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

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

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

                                       or

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

                          COMMISSION FILE NO. 333-48675

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

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

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

                     Issuer's telephone number: 800-522-7841

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

                           Title of each class: None.

                Name of each exchange on which registered: None.

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

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

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

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


                                       1
<PAGE>

State issuer's revenues for its most recent fiscal year:  $121,656.

         State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within the past 60 days: $5,705,719 computed by
reference to the $0.665 average of the bid and asked price of the company's
Common Stock on March 18, 2002.

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of March 11, 2002: 13,882,994 shares of Common Stock,
$0.001 par value.

DOCUMENTS INCORPORATED BY REFERENCE

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

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]


                                       2
<PAGE>


                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                           Page
                                                                           ----
<S>      <C>                                                              <C>
Item 1.  Description of Business .........................................    5

         Business Development ............................................    5
         Principal Products ..............................................    5
         Distribution Methods ............................................    7
         Competition .....................................................    8
         Raw Materials and Suppliers    ..................................    8
         Dependence on Major Customers ...................................    8
         Patents, Trademarks and Licenses ................................    8
         Government Approval of Principal Products........................    9
         Seasonality......................................................   10
         Research and Development.........................................   10
         Environmental Controls...........................................   10
         Number of Employees..............................................   10

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


         Facilities.......................................................   11

Item 3.  Legal Proceedings................................................   11

Item 4.  Submission of Matters to a Vote of Security Holders .............   11

Item 5.  Market for Common Equity and Related Stockholder Matters.........   11

Item 6.  Management's Discussion and Analysis.............................   12

         Overview.........................................................   12
         Results of operations............................................   16

         Sales............................................................   16
         Gross margin.....................................................   18
         Operating expenses...............................................   18
         Net loss.........................................................   19
         Liquidity and capital resources..................................   19
         Outlook..........................................................   19

Item 7.  Financial Statements.............................................   24

Item 8.  None

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
                  Compliance with Section 16(a) of the Exchange Act.......   36

Item 10. Executive Compensation...........................................   38

Item 11. Security Ownership of Certain Beneficial Owners and Management...   39
</Table>


                                       3
<PAGE>

<Table>
<Caption>
                                                                           Page
                                                                           ----
<S>      <C>                                                              <C>

Item 12. Certain Relationships and Related Transactions...................   40

         Parents of the Company...........................................   41

Item 13. Exhibits and Reports on Form 8-K.................................   41

         Signatures.......................................................   42
</Table>


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<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS.

         BUSINESS DEVELOPMENT

         We 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 and, respectively, the chief executive officer and vice president for
shareholder relations of the company. Originally, Moonlighting developed and
marketed health and well-being products designed to improve the quality of an
individual's life and also marketed other industrial cleaners, chemicals and
fire suppression agents.

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

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

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

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

         PRINCIPAL PRODUCTS

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


                                       5
<PAGE>

         FIREPOWER 911(TM)and FLAMEOUT(R)

         These products are fire suppressants and retardants manufactured for
us. FLAMEOUT(R) was developed by Dr. Mohsen C. Amiran and his company,
BioGenesis, to be a replacement for Halon 1211. Halon 1211 was a widely used
fire suppression and explosion protection agent. It was applied primarily as a
wetting agent and was the fire-extinguishing agent of choice for many uses, such
as most fire extinguishers. Its production was halted in 1994 by actions taken
at the 1992 Geneva Peace Conference primarily because Halon 1211 has one of the
higher ozone depletion potentials of any compound. Halon 1211 is still approved
for certain limited mission-critical uses (such as ship- and shore-based crash,
fire and rescue), but existing installations of Halon 1211 that are not mission
critical must switch to an approved, acceptable alternative. We are engaged with
International Aero in accordance with the Federal Aviation Administration
minimum performance initiative to find acceptable replacements for the onboard
Halon fire extinguishers on commercial aircraft. In December 2001, FlameOut(R)
was approved by the United States Department of Transportation and Federal
Aviation Administration as an acceptable replacement for Halon 1211.

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

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

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

         In December 2000 we submitted FLAMEOUT(R) to the United States Forestry
Service for certification as a Wetland Wildfire-approved fire extinguishing
agent. All test results received to date have been listed as "acceptable".
Completion and listing is expected by May 2002.

         FLAMEOUT(R) was involved at the end of 2001 in two international tests
for the purpose of certification as an alternative replacement product for AFFF.
AFFF is a fire fighting foam which is classified as a biohazard. Suspected as a
possible link to causing cancer, fire fighters using AFFF wear biohazard suits
when using AFFF. These tests were conducted in Europe and Mexico. We have an
official military specification test scheduled toward the end of the first
quarter 2002 with the United States Airforce testing laboratory.


                                       6
<PAGE>

         FIREPOWER 911(TM) contains Surfactant Blend A--FLAMEOUT(R) formula.
FIREPOWER 911(TM) and FLAMEOUT(R) suppress and extinguish fires quickly. State
fire codes prohibit products from being marketed as fire extinguishers without
proper testing, listing, and rating. 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. A new Non-Halon
certification, with regard to residential fire extinguisher sales, leaves
FIREPOWER 911(TM) in a class of its own.

         INDUSTRIAL CHEMICALS AND CLEANERS

         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. We market industrial chemicals and cleaners that we have introduced into
our line of products.

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

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

         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.

         Our management decided in June 2000 to develop a marketing division for
these products. In September 2000, the decision was made to develop a color line
of products complementing the rest of the Pannache line. The initial product
would be in a new category of cosmetic lipsticks; long-lasting, no smear,
semi-permanent lip color. The company first introduced Luscious Lips in August
2001. Luscious Lips is manufactured by Lady Burd Exclusive Private Label
Cosmetics of Farmingdale, New York. Our website www.pannachelusciouslips.com
displays the entire Pannache Cosmetics Product Line.

         DISTRIBUTION METHODS

         We market products primarily through the development of strategic
alliances, the first of which was with International Aero, Inc., for the
aviation industry, the U. S. Military and the United States Gulf


                                       7
<PAGE>
Coast petroleum industry. International Aero is the world's largest
re-configuration and retrofit contractor for the aviation industry. Other
alliances made by the company for specific industries include e-commerce,
catalogue sales, roofing, plumbing, heating and air conditioning, building
materials, and retail mass merchandisers and convenience stores. We are
preparing to launch sales efforts through infomercials and through direct
television advertising. Internationally, we market products through exclusive
distribution agreements with revenue sharing clauses.

         Exclusive distribution agreements which we have entered into include
the Philippines, England and the European Union, Scandinavia, Australia, New
Zealand, Hong Kong, Singapore, Japan, Mexico, Argentina, Brazil, Chile, Uruguay,
Paraguay, Venezuela, Peru, Ecuador, Columbia, Bolivia, Puerto Rico, the
Dominican Republic, South Africa and Canada. An exclusive distribution agreement
with Tianfa Corporation in The Peoples Republic of China has been agreed to in
principle by both parties. The executed agreement is expected by April 2002.

         COMPETITION

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

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

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

         We have compared Luscious Lips to similar products manufactured by
Revlon, Max Factor, Cover Girl, Avon and Beauty Control touting no smear and
extended wear. These products simply do not perform as represented or to the
extent of Luscious Lips. 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 Luscious Lips from the world famous Kilgore
College Rangerettes. Jessie Ward, Miss Arkansas 2001/2002 is the
Pannache/Luscious Lips official National Spokesperson. Direct Response
television initiatives are in negotiations and are planned for direct shopping
channels both in the US and International markets in the first quarter 2002.

         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 has retained Dr. Amiran and his company, BioGenesis, to formulate and
package the company's products on a cost-plus-10 percent basis.

         DEPENDENCE ON MAJOR CUSTOMERS

         Our markets are not dependent on one or a few major customers.

         PATENTS, TRADEMARKS AND LICENSES

         In mid-1997, Moonlighting and B. Keith Parker obtained a nearly
worldwide license from BioGenesis for its fire suppressant products and
improvements. See "Description of Summit


                                       8
<PAGE>
Technologies' Business--Business Development." The excepted countries were most
Arabic countries and the Scandinavian countries. On May 1, 1997, both of these
areas, then under exclusive license to other companies, became available due to
the existing licensees' failure to meet periodic sales quotas, and Parker and
Moonlighting acquired licenses in these areas pursuant to the terms of their
agreement with BioGenesis.

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

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

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

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

         In November 2001, we negotiated an agreement with Lady Burd Exclusive
Private Label Cosmetics to purchase the patent and intellectual property rights
to Luscious Lips. The agreement is still not in final written form but the
purchase price is $350,000 in cash and 500,000 shares of common stock of our
company. An advance royalty of $200,000 ($0.30 per tube) is to be paid. Lady
Burd will collect $0.15 per tube until the company has been reimbursed the
$200,000 for the advanced royalty.

         GOVERNMENT APPROVAL OF PRINCIPAL PRODUCTS

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

         Our ULTIMATE CLEAN line has received the appropriate U.S. Government
approvals for the industrial chemical and cleaning products.

         The fire suppressant products we distribute are subject to government
regulation in most countries of the world. The existence of this regulation is
of benefit to us. The company's fire suppressants are qualified substitutes for
Halon 1211, the fire suppressant of choice in most of the world


                                       9
<PAGE>
prior to the 1992 Geneva Peace Conference that implemented what today is a
global banning of Halon 1211. The company obtained a rating and listing for
FIREPOWER 911(TM) as a fire extinguisher in February 1999. FIREPOWER 911(TM) was
tested to ANSI/UL8 and ANSI/UL711 according to NFPA standard 10. During 2000,
state fire marshals' offices began removing "copycat" products, which were not
listed and rated accordingly, from retail establishments via cease and desist
removal orders.

         Both the manufacturers of our cosmetic products, Cosmetic Laboratories,
Inc., and Lady Burd Exclusive Private Label Cosmetics are 20-year plus members
in good standing of the Cosmetic, Toiletry and Fragrance Association (CTFA).

         SEASONALITY

         There is no known seasonal aspect to our business.

         RESEARCH AND DEVELOPMENT

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

         International Aero, Inc., the world's largest reconfigurator of
commercial aircraft, has several projects underway. One is the development of an
approved fire suppression agent, tested to the new minimum performance standards
established by the FAA, that will be a replacement agent for the fire
extinguishers in bathrooms and galleys on board all commercial aircraft which
now contain Halon 1211. The Halon 1211 fire extinguishers are no longer (as of
March 1999) protected for continued use under the classification of Mission
Critical. FlameOut(R) was officially listed by the US DOT and FAA Halon
Replacement Product Listing for the airline industry replacement protocol in
December 2001.

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

         We and Dr. Amiran have been jointly working on an advanced formula for
FlameOut(R) to be approved as a replacement for AFFF. Military specification
tests with the United States Air Force are scheduled to begin March 2002.

         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 December 31, 2001, we employed six persons full time and one person
part time.

ITEM 2. PROPERTIES

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


                                       10
<PAGE>

         FACILITIES

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

ITEM 3. LEGAL PROCEEDINGS

         On December 28, 2001, we filed a collection lawsuit against Harry
Bachelder III, dba Performance Marketing , Inc. for non-performance on a
guaranteed note payable and delinquent accounts in the amount for both of
$46,000. In November 2000, we had negotiated a note payable, personally
guaranteed by Mr. Bachelder III , for existing past due accounts. The note was
paid as agreed through May 2001. When payments stopped, management negotiated
for a lump sum to be paid by December 21, 2001. When payment was not received, a
lawsuit was filed for default.

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

         None

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Summit Environmental'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
1999, 2000 and 2001. The quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions.

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

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

         2001:
                  1st Qtr.          0.6875           0.25
                  2nd Qtr.          1.12             0.13
                  3rd Qtr.          1.05             0.40
                  4th Qtr.          0.45             0.21
</Table>


                                       11
<PAGE>

         Holders. Based on information provided by our transfer agent, we had
609 shareholders of record of our common stock on March 11, 2002.

         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.

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

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

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

         In 2001 we sold 320,000 shares of our common stock for cash at $0.50 a
share to accredited investors in an offering exempt from registration pursuant
to Regulation D, Rule 506 of the Commission. We also issued 930,000 shares of
our common stock for cash at $0.35 a share to persons that exercised stock
purchase warrants they had acquired in 1999 and 2000. These purchasers were all
accredited investors, and the offering was exempt from registration pursuant to
Regulation D, Rule 506 of the Commission.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS

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

         OVERVIEW

         By year end 2001, we had finalized some of our distribution
negotiations and product certifications. Our vision continues to be marketing
our products through strategic alliances. A major agreement was finalized in
terms at year end with Tianfa Corp. in The People's Republic of China. The
executed agreement is expected by April 2002. By year end, additional new
agreements had been reached or executed in Canada, Mexico, Scandinavia,
Malaysia, Thailand, Taiwan, Singapore, Hong Kong, Philippines, Australia and New
Zealand.

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


                                       12
<PAGE>

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

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

         Still believing in the uniqueness of an aerosol product providing
safety and ease of use for all consumers, we negotiated an agreement with a
firm, Triple-S Marketing, to provide the in-store service required by some of
the nation's larger retailers. We focused on Triple-S because of its emphasis on
home improvement stores. One national chain has approved FIREPOWER 911(TM) for
its stores, scheduled to appear in the first half of 2002. The store and its
locations will be made public when the appropriate time occurs. Due to the
events of September 11, 2001, the process was delayed. However, during the first
week of January 2002, FIREPOWER 911(TM) was approved by Lowe's. FIREPOWER
911(TM) will be introduced into Lowe's through two "in and out" programs during
2002 - projected in June and in October in 150-200 stores.

         In 2000, the first shipment of FIREPOWER 911(TM) was packaged for
international sales with foreign language labels. Initial first market shipments
ranging from 2,000 to 5,000 cans went to Chile, Hong Kong and Japan. 5,000 cans
were to be sold to the public by the local fire departments in Chile. We and
Marketing Perspectives Incorporated ("MPI") will be satisfying labeling
requirements and insurance requests for completed product liability coverage.
FIREPOWER 911(TM) has also been approved for the Federales (military police) in
Chile as part of their military equipment belt. FIREPOWER 911(TM) will be on
these equipment belts as a tool for riot control due to fire bombs thrown into
crowds at large public events such as soccer matches. MPI has been reporting to
us, since September 2001, that the instructions have been given to issue the
purchase order for this sale.

         In 2000, we were notified by a direct home product television sales
channel that FIREPOWER 911(TM) would be part of its programming in 2001. QVC and
Shop at Home notified us that product approval has been completed. QVC is
seeking a letter of verification that FIREPOWER 911(TM) is validated for sales
in all 50 states. We have such a letter posted on our web site and are awaiting
the formal request from QVC's legal department. There has been no further
information given to us from QVC. We have complied with all requirements and
passed Quality Control requirements for product shipping. Approval at QVC is
anticipated by April 2002.

         Our strategic alliance partner, International Aero, Inc., is the
world's largest reconfiguration company for commercial aircraft. We and
International Aero have been working on the minimum performance standards
requirements established by the Federal Aviation Administration. Previously, the
handheld fire extinguishers onboard all commercial aircraft contained Halon
1211. The Geneva Peace Conference banning of Halon 1211 included a catastrophic
exposure clause called Mission Critical that allowed the airline industry an
extension of time before these extinguishers faced mandated replacement. The
testing protocol for selecting the replacement agent has been published by the
FAA. FLAMEOUT(R) meets all of the technical criteria required by the performance
standards. Last year, the actual Gross


                                       13
<PAGE>
Volume Production Tests of FLAMEOUT(R) on jet fuel and heptane were conducted.
The initial performance tests will be conducted at International Aero's new
licensed fire testing facility. In December 2001, FLAMEOUT(R) was officially
listed by the US Department of Transportation and Federal Aviation
Administration as an officially approved replacement for Halon.

         International Aero's distribution rights extend to the aviation
industry, the United States Military, and the United States Gulf Coast petroleum
industry. In conjunction with the research department at International Aero, we
are developing an alternative to another fire-fighting agent, AFFF. AFFF, used
primarily for petroleum fires, is a known cancer-causing agent. Our intent with
International Aero is to develop a non-toxic, non-corrosive, biodegradable
alternative for AFFF. During April of 2000, FLAMEOUT II(TM) was tested at the
Ansul fire test facility in Marinette, Wisconsin. The foam stability test was
very successful. Additionally, FLAMEOUT II(TM) was the only product tested to
pass the UL162 encapsulation and emulsification test. This new formula is being
tested by Jockel Manufacturing in Germany and by the National State Fire
Department and Testing Agency in Brazil and Exxon of Norway. We will begin
testing for a military specification number as an alternative for AFFF at the
United States Air Force testing center at Eglin Air Force base in Florida by
April 2002.

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

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

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

         We concede that this testing process has been very tedious and
time-consuming. The reward for us will be a head start in the market. Even
though there have been unknowns to be dealt with, we and our product have not
experienced any setbacks. The lab conducting the test protocols for the
MIL-PRF-85704C has notified us that ULTIMATE CLEAN 668(TM) has successfully
conformed with the requirements for corrosion, crazing, painted surfaces,
acrylic surfaces, and water and acid stability. The storage stability test is
the final remaining requirement and is now classified as "accelerated storage
stability." Application was formally requested by the United States Navy, and we
and International Aero promptly submitted said application. Our physical testing
request has been accepted at Pax River. The major


                                       14
<PAGE>
obstacle has centered around an aqueous (water) based product testing to a
50-year-old-plus military specification designed for petro-chemically produced
products. We, BioGenesis, and the laboratory collectively have resolved a major
obstacle with regards to storage stability. We and International Aero are
fervently working at completion of the protocol as there are several major
airlines awaiting product approval in order that orders be placed through
International Aero.

         Through our South American alliance partner, we submitted material,
product, and previous certifications to the authorities in Chile and Argentina
in order to obtain the appropriate approvals and ratings with each country. Our
existing certifications on both FIREPOWER 911(TM) and FLAMEOUT(R) have been
accepted. During January 2000, the actual state fire department tests began
taking place. FIREPOWER 911(TM) has been successfully tested in Chile. The first
product was shipped in September 2000 for the initial test market, under the
Spanish label "FIREPOWER LIQUIDO 911(TM)." The official government approval for
FirePower 911(TM) was issued on January 10, 2002 by the University of Chile.

         Official government of Chile approval and certification have been
completed with the regulatory agencies. The first customers for FirePower
Liquido 911 are the Federal Police of Chile. First orders are anticipated by the
end of the first quarter 2002.

         Further tests being conducted on FLAMEOUT(R) have positioned
FlameOut(R) to become officially approved in Brazil by the end of the second
quarter of 2002. This approval will also be accepted in the other Mercosur Pact
countries--Argentina, Uruguay and Paraguay.

         COSMETICS

         During the 3rd Quarter of 2000, management gave Paula Parker,
Vice-President for Shareholder Relations, a directive to develop a new product
line, a color cosmetic line to complement 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. The initial
product would be in a new category of cosmetic lipsticks; long-lasting, no
smear, semi-permanent lip color. The company first introduced Luscious Lips in
August 2001. Luscious Lips is manufactured by Lady Burd Exclusive Private Label
Cosmetics of Farmingdale, New York. Our website www.pannachelusciouslips.com
displays the entire Pannache/Luscious Cosmetics Product Line.

         The idea for the star product of the color line was to develop a
semi-permanent, long-wearing, no smear or stain lip color. Companies like Avon,
Beauty Control, Max Factor, Revlon, Cover Girl and Maybelline have developed
products they tout as long-wear, no smear; however, we believe they do not
perform as advertised. Luscious Lips will stay on 8 to 10 hours and will not
come off until removed with remover. The development phase began in September
2000 with final formula approvals in June 2001. We received four of the twelve
selected colors in August and began the first of two directed test markets. One
market was to sell product directly to performing groups such as dance lines,
dance schools, high school drill teams, cheerleaders and twirling groups. Prior
to beginning, we secured the endorsements during July for the Miss Texas and
Miss Arkansas Pageants. Both Stacy James (Miss Texas 2001) and Jessie Ward (Miss
Arkansas 2001) were using Luscious Lips during their state pageants when they
won their respective pageants. Stacy was in the top twenty and Jessie was a top
ten finalist in the Miss America Pageant.

         Pageants are already being held every weekend from October 1, 2001,
through July, 2002. There will be over 50,000 contestants introduced to - and
many using - Luscious Lips in the Arkansas pageant system. Jessie Ward's photos
appear in all official company publications and web sites. The official web
address is www.lusciouslips.cc and www.pannachelusciouslips.com.


                                       15
<PAGE>

         The success of the test markets indicates to management that expanding
the marketing toward performing groups and through direct distributors should
create high-profit-margin venues. The sale of a single tube of Luscious Lips
wholesale creates a greater profit margin than the sale of a can of FIREPOWER
911(TM).

         The cosmetic industry is a 300 billion-dollar industry worldwide with
Avon being the largest, controlling only 7% of the market share. Therefore, no
one company can control the market. Prices are always stable while sales are
always consistent.

         The initially established dealer network attained a closing ratio of
close to 100% of the presentations being closed and purchasing the initial
inventory for a dealer. A dealer purchases at 50% off of retail and makes 100%
profit on resale. Our margin is at 106%. The direct sales test market directed
to drill teams and cheerleading groups produced a 100% closing ratio. We have
become an associate member of the Texas High School Dance and Drill Teams
Association, whose state convention was held in Houston, Texas, January 3-5,
2002. There are 178,000 drill team participants in high schools in Texas each
year. Couple this with the middle and high school cheerleaders, and the market
is over 500,000 participants in Texas alone. We introduced a targeted fund
raising program especially designed for these groups at the January meeting of
the association. The response was better than anticipated which has led us to
begin to hire commissioned sales agents for four specific territories in Texas
to follow up on the sales leads from this one meeting.

         We have submitted Luscious Lips and a second product, Luscious Dust
Brush for Q and A through Reliant International Media Group for marketing on
direct home shopping channels. Approvals are anticipated in early 2002.

         We have completed an endorsement agreement with Jessie Ward, Miss
Arkansas, for the remainder of her reign. Pannache/Luscious Lips cosmetics have
been named the official "Wardrobe showing sponsor" for the Miss Arkansas
Pageant.

         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, 2001 and 2000:

<Table>
<Caption>
Year ended December 31                      2001       2000
                                           ------
<S>                                        <C>        <C>
Sales                                       100.0%     100.0%
Cost of Sales                                50.6       49.1
                                           ------     ------
Gross Margin                                 49.4       50.9
                                           ------     ------
Operating Expenses                          728.6     1537.5
Other Income and Expenses, Net              (27.7)     (20.4)
                                           ------     ------

Net income (loss)                          (651.5)%  (1466.2)%
                                                      ======
</Table>

         SALES

         Sales of $121,656 for 2001 increased by $41,472 or 51.7% from the prior
year's sales of $80,184. Management devoted considerable attention during 2001
to certification and test marketing:


                                       16
<PAGE>

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

     With the buyers not being knowledgeable of the state fire codes which
     prohibit illegal sales of these "copycats," we took the posture during 2000
     of notifying the state fire marshals of the stores who offered such
     "copycat" products. This is a slow process, but we had no other choice than
     to protect our investment and unique product by encouraging the state fire
     marshals' offices to issue cease and desist orders to companies violating
     the state fire codes by selling "copycats" which do not have the
     validations and listings of FIREPOWER 911(TM). This slow-down has resulted
     in knowledge to the buyers and pre-approvals by one of the nation's largest
     building materials superstores. We met with the major buyer for fire
     extinguishers at Lowe's Home Improvement Stores in January 2002. Test
     market approvals were received for 2002.

o    Lighthouse America is a direct sale company which during the year 2000 was
     selling a fire fighting product through their networking membership. The
     product which they were selling was not a validated and listed fire
     extinguisher. They received notification from several state fire marshals'
     offices that they could no longer sell their product. We were contacted by
     the management of Lighthouse America in August 2001. After Lighthouse
     verified that FIREPOWER 911(TM) would satisfy the issues with which they
     were dealing, a marketing agreement was executed. Lighthouse ordered
     product in the fourth quarter of 2001 and began marketing to their dealers.
     Lighthouse had over 7,000 dealers when they were forced to discontinue
     their previous product sales. After reintroduction periods of the fourth
     quarter of 2001 and the first quarter of 2002, Lighthouse believes it will
     soon be back to its sales levels of August 2000.

o    In November 2000, we submitted FLAMEOUT(R) to the United States Forestry
     Service for Qualification Testing as an approved wetting agent under the
     category of Wildland Fire Chemical. We have received progressive test
     result reports. All results received have been in the "acceptable"
     category. The anticipated approval date is May 2002. New protocols in
     Canada prevent the dropping from the air any fire suppression agent which
     is toxic by containing any phosphates. Monoammonium phosphate is the
     primary ingredient of nearly all agents dropped from the air. FLAMEOUT(R)
     is 100% non-toxic and biodegradable. The company has orders pending from
     two large aerial fire fighting companies in Canada. When we obtain the
     approval of the United States Forestry Service for FLAMEOUT(R), we believe
     the Canadian Forestry Service will recognize the US Forestry Service
     approval as sufficient for its purposes.

o    We introduced our super absorbent, ULTIMATE ABSORB 1103(TM), into the
     marketplace through convenience stores initially. We began testing this
     super absorbent at several worldwide industrial companies toward the end of
     2000. Some anticipated approvals are expected in second quarter 2002.
     Ultimate Absorb 1103(TM) meets or exceeds those requirements for FDA, USDA,
     EPA, California TH622 and World Health Organization.

o    We introduced our natural botanical skin care cosmetic and color cosmetics
     lines through the production of an infomercial, direct television shopping
     and e-commerce business to customer


                                       17
<PAGE>
     programs by late 2001. Direct Market sales venues were opened. Approvals
     for Direct Home Shopping for more than one of the Pannache/Luscious Lips
     products is expected by April 2002.

o    FLAMEOUT II(TM) was successfully tested at the Ansul Fire Test Facility in
     Marinette, Wisconsin. Additional preparatory tests for future U. S. Naval
     testing were conducted at International Aero's fire test facility. The new
     formulation has been submitted in Europe for testing to replace 3M's AFFF
     for which manufacturing has been halted. Regular FlameOut(R) was also
     submitted for the same test and has been approved. Tests are scheduled to
     begin on FlameOut(R) II with the United States Air Force at the end of
     first quarter 2002.

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

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

o    International agreements negotiated and executed expanded the prospects for
     our products to Malaysia, Thailand, Taiwan, Singapore, Hong Kong, Brunei,
     Canada, The People's Republic of China, and Mexico.

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

o    614575 Alberta Ltd negotiated an agreement for Canada for repackaging of
     FLAMEOUT(R) in home and mobile fire extinguishing systems. We will sell
     FLAMEOUT(R) and receive a royalty on the sale of these units.

o    Management - in test marketing - discovered that direct presentation of
     Luscious Lips to High School Drill Teams produced a 100% closing ratio. The
     company successfully introduced a new fundraising concept utilizing
     Luscious Lips as a fundraising product to several of the high schools which
     had purchased Luscious Lips for its team. We expect to expand the venue
     through a commissioned sales force during September 2002.

         GROSS MARGIN

         Gross margin of $40,831 in 2000, or 50.9 percent of sales, decreased to
$60,120, or 49.4 percent of sales in 2001. Sales have not yet reached a level to
reflect a gross margin percentage with accuracy.

         OPERATING EXPENSES

         Operating expenses of $1,232,867 for 2000 decreased by $346,536, or 28
percent, to $886,331 in 2001. Audit fees decreased in 2001 by $6,830 over 2000.
Bad debt expense remained unchanged. Commissions decreased to $3,066 in 2001
over 2000 as a result of more sales directly from the company into the market.
Marketing expenses decreased by $184,525 in 2001 over 2000. Officer compensation
decreased by $33,490 in 2001 over 2000 due to changes in officer staff, and the
replacing of the accounting department to an outside CFO and accounting firm.
Professional fees increased to $16,531 in 2001 from $9,000 in 2000. Rent was
down in 2001 by $9,100 over 2000. Repairs decreased by $9,536 in 2001 over 2000.
Research and development increased to $39,018 in 2001 over $18,575 in 2000. SEC


                                       18
<PAGE>
expense, which includes the costs of preparing and filing through EDGAR all
required reports, decreased to $19,909 in 2001 over $35,238 in 2000. Travel and
entertainment expense was down from $63,698 in 2000 to $20,647 in 2001

         NET LOSS

         We had a net loss of $1,175,650 during 2000, as compared to a reduced
net loss of $792,536 during 2001. The years 2000 and 2001 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. Progress in reducing overall
operating expenses was accomplished in 2001. 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.

         LIQUIDITY AND CAPITAL RESOURCES

         We had negative cash flow from operations of $929,793 in 2000 and
negative cash flow from operations of $705,143 in 2001. Major contributor to the
2000 negative cash flow from operations was the $1,175,650 net loss from
operations. Major contributors to the 2001 negative cash flow from operations
were the $792,536 net loss from operations and $162,333 in amortization.

         We had negative cash flow from investing activities of $41,720 in 2000
and positive flow from investing activities of $17,975 in 2001. The major
components of both years' cash flow from investing activities were acquisitions
of property and equipment in 2000 and sales of equipment in 2001.

         We were able to stay liquid only from the sale of $822,500 of our
common stock during 2000 and $485,500 of our common stock during 2001. At
year-end 2000, we had $428,478 cash on hand. At year-end 2001, we had $193,806
cash on hand

         We have received indications from several prospective buyers of fire
suppressant, industrial cleaning products and cosmetic products that a
considerable market for these products will develop during 2002. See "Outlook"
below.

         OUTLOOK

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

         We continue to believe that, with the approval, listing and rating of
FIREPOWER 911(TM) as a fire extinguisher, a niche market can be created. This is
supported by actions taken by the USEPA, which has been mentioned previously,
and actions of the Connecticut State Fire Marshal's Office and the California
State Fire Marshal's Office. Last year, we sought additional enforcement by
other state fire marshals' offices.

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


                                       19
<PAGE>

receive the same notification. While we were not marketing FIREPOWER 911(TM) as
a fire extinguisher at that time, the other aerosol fire suppressors subject to
this action were touting their products to be fire extinguishers.

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

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

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

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

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

         Several issues have slowed down the marketing of FIREPOWER 911(TM). Its
formula is FLAMEOUT(R), a technology for fire suppression, not merely soap in an
aerosol can. A specific type of aluminum is required for the container to meet
the ANSI/UL8 portion of the validation and listing tests. The size and type of
can required to hold the FLAMEOUT(R) by the very rigid standard for fire
extinguishers is not manufactured in the United States. We must bring the empty
shells in from Madrid, Spain.

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

         When attempts to market a product like FIREPOWER 911(TM) are met with
"copycats" which have not passed the scrutiny of the validations, listings and
ratings, an education issue is created which must be


                                       20
<PAGE>
carried out at the buyers' level. For this education effort to have meaningful
effect, enforcement action is required by the state fire marshals' offices.
These enforcement actions are public record. We now have our marketing and
merchandising representatives equipped with information showing the buyers that
there are issues other than the cheapest product in an aerosol can.

         Presenting the information in this format last year, we negotiated an
agreement with a national marketing and merchandising company, Triple S
Marketing, that places the products they represent into two of the largest home
building products stores in the country. The senior buyer for one of these
chains of stores has approved FIREPOWER 911(TM). A redesign of the home safety
products section began in June 2001. Currently, FIREPOWER 911(TM) is scheduled
to appear in these stores but we do not have a firm date. Management met for
line review at Lowe's headquarters in North Carolina the first week of January
2002. FirePower 911(TM) has been approved for test marketing. The specifics will
be noted in the first quarter report 2002.

         Over three years ago, we negotiated a contract with Wal-Mart on a
regional basis in Florida, Southern Georgia and Southeastern Alabama. When a
category buyer from Wal-Mart decided to remove FIREPOWER 911(TM) from the
regional purchasing agreement and take it to a full category purchase,
management was forced to "not fill" in-hand purchase orders. Full category meant
supplying as many as 4,000 stores in a brief time. However, the major obstacle
was the fourteen- day fulfillment deadline on new purchase orders. The time
required for the manufacturing of the shells for FIREPOWER(TM) is five weeks.
Management knew that the initial news of the Wal-Mart contract would be great
for the new public company, but failure to meet unrealistic production
requirements would be extremely detrimental.

         During the last week of April 2001, a Wal-Mart opportunity once again
presented itself. Through one of our direct dealers, FIREPOWER 911(TM) has once
again been approved for Wal-Mart. However, this time it is on a local store
district purchase program. Once the contract starts, it cannot be changed for
six months. The completed applications, initial insurance certification, and bar
codes registrations were sent to the district supervision level for a specific
region of Wal-Mart on May 1, 2001. Our dealer for that area submitted his final
order through the stores. We had not received an order as of the end of 2001.

         We have executed an agreement for the sale of FIREPOWER 911(TM) with
Lighthouse America and its direct sales company TEAMFIRE. TEAMFIRE previously
had 8,000 direct dealers selling a portable fire product that was classified as
a portable fire extinguisher by State Fire Marshals. TEAMFIRE has a great
appreciation for FIREPOWER 911(TM) because of its experience with the fire
marshals' offices. With FIREPOWER 911(TM) which is the only rated and validatED
portable fire extinguisher in an aerosol can in the world, TEAMFIRE feels that
it will quickly begin to move FIREPOWER 911(TM) through its established network
of direct dealers. Before regulatory measures halted TEAMFIRE's selling,
previous sales were 1.6 million dollars from January through August, 2000.
Lighthouse ordered its first pallet of FIREPOWER 911(TM) in November 2001. It
began rebuilding its former distributor base, which previously had been selling
fire extinguishers. According to Paul Burks, Lighthouse President, Lighthouse
will need about 6 months to reintroduce products to its former marketing base,
which consisted of 7,000 distributors. A second pallet was ordered and shipped
in February 2002.

         FLAMEOUT(R) has been submitted to the United States Forestry Service
through its technology development program in order to satisfy the requirements
for qualification testing as a Wildland Fire Chemical. This test protocol will
be ongoing for eighteen months. The Forestry Service requested and we supplied
the actual test product in order to complete the protocol through our Canadian
Strategic Alliance Partner, Mark Hays dba 614751 Alberta Limited. The aerial
fire fighting company Pro Air, and the Canadian Forestry Service are following
the U. S. Forestry Service's test. Feedback is that FLAMEOUT(R) is performing
very favorably. The reports received by the Company are that the Canadian


                                       21
<PAGE>

Forestry will accept the U. S. Forestry approval for immediate sales in Canada.
The Company has been notified of pending orders at Pro Air. We will be in line
to secure the approval of FLAMEOUT(R) in second quarter 2002.

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

         We have been in negotiations with QVC for the sale of FIREPOWER 911(TM)
since October 2000. FIREPOWER 911(TM)'s front runner, Chief's Choice, was the
initial aerosol fire suppressant sold on QVC. While FIREPOWER 911(TM) was going
through the validation and listing process at Applied Research Laboratories,
"ARL," QVC was notified of the NFPA standards requirement held by State Fire
Marshals' offices and substituted another "copycat" product for Chief's Choice,
which also violated the requirements for which we had chosen to qualify in order
to be in compliance in all 50 states. Last year, this "copycat" product was
removed from programming at QVC, due to action taken by the Texas State Fire
Marshal's office, and we were notified that the category buyers at QVC had
approved FIREPOWER 911(TM) one-liter rated fire extinguisher for purchase. We
were told that once the legal department was cleared, scheduling of programming
and initial purchases would begin. During April 2001, we were notified that the
QVC legal department would be requesting a letter of verification that FIREPOWER
911(TM) is legal in all 50 states. We are awaiting the official request from
QVC's legal department. However, a letter stating this verification is currently
posted on our web site, www.seci-us.com or www.summitenvironmental.com.
Management met with the buyers at QVC in February 2002, and FIREPOWER 911(TM)
was approved for programming. The company is working through Reliant Interactive
Media Group for this promotion. Summit's new FIREPOWER 911(TM) will be
introduced through Reliant. Reliant's production studio is located in the former
Discovery Channel studios at Universal Studios in Orlando, Florida.

         International marketing agreements continue to be negotiated and
executed this year. A key element of these agreements is the revenue sharing
clause that provides us profit sharing from the tools, devices or mechanisms
into which FLAMEOUT(R) is introduced for resale. Global agreements reached
during the year agreements with Tianfa Corporation in The People's Republic of
China, Mexico, and Canada. We have been assisting our distributor partners with
necessary testing, listing, ratings and certification in order to complete the
registration process in each of these countries.

         During February 2001, we sold our first order of FIREPOWER 911(TM) to
our distributor, Techno-Supplies, in Norway. In April 2001, Techno-Supplies
ordered its first shipment of FLAMEOUT(R). A portion of this initial order has
been sold to Exxon of Norway. Tests results have been favorable and are
concluding.

         FLAMEOUT(R)'S formal certification with the government of Brazil is
ongoing. Sales orders are already in place through strategic alliance partner,
MPI, and are awaiting release of this product's registration number.

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


                                       22
<PAGE>
alliance partners. The first orders of FLAMEOUT(R) were shipped in January 2002.
Subsequent orders were shipped in February and March 2002.

         Our test for securing the military specification number MIL-PRF-85704C,
which will enable the company's ULTIMATE CLEAN 668(TM) jet engine cleaner to be
listed with the Department of Defense, Quality Products Listing, has proceeded
into classification tests for Type II concentrates and Type II ready-to-use. The
testing for this non-corrosive approval has resulted in some adjustments to the
formula for the test on ceramic and acrylic finishes. This test is also being
done in the "water soluble" category. To our knowledge, there are no other
products that are aqueous-based which can accomplish the cleaning requirements
of the test protocol or the actual engine cleanings. The expanding from the
initial Type III approvals to include the two categories of Type II greatly
increased the market potential for ULTIMATE CLEAN 668(TM). Technical testing
confirmation for protocols was received in May 2001. We are now awaiting a
slotting appointment for the completion of the physical application test in
cleaning test engines Through our strategic alliance partner, International
Aero, we have initial sales to be made to major airlines such as United,
Continental, Delta, Northwest and Eastern airlines. The recent increase in jet
fuel costs has heightened the airlines' interest in ULTIMATE CLEAN 668(TM).
During September, 2001, formal application for the physical test was submitted
to and accepted by the United States Navy. Progress has been made on the
accelerated storage stability final phase of the testing. Expectations are for
finalization during first quarter 2002.

         Our development of ULTIMATE ABSORB 1103(TM) has led to our negotiating
the purchase of the patents, formulas and intellectual property rights. Of
special importance to this agreement is the completion of the
never-before-issued EPA Landfill Stamp approval. ULTIMATE ABSORB 1103(TM)
already has EPA (as non-toxic), USDA, FDA, WHO and California Title 22
approvals. However, the EPA Landfill Stamp allows for encapsulated and absorbed
materials to be deposited in landfills anywhere. On April 2, 2001, we were
notified that we had successfully stabilized heavy metals in the hazardous
materials containment portion of this testing. No other product has ever
completed this portion of the test protocol. We have introduced the absorbent in
South America, Scandinavia, Europe and in several industries within the U.S.
Ultimate Absorb 1103(TM) has been submitted for vendor application approval to
Ace Hardware and Lowe's Home Improvement stores.

         COSMETICS

         Successful test markets of Pannache/Luscious Cosmetics for direct
dealer sales and shopping channel sales have shown us two high volume markets.
Both test markets provided nearly 100% closing ratios. The profit margins are
greater than any of our other products whether sold wholesale or direct to the
consumer from us.

         New innovative fund raising programs were kicked off in January selling
Luscious Lips through high school drill teams, cheerleading groups and twirling
groups. We will also be attending a national show each month promoting the
entire line and securing new dealers. International expansion is also
anticipated from those shows as the shows for 2002 will include Italy, Hong Kong
and Canada.

           Negotiations for Luscious Lips and Luscious Dust Brushes are
scheduled to be completed first quarter 2002 on home shopping channels through
Reliant Interactive Media Group.

         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


                                       23
<PAGE>
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.

ITEM     7.       FINANCIAL STATEMENTS

<Table>
<S>                                                                         <C>
         Report of Independent Certified Public Accountants                 25
         Balance Sheet December 31, 2001                                    26
         Statements of Operations Year Ended December 31, 2001 and 2002
                  and Period from August 14, 1997 to December 31, 2001      27
         Statements of Changes in Stockholders' Equity for the period from
                  August 14, 1997 to December 31, 2001                      28
         Statements of Cash Flows Year Ended December 31, 2001 and 2002
                  and Period from August 14, 1997 to December 31, 2001      29
         Notes to Financial Statements                                      30
</Table>


                                       24
<PAGE>

Report of Independent Certified Public Accountants



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


We have audited the accompanying balance sheet of Summit Environmental
Corporation, Inc. (a development stage company) as of December 31, 2001 and the
related statements of operations, changes in stockholders' equity and cash flows
for each of the two years in the period ended December 31, 2001 and the period
from August 14, 1997 (date of incorporation) to December 31, 2001. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Summit Environmental
Corporation, Inc. as of December 31, 2001, and the results of its operations and
its cash flows for each of the two years in the period ended December 31, 2001
and the period from August 14, 1997 (date of incorporation) to December 31,
2001, in conformity with accounting principles generally accepted in the United
States of America.



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

LANE GORMAN TRUBITT, L.L.P.



Dallas, Texas
March 15, 2002


                                       25
<PAGE>

                     SUMMIT ENVIRONMENTAL CORPORATION, INC.
                          (A Development Stage Company)
                                  BALANCE SHEET
                                December 31, 2001


<Table>
<S>                                                                 <C>
                                     ASSETS

CURRENT ASSETS
Cash and cash equivalents                                           $   193,806
Accounts receivable, less allowance of $44,000                          137,460
Note receivable - related party                                          20,496
Inventories                                                             769,644
Prepaid insurance                                                         4,183
                                                                    -----------
Total current assets                                                  1,125,589
                                                                    -----------

PROPERTY AND EQUIPMENT - AT COST
Office furniture and equipment                                           49,287
Leasehold improvements                                                    7,898
Accumulated depreciation and amortization                               (20,782)
                                                                    -----------
Net property and equipment                                               36,403
                                                                    -----------

OTHER ASSETS
Prepaid royalties                                                       511,505
Deposits                                                                  1,550
Patent and licenses, net of accumulated amortization of $348,466      1,949,201
                                                                    -----------
Total other assets                                                    2,462,256
                                                                    -----------

Total assets                                                        $ 3,624,248
                                                                    ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable                                                    $    33,989
Accrued payroll                                                          20,906
                                                                    -----------
Total current liabilities                                                54,895
                                                                    -----------

COMMITMENTS                                                                  --

STOCKHOLDERS' EQUITY
Preferred stock, par value $.001; 10,000,000 shares
authorized; no shares issued                                                 --
Common stock, par value $.001; 40,000,000 shares
authorized; 13,342,994 shares issued and outstanding                     13,344
Additional paid-in capital                                            7,121,385
Deficit accumulated in development stage                             (3,565,376)
                                                                    -----------
Total stockholders' equity                                            3,569,353
                                                                    -----------

Total liabilities and stockholders' equity                          $ 3,624,248
                                                                    ===========
</Table>


The accompanying notes are an integral part of these statements.


                                       26
<PAGE>

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


<Table>
<Caption>
                                                       Years Ended December 31,      Period from
                                                    ---------------------------   August 14, 1997 to
                                                        2001            2000      December 31, 2001
                                                    ------------    ------------  -----------------
<S>                                                 <C>             <C>           <C>
SALES                                               $    121,656    $     80,184    $    578,961

COST OF SALES                                             61,536          39,353         201,736
                                                    ------------    ------------    ------------

Gross profit                                              60,120          40,831         377,225
                                                    ------------    ------------    ------------

OPERATING EXPENSES
Selling, general, and administrative expenses            707,829       1,050,852       3,324,182
Amortization                                             162,333         162,348         520,496
Depreciation                                              16,169          19,667          45,751
                                                    ------------    ------------    ------------
Total operating expenses                                 886,331       1,232,867       3,890,429
                                                    ------------    ------------    ------------

Net loss from operations                                (826,211)     (1,192,036)     (3,513,204)

OTHER INCOME (EXPENSE)
Interest income                                           13,558          30,053          57,887
Interest expense                                          (2,629)         (7,704)        (13,478)
Loss on sale of assets                                    (4,723)         (8,477)        (13,200)
Miscellaneous                                             27,469           2,514          36,213
                                                    ------------    ------------    ------------
                                                          33,675          16,386          67,422
                                                    ------------    ------------    ------------

Net loss before income tax                              (792,536)     (1,175,650)     (3,445,782)

INCOME TAXES                                                  --              --              --
                                                    ------------    ------------    ------------

Net loss before cumulative effect of the
change in accounting principle                          (792,536)     (1,175,650)     (3,445,782)

Cumulative effect on prior years of change in
accounting principle, net of tax                              --              --        (119,594)
                                                    ------------    ------------    ------------
NET LOSS                                            $   (792,536)   $ (1,175,650)   $ (3,565,376)
                                                    ============    ============    ============

NET LOSS PER SHARE before cumulative
effect of the change in accounting principle        $      (0.06)   $      (0.10)   $      (0.39)

Cumulative effect on prior years of the change in
accounting principle                                          --              --           (0.01)
                                                    ------------    ------------    ------------
NET LOSS PER SHARE                                  $      (0.06)   $      (0.10)   $      (0.40)
                                                    ============    ============    ============

WEIGHTED AVERAGE SHARES                               12,757,422      11,728,336       8,789,781
                                                    ============    ============    ============
</Table>


The accompanying notes are an integral part of these statements.


                                       27
<PAGE>

                     SUMMIT ENVIRONMENTAL CORPORATION, INC.
                         (A Development Stage Company)
                 STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
            For the Period From August 14, 1997 to December 31, 2001

<Table>
<Caption>
                                                                                                     Deficit
                                                                                                   Accumulated
                                                            Common Stock                               in
                                                      -----------------------       Additional     Development
                                                         Shares        Amount     Paid-in Capital     Stage          Total
                                                      -----------    -----------  ---------------  ------------   -----------
<S>                                                   <C>            <C>          <C>              <C>            <C>
Balances, August 14, 1997 (Inception)                          --    $        --    $        --    $        --    $        --

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

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

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

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

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

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

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

Balances, December 31, 2000                            12,092,994         12,094      6,637,135     (2,772,840)     3,876,389

Sale of 320,000 shares ($.50 per share)                   320,000            320        159,680             --        160,000
Issuance of 930,000 shares upon exercise
  of stock options ($.35 per share)                       930,000            930        324,570             --        325,500
Net loss                                                       --             --             --       (792,536)      (792,536)
                                                      -----------    -----------    -----------    -----------    -----------

Balances, December 31, 2001                            13,342,994    $    13,344    $ 7,121,385    $(3,565,376)   $ 3,569,353
                                                      ===========    ===========    ===========    ===========    ===========
</Table>


The accompanying notes are an integral part of these statements.


                                       28
<PAGE>
                     SUMMIT ENVIRONMENTAL CORPORATION, INC.
                          (A Development Stage Company)
                            STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                        Years Ended December 31,     Period from
                                                       -------------------------- August 14, 1997 to
                                                          2001           2000     December 31, 2001
                                                       -----------    ----------- ------------------
<S>                                                    <C>            <C>         <C>

CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                                $  (792,536)   $(1,175,650)   $(3,565,376)
  Adjustments to reconcile net loss to cash
  used in operating activities
  Amortization                                                162,333        162,348        520,496
  Bad debt expense                                                 --          3,983         48,435
  Cumulative effect of change in accounting principle              --             --        119,594
  Depreciation                                                 16,169         19,667         45,751
  Gain (loss) on sale of assets                                (5,724)         8,477          2,753
  Common stock issued for services                                 --         50,000         67,494
  Change in operating assets and liabilities:
    Accounts receivable                                       (84,499)        28,245       (222,126)
    Inventories                                                26,213        (66,673)      (769,644)
    Prepaid expenses                                              620        (14,686)      (517,238)
    Accounts payable                                          (25,197)        47,785         33,989
    Accrued liabilities                                        (2,522)         6,711         20,906
                                                          -----------    -----------    -----------
      Net cash used in operating activities                  (705,143)      (929,793)    (4,214,966)
                                                          -----------    -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
  Acquisition of property and equipment                        (4,465)       (41,720)       (71,911)
  Proceeds from sale of equipment                              47,440                        47,440
  Organization costs                                               --             --       (129,291)
  Acquisition of patent                                       (25,000)                      (25,000)
  Acquisition of licenses                                          --             --        (60,000)
                                                          -----------    -----------    -----------
    Net cash provided by (used in) investing activities        17,975        (41,720)      (238,762)
                                                          -----------    -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES
  Loan proceeds                                                    --             --          6,554
  Loan principal repayments                                   (48,739)        (8,366)       (66,990)
  Loan principal repayments - related party                    15,735             --       (134,265)
  Proceeds from sale of stock                                 485,500        822,500      4,842,235
                                                          -----------    -----------    -----------
    Net cash provided by financing activities                 452,496        814,134      4,647,534
                                                          -----------    -----------    -----------

NET INCREASE (DECREASE) IN CASH                              (234,672)      (157,379)       193,806

Cash - Beginning of period                                    428,478        585,857             --
                                                          -----------    -----------    -----------

Cash - End of period                                      $   193,806    $   428,478    $   193,806
                                                          ===========    ===========    ===========

SUPPLEMENTAL INFORMATION
  Cash paid for interest                                  $     2,629    $     7,704    $    14,201
  Cash paid for income taxes                                       --             --          7,252
  Issuance of common stock for patent                              --             --      1,875,000
  Issuance of note payable for patent                              --             --        500,000
  Issuance of notes payable to purchase equipment                  --         50,795        102,561
  Conversion of notes payable to common stock                      --             --        350,000
  Conversion of long-term debt to common stock                     --             --        130,000
  Conversion of accounts receivable to note receivable             --         36,231         36,231
</Table>


The accompanying notes are an integral part of these statements.


                                       29
<PAGE>

                     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.

       Recent Accounting Pronouncements

       The Financial Accounting Standards Board has released FAS 141, "Business
       Combinations," FAS 142, "Goodwill and Other Intangible Assets," FAS 143,
       "Accounting for Asset Retirement Obligations," and FAS 144, "Accounting
       for the Impairment or Disposal of Long-Lived Assets." The Company
       believes that the impact of these new standards will not have a material
       effect on the Company's consolidated financial position, results of
       operations or disclosures.

       During 1999 the Company changed its method of accounting for
       organizational costs to conform with new requirements of the American
       Institute of Certified Public Accountants Statement of Position 98-5. The
       effect of this change was to increase the net loss for 1999 by $93,736
       ($0.01 per share).

       Revenue Recognition

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

       Cash

       The Company maintains cash balances at a financial institution located in
       Longview, Texas, which at times may exceed federally insured limits. The
       Company has not experienced any losses in such accounts and believes it
       is not exposed to any significant credit risk on cash and cash
       equivalents.

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

       Inventory

       Inventory, which consists of products held for resale, is recorded at the
       lower of cost or market, with cost being determined by the first-in,
       first-out method. At December 31, 2001, fire suppression inventory was
       $707,353 and Pannache inventory was $62,291.

       Intangible Assets

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


                                       30
<PAGE>

                     Summit Environmental Corporation, Inc.
                          NOTES TO FINANCIAL STATEMENTS


       SIGNIFICANT ACCOUNTING POLICIES (continued)

       Income Taxes

       The Company provides for income taxes under the asset and liability
       method. Under the asset and liability method, deferred tax assets and
       liabilities are recognized for the future tax consequences attributable
       to differences between the financial statement carrying amounts of
       existing assets and liabilities and their respective tax bases. Deferred
       tax assets and liabilities are measured using enacted tax rates expected
       to apply to taxable income in the years in which those temporary
       differences are expected to be recorded or settled. The effect on
       deferred tax assets and liabilities of a change in tax rates is
       recognized in income in the period that includes the enactment date.

       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.

       Property and Equipment

       Depreciation and amortization are provided in amounts sufficient to
       relate the cost of depreciable assets to operations over their estimated
       service lives by the straight-line method.

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

       Major repairs or replacements of property and equipment are capitalized.
       Maintenance, repairs and minor replacements are charged to operations as
       incurred.

       When units of property are retired or otherwise disposed of, their cost
       and related accumulated depreciation are removed from the accounts and
       any resulting gain or loss is included in operations.

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

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

       Advertising and Marketing

       Advertising and marketing costs are expensed as incurred, which totaled
       $46,489 and $254,937 for 2001 and 2000, 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.

       Per Share Information

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


                                       31
<PAGE>

                     Summit Environmental Corporation, Inc.
                          NOTES TO FINANCIAL STATEMENTS


1.     PATENT

       On November 2, 1998, the Company purchased via issuance of common stock
       and a note payable, patent rights and intellectual property to various
       fire suppression products for a purchase price of $2,375,000. This
       purchase required cash payments of $500,000 and 875,000 shares of common
       stock of the Company to be issued and delivered to BioGenesis
       Enterprises, Inc.

2.     LICENSES

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

3.     LEASES

       The Company is obligated under various operating leases for equipment,
       vehicles, and office and warehouse space. Management expects that, in the
       normal course of business, leases that expire will be renewed by other
       leases; thus it is anticipated that future minimum lease commitments will
       not be less than the amount shown for the year ending December 31, 2001.
       Rent expense for all operating leases was approximately $55,400 and
       $61,300 for 2001 and 2000, respectively.

       At December 31, 2001, approximate rental commitments under all
       noncancellable leases having terms in excess of one year are as follows:

<Table>
<Caption>
              Years Ending
              December 31,
              ------------
<S>                                                               <C>
                  2002                                            34,624
                  2003                                            12,082
                  2004                                             6,493
                  2005                                             2,500
                  2006                                             2,500
                                                                 -------
              Total minimum lease payments                       $58,199
                                                                 =======
</Table>

4.     COMMON STOCK

       Common Stock Options

       The sole director and stockholders approved the 1998 Stock Option Plan
       (the "Plan") of the Company whereby, at the discretion of the directors
       or of a Stock Option Committee appointed by the board of directors,
       invited employees of the Company or directors of the Company or
       consultants to the Company will have the option of subscribing to common
       shares of the Company based on a price determined by the directors or
       Stock Option Committee. The number of shares subject to the Plan is
       500,000.

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

       The following schedule summarizes the changes in the Plan for the three
       years ended December 31, 2001:

<Table>
<Caption>
                                                               Option Price
                                                          ------------------------
                                                Number of            Total Option
                                                 Shares   Per Share     Price
                                                --------- --------- -------------
<S>                                             <C>       <C>       <C>
Outstanding at December 31, 1998                      --    $  --     $     --
For the year ended December 31,1999:
    Granted                                      350,000     1.00      350,000
    Exercised                                         --       --           --
                                                --------    -----     --------

Outstanding at December 31, 1999                 350,000    $1.00     $350,000
</Table>


                                       32
<PAGE>

                     Summit Environmental Corporation, Inc.
                          NOTES TO FINANCIAL STATEMENTS


4.       COMMON STOCK (Continued)

<Table>
<Caption>
                                                                      Option Price
                                                                 -----------------------
                                                       Number of           Total Option
                                                         Shares  Per Share    Price
                                                       --------- --------- -------------
<S>                                                    <C>       <C>       <C>
              For 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)                      =======    =====    =========
</Table>

       Warrants

       During 2001 and 2000, the Company issued warrants to acquire 160,000 and
       766,500 shares, respectively, for $1.00 per share through June 30, 2002
       in connection with a private placement.

       Stock Options

       In compliance with Statement of Financial Accounting Standards No. 123,
       the Company recognizes and measures compensation costs related to the
       Employee Plan utilizing the intrinsic value based method. Accordingly, no
       compensation cost has been recorded. Had compensation expense been
       determined on the fair value of awards granted, net loss and loss per
       share would have been as follows:

<Table>
<Caption>
                                    2001                       2000
                          ------------------------   -----------------------
                          As Reported   Pro forma    As Reported   Pro forma
                          ------------ -----------   -----------  ----------
<S>                       <C>          <C>          <C>          <C>
Net loss                   $ 791,567    $ 798,680    $1,175,647   $1,198,942
Loss per share             $    (.06)   $    (.09)   $     (.10)  $     (.10)
</Table>

       The fair value of all options and warrants are estimated using the
       Black-Scholes option-pricing model with the following weighted-average
       assumptions: risk free interest rate 6.78%, expected life 10 years;
       expected volatility 162%; dividend yield 0%; and an exercise price of
       $1.00. The fair values generated by the Black-Scholes model may not be
       indicative of the future benefit, if any, which may be received by the
       holders.

5.     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 $29,311 and $6,003 were made to related parties in 2001
       and 2000, respectively.

       At December 31, 2001 and 2000 accounts receivables from related parties
       totaled $33,860 and $11,850 and notes receivables from related parties
       totaled $20,496 and $36,231, respectively.


                                       33
<PAGE>

                     Summit Environmental Corporation, Inc.
                          NOTES TO FINANCIAL STATEMENTS


5.     RELATED PARTY TRANSACTIONS (Continued)

       The Company acquired a patent from BioGenesis Enterprises, Inc.
       (BioGenesis) on November 2, 1998 (see Note 2). The purchase agreement
       requires the Company to pay BioGenesis a periodic royalty of $.50 per
       16-oz. can and an equivalent (approximately 7%) on all other product
       categories using the fire suppressant technology. One-half of all
       periodic royalty fees due to BioGenesis will be credited against the
       advance royalty fee (until fully recovered) and one-half will be paid to
       BioGenesis in cash on the 30th of each month based upon invoiced sales
       through the close of the preceding month. The Company has prepaid
       royalties to BioGenesis totaling $496,505 and $499,000 as of December 31,
       2001 and 2000, respectively.

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

6.     CONCENTRATIONS

       Approximately 46% and 63% of sales were made to three customers in 2001
       and 2000, respectively. The three customers were different for each of
       the two years. Accounts receivable from those three customers were
       $34,437 and 1,920 at December 31, 2001 and 2000, respectively.

7.     INCOME TAXES

       Deferred tax assets and liabilities are determined based on the
       difference between the financial statement and tax bases of assets and
       liabilities as measured by the currently enacted tax rates. Deferred tax
       expense or benefit is the result of the changes in deferred tax assets
       and liabilities.

       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 (liabilities) include the following components:

<Table>
<Caption>
                                                2001          2000
                                            -----------    -----------
<S>                                         <C>            <C>
Deferred tax assets:
Current                                     $    14,960    $    14,960
Noncurrent                                    1,208,039        939,073
Valuation allowance                          (1,220,374)      (949,198)
                                            -----------    -----------
  Deferred tax assets, net                        2,625          2,583
                                            -----------    -----------

Deferred tax liabilities:
Current                                              --             --
Noncurrent                                        2,625          2,583
                                            -----------    -----------
  Deferred tax liabilities, net                   2,625          2,583
                                            -----------    -----------
                                            $        --    $        --
                                            ===========    ===========
</Table>

       The valuation allowance was established to reduce the deferred tax asset
       for the amounts that will more likely than not be realized. This
       reduction is primarily necessary due to the uncertainty of the Company's
       ability to utilize all of the net operating loss carryforward. The
       valuation allowance increased $271,176 and $406,432 in 2001 and 2000,
       respectively. The Company has a net operating loss carryforward of
       approximately $3,506,000 of which $605,000 expires in 2018, $882,000
       expires in 2019, $1,203,000 expires in 2020 and $816,000 expires in 2021.


                                       34
<PAGE>

                     Summit Environmental Corporation, Inc.
                          NOTES TO FINANCIAL STATEMENTS


8.       SUBSEQUENT EVENT (UNAUDITED)

       In January 2002, Summit entered into a joint venture agreement with Earth
       Safe Technology, Inc. to market products manufactured by Summit in
       Mexico.

       In February 2002, Summit entered into a distribution agreement with
       Tianyang Group for the sale of products manufactured by Summit. These
       products are to be sold to Tianyang for production and resale in The
       Peoples Republic of China.


                                       35
<PAGE>

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

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

<Table>
<Caption>
                                                                    OFFICE HELD                   TERM OF
           NAME                              OFFICE                   SINCE                        OFFICE
           ----                              ------                 -----------                   -------
<S>                                 <C>                             <C>                           <C>
B. Keith Parker, 53                 Chief Executive Officer and        1997                         4-02
                                    Director

Chris Dellinges, 52                 Chief Financial Officer            2001                         4-02

Paula Parker, 48                    Vice President, Secretary          1997                         4-02
                                    And Director

Dean Haws, 32                       Director                           1997                         4-02

John Brooks, 54                     Director                           1999                         4-02

James J. Roach, 54                  Director                           1997                         4-02

Thomas J. Kenan, 70                 Director                           1997                         4-02

Mohsen Amiran, 52                   Director                           1999                         4-02

Wilton Dennis Stripling, 60         Director                           2000                         4-02
</Table>

KEITH PARKER, CHAIRMAN, CEO

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

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.

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


                                       36
<PAGE>

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

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

DEAN HAWS, DIRECTOR

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

JAMES J. ROACH, DIRECTOR

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

JOHN BROOKS, DIRECTOR

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

THOMAS J. KENAN, DIRECTOR

         Mr. Kenan has practiced securities and corporation law in Oklahoma
City, Oklahoma for the last 36 years. He is presently affiliated with Fuller,
Tubb, Pomeroy & Stokes in an "of counsel" capacity.

DR. MOHSEN AMIRAN, DIRECTOR

         Dr. Amiran grew up with a passion for the environment. While attending
a UK University, his two thesis papers on organic chemistry received national
attention. He was viewed as one of the brilliant minds in 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


                                       37
<PAGE>
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 Irans leading minds
had defected caused much turmoil in Iran. Fearing that Dr. Amiran was working
with the CIA, his possessions were seized and family members tormented, tortured
or killed. He came to the United States and became a professor at Northwestern
University. He later founded BioGenesis, where he again began working on his
environment-saving fire suppressants and cleaning agents.

         Dr. Amiran received his undergraduate degree in Organic Chemistry from
Areya Mehr University in Tehran, Iran and his Ph.D. from the University of Essex
in England.

DR. WILTON DENNIS STRIPLING, DIRECTOR

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

ITEM 10. EXECUTIVE COMPENSATION

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

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

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

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


                                       38
<PAGE>
(2)  25% vests on the first, second, third and fourth anniversaries of the date
     of initial employment.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table shows information as of December 31, 2001 with
respect to each beneficial owner of more than 5 percent of each class of voting
stock of the company and to each of the officers and directors of the company
individually and as a group:

<Table>
<Caption>
                                              NO. OF         % OF
         SUMMIT ENVIRONMENTAL CORP.           SHARES         CLASS
         --------------------------           ------         -----
<S>                                        <C>               <C>
         B. Keith Parker                    2,234,805(1)      16.1
         521 Delia
         Longview, TX 75601

         Paula Parker                         446,000(2)       3.2
         521 Delia
         Longview, TX 75601

         Moonlighting Distribution            350,000(3)       2.5
         Corporation
         521 Delia
         Longview, TX 75601

         Dean Haws                            250,000          1.8
         P. O. Box 1071
         Gilmer, TX 75644

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

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

         Thomas J. Kenan                      190,620(4)       1.4
         212 NW 18th Street
         Oklahoma City, OK 73103

         BioGenesis Enterprises, Inc.      1, 075,000(5)       7.7
         7420 Alban Station, Ste. B-208
         Springfield, VA 22150

         Mohsen Amiran                     1, 275,700(5)       9.2
         7420 Alban Station, Ste. B-208
         Springfield, VA 22150
</Table>


                                       39
<PAGE>


<Table>
<S>                                        <C>               <C>
         Wilton Dennis Stripling              900,000          6.5
         5230 Walnut Hill Lane, Ste. 306
         Dallas, TX 75231

         Officers and Directors             4,916,125         35.4
         as a group (7 persons)
</Table>

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

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

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

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

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

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

         Summit Technologies' and, now, 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 will pay to Moonlighting a royalty of $0.50 for each 16-ounce can of
FIREPOWER 911(TM), $0.35 for each 1-liter can of FIREPOWER 911(TM), and $0.50
for each gallon of FLAMEOUT(R).


                                       40
<PAGE>

         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.

         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.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)      EXHIBITS

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

       2.1        -       Agreement of Merger of July 14, 1998, between Summit
                          Environmental Corporation, Inc. and Summit
                          Technologies, Inc.**

       3.1        -       Articles of Incorporation of Summit Environmental
                          Corporation, Inc.*

       3.1.1     -        Amendment to Articles of Incorporation of Summit
                          Environmental Corporation, Inc.**

       3.2        -       Bylaws of Summit Environmental Corporation, Inc.*

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

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

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

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

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

      *                   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.


                                       41
<PAGE>

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

(b)      REPORTS ON FORM 8-K

         None

                                   SIGNATURES


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

                                        SUMMIT ENVIRONMENTAL CORPORATION, INC.



Date:  April 11, 2002                   By /s/ B. Keith Parker
                                        ----------------------------------------
                                        B. Keith Parker, Chief Executive Officer

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



Date:  April 11, 2002                   By
                                        ----------------------------------------
                                        Chris Dellinges, Chief Financial Officer



Date:  April 11, 2002                   By /s/ B. Keith Parker
                                        ----------------------------------------
                                        B. Keith Parker, Chief Executive Officer
                                        and Director



Date:  April 11, 2002                   By /s/ Paula Parker
                                        ----------------------------------------
                                        Paula Parker, Director



Date:  April 11, 2002                   By /s/ Dean Haws
                                        ----------------------------------------
                                        Dean Haws, Director



Date:  April 11, 2002                   By /s/ Thomas J. Kenan
                                        ----------------------------------------
                                        Thomas J. Kenan, Director



Date:  April 11, 2002                   By /s/ James J. Roach
                                        ----------------------------------------
                                        James J. Roach, Director


                                       42
<PAGE>

Date:  April 11, 2002                   By /s/ John Brooks
                                        ----------------------------------------
                                        John Brooks, Director



Date:  April 11, 2002                   By /s/ Mohsen Amiran
                                        ----------------------------------------
                                        Mohsen Amiran, Director



Date:  April 11, 2002                   By /s/ Wilton Dennis Stripling
                                        ----------------------------------------
                                        Wilton Dennis Stripling, Director


                                       43