<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
SUMMIT ENVIRONMENTAL CORPORATION, INC.
(Name of small business issuer in its charter)
Texas 42269 73-1537206
---------- ------------------------------ ---------------
(state of (Primary Standard Industrial (IRS Employer
incorporation) Classification Code Number) I.D. Number)
414 East Loop 281, Suite 7
Longview, TX 75605
800-522-7841
---------------------------------------------------------
(Address and telephone number of registrant's principal
executive offices and principal place of business)
Don Hendon
414 East Loop 281, Suite 7
Longview, TX 75605
800-522-7841
---------------------------------------------------------
(Name, address and telephone number of agent for service)
Copies to:
Thomas J. Kenan, Esq., Fuller, Tubb, Pomeroy & Stokes
201 Robert S. Kerr Avenue, Suite 1000
Oklahoma City, OK 73102
Approximate date of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(c) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list
<PAGE> 2
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==========================================================================================================================
Title of Proposed Proposed
each class maximum maximum
of securities Amount offering aggregate Amount of
to be to be price offering registration
registered registered per unit price fee
------------- ---------- -------- --------- ------------
<S> <C> <C> <C> <C>
Common Stock 4,321,000 $0.91(1) $3,932,110(1) $1,038(1)
==========================================================================================================================
</TABLE>
(1) These 4,321,000 shares are to be offered by 70 selling shareholders
from time to time at fluctuating market prices. The registration fee
for these shares is based on the average of a bid price of $0.81 and
an ask price of $1.00 on July 17, 2000 on the OTC Bulletin Board. Reg.
230.457(c).
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission acting pursuant to said section 8(a)
may determine.
2
<PAGE> 3
PROSPECTUS
SUMMIT ENVIRONMENTAL CORPORATION, INC.
4,321,000 SHARES OF COMMON STOCK
4,321,000 shares of Common Stock are being offered by 70 selling
security holders. None of the proceeds of sale will go to the company. All
proceeds will go to the selling security holders and for the payment of their
brokerage commissions. Two of the selling security holders are directors of
Summit Environmental Corporation, and one of the selling security holders is a
corporation under the control of a director of Summit Environmental
Corporation.
The selling security holders will offer the 4,321,000 shares from time
to time in the over-the-counter market through brokers at fluctuating market
prices. They may also offer the shares in negotiated transactions, through the
writing of options on the securities, a combination of such methods of sale, or
otherwise. Sales may be made at fixed prices which may be changed, at market
prices prevailing at the time of sale, or at negotiated prices.
-------------------------
Our Common Stock trades on the OTC Bulletin Board.
Its trading symbol is "SEVT".
-------------------------
THE PURCHASE OF THESE SHARES INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS," BEGINNING ON PAGE 1.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
offering memorandum is truthful or complete. Any representation to the contrary
is a criminal offense.
SUMMIT ENVIRONMENTAL CORPORATION, INC.
414 East Loop 281, Suite 7
Longview, TX 75605
Telephone 800-522-7841
July __, 2000
<PAGE> 4
SUMMARY
THE COMPANY. Our company, Summit Environmental Corporation, Inc.,
markets products manufactured for us by unaffiliated companies. We either own
the patent and other intellectual property rights to our products, or we have
licenses from the owners of the intellectual property rights to our products.
Our principal product is a non-toxic, biodegradable fire suppressant,
called FIREPOWER 911(TM) or FLAMEOUT(TM), depending on the strength of certain
of the active ingredients in the product and on the intended usage of the fire
suppressant.
We also market several industrial cleaners, the principal one being
ULTIMATE CLEAN 668(TM), a non-toxic, biodegradable turbine cleaner for use on
jet engines.
We have directed our efforts since December 1997
o to organizing and financing our company,
o to clearing our products with governmental regulatory
authorities and listing them with Underwriter Laboratories,
o entering into strategic alliances with other marketing
companies and into product approval contracts with retailers,
and
o obtaining inventories of our products.
We are now poised to commence selling our products in significant commercial
quantities. We believe our products are superior to those of our competitors
and will be accepted by consumers of these types of products.
RISK FACTORS
The following principal factors make the offering described herein
speculative and one of high risk. An investment in the shares offered
herein should not be made by persons who cannot afford the loss of their entire
investment.
1. WE HAVE NO HISTORY OF PROFITABLE OPERATIONS.
Our company is a development stage corporation. It was organized in
late 1997 and is not yet operating at a profit. There can be, and is, no
assurance that profitable operations can be achieved or, if achieved,
maintained.
1
<PAGE> 5
2. IT IS LIKELY THAT TRADING IN OUR STOCK WILL BE VOLATILE AND
LIMITED.
Our common stock is listed on the OTC Bulletin Board. It currently
trades at less than $5 a share, which makes it a so-called "penny stock." This
subjects broker-dealer firms to certain restrictions and a strict regimen if
they recommend the stock to certain of their customers. Because of these
restrictions, trading in the stock is likely inhibited and a shareholder's
ability to resell the stock in the stock market could be limited, which itself
could tend to further inhibit the creation of market interest in the stock and
act as a depressant on its price in the stock market. See "Penny Stock
Regulations."
3. WE ENGAGE IN A SIGNIFICANT AMOUNT OF TRANSACTIONS WITH COMPANIES
THAT ARE AFFILIATED WITH US.
We are affiliated with Moonlighting Distribution Corporation
("Moonlighting"), a Longview, Texas corporation under the control and 52.5
percent ownership of B. Keith Parker and his spouse, Paula Parker, who are
officers and directors of our company.
We acquired our distribution rights to our FIREPOWER 911(TM),
FLAMEOUT(TM), STRESSEX(TM), PODER 24(TM) and TRIM-AWAY(TM) products from
Moonlighting in exchange for $30,000 and 350,000 shares of our common stock. We
pay to Moonlighting a royalty of $0.35 for each one-liter can of FIREPOWER
911(TM), $0.50 for each 16-ounces of FIREPOWER 911(TM) and $0.50 for each gallon
of FLAMEOUT(TM). We buy our STRESSEX(TM), PODER 24(TM) and TRIM-AWAY(TM)
products from Moonlighting (which does not itself manufacture these products),
which marks up the price of these products to us approximately 37 percent over
its own cost.
Because both our company and Moonlighting are under the common
direction and control of B. Keith Parker and his spouse, Paula Parker, there
can be no assurance that negotiations between the two companies concerning the
pricing of the STRESSEX(TM), PODER 24(TM) and TRIM-AWAY(TM) products we buy from
Moonlighting or concerning other matters will, or can be, conducted in an
arm's-length manner or that the result of such negotiations will be as
advantageous to us as they could have been had the two companies not been under
common control.
4. OUR SUCCESS MAY DEPEND ON OUR ABILITY TO RETAIN KEY PERSONNEL.
We are reliant on the continued services of several key personnel,
and the loss of any of them could have a materially adverse effect on the
future operations of the company. These persons are B. Keith Parker, chief
executive officer of Summit Technologies; Don Hendon, president, chief
financial officer and treasurer, and Paula Parker, vice president and corporate
secretary. There can be no assurance that the loss of key
2
<PAGE> 6
personnel will not materially and adversely affect our operations and,
particularly, our expansion. See "Management Information - Directors, Executive
Officers and Significant Employees."
5. SHOULD A CHANGE IN MANAGEMENT SEEM NECESSARY, IT WILL BE DIFFICULT
FOR THE NON-MANAGEMENT SHAREHOLDERS TO DO THIS.
The company's officers and directors and their affiliates own
approximately 26.6 percent of the common stock of the company and thereby may
be able to determine the outcome of any vote affecting the control of the
company.
6. WE DO NOT INTEND TO PAY DIVIDENDS.
For the foreseeable future it is anticipated that any earnings
which may be generated from operations of the company will be used to finance
the growth of our company, and cash dividends will not be paid to holders of
the common stock.
7. WE INDEMNIFY MOST ACTS OF OUR OFFICERS AND DIRECTORS.
Pursuant to the Texas General Corporation Act, under most
circumstances the company's officers and directors may not be held liable to
the company or its shareholders for errors in judgment or other acts or
omissions in the conduct of the company's business unless such errors in
judgment, acts or omissions constitute fraud, gross negligence or malfeasance.
USE OF PROCEEDS
All proceeds from the sale of the 4,321,000 shares of common stock
offered herein will go to the selling security holders for their own personal
use after the payment of any brokerage commissions.
DETERMINATION OF OFFERING PRICES
Each of the selling security holders proposes to sell the shares
offered herein primarily through broker-dealers at prevailing market prices.
They may also offer the securities in private transactions at negotiated
prices.
THE SELLING SECURITY HOLDERS
There are 70 selling security holders of the 4,321,000 shares of
common stock of Summit offered hereby.There are 70 selling security holders of
the 4,321,000 shares of common stock of Summit offered hereby.There are 70
selling security holders of the 4,321,000 shares of common stock of Summit
offered hereby.There are 70 selling security holders of the 4,321,000 shares of
common stock of Summit offered hereby.There are 70 selling security holders of
the 4,321,000 shares of common stock of Summit offered hereby.
3
<PAGE> 7
Of the selling security holders, the following have had positions,
offices or other material relationships within the past three years with Summit
Environmental Corporation or any of its predecessors or affiliates:
Patrick Ty Bishop was a director of Summit Environmental during the
period from its inception to April 28, 1999.
Dean Hawes is a director of Summit Environmental.
Albert L. Welsh was the sole director and officer of Summit
Environmental from the time of its incorporation on February 28, 1998 until
December 2, 1998, when it merged with Summit Technologies, Inc.
BioGenesis Enterprises, Inc. is affiliated with Summit Environmental
through Mohsen Amiran, who is a director of both companies. BioGenesis is under
the control of Dr. Amiran, the inventor of Summit Environmental's fire
suppressant and industrial cleaner products. Dr. Amiran serves as a research
and development advisor to the board of directors of Summit Environmental.
Each selling security holder's ownership of the company's common
stock, both before and after the offering, is as follows:
<TABLE>
<CAPTION>
AMOUNT OF COMMON STOCK
---------------------------------------- PERCENTAGE OF CLASS
OWNED AFTER TO BE OWNED
SELLING AMOUNT OFFERING AFTER OFFERING
SECURITY HOLDER OWNED NOW OFFERED IS COMPLETE IS COMPLETE
--------------- --------- ------- ------------ -------------------
<S> <C> <C> <C> <C>
Adair, Donald K. 25,000 10,000 15,000 0.1
Adams, John E. and
N. Kaye 62,287 30,000 32,287 0.3
Allen, Valerie G. 40,000 40,000 0 0
Bailey, Gary 426,000 388,000 38,000 0.3
Bailey, Leta 20,000 20,000 0 0
Bailey, Susan K. 50,000 50,000 0 0
Biogenesis Enterprises, Inc. 804,950 804,950 0 0
Bishop, Joleta 30,000 30,000 0 0
Bishop, Patrick Ty 140,000 140,000 0 0
Boatright Irrevocable Trust 20,000 20,000 0 0
Bowey, J. Douglas 100,000 100,000 0 0
Bridge Gap Communications 10,000 10,000 0 0
Burdick, Michael D. 20,000 20,000 0 0
Caribbean Financial Ventures 300,000 300,000 0 0
Carry, Shawn 20,000 20,000 0 0
Comer, Patrick 50,000 50,000 0 0
Crowley, Cory 20,000 20,000 0 0
Dan l Boone Construction,
Inc. 20,000 20,000 0 0
Dehoust, Joe 45,100 45,100 0 0
Dixon, William L. 60,000 50,000 10,000 0.1
Fernadez, Kent 80,000 80,000 0 0
First Trust Corporation TTEE
Wilton Dennis Stripling 150,000 150,000 0 0
Fowler, Sandra 40,000 40,000 0 0
Garret, Raymond 156,000 156,000 0 0
</TABLE>
4
<PAGE> 8
<TABLE>
<CAPTION>
AMOUNT OF COMMON STOCK
---------------------------------------- PERCENTAGE OF CLASS
OWNED AFTER TO BE OWNED
SELLING AMOUNT OFFERING AFTER OFFERING
SECURITY HOLDER OWNED NOW OFFERED IS COMPLETE IS COMPLETE
--------------- --------- ------- ------------ -------------------
<S> <C> <C> <C> <C>
Gerstein, Rachel L. 40,000 40,000 0 0
Ghaffari, Scott 20,000 20,000 0 0
Gilpin, Wes 5,000 5,000 0 0
Graff, Ann 8,000 8,000 0 0
Haws, Dean, Jr. 42,900 42,900 0 0
Hoffman, Joseph 160,000 160,000 0 0
Hok, Jennifer 10,000 10,000 0 0
Hok, Timothy 20,000 20,000 0 0
Huntsman, Ralph 40,000 40,000 0 0
Hurlburt, Mary 3,000 3,000 0 0
Jackson, Tommy 30,000 30,000 0 0
Kertes, Peter 200,000 200,000 0 0
Kertes, Renee 50,000 50,000 0 0
Ketchum, Kelly 20,000 20,000 0 0
Klein, Richard E. 20,000 20,000 0 0
Lanford, William E., II 20,000 20,000 0 0
Lee, Everett 20,000 20,000 0 0
Lee, John 70,000 70,000 0 0
Lee, Josephine L. 20,000 20,000 0 0
Lejeune, James L. 20,000 20,000 0 0
Lejeune, James Troy 20,000 20,000 0 0
Lindsey, Darin 30,000 30,000 0 0
Loveless, Kirk & Susan 20,000 20,000 0 0
Morvan, Sherry 20,000 20,000 0 0
Nutt, Rowdy 20,000 20,000 0 0
Phillips, Rebecca A. 20,000 20,000 0 0
Phillips, Robert V. and
Cecilia 10,000 10,000 0 0
Reid, Ursula T. 40,000 40,000 0 0
Richards, Lee 40,000 40,000 0 0
Ritter, Todd 30,000 30,000 0 0
Scannell, Gregg 20,000 20,000 0 0
Schmidt, Dorothy 60,000 40,000 20,000 0.2
Schucany, William R. 20,000 20,000 0 0
Severson, Jim 5,000 5,000 0 0
Shea, Susan L. 10,000 10,000 0 0
Skinner, Mark 4,050 4,050 0 0
Sosa, Chris A. 28,000 28,000 0 0
Speranza, George 100,000 100,000 0 0
Stripling, Dr. Lyndel 100,000 100,000 0 0
Stripling, Wilton Dennis II 20,000 20,000 0 0
Talley, John 25,000 25,000 0 0
Turner, Eddie 1,000 1,000 0 0
Turner, Gale 100,000 100,000 0 0
Welsh, Albert L. 96,300 60,000 36,300 0.3
Williams, Don 5,000 5,000 0 0
Willingham, W. W., III 100,000 100,000 0 0
Wilson, Paul 20,000 20,000 0 0
</TABLE>
PLAN OF DISTRIBUTION
Each of the selling security holders may effect sales from time to
time in transactions in the over-the-counter market at market prices prevailing
at the time of sale or in negotiated transactions at negotiated prices. Sales
could be made at fixed prices which each could change.
Each of the selling security holders may effect such transactions by
selling the securities directly to a purchaser, through broker-dealers acting
as agents or to broker-dealers who may purchase the securities as principals
and thereafter sell the securities from time to time in the over-the-counter
market, in
5
<PAGE> 9
negotiated transactions or otherwise. Such broker-dealers, if any, may receive
compensation in the form of discounts, concessions or commissions from the
selling security holders or the purchaser for whom such broker-dealers may act
as agents or to whom they may sell as principals (which compensation as to a
particular broker-dealer may be in excess of customary commissions).
The selling security holders and broker-dealers, if any, acting in
connection with any such sale might be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, and any commission received by
them and any profit on the resale of the securities might be deemed to be
underwriting discounts and commissions under the Securities Act.
With respect to the plan of distribution for the sale by the selling
security holders as stated above,
o to the extent that the securities are sold at a fixed price
or by option at a price other than the prevailing market
price, such price would need to be set forth in this
Prospectus;
o if the securities are sold in block transactions and the
purchaser wishes to resell the securities purchased, such
arrangements would need to be described in this Prospectus;
and
o if the compensation paid to broker-dealers is other than
usual and customary discounts, concessions or commissions,
disclosure of the terms of the transaction in this Prospectus
would be required.
The company has been advised that the selling security holders
understand the prospectus delivery requirements for sales made pursuant to this
Prospectus and that, if there are changes to the stated plan of distribution or
if additional information as noted above is needed, a post-effective amendment
with current information would need to be filed before offers are made and no
sales could occur until such amendment is declared effective.
DESCRIPTION OF SECURITIES
The company is authorized to issue 40 million shares of Common Stock,
$0.001 par value and 10 million shares of Preferred Stock, $0.001 par value.
The presently outstanding 12,043,494 shares of Common Stock are fully paid and
nonassessable.
6
<PAGE> 10
COMMON STOCK
VOTING RIGHTS. Holders of shares of Common Stock are entitled to one
vote per share on all matters submitted to a vote of the shareholders. Shares
of Common Stock do not have cumulative voting rights, which means that the
holders of a majority of the shareholder votes eligible to vote and voting for
the election of the Board of Directors can elect all members of the Board of
Directors.
DIVIDEND RIGHTS. Holders of record of shares of Common Stock are
entitled to receive dividends when and if declared by the Board of Directors
out of funds of the company legally available therefor.
LIQUIDATION RIGHTS. Upon any liquidation, dissolution or winding up of
the company, holders of shares of Common Stock are entitled to receive pro rata
all of the assets of the company available for distribution to shareholders
after distributions are made to the holders of the company's Preferred Stock.
PREEMPTIVE RIGHTS. Holders of Common Stock do not have any preemptive
rights to subscribe for or to purchase any stock, obligations or other
securities of the company.
REGISTRAR AND TRANSFER AGENT. The company's registrar and transfer
agent is Securities Transfer Corporation, 2591 Dallas Parkway, Suite 102,
Frisco, TX 75034.
DISSENTERS' RIGHTS. Under current Texas law, a shareholder is afforded
dissenters' rights which, if properly exercised, may require the company to
purchase his shares. Dissenters' rights commonly arise in extraordinary
transactions such as mergers, consolidations, reorganizations, substantial
asset sales, liquidating distributions, and certain amendments to the company's
certificate of incorporation.
PREFERRED STOCK
The company is also authorized to issue 10 million shares of Preferred
Stock, $0.001 par value. No shares of Preferred Stock have been issued.
The Preferred Stock or any series thereof shall have such
designations, preferences and relative, participating, optional or special
rights and qualifications, limitations or restrictions thereof as shall be
expressed in the resolution or resolutions providing for the issue of such
stock adopted by the board of directors and may be made dependent upon facts
ascertainable outside such resolution or resolutions of the board of directors,
provided that the manner in which such facts shall operate upon such
designations, preferences, rights and qualifications, limitations or
restrictions of such class or series of stock is clearly and expressly set
forth in the resolution or resolutions providing for the issuance of such stock
by the board of
7
<PAGE> 11
directors.
There are no provisions in the company's charter or bylaws that would
delay, defer or prevent a change in control of the company.
INTEREST OF NAMED EXPERTS AND COUNSEL
Thomas J. Kenan is named in the Registration Statement of which this
Prospectus is a part as having given an opinion on the validity of the
securities offered herein. Mr. Kenan owns 55,501 shares of common stock of the
Company. His spouse, Marilyn C. Kenan, is the trustee and sole beneficiary of
the Marilyn C. Kenan Trust, which is the record owner of 55,119 shares of
common stock of the company. Mr. Kenan disavows any beneficial interest in the
shares owned of record by such trust.
INDEMNIFICATION
Under Texas corporation law, a corporation is authorized to indemnify
officers, directors, employees and agents who are parties or threatened to be
made parties to any civil, criminal, administrative or investigative suit or
proceeding by reason of the fact that they are or were a director, officer,
employee or agent of the corporation or are or were acting in the same capacity
for another entity at the request of the corporation. Such indemnification
includes reasonable expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement if they acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
corporation.
With respect to any criminal action or proceeding, these same
indemnification authorizations apply if these persons had no reasonable cause
to believe their conduct was unlawful.
In the case of any action by the corporation against such persons, the
corporation is authorized to provide similar indemnification, but if any such
persons should be adjudged to be liable for negligence or misconduct in the
performance of duties to the corporation, the court conducting the proceeding
must determine that such persons are nevertheless fairly and reasonably
entitled to indemnification.
To the extent any such persons are successful on the merits in defense
of any such action, suit or proceeding, Texas law provides that they shall be
indemnified against reasonable expenses, including attorney fees. A corporation
is authorized to advance anticipated expenses for such suits or proceedings
upon an undertaking by the person to whom such advance is made to repay such
advances if it is ultimately determined that such person is not entitled to be
indemnified by the corporation.
Indemnification and payment of expenses provided by Texas law are not
deemed exclusive of any other rights by which an
8
<PAGE> 12
officer, director, employee or agent may seek indemnification or payment of
expenses or may be entitled to under any bylaw, agreement, or vote of
stockholders or disinterested directors. In such regard, a Texas corporation
may purchase and maintain liability insurance on behalf of any person who is or
was a director, officer, employee or agent of the corporation.
As a result of such corporation law, Summit may, at some future time,
be legally obligated to pay judgments (including amounts paid in settlement)
and expenses in regard to civil or criminal suits or proceedings brought
against one or more of its officers, directors, employees or agents, as such.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the company pursuant to the foregoing provisions or otherwise, the
company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
We incorporate by reference into this prospectus the following
documents that have been filed with the Securities and Exchange Commission:
o Our latest annual report on Form 10-KSB for our fiscal year
ended December 31, 1999, which report contains financial
statements for our fiscal year ended December 31, 1999, and
o Our Form 10-QSB quarterly report which contains interim
financial statements for our fiscal quarter ended March 31,
2000.
We also incorporate by reference all other documents that we may subsequently
file with the Securities and Exchange Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of this
offering.
We will provide to each person, including any beneficial owner, to
whom a prospectus is delivered, a copy of any or all of the information that
has been incorporated by reference in this prospectus but not delivered with
the prospectus. In this regard,
o we will provide this information upon either written or oral
request,
o we will provide this information at no cost to the requester,
and
o any request for this information must be made to Valerie
Allen of our office at telephone number 1-800-522-7841
9
<PAGE> 13
or addressed to her at Summit Environmental Corporation, Inc.,
414 East Loop 281, Suite 7, Longview, Texas 75605.
REPORTS TO SECURITY HOLDERS
We file reports with the Securities and Exchange Commission. These
reports are annual 10-KSB, quarterly 10-QSB and periodic 8-K reports. We will
furnish stockholders with annual reports containing financial statements
audited by independent public or certified accountants and such other periodic
reports as we may deem appropriate or as required by law. The public may read
and copy any materials we file with the SEC at the Public Reference Room of the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. Summit is an electronic filer, and the SEC maintains an
Internet Web site that contains reports, proxy and information statements and
other information regarding issuers that file electronically with the SEC. The
address of such site is http://www.sec.gov.
MATERIAL CHANGES
There are several developments in our business that have occurred
since the end of 1999 that have not been described in a report on Form 10-QSB
or Form 8-K, filed with the Commission. To place these developments into
context, the following are updated versions of our "Overview" and "Outlook"
sections of our "Management's Discussion and Analysis of Financial Condition
and Results of Operations" of our Form 10-KSB for the fiscal year ended
December 31, 1999, which Form 10-KSB is incorporated by reference into this
prospectus.
OVERVIEW
We completed in 1999 a successful year in establishing marketing
venues. Our strategy is to market the company's products primarily through
strategic alliances.
Several such alliances have been formed with 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.
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, we developed an
agenda to first introduce FIREPOWER 911(TM) through marketing venues where
discount pricing was not the
10
<PAGE> 14
primary negotiating factor.
The marketing venues that were developed were retail grocery stores,
convenience stores, catalogues, e-commerce, direct response television spots,
and infomercials. By the end of 1999, we had positioned FIREPOWER 911(TM) in
areas that met our criteria for establishing a retail pricing structure.
Through Convenience Service Group, our strategic alliance partner for retail
grocery and convenience stores marketing, a successful test market was kicked
off in Texas just prior to Christmas 1999. FIREPOWER 911(TM) was introduced
into this market through Tom Thumb Supermarkets in the Dallas-Fort Worth, Texas
area, Randall's Supermarkets in Houston, Texas and through United Supermarkets
in Midland, Odessa, Lubbock and Amarillo, Texas. A 60-second directed
television ad was introduced on the CBS and Fox Network affiliates in these
cities, directing viewers to the local stores. Convenience Service Group's
president is Dale Fowler, a past president of Core-Mark. Core-Mark places
products in 47,000 convenience stores in the Western section of the United
States. Dale has 32 years experience in non-food products distribution in the
convenience and grocery store industry.
During November 1999, we presented FIREPOWER 911(TM) to buyers at the
Advantage Buyers Program Meeting for Grocery Supply Company. Grocery Supply
Company is based in Sulphur Springs, Texas with additional warehouses in San
Antonio, Oklahoma City and Kansas City. They provide products to 12,000 stores.
The initial order to the stores represented at the Advantage meeting was
shipped in January 2000. Additional regional product introductions were made in
New Mexico, Arkansas, Louisiana and Utah during the first half of 2000.
In an effort to align the retailing efforts for FIREPOWER 911(TM) and
additional retail products, we hired Tracy Fowler in December 1999 to begin as
Vice-President of Marketing for retail sales effective January 3, 2000. Tracy
came to our company after serving ten years as the head buyer for the largest
of the Core-Mark regional distribution centers, based in Salt Lake City.
To further build a stable pricing base for FIREPOWER 911(TM), through
one of our brokers we obtained product approval for FIREPOWER 911(TM) to appear
in the Amway Spring-Summer 2000 gift catalog and in Healthy Living Catalogs.
Healthy Living is a publication directed to households where there is either a
confined person on the premises or someone disabled in the home.
In the area of e-commerce, we created a website for FIREPOWER 911(TM),
www.FirePower911.com. This website was linked to www.worldmall.com, a virtual
mall on the Internet, which links to approximately 1300 search engines.
In addition, we committed to an exclusive agreement with Adatom, the
world's largest Internet shopping site, www.adatom.com. In the Spring of 2000,
FIREPOWER 911(TM) became the "product of the day" for Adatom on a regular
rotating basis. Exposure is a key
11
<PAGE> 15
to e-commerce, and Adatom's treaties produce over 50,000,000 hits on its
website annually.
We entered into an agreement with United Telemedia for a sixty-day
test market for FIREPOWER 911(TM). This initiative is designed to establish the
criteria for a 30-minute infomercial for FIREPOWER 911(TM). The test program
consists of 2000 scheduled airings of a 60-second commercial produced for the
company. This advertising campaign began March 2, 2000 and will air in selected
cities for the test market.
In 1999 an agreement was executed with a strategic alliance partner,
International Aero, Inc. International Aero is the world's largest
reconfiguration company for commercial aircraft. Our company and International
Aero began working on the minimum performance standards requirements
established by the Federal Aviation Agency during 1999. Heretofore, the
handheld fire extinguishers on board 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(TM) meets all of the technical criteria required by the
performance standards. During early 2000, the actual field tests of FLAMEOUT(TM)
on jet fuel and heptane were conducted. Initial tests have demonstrated
extraordinary performance.
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. The new product
will be tested for performance by the United States Navy aircraft carrier
fleet.
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
enough fuel savings 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 our
company to obtain a military specification number for ULTIMATE CLEAN 668(TM).
Initial sales of ULTIMATE CLEAN 668(TM) have already begun with
12
<PAGE> 16
Solar Turbines. Solar manufactures low horsepower jet engines that provide
power for remote areas such as offshore platforms and pipelines. ULTIMATE CLEAN
668(TM) was specified by Solar during 1999.
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(TM) have been
accepted. During January 2000, the actual state fire department tests took
place.
In the Japanese, Hong Kong and Singapore markets, we have submitted
the same testing and certification documentation to authorities for each
country's government. Agencies' preliminary approvals have been received. We
will have to fill product orders to Japanese specifications, which are
different than the procedures used currently. It is anticipated that the
company will soon receive an initial product order for test marketing purposes.
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 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 Marshall's Office and the California State Fire
Marshall's Office.
The formula for FIREPOWER 911(TM) and FLAMEOUT(TM) 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 Marshall's
Office notified the company 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 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(TM), 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.
In February 1999, we 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
13
<PAGE> 17
in the global marketplace. In March 1999, we received a letter from the
Connecticut State Fire Marshall's Office certifying that our FIREPOWER 911(TM)
had satisfied its fire code requirements.
The California State Fire Marshall's Office notified us in July 1999
that California had a unique legislative requirement in addition to the NFPA
and ANSI/UL standards for portable fire extinguishers. This is a new area,
termed Non-Halon Certification, and means that any portable fire extinguisher
whose marketing intent is directed to the residential and individual use market
must contain a formula that has been certified as Non-Halon. FLAMEOUT(TM) is
the first of seven permanent listed and certified replacements for Halon 1211.
It is the only product that can meet this requirement due to the type of
approval for FLAMEOUT(TM). 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 our
behalf, 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 can
survive this process, according to the California State Fire Marshall'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.
We spent all of 1999 preparing, submitting and obtaining these direct
and crucial marketing positions. The concepts for marketing, now that strategic
positioning has been accomplished, are discussed in Management's Discussion and
Analysis.
Our negotiations with International Aero have resulted in an exclusive
distribution agreement for the aviation industry and the military that was
executed in January, 1999. During 2000, FLAMEOUT(TM) will be submitted by
International Aero as the agent to replace Halon in the onboard handheld fire
extinguishers. In March 1999, the Federal Aviation Agency published the Minimum
Performance Standards, which is the requirement guideline for finding the
selected firefighting agent to qualify for this mandatory replacement.
Two major criteria for the selected agent are that the agent must be
an EPA-SNAP certified replacement for Halon 1211, and the agent must possess
near zero toxicity levels.
FLAMEOUT(TM) meets both these requirements. We have previously
discussed the EPA issues surrounding FLAMEOUT(TM). Additionally, FLAMEOUT(TM)
has an HMIS reactivity rating of 0-0-0-B, certifying that it is a non-toxic
agent.
14
<PAGE> 18
FLAMEOUT(TM) was demonstrated April 11-13, 2000 in Wisconsin, at the
NFPA 18 fire suppressant testing meeting. This event began the exposure of
FLAMEOUT(TM) in the upper echelons of firefighting products worldwide.
International marketing agreements were negotiated and executed during
1999. A key element of these agreements is a revenue sharing clause that
provides that we will share in any profit from the tools, devices or mechanisms
into which FLAMEOUT(TM) is introduced for resale. Global agreements reached
during 1999 included Australia, New Zealand, Hong Kong, Singapore, Japan,
England and the European Union, the Dominican Republic, Brazil, Argentina,
Chile, Peru, Ecuador, Paraguay, Uruguay, Puerto Rico, Venezuela, Columbia,
Bolivia and Mexico. We spent all of 1999 assisting our distributor partners
with necessary testing, listing, ratings and certification in order to complete
the registration process in each of these countries.
We recently entered into a limited liability partnership with Kerst
Houweling Holdings of Nijerk, Netherlands for the purpose of marketing our fire
suppressant products in the European Union, the United Arab Emirates and
several eastern Europe countries. Our partner is already established as a fire
products sales company in these countries. We will be allocated 40 percent of
the income, gains, expenses and losses of the partnership.
The partnership, named Summit Environmental Europe BV, has entered
into a revenue sharing agreement with Jockel Manufacturing Co. of Germany.
Jockel is the largest fire extinguisher manufacturer in Europe. The partnership
will sell our FLAMEOUT(TM) to Jockel for it to use to fill fire extinguishers.
The partnership will receive 25 percent of the sales of Jockel fire
extinguishers that are filled with FLAMEOUT(TM).
The company's future results of operations and the other
forward-looking statements contained in this Outlook involve a number of risks
and uncertainties. Among the factors that could cause actual results to differ
materially are the following: inability of the company to obtain needed
additional capital, loss of personnel - particularly chief executive officer B.
Keith Parker - as a result of accident or for health reasons, interruptions in
the supply of inventory from manufacturers of the inventory, the development of
a competing fire suppressant by a well-capitalized competitor that either is
able to develop a new product with the same attributes as the company's fire
suppressant or is able to discover the additives to the company's fire
suppressant that give it its unique and superior qualities, and an accident
involving life or serious bodily harm that fairly or unfairly would bring into
question the safety of using the company's fire suppressant products.
15
<PAGE> 19
LEGAL MATTERS
Thomas J. Kenan, Esq., of Oklahoma City, Oklahoma has passed and will
pass on certain legal matters for the company in connection with the offer,
sale and issuance of the shares offered herein.
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses of this offering, other than brokers'
commissions, are as follows:
<TABLE>
<CAPTION>
Estimated
Item Amount
--------------------- ---------
<S> <C>
Registration fees $ 5,000
Transfer agent's fees 1,500
Printing 7,500
Legal 10,000
Accounting 5,000
EDGAR provider fees 3,000
---------
$32,000
</TABLE>
The Registrant will advance all the above expenses and send invoices
to each selling security holder for his, her or its proportionate part of the
expenses.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The general corporation law of Texas and the bylaws of the Registrant
provide certain indemnification rights for directors, officers and agents of
the Registrant. These indemnification provisions are set forth in the
Prospectus under "Indemnification."
EXHIBITS
The following exhibits are filed as part of this Registration
Statement:
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<S> <C>
5 - Opinion of Thomas J. Kenan, Esquire, on the
legality of the securities being registered.
23 - Consent of Lane Gorman Trubitt, L.L.P. to be named
as an expert in the Registrant's Form 10-KSB for the
fiscal year ended December 31, 1999, which is
incorporated herein.
23.1 - Consent of Thomas J. Kenan, Esquire, to the
reference to him as an attorney who has passed upon
certain information contained in the Registration Statement
</TABLE>
16
<PAGE> 20
ITEM 28. UNDERTAKINGS
Summit Environmental Corporation, Inc. will:
For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering; and
File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the company pursuant to the foregoing provisions, or
otherwise, the company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the company of expenses incurred or paid by a
director, officer or controlling person of the company in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
17
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Longview, Texas.
Date: July 13, 2000 SUMMIT ENVIRONMENTAL CORPORATION, INC.
By: /s/ B. Keith Parker
---------------------------------------
B. Keith Parker, Chief Executive Officer,
and individually as a Director
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Date: July 13, 2000 By: /s/ Don Hendon
----------------------------------------------
Don Hendon, President, Chief Financial
Officer and Principal Accounting Officer,
and Director
Date: July 13, 2000 /s/ Paula Parker
----------------------------------------------
Paula Parker, Vice President, Secretary,
and Director
Date: July 13, 2000 /s/ Dean Hawes
----------------------------------------------
Dean Hawes, Director
18
<PAGE> 22
Date: July 14, 2000 /s/ John Brooks
----------------------------------------------
John Brooks, Director
Date: July 13, 2000 /s/ James J. Roach
----------------------------------------------
James J. Roach, Director
Date: July 11, 2000 /s/ Mohsen Amiran
----------------------------------------------
Mohsen Amiran, Director
Date: July 13, 2000 /s/ Thomas J. Kenan
----------------------------------------------
Thomas J. Kenan, Director
19
<PAGE> 23
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
5 - Opinion of Thomas J. Kenan, Esquire, on the
legality of the securities being registered.
23 - Consent of Lane Gorman Trubitt, L.L.P. to be named
as an expert in the Registrant's Form 10-KSB for the
fiscal year ended December 31, 1999, which is
incorporated herein.
23.1 - Consent of Thomas J. Kenan, Esquire, to the
reference to him as an attorney who has passed upon
certain information contained in the Registration Statement
</TABLE>
