          TO
          FINANCIAL STATEMENTS
 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 $150,000 and 1,625,000 shares of common stock of the Company
        to be
        issued and delivered to BioGenesis Enterprises, Inc. The estimated aggregate
        amortization expense of patent rights for each of the five succeeding years
        is
        $158,333 per year. Amortization expense was $158,333 for the years ended
        December 31, 2004 and 2003.
 
 3.
              LICENSES
 
 Licenses
        for exclusive marketing rights to various products have been acquired for
        fees
        totaling $175,720 from related parties. The prices paid were demanded by
        the
        seller. The Company is the manufacturer/supplier of the products. The estimated
        aggregate amortization expense of licenses for each of the five succeeding
        years
        is $11,680 per year. The weighted-average amortization period for licenses
        is 15
        years. Amortization expense was $11,680 for the years ended December 31,
        2004
        and 2003.
 
 4.
              ACCRUED
                  EXPENSES
 
 Accrued
        expenses are made up of the following as of December 31, 2004:
 Commissions
                
                $
                14,664Salaries
                
                
                12,756Taxes
                
                
                2,378Other
                
                
                8,247$
                38,045
  5.
                  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
  Deferred
                    tax assets:Current
                
                $
                58,710Noncurrent
                
                
                2,419,880Valuation
                    allowance
                
                
                (2,471,040
                )Deferred
                    tax assets, net
                
                
                7,550Deferred
                    tax liabilities:Current
                
                
                -Noncurrent
                
                
                7,5507,550$
                -
  The
        valuation allowance was established to reduce the deferred tax asset for
        the
        amounts that more likely than not will not be realized. This reduction is
        primarily necessary due to the uncertainty of the Company’s ability to utilize
        all of the net operating loss carryforwards. The valuation allowance increased
        $397,665 and $402,355 in 2004 and 2003, respectively. The Company has a net
        operating loss carryforwards of approximately $7,110,000 of which $605,000
        expires in 2018, $882,000 expires in 2019, $1,200,000 expires in 2020, $819,000
        expires in 2021, $1,240,000 expires in 2022 and $1,190,000 expires in 2023,
        and
        $1,174,000 expires in 2024.
 
 28
  Summit
        Environmental Corporation, Inc.
 
 NOTES
        TO
        FINANCIAL STATEMENTS
  6.
              COMMITMENTS
                  AND CONTINGENCIES
 
 Leases
 
 The
        Company is obligated under various operating leases for equipment, 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, 2004. Rent expense for all operating leases was
        approximately $47,432 and $67,283 for 2004 and 2003, respectively, which
        includes related party rent expense of $2,452 and $2,217,
        respectively.
  At
        December 31, 2004, approximate rental commitments under all noncancellable
        leases having terms in excess of one year are as follows:


Year
                    Ending December 31,
                
                Total2005
                
                $
                9,6202006
                
                
                2,5852007
                
                
                -2008
                
                
                -Total
                    minimum lease payments
                
                $
                12,205
 The
        Company’s office lease requires the Company to maintain $250,000 in general
        liability insurance among other requirements or the landlord has the option
        to
        (a) terminate the Company’s right to occupy the leased premises by providing the
        Company with at least 3 days written notice; and (b) accelerate all rents
        which
        are payable during the remainder of this lease or any renewal period without
        notice or demand. As of December 31, 2004, the Company does not maintain
        general
        liability insurance. Management is in the process of obtaining general liability
        insurance to satisfy this requirement. The Company’s landlord has provided a
        written notice indicating that they will not terminate the Company’s right to
        occupy the leased premises and will not accelerate all rents payable during
        the
        remainder of the lease without notice or demand, provided that the Company
        will
        provide a copy of the new insurance certificate once coverage is
        obtained.
 
 Gain
        Contingency
 
 In
        November, 2002, the Company won a default judgment against Proformance
        Marketing, LLC (Proformance), a related party, for $204,189. This settlement
        was
        a result of the loss of the Company’s inventory that was in the possession of
        Proformance as well as for the collection of two delinquent receivables from
        Proformance. This inventory was expensed by the Company in 2002 and the
        corresponding receivables due from Proformance have been allowed for as of
        December 31, 2004 and 2003. This default judgment balance due of $204,189
        is not
        reflected in the Company’s balance sheet as there is doubt as to the
        collectibility of this balance. As a result, any funds received from Proformance
        will be recorded as income, net of collection costs, as received.
 
 Litigation
 
 The
        Company is involved in various claims and legal actions arising in the ordinary
        course of business. These lawsuits are in various stages and a determination
        as
        to the outcome of these lawsuits and their effect on the financial statements
        is
        not determinable. The Company intends to vigorously defend its positions
        in
        regards to these lawsuits. In the opinion of management, the ultimate
        disposition of these matters will not have a material adverse effect on the
        Company’s financial position.
  29
 Summit
          Environmental Corporation, Inc.
 
 NOTES
          TO
          FINANCIAL STATEMENTS
 7.
              COMMON
                  STOCK
  Lady
        Burd® stock rescission
 
 During
        2002, the Company issued 500,000 shares of stock at $0.45 per share with
        the
        intention to purchase the rights to patents from Lady Burd®. Also included in
        this exchange were a non-refundable deposit of $25,000 in late 2001 and a
        payment of $25,000 in early 2002. As part of this transaction, the Company
        recorded a prepaid royalty asset of $200,000, a patent of $550,000 and an
        initial liability of $525,000 due to Lady Burd® ($50,000 was paid through
        December 31, 2002).
 
  Late
        in
        2002, the Company was made aware that Lady Burd® did not have the patents on the
        products that it represented to the Company. Also at this time, Lady Burd®
        notified the Company that it did not have an agreement with the Company and
        it
        has no obligation to complete this transaction.
 
 Lady
        Burd
        commenced litigation against the Company in New York, and the Company commenced
        litigation against Lady Burd in Longview, Texas. The two suits are being
        settled
        with the Company obtaining ownership of the formula (not patented) for a
        purchase price of 500,000 shares of stock and $62,000 instead of 500,000
        shares
        of stock and $350,000. $50,000 of the $62,000 has been paid.
 
 Private
        placement
  During
        the first quarter of 2004, 640,000 shares of common stock were sold in a
        private
        placement at $.20 per share. During the second quarter of 2004, 681,250 shares
        of common stock were sold in a private placement at $.20 per share, and
        1,000,000 shares of common stock were sold at $.50 per share in a private
        placement. As noted below, warrants to acquire additional shares were issued
        along with the shares under the private placements.
  Warrants
 
  During
        2004 and 2003, the Company issued warrants to acquire 1,354,000 and 802,000
        shares of common stock, respectively, for $0.25 per share through June 11,
        2004,
        in connection with private placement offerings. During 2004, the expiration
        date
        of these warrants was extended to August and October 2004. The business purpose
        for extending the warrants was to make it more likely they would be exercised,
        as the warrants were not “in the money” at the time of the extension. There is
        no additional expense related to the extension of the expiration date, as
        the
        warrants were issued in connection with private placement offerings. During
        2004, 2,097,000 of these warrants were exercised and 1,333,500 expired. As
        of
        December 31, 2004, 180,000 warrants were still outstanding.
 
 During
        2004, the Company issued warrants to acquire 1,321,250 shares of common stock
        for $0.50 per share through January 31, 2005, in connection with private
        placement offerings. During 2005, the expiration date of these warrants was
        extended to May 27, 2005. The business purpose for extending the warrants
        was to
        make it more likely they would be exercised, as the warrants were not “in the
        money” at the time of the extension. There is no additional expense related to
        the extension of the expiration date as the warrants were issued in connection
        with private placement offerings. During 2004, 460,000 of these warrants
        were
        exercised. As of December 31, 2004, 861,250 warrants were still
        outstanding.
 
 During
        2004, the Company issued warrants to acquire 1,000,000 shares of common stock
        for $1.00 per share through May 7, 2005, in connection with private placement
        offerings. During March 2005, the expiration date of these warrants was extended
        to May 27, 2005. The business purpose for extending the warrants was to make
        it
        more likely they would be exercised, as the warrants were not “in the money” at
        the time of the extension. There is no additional expense related to the
        extension of the expiration date as the warrants were issued in connection
        with
        private placement offerings. During 2004, none of these warrants were exercised.
        As of December 31, 2004, all of these warrants were still
        outstanding.
 30
 
 Summit
              Environmental Corporation, Inc.
 
 NOTES
              TO
              FINANCIAL STATEMENTS
 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 to have the option
        of
        subscribing to common shares of the Company based on a price determined by
        the
        directors or Stock Option Committee. The number of shares subject to the
        Plan is
        500,000.
 
 The
        following schedule summarizes the changes in the Plan for the five years
        ended
        December 31, 2004:
 
 Option
                      PriceNumber
                    of
                
                
                
                Total
                      OptionShares
                
                Per
                    Share
                
                PriceOutstanding
                    at December 31, 1998
                
                
                -
                
                $
                -
                
                $
                -For
                    the year ended December 31, 1999:Granted
                
                
                350,000
                
                
                1.00
                
                
                350,000Exercised
                
                
                -
                
                
                -Outstanding
                    at December 31, 1999
                
                
                350,000
                
                $
                1.00
                
                $
                350,000For
                    the year ended December 31, 2000:Granted
                
                
                -
                
                
                -
                
                
                -Exercised
                
                
                -
                
                
                -
                
                
                -Expired
                
                
                (85,000
                )
                
                (1.00
                )
                
                (85,000
                )Outstanding
                    at December 31, 2000
                
                
                265,000
                
                $
                1.00
                
                $
                265,000(127,500
                    exercisable)For
                    the year ended December 31, 2001:Granted
                
                
                -
                
                
                -
                
                
                -Exercised
                
                
                -
                
                
                -
                
                
                -Expired
                
                
                (66,250
                )
                
                (1.00
                )
                
                (66,250
                )Outstanding
                    at December 31, 2001
                
                
                198,750
                
                $
                1.00
                
                $
                198,750(95,000
                    exercisable)For
                    the year ended December 31, 2002:Granted
                
                
                280,000
                
                
                0.30
                
                
                84,000Exercise
                    price reduction
                
                
                -
                
                
                (0.70
                )
                
                (129,500
                )Exercised
                
                
                -
                
                
                -
                
                
                -Expired
                
                
                (13,750
                )
                
                (1.00
                )
                
                (13,750
                )Outstanding
                    at December 31, 2002
                
                
                465,000
                
                
                0.30
                
                
                139,500(465,000
                    exercisable)For
                    the year ended December 31, 2003:Granted
                
                
                10,000
                
                
                0.30
                
                
                3,000Exercised
                
                
                -
                
                
                -
                
                
                -Expired
                
                
                (80,000
                )
                
                (0.30
                )
                
                (24,000
                )Outstanding
                    at December 31, 2003
                
                
                395,000
                
                $
                0.30
                
                $
                118,500(395,000
                    exercisable)For
                    the year ended December 31, 2004:Granted
                
                
                5,000
                
                
                0.16
                
                
                800Exercised
                
                
                -
                
                
                -
                
                
                -Expired
                
                
                (2,500
                )
                
                (0.16
                )
                
                (400
                )Outstanding
                    at December 31, 2004
                
                
                397,500
                
                $
                0.30
                
                $
                118,900(395,000
                    exercisable)




31




Summit
      Environmental Corporation, Inc.





NOTES
      TO
      FINANCIAL STATEMENTS


During
      2004, the board of directors approved the 2004 Stock Option Plan (the “Plan”) of
      the Company whereby, at the discretion of the directors or of a Stock Option
      Committee appointed by the board of directors, invited employees of the Company
      or directors of the Company or consultants to the Company to have the option
      of
      subscribing to common shares of the Company based on a price determined by
      the
      directors or Stock Option Committee. The number of shares subject to the Plan
      is
      1,000,000.


The
        following schedule summarizes the changes in the Plan for the year ended
        December 31, 2004:
 For
                    the year ended December 31, 2004:Granted
                
                
                480,000
                
                $
                0.16
                
                $
                76,800Exercised
                
                
                -
                
                
                -
                
                
                -Expired
                
                
                -
                
                
                -
                
                
                -Outstanding
                    at December 31, 2004
                    (480,000
                      exercisable)
                
                
                480,000
                
                $
                0.16
                
                $
                76,800
  During
        2002, the Company reduced the exercise price for all stock options from $1.00
        per share to $0.30 per share.
 
 During
        2001, the Company issued options outside the Plan to purchase 250,000 shares
        of
        common stock at $0.50 to a strategic alliance partner. During 2004, the Company
        reduced the exercise price to $0.40 and extended the expiration of these
        options
        to June 30, 2005. During January 2005, the expiration date of these options
        was
        extended to February 12, 2006. These stock options are exercisable as of
        December 31, 2004.
 
  According
        to SFAS 123, *Accounting
        for Stock-Based Compensation* ,
        additional expense is to be recognized if the modification of the terms causes
        the new award to be more valuable than the original award. The Company
        determined that no additional expense is to be recognized as the value of
        the
        new awards is less than the value of the original award.
   During
        2001, the Company issued options outside the Plan to purchase 150,000 shares
        of
        common stock at $0.40 to a marketing partner. These stock options expired
        in
        2002.
 
 During
        2004, the Company issued options to purchase 188,584 shares of common stock
        at
        $0.16 per share to a consultant offering investment and marketing advice.
        As of
        December 31, 2004, 141,438 of these options were exercisable. The remaining
        47,146 options will be exercisable as of March 9, 2005. These stock options
        expire as follows: 47,146 options expire June 9, 2009; 47,146 options expire
        September 9, 2009; 47,146 options expire December 9, 2009; 47,146 options
        expire
        March 9, 2010. As of December 31, 2004, 94,294 of these options had been
        exercised, but had not been issued as of December 31, 2004. For the year
        ended
        December 31, 2004, $30,901 has been recognized in expense in connection with
        services provided under this option contract.
 
 During
        2004, the Company issued options to purchase 100,000 shares of common stock
        at
        $0.16 per share to a consultant offering marketing consulting services. As
        of
        December 31, 2004, all of these options had been exercised. For the year
        ended
        December 31, 2004, $22,225 has been recognized in expense in connection with
        services provided under this option contract.
   32
 Summit
          Environmental Corporation, Inc.
 
 NOTES
          TO
          FINANCIAL STATEMENTS
 Common
        Stock Issued for Services Rendered
 
 During
        2004, the Company issued 210,000 shares of stock ranging from $0.16 to $0.74
        per
        share to officers of the Company for services rendered. During 2003, the
        Company
        issued 210,000 shares of stock ranging from $0.18 to $0.28 per share to officers
        of the Company for services rendered
 
 During
        2004, the Company issued 11,900 and 50,000 shares at $0.45 per share
        respectively, for services rendered by outside companies. During 2003, the
        Company issued 44,000 and 6,000 shares at $0.30 and $0.33 per share
        respectively, for services rendered by outside companies.
 
 During
        2003, the Company issued 360,000 shares of stock at $0.32 per share for
        licenses.
 
 8.
              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 $851 and $8,823 were made to related parties in 2004
        and
        2003 ,
        respectively.
 
  At
        December 31, 2004 ,
        accounts receivables from related parties totaled $154,037 all of which was
        reserved for at December 31, 2004. The related parties, the amounts owed
        by each
        to the Company, and the nature of the transactions giving rise to the accounts
        receivable are as follows:
  Ex-employee
                    - $54,568 -
                charged
                    by the Company with embezzlement. Judgment obtained and judgment
                    settled
                    for $52,000 paid in April 2005.Summit
                    Environmental Europe - $7,383 -
                the
                    Company’s former marketing representative in Europe received fire
                    suppressant product but never paid for it.Proformance
                    Marketing - $31,517 -
                this
                    former marketing representative received fire suppressant product
                    but
                    never paid for it.FlameOut
                    International - $60,569 -
                this
                    former marketing representative received fire suppressant product
                    but
                    never paid for it.
 
 Notes
        receivable from a related party totaled $20,496, all of which was reserved
        for
        at December 31, 2004.
 
 The
        Company has a royalty payable to a related party with a balance of $9,328
        as of
        December 31, 2004. This balance is included in accounts payable on the balance
        sheet.
 
  The
        Company acquired a patent from BioGenesis Enterprises, Inc. (BioGenesis)
        on
        November 2, 1998 (see Note 2), pursuant to which advanced royalty fees totaling
        $500,000 were paid. The purchase agreement requires the Company to pay
        BioGenesis a periodic royalty of $.50 per 16-oz. can and an equivalent
        (approximately 7%) on all other product categories using the fire suppressant
        technology. One-half of all periodic royalty fees due to BioGenesis will
        be
        credited against the advance royalty fee (until fully recovered) and one-half
        will be paid to BioGenesis in cash on the 30 th of each
        month based upon invoiced sales through the close of the preceding month.
        The
        Company has prepaid royalties to BioGenesis totaling $490,095as of December
        31,
        2004. Included in accounts payable is $15,573 due to BioGenesis at December
        31,
        2004, for goods received and royalties due. We credited against the advance
        royalties $0 in 2003 and $9,905 in 2004. The product certification process
        that
        the Company was subjected to took 5-1/2 years to complete before it was allowed
        to begin test marketing, which first occurred in 2004. In 2005 QVC started
        regular monthly programming, and the Company has since received purchase
        orders
        from retailers for 3rd and 4th quarter shipments in excess of
        $1,000,000.
  
 33
 Summit
          Environmental Corporation, Inc.
 
 NOTES
          TO
          FINANCIAL STATEMENTS
 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 license.
  During
        2003, the Company purchased a license for various products from an entity
        with
        common shareholders and management members of the Company, and paid $115,200
        for
        such license.
 
 9.
              CONCENTRATIONS
 
 Approximately
        50% and 18% of sales were made to two customers, respectively in 2004 and
        35% of
        sales were made to two customers in 2003, respectively. These customers were
        different for each year presented. Accounts receivable from the two customers
        was $16,589 and from the two customers $11,366 in 2004 and 2003,
        respectively .
 
 10.
              FINANCIAL
                  RESULTS AND LIQUIDITY
 
 The
        accompanying financial statements have been prepared on a going concern basis,
        which contemplates the realization of assets and the satisfaction of liabilities
        in the normal course of business. As shown in the accompanying financial
        statements, the Company has incurred net losses of $1,136,783 and $1,185,992
        for
        the years ended December 31, 2004 and 2003, respectively, and has incurred
        losses of $7,216,663 since inception. The Company also has negative cash
        flows
        from operations of $942,867 and $514,786 for the years ended December 31,
        2004
        and 2003, respectively, and has used cash in operations of $6,208,075 since
        inception. These factors, among others, may indicate that the Company will
        be
        unable to continue as a going concern for a reasonable period of time. The
        financial statements do not include any adjustments relating to the
        recoverability and classification of recorded assets, or the amounts and
        classification of liabilities that might be necessary in the event the Company
        cannot continue in existence.
 
 Despite
        its negative cash flow, the Company has been able to secure financing to
        support
        its operations to date. Going forward, additional cash will be needed to
        implement the proposed business plan and to fund losses until the Company
        becomes profitable. Where there is no assurance that funding will be available
        to execute the plan, the Company is continuing to seek financing to support
        its
        turnaround efforts and is exploring a number of alternatives in this regard.
        Management is exploring alternatives that include seeking strategic investors
        and implementing cost reduction programs. There can be no assurance that
        management’s efforts in this regard will be successful. The Company believes
        that the capital raised in fiscal 2004 and 2005 will be sufficient to support
        the Company’s liquidity requirements through December 31, 2005, depending on
        operating results. Management believes that, despite the financial hurdles
        and
        funding uncertainties going forward, it has under development, a business
        plan
        that if successfully funded and executed as part of the financial restructuring,
        can significantly improve operating results.
  34






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


On
      November 22, 2004 Summit Environmental Corporation, Inc. (“Summit”) received a
      letter, dated November 18, 2004, from Lane Gorman Trubitt, L.L.P. of Dallas,
      Texas, the principal independent registered public accountants of Summit, in
      which the accountants resigned. Lane Gorman Trubitt, L.L.P. had been engaged
      as
      Summit’s principal independent registered public accountants since December 17,
      1998, when it replaced Hogan & Slovacek of Oklahoma City, Oklahoma as
      Summit’s principal independent registered public accountants. See Summit’s Form
      8-K filed with the Commission on December 18, 1998 (Commission File No.
      333-48659).





The
      reports of Lane Gorman Trubitt, L.L.P. on the financial statements of Summit
      for
      its fiscal years ended December 31, 2002 and 2003 contained no adverse opinion
      or disclaimer of opinion, and, other than raising substantial doubt about
      Summit’s ability to continue as a going concern for the fiscal year ended
      December 31, 2003, was not otherwise qualified or modified as to uncertainty,
      audit scope, or accounting principles during the period of its engagement
      (December 17, 1998) to November 18, 2004, the date of resignation.





During
      the past two years or interim periods prior to November 18, 2004, there were
      no
      disagreements between Summit and Lane Gorman Trubitt, L.L.P. whether or not
      resolved, on any matter of accounting principles or practices, financial
      statement disclosure, or auditing scope or procedure which, if not resolved
      to
      the satisfaction of Lane Gorman Trubitt, L.L.P., would have caused them to
      make
      reference to the subject matter of the disagreements in their reports on the
      financial statements.





Summit
      provided Lane Gorman Trubitt, L.L.P. with a copy of the disclosures it makes
      in
      its Form 8-K and requested Lane Gorman Trubitt to furnish a letter addressed
      to
      the Commission stating whether it agreed with the statements made therein and,
      if not, stating the respects in which it did not agree. Such a letter was filed
      as Exhibit 16.1 to said Form 8-K on November 24, 2004.





On
      December 28, 2004. the board of directors of Summit Environmental Corporation,
      Inc. (“Summit”) engaged Philip Vogel & Co. PC, of Dallas, Texas as Summit’s
      principal independent registered public accountants to audit its financial
      statements. Summit did not consult the new accountant regarding the application
      of accounting principles to a specific completed or contemplated transaction,
      or
      the type of audit opinion that might be rendered on the issuer's financial
      statements.





**ITEM
      8A.**  **CONTROLS
      AND PROCEDURES.**




**Evaluation
      of disclosure controls and procedures** .
      The
      Company’s management, with the participation of the Company’s Chief Executive
      Officer and Chief Financial Officer, has evaluated the effectiveness of the
      Company’s disclosure controls and procedures as of December 31, 2004. Based on
      this evaluation, the Company’s Chief Executive Officer and Chief Financial
      Officer concluded that the Company’s disclosure controls and procedures are
      effective.




35




**OTHER
      INFORMATION**





There
      is
      no information that was required to be disclosed on Form 8-K during the fourth
      quarter of 2004 that was not reported.




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





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





The
      following table shows information as of March 24, 2005 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:


TERM
                  OFOFFICE
                  HELD
              
              
              
              OFFICENAME
              
              OFFICE
              
              SINCE
              
              EXPIRESB.
                  Keith Parker, 55(1)
              
              Chief
                  Executive Officer and
              
              1998
              
              5-05DirectorChris
                  Dellinges, 55
              
              Chief
                  Financial Officer
              
              2002
              
              5-05Director
              
              2001
              
              5-05Paula
                  Parker, 50(1)
              
              Vice
                  President, Secretary
              
              1998
              
              5-05And
                  DirectorDean
                  Haws, 34
              
              Director
              
              1998
              
              5-05James
                  J. Roach, 56
              
              Director
              
              1998
              
              5-05Thomas
                  J. Kenan, 73
              
              Director
              
              1998
              
              5-05Mohsen
                  Amiran, 54
              
              Director
              
              1999
              
              5-05Wilton
                  Dennis Stripling, 62
              
              Director
              
              2000
              
              5-05




Mr.
      and
      Mrs. Parker are husband and wife.





36




**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. which merged with
      Summit Environmental in 1998. Mr. Parker has been the full-time CEO of Summit
      Technologies and, then, Summit Environmental, since 1997.





**Chris
      Dellinges, CFO**





Mr.
      Dellinges graduated from the College of the Southwest and attended Texas
      Wesleyan University School of Law. He has been a CPA since 1977 and has
      particular expertise in complex tax matters, audits, appeals, tax court issues,
      Internal Revenue Service installment agreements and offers in compromise,
      bankruptcy, reorganization, business management and turnaround, divorce
      litigation, tax and business fraud, oil and gas, partnership, corporation,
      and
      individual taxation. He has been self-employed as a CPA in Dallas, Texas for
      the
      last five years and the CFO of Summit Environmental since 2002.





**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 her spouse, Keith Parker, to form
      Moonlighting Distribution Corporation and then, in 1997, to form Summit
      Environmental Corporation. She has been a full-time employee of Summit
      Technologies and, then, Summit Environmental since 1997.





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




37





**James
      J. Roach, Director**





Mr.
      Roach
      was 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. He has been a director of our company since 1998.





**Thomas
      J. Kenan, Director**





Mr.
      Kenan
      has practiced securities and corporation law in Oklahoma City, Oklahoma for
      the
      last 38 years. He has been affiliated with Fuller, Tubb, Pomeroy & Stokes in
      an “of counsel” capacity since May 1, 1993. He has been a director and outside
      corporate counsel of Summit Environmental since 1998.





**Dr.
      Mohsen Amiran, Director**





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





Soon
      after, the Islamic revolution took place and a new government took over. For
      a
      two-month period, Dr. Amiran lived a life of torment and feared for his life.
      The new regime destroyed the laboratory, burned his equipment and destroyed
      all
      his research. Eventually, Ayatollah 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. He has been employed the last five years as the CEO of BioGenesis
      and a
      director of our company since 1999.




38





**Dr.
      Wilton Dennis Stripling, Director**





Dr.
      Stripling is an orthopaedic surgeon specializing in hand, wrist and forearm
      surgery in the Dallas area and has been practicing medicine there since 1968.
      He
      is board certified in Orthopaedic Surgery. 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 has a certificate
      in
      finance from the Cox Business School at SMU and a certificate in Medical
      Management from Carnegie Mellon University. He has been a director of our
      company since 2000.





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





•
            bankruptcy,





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





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





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





**Audit
      Committee and Audit Committee Financial Expert**





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





**Code
      of Ethics**





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





**Compliance
      With Section 16(a) of the Exchange Act** **.**





Our
      securities are not registered with the Securities and Exchange Commission under
      Section 12(b) or 12(g) of the Exchange Act. Accordingly, our officers, directors
      and beneficial owners of 10 percent or more of any class of stock are not
      subject to Section 16(a) of the Exchange Act.




39





**ITEM
      10.**  **EXECUTIVE
      COMPENSATION.**





The
      following sets forth the remuneration received in the last three fiscal years
      by
      Keith Parker (CEO), the president of Summit, in all capacities. No other officer
      or employee has received total remuneration of $100,000 or more in any of such
      years.





Long
                Term CompensationAwards
            PayoutsYear
            Salary
            Bonus
            Other
                Annual
              Compensation
            Restricted
              Stock
                Award
            Securities
              Underlying
              Options/SARS(#)
            LTIP
              Payouts
            All
                Other
              Compensation2004:CEO
            $90,000
            0
            
            32,625
            /
            0
            $11,9322003:CEO
            $90,000
            0
            
            13,230
            /
            0
            $12,0062002:CEO
            $67,500
            0
            
            24,215
            /
            0
            $12,098





**Employment
      Contracts** **.**





We
      have
      no employment agreements.





**Stock
      Options** **.**





We
      have
      two stock option plans. The major provisions of the 1998 Plan are as
      follows:





Options
      granted under the 1998 Plan may be "employee incentive stock options" as defined
      under Section 422 of the Internal Revenue Code or non-qualified stock
      options, as determined by the option committee of the board of directors at
      the
      time of grant of an option. The plan enables the option committee of the board
      of directors to grant up to five hundred thousand stock options to employees
      and
      consultants from time to time. The following tables disclose the stock options
      that were granted to our executive officers during the last fiscal year, the
      number of options that were exercised the last fiscal year and the value of
      unexercised options retained by such executive officers at year end
      2004.





Option/SAR
                Grants in Last Fiscal YearIndividual
                GrantsName
                of Executive Officer
            Number
                of Securities Underlying
              Options/SARs
                Granted
            %
                of Total Options/SARs Granted to Employees in Fiscal Year
            Exercise
                Price
            Expiration
                DateKeith
                Parker, CEO
            0
            0Paula
                Parker, VP
            0
            0Chris
                Dellinges, CFO
            0
            0





40




Aggregate
                Option/SAR Exercisable in Last Fiscal Year and FY-End Option/SAR
                ValuesName
                of
              Executive
                Officer
            Shares
              Acquired
              On
                Exercise
              (#)
            Value
              Realized
              ($)
            Number
                of Securities Underlying
              Unexercised
                Options/SARs at
              FY-End
                (#)
              
              Exercisable/Unexercisable
            Value
                of Unexercised In-the-
              Money
                Options/SARs at FY-
              End
                ($)
              
              Exercisable/UnexercisableKeith
                Parker, CEO
            0
            $0
            0/0
            0Paula
                Parker, VP
            0
            $0
            0/0
            0Chris
                Dellinges, CFO
            0
            $0
            40,000/0
            $12,000/0





Options
      granted under the 2004 Plan may be "employee incentive stock options" as defined
      under Section 422 of the Internal Revenue Code or non-qualified stock
      options, as determined by the option committee of the board of directors at
      the
      time of grant of an option. The plan enables the option committee of the board
      of directors to grant up to one million stock options to employees and
      consultants from time to time. The following tables disclose the stock options
      that were granted to our executive officers during the last fiscal year, the
      number of options that were exercised the last fiscal year and the value of
      unexercised options retained by such executive officers at year end
      2004.




Option/SAR
                Grants in Last Fiscal YearIndividual
                GrantsName
                of Executive Officer
            Number
                of Securities Underlying
              Options/SARs
                Granted
            %
                of Total Options/SARs Granted to Employees in Fiscal Year
            Exercise
                Price
            Expiration
                DateKeith
                Parker, CEO
            0
            0Paula
                Parker, VP
            0
            0Chris
                Dellinges, CFO
            80,000
            16%
            $0.16
            2/2014








Aggregate
                Option/SAR Exercisable in Last Fiscal Year and FY-End Option/SAR
                ValuesName
                of
              Executive
                Officer
            Shares
              Acquired
              On
                Exercise
              (#)
            Value
              Realized
              ($)
            Number
                of Securities Underlying
              Unexercised
                Options/SARs at
              FY-End
                (#)
              
              Exercisable/Unexercisable
            Value
                of Unexercised In-the-
              Money
                Options/SARs at FY-
              End
                ($)
              
              Exercisable/UnexercisableKeith
                Parker, CEO
            0
            $0
            0/0
            0Paula
                Parker, VP
            0
            $0
            0/0
            0Chris
                Dellinges, CFO
            0
            $0
            80,000/0
            $12,800/0





**Compensation
      of Directors.**





We
      have
      no standard arrangements pursuant to which directors are compensated for any
      services as directors, including compensation for committee participation or
      special assignments. However, during the last fiscal year the following
      directors were each granted stock options to purchase 80,000 shares of common
      stock at an exercise price of $0.16 and expiring in February 2014: Dean Haws,
      Jim Roach, Thomas Kenan, Mohsen Amiran, Dennis Stripling and Chris Dellinges.
      The options granted to Mr. Dellinges are the same options reported above under
      “Option/SAR Grants in Last Fiscal Year.”




41





**ITEM
      11.**  **SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.**





The
      following table shows information as of March 24, 2005 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:


NO.
                  OF
              
              %
                  OFSUMMIT
                  ENVIRONMENTAL CORP.
              
              SHARES
              
              CLASSB.
                  Keith Parker
              
              
              2,458,805
              (1)(4)
              
              10.4133
                  East Tyler StreetLongview,
                  TX 75601Paula
                  Parker
              
              
              580,000
              (2)
              
              2.4133
                  East Tyler StreetLongview,
                  TX 75601Dean
                  Haws
              
              
              410,000
              (4)
              
              1.7P.
                  O. Box 1071Gilmer,
                  TX 75644James
                  J. Roach
              
              
              175,000
              (4)
              
              0.7182
                  Curtis RoadMiddlebury,
                  CT 06762Thomas
                  J. Kenan
              
              
              238,253
              (4)
              
              1.0212
                  NW 18thStreetOklahoma
                  City, OK 73103Mohsen
                  Amiran
              
              
              472,500
              (4)
              
              2.07420
                  Alban Station, Ste. B-208Springfield,
                  VA 22150Wilton
                  Dennis Stripling
              
              
              1,837,100
              (4)
              
              7.85230
                  Walnut Hill Lane, Ste. 306Dallas,
                  TX 75231Chris
                  Dellinges
              
              
              320,000
              (4)
              
              1.45949
                  Sherry Lane, Suite 650Dallas,
                  TX 75225Officers
                  and Directors
              
              
              6,491,658
              
              
              27.4as
                  a group (8 persons)




42





(1)
            Mr.
                Parker directly owns 1,850,805 shares of common stock. He is attributed
                the beneficial ownership of 1,451,000 shares owned by a family limited
                partnership. 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.
                He is
                also attributed the ownership of 170,000 shares owned by his spouse,
                Paula
                Parker. All these same shares are attributed to Paula Parker. See
                footnote
                (2).





(2)
            Mrs.
                Parker, who is the spouse of B. Keith Parker, is attributed the beneficial
                ownership of the same shares attributed to Mr. Parker. See footnote
                (1).





(4)
            These
                shares include the shares subject to stock options reported for this
                person under “Stock Options” on page
                40.





**ITEM
      12.**  **CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS.**





Summit
      Technologies, prior to its merger with our company, paid $30,000 to Moonlighting
      Distribution Corporation for the exclusive license to distribute products
      manufactured by Moonlighting Distribution Corporation - **Stressex** **Ô** , **Pannache** **Ô** **,** and **Trim-Away** **Ô** .
      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 pays royalties to Moonlighting for the exclusive licensing
      rights to the products from Moonlighting.





Summit
      Technologies’ and, now, our 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
      initially paid to Moonlighting a royalty of $0.50 for each 16-ounce can of **FirePower
      911** **Ô** **,** $0.35
      for
      each 1-liter can of **FirePower** **Ô** **,** and
      $0.50 for each gallon of **FlameOut** **â** .
      As of
      January 2005, the royalties for **FirePower** **Ô** and **FlameOut** **â** in
      aerosol form are now reduced to $0.25 a can.





On
      November 2, 1998, BioGenesis assigned to Summit Technologies all patents and
      intellectual property rights associated with the fire suppressant products.
      Because of our merger with Summit Technologies, these rights are now owned
      by
      our 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.





Royalties
      that have been paid to Moonlighting are as follows:





**Date**
            
            **Amount**
            
            **Balance
                Paid**03-31-99
            
            $
            5,780.00
            
            $
            5,780.0005-05-99
            
            $
            39,685.80
            
            $
            45,465.8008-28-01
            
            $
            10,322.62
            
            $
            55,788.4211-05-03
            
            $
            5,391.78
            
            $
            61,180.2006-11-04
            
            $
            4,966.81
            
            $
            66,147.01





**PARENTS
      OF THE COMPANY**





Moonlighting
      Distribution Corporation (“Moonlighting”) is affiliated with the company through
      the common control of it and our 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.




43




**ITEM
      13.**  **EXHIBITS.**





The
      following exhibits are filed, by incorporation by reference, as part of this
      Form SB-2 Registration Statement:





Exhibit
      No.      Description





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.*





5
            
            -
            Opinion
                of Thomas J. Kenan, Esquire, on the legality of the securities being
                registered.+++





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





10.3
            
            -
            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****Ô**,
                Super Cold Fire, and**Flame
                Out®**)*





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.***





10.8
            
            -
            2004
                Stock Option Plan adopted by Summit Environmental Corporation,
                Inc.+





44




14
            
            -
            Code
                of Ethics for the Chief Executive officer and Senior Financial
                Officers.*+





16.1
            
            -
            Letter
                of November 24, 2004 of Lane Gorman Trubitt, L.L.P. agreeing with
                the
                statements made in Form 8-K by Summit Environmental Corporation,
                Inc.,
                concerning Summit’s change of principal independent
                accountants.++





23
            
            -
            Consent
                of Lane Gorman Trubitt, L.L.P. to be named as an expert in the
                Registrant's Form 10-KSB for the fiscal year ended December 31, 2003,
                which is incorporated herein.





23.1
            
            -
            Consent
                of Thomas J. Kenan, Esquire, to the reference to him as an attorney
                who
                has passed upon certain information contained in the Registration
                Statement.





*
            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.




+
            Previously
                filed with Form 10-KSB Annual Report FYE 12-31-03, Commission File
                No.
                333-48675 incorporated herein.




++
            Previously
                filed with Form 8-K November 22, 2004; Commission File No. 333-48659
                incorporated herein.






+++
            Being
                filed with Form SB-2 Am 1, Commission File No. 333-122402 incorporated
                herein.




*+
              Previously
                  filed with Form 10-KSB Annual Report FYE 12-31-04, Commission File
                  No.
                  333-48675 incorporated herein.




**ITEM
      14.**  **PRINCIPAL
      ACCOUNTANT FEES AND SERVICES.**





**Audit
      Fees** .
      Our
      principal independent accountant billed us, for each of the last two fiscal
      years, the following aggregate fees for its professional services rendered
      for
      the audit of our annual financial statements and review of financial statements
      included in our Form 10-QSB reports or other services normally provided in
      connection with statutory and regulatory filings or engagements for those two
      fiscal years:





Fiscal
      Year ended December 31, 2004   $39,005.50


Fiscal
      Year ended December 31, 2003   $34,662.71





**Audit-Related
      Fees.** Our
      principal independent accountant billed us, for each of the last two fiscal
      years, the following aggregate fees for assurance and related services
      reasonably related to the performance of the audit or review of our financial
      statements and not reported above under “Audit Fees”:




45





Fiscal
      Year ended December 31, 2004   $0


Fiscal
      Year ended December 31, 2003   $0





**Tax
      Fees** .
      Our
      principal independent accountant billed us, for each of the last two fiscal
      years, the following aggregate fees for professional services rendered for
      tax
      compliance, tax advice and tax planning:





Fiscal
      Year ended December 31, 2004   $0


Fiscal
      Year ended December 31, 2003   $0





**All
      Other Fees** .
      Our
      principal independent accountant billed us, for each of the last two fiscal
      years, the following aggregate fees for products and services provided by it,
      other than the services reported in the above three categories:





Fiscal
      Year ended December 31, 2004   $0


Fiscal
      Year ended December 31, 2003   $0





**Pre-Approval
      of Audit and Non-Audit Services.**  The
      Audit
      Committee charter requires that the committee pre-approve all audit, review
      and
      attest services and non-audit services before such services are
      engaged.





**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




Date:
                July 22, 2005
              SUMMIT
                ENVIRONMENTAL CORPORATION, INC.By:
              */s/
                B. Keith Parker*B.
                  Keith Parker, Chief Executive Officer,
                and
                  individually as a Director





46




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




Date:
                    July 22, 2005
                */s/
                    Chris Dellinges*Chris
                    Dellinges, Chief Financial Officerand
                    Principal Accounting OfficerDate:
                    July 22, 2005
                */s/
                    Paula Parker*Paula
                    Parker, Vice President, Secretary, and DirectorDate:
                    July 22, 2005
                */s/
                    Dean Haws*Dean
                    Haws, DirectorDate:
                    July 22, 2005
                */s/
                    James J. Roach*James
                    J. Roach, DirectorDate:
                    July 22, 2005
                */s/
                    Mohsen Amiran*Mohsen
                    Amiran, DirectorDate:
                    July 22, 2005
                */s/
                    Thomas J. Kenan*Thomas
                    J. Kenan, DirectorDate:
                    July 22, 2005
                /s/*Wilton
                    Dennis Stripling*Wilton
                    Dennis Stripling, Director




47




**Summit
      Environmental Corporation, Inc.**


Commission
      File No. 333-48659





**EXHIBIT
      INDEX**





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


**For
      the year ended December 31, 2004**





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


Exhibit No.
              Description
 
 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.*





5
            
            -
            Opinion
                of Thomas J. Kenan, Esquire, on the legality of the securities being
                registered.+++





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





10.3
            
            -
            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****Ô**,
                Super Cold Fire, and**Flame
                Out®**)*





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





48




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.***





10.8
            
            -
            2004
                Stock Option Plan adopted by Summit Environmental Corporation,
                Inc.+





14
            
            -
            Code
                of Ethics for the Chief Executive officer and Senior Financial
                Officers.*+





16.1
            
            -
            Letter
                of November 24, 2004 of Lane Gorman Trubitt, L.L.P. agreeing with
                the
                statements made in Form 8-K by Summit Environmental Corporation,
                Inc.,
                concerning Summit’s change of principal independent
                accountants.++





23
            
            -
            Consent
                of Lane Gorman Trubitt, L.L.P. to be named as an expert in the
                Registrant's Form 10-KSB for the fiscal year ended December 31, 2003,
                which is incorporated herein.





23.1
            
            -
            Consent
                of Thomas J. Kenan, Esquire, to the reference to him as an attorney
                who
                has passed upon certain information contained in the Registration
                Statement.





*
            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.




+
            Previously
                filed with Form 10-KSB Annual Report FYE 12-31-03, Commission File
                No.
                333-48675 incorporated herein.




++
            Previously
                filed with Form 8-K November 22, 2004; Commission File No. 333-48659
                incorporated herein.




+++
            Being
                filed with Form SB-2 Am 1, Commission File No. 333-122402 incorporated
                herein.




+
              Previously
                  filed with Form 10-KSB Annual Report FYE 12-31-04, Commission File
                  No.
                  333-48675 incorporated herein.




49