Form 10QSB Home System Group

Quarterly report pursuant to section 13 and 15(d) for small business issuers

What is Form 10QSB?
  • Accession No.: 0001144204-06-021932 Act: 34 File No.: 000-49770 Film No.: 06857876
  • CIK: 0001172319
  • Submitted: 2006-05-22
  • Period of Report: 2006-03-31

10QSB HTML

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-QSB
 
(Mark One)
 
x       QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
March 31, 2006



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
(State or other jurisdiction of incorporation or organization)
43-195-4776
(IRS Employer Identification No.)
 
No. 5A, Zuanshi Ge, Fuqiang Yi Tian Ming Yuan,
Fu Tian Qu, Shenzhen City, P.R. China
 
(Address of principal executive offices)
 
86 755 83570142
 
(Issuer's telephone number)
 
 
 
 
 
 
 
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

Indicate by check mark whether the Company is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No o
 

 
APPLICABLE ONLY TO CORPORATE ISSUERS
 
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:
 
The Registrant’s common stock outstanding as of May 19, 2006 was 12,500,000 shares.
 
Transitional Small Business Disclosure Format (Check one): Yes o No x
2

 
 
SUPREME REALTY INVESTMENTS, INC.
 
 
INDEX
 
 
 
 
Page No.
PART 1 - FINANCIAL INFORMATION
4
 
ITEM 1. FINANCIAL STATEMENTS
4
 
Supreme Financial Statements March 31, 2006 and 2005
4
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
16
 
General
16
 
Three months ended March 31, 2006 versus three months ended March 31, 2005
16
 
Results of Operations
16
 
Revenue
16
 
General and Administrative Expenses
16
 
Liquidity and Capital Resources
16
 
ITEM 3: CONTROLS & PROCEDURES
17
 
PART II - OTHER INFORMATION
17
 
ITEM 1. LEGAL PROCEEDINGS
17
 
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
17
 
Changes in Securities
17
 
Recent Sales of Unregistered Securities
19
 
Recent Sales of Registered Securities
18
 
Use of Proceeds
18
 
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
18
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
18
 
ITEM 5. OTHER INFORMATION
18
 
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
19
 
a. Exhibits
19
SIGNATURES
19
 

 

3


 
 
 
 
 
 
The information in this report is for the three month period ended March 31, 2006, is unaudited but includes all adjustments (consisting only of normal recurring accruals, unless otherwise indicated) which Supreme Realty Investments, Inc. ("Supreme " or the "Company") considers necessary for a fair presentation of the financial position, results of operations, changes in stockholders' equity and cash flows for those periods.
 
 
The condensed consolidated financial statements should be read in conjunction with Supreme's financial statements and the notes thereto contained in Supreme's Audited Financial Statements for the year ended December 31, 2005, in the From 10-KSB/A2 as filed with the SEC on May 20, 2005.
 
 
Interim results are not necessarily indicative of results for the full fiscal year.
4

 

Pollard-Kelley Auditing Services, Inc.
 
Auditing Services
3250 West Market St, Suite 307, Fairlawn, OH 44333 330-836-2558



 
Report of Independent Certified Public Accountants


Board of Directors
Supreme Realty Investments, Inc.

We have reviewed the accompanying consolidated balance sheets of Supreme Realty Investments, Inc. as of March 31, 2006 and the related consolidated statements of income, stockholders’ equity, and cash flows for the three-month period then ended. These interim financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit in accordance with the standards of the Public Company Accounting Oversight Board, the object of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

The Company has not generated significant revenues or profits and has no operations at year end. These factors among others raise considerable doubt the Company will be able to continue as a going concern. The Company’s continuation as a going concern depends upon its ability to generate sufficient cash flow to conduct its operations and its ability to obtain additional sources of capital and financing. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles accepted in the United States of America.

Pollard-Kelley Auditing Services, Inc.

/S/ Pollard-Kelley Auditing Services, Inc.

May 18, 2006
Fairlawn, Ohio
5

 
SUPREME REALTY INVESTMENTS, INC.
UNAUDITED CONSOLIDATED BALANCE SHEET
As of March 31
 
   
 2006
 
2005
 
ASSETS:
 
 
     
Current Assets:
 
 
     
Cash & Cash Equivalents
 
$
1,769
   
(977
)
Accounts Receivable
       
7,379
 
Less: Allowance for Doubtful Accounts
         
-0-
 
Total Current Assets
   
1,769
   
6,402
 
Real Estate Investments: 
         
Existing Properties
       
1,466,000
 
New Property Acquisitions
       
-0-
 
Gross Properties
       
1,466,000
 
Less: Accumulated Deprec.
       
(143,957
)
Total Real Estate Investments
   
-0-
   
1,322,043
 
Other Assets:
         
Furniture/Fixtures/Equipment
       
11,662
 
Less: Accumulated Deprec.
       
(7,550
)
Total Other Assets
   
-0-
   
4,112
 
 
             
TOTAL ASSETS
   
1,769
   
1,332,557
 
LIABILITIES:
         
Current Liabilities
   
10,000
   
173,468
 
Notes Payable
       
-0-
 
Mortgages Payable
           
835,000
 
Total Liabilities
   
10,000
   
1,008,468
 
STOCKHOLDER'S EQUITY:
         
Common Stock, $0.001 par, 200,000,000 authorized, 12,500,000 outstanding
   
12,500
   
46,000
 
Additional Paid In Capital
   
670,275
   
2,207,146
 
Retained Earnings (Deficit)
   
(691,007
)
 
(329,048
)
Less:  Treasury Stock
   
-0-
   
-0-
 
Stock Subscriptions Receivable
   
-0-
   
(1,600,000
)
Total Stockholder Equity
   
(8,231
)
 
324,098
 
 
              
TOTAL LIABILITIES & EQUITY
   
1,769
   
1,332,557
 
 
See accompanying notes to the financial statements
6


SUPREME REALTY INVESTMENTS, INC.
UNAUDITED CONSOLIDATED STATEMENT OF EARNINGS
For the Fiscal Quarter Ended March 31

           
   
2006
 
2005
 
REVENUES:
         
Revenues from Rental Properties
       
$
1,273
 
Revenues from Mortgage Banking
             
Revenues from Realty & Management
             
TOTAL REVENUES
   
-0-
   
1,273
 
               
PROPERTY OPERATING EXPENSES:
             
Real Estate Taxes
         
-0-
 
Mortgage Interest
         
19,331
 
Operations and Maintenance
         
-0-
 
Depreciation and Amortization
         
8,000
 
Total Property Expenses
   
-0-
   
27,331
 
GENERAL EXPENSES:
             
Salaries, Commissions, & Employee Benefits
   
2,042
   
10,463
 
General & Administrative Expenses
   
5,887
   
3,827
 
Interest Expense
         
-0-
 
Depreciation & Amortization
         
547
 
Total General Expenses
   
7,929
   
14,838
 
TOTAL EXPENSES
         
42,169
 
               
NET INCOME(LOSS) Before Taxes & Extraordinary Items
   
(7,292
)
 
(40,896
)
Provision for Income Taxes
         
-0-
 
NET INCOME(LOSS)
   
(7,929
)
 
(40,896
)
               
Weighted Average Common Shares Outstanding
   
6,446,000
   
46,000,000
 
               
NET INCOME per Common Share
   
0.00
   
0.00
 
 
See accompanying notes to the financial statements
7



SUPREME REALTY INVESTMENTS, INC.
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOW
For the Three Months Ended March 31
   
2006
 
2005
 
CASH FLOW FROM OPERATING ACTIVITIES:
         
Net Income
   
(7,929
)
 
(40,896
)
Adjustments to reconcile net income to cash providedby Operating Activities
             
Depreciation and Amortization
         
8,547
 
Provision for Income Taxes
         
-0-
 
(Increase) Decrease in Receivables
         
-0-
 
(Increase) Decrease in Prepaid Expenses
         
-
 
Increase (Decrease) in Current Liabilities
         
7,915
 
Net Cash from Operating Activities
   
(7,929
)
 
(5,102
)
               
CASH FLOW FROM INVESTING ACTIVITIES:
             
Purchases of Furniture, Fixtures, & Equipment
         
-0-
 
               
Proceeds from the Sale of:
             
Furniture, Fixtures, & Equipment
         
-0-
 
Real Estate Improvements
         
-0-
 
Net Cash from Investing Activities
   
-0-
   
-0-
 
               
CASH FLOW FROM FINANCING ACTIVITIES:
             
Proceeds from:
             
Borrowings-Mortgages
         
-0-
 
Issuance of Common Stock
   
9,629
   
-0-
 
Payments for:
             
Debt Repayment
         
-0-
 
               
Net Cash from Financing Activities
   
9,629
   
-0-
 
               
Net Change In Cash
   
1.700
   
(5,102
)
Cash Balance, January 1
   
69
   
4,125
 
               
Cash Balance, March 31
   
1,769
   
(977
)
               
 
See accompanying notes to the financial statements
8


SUPREME REALTY INVESTMENTS, INC
Statement of Changes in Stockholders' Equity
As of March 31, 2006
           
Additional
     
Treasury
 
Common
 
Total
 
   
Common Stock
 
paid in
 
Retained
 
Stock
 
Stock
 
Stockholders'
 
   
Shares
 
Amount
 
Capital
 
Earnings
 
(common)
 
Subscribed
 
Equity
 
Balance, December 31, 2005
   
5,000,000
   
5,000
   
668,146
   
(683,078
)
 
-
   
-
   
(9,931
)
Common Stock Issued
   
7,500,000
   
7,500
   
2,129
                     
9,629
 
Net Income
                     
(7,929
)
             
(7,929
)
                                           
Balance, March 31, 2006
   
12,500,000
   
12,500
   
670,275
   
(691,007
)
 
-
       
(8.231
)
 
See accompanying notes to the financial statements
9

 
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.
 
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.
 
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.
10

 
3.
Real Estate Investments
 
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.

Depreciation has been computed using the straight-line method over the estimated useful lives of 27.5 years.

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 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
 
 
 
 
 
 
             
12-Unit Apartment Bldg
   
600,000
   
480,000
   
89,091
   
480,000
   
($30,909
)
4-Unit Apartment Bldg
   
280,000
   
224,000
   
41,576
   
244,000
 
$
5,576
 
6-Unit Bldg/ Vacant Lots
   
550,899
   
131,000
   
35,515
   
331,777
   
($183,607
)
                                 
TOTALS
 
$
1,430,899
 
$
835,000
 
$
166,182
 
$
1,055,777
   
($208,940
)
 
4.
Revenue Recognition
 
Rental revenues are recognized in the month they are earned. 
 
5.
Income Taxes
 
The Company and its subsidiary file a consolidated federal income tax return.
 
6.
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, $202,138 for 2004, and 399,875 for 2005. The tax loss carry-forwards expire in 2022, 2023, 2024, and 2025 respectively.
 
7.
Investment in Affiliates
 
In February 2006, the Company spun off its wholly-owned subsidiary, Supreme Hotel Properties, Inc., to its shareholders, pursuant to the approval of the then Board of Directors on August 22, 2005.
 
8.
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.
11

 
 
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, 2005 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.
 
9.
Current Liabilities and Notes Payable
 
Current Liabilities include $10,000 in trade payables.
12

 
10.
Mortgages Payable
 
N/A
 
11.
Common Stock Transactions
 
During the fiscal year, the Board of Directors reduced the number of shares outstanding by effecting 1-10 reverse stock split.
 
To date, no dividends have been declared or paid.
 
12.
Market for Common Equity and Related Stockholder Matters
 
The Company’s common stock trades on the Over-the-Counter Bulletin Board (OTCBB) under the symbol “SRLT”.

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, 2006, was $0.05.
 
13.
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").
 
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.
13

 
14.
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 4700 Millennia Blvd- Suite 175, Orlando, Florida on a month-to-month basis.
 
15.
Contingencies
 
None
14


16.
Material Subsequent Events
 
On February 15, 2006 the Board of Directors authorized the increase its outstanding common shares to approximately 12,500,000; and that the Corporation’s major shareholders will then sell 9,222,135 shares of common stock to for cash consideration, to be transferred to Supreme Hotel Properties, Inc. to continue its business purposes; the shares purchased will represent approximately 74% of the outstanding common stock; and that Corporation’s current Board of Directors will then resign their duties to become the Board of Directors of Supreme Hotel Properties Inc.
 
On April 11, 2006, the Companyentered into a stock purchase agreement (the “Stock Purchase Agreement”) with Thomas Elliot, Jean LeRoy, Jimmy Harvey and Zujun Xu. There were no material relationships between the Registrant or its affiliates and any of the parties to the Stock Purchase Agreement, other than in respect of the Stock Purchase Agreement. Pursuant to the terms and conditions of the Stock Purchase Agreement, Zujun Xu acquired from Thomas Elliot, Jean LeRoy, and Jimmy Harvey an aggregate of 8,821,000 shares of common stock of the Registrant (the “Transaction”).

On April 12, 2006, Thomas Elliot resigned as the President of the Company.

On April 12, 2006, Zujun Xu was appointed President, Chief Executive Officer and Chief Financial Officer as well as a member of the Board of Directors of the Company.

On May 4, 2006, the Registrant issued and sold 55,000,000 shares of its common stock in a private placement exempt from the registration requirements of Section 5 of the Securities Act of 1933. The Registrant sold the shares at a price of $0.0182 per share, for aggregate offering consideration of $1,000,000.
15

 
 
Results of Operations
 
Revenues from Continuing Operations
 
Rental revenue decreased to $-0- for the 3-month period ended March 31, 2006 compared to $1,273 for the 3-month period ended March 31, 2005. The decrease in rental revenue in 2005 can be attributed to the fact we have sold our interests in all rental properties.
 
Expenses from Continuing Operations.
 
Total expenses from continuing operations decreased from $69,988 for the 3-month period ended March 31, 2005 to $28,165 for the 3-month period ended March 31, 2006, a net decrease of $41,823.
 
1.
Property operating expenses decreased to -0-.
2.
Property Depreciation and Amortization decreased to -0-
3.
Salaries, commissions and employees benefits remained stable.
4.
General and administrative expenses increased by $2,000 for the for 3-month period ending March 31, 2006 compared to the same period ending March 31, 2005.
5.
Interest Expense reflects that fact that the only notes we have outstanding are non-interest bearing notes.
6.
Other Depreciation and Amortization decreased to -0-.
 
Net Income/Loss from Operations.
 
Net loss from operations for the 3-month period ended March 31, 2006 was $ 7,929 versus net loss of $40,896 for the 3-month period ended March 31, 2005. The net loss in 2006 is attributed primarily to expenses associated with the corporate move to Orlando, Florida.
 
Liquidity and Capital Resources
 
For the 3-month periods ended March 31, 2006 and March 31, 2005, Supreme's net cash used by operating activities totaled ($7,929) and ($5,102), respectively. This change relates directly to an increase in Supreme's expenses.
 
As of the 3-month period ended March 31, 2006, Supreme's unrestricted cash resources were $1,729 as compared to ($977) as of the 3-month period ended March 31, 2005. The cash flow from our existing properties will not fund our future liquidity requirements.
 
With respect to the interim financial statements, management believes that there are no material trends, events, or uncertainties that have, occurred since the end of the last fiscal period that have, or 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. Likewise, there are no material changes in any line items on the financial statements or seasonal aspects that have had a material effect on the company's financial condition or the results of operations.
 
Off-balance sheet arrangements
 
Supreme does not have any significant 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.
16


ITEM 3. 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 end of the fiscal quarter ended March 31, 2006. 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.
 
 
 
 
To Supreme's knowledge, no lawsuits were commenced against Supreme during the 3-months ended March 31, 2006, nor did Supreme Commence any lawsuits during the same period. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
 
 
Changes in Securities
 
The Company has increased the number of authorized shares of common stock to 200,000,000. Such authorization is set forth in the Articles of Merger filed with the Secretary of State of Nevada on October 21, 2004 and included as Exhibit 3.0.
 
Company has adopted a Stock Option and Restricted Stock Compensation Plan. A description of the plan is set forth in the Company’s financial statements under Note 13.
 
On February 15, 2006 the Board of Directors authorized the increase its outstanding common shares to approximately 12,500,000; and that the Corporation’s major shareholders will then sell 9,222,135 shares of common stock to for cash consideration, to be transferred to Supreme Hotel Properties, Inc. to continue its business purposes; the shares purchased will represent approximately 74% of the outstanding common stock; and that Corporation’s current Board of Directors will then resign their duties to become the Board of Directors of Supreme Hotel Properties Inc.
 
On April 11, 2006, the Company entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Thomas Elliot, Jean LeRoy, Jimmy Harvey and Zujun Xu. There were no material relationships between the Registrant or its affiliates and any of the parties to the Stock Purchase Agreement, other than in respect of the Stock Purchase Agreement. Pursuant to the terms and conditions of the Stock Purchase Agreement, Zujun Xu acquired from Thomas Elliot, Jean LeRoy, and Jimmy Harvey an aggregate of 8,821,000 shares of common stock of the Registrant.
17

 
Recent Sales of Unregistered Securities
 
None.
 
Recent Sales of Registered Securities
 
None.
 
Use of Proceeds
 
Not applicable.
 
 
Not applicable.
 
 
Not applicable.
 
 
Not Applicable
18

 
 
a. Exhibits
 
Exhibit
Number
 
Exhibit Title
3.0
Articles of Merger, filed with the Nevada Secretary of State on October 21, 2004
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)
31.1
Certificate of CEO/CFO as Required by Rule Rule 13a-14(b) and Rule 15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code
32.1
Certificate of CEO as Required by Rule Rule 13a-14(b) and Rule 15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code
 
b. Reports of Form 8-K.
 
None.
 
 
 
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: May 22, 2004
 
 
By:
 
 
 
/s/
 
Zujun Xu
Chief Executive Officer, Chief Financial Officer
   
   
   

 
19


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CERTIFICATION
 
 
I, Zujun Xu, certify that:
 
1.
I have reviewed this quarterly report on Form 10-QSB 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 quarter ending March 31, 2006;
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 quarter ended March 31, 2006;
4.
I am 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 by others within those entities, particularly during the fiscal quarter ended March 31, 2006;
 
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my 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 quarter ended March 31, 2006, 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 first fiscal quarter that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and
     
5.
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):
   
 
d.
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
 
e.
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.
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: May 19, 2006
/s/
 
Zujun Xu
Chief Executive Officer, Chief Financial Officer
 
 


EX-32.1 HTML

v043950_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 Quarterly Report of Supreme Realty Investments, Inc. (the "Company") on Form 10-QSB for the quarter ended March 31, 2006, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Zujun Xu, in my capacity as Chief Executive Officer, and 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: May 19, 2006
/s/
 
Zujun Xu
Chief Executive Officer, Chief Financial Officer