Form 10KSB/A Home System Group

[Amend] Annual report pursuant to section 13 and 15(d) for small business issuers

What is Form 10KSB/A?
  • Accession No.: 0001140361-05-008029 Act: 34 File No.: 000-49770 Film No.: 051127840
  • CIK: 0001172319
  • Submitted: 2005-10-06
  • Period of Report: 2004-12-31

SUPREME REALTY 10KSB-A #2 12-31-2004 HTML

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-KSB/A
(Amendment No. 2)

(Mark One)
 
 
x
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the annual period ended
December 31, 2004
 

 
 
o
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 
For the transition period from
 
to
   
 
Commission file number
   000-49770
 
 
SUPREME REALTY INVESTMENTS, INC.
(Exact name of small business issuer as specified in its charter)
 
Nevada
43-1954776
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)

P.O. Box 690578, Orlando, FL 32869
(Address of principal executive offices)
 
(407) 583-4603
(Issuer's telephone number)
 
Securities Issued under Section 12(b) of the Exchange Act:
 
Title of Each Class
Name of Exchange on which registered
$0.001 par value, common
Over-the-Counter Bulletin Board(OTCBB)
 
Securities Issued under Section 12(g) of the Exchange Act:    None
 
     
 
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 o
 

 

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of 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

Issuer’s revenues for the fiscal year ended December 31, 2004, were $63,405.

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Issuer as of April 8, 2005, based upon the last reported sales price on the OTCBB was $412,433.

(APPLICABLE ONLY TO CORPORATE ISSUERS)

The Registrant’s common stock outstanding as of April 8, 2005, was 30,000,000 shares.

DOCUMENTS INCORPORATED BY REFERENCE:

Form 10-KSB, Filed April 15, 2005 and amended September 20, 2005

Transitional Small Business Disclosure Format (Check One): Yes   No  x
 
 
Explanatory Note
 
This Amendment No. 2 to the Annual Report on Form 10-KSB of Supreme Realty Investments, Inc. for the fiscal year ended December 31, 2004 is being filed solely for the purpose of revising and amending our audited financial statements and related notes to correct accounting errors.
 


2

 

SUPREME REALTY INVESTMENTS, INC.
 
10-KSB
 
FOR THE YEAR ENDED DECEMBER 31, 2004
 
INDEX
 
     
Page
Part I
Item 1
4
 
Item 2
5
 
Item 3
7
 
Item 4
7
Part II
Item 5
7
 
Item 6
8
 
Item 7
11
 
Item 8
29
 
Item 8A
29
 
Item 8B
29
Part III
Item 9
29
 
Item10
32
 
Item 11
32
 
Item 12
32
 
Item 13
32
 
Item 14
32
   
32
 
 
3


PART I
Item 1. Description of Business

Supreme Realty Investments, Inc. is a real estate operating company primarily engaged in the acquisition, operation, and disposition of real properties and loans secured by real properties. Through its and its wholly-owned subsidiary, Supreme Capital Funding, Inc., it also engages in mortgage banking activities such as loan origination, servicing, and brokering real estate loans to and from lending institutions and institutional investors.

The Company acquires hotels and other real properties either directly in fee simple, or indirectly through ownership of beneficial interests in land trusts or partnerships that hold title to the real property. The Company believes that, in some cases acquiring indirect interests in real property is advantageous because it gives us flexibility in addressing the financial and risk management considerations presented by the particular property when debt financing may not be appropriate or when the Company is trying to avoid exposing its entire portfolio to litigation as the result of personal injuries resulting from environmental hazards or other unforeseen conditions on the property.

The Company's policy is to acquire properties primarily for current income. However, income from, and appreciation of its properties may be adversely affected by general and local economic conditions, neighborhood values, competitive overbuilding, weather, casualty losses, and other factors beyond its control. The value of real properties may also be affected by the cost of compliance with regulations and liability under applicable environmental laws, changes in interest rates, and the availability of financing. Income properties are also adversely affected if a significant number of tenants are unable to pay rent or if available space cannot be rented on favorable terms.

Investments in Real Estate Securities or other Passive Interests. From time to time, Supreme will also invest in the interests of others primarily engaged in real estate activities. The Company will invest in the common stock of other public and private real estate operating companies, real estate investment trusts, partnerships, or joint ventures. The primary opportunities the Company will consider are residential housing developments. The Company's acquisition committee will apply the same underwriting criteria as applied in its direct investments.

Mortgage Banking Operations. The Company, through its subsidiary Supreme Capital Funding, Inc., acquires 1st or 2nd mortgages, on single-family dwellings and apartment buildings. Not more than 20% of our total assets may be invested in any type of mortgage and not more than 1% of our total assets may be invested in any one mortgage.

The Company will acquire these mortgages and package them for resale. The Company applies the same rigorous underwriting analysis to the acquisition of these loans that it does to the direct acquisition of property. The Company looks to enhance its total returns through increased yields or, upon sale, the realization of some or the entire discount at which they were acquired.

Direct Lending and Joint Participation. In some cases, particularly land development (or redevelopment), the Company's Acquisition Committee will apply the same underwriting criteria as applied in its direct investments to make direct loans to developers for the construction and sale of multi-family housing or commercial properties.

Loan Origination and Brokerage. To generate fees associated with the origination of mortgage loans, the Company relies on the relationships of the senior management of Supreme Capital Funding, Inc. with lenders and institutional investors. They have extensive experience in the mortgage lending and real estate finance industries and have cultivated extensive contacts with banks, wholesale lenders, other mortgage brokers, and direct borrowers. The Company uses a variety of web-based lead generation tools along with direct marketing and solicitation of loan business from homebuyers and real estate brokers.

 
4


Since the Company's focus will be on residential borrowers with substandard credit, banks and other institutional lenders make referrals to the Company for loan opportunities that they do not wish to underwrite. The Company's management has formal brokerage agreements with several national mortgage lenders who underwrite the loan packages. Origination fees, administration fees, and document processing fees are paid to the Company at loan closing, by the lender, out of the loan proceeds.

Item 2. Description of Property

Investment Policies

Investment policies are established by the Board of Directors with respect to investing in real property interests and loans secured by real property. Such policies may be changed by the directors in response to economic and market conditions without vote of the stockholders; however the Board will promptly notify the shareholders in writing of any such change in policies. The percentage of assets invested in any one type of investment, property, loan, or security is set by the Board of Directors during its annual meeting. Under our current investment policy, not more than 20% of Supreme's total assets may be invested in any one property, loan, or security. Currently, we have exceeded this guideline with respect to one property which we hold as we have approximately 23% of our current total assets invested with that property. We expect this percentage will drop to below 20% as we develop our business model.

The number or amount of mortgages or other loans securing any one piece of real property may not exceed 90% of the property's appraised value.

Supreme's excess funds are generally held as cash or invested in short-term, highly liquid, interest-bearing securities, which may include short-term municipal bonds, time deposits, money market funds, commercial paper, and U.S. government securities.

Investments in Real Estate or other Property Interests.

Supreme acquires real property either directly in fee simple, or indirectly through ownership of beneficial interests land trusts or partnerships that hold title to the real property. Supreme believes that, in some cases acquiring indirect interests in real property is advantageous because it gives us flexibility in addressing the financial and risk management considerations presented by the particular property when debt financing may not be appropriate or when Supreme is trying to avoid exposing its entire portfolio to litigation as the result of personal injuries resulting from environmental hazards or other unforeseen conditions on the property.

Supreme's policy is to acquire properties primarily for current income. However, income from, and appreciation of its properties may be adversely affected by general and local economic conditions, neighborhood values, competitive overbuilding, weather, casualty losses, and other factors beyond its control. The value of real properties may also be affected by the cost of compliance with regulations and liability under applicable environmental laws, changes in interest rates, and the availability of financing. Income properties are also adversely affected if a significant number of tenants are unable to pay rent or if available space cannot be rented on favorable terms.

To help to mitigate these risks, our present policy goal is to diversify Supreme's portfolio across the following different property types, in rapidly-growing suburban areas, near large population centers, in the following economic regions or "belts":

Currently 100% of portfolio is held in apartment buildings located in Chicago, Illinois.

·
12-unit apartment building in Chicago, Illinois, acquired by Installment Agreement for Warranty Deed at a cost of $600,000, which carries a non-recourse mortgage note in the amount of $480,000, which bears interest at a rate of 7%, and is due on December 15, 2005. Property is currently 92% occupied and stable. The company leases the residential apartments pursuant to a Section 8-Housing Assistance Payments contract with the U.S. Dept. of Housing and Urban Development(HUD).

 
5

 
·
4-unit apartment building in Chicago, Illinois acquired by Installment Agreement for Warranty Deed at a cost of $280,000, which carries a non-recourse mortgage note in the amount of $224,000, which bears interest at a rate of 7% and is due on December 15, 2005. Property is currently 100% occupied and stable.

·
6-unit apartment building in Chicago, Illinois, acquired by Installment Agreement for Warranty Deed at a cost of $586,000, which carries a non-recourse first mortgage note in the amount of $131,000, which bears interest at a rate of 7% and is due on February 1, 2031. The property is currently unoccupied and scheduled for demolition. The company plans to demolish the building and build townhouses on the 18,750 SF site.
 
Description
 
Encumbrances
 
Initial Cost
 
Cost Capitalized
 
Gross amount
carried at
close of period
 
Accumulated
Depreciation
 
Date of
Construction
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12-Unit Apartment Bldg(1)
 
$
480,000
 
$
600,000
   
-0-
 
$
600,000
 
$
67,272
   
N/A
 
6-Unit Apartment Bldg(3)
 
$
131,000
 
$
586,000
   
-0-
 
$
586,000
 
$
35,102
   
N/A
 
4-Unit Apartment Bldg(4)
 
$
224,000
 
$
280,000
   
-0-
 
$
280,000
 
$
31,394
   
N/A
 
                                       
TOTALS
   
835,000
   
1,466,000
   
0
   
1,466,000
   
133,768
     

Real Estate Investments are recorded at cost, less accumulated depreciation. If there is an event or change of circumstances that indicates that the basis of a property may not be recoverable, then management will assess any impairment in value by making a comparison of (i) the current and projected operating cash flows (undiscounted and without interest charges) of the property over its remaining useful life and (ii) the net carrying amount of the property. If the current and projected operating cash flows are less than the carrying value of the property, the carrying value would be written down to an amount to reflect the fair value of the property.

Proposed Real Estate Acquisitions

The Company has entered into a formal Letter of Intent to acquire the following portfolio of hotel properties from a Belgium-based company for a total acquisition cost of $34 million, plus transaction costs:

 
·
263-room, full service hotel in Detroit, Michigan (DoubleTree Hotel)
 
·
197-room, full service hotel in St. Louis, Missouri (DoubleTree Hotel)
 
·
185-room, full service hotel in Dayton, Ohio (DoubleTree Hotel); and
 
·
283-room, full service hotel in Tulsa, Oklahoma (Hilton Hotel)

The company plans to finance the transaction by issuing debentures and/or convertible securities trhough a private placement to institutional investors.
The properties have a total of 938 rooms and are located in close proximity to well-known tourist attractions, metropolitan airports, business centers, and convention facilities. They are affiliated with well-known brands, such as Hilton Hotels, and DoubleTree Inn.

 
6

 
The properties currently have an average occupancy rate of 66%, an average daily rate (ADR) of $66.23, and approximately $23.1 million in gross revenues.
 
Item 3. Legal Proceedings

The Company is not aware of any current, pending, or threatened litigation or proceedings that could have a material adverse effect on its results of operations, cash flows or financial condition.
 
Item 4. Submission of Matter to a Vote of Security Holders
 
No matters were submitted during the fourth quarter of the period covered in this report to a vote of shareholders.

PART II
 
Item 5. Market for Common Equity and Related Stockholder Matters
 
Market Information

The Company’s common stock trades on the Over-the-Counter Bulletin Board (OTCBB) under the symbol “SUPR”.

The range for high and low bids since the stock began trading on March 3, 2005 is $0.025 - $0.40. The last reported price of the Company’s common stock, as of April 8, 2005, was $0.05.

Holders

As of December 31, 2004, there were approximately 58 holders of record of the Company’s common stock.

Dividends

The Company has not paid any cash dividends since its inception. Any future dividends will be subject to the discretion of the Company's Board of Directors and will depend upon, among other things, future earnings, the operating and financial condition of the Company, its capital requirements, general business conditions and other pertinent facts. Therefore, there can be no assurance that any dividends on the common stock will be paid in the future.

Securities Authorized for Issuance under Equity Compensation Plan

On August 28, 2004, the Board of Directors adopted and the shareholders approved a Stock Option and Restricted Stock Plan. The purpose of the plan is to advance the interests of the Corporation by enhancing the ability of the Corporation and its subsidiaries to attract and retain officers, employees and non-employee directors to the Corporation, to reward such individuals for their contributions and to encourage them to take into account the long-term interests of the Corporation through interests in the Corporation's Common Stock. The Plan provides for the grant of options to acquire Stock ("Options"), which may be non-qualified stock options ("NQSOs") within the meaning of the Internal Revenue Code of 1986, as amended (the "Code"), and awards of Stock subject to certain restrictions ("Restricted Stock"). Under the Plan, Restricted Stock consists exclusively of (i) Stock subject to performance-based restrictions intended to comply with the provisions of Section 162(m) of the Code ("Performance-Based Restricted Stock) and (ii) Stock awarded to non-employee directors in lieu of some or all of the cash compensation such directors would otherwise receive for their service as directors ("Non-employee Director Restricted Stock").

 
7


EQUITY COMPENSATION PLAN INFORMATION
 
Plan Category
 
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
 
Weighted average
exercise price of
outstanding options,
warrants and rights
 
Number of securities
remaining available for
future issuance
 
   
(a)
 
(b)
 
(c)
 
Equity compensation plans approved by security holders
   
16,000,000
 
$
0.10
   
34,000,000
 
                     
Equity compensation plans not approved by security holders
   
-0-
   
-0-
   
-0-
 
Total
   
16,000,000
 
$
0.10
   
34,000,000
 


Item 6. Management’s Discussion And Analysis

2004 Developments

During the period the management continued to shift its focus away from residential multi-unit properties to hotel and other hospitality-related properties. We sold our interests in one of our properties and we continue to actively market our interests in our other residential properties. Management has determined that it is not economically feasible at this time to undergo the extensive renovations required to meet the standards required to qualify for the housing assistance payments that are necessary to operate affordable housing units profitably.

To better pursue opportunities in the hospitality sector, the Company moved its corporate headquarters to Orlando, Florida in October, 2004.

In furtherance of our business strategy to acquire hotel properties, in December, the Company entered into a formal Letter of Intent to acquire a portfolio of four (4) hotel properties from a Belgium-based company. The hotels fit our strategy of geographic diversification and are excellent candidates that can benefit from our property renovation and brand repositioning strategies. All four of the hotels meet our criteria for their ability to enhance the performance of our portfolio, creating added value for our shareholders.

The Company plans to implement an extensive renovation plan to upgrade the properties by repositioning them to upscale select service hotels with premium brands to generate increased room rates commensurate with the improved quality. We have entered into a master hotel management agreement with Sage Hospitalty, of Denver, Colorado to provide management and development services for the properties upon acquisition.

The company has entered into a private placement agency agreeement with the investment banking firm of M.R. Beal & Co., New York, NY to place up to $40 million of its debt and/or convertible securities in a private placement to institutional investors. The funds will be used to acquire the hotels and the debt will be secured by first mortgages.

 
8


Results of Operations

Revenues from Continuing Operations

Rental revenue decreased to $48,405 for the year ended December 31, 2004 compared to $191,758 for the year ended December 31, 2003. The decrease in rental revenue in 2004 can be attributed to the fact that one six-unit property was sold during the period and rent payments for twelve units were suspended under the terms of the HUD Rental Assistance contract pending mandated repairs.

Income from the Realty and Management segment increased from -0- to $15,000 during the year ending December 31, 2004, reflecting brokerage commissions earned on transactions closed during the period.

Expenses from Continuing Operations.

Total expenses from continuing operations increased from $266,046 for the year ended December 31, 2003 to $275,804 for the year ended December 31, 2004, a net increase of $9,758.

 
1.
Property operating expenses increased by $63,903 for the year ended December 31, 2004 compared to the year ended December 31, 2003. This expense increase is primarily attributable to mortgage interest costs and property repairs.
 
2.
Property Depreciation and Amortization decreased by $7,030 for the year ending December 31, 2004 compared to the same period ending December 31, 2003. This reflects the fact that we sold our interest in one of our apartment buildings during the period and we have changed the estimated useful life of one of our properties to -0-.
 
3.
Salaries, commissions and employees benefits decreased by $15,658, reflecting lower labor costs after we moved our corporate headquarters to Orlando, FL.
 
4.
General and administrative expenses decreased by $38,487 for the year ending December 31, 2004 compared to the same period ending December 31, 2003. This reflects the fact that fewer expenses were paid to outside parties for legal, accounting, consulting, and other fees and expenses for services rendered in association with, and related to, the merger.
 
5.
Other Depreciation and Amortization reflects the depreciation on Office Furniture, Fixtures, and Equipment.
 
6.
Gain(Loss) on Sale of Assest reflects the gain on the sale of our Illinois mortgage banking license and other intangible assets related to our mortgage banking operation.
 
7.
Gain(Loss) on Sale of Assets reflects the gain on the sale of our interest in one of our apartment buildings.

Net Income/Loss from Operations.

Net loss from operations for the year ended December 31, 2004 was $ (212,399) versus net loss of $(74,288) for the year ended December 31, 2003. The net loss in 2004 is attributed primarily to expenses associated with the merger, loss of rental revenues, and interest on mortgage indebtedness charges.
 
Liquidity and Capital Resources

For the years ended December 31, 2004 and December 31, 2003, Supreme's net cash provided by operating activities totaled ($24,196)and $12,900, respectively. This change relates to an increase in accrued mortgage interest.

As of the year ended December 31, 2004, Supreme's unrestricted cash resources were $4,126 as compared to $3,266 as of the year ended December 31, 2003. The cash flow from our existing properties will not fund our future liquidity requirements. The principal source of Supreme's capital has been from funds received from operations, the issuance of common stock, and the use of non-recourse debt in association with the acquisition of its real properties.

 
9


Supreme intends to use its future capital to increase its liquidity by issuing different classes of convertible preferred stock or convertible debentures to institutional investors in future offerings and by using cash provided from operations of its mortgage banking subsidiary and rents from its properties. At present, Supreme has no plans to increase its borrowings or add any new bank debt liabilities. Supreme intends to sell its remaing apartment buildings and use the proceeds to pay off the existing current liabilities, namely the balloon mortgage payments coming due in December, 2005. The Company plans to use the proceeds of any debt or equity offerings to acquire, renovate, and operate hotel properties. Further, from time to time the Board of Directors may elect to distribute some of its taxable income in the form of dividends to our stockholders. That could limit the amount of cash Supreme will have available for other business purposes or to grow through the use of retained earnings. Much of Supreme's ability to raise capital is dependent upon the relative attractiveness of its shares, and the supply of shares of competitive real estate entities currently trading in the marketplace.

Management of believes that it has identified a unique niche in its market by acquiring "distressed" properties and under-performing real estate loans from banks and other lending institutions. "Distressed" properties are properties that are not being operated at optimal efficiency and "under-performing" loans are loans that are currently past due or in default.

Cash provided by operations, equity transactions, and borrowings from lending institutions have generally provided the primary sources of liquidity to Supreme. Historically, Supreme has used these sources to fund operating expenses and to satisfy its debt service obligations.

Management believes that there are material trends, events, or uncertainties that are reasonably likely to have a material impact on the company's short-term or long-term liquidity or significant items of income or loss arising from continued operations. The acquisitions of hotels are likely to produce material changes in line items on the company’s financial statements, financial condition, and its results of operations.

Off-balance sheet arrangements
 
Supreme does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to its stockholders.
 
 
10


Item 7. Financial Statements

GEORGE STEWART, CPA
2301 SOUTH JACKSON STREET, SUITE 101-G
SEATTLE, WASHINGTON 98144
(206) 328-8554 FAX(206) 328-0383
 
INDEPENDENT AUDITORS REPORT
 
 
To the Board of Directors
Supreme Realty Investments, Inc., Inc.
 
 
I have audited the accompanying balance sheets of Supreme Realty Investments, Inc., Inc. as of December 31, 2004 and 2003, and the related statements of operations and retained earnings, stockholders’ equity and cash flows for the years ended December 31, 2004 and 2003. These financial statements are the responsibility of the Company’s management. My responsibility is to express an opinion on these financial statements based on my audit.
 
I conducted my audit in accordance with the standards in the Public Company Accounting Oversight Board (United States). Those standards require that I 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. I believe that my audit provides a reasonable basis for my opinion.
 
In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Supreme Realty Investments, Inc., Inc., as of December 31, 2004 and 2003, and the results of its operations and cash flows for the years ended December 31, 2004 and 2003 in conformity with generally accepted accounting principles in the United States of America.
 
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in the Note #14 to the financial statements, the Company has experienced losses for several years. This raises substantial doubt about its ability to continue as a going concern. Management’s plan in regard to these matters is also described in Note #14. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
/s/ George Stewart
Seattle, Washington
May 14, 2005
 
 
11


CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As of

   
31-Dec
2004
 
31-Dec
2003
 
ASSETS:
         
Current Assets:
             
Cash or Cash Equivalents
   
4,126
   
3,266
 
Accounts Receivable
   
7,379
   
9,600
 
Total Current Assets
   
11,505
   
12,866
 
Real Estate Investments
             
Existing Properties
   
1,466,000
   
1,966,000
 
New Acquisitions
   
-
   
-
 
Gross Properties
   
1,466,000
   
1,966,000
 
Less: Accumulated Depreciation
   
(133,768
)
 
(122,091
)
Total Real Estate Investments
   
1,332,232
   
1,843,909
 
Other Assets:
             
Goodwill & Other Intangibles
   
-
   
-
 
Less: Amortization
   
-
   
-
 
Furniture, Fixtures, and Equipment
   
11,662
   
11,662
 
Less: Accumulated Depreciation
   
(7,002
)
 
(4,339
)
Total Other Assets
   
4,660
   
7,323
 
     
 
   
 
 
TOTAL ASSETS
   
1,348,397
   
1,864,098
 
LIABILITIES:
             
Current Liabilities
   
143,453
   
28,160
 
Notes Payable
   
-
   
12,000
 
Mortgages Payable
   
835,000
   
1,235,000
 
Total Liabilities
   
978,453
   
1,275,160
 
STOCKHOLDERS' EQUITY
             
Common Stock, $.001 par value, 200,000,000 authorized, 30,000,000 outstanding
   
30,000
   
64,356
 
Additional Paid-In Capital
   
623,146
   
623,146
 
Retained Earnings(Deficit)
   
(283,202
)
 
(81,064
)
Less: Treasury Stock
   
-
   
(17,500
)
Total Stockholders' Equity
   
369,944
   
588,938
 
     
 
   
 
 
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY
   
1,348,397
   
1,864,098
 
 
 
12


CONSOLIDATE STATEMENTS OF OPERATIONS
For the Fiscal Year Ended
December 31

   
2004
 
2003
 
REVENUES:
         
Revenues from Rental Properties
   
48,405
   
191,758
 
Revenues from Mortgage Banking
   
-
   
-
 
Revenues from Realty & Management
   
15,000
   
-
 
TOTAL REVENUES:
   
63,405
   
191,758
 
PROPERTY OPERATING EXPENSES:
             
Real Estate Taxes
   
5,739
   
12,000
 
Mortgage Interest
   
77,322
   
17,036
 
Operations and Maintenance
   
48,463
   
25,374
 
Property Depreciation
   
58,279
   
71,491
 
Total Property Expenses
   
189,803
   
125,900
 
GENERAL EXPENSES:
             
Salaries, Commissions, & Employee Benefits
   
33,418
   
49,076
 
General & Administrative Expenses
   
50,394
   
88,881
 
Depreciation & Amortization
   
2,189
   
2,189
 
Total General Expenses
   
86,001
   
140,146
 
TOTAL EXPENSES
   
275,804
   
266,046
 
               
INCOME BEFORE INVESTMENT ACTIVITIES
   
(212,399
)
 
(74,288
)
Gain(Loss)-on Sale of Assets
   
4,200
   
-
 
Gain(Loss)-on Forgiveness of Debt
   
-
   
-
 
Gain(Loss)-on Sale of Properties
   
6,061
   
-
 
NET INCOME (LOSS) Before Taxes & Extraordinary Items
   
(202,138
)
 
(74,288
)
Provision for Income Taxes
   
-
   
-
 
Extraordinary Gains(Losses)
   
-
   
-
 
NET INCOME(LOSS)
   
(202,138
)
 
(74,288
)
               
Weighted Average Common Shares Outstanding
   
3,800,000
   
3,800,000
 
               
NET INCOME (LOSS) per Common Share-Basic
   
($0.05
)
 
($0.02
)
NET INCOME (LOSS) per Common Share-Diluted
   
($0.05
)
 
($0.02
)
               
 
 
13

 
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Fiscal Year Ended
December 31

   
2004
 
2003
 
CASH FLOW FROM OPERATING ACTIVITIES:
         
Net Income
   
(202,138
)
 
(74,288
)
Adjustments to reconcile net income to cash providedby Operating Activities
             
Depreciation and Amortization
   
60,468
   
73,680
 
Provision for Income Taxes
             
(Increase) Decrease in Receivables
   
2,221
   
9,600
 
(Increase) Decrease in Prepaid Expenses
             
Increase (Decrease) in Current Liabilities
   
115,293
   
23,109
 
Net Cash from Operating Activities
   
(24,196
)
 
12,900
 
               
CASH FLOW FROM INVESTING ACTIVITIES:
             
Purchases of Furniture, Fixtures, & Equipment
         
(522
)
               
Proceeds from the Sale of:
             
Furniture, Fixtures, & Equipment
   
6,061
       
Real Estate Improvements
   
450,000
       
Net Cash from Investing Activities
   
456,061
   
(522
)
               
CASH FLOW FROM FINANCING ACTIVITIES:
             
Proceeds from:
             
Borrowings-Mortgages
             
Issuance of Common Stock
         
17,500
 
Payments for:
             
Debt Repayment
   
(412,000
)
 
28,600
 
Repurchase of Treasury Stock
   
(19,045
)
     
Net Cash from Financing Activities
   
(431,045
)
 
(11,100
)
               
Net Change In Cash
   
860
   
1,278
 
Cash Balance, January 1
   
3,266
   
1.987
 
               
Cash Balance, December 31
   
4,126
   
3,266
 

 
14

 
 STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

   
Common Stock
 
Additional paid in
 
 
 
Treasury Stock
 
Total Stockholders’
 
 
 
Shares
 
 Amount 
  Capital  
Retained Earnings
 
(common)
  Equity   
Beginning Balance, January 1, 2001
   
1,000,000
   
10,000
   
15,000
   
-
   
-
   
25,000
 
Common Stock Issued
   
4,000,000
   
40,000
   
127,769
   
-
   
-
   
167,769
 
Net Income
   
-
   
-
   
-
   
8,915
   
-
   
8,915
 
Balance, December 31, 2001
   
5,000,000
   
50,000
   
142,769
   
8,915
   
-
   
201,684
 
Common Stock Issued
   
14,356,327
   
14,356
   
445,377
   
-
   
-
   
439,733
 
Net Income
   
-
   
-
   
-
   
(15,691
)
 
-
   
(15,691
)
Balance, December 31, 2002
   
19,356,327
   
64,356
   
588,146
   
(6,776
)
 
-
   
625,726
 
Common Stock Issued
   
-
   
-
   
-
   
-
         
-
 
Net Income
   
-
   
-
   
-
   
(74,288
)
 
-
   
(74,288
)
Treasury Stock Acquired from Subsidiary
   
(100,000
)
       
35,000
               
35,000
 
Treasury Stock Reissued
   
82,500
                     
(17,500
)
 
(17,500
)
Balance, December 31, 2003
   
19,338,827
   
64,356
   
623,146
   
(81,064
)
 
(17,500
)
 
568,938
 
Common Stock Issued In Merger
   
10,661,173
   
(16,856
)
                 
(16,856
)
Treasury Stock Reissued
         
(17,500
)
           
17,500
     
Net Income
                     
(202,138
)
       
(202,138
)
Balance, December 31, 2004
   
30,000,000
   
30,000
   
623,146
   
(283,202
)
 
-0-
   
369,944
 

 
15


NOTES TO FINANCIAL STATEMENTS
 
1.
Summary of Significant Accounting Policies

Basis of Presentation

A summary of the significant accounting policies of Supreme Realty Investments, Inc. ("the Company") is presented to assist in understanding the Company's financial statements. The financial statements and notes are representations of the Company's management which is responsible for their integrity and objectivity. The accounting policies used conform to generally accepted accounting principles which have been consistently applied in the preparation of these financial statements. The financial statements herein are presented using the accrual basis of accounting.

Nature of Operations

Supreme Realty Investments, Inc. is a real estate operating company primarily engaged in the acquisition, operation, and disposition of real properties and loans secured by real properties. Through its and its wholly-owned subsidiary, Supreme Capital Funding, Inc., it also engages in mortgage banking activities such as loan origination, servicing, and brokering real estate loans to and from lending institutions and institutional investors.

The Company acquires hotel properties either directly in fee simple, or indirectly through ownership of beneficial interests in land trusts or partnerships that hold title to the real property. The Company believes that, in some cases acquiring indirect interests in real property is advantageous because it gives us flexibility in addressing the financial and risk management considerations presented by the particular property when debt financing may not be appropriate or when the Company is trying to avoid exposing its entire portfolio to litigation as the result of personal injuries resulting from environmental hazards or other unforeseen conditions on the property.

The Company's policy is to acquire properties primarily for current income. However, income from, and appreciation of its properties may be adversely affected by general and local economic conditions, neighborhood values, competitive overbuilding, weather, casualty losses, and other factors beyond its control. The value of real properties may also be affected by the cost of compliance with regulations and liability under applicable environmental laws, changes in interest rates, and the availability of financing. Income properties are also adversely affected if a significant number of tenants are unable to pay rent or if available space cannot be rented on favorable terms.

Investments in Real Estate Securities or other Passive Interests

From time to time, Supreme will also invest in the interests of others primarily engaged in real estate activities. The Company will invest in the common stock of other public and private real estate operating companies, real estate investment trusts, partnerships, or joint ventures. The primary opportunities the Company will consider are residential housing developments. The Company's acquisition committee will apply the same underwriting criteria as applied in its direct investments.

Mortgage Banking Operations

The Company, through its subsidiary Supreme Capital Funding, Inc., acquires 1st or 2nd mortgages, on single-family dwellings and apartment buildings. Not more than 20% of our total assets may be invested in any type of mortgage and not more than 1% of our total assets may be invested in any one mortgage.

 
16


The Company will acquire these mortgages and package them for resale. The Company applies the same rigorous underwriting analysis to the acquisition of these loans that it does to the direct acquisition of property. The Company looks to enhance its total returns through increased yields or, upon sale, the realization of some or the entire discount at which they were acquired.

Direct Lending and Joint Participation

In some cases, particularly land development (or redevelopment), the Company's Acquisition Committee will apply the same underwriting criteria as applied in its direct investments to make direct loans to developers for the construction and sale of multi-family housing or commercial properties.

Loan Origination and Brokerage

To generate fees associated with the origination of mortgage loans, the Company relies on the relationships of the senior management of Supreme Capital Funding, Inc. with lenders and institutional investors. They have extensive experience in the mortgage lending and real estate finance industries and have cultivated extensive contacts with banks, wholesale lenders, other mortgage brokers, and direct borrowers.

The Company uses a variety of web-based lead generation tools along with direct marketing and solicitation of loan business from homebuyers and real estate brokers.

Since the Company's focus will be on residential borrowers with substandard credit, banks and other institutional lenders make referrals to the Company for loan opportunities that they do not wish to underwrite.

The Company's management has formal brokerage agreements with several national mortgage lenders who underwrite the loan packages. Origination fees, administration fees, and document processing fees are paid to the Company at loan closing, by the lender, out of the loan proceeds.
 
2.
Principles of Consolidation and Estimates

The accompanying Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.

Generally accepted accounting principles ("GAAP") requires the Company's management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses during a reporting period. The most significant assumptions and estimates relate to the valuation of real estate, depreciable lives, revenue recognition, and the recoverability of trade accounts receivable. The application of these estimates requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates.

 
17

 
3.
Real Estate Investments
 
Supreme currently holds interests in the following properties:

·
12-unit apartment building in Chicago, Illinois, acquired by Installment Agreement for Warranty Deed at a cost of $600,000, which carries a non-recourse mortgage note in the amount of $480,000, which bears interest at a rate of 7%, and is due on December 15, 2005. Property is currently 92% occupied and stable. The company leases the residential apartments pursuant to a Section 8-Housing Assistance Payments contract with the U.S. Dept. of Housing and Urban Development(HUD).

·
4-unit apartment building in Chicago, Illinois acquired by Installment Agreement for Warranty Deed at a cost of $280,000, which carries a non-recourse mortgage note in the amount of $224,000, which bears interest at a rate of 7% and is due on December 15, 2005. Property is currently 100% occupied and stable, but each of the tenants receives rental assistance from HUD in the form of a Section 8 Housing Voucher.

·
6-unit apartment building in Chicago, Illinois, acquired by Installment Agreement for Warranty Deed at a cost of $586,000, which carries a non-recourse first mortgage note in the amount of $131,000, which bears interest at a rate of 7% and is due on February 1, 2031. The property is currently unoccupied and scheduled for demolition. The company plans to erect (6) new townhouses on the 18,750 sf lot where the property now sits.

 
 
Description
 
 
 
Encumbrances
 
 
 
Initial Cost
 
 
 
Cost Capitalized
 
Gross amount
carried at
close of period
 
 
Accumulated Depreciation
 
 
Date of 
Construction
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12-Unit Apartment Bldg (1)
 
$
480,000
 
$
600,000
   
-0-
 
$
600,000
 
$
67,272
   
N/A
 
6-Unit Apartment Bldg  (3)
 
$
131,000
 
$
586,000
   
-0-
 
$
586,000
 
$
35,102
   
N/A
 
4-Unit Apartment Bldg  (4)
 
$
224,000
 
$
280,000
   
-0-
 
$
280,000
 
$
31,394
   
N/A
 
                                       
TOTALS
   
835,000
   
1,466,000
   
0
   
1,466,000
   
133,768
     

Real Estate Investments are recorded at cost, less accumulated depreciation. If there is an event or change of circumstances that indicates that the basis of a property may not be recoverable, then management will assess any impairment in value by making a comparison of (i) the current and projected operating cash flows (undiscounted and without interest charges) of the property over its remaining useful life and (ii) the net carrying amount of the property. If the current and projected operating cash flows are less than the carrying value of the property, the carrying value would be written down to an amount to reflect the fair value of the property. At the time of the preparation of these financial statements, we have tested each of our real estate assets for impairment. The following table describes our net carrying costs and projected cash flows associated with each property:

 
18

 
 
 
 
 
 
 
 
 
Estimated Fair Value (1)
 
 
 
Description
 
Gross amount
carried at
close of period
 
 
Accumulated Depreciation
 
 
Net Carrying Cost
 
 
 
Land (2)
 
 
 
Building
 
 
 
Cost to Sell (3)
 
 
Estimated Fair Value
 
12-Unit Apartment Bldg
 
$
600,000
   
(67,272
)
 
532,728
   
250,000
   
400,000
   
($19,500
)
$
624,000
 
6-Unit Apartment Bldg
 
$
586,000
   
(35,102
)
 
550,898
   
468,750
   
100,000
   
($11,375
)
$
557,375
 
4-Unit Apartment Bldg
 
$
280,000
   
(31,394
)
 
248,606
   
93,750
   
256,250
   
($10,500
)
$
336,000
 
                                             
TOTALS
   
1,466,000
   
($133,768
)
 
1,083,626
   
812,500
   
756,250
   
($41,375
)
$
1,517,375
 

 
(1)
SFAS 144 defines “fair value” as the amount at which an asset could be sold in a current transaction between willing parties, other than in a forced or liquidation sale. When auoted market prices in active markets are not available, the estimate of fair value shall be the based on the best information available, including recent sales of similar assets. Our estimates are based on recent sales of comparable properties quoted by the Chicago Association of Realtors, Multiple Listing Service(MLS).
 
(2)
Local vacant land values range from $15-$25/sf.
 
(3)
Includes legal fees, broker’s commissions, etc.
 
Depreciation has been computed using the straight-line method over the estimated useful lives of 27.5 years. SFAS 144 states that a long-lived asset is considered abandoned when it ceases to be used. SFAS 144 further requires that when a company commits to a plan to abandon an asset before the end of its previously estimated useful life, depreciation estimates must be revised in accordance with SFAS 154 to reflect the use of the asset over its shortened useful life. Therefore, we have revised our revised our estimated useful life of the the six-unit apartment building listed above to -0-, and revised our depreciation estimates for this period and future periods.

Expenses for maintenance and repairs are charged to operations as incurred. Significant renovations are capitalized.

During the fourth quarter of the fiscal year, the company sold all of its interests in one of its residential properties. A tabular summary of that transaction follows.

 
Description
 
Gross amount
carried at
time of sale
 
 
 
Encumbrances
 
Accumulated Depreciation
 
 
 
Sale Price
 
 
 
Gain(Loss) on Sale
 
 
 
 
 
 
             
6-Unit Apartment Bldg (2)
   
500,000
   
400,000
   
43,939
   
450,000
   
6,061
 
 
4.
Proposed Real Estate Acquisitions

The Company has entered into a formal Letter of Intent to acquire the following portfolio of hotel properties from CITY HOTELS, NV, of Brussels, Belgium:

 
·
263-room, full service hotel in Detroit, Michigan (DoubleTree Hotel)
 
·
197-room, full service hotel in St. Louis, Missouri (DoubleTree Hotel)
 
·
185-room, full service hotel in Dayton, Ohio (DoubleTree Hotel); and
 
·
283-room, full service hotel in Tulsa, Oklahoma (Hilton Hotel)

SFAS 5 requires the disclosure of contingencies involving uncertainty that may result in a gain or loss to the Company that will ultimately be resolved when one or more future events occur or fail to occur. For purposes of this statement, the likelihood that a future event will occur can range from remote, to reasonably possible, to probable. SFAS 5 further states that, in the event of a gain contingency, care must be exercised to avoid misleading implications as to the likelihood of realization. At this time, management considers it reasonably probable that these proposed acquisitions are likely to occur.

 
19

 
5.
Revenue Recognition

Rental revenues are recognized in the month they are earned. Revenues from fees include brokerage commissions, management fees, development fees, origination fees, administration fees, and document processing fees and referral fees. All fee-base revenues are recognized when the service has been performed and the fee is due and payable. In cases where there is a significant degree of uncertainty surrounding collection of the fee, revenue is not recognized until the cash is collected.

6.
Income Taxes

The Company and its subsidiary file a consolidated federal income tax return.
 
7.
Deferred Tax Assets, Liabilities, and Valuation Allowances

Management has provided for tax loss carry-forwards of $15,691 for 2002, and $74,299 for 2003, and $202,138 for 2004. The tax loss carry-forwards expire in 2022, 2023, and 2024 respectively.

8.
Investment in Affiliates

The Company has one wholly-owned subsidiary, Supreme Capital Funding, Inc., of which it owns 100% of the outstanding common stock. SFAS 94 requires investments in companies in which the parent company has the ability to influence operations and finances to be accounted for by the consolidation method.

In 2002, the Company issued 100,000 shares of its common stock to the subsidiary, in exchange for 100% (1,000,000 shares) of the subsidiary's stock. The Company's shares had a stated value of 1.00.

The subsidiary then filed an application for a mortgage banking license in the state of Illinois. Since it had not been granted the license, the subsidiary had not commenced operations, and there were no earnings or losses during the period to adjust to reflect the Company's share of such earnings or losses.

On December 5, 2003, the subsidiary was granted a mortgage banking license by the State of Illinois Office of Banks and Real Estate and commenced operations in Illinois. The company subsequently sold its assets in its Illinois operation and has applied for licensing in the states of Nevada and Florida. To date, neither state has granted a mortgage banking license.

The consolidation method was used to account for the parent's investment from its inception through the 2003 fiscal year. As a result of applying the consolidation method, all significant intercompany balances and transactions have been eliminated in consolidation. The Company's stock issued to its subsidiary was reacquired and recorded as Treasury Stock.

 
20


9.
Recent Accounting Pronouncements

In August 2001, the FASB issued Financial Accounting Standard No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). SFAS 144 establishes a model for measurement and reporting the impairment of assets to be disposed of by sale and addresses accounting for a segment of a business accounted for as a discontinued operation. SFAS 144 is effective for fiscal years beginning after December 15, 2001. SFAS 144 supersedes SFAS 121 and thereby removes Goodwill from its scope and eliminates the requirement to allocate Goodwill to long-lived assets to be tested for impairment in business segments that are discontinued. Supreme has accounted for the write down of the Goodwill associated with its discontinued property management segment in accordance with SFAS 144.

In December 2002, the FASB issued Financial Accounting Standard No. 148, "Accounting for Stock-Based Compensation -Transition and Disclosure" ("FAS 148"), an Amendment of Financial Accounting Standard No. 123, "Accounting for Stock-Based Compensation" ("FAS 123"). FAS 148 amends FAS 123 to provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. It also amends the disclosure provisions of that Statement to require prominent disclosure about the effects on reported net income of an entity's accounting policy decisions with respect to stock-based employee compensation.

In December 1999, the SEC issued SAB 101, "Revenue Recognition in Financial Statements." SAB 101 summarizes certain aspects of the staff's views in applying generally accepted accounting principles to revenue recognition in financial statements. On March 24, 2000 and September 26, 2000, the SEC issued Staff Accounting Bulletin No. 101A and No. 101B, respectively, which extend the transition provisions of SAB 101 until no later than the fourth quarter of fiscal years beginning after December 15, 1999, which would be December 31, 2004 for us.

In March 2000, the FASB issued FIN 44, Accounting for Certain Transactions Involving Stock Compensation - an Interpretation of APB No. 25, Accounting for Stock Issued to Employees". This Interpretation clarifies (a) the definition of employee for purposes of applying Opinion 25, (b) the criteria for determining whether a plan qualifies as a non-compensatory plan, (c) the accounting consequences of various modifications to the terms of a previously fixed stock option or award, and (d) the accounting for an exchange of stock compensation awards in a business combination. This Interpretation is effective July 1, 2000, but certain conclusions in this Interpretation cover specific events that occur after either December 15, 1998, or January 12, 2000. To the extent that this Interpretation covers events occurring during the period after December 15, 1998, or January 12, 2000, but before the effective date of July 1, 2000, the effects of applying this Interpretation are recognized on a prospective basis from July 1, 2000.

Management believes that any other newly required pronouncements are not applicable.

10.
Current Liabilities and Notes Payable

Current Liabilities include trade payables and $77,322 in accrued mortgage interest. The $12,000 balance due to John Davis on Supreme Property, Inc.'s note for the purchase of substantially all of the assets from its predecessor company, Supreme Property Management & Sales, Inc., was paid on August 28, 2004.

 
21


11.
Mortgages Payable

Three(3) parcels of property are being purchased by Installment Agreement for Warranty Deed, over a term of thirty(30) years. The notes bear interest at the rate of 7% per annum. Interest only payments are payable in quarterly installments, with balloon payments of the outstanding principal on maturity dates in December of 2005.
 
 
 
Principal Payments Each Year
 
   
2005
 
2006
 
2007
 
2008
 
                   
12-Unit Apartment Bldg (1)
   
480,000
   
-0-
   
-0-
   
-0-
 
6-Unit Apartment Bldg (3)
   
131,000
   
-0-
   
-0-
   
-0-
 
4-Unit Apartment Bldg (4)
   
224,000
   
-0-
   
-0-
   
-0-
 
                           
TOTALS
   
835,000
   
-0-
   
-0-
   
-0-
 

12.
Common Stock Transactions

In December, 2003, as a result of changing to the consolidation method of accounting for an investment in its subsidiary, the Company reacquired 100,000 shares of its own stock from its subsidiary and recorded them as Treasury Stock. 82,500 of those Treasury shares were reissued to non-related parties at an average price of 0.21 per share. The proceeds from this sale, $17,500 were used for operating capital.

During the 2004 fiscal year the remaining 17,500 Treasury shares were reissued to non-related parties at an average price of $1.20 per share. The proceeds from this sale were used for operating capital and the payment of the $12,000 balance due to John Davis on Supreme Property, Inc.'s note for the purchase of substantially all of the assets from its predecessor company, Supreme Property Management & Sales, Inc.

On March 31, 2003, the Company entered into an Agreement and Plan of Exchange and Reorganization ("the Merger") with Coronation Acquisition Corp. ("Coronation"). Coronation is a reporting "blank check" company formed in 2000, in the state of Nevada, solely for the purposes of effecting a merger or acquisition of an operating company.

The respective boards of directors and majority stockholders of each company spent considerable time reviewing the terms of the merger, the background of their respective business operations, management, and the future business potential and plans of the combined entities.

Based on these and other considerations, the Board of Directors of each company, together with their respective majority stockholders, believes that the transactions contemplated by the merger agreement, are fair and in the best interest of each company.

On August 27, 2004, Coronation and Supreme completed the merger when the following specific conditions were satisfied: (a) receipt of all stockholder approvals; (b) Form S-4 Registration Statement having become effective under the Securities Act of 1933 and all state securities permits or authorizations necessary to issue the shares of Coronation have been obtained; (c) no legal restraints or prohibitions which would prevent the consummation of the merger; (d) the representations and warranties of Coronation and Supreme under the merger agreement must be materially true and correct; (e) that there have been no material adverse change to the parties since signing the agreement; and (f) the parties have performed all material obligations required to be performed by them under the merger agreement.

 
22


The merger became effective on August 27, 2004 when the certificate of merger was filed with the Secretary of State of the States of Nevada and Illinois.

No regulatory approval is required in order to consummate the merger other than the successful registration of the shares to be issued in connection with the merger by the Securities and Exchange Commission and all applicable State securities regulators.

As a result of the merger, Supreme's stockholders received 1.3953 shares of common stock of Coronation for each share of Supreme that they previously owned. Coronation will issue approximately 27,000,000 shares of common stock to Supreme stockholders in connection with the merger. Supreme's stockholders will own approximately 89.98% of the outstanding common stock of Coronation after the merger. As of December 31, 2003, there were 19,338,327 shares of Supreme common stock outstanding, 17,500 shares of Treasury Stock outstanding, and no warrants or options. The Board of Directors of Supreme and Coronation have agreed to issue 1,650,000 or approximately 5.52% of the outstanding common stock to Nick Segounis and John Coleridge, who provided services in connection with the merger agreement. These shares will be registered under a separate registration statement. These parties were integral in introducing Supreme and Coronation to one another. The remaining 1,350,000 shares, which will represent 4.5% of the issued and outstanding share capital of Coronation on closing of the merger, will be retained by Mr. Harry Miller, President of Coronation.

Supreme’s transfer agent has placed appropriate legends on the certificates of any common stock of the Company to be received by affiliates of Supreme which are subject to the resale rules of Rule 144. In addition, affiliates of Supreme have also acknowledged the resale restrictions imposed by Rule 145 under the Securities Act of 1933 on shares of common stock of Coronation to be received by them in the merger.

All shares of common stock of Coronation received by the stockholders of Supreme in connection with the merger are freely transferable unless the shareholder is considered an affiliate of either Coronation or Supreme under the federal securities laws.

The majority stockholders of Supreme and others have agreed to enter into a voluntary escrow agreement regarding the resale of their shares. Under the escrow agreement the stockholders have agreed to not resell 75% the shares of Coronation they will receive under the merger until Coronation has obtained a minimum of 3,000,000 in new debt or equity financing to advance its business. At that time an additional 25% of the shares will be released for resale with an additional 25% being released every three months until 100% of the shares escrowed have been released.

To date, no dividends have been declared or paid.

13.
Market for Common Equity and Related Stockholder Matters

Management, through its market maker Penna Luna, & Co., has filed an application (15c-211) with the National Association of Securities Dealers (NASD) requesting a trading symbol and listing on the Over-the-Counter Bulletin Board (OTC BB). To date no symbol has been assigned and the shares of Supreme are not quoted for trading on any national market or quotation system. There can be no certainty that the shares of Supreme will ever trade in a public market.

14.
Equity Compensation Plan

On August 28, 2004, the Board of Directors adopted and the shareholders approved a Stock Option and Restricted Stock Plan. The purpose of the plan is to advance the interests of the Corporation by enhancing the ability of the Corporation and its subsidiaries to attract and retain officers, employees and non-employee directors to the Corporation, to reward such individuals for their contributions and to encourage them to take into account the long-term interests of the Corporation through interests in the Corporation's Common Stock. The Plan provides for the grant of options to acquire Stock ("Options"), which may be non-qualified stock options ("NQSOs") within the meaning of the Internal Revenue Code of 1986, as amended (the "Code"), and awards of Stock subject to certain restrictions ("Restricted Stock"). Under the Plan, Restricted Stock consists exclusively of (i) Stock subject to performance-based restrictions intended to comply with the provisions of Section 162(m) of the Code ("Performance-Based Restricted Stock) and (ii) Stock awarded to non-employee directors in lieu of some or all of the cash compensation such directors would otherwise receive for their service as directors ("Non-employee Director Restricted Stock").

 
23


EQUITY COMPENSATION PLAN INFORMATION
 
Plan Category
Number of securities to be issued upon exercise of outstanding options, warrants and rights
Weighted average exercise price of outstanding options, warrants and rights
Number of securities remaining available for future issuance
 
(a)
(b)
(c)
Equity compensation plans approved by security holders
16,000,000
0.10
34,000,000
Equity compensation plans not approved by security holders
-0-
-0-
-0-
Total
16,000,000
0.10
34,000,000

On August 28, 2004, (“Grant Date” and “Measurement Date”) the Company granted options to purchase 16,000,000 shares of common stock to officers and non-employee consultants in recognition of past services rendered, at an exercise price of $0.10 per share. Under the provisions of APB 25, the Company estimated the “fair market value” of the shares to be equal to the book value of $0.02 per share. Since the exercise price was greater than the fair market value as of the measurement date, no compensation cost was incurred by the Company.

15.
Commitments

Employment Obligations

The Company has entered into automatically renewing, one-year employment agreements with its President and Chief Financial Officer. In the event of termination other than for cause, the contracted employee will receive a lump sum benefit.

Lease Obligations

The company leases office space at 7380 Sand Lake Road - Suite 500, Orlando, Florida on a month-to-month basis.

16.
Contingencies

The company leases 16 of its residential apartments pursuant to a Section 8-Housing Assistance Payments contract with the U.S. Dept. of Housing and Urban Development(HUD). Payments have been suspended under the terms of that contract pending the completion of mandated repairs. There is no assurance that the contract will be renewed or past due payments will ever be recovered.

 
24


17.
Material Subsequent Events

The Company has entered into a formal Letter of Intent to acquire a portfolio of hotel properties. (See Proposed Acquisitions). The Letter of Intent calls for the execution of a formal Real Estate Purchase Agreement for each property subsequent to the date of these financial statements. The proposed acquisition of the properties will necessitate the issuance of new equity and debt securities and cause the Company to enter into hotel management and franchise agreements with third parties that will have a material impact on the financial condition of the Company.

Pursuant to Rule 11-02 of Regulation S-X, the Company has included the following Pro Forma Financial Statements to disclose the estimated financial impacts of the proposed hotel acquisitions. Adjustments to reflect the acquisition of these properties for the pro forma income statements include depreciation charges based on the new accounting basis for the assets, interest financing on additional or refinanced debt, and other appropriate adjustments that can be factually supported.

 
25


PRO FORMA CONDENSED FINANCIAL STATEMENTS


OVERVIEW

SUPREME REALTY INVESTMENTS, INC., has entered into a Letter of Intent to acquire four (4) hotel properties in major metropolitan areas throughout the United States for a total acquisition cost of $34 million, plus transaction costs. The company plans to finance the transaction by issuing debentures and/or additional shares of its common stock to institutional investors.

The properties have a total of 938 rooms and are located in prime locations in close proximity to well-known tourist attractions, metropolitan airports, business centers, and convention facilities. They are affiliated with well-known brands, such as Hilton Hotels, and DoubleTree Inn.

The properties currently have an average occupancy rate of 66%, an average daily rate (ADR) of $66.23, and approximately $23.1 million in gross revenues.

At current discount rates and capitalization rates, we have estimated the portfolio’s current total value at $52 million and we expect that with improved management and overall economic conditions we can increase that value by 10%-30% over the next 5 years.

These pro forma statements illustrate the possible future prospects of the Company because they set forth the scope of the change in the company's historical financial position and results of operations that may be caused by the transaction. The statements are presented as if the transaction was consummated at the beginning of the fiscal year presented.

 
26


UNAUDITED PRO FORMA CONDENSED
STATEMENT OF INCOME
For the year ending
12/31
 
REVENUES:
 
2005
 
2004
 
Revenues from Hotel Properties
 
$
35,392,400
   
-
 
Revenues from Apartment Properties
   
-
   
48,405
 
Revenues from Realty & Management
         
15,000
 
TOTAL REVENUES:
   
35,392,400
   
63,405
 
PROPERTY OPERATING EXPENSES:
             
Interest on Long-Term Debt
   
2,443,750
   
-
 
Operations and Maintenance
   
19,387,957
   
54,202
 
Depreciation and Amortization-Property
   
871,795
   
64,461
 
Total Property Expenses
   
21,481,627
   
118,663
 
GENERAL EXPENSES:
             
Salaries, Commissions, & Employee Benefits
   
2,376,306
   
33,418
 
General & Administrative Expenses
   
596,800
   
50,394
 
Depreciation & Amortization-Office
   
40,000
   
2,189
 
Total General Expenses
   
3,013,106
   
86,001
 
               
TOTAL EXPENSES
   
24,494,733
   
204,664
 
               
INCOME BEFORE INVESTMENT ACTIVITIES
   
9,721,212
   
(141,259
)
               
Interest Income-Exempt
   
45,500
   
-
 
Gains(Loss) on Sale of Assets
   
-
   
4,200
 
Gains(Loss) on Forgiveness of Debt
   
-
   
-
 
Gains(Loss) on Sale of Properties
   
-
   
6,061
 
NET EARNINGS (LOSS) Before Taxes & Extraordinary Items
   
10,943,167
   
(130,998
)
Provision for Income Taxes
   
(3,361,370
)
 
-
 
Extraordinary Gains(Losses)
   
-
   
-
 
NET EARNINGS(LOSS)
   
6,359,922
   
(130,998
)
               
Weighted Average Common Shares Outstanding
   
62,594,000
   
30,000,000
 
               
NET EARNINGS per Common Share
 
$
0.10
 
$
( 0.00
)
 
 
27


UNAUDITED PRO FORMA CONDENSED
BALANCE SHEET
As of
12/31

ASSETS:
 
2005
 
2004
 
Current Assets:
         
Cash or Cash Equivalents
   
9,935,481
   
4,125
 
Capital Reserves
   
1,000,000
   
-
 
Accounts/Notes Receivable
   
-
   
7,379
 
Total Current Assets
   
10,935,481
   
11,504
 
               
Real Estate Investments
             
Existing Properties
   
-
   
1,466,000
 
New Acquisitions
   
34,000,000
   
-
 
Gross Properties
   
34,000,000
   
1,466,000
 
Less: Accumulated Depreciation
   
(871,795
)
 
(190,551
)
Land and Other Non-Depreciable Property
   
12,000,000
   
-
 
Total Real Estate Investments
   
45,128,205
   
1,275,449
 
Other Assets:
             
Office Furniture, Fixtures, and Equipment
   
211,662
   
11,662
 
Less: Accumulated Depreciation
   
(46,541
)
 
(6,515
)
Total Other Assets
   
165,121
   
5,148
 
               
TOTAL ASSETS
   
56,228,807
   
1,292,101
 
LIABILITIES:
             
Current Liabilities
   
2,067,068
   
851,017
 
Income Taxes Payable
   
3,361,370
       
Notes Payable
   
-
   
-
 
Long-Term Debt Payable, 6% 1st Mtg Debentures
   
39,100,000
   
-
 
Total Liabilities
   
44,528,438
   
851,017
 
STOCKHOLDERS' EQUITY
             
Common Stock, $.001 par value, 200,000,000 authorized, 62,594,000 outstanding
   
62,594
   
30,000
 
Partnership Units
   
1,000,000
   
-
 
Additional Paid-In Capital-Common
   
9,350,495
   
623,146
 
Retained Earnings(Deficit)
   
1,287,280
   
(212,062
)
Total Stockholders' Equity
   
11,700,369
   
441,084
 
               
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY
   
56,228,807
   
1,292,101
 

 
28


EXPLANATORY NOTES TO UNAUDITED PRO FORMA
CONDENSED FINANCIAL STATEMENTS
 
1.
Financial Structure

The company proposes to finance the acquisition of the hotels by issuing up to $40 million of 1st mortgage debentures and up to $12 million of common stock to institutional investors through a combination private placement and secondary public offering. Partnership units will be issued to the company’s hotel management agent.

The statements assume an interest rate of 6% on the debentures, payable semiannually. The cost of issuing the securities is estimated at 8%-10%.

2.
Revenues

Revenue projections are based on 938 hotel rooms with an average daily room rate of $128 and an average occupancy rate of 65%.

3.
Depreciation

Depreciation is computed on the new asset cost basis using the straight-line method with a 39 year useful life. Acquisition costs and all substantial renovation and other capital improvements have been capitalized.

4.
Earnings per Share

Earnings per share are reported on a fully diluted basis with 62,594,000 weighted average shares outstanding.

 
29


Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.
 
Item 8A. Controls And Procedures
 
Evaluation of Disclosure Controls and Procedures.

Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934, as amended) as of the fiscal year ended December 31, 2004. Based upon their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective.

Changes in internal controls.

There were no significant changes in Supreme's internal controls or in any factors that could significantly affect internal controls subsequent to the date of the Chief Executive Officer and the Chief Financial Officer's evaluation.
 
Item 8B. Other Information

Completion of Dispostion of Assets

On November 23, 2004, the Company sold its interest in a six (6) unit apartment building in Chicago, Illinois. The property was sold for $450,000 to a non-related party. The proceeds were used to retire existing debt related to the property.

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

The Company’s Directors and Executive Officers, their ages and positions are as follows:
 
Name
Age
Position
Thomas Elliott
50
Chairman & Chief Executive Officer
Jean LeRoy
37
President & Chief Financial Officer
     
 
There are no family relationships among the directors or officers of the Company.

Mr. Elliott's background covers a broad spectrum of real estate and development activities including master planning, financing, site acquisition, zoning, development, management, and sales of several major residential and commercial properties throughout the United States. More specifically, over the past 25 years, his duties have included performing feasibility studies and market analysis, arranging mortgage financing, providing contract administration, coordinating construction, and property management activities for single- and multi-family residential developments, elderly hi-rises, regional shopping malls, urban strip centers, and low-rise office complexes.

Prior to acquiring Supreme in April, 2000, Mr. Elliott was employed as:

 
30


 
·
Real Estate Attorney (1993-2001); advising clients on the planning, negotiation, and financing of real estate transactions.  
 
·
Sr. Project Manager, Mesirow/Stein Real Estate Services, Inc. (1991-1993); Large real estate development firm. Duties included supervision of master planning, financing, site acquisition, zoning, and development of several major residential and commercial properties in Chicago, Washington, DC, and St. Louis, MO.  
 
·
Assistant Commissioner, City of Chicago, - Dept. of Housing (1989-1991). Local government housing agency. Duties included planning and oversight of all major multi-family housing rehab projects throughout Chicago.

Mr. Elliott is a licensed real estate broker who also holds: Doctor of Jurisprudence (JD, Real Estate Law) Illinois Institute of Technology Chicago Kent College of Law; Master of Business Administration (MBA, Finance) Devry University Keller Graduate School of Management, Chicago, IL; and Bachelor of Science (BS, Bus. Admin/Econ.) Culver-Stockton College, Canton, MO.

Mr. Leroy's background includes extensive experience in the design, development, implementation, integration, and customization of information technology and accounting systems for the financial services, computing, and communication industries. Over the past 14 years he has performed these services for several Fortune 500 companies and leaders in their respective industries.

Prior to coming to Supreme in January, 2002 Mr. LeRoy was employed as:

 
·
Systems Engineer, EMC Corp (2001-2002).; Major information technology firm. Duties included design, development, implementation, integration, and customization of information technology and accounting systems.  
 
·
Management Consultant, Adventis Corp (1997-2001); Major management consulting firm. Duties included consulting for the design and integration of information technology systems for 3M Corp (manufacturing), BellSouth Wireless (telecommunications), and Reuters, Inc (news and information services).

Mr. LeRoy holds a Bachelor of Science (BS, Electronic Engineering) from Devry University and a Master of Business Administration (MBA, Finance) from DePaul University.
Committees of the Board

The Company presently does not retain independent directors who chair the audit and compensation committees. The Company does not have an "audit committee financial expert" or a nominating committee.

Code of Ethics

The Board of Directors has adopted a Code of Business Ethics covering all of its officers, directors and employees. The Company requires all employees to adhere to the Code of Business Ethics in addressing legal and ethical issues encountered in conducting their work. The Code of Business Ethics requires that the Company’s employees avoid conflicts of interest, comply with all laws and other legal requirements, conduct business in an honest and ethical manner and otherwise act with integrity and in the Company's best interest.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors, executive officers and persons who own beneficially more than ten percent of the Company’s common stock, to file reports of ownership and changes of ownership with the SEC. Based solely on the reports received by the company and on written representations from certain reporting persons, the Company believes that the directors, executive officers and greater than ten percent beneficial owners have complied with all applicable filing requirements.
 
 
31

 
Item 10. Executive Compensation
 
The following table provides information about the compensation received during the last five fiscal years by the Company’s executive officers.
 
SUMMARY COMPENSATION TABLE
 
Name & Position
 
Year
 
Annual Compensation
 
Long-Term Compensation
     
                   
Awards
 
Payouts
 
 
 
       
Salary
 
Bonus
 
Other
 
Securities Granted Under Options/SARS
 
Restricted Shares or Units
 
LTIP
Payouts
 
All Other
Compensation 
 
                                   
Thomas Elliott, CEO
   
2004
   
Nil
   
Nil
   
Nil
   
10,000,000
   
Nil
   
Nil
 
$
28,758
 
     
2003
   
Nil
   
Nil
   
Nil
   
Nil
   
6,979,635(1)
 
 
Nil
   
13,765
 
     
2002
   
Nil
   
Nil
   
Nil
   
Nil
   
6,979,635(1)
 
Nil
   
Nil
 
     
2001
   
Nil
   
Nil
   
Nil
   
Nil
   
Nil
   
Nil
   
Nil
 
     
2000
   
Nil
   
Nil
   
Nil
   
Nil
   
Nil
   
Nil
   
Nil
 
                                                   
                                                   
Jean LeRoy, CFO
   
2004
   
Nil
   
Nil
   
Nil
   
4,000,000
   
Nil
   
Nil
   
Nil
 
     
2003
   
Nil
   
Nil
   
Nil
   
Nil
   
6,142,078(2)
 
 
Nil
   
Nil
 
     
2002
   
Nil
   
Nil
   
Nil
   
Nil
   
Nil
   
Nil
   
Nil
 
                                                   
 
 
(1)
5,000,000 shares of Supreme Property, Inc. exchanged for 6,979,635 shares of Supreme Realty Investments, Inc. in the merger.
 
(2)
4,000,000 shares of Supreme Property, Inc. exchanged for 6,142,078 shares of Supreme Realty Investments, Inc. in the merger.
 
 
32

 
Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

As of December 31, 2004, 30,000,000 shares of common stock were outstanding. The following table sets forth, as of such date, information with respect to shares beneficially owned by:

 
§
each person who is known by the Company to be the beneficial owner of more than 5% of its outstanding shares of common stock;
 
§
each of the Company’s directors;
 
§
each of the Company’s named executive officers; and
 
§
all of the Company’s directors and executive officers as a group.

Beneficial ownership has been determined in accordance with Rule 13d-3 of the Exchange Act. Under this rule, shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire shares (for example, upon exercise of an option) within 60 days of the date of this table. In computing the percentage ownership of any person, the amount of shares includes the amount of shares beneficially owned by the person by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person does not necessarily reflect the person’s actual voting power.

To the Company’s knowledge, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. Unless otherwise indicated, the business address of the individuals listed is 7380 Sand Lake Road - Suite 500, Orlando, FL 32819.

Name& Address of Beneficial Owner
No. of Shares Beneficially Owned
% of Outstanding Shares
Thomas Elliott
13,959,270
47%
Jean LeRoy
6,142,078
20%
     
TOTAL
20,101,348
67%

Item 12. Certain Relationships and Related Party Transactions

None.
 
Item 13. Exhibits

a. Exhibits
 
 
Exhibit
Number
 
Exhibit Title
 
3.1
Articles of Incorporation, (incorporated by reference from our Form S-4 A/12, filed August 18, 2004)
 
3.2
Articles of Amendment (incorporated by reference from our Form S-4 A/12, filed August 18, 2004)
 
3.2
Bylaws (incorporated by reference from our Form S-4 A/12 Registration Statement, filed August 18, 2004)
 
 
33


b. Reports of Form 8-K.

None.
Item 14. Principal Accountant Fees and Services

Fees Paid to Independent Public Accountants

The following table presents fees for professional audit services rendered by George Stewart & Co., CPA’s. for the audit of the Company's annual financial statements for the years ended December 31, 2004 and December 31, 2003 and fees billed for other services rendered by George Stewart & Co., CPA’s. during those periods.

   
Fiscal 2004
 
Fiscal 2003
 
Audit fees (1)
   
12,000
   
2,000
 
Audit Related Fees
   
-0-
   
-0-
 
Tax Fees
   
-0-
   
-0-
 
All Other Fees
   
-0-
   
-0-
 
               
TOTAL
   
12,000
   
2,000
 

(1)  Audit Fees consist of fees billed for professional services rendered for the audit of the Company's consolidated annual financial statements and review of the interim consolidated financial statements included in quarterly reports and services that are normally provided by George Stewart & Co., CPA’s in connection with statutory and regulatory filings or engagements.

Policy on Pre-Approval of Audit and Non-Audit Services of Independent Auditor

The Company’s audit committee has adopted a specific policy relating to pre-approval of all audit and non-audit services provided by the Company’s independent auditors.



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
SUPREME REALTY INVESTMENTS, INC.
Date: October 5, 2005
 
By:
 
 
/s/ Thomas Elliott
 
Thomas Elliott, Chief Executive Officer
   
 
/s/ Jean LeRoy
 
Jean LeRoy, President, Chief Financial Officer
 
34




EXHIBIT 31.1 HTML

ex31_1.htm



CERTIFICATION

I, Jean LeRoy, certify that:
 
 
1.
I have reviewed this annual report on Form 10-KSB of Supreme Realty Investments, Inc.;
 
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the fiscal year ending December 31, 2004;
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the fiscal year ended December 31, 2004;
 
4.
The company's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 and 15d-15) for the company and have:
 
 
a.
Designed such disclosure controls and procedures to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the fiscal year ended December 31, 2004;
 
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c.
Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the fiscal year ended December 31, 2004, based on such evaluation; and
 
d.
Disclosed in this report any change in the company's internal control over financial reporting that occurred during the company's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and
 
 
5.
The company's other certifying officers and I have disclosed, based on our most recent evaluation, to the company's auditors and the audit committee of company's board of directors (or persons performing the equivalent functions):
 
 
a.
All significant deficiencies in the design or operation of internal controls which could adversely affect the company's ability to record, process, summarize and report financial data and have identified for the company's auditors any material weaknesses in internal controls; and
 
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal controls; and
 
 
6.
The company's other certifying officers and I have indicated in this report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: October 5, 2005
/s/ Jean LeRoy
 
Jean LeRoy, Chief Financial Officer
 


EXHIBIT 31.2 HTML

ex31_2.htm



CERTIFICATION

I, Thomas Elliott, certify that:
 
 
1.
I have reviewed this annual report on Form 10-KSB of Supreme Realty Investments, Inc.;
 
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the fiscal year ending December 31, 2004;
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the fiscal year ended December 31, 2004;
 
4.
The company's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 and 15d-15) for the company and have:
 
 
a.
Designed such disclosure controls and procedures to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the fiscal year ended December 31, 2004;
 
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c.
Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the fiscal year ended December 31, 2004, based on such evaluation; and
 
d.
Disclosed in this report any change in the company's internal control over financial reporting that occurred during the company's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and
 
 
5.
The company's other certifying officers and I have disclosed, based on our most recent evaluation, to the company's auditors and the audit committee of company's board of directors (or persons performing the equivalent functions):
 
 
a.
All significant deficiencies in the design or operation of internal controls which could adversely affect the company's ability to record, process, summarize and report financial data and have identified for the company's auditors any material weaknesses in internal controls; and
 
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal controls; and
 
 
6.
The company's other certifying officers and I have indicated in this report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: October 5, 2005
/s/ Thomas Elliott
 
Thomas Elliott, Chief Executive Officer
 


EXHIBIT 32.1 HTML

ex32_1.htm



CERTIFICATION PURSUANT TO

18 U.S.C. 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Annual Report of Supreme Realty Investments, Inc. (the "Company") on Form 10-KSB for the year ended December 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Thomas Elliott, in my capacity as Chief Executive Officer, and I, Jean LeRoy, in my capacity as Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
 
1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 
Date: October 5, 2005
/s/ Thomas Elliott
 
Thomas Elliot
Chief Executive Officer
 
 
 
/s/ Jean LeRoy
 
Jean LeRoy
Chief Financial Officer