Form 8-K Home System Group

Events or Changes Between Quarterly Reports

What is Form 8-K?
  • Accession No.: 0001144204-06-031125 Act: 34 File No.: 000-49770 Film No.: 061005982
  • CIK: 0001172319
  • Submitted: 2006-08-04
  • Period of Report: 2006-08-04

8-K HTML

v048995_8k.htm


United States
Securities and Exchange Commission
Washington, D.C. 20549
 
 
FORM 8-K
 
 
Current Report Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
August 4, 2006
(Date of Report)
 
 
 
Supreme Realty Investments, Inc.
(Exact name of registrant as specified in its charter)
 
 
 
Nevada
000-49770
43-1954776
(State of incorporation)
(Commission File Number)
(IRS Employer Identification No.)
 
No. 5A, Zuanshi Ge, Fuqiang Yi Tian Ming Yuan,
Fu Tian Qu, Shenzhen City, P.R. China
  518000
(Address of principal executive offices)
(Zip Code)
 
086-755-83570142
(Registrant’s telephone number, including area code)
 
N/A
(Former name or former address, if changed since last report.)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
[ ]    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
[ ]    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
[ ]    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
[ ]    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 




Item 1.01 Entry into a Material Definitive Agreement.

A. Merger Agreement

On August 4, 2006, the Registrant entered into an agreement and plan of merger with XY Acquisition Corporation (“XY”), Home System Group, Inc. (“HSG”), Cheung Kin Wai, Li Wei Qiu, Ye Bo Quan, Li Shu Bo, Huang Jian Wei, Value Global International Limited, Simple (Hong Kong) Investment & Management Company Limited, First Capital Limited, Shenzhen Dingyi Investment Company Limited, China US Bridge Capital Limited (the “Merger Agreement”). A copy of the Merger Agreement is being filed as Exhibit 10.2 to this Current Report.
 
The transaction described in the Merger Agreement is referred to in this Current Report as the “Merger Transaction.” A summary of the Merger Transaction, as well as the material terms and conditions of the Merger Agreement, are set forth below, but such summary is qualified in its entirety by the terms and condition of the Merger Agreement, which are incorporated herein by this reference.

1. The Parties to the Merger Agreement

Prior to the completion of the Merger Transaction on August 4, 2006, XY Acquisition Corporation was a Nevada corporation and a wholly owned subsidiary of the Registrant.

HSG is a corporation formed on February 28, 2003 under the laws of the British Virgin Island. HSG, with a minimum capitalization of $2, was inactive until June 30, 2006, when HSG acquired all of the issued and outstanding stock of Oceanic International (HK) Limited ("OCIL"). OCIL is an operating company organized under the laws of Hong Kong. Since the ownership of HSG and OCIL were the same, the merger was accounted for as a transaction between entities under common control, whereby HSG recognized the assets and liabilities transferred at their carrying amounts. The financial statements of OCIL as of and for the years ended December 31, 2004 and 2005 and as of March 31, 2006 and for the three months ended March 31, 2005 and 2006 are essentially the same as the consolidated financial statements of HSG. Additional information about OCIL, including audited financial statements for the past two fiscal years, is contained elsewhere in this Current Report.

Prior to the completion of the Merger Transaction on August 4, 2006, Cheung Kin Wai, Li Wei Qiu, Ye Bo Quan, Li Shu Bo, Huang Jian Wei, Value Global International Limited, Simple (Hong Kong) Investment & Management Company Limited, First Capital Limited, Shenzhen Dingyi Investment Company Limited, China US Bridge Capital Limited were the shareholders of HSG (the “HSG Shareholders”). In addition, Cheung Kin Wai and Li Wei Qiu are the two only directors of HSG.

2. The Merger Transaction

Pursuant to the Merger Agreement, HSG merged with XY Acquisition Corporation, with HSG as the survivor of the merger. As a result of the Merger Transaction, HSG became a wholly owned subsidiary of the Registrant, which, in turn, made the Registrant the indirect owner of the Chinese operating company subsidiary OCIL.


3. The Merger Consideration

Under the Merger Agreement, in exchange of surrendering their shares in HSG, the HSG Shareholders received only stock consideration. The stock consideration consisted of 8,000,000 newly issued shares of the Registrant’s common stock, which were divided proportionally among the HSG Shareholders in accordance with their respective ownership interests in HSG immediately before the completion Merger Transaction.

4. The Merger Agreement

There was no delay between the signing of the Merger Agreement and the closing of the Merger Agreement; both occurred on August 4, 2006. The Merger Agreement contains customary terms and conditions for a transaction of this type, including representations, warranties and covenants, as well as provisions describing the merger consideration, the process of exchanging the consideration and the effect of the merger. The Merger Agreement contains reciprocal indemnification provisions that provide for indemnification in the event of a breach of a representation or warranty. The indemnification provisions survive the closing of the Merger Transaction for 18 months.

5. Material Relationships

There were no material relationships between the Registrant or its affiliates and any of the parties to the Merger Agreement, other than in respect of the Merger Agreement.

Item 2.01 Completion of Acquisition or Disposition of Assets.

On August 4, 2006, the Registrant entered into the Merger Agreement, pursuant to which the Registrant completed the Merger Transaction and acquired HSG from the HSG Shareholders and thereby indirectly acquired the Chinese operating subsidiary company OCIL. Further information about the Merger Agreement and the Merger Transaction is provided above under Item 1.01 of this Current Report.

In exchange for transferring HSG to the Registrant, the HSG Shareholders received stock consideration consisting of 8,000,000 newly issued shares of the Registrant’s common stock, which were divided proportionally among the HSG Shareholders in accordance with their respective ownership interests in HSG immediately before the completion Merger Transaction. Further information about the merger consideration is provided above under Item 1.01 of this Current Report.

There were no material relationships between the Registrant or its affiliates and any of the parties to the Merger Agreement, other than in respect of the Merger Agreement.

The Registrant was a “shell company” (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) immediately before the completion of the Merger Transaction. Accordingly, pursuant to the requirements of Item 2.01(a)(f) of Form 8-K, set forth below is the information that would be required if the Registrant were filing a general form for registration of securities on Form 10-SB under the Exchange Act, reflecting the Registrant’s common stock, which is the only class of its securities subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act upon consummation of the Merger Transaction, with such information reflecting the Registrant and its securities upon consummation of the Merger Transaction.


A. Description of Business

The operating company, Oceanic International (Hong Kong) Limited, or OCIL, is a company organized under the laws of Hong Kong, China since June 23rd, 2004. OCIL is the distributor of home appliance products, such as grills, home use water pumps, blenders, electric fans, heaters, laser printers, and other electronics and environmental protection products.

OCIL is an enterprise integrating the selling, circulation and modern logistics of home appliance products. OCIL establishes strategic partnerships with some of the world famous enterprises. OCIL is the strategic partner of the world well-known home grill manufacture, Nexgrill Industries Inc., in the greater China area. OCIL is also one of the strategic partners of global famous retailer, Whalen Storage, in the greater China area. Products distributed by OCIL have already entered into the US, Germany, France, and Australia markets, and continuously expands to other neighboring countries.

OCIL does not have a R&D Department and does not initiate any advertising or promotion activities on the products because OCIL is not the manufacturer. OCIL currently has two employees, Cheung Kin Wai and Li Wei Qiu, who are also the shareholders of HSG.

The five largest suppliers for OCIL are Zhongshan City Xin Da Imports and Exports Company Limited, Foshan City Shun De Ying Yuan Imports and Exports Company Limited, Zhongshan City Bao Chang Long Imports and Exports Company Limited, Zhongshan City Tai Quan Imports and Exports Company Limited, and China Wu Jin Zhi Pin Imports and Exports Company Limited. The three largest customers for OCIL are Nexgrill Industries, Inc., Whalen Storage, and BTB Products, Inc.

Risk factors associated with the business of OCIL includes the following:

 (1) Highly Dependent upon the Continued Services of the Executive Officers and the Loss of Key Personnel Could Affect the Ability to Successfully Growing Business. OCIL is highly dependent upon the services of its senior management team, particularly Cheung Kin Wai and Raymand Li. The permanent loss for any of the key executives could have a material adverse effect upon the operating results.

(2) Non-performance by the suppliers may adversely affect the operations by delaying delivery or causing delivery failures, which may negatively affect demand, sales and profitability.  OCIL distributes various types of products from the manufacturing suppliers. OCIL will be materially and adversely affected by the failure of the suppliers to perform as expected.  OCIL could experience delivery delays or failures caused by production issues or delivery of non-conforming products if its suppliers failed to perform, and OCIL also faces the risks in the event that any of its suppliers becomes insolvent or bankrupt. 


(3)Any change in policies by the Chinese government could adversely affect the operating of businesses. Changes in policies could result in imposition of restrictions on currency conversion, imports or the source of suppliers, as well as new laws affecting joint ventures and foreign-owned enterprises doing business in China. Although China has been pursuing economic reforms for the past two decades, events such as a change in leadership or social disruptions that may occur upon the proposed privatization of certain state-owned industries could significantly affect the government's ability to continue with its reform.

B. Plan of Operation

Forward Looking Statements

The information in this discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties, including statements regarding the Registrant’s capital needs, business strategy and expectations. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as “may”, “will”, “should”, “expect”, “plan”, “Intend”, “anticipate”, “believe”, estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. Actual events or results may differ materially. The Registrant disclaim any obligation to publicly update these statements, or disclose any difference between its actual results and those reflected in these statements. The information constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

The Company became a holding company and has no significant business operations or assets other than its interest in Oceanic International (Hong Kong) Limited, or OCIL, its accounting predecessor company. OCIL is a company organized under the laws of Hong Kong, China since June 23rd, 2004. OCIL is the distributor of home appliance products, such as grills, home use water pumps, blenders, electric fans, heaters, laser printers, and other electronics and environmental protection products.

The Registrant’s short to mid-term strategic plan is to focus on market expansion in Europe and North America. To achieve this goal, the Registrant plans to sell more new brand products and start acquiring some manufacturers of the home appliance products in China. The Registrant’s long-term strategic goal is to establish strategic partnerships with more client companies, expands the market to other Asia countries, and becoming the leader distributor of the home appliance products in China.

The Registrant may issue additional shares of capital stock to raise additional cash for working capital in the next twelve months. If the Registrant issues additional shares of capital stock, the stockholders will experience dilution in their respective percentage ownership in the Registrant. The Registrant has not decided on the amount of the cash needed for working capital at this point. Working capital will be used for expanding domestic market by establishing more sales points or own chain stores in eastern China, hiring more sales person, and expanding current distribution channels.


C. Description of Property

The assets of the Registrant and its subsidiaries on a consolidated, post-merger basis includes cash, accounts receivable from customers, trade deposits, and due from directors. The Registrant does not own any real estate properties. OCIL uses shareholders’ office at No. 264-298 Qingshan Road, Nanfeng Center Suite 1905, Quanwan Xingjie, Hong Kong at no cost to OCIL.

D. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information, as of July 31, 2006, concerning shares of common stock of the Registrant, the only class of its securities that are issued and outstanding, held by (1) each shareholder known by the Registrant to own beneficially more than five percent of the common stock, (2) each director of the Registrant, (3) each executive officer of the Registrant, and (4) all directors and executive officers of the Registrant as a group:
 
 
 
 
Name and Address of Beneficial Owner (1)
Amount and
Nature of
Beneficial
Ownership
 
Percentage of
Common Stock
Zujun Xu
882,100
13%
Yujiao Xiong
825,000
12.21%
Chaohui Wu
825,000
12.21%
Pingxin Liu
825,000
12.21%
Bo Chen
825,000
12.21%
Youming Xiong
825,000
12.21%
All directors and executive officers as a group (1 person - Zujun Xu)
882,100
13%

(1) Unless otherwise indicated in the footnotes to the table, each shareholder shown on the table has sole voting and investment power with respect to the shares beneficially owned by him or it. The information in the tables reflects the 1-for-10 reverse stock split effected by the Registrant on July 21, 2006.

Change in Control Arrangements

There are currently no arrangements that would result in a change in control of the Registrant.

E. Directors and Executive Officers, Promoters and Control Persons

Zujun Xu, Director, President and Chief Financial Officer
 
Mr. Xu, age 34, has been self employed as a business consultant since 2003. From 1998 through 2003 Mr. Xu was the general manager at Xiamen Motic China Group Company Limited, where he managed the business operations.
 

Mr. Xu does not hold any other directorships with reporting companies in the United States. There are no family relationships between Mr. Xu and the directors, executive officers, or persons nominated or chosen by the Registrant to become directors or executive officers. During the last two years, there have been no transactions, or proposed transactions, to which the Registrant was or is to be a party, in which Mr. Xu (or any member of his immediate family) had or is to have a direct or indirect material interest.


F. Executive & Director Compensation

Executive Compensation
 
Shown on the table below is information on the annual and long-term compensation for services rendered to the Registrant in all capacities, for the 2005, 2004, and 2003 fiscal years, paid by the Registrant to all individuals serving as the Registrant’s chief executive officer or acting in a similar capacity during the last three completed fiscal years, regardless of compensation level. During the last completed fiscal year, the Registrant did not pay aggregate compensation to any executive officer in an amount greater than $100,000.
 
 
 
 
 
 
 
Annual Compensation
 
Long Term Compensation
Name
 
Title
 
Year
 
Salary
 
Bonus
 
Other
Annual
Compensation
 
Restricted
Stock
Awarded
 
Options/
SARs
(#)
 
LTIP
payouts
($)
 
All
Other
Compensation
                            
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Thomas Elliot
   
CEO
  
2005
  
$
0
  
0
  
0
  
0
  
0
  
0
  
$
32,395
 
 
 
 
2004
 
$
0
 
0
 
0
 
10,000,000
 
0
 
0
 
$
28,758
 
 
 
 
2003
 
$
0
 
0
 
0
 
0
 
6,979,635
(1)
0
 
$
13,765
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Jean LeRoy
 
CFO
 
2005
 
$
0
 
0
 
0
 
0
 
0
 
0
 
 
0
 
 
 
 
2004
 
$
0
 
0
 
0
 
4,000,000
 
0
 
0
 
 
0
 
 
 
 
2003
 
$
0
 
0
 
0
 
0
 
6,142,078
(2)
0
 
 
0
——————
(1) 5,000,000 shares of Supreme Property, Inc. common stock exchanged for 6,979,635 shares of Supreme Realty Investments, Inc. common stock in the merger between the two companies. These shares are calculated prior to the Registrant’s recent 1:10 reverse split.
 
(2) 4,000,000 shares of Supreme Property, Inc. common stock exchanged for 6,142,078 shares of Supreme Realty Investments, Inc. common stock in the merger between the two companies. These shares are calculated prior to the Registrant’s recent 1:10 reverse split.

To date, no compensation has been awarded to, earned by or paid to Mr. Xu, in his capacity as chief financial officer and chairman of the board and chief executive officer of the Registrant. There are no employment contracts or change-in-control arrangement between the Registrant and its executive officers.
 
Director Compensation
 
The directors of the Registrant have not received compensation for their services as directors nor have they been reimbursed for expenses incurred in attending board meetings.



G. Certain Relationships and Related Transactions

Except as otherwise disclosed herein or incorporated herein by reference, there have not been any transactions, or proposed transactions, during the last two years, to which the Registrant was or is to be a party, in which any director or executive officer of the Registrant, any nominee for election as a director, any security holder owning beneficially more than five percent of the common stock of the Registrant, or any member of the immediate family of the aforementioned persons had or is to have a direct or indirect material interest.

H. Description of Securities

Each share of common stock is entitled to one vote on all matters upon which such shares can vote. All shares of common stock are equal to each other with respect to the election of directors and cumulative voting is not permitted. There are no preemptive rights. In the event of liquidation or dissolution, holders of common stock are entitled to receive, pro rata, the assets remaining, after creditors, and holders of any class of stock having liquidation rights senior to holders of shares of common stock, have been paid in full. All shares of common stock are entitled to such dividends as the Board of Directors may declare from time to time. There are no provisions in the articles of incorporation or bylaws that would delay, defer or prevent a change of control. The Registrant does not have any other classes of issued and outstanding capital stock.

I. Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters

The Registrant’s common stock is traded on the OTCBB under the symbol “SRLV”. As of August 1, 2006, the market price for the Registrant’s common stock was $1.10 per share. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

As of July 31, 2006, there were approximately 59 holders of record of the Registrant’s common stock.

The Registrant has no plans to declare cash dividends on its common stock in the future and has not declared any thus far during fiscal year 2006 or during the last two completed fiscal years. There are no restrictions that limit the ability of the Registrant to declare cash dividends on its common stock and the Registrant does not believe that there are any that are likely to do so in the future.

J. Legal Proceedings

Neither the Registrant nor its property is a party to any pending legal proceeding.

K. Changes in and Disagreements with Accountants

Not applicable.

L. Recent Sales of Unregistered Securities


Please see the information set forth below under Item 3.02 of this Current Report, as well as the information set forth under Item 3.02 of the Registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on May 4, 2006, all of which information is incorporated hereunder by this reference.

M. Indemnification of Directors and Officers

The Registrant will indemnify its directors and officers to the fullest extent permitted by the General Corporation Law of the State of Nevada.

Item 3.02 Unregistered Sales of Equity Securities.

A. Sale of Common Stock to the Investors

On May 4, 2006, the Registrant entered into a Subscription Agreement with Yujiao Xiong, Youming Xiong, Chaohui Wu, Pingxin Liu, Bo Chen, Wei Liu, Juhua Wang, Shaoke Chen, Hanping Lee, and Mingtung Chen (collectively referred to herein as “Investors”). Pursuant to the terms of the Subscription Agreement, the Registrant issued and sold 55,000,000 shares of its common stock to the Investors 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. There are no material relationships between the Registrant or its affiliates and the Investors, other than in respect of the Subscription Agreement. A copy of the Subscription Agreement was filed as Exhibit 10.1 to the Current Report filed on May 4, 2006.
 
1. Section 4(2) of the Securities Act
 
The shares were sold to the Investors without registration under Section 5 of the Securities Act of 1933 in reliance on the exemption from registration contained in Section 4(2) of the Securities Act. Section 4(2) of the Securities Act exempts from registration “transactions by an issuer not involving any public offering.” To qualify for this exemption, the purchasers of the securities must (1) have enough knowledge and experience in finance and business matters to evaluate the risks and merits of the investment or be able to bear the investment's economic risk, (2) have access to the type of information normally provided in a prospectus, and (3) agree not to resell or distribute the securities to the public. In addition, the registrant cannot use any form of public solicitation or general advertising in connection with the offering.
 
The Registrant believes that all of the requirements to qualify to use the exemption from registration contained in Section 4(2) of the Securities Act have been satisfied in connection with the sale of its common stock to the Investors. Specifically, (1) the Registrant has determined that the Investors are knowledgeable and experienced in finance and business matters and thus are able to evaluate the risks and merits of acquiring the Registrant’s common stock; (2) the Investors have advised the Registrant that they are able to bear the economic risk of purchasing the common stock; (3) the Registrant has provided the Investors with access to the type of information normally provided in a prospectus; (4) pursuant to the Subscription Agreement, the Investors have agreed not to resell or distribute the securities to the public; and (5) the Registrant did not use any form of public solicitation or general advertising in connection with the offering.
 

2. Regulation S under the Securities Act
 
In addition, the shares were sold to the Investors without registration under Section 5 of the Securities Act of 1933 in reliance on the exemption from registration contained in Regulation S under the Securities Act. Regulation S is available only for offers and sales of securities made entirely outside the United States. These transactions are referred to as “offshore transactions,” and pursuant to Regulation S offshore transactions are not subject to Section 5 of the Securities Act. Offshore transactions include offers and sales of securities by a registrant located in the United States to persons located outside the United States.
 
The Registrant, which is located in the United States, believes that the sale of its common stock to the Investors constituted an offshore transaction. Investors are all residents of China. At the time the Registrant offered to sell them shares of its common stock, the Investors were located in China. Furthermore, at the time the Registrant sold its common stock to the Investors, the Registrant reasonably believed that the Investors were outside the United States. As a result, the Registrant believes that these facts enable it to also rely on Regulation S for an exemption from the registration requirements of Section 5 of the Securities Act.

B. Issuance Pursuant to the Merger Agreement

On or about August 4, 2006, the Registrant issued 8,437,500 shares of its common stock to the HSG Shareholders. The shares were issued as consideration in the Merger Transaction pursuant to the Merger Agreement, which is described above under Item 1.01 of this Current Report. The parties used a valuation of $0.80 per share for the issuance.

1. Section 4(2) of the Securities Act

The shares were issued to the HSG Shareholders without registration under Section 5 of the Securities Act of 1933 in reliance on the exemption from registration contained in Section 4(2) of the Securities Act. The requirements to qualify to use this exemption are described above.

The Registrant believes that all of the requirements to qualify to use the exemption from registration contained in Section 4(2) of the Securities Act have been satisfied in connection with the issuance of the shares to the HSG Shareholders. Specifically, (1) the Registrant has determined that the HSG Shareholders are knowledgeable and experienced in finance and business matters and thus they are able to evaluate the risks and merits of acquiring the Registrant’s securities; (2) the HSG Shareholders have advised the Registrant that they are able to bear the economic risk of purchasing the Registrant’s common stock; (3) the Registrant has provided the HSG Shareholders with access to the type of information normally provided in a prospectus; (4) pursuant to the Merger Agreement, the HSG Shareholders have agreed not to resell or distribute the securities to the public; and (5) the Registrant did not use any form of public solicitation or general advertising in connection with the issuance of the shares.

2. Regulation S under the Securities Act


In addition, the shares were issued to certain of the HSG Shareholders without registration under Section 5 of the Securities Act of 1933 in reliance on the exemption from registration contained in Regulation S under the Securities Act. The relevant requirements to qualify to use this exemption are described above.

The Registrant, which is located in the United States, believes that the issuance of its common stock to Yimin Zhang, Weiyi Lv, Xiaochun Wang, Zhongsheng Bao, Simple (Hongkong) Investment & Management Company Limited, First Capital Limited and Shenzhen Dingyi Investment & Consulting Limited (the “Offshore HSG Shareholders”) constituted an offshore transaction. Each of the Offshore HSG Shareholders is a resident of China. At the time the Registrant offered to issue its shares to the Offshore HSG Shareholders, each of the Offshore HSG Shareholders was located in China. Furthermore, at the time the Registrant issued its common stock to the Offshore HSG Shareholders, the Registrant reasonably believed that each of the Offshore HSG Shareholders was outside the United States. As a result, the Registrant believes that these facts enable it to also rely on Regulation S for an exemption from the registration requirements of Section 5 of the Securities Act with respect to the issuances to the Offshore HSG Shareholders.

Item 5.01 Changes in Control of Registrant.

Immediately prior to the completion of the Merger Transaction, Zujun Xu, Yujiao Xiong, Youming Xiong, Chaohui Wu, Pingxin Liu, and Bo Chen controlled the Registrant by virtue of their holdings in the Registrant’s common stock. With the completion of the Merger Transaction, Cheung Kin Wai and Li Wei Qiu controls the Registrant.
 
For information about the Merger Transaction, please see the information set forth above under Item 1.01 and Item 2.01 of this Current Report, which information is incorporated hereunder by this reference.

Item 5.06 Change in Shell Company Status.

The Registrant was a “shell company” (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended) immediately before the Merger Transaction. As a result of the Merger Transaction, the Registrant has acquired subsidiaries that possess operating businesses. Consequently, the Registrant believes that the Merger Transaction has caused it to cease to be a shell company. For information about the Merger Transaction, please see the information set forth above under Item 1.01 and Item 2.01 of this Current Report, which information is incorporated hereunder by this reference.

Item 9.01 Financial Statements and Exhibits.

(a) Financial statements of businesses acquired.

The following financial statements are hereby included as part of this Current Report.

Oceanic International (Hong Kong) Limited
Report of Independent Registered Public Accounting Firm
Balance Sheets at December 31, 2005 and 2004
Statements of Operations for the Periods Ended December 31, 2005 and 2004
Statements of Cash Flows for the Periods Ended December 31, 2005 and 2004
Statements of Changes in Stockholders’ Equity for the Periods Ended December 31, 2005 and 2004
Notes to Financial Statements


Unaudited Balance Sheet at March 31, 2006
Unaudited Statement of Operations for the three months ended March 31, 2006 and 2005
Unaudited Statement of Stockholders’ Equity for the three months ended March 31, 2006
Notes to Financial Statements

(b) Pro forma financial information.

The following financial statements are hereby included as part of this Current Report.

Supreme Realty Investments, Inc. 
Unaudited Pro Forma Condensed ConsolidatedBalance Sheet as of March 31, 2006
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2005
Unaudited Pro Forma Condensed Consolidated Statement of operations for the three months ended March 31, 2006


(d) Exhibits.
 
10.2
 
Agreement and Plan of Merger, dated as of August 4, 2006, among the Registrant, XY Acquisition Corporation, Home System Group, Inc., Cheung Kin Wai, Li Wei Qiu, Ye Bo Quan, Li Shu Bo, Value Global International Limited, Simple (Hongkong) Investment & Management Company Limited, First Capital Limited, Shenzhen Dingyi Investment & Consulting Limited, and China US Bridge Capital Limited.
 


SIGNATURES


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 hereunto duly authorized.
 
Date: August 4, 2006
 
SUPREME REALTY INVESTMENTS, INC.
     
     
   
/s/ Zujun Xu
   
Zujun Xu
   
Chairman of the Board &
   
Chief Executive Officer







OCEANIC INTERNATIONAL (HK) LIMITED

FINANCIAL STATEMENTS

DECEMBER 31, 2005 AND 2004








OCEANIC INTERNATIONAL (HK) LIMITED




C O N T E N T S

           
PAGE
             
             
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
1
             
BALANCE SHEETS
2
             
STATEMENTS OF OPERATIONS
3
             
STATEMENTS OF STOCKHOLDERS' EQUITY
4
             
STATEMENTS OF CASH FLOWS
5
             
NOTES TO FINANCIAL STATEMENTS
6 - 9
 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To the Stockholders and Board of Directors
Oceanic International (HK) Limited
Hong Kong


We have audited the accompanying balance sheets of Oceanic International (HK) Limited, as of December 31, 2005 and 2004, and the related statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2005 and the period June 23, 2004 (date of inception) through December 31, 2004. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Oceanic International (HK) Limited as of December 31, 2005 and 2004, and the results of its operations and its cash flows for the year ended December 31, 2005 and the period June 23, 2004 (date of inception) through December 31, 2004 in conformity with accounting principles generally accepted in the United States.
 

/s/ Morison Cogen, LLP
Morison Cogen, LLP
 
Bala Cynwyd, Pennsylvania
June 23, 2006
 


 
-1-

OCEANIC INTERNATIONAL (HK) LIMITED
BALANCE SHEETS
DECEMBER 31, 2005 AND 2004




     
2005
   
2004
 
               
ASSETS
             
               
CURRENT ASSETS
             
Cash
 
$
103,701
 
$
624
 
Accounts receivable
   
3,962,986
   
1,700,186
 
Trade deposits
   
2,208,079
   
1,541,810
 
Due from directors
   
-
   
9,952
 
               
TOTAL ASSETS
 
$
6,274,766
 
$
3,252,572
 
               
LIABILITIES AND STOCKHOLDERS' EQUITY
             
               
CURRENT LIABILITIES
             
Bank loans
 
$
3,030,836
 
$
2,651,698
 
Accounts payable and accrued expenses
   
1,578,677
   
335,036
 
Due to directors
   
53,637
   
-
 
               
TOTAL LIABILITIES
   
4,663,150
   
2,986,734
 
               
STOCKHOLDERS' EQUITY
             
               
COMMON STOCK - $0.1282 par value; 10,000 shares
             
authorized, issued and outstanding
   
1,282
   
1,282
 
               
RETAINED EARNINGS
   
1,610,334
   
264,556
 
               
TOTAL STOCKHOLDERS' EQUITY
   
1,611,616
   
265,838
 
               
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 
$
6,274,766
 
$
3,252,572
 









The accompanying notes are an integral part of these financial statements.

-2-


OCEANIC INTERNATIONAL (HK) LIMITED
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 2005 AND THE PERIOD
JUNE 23, 2004 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2004






     
2005
   
2004
 
               
NET SALES
 
$
11,130,194
 
$
2,861,133
 
               
               
               
OPERATING EXPENSES
             
Cost of net sales
   
9,370,917
   
2,515,773
 
General and administrative expenses
   
167,887
   
45,803
 
     
9,538,804
   
2,561,576
 
               
               
               
INCOME FROM OPERATIONS
   
1,591,390
   
299,557
 
               
               
               
OTHER INCOME (EXPENSE)
             
Finance costs
   
(246,233
)
 
(35,195
)
Interest income
   
621
   
194
 
     
(245,612
)
 
(35,001
)
               
               
               
NET INCOME
 
$
1,345,778
 
$
264,556
 







The accompanying notes are an integral part of these financial statements.
 
-3-



OCEANIC INTERNATIONAL (HK) LIMITED
STATEMENTS OF STOCKHOLDERS’ EQUITY
YEAR ENDED DECEMBER 31, 2005 AND THE PERIOD
JUNE 23, 2004 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2004



   
Common
 
Retained
     
   
Stock
 
Earnings
 
Total
 
               
               
BALANCE AT JUNE 23, 2004
 
$
-
 
$
-
 
$
-
 
                     
                     
Initial capitalization
   
1,282
   
-
   
1,282
 
                     
                     
Net income for the period ended December 31, 2004
   
-
   
264,556
   
264,556
 
                     
                     
BALANCE AT DECEMBER 31, 2004
   
1,282
   
264,556
   
265,838
 
                     
                     
Net income for the year ended December 31, 2005
   
-
   
1,345,778
   
1,345,778
 
                     
                     
BALANCE AT DECEMBER 31, 2005
 
$
1,282
 
$
1,610,334
 
$
1,611,616
 











The accompanying notes are an integral part of these financial statements.

-4-


OCEANIC INTERNATIONAL (HK) LIMITED
STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2005 AND THE PERIOD
JUNE 23, 2004 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2004



   
2005
 
2004
 
           
CASH FLOWS FROM OPERATING ACTIVITIES
             
Net income
 
$
1,345,778
 
$
264,556
 
Adjustments to reconcile net income
             
to net cash used in operating activities
             
(Increase) decrease in assets
             
Accounts receivable
   
(2,262,800
)
 
(1,700,186
)
Trade deposits
   
(666,269
)
 
(1,541,810
)
Increase in liabilities
             
Accounts payable and accrued expenses
   
1,243,641
   
335,036
 
               
Net cash used in operating activities
   
(339,650
)
 
(2,642,404
)
               
               
CASH FLOWS FROM FINANCING ACTIVITIES
             
Decrease (increase) in due to/from director
   
63,589
   
(9,952
)
Proceeds from bank loans
   
13,401,892
   
6,020,844
 
Repayment of bank loans
   
(13,022,754
)
 
(3,369,146
)
Proceeds from initial capitalization
   
-
   
1,282
 
               
Net cash provided by investing activities
   
442,727
   
2,643,028
 
               
               
NET INCREASE IN CASH
   
103,077
   
624
 
               
               
CASH - BEGINNING OF PERIOD
   
624
   
-
 
               
               
CASH - END OF YEAR
 
$
103,701
 
$
624
 
               
               
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
             
INFORMATION
             
Cash paid during the year for:
             
Interest
 
$
246,233
 
$
35,195
 
               
Income taxes
 
$
-
 
$
-
 
 



The accompanying notes are an integral part of these financial statements.

-5-



OCEANIC INTERNATIONAL (HK) LIMITED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004
 

 
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business
Oceanic International (HK) Limited (the “Company”), was incorporated in Hong Kong on June 23, 2004 for the purpose of trading of gas grills, home electronic appliances and bin racks.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the use of estimates based on management’s knowledge and experience. Accordingly, actual results could differ from those estimates.

Comprehensive Income

The Company follows the Statement of Financial Accounting Standard (“SFAS”) No. 130, “Reporting Comprehensive Income.” Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. Since the Company has no items of other comprehensive income, comprehensive income is equal to net income.

Fair Value of Financial Instruments

The fair value of financial instruments classified as current assets or liabilities, including cash, trade deposits, receivables, accounts payable and accrued expenses and due to director, approximates carrying value due to the short-term maturity of the instruments. The carrying value of the bank loans approximates fair value since the interest rate associated with the debt approximates the current market interest rate.

Cash Equivalents

The Company considers all short-term securities purchased with a maturity of three months or less to be cash equivalents.

Concentration of Credit Risk

Certain financial instruments potentially subject the Company to concentrations of credit risk. These financial instruments consist primarily of cash and accounts receivable. The Company places its temporary cash investments with high credit quality financial institutions to limit its credit exposure. Concentrations of credit risk with respect to accounts receivable are limited since the Company performs ongoing credit evaluations of its customers’ financial condition and due to the generally short payment terms.

Accounts Receivable

The Company considers accounts receivable to be fully collectible; accordingly, the Company has not provided for an allowance for doubtful accounts. As amounts become uncollectible, they will be charged to an allowance or operations in the period when a determination of uncollectibility is made.

Revenue Recognition

In accordance with Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition, the Company recognizes revenue when persuasive evidence of a customer or distributor arrangement exists or acceptance occurs, receipt of goods by customer occurs, the price is fixed or determinable, and the sales revenues are considered collectible. Subject to these criteria, the Company generally recognizes revenue at the time product is shipped to the customer.

The Company follows Emerging Issues Task Force (“EITF”) No. 99-19, “Reporting Revenue as a Principal versus Net as an Agent.” Under the guidance of this EITF, the assessment of whether revenue should be reported gross with separate display of cost of sales to arrive at gross profit should be based on the following considerations: the Company acts as principal in the transaction, takes title to the products and has risk and rewards of ownership (such as the risk of loss for collection, delivery or returns). Based on EITF No. 99-19, the Company recognizes all revenue on a gross basis.

-6-


OCEANIC INTERNATIONAL (HK) LIMITED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004


NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes

The Company accounts for income taxes under SFAS No. 109, “Accounting for Income Taxes”, which requires an asset and liability approach to financial accounting and reporting for income taxes. Under the liability method, deferred income tax assets and liabilities are computed annually for temporary differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.

Recoverability of Long Lived Assets

The Company follows SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” The Statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The Company is not aware of any events or circumstances which indicate the existence of an impairment which would be material to the Company’s annual financial statements.

Advertising Costs

Advertising costs are expensed as incurred.

Shipping and Handling Fees and Costs

The Company follows Emerging Issues Task Force (“EITF”) No. 00-10, “Accounting for Shipping and Handling Fees and Costs.” The Company does not charge its customers for shipping and handling. The Company classifies shipping and handling costs as part of the cost of goods sold. For the periods ended December 31, 2005 and 2004, shipping and handling costs were $123,070 and $-0-.

Product Warranties

The manufacturers of the products that the Company sells extend product warranties, however, the Company does not offer its own warranty to its customers.

Foreign Currency Translation

The Company maintains its accounts in its functional currency which is the U.S. dollar. Gains and losses from foreign currency transactions such as those resulting from settlement of foreign receivables or payables are included in the statements of operations.

NOTE 2 - TRADE DEPOSITS

Amounts represent deposits held by suppliers to be applied against future purchases by the Company.


NOTE 3 - DUE TO DIRECTOR

Amount represents payable to two directors for advances made to the Company with no stated interest or repayment terms.


-7-



OCEANIC INTERNATIONAL (HK) LIMITED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004 




NOTE 4 - BANK LOANS

In January 2005 the Company entered into a new agreement with its existing bank under which the bank increased the Export Packing Loan credit line from $2,000,000 to $4,000,000 and maintained the Short Term Revolving Loan of Accounts Receivable Financing (“Short Term Revolving Loan”) of up to $1,600,000. The Short Term Revolving Loan is collateralized by accounts receivable of customers approved by the bank. The loans bear interest at the Singapore Inter-Bank Offered Rate (SIBOR”) plus 4%. The credit facilities are subject to recourse and are personally guaranteed by the two stockholders of the Company.

The bank debt consists of the following as of December 31:

     
2005
   
2004
 
               
Short Term Export Packing Loans, unsecured with interest rates ranging between 6% and 8%
 
$
835,106
 
$
2,284,498
 
               
Short Term Revolving Loans, collateralized by accounts receivable ($2,195,730 and $367,200 at December 31, 2005 and 2004) with recourse, interest rate 8.53% at December 31, 2005.
   
2,195,730
   
367,200
 
               
Total
 
$
3,030,836
 
$
2,651,698
 



NOTE 5 - INCOME TAXES

As discussed in Note 1, the Company utilizes the asset and liability method of accounting for income taxes in accordance with SFAS No. 109. No Hong Kong Profits Tax has been provided in the financial statements as the business of the Company is carried outside Hong Kong and there was no income derived from or arising in Hong Kong during the periods. The reconciliation of the statutory Hong Kong tax expense to the Company’s effective income tax expense is as follows:

     
2005
   
2004
 
               
Income tax benefit at applicable income tax rate
 
$
235,511
 
$
46,297
 
Tax effect of expenses not deductible for tax purposes
   
1,712,381
   
454,435
 
Tax effect of income not taxable for tax purposes
   
(1,947,892
)
 
(500,732
)
               
Income tax expense
 
$
-
 
$
-
 

No provision for deferred taxes has been made as there were no material timing differences at December 31, 2005 and 2004.

-8-


OCEANIC INTERNATIONAL (HK) LIMITED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004


NOTE 6 - MAJOR SUPPLIER

During 2005 and 2004, the Company purchased 82% and 91% of it products form three suppliers and two suppliers. At December 31, 2005 and 2004, amounts due to those suppliers included in accounts payable were $1,573,549 and $335,036. This concentration makes the Company vulnerable to a near-term severe impact, should the relationships be terminated.


NOTE 7 - CUSTOMER CONCENTRATION 

The Company sells a substantial portion of its product to a limited number of customers. During the year ended December 31, 2005, sales to the Company’s three largest customers, based on net sales made to such customers, aggregated $10,829,138, or approximately 97% of total net sales, and sales to the company’s largest customer represented approximately 82% of total net sales. At December 31, 2005, amounts due from these customers were $3,962,986. This concentration makes the Company vulnerable to a near-term severe impact, should the relationships be terminated.
 

 
-9-


Supreme Realty Investments, Inc. (SRLV) Unaudited Pro Forma Financial Statements


The following unaudited pro forma financial statements for SRLV have been prepared to illustrate the acquisition of Home System Group, Inc. and Subsidiary in a merger transaction. Under accounting principles generally accepted in the United States, the share exchange is considered to be a capital transaction in substance, rather than a business combination. That is, the share exchange is equivalent to the issuance of stock by Home System Group, Inc. and Subsidiary for the net monetary assets of SRLV, accompanied by a recapitalization, and is accounted for as a change in capital structure. Accordingly, the accounting for the share exchange will be identical to that resulting from a reverse acquisition, except no goodwill will be recorded. Under reverse takeover accounting, the post reverse acquisition comparative historical financial statements of the legal aquirer, SRLV, are those of the legal acquiree, Home System Group, Inc. and Subsidairy, which are considered to be the accounting acquirer.

The unaudited pro forma financial information combines the historical financial information of SRLV and Home System Group, Inc. for the year ended December 31, 2005 and as of and for the three months ended March 31, 2006. The carrying value of the assets and liabilities of Home System Group, Inc. and Subsidiary approximates the fair value of the assets and liabilities. The unaudited pro forma balance sheet as of March 31, 2006 assumes the merger was completed on that date. The unaudited pro forma statements of operations give effect to the merger as if the merger had been completed on January 1, 2005.

Under the terms of the merger agreement, as of the effective dates describe therein, upon completion of the proposed merger, all shareholders of Home System Group, Inc. will receive a total amount of 8,000,000 shares of voting common stock of SRLV in exchange for all shares of Home System Group, Inc. common stock held by all shareholders.

These unaudited pro forma financial statements are for information purposes only. They do not purport to indicate the results that would have actually been obtained had the acquisition been completed on the assumed dates or for the periods presented, or which may be realized in the future. The accounting adjustments reflected in these unaudited pro forma consolidated financial statements included herein are preliminary and are subject to change. The accompanying notes are an integral part of these pro forma consolidated financial statements.

-10-



Income Statement (Consolidated)
       
         
Supreme Realty Investments, Inc.
SRLV
(US)
Home System Group
and Sub
Pro Forma Adjustments
Pro Forma Consolidated
12/31/2005
US$
US$
US$
US$
         
Revenues from Rental Properties
1273
   
1273
Revenue of sales
 
11130194
-
11130194
         
TOTAL REVENUES
1273
11130194
 
11131467
         
Cost of sales
 
9370917
-
9370917
Operations and Maintenance
7379
   
7379
Property Depreciation
32000
167887
 
199887
Finance Cost
77324
246233
 
323557
Salaries, Commissions, & Employee Benefits
32395
   
32395
General & Administrative Expenses
38449
 
-
38449
Depreciation & Amortization
2189
   
2189
         
Total cost and Expense
189736
9785037
 
9974773
         
INCOME BEFORE INVESTMENT ACTIVITIE
-188463
1345157
 
1156694
Gain(Loss)-on Sale of Assets
-2472
   
-2472
Gain(Loss)-on Sale of Properties
-208940
   
-208940
Other revenue
 
621
 
621
         
NET INCOME(LOSS) Before Taxes & Extraordinary Items
-399875
1345778
 
945903
Provision for Income Taxes
       
Extraordinary Gains(Losses)
       
         
NET INCOME(LOSS)
-399875
1345778
 
945903
         
Weighted Average Common Shares Outstanding
4,184,000
80,000,000
 
84,184,000
 
       
NET INCOME per Common Share
     
0.01
NET INCOME per Common Share-Fully Diluted
     
0.01
 

 
-11-


Balance Sheet (Consolidated)
       
         
Supreme Realty Investments, Inc.
       
         
3/31/2006
SRLV
 (US)
Home System Group
and Sub
Pro Forma Adjustments
Pro Forma Consolidated
ASSETS
US$
US$
US$
US$
Current assets
       
Cash and cash equivalents
1,769
147,489
-
149,258
Due from directors
-
3,618
-
3,618
Account receivable
-
9,960,864
-
9,960,864
Trade deposit
-
2,234,609
-
2,234,609
Total Current Assets
1,769
12,346,580
-
12,348,349
 
       
Non-cash acquisiiton
-
-
   
Property, plant and equipment, net
-
-
-
-
 
-
-
-
-
TOTAL ASSETS
1,769
12,346,580
 
12,348,349
         
 
       
LIABILITIES AND STOCKHOLDERS' EQUITY
       
 
       
Current Liabilities
       
Bank loan
-
5,330,295
-
5,330,295
Accounts payable and accured expenses
10,000
4,235,730
-
4,245,730
Due to directors
-
38,718
-
38,718
Total Current Liabilities
10,000
9,604,743
-
9,614,743
 
       
Stockholders’s Equity
       
Common stock
12,500
1,282
78,718
92,500
Additional paid-in capital
670,275
-
-769,724
-99,449
Retained earnings
-691,006
2,740,555
691,006
2,740,555
Total Stockholders’ Equity
-8,231
2,741,837
 
2,733,606
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
1,769
12,346,580
 
12,348,349
 
       
Note to Financial Statements
       
1. Pro forma adjustment reflects the recapitalization based on the issuance of 80,000,000 (pre 10:1 reverse split) shares of Supreme Realty Investments, Inc's Common stock as part of the merger transaction.
       
 

 
-12-


Income Statement (Consolidated)
       
         
Supreme Realty Investments, Inc.
       
3/31/2006
       
 
SRLV
 (US)
Home System Group
and Sub
Pro Forma Adjustments
Pro Forma Consolidated
 
US$
US$
US$
US$
         
Revenue of Sales
-
9,549,040
-
9,549,040
Total Operating income
-
9,549,040
-
9,549,040
 
       
Operating expenses:
       
Cost of sales
-
8,221,967
-
8,221,967
General and administrative
7,929
98,623
-
106,552
Finance Cost
-
98,229
-
98,229
Total operating expenses
7,929
8,418,819
-
8,426,748
 
       
Net income before income tax
-7,929
1,130,221
-
1,122,292
 
       
Provision for income tax
-
-
-
-
Net Income (Loss)
-7,929
1,130,221
-
1,122,292
 
       
Weighted Average Common Shares Outstanding
6,446,000
80,000,000
 
86,446,000
 
       
NET INCOME per Common Share
     
0.01
NET INCOME per Common Share-Fully Diluted
     
0.01

 
 

 
-13-


EX-10.2 HTML

v048995_ex10-2.htm


Execution Copy
 
AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this “Agreement”) has been made as of August 4, 2006, by and among Supreme Realty Investments, Inc., a Nevada corporation (“SRLT”), XY Acquisition Corporation, a Nevada corporation and a wholly-owned Subsidiary of SRLT (Sub”), Home System Group, Inc., a British Virgin Islands corporation (“HSG”), and the shareholders of HSG, each of whom is identified on Schedule A to this Agreement (the “HSG Shareholders”).

Whereas, the respective Boards of Directors of SRLT, Sub and HSG have approved the merger, pursuant and subject to the terms and conditions of this Agreement, of Sub with and into HSG (the “Merger”), whereby all of the issued and outstanding shares of the Common Stock of HSG (the “HSG Common Stock”) will be converted into the right to receive a specified number of shares of the Common Stock of SRLT (the “SRLT Common Stock”); and the parties each desire to make certain representations, warranties and agreements in connection with the Merger and also to prescribe various conditions to the Merger;

Now, Therefore, in consideration of the premises and the representations, warranties and covenants herein contained, the parties agree to effect the Merger on the terms and conditions herein provided and further agree as follows:
ARTICLE 1. definitions
1.1 Definitions.

In addition to the other definitions contained in this Agreement, the following terms will, when used in this Agreement, have the following respective meanings:

Affiliate means a Person that, directly or indirectly, controls, is controlled by, or is under common control with, the referenced party.

“Claim” means any contest, claim, demand, assessment, action, suit, cause of action, complaint, litigation, proceeding, hearing, arbitration, investigation or notice of any of the foregoing involving any Person.

“Closing” means the consummation of the Merger.

“Code” means the Internal Revenue Code of 1986, as amended, together with all rules and regulations promulgated thereunder.

“Constituent Corporations” means HSG and Sub, as the constituent corporations of the Merger.

“GAAP” means United States generally accepted accounting practices.

“GCL” means the Nevada General Corporation Law.

“Person” means and includes any individual, partnership, corporation, trust, company, unincorporated organization, joint venture or other entity, and any Governmental Entity.


“Record Holder” means a holder of record of HSG Common Stock as shown on the regularly maintained stock transfer records of HSG.

“Subsidiary” means, with respect to any Person, any corporation, partnership, joint venture, trust or other entity of which such Person, directly or indirectly through an Affiliate, owns an amount of voting securities, or possesses other ownership interests, having the power, direct or indirect, to elect a majority of the Board of Directors or other governing body thereof.

“Surviving Corporation” means HSG, as the surviving corporation of the Merger.

“U.S.” means the United States of America.
 
1.2 Interpretation.

In this Agreement, unless the express context otherwise requires:

(a) the words “herein,” “hereof” and “hereunder and words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement;

(b) references to “Article” or “Section” are to the respective Articles and Sections of this Agreement, and references to “Exhibit” or “Schedule” are to the respective Exhibits and Schedules annexed hereto;

(c) references to a “party” means a party to this Agreement and include references to such party’s successors and permitted assigns;

(d) references to a “third party” means a Person that is neither a Party to this Agreement nor an Affiliate thereof;

(e) the terms “dollars” and “$ means U.S. dollars;

(f) terms defined in the singular have a comparable meaning when used in the plural, and vice versa;

(g) the masculine pronoun includes the feminine and the neuter, and vice versa, as appropriate in the context; and

(h)  wherever the word “include,” “includes” or “including is used in this Agreement, it will be deemed to be followed by the words “without limitation.”
 
ARTICLE 2. THE MERGER
 
2.1 Effective Time of the Merger.

Subject to the provisions of this Agreement, the Merger will be consummated by the filing with the Secretary of State of the State of Nevada of articles of merger, in such form as required by, and signed and attested in accordance with, the relevant provisions of the GCL (the time of such filing or such later time and date as is specified in such filing being the “Effective Time”).
 
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2.2 Closing.

The Closing will take place at 10:00 a.m., local time, on the earliest date practicable after all of the conditions set forth in Article 9 are satisfied or waived by the appropriate party, but in no event later than the applicable date referred to in Section 10.1(d) (the “Closing Date”), unless another time, date or place is agreed to in writing by the parties.
 
2.3 Effects of the Merger.

By virtue of the Merger and without the necessity of any action by or on behalf of the Constituent Corporations, or either of them:

(a) at the Effective Time, (i) the separate existence of Sub will cease, and Sub will be merged with and into HSG, and (ii) the certificate of incorporation and bylaws of HSG as in effect immediately prior to the Effective Time will be the certificate of incorporation and bylaws of the Surviving Corporation until thereafter amended; and

(b) at and after the Effective Time, the Surviving Corporation will possess all the rights, privileges, powers and franchises of a public as well as of a private nature, and be subject to all the restrictions, disabilities and duties, of each of the Constituent Corporations; and all property, real, personal and mixed, and all debts due to either of the Constituent Corporations on whatever account, as well for stock subscriptions as all other things in action or belonging to each of the Constituent Corporations will be vested in the Surviving Corporation; and all property, rights, privileges, powers and franchises, and all and every other interest will be thereafter as effectually be the property of the Surviving Corporation as they were of the respective Constituent Corporations, and the title to any real estate vested by deed or otherwise, in either of the Constituent Corporations, will not revert or be in any way impaired; but all rights of creditors and all liens upon any property of either of the Constituent Corporations will be preserved unimpaired, and all debts, liabilities and duties of the respective Constituent Corporations will thereafter attach to the Surviving Corporation, and may be enforced against it to the same extent as if such debts and liabilities had been incurred or contracted by it.
 
ARTICLE 3. EFFECT OF MERGER ON CAPITAL STOCK
 
3.1 Effect on Capital Stock.

As of the Effective Time, by virtue of the Merger and without any action on the part of any holder of shares of HSG Common Stock or of shares of the capital stock of Sub:

(a)  Capital Stock of Sub. Each issued and outstanding share of the capital stock of Sub will be converted into the right to receive one fully paid and non-assessable share of the capital stock of the Surviving Corporation.

(b) Cancellation of Treasury Stock. Shares of HSG Common Stock, if any, that are held by HSG as treasury stock will be cancelled and retired and will cease to exist, and no Merger Consideration will be delivered in exchange therefor. Shares of Supreme Realty Investments, Inc. Common Stock, if any, owned by HSG as of the Effective Time will remain unaffected by the Merger.


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(c) Exchanged Shares; Merger Consideration.

(i) “Exchanged Shares” means all shares of HSG Common Stock issued and outstanding immediately prior to the Effective Time other than shares of HSG Common Stock, if any, held by HSG as treasury stock.

(ii) The consideration payable in the Merger will consist of an aggregate of eight million (8,000,000) shares of Supreme Realty Investments, Inc. Common Stock, which shall be distributed among the HSG Shareholders in accordance with Schedule A hereto (the “Stock Merger Consideration”).

(iii) “Merger Consideration” means the Stock Merger Consideration.

(d) Exchange of Exchanged Shares for Merger Consideration. As of the Effective Time, by virtue of the Merger, each issued and outstanding Exchanged Share will be converted into the right to receive the Merger Consideration, payable, to the Record Holders of Exchanged Shares at the Effective Time. As of the Effective Time, all shares of HSG Common Stock will no longer be outstanding and will automatically be cancelled and retired and will cease to exist, and each holder of a certificate representing any such shares will cease to have any rights with respect thereto, except the right to receive the Merger Consideration therefor, without interest, upon the surrender of such certificate in accordance with Section 3.2.
 
3.2 Exchange of Merger Consideration for Exchanged Shares.

(a) Exchange. On the Closing Date, the holders of all of the HSG Common Stock shall deliver to Supreme Realty Investments, Inc. certificates or other documents evidencing all of the issued and outstanding HSG Common Stock, duly endorsed in blank or with executed power attached thereto in transferable form. In exchange for all of the HSG Common Stock tendered pursuant hereto, Supreme Realty Investments, Inc. shall issue to HSG Shareholders the Stock Merger Consideration.

(b) No Further Ownership Rights in HSG Common Stock. All shares of Supreme Realty Investments, Inc. Common Stock issued upon the surrender for exchange of shares of HSG Common Stock in accordance with the terms hereof will be deemed to have been issued in full satisfaction of all rights pertaining to such shares of HSG Common Stock, and there will be no further registration of transfers of the shares of HSG Common Stock (other than shares held directly or indirectly by Supreme Realty Investments, Inc.) after the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation or its transfer agent for any reason, such Certificates will be cancelled and exchanged as provided by this Article 3.

ARTICLE 4.  REPRESENTATIONS AND WARRANTIES OF HSG

HSG represents and warrants to Supreme Realty Investments, Inc. and to Sub as follows, as of the date hereof and as of the Closing Date:

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4.1 Organization.

HSG is a corporation duly organized, validly existing and in good standing under the laws of British Virgin Island and has the corporate power and is duly authorized, qualified, franchised and licensed under all applicable laws, regulations, ordinances and orders of public authorities to own all of its properties and assets and to carry on its business in all material respects as it is now being conducted, including qualification to do business as a foreign entity in the country or states in which the character and location of the assets owned by it or the nature of the business transacted by it requires qualification. Included in the attached Schedules (as hereinafter defined) are complete and correct copies of the articles of incorporation, bylaws and amendments thereto as in effect on the date hereof. The execution and delivery of this Agreement does not and the consummation of the transactions contemplated by this Agreement in accordance with the terms hereof will not, violate any provision of HSG’s certificate of incorporation or bylaws. HSG has full power, authority and legal right and has taken all action required by law, its articles of incorporation, bylaws or otherwise to authorize the execution and delivery of this Agreement.

4.2 Capitalization.

The authorized capitalization of HSG consists of 50,000 shares of common stock, no par value and no preferred shares. As of the date hereof, there are 50,000 shares of common stock issued and outstanding. All issued and outstanding common shares have been legally issued, fully paid, are nonassessable and not issued in violation of the preemptive rights of any other person. HSG has no other securities, warrants or options authorized or issued.

4.3 Subsidiaries.

HSG owns 100% of Oceanic International (Hong Kong) Limited, a Hong Kong, China corporation.

4.4 Tax Matters; Books & Records

(a) The books and records, financial and others, of HSG are in all material respects complete and correct and have been maintained in accordance with good business accounting practices; and

(b) HSG has no liabilities with respect to the payment of any country, federal, state, county, local or other taxes (including any deficiencies, interest or penalties).

(c) HSG shall remain responsible for all debts incurred prior to the closing.

4.5 Information.

The information concerning HSG as set forth in this Agreement and in the attached Schedules is complete and accurate in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact required to make the statements made, in light of the circumstances under which they were made, not misleading.

4.6 Title and Related Matters.

HSG has good and marketable title to and is the sole and exclusive owner of all of its properties, inventory, interests in properties and assets, real and personal (collectively, the “Assets”) free and clear of all liens, pledges, charges or encumbrances. Except as set forth in the Schedules attached hereto, HSG owns free and clear of any liens, claims, encumbrances, royalty interests or other restrictions or limitations of any nature whatsoever and all procedures, techniques, marketing plans, business plans, methods of management or other information utilized in connection with HSG’s business. Except as set forth in the attached Schedules, no third party has any right to, and HSG has not received any notice of infringement of or conflict with asserted rights of others with respect to any product, technology, data, trade secrets, know-how, proprietary techniques, trademarks, service marks, trade names or copyrights which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a materially adverse affect on the business, operations, financial conditions or income of HSG or any material portion of its properties, assets or rights.

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4.7 Litigation and Proceedings

There are no actions, suits or proceedings pending or threatened by or against or affecting HSG, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign or before any arbitrator of any kind that would have a material adverse effect on the business, operations, financial condition, income or business prospects of HSG. HSG does not have any knowledge of any default on its part with respect to any judgment, order, writ, injunction, decree, award, rule or regulation of any court, arbitrator or governmental agency or instrumentality.

4.8 Contracts.

On the Closing Date:

(a) Except as set forth on Schedule, there are no material contracts, agreements, franchises, license agreements, or other commitments to which HSG is a party or by which it or any of its properties are bound;

(b) HSG is not a party to any contract, agreement, commitment or instrument or subject to any charter or other corporate restriction or any judgment, order, writ, injunction, decree or award which materially and adversely affects, or in the future may (as far as HSG can now foresee) materially and adversely affect, the business, operations, properties, assets or conditions of HSG; and

(c) HSG is not a party to any material oral or written: (i) contract for the employment of any officer or employee; (ii) profit sharing, bonus, deferred compensation, stock option, severance pay, pension, benefit or retirement plan, agreement or arrangement covered by Title IV of the Employee Retirement Income Security Act, as amended; (iii) agreement, contract or indenture relating to the borrowing of money; (iv) guaranty of any obligation for the borrowing of money or otherwise, excluding endorsements made for collection and other guaranties of obligations, which, in the aggregate exceeds $1,000; (v) consulting or other contract with an unexpired term of more than one year or providing for payments in excess of $10,000 in the aggregate; (vi) collective bargaining agreement; or (vii) contract, agreement, or other commitment involving payments by it for more than $10,000 in the aggregate.

4.9 No Conflict With Other Instruments.

The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the breach of any term or provision of, or constitute an event of default under, any material indenture, mortgage, deed of trust or other material contract, agreement or instrument to which HSG is a party or to which any of its properties or operations are subject.

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4.10 Material Contract Defaults.

To the best of HSG’s knowledge and belief, it is not in default in any material respect under the terms of any outstanding contract, agreement, lease or other commitment which is material to the business, operations, properties, assets or condition of HSG, and there is no event of default in any material respect under any such contract, agreement, lease or other commitment in respect of which HSG has not taken adequate steps to prevent such a default from occurring.

4.11  Governmental Authorizations.

To the best of HSG’s knowledge, HSG has all licenses, franchises, permits and other governmental authorizations that are legally required to enable it to conduct its business operations in all material respects as conducted on the date hereof. Except for compliance with federal and state securities or corporation laws, no authorization, approval, consent or order of, or registration, declaration or filing with, any court or other governmental body is required in connection with the execution and delivery by HSG of the transactions contemplated hereby.

4.12 Compliance With Laws and Regulations.

To the best of HSG’s knowledge and belief, HSG has complied with all applicable statutes and regulations of any federal, state or other governmental entity or agency thereof, except to the extent that noncompliance would not materially and adversely affect the business, operations, properties, assets or condition of HSG or would not result in HSG’s incurring any material liability.

4.13 Insurance.

All of the insurable properties of HSG are insured for HSG’s benefit under valid and enforceable policy or policies containing substantially equivalent coverage and will be outstanding and in full force at the Closing Date.

4.14 Approval of Agreement.

The directors of HSG have authorized the execution and delivery of the Agreement and have approved the transactions contemplated hereby.

4.15 Material Transactions or Affiliations.

As of the Closing Date, there will exist no material contract, agreement or arrangement between HSG and any person who was at the time of such contract, agreement or arrangement an officer, director or person owning of record, or known by HSG to own beneficially, ten percent (10%) or more of the issued and outstanding Common Shares of HSG and which is to be performed in whole or in part after the date hereof. HSG has no commitment, whether written or oral, to lend any funds to, borrow any money from or enter into any other material transactions with, any such affiliated person.

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ARTICLE 5.  REPRESENTATIONS AND WARRANTIES OF SUPREME REALTY INVESTMENTS, INC.

Supreme Realty Investments, Inc. represents and warrants to HSG, as of the date hereof and as of the Closing Date, as follows:

5.1 Organization.

Supreme Realty Investments, Inc. is a corporation duly organized, validly existing, and in good standing under the laws of Nevada and has the corporate power and is duly authorized, qualified, franchised and licensed under all applicable laws, regulations, ordinances and orders of public authorities to own all of its properties and assets and to carry on its business in all material respects as it is now being conducted, including qualification to do business as a foreign corporation in the jurisdiction in which the character and location of the assets owned by it or the nature of the business transacted by it requires qualification. The execution and delivery of this Agreement does not and the consummation of the transactions contemplated by this Agreement in accordance with the terms hereof will not violate any provision of Supreme Realty Investments, Inc.’s articles of incorporation or bylaws. Supreme Realty Investments, Inc. has full power, authority and legal right and has taken all action required by law, its articles of incorporation, its bylaws or otherwise to authorize the execution and delivery of this Agreement.

5.2 Capitalization.

The authorized capitalization of Supreme Realty Investments, Inc. consists of 200,000,000 shares of common stock, $0.001 par value per share. As of the date hereof, Supreme Realty Investments, Inc. has approximately 6,754,000 shares of common stock issued and outstanding. All issued and outstanding shares are legally issued, fully paid and nonassessable and are not issued in violation of the preemptive or other rights of any person.

5.3 Subsidiaries.

Supreme Realty Investments, Inc. has no subsidiaries other than Sub.

5.4 Tax Matters: Books and Records.

(a) The books and records, financial and others, of Supreme Realty Investments, Inc. are in all material respects complete and correct and have been maintained in accordance with good business accounting practices; and

(b) Supreme Realty Investments, Inc. has no liabilities with respect to the payment of any country, federal, state, county, or local taxes (including any deficiencies, interest or penalties).

(c) Supreme Realty Investments, Inc. shall remain responsible for all debts incurred by Supreme Realty Investments, Inc. prior to the date of closing.

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5.5 Litigation and Proceedings.

There are no actions, suits, proceedings or investigations pending or threatened by or against or affecting Supreme Realty Investments, Inc. or its properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign or before any arbitrator of any kind that would have a material adverse affect on the business, operations, financial condition or income of Supreme Realty Investments, Inc. Supreme Realty Investments, Inc. is not in default with respect to any judgment, order, writ, injunction, decree, award, rule or regulation of any court, arbitrator or governmental agency or instrumentality or of any circumstances which, after reasonable investigation, would result in the discovery of such a default.

5.6 Material Contract Defaults.

Supreme Realty Investments, Inc. is not in default in any material respect under the terms of any outstanding contract, agreement, lease or other commitment which is material to the business, operations, properties, assets or condition of Supreme Realty Investments, Inc., and there is no event of default in any material respect under any such contract, agreement, lease or other commitment in respect of which Supreme Realty Investments, Inc. has not taken adequate steps to prevent such a default from occurring.

5.7 Information.

The information concerning Supreme Realty Investments, Inc. as set forth in this Agreement and in the attached Schedules is complete and accurate in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact required to make the statements made in light of the circumstances under which they were made, not misleading.

5.8 Title and Related Matters.

Supreme Realty Investments, Inc. has good and marketable title to and is the sole and exclusive owner of all of its properties, inventory, interest in properties and assets, real and personal (collectively, the “Assets”) free and clear of all liens, pledges, charges or encumbrances. Supreme Realty Investments, Inc. owns free and clear of any liens, claims, encumbrances, royalty interests or other restrictions or limitations of any nature whatsoever and all procedures, techniques, marketing plans, business plans, methods of management or other information utilized in connection with Supreme Realty Investments, Inc.’s business. No third party has any right to, and Supreme Realty Investments, Inc. has not received any notice of infringement of or conflict with asserted rights of other with respect to any product, technology, data, trade secrets, know-how, proprietary techniques, trademarks, service marks, trade names or copyrights which, singly on in the aggregate, if the subject of an unfavorable decision ruling or finding, would have a materially adverse affect on the business, operations, financial conditions or income of Supreme Realty Investments, Inc. or any material portion of its properties, assets or rights.

5.9 Contracts.

On the Closing Date:

(a) There are no material contracts, agreements franchises, license agreements, or other commitments to which Supreme Realty Investments, Inc. is a party or by which it or any of its properties are bound;

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(b) Supreme Realty Investments, Inc. is not a party to any contract, agreement, commitment or instrument or subject to any charter or other corporate restriction or any judgment, order, writ, injunction, decree or award materially and adversely affects, or in the future may (as far as Supreme Realty Investments, Inc. can now foresee) materially and adversely affect, the business, operations, properties, assets or conditions of Supreme Realty Investments, Inc.; and

(c) Supreme Realty Investments, Inc. is not a party to any material oral or written: (i) contract for the employment of any officer or employee; (ii) profit sharing, bonus, deferred compensation, stock option, severance pay, pension benefit or retirement plan, agreement or arrangement covered by Title IV of the Employee Retirement Income Security Act, as amended; (iii) agreement, contract or indenture relating to the borrowing of money; (iv) guaranty of any obligation for the borrowing of money or otherwise, excluding endorsements made for collection and other guaranties, of obligations, which, in the aggregate exceeds $1,000; (v) consulting or other contract with an unexpired term of more than one year or providing for payments in excess of $10,000 in the aggregate; (vi) collective bargaining agreement; (vii) contract, agreement or other commitment involving payments by it for more than $10,000 in the aggregate.

5.10 Compliance With Laws and Regulations.

To the best of Supreme Realty Investments, Inc.’s knowledge and belief, Supreme Realty Investments, Inc. has complied with all applicable statutes and regulations of any federal, state or other governmental entity or agency thereof, except to the extent that noncompliance would not materially and adversely affect the business, operations, properties, assets or condition of Supreme Realty Investments, Inc. or would not result in Supreme Realty Investments, Inc. incurring material liability.

5.11 Insurance.

Supreme Realty Investments, Inc. maintains no insurance policies.

5.12 Approval of Agreement.

The directors of Supreme Realty Investments, Inc. have authorized the execution and delivery of the Agreement by and have approved the transactions contemplated hereby.

5.13 Material Transactions or Affiliations.

There are no material contracts or agreements of arrangement between Supreme Realty Investments, Inc. and any person, who was at the time of such contract, agreement or arrangement an officer, director or person owning of record, or known to beneficially own ten percent (10%) or more of the issued and outstanding Common Shares of Supreme Realty Investments, Inc. and which is to be performed in whole or in part after the date hereof. Except as disclosed in the attached Schedule, Supreme Realty Investments, Inc. has no commitment, whether written or oral, to lend any funds to, borrow any money from or enter into material transactions with any such affiliated person.

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5.14 No Conflict With Other Instruments.

The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the breach of any term or provision of, or constitute an event of default under, any material indenture, mortgage, deed of trust or other material contract, agreement or instrument to which Supreme Realty Investments, Inc. is a party or to which any of its properties or operations are subject.

5.15 Governmental Authorizations.

Supreme Realty Investments, Inc. has all licenses, franchises, permits or other governmental authorizations legally required to enable it to conduct its business in all material respects as conducted on the date hereof. Except for compliance with federal and state securities and corporation laws, as hereinafter provided, no authorization, approval, consent or order of, or registration, declaration or filing with, any court or other governmental body is required in connection with the execution and delivery by Supreme Realty Investments, Inc. of this Agreement and the consummation of the transactions contemplated hereby.

ARTICLE 6.  SPECIAL COVENANTS

6.1 Access to Properties and Records.

Prior to closing, Supreme Realty Investments, Inc. and HSG will each afford to the officers and authorized representatives of the other full access to the properties, books and records of each other, in order that each may have full opportunity to make such reasonable investigation as it shall desire to make of the affairs of the other and each will furnish the other with such additional financial and operating data and other information as to the business and properties of each other, as the other shall from time to time reasonably request.

6.2 Availability of Rule 144.

Supreme Realty Investments, Inc. and HSG Shareholders holding “restricted securities, “ as that term is defined in Rule 144 promulgated pursuant to the Securities Act will remain as “restricted securities”. Supreme Realty Investments, Inc. is under no obligation to register such shares under the Securities Act, or otherwise. The stockholders of Supreme Realty Investments, Inc. and HSG holding restricted securities of Supreme Realty Investments, Inc. and HSG as of the date of this Agreement and their respective heirs, administrators, personal representatives, successors and assigns, are intended third party beneficiaries of the provisions set forth herein. The covenants set forth in this Section 6.2 shall survive the Closing and the consummation of the transactions herein contemplated.

6.3 The Stock Merger Consideration.

The consummation of this Agreement, including the issuance of the Supreme Realty Investments, Inc. Common Shares to the HSG Shareholders as contemplated hereby, constitutes the offer and sale of securities under the Securities Act, and applicable state statutes. Such transaction shall be consummated in reliance on exemptions from the registration and prospectus delivery requirements of such statutes that depend, inter alia, upon the circumstances under which the HSG Shareholders acquire such securities.

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6.4 Third Party Consents.

Supreme Realty Investments, Inc. and HSG agree to cooperate with each other in order to obtain any required third party consents to this Agreement and the transactions herein contemplated.

6.5 Actions Prior and Subsequent to Closing.

(a) From and after the date of this Agreement until the Closing Date, except as permitted or contemplated by this Agreement, Supreme Realty Investments, Inc. and HSG will each use its best efforts to:

(i) maintain and keep its properties in states of good repair and condition as at present, except for depreciation due to ordinary wear and tear and damage due to casualty;

(ii) maintain in full force and effect insurance comparable in amount and in scope of coverage to that now maintained by it; and

(iii) perform in all material respects all of its obligations under material contracts, leases and instruments relating to or affecting its assets, properties and business.

(b) From and after the date of this Agreement until the Closing Date, Supreme Realty Investments, Inc. will not, without the prior consent of HSG:

(i) except as otherwise specifically set forth herein, make any change in its articles of incorporation or bylaws;

(ii) declare or pay any dividend on its outstanding Common Shares, except as may otherwise be required by law, or effect any stock split or otherwise change its capitalization, except as provided herein;

(iii) enter into or amend any employment, severance or agreements or arrangements with any directors or officers;

(iv) grant, confer or award any options, warrants, conversion rights or other rights not existing on the date hereof to acquire any Common Shares; or

(v) purchase or redeem any Common Shares.

6.6 Indemnification.

(a) Supreme Realty Investments, Inc. hereby agrees to indemnify HSG, each of the officers, agents and directors and current shareholders of HSG as of the Closing Date against any loss, liability, claim, damage or expense (including, but not limited to, any and all expense whatsoever reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened or any claim whatsoever), to which it or they may become subject to or rising out of or based on any inaccuracy appearing in or misrepresentation made in this Agreement. The indemnification provided for in this paragraph shall survive the Closing and consummation of the transactions contemplated hereby and termination of this Agreement; and

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(b) HSG hereby agrees to indemnify Supreme Realty Investments, Inc., each of the officers, agents, directors and current shareholders of Supreme Realty Investments, Inc. as of the Closing Date against any loss, liability, claim, damage or expense (including, but not limited to, any and all expense whatsoever reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened or any claim whatsoever), to which it or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentation made in this Agreement. The indemnification provided for in this paragraph shall survive the Closing and consummation of the transactions contemplated hereby and termination of this Agreement.

6.7 HSG Shareholder Representations. Each of the HSG Shareholders represents and warrants as follows:

(a) as of the date of this Agreement each of the HSG Shareholders was, and at the Closing Date it is, an “accredited investor” as defined in Rule 501(a) under the Securities Act. Such HSG Shareholder has not been formed solely for the purpose of acquiring the SRLT Common Stock. Each HSG Shareholder is not a registered broker-dealer under Section 15 of the Exchange Act.

(b) each of the HSG Shareholders are knowledgeable and experienced in finance and business matters and thus they are able to evaluate the risks and merits of acquiring the shares of Common Stock of Supreme Realty Investments, Inc.;

(c) each of the HSG Shareholders are able to bear the economic risk of purchasing the Supreme Realty Investments, Inc. common stock;

(d) Supreme Realty Investments, Inc. has provided the HSG Shareholders with access to the type of information normally provided in a prospectus;

(e) Supreme Realty Investments, Inc. did not use any form of public solicitation or general advertising in connection with the issuance of the shares;

(f) as to the following HSG Shareholders (Yimin Zhang, Weiyi Lv, Xiaochun Wang, Zhongsheng Bao, Simple (Hongkong) Investment & Management Company Limited, First Capital Limited and Shenzhen Dingyi Investment & Consulting Limited, collectively the “Offshore HSG Shareholders”)  the offer of such securities was not made to a person in the United States and either (A) at the time the buy order was originated, each of the Offshore HSG Shareholders was outside the United States (in China), or Supreme Realty Investments, Inc. and any person acting on its behalf reasonably believed that each Offshore HSG Shareholders was outside the United States, or (B) the transaction was not executed on or through the facilities of the Over the Counter Bulletin Board and neither Supreme Realty Investments, Inc. nor any person acting on its behalf knows that the transaction has been prearranged with a person in the United States; 
 
(g) the transactions contemplated hereby are bona fide and not for the purpose of “washing off’ the resale restrictions imposed because the securities are “restricted securities” (as that term is defined in Rule 144(a)(3) under the 1933 Act);
 
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(h) each of the HSG Shareholders understands and acknowledges that none of the SRLT Common Stock has been registered under the Securities Act. Each HSG Shareholder is acquiring the SRLT Common Stock as principal for its own account and not with a view to or for distributing or reselling such securities or any part thereof, without prejudice, however, to such HSG Shareholder's right, subject to the provisions of this Agreement, at all times to sell or otherwise dispose of all or any part of such securities pursuant to an effective registration statement under the Securities Act or under an exemption from such registration and in compliance with applicable federal and state securities laws. Nothing contained herein shall be deemed a representation or warranty by such HSG Shareholder to hold the securities for any period of time. Such HSG Shareholder is acquiring the SRLT Common Stock hereunder in the ordinary course of its business. Such HSG Shareholders does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the SRLT Common Stock.
 
ARTICLE 7. CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF SUPREME REALTY INVESTMENTS, INC. AND SUB

The obligations of Supreme Realty Investments, Inc. and Sub under this Agreement are subject to the satisfaction, at or before the Closing Date, of the following conditions:

7.1 Accuracy of Representations.

The representations and warranties made by HSG in this Agreement were true when made and shall be true at the Closing Date with the same force and effect as if such representations and warranties were made at the Closing Date (except for changes therein permitted by this Agreement), and HSG shall have performed or compiled with all covenants and conditions required by this Agreement to be performed or complied with by HSG prior to or at the Closing HSG shall be furnished with a certificate, signed by a duly authorized officer of HSG and dated the Closing Date, to the foregoing effect.

7.2 Director Approval.

The Board of Directors of Supreme Realty Investments, Inc. shall have approved this Agreement and the transactions contemplated herein.

7.3 Officer’s Certificate.

Supreme Realty Investments, Inc. shall have been furnished with a certificate dated the Closing Date and signed by a duly authorized officer of HSG to the effect that: (a) the representations and warranties of HSG set forth in the Agreement and in all exhibits, schedules and other documents furnished in connection herewith are in all material respects true and correct as if made on the Effective Date; (b) HSG has performed all covenants, satisfied all conditions, and complied with all other terms and provisions of this Agreement to be performed, satisfied or complied with by it as of the Effective Date; (c) since such date and other than as previously disclosed to Supreme Realty Investments, Inc., HSG has not entered into any material transaction other than transactions which are usual and in the ordinary course if its business; and (d) no litigation, proceeding, investigation or inquiry is pending or, to the best knowledge of HSG, threatened, which might result in an action to enjoin or prevent the consummation of the transactions contemplated by this Agreement or, to the extent not disclosed in the HSG Schedules, by or against HSG which might result in any material adverse change in any of the assets, properties, business or operations of HSG.

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7.4 No Material Adverse Change.

Prior to the Closing Date, there shall not have occurred any material adverse change in the financial condition, business or operations of nor shall any event have occurred which, with the lapse of time or the giving of notice, may cause or create any material adverse change in the financial condition, business or operations of HSG.

7.5 Other Items.

Supreme Realty Investments, Inc. shall have received such further documents, certificates or instruments relating to the transactions contemplated hereby as Supreme Realty Investments, Inc. may reasonably request.

ARTICLE 8.  CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF HSG AND THE HSG SHAREHOLDERS

The obligations of HSG and the HSG Shareholders under this Agreement are subject to the satisfaction, at or before the Closing date (unless otherwise indicated herein), of the following conditions:

8.1 Accuracy of Representations.

The representations and warranties made by Supreme Realty Investments, Inc. in this Agreement were true when made and shall be true as of the Closing Date (except for changes therein permitted by this Agreement) with the same force and effect as if such representations and warranties were made at and as of the Closing Date, and Supreme Realty Investments, Inc. shall have performed and complied with all covenants and conditions required by this Agreement to be performed or complied with by Supreme Realty Investments, Inc. prior to or at the Closing. HSG shall have been furnished with a certificate, signed by a duly authorized executive officer of Supreme Realty Investments, Inc. and dated the Closing Date, to the foregoing effect.

8.2 Director Approval.

The Board of Directors of HSG shall have approved this Agreement and the transactions contemplated herein.

8.3 No Material Adverse Change.

Prior to the Closing Date, there shall not have occurred any material adverse change in the financial condition, business or operations of nor shall any event have occurred which, with the lapse of time or the giving of notice, may cause or create any material adverse change in the financial condition, business or operations of Supreme Realty Investments, Inc.
 
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ARTICLE 9. TERMINATION
 
9.1 Termination Rights.

(a) This Agreement may be terminated by the board of directors or majority interest of Shareholders of either Supreme Realty Investments, Inc. or HSG, respectively, at any time prior to the Closing Date if:

(i) there shall be any action or proceeding before any court or any governmental body which shall seek to restrain, prohibit or invalidate the transactions contemplated by this Agreement and which, in the judgment of such board of directors, made in good faith and based on the advice of its legal counsel, makes it inadvisable to proceed with the exchange contemplated by this Agreement; or

(ii) any of the transactions contemplated hereby are disapproved by any regulatory authority whose approval is required to consummate such transactions.

In the event of termination pursuant to this paragraph (a), no obligation, right, or liability shall arise hereunder and each party shall bear all of the expenses incurred by it in connection with the negotiation, drafting and execution of this Agreement and the transactions herein contemplated.

(b) This Agreement may be terminated at any time prior to the Closing Date by action of the board of directors of Supreme Realty Investments, Inc. if HSG shall fail to comply in any material respect with any of its covenants or agreements contained in this Agreement or if any of the representations or warranties of HSG contained herein shall be inaccurate in any material respect, which noncompliance or inaccuracy is not cured after 20 days written notice thereof is given to HSG. If this Agreement is terminated pursuant to this paragraph (b), this Agreement shall be of no further force or effect and no obligation, right or liability shall arise hereunder.

(c) This Agreement may be terminated at any time prior to the Closing Date by action of the board of directors of HSG if Supreme Realty Investments, Inc. shall fail to comply in any material respect with any of its covenants or agreements contained in this Agreement or if any of the representations or warranties of Supreme Realty Investments, Inc. contained herein shall be inaccurate in any material respect, which noncompliance or inaccuracy is not cured after 20 days written notice thereof is given to Supreme Realty Investments, Inc. If this Agreement is terminated pursuant to this paragraph (d), this Agreement shall be of no further force or effect and no obligation, right or liability shall arise hereunder.

(d) In the event of termination pursuant to paragraph (b) and (c) hereof, the breaching party shall bear all of the expenses incurred by the other party in connection with the negotiation, drafting and execution of this Agreement and the transactions herein contemplated.

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ARTICLE 10. MISCELLANEOUS

10.1 Brokers and Finders.

Each party hereto hereby represents and warrants that it is under no obligation, express or implied, to pay certain finders in connection with the bringing of the parties together in the negotiation, execution, or consummation of this Agreement. The parties each agree to indemnify the other against any claim by any third person for any commission, brokerage or finder’s fee or other payment with respect to this Agreement or the transactions contemplated hereby based on any alleged agreement or understanding between the indemnifying party and such third person, whether express or implied from the actions of the indemnifying party.

10.2 Law, Forum and Jurisdiction.

This Agreement shall be construed and interpreted in accordance with the laws of the State of New York, United States of America, except for applicable provisions of the Nevada General Corporation Law, which shall control to the extent applicable.

10.3 Notices.

Any notices or other communications required or permitted hereunder shall be sufficiently given if personally delivered to it or sent by registered mail or certified mail, postage prepaid, or by prepaid telegram addressed as follows:

If to Supreme Realty Investments, Inc.: 10880 Wilshire Blvd Suite 2250, Los Angeles, CA 90024

If to HSG: No. 264-298 Qingshan Road, Nanfeng Center Suite 1905, Quanwan Xingjie, Hong Kong

or such other addresses as shall be furnished in writing by any party in the manner for giving notices hereunder, and any such notice or communication shall be deemed to have been given as of the date so delivered, mailed or telegraphed.

10.4 Attorneys’ Fees.

In the event that any party institutes any action or suit to enforce this Agreement or to secure relief from any default hereunder or breach hereof, the breaching party or parties shall reimburse the non-breaching party or parties for all costs, including reasonable attorneys’ fees, incurred in connection therewith and in enforcing or collecting any judgment rendered therein.

10.5 Confidentiality.

Each party hereto agrees with the other party that, unless and until the transactions contemplated by this Agreement have been consummated, they and their representatives will hold in strict confidence all data and information obtained with respect to another party or any subsidiary thereof from any representative, officer, director or employee, or from any books or records or from personal inspection, of such other party, and shall not use such data or information or disclose the same to others, except: (i) to the extent such data is a matter of public knowledge or is required by law to be published; and (ii) to the extent that such data or information must be used or disclosed in order to consummate the transactions contemplated by this Agreement.

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10.6 Schedules; Knowledge.

Each party is presumed to have full knowledge of all information set forth in the other party’s schedules delivered pursuant to this Agreement.

10.7 Third Party Beneficiaries.

This contract is solely among the parties hereto and except as specifically provided, no director, officer, stockholder, employee, agent, independent contractor or any other person or entity shall be deemed to be a third party beneficiary of this Agreement.

10.8 Entire Agreement.

This Agreement represents the entire agreement between the parties relating to the subject matter hereof. This Agreement alone fully and completely expresses the agreement of the parties relating to the subject matter hereof. There are no other courses of dealing, understanding, agreements, representations or warranties, written or oral, except as set forth herein. This Agreement may not be amended or modified, except by a written agreement signed by all parties hereto.

10.9 Survival; Termination.

The representations, warranties and covenants of the respective parties shall survive the Closing Date and the consummation of the transactions herein contemplated for 18 months.

10.10 Counterparts.

This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be but a single instrument.

10.11 Amendment or Waiver.

Every right and remedy provided herein shall be cumulative with every other right and remedy, whether conferred herein, at law, or in equity, and may be enforced concurrently herewith, and no waiver by any party of the performance of any obligation by the other shall be construed as a waiver of the same or any other default then, theretofore, or thereafter occurring or existing. At any time prior to the Closing Date, this Agreement may be amended by a by all parties hereto, with respect to any of the terms contained herein, and any term or condition of this Agreement may be waived or the time for performance hereof may be extended by the party or parties for whose benefit the provision is intended.

10.12 Expenses.

Each party herein shall bear all of their respective cost s and expenses incurred in connection with the negotiation of this Agreement and in the consummation of the transactions provided for herein and the preparation thereof.

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10.13 Headings; Context.

The headings of the sections and paragraphs contained in this Agreement are for convenience of reference only and do not form a part hereof and in no way modify, interpret or construe the meaning of this Agreement.

10.14 Benefit.

This Agreement shall be binding upon and shall inure only to the benefit of the parties hereto, and their permitted assigns hereunder. This Agreement shall not be assigned by any party without the prior written consent of the other party.

10.15 Public Announcements.

Except as may be required by law, neither party shall make any public announcement or filing with respect to the transactions provided for herein without the prior consent of the other party hereto.

10.16 Severability.

In the event that any particular provision or provisions of this Agreement or the other agreements contained herein shall for any reason hereafter be determined to be unenforceable, or in violation of any law, governmental order or regulation, such unenforceability or violation shall not affect the remaining provisions of such agreements, which shall continue in full force and effect and be binding upon the respective parties hereto.

10.17 Failure of Conditions; Termination.

In the event of any of the conditions specified in this Agreement shall not be fulfilled on or before the Closing Date, either of the parties have the right either to proceed or, upon prompt written notice to the other, to terminate and rescind this Agreement. In such event, the party that has failed to fulfill the conditions specified in this Agreement will liable for the other parties legal fees. The election to proceed shall not affect the right of such electing party reasonably to require the other party to continue to use its efforts to fulfill the unmet conditions.

10.18 No Strict Construction.

The language of this Agreement shall be construed as a whole, according to its fair meaning and intendment, and not strictly for or against either party hereto, regardless of who drafted or was principally responsible for drafting the Agreement or terms or conditions hereof.

10.19 Execution Knowing and Voluntary.

In executing this Agreement, the parties severally acknowledge and represent that each: (a) has fully and carefully read and considered this Agreement; (b) has been or has had the opportunity to be fully apprized by its attorneys of the legal effect and meaning of this document and all terms and conditions hereof; (c) is executing this Agreement voluntarily, free from any influence, coercion or duress of any kind.

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10.20 Amendment.

At any time after the Closing Date, this Agreement may be amended by both parties, with respect to any of the terms contained herein, and any term or condition of this Agreement may be waived or the time for performance hereof may be extended by the party or parties for whose benefit the provision is intended.






 













[Signature page follows]
 
 
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In Witness Whereof, Supreme Realty Investments, Inc., Sub and HSG, each pursuant to the approval and authority duly given, as well as the HSG Shareholders, have caused this Agreement and Plan of Merger to be executed as of the date first above written.
 
   
Supreme Realty Investments, Inc.
     
   
By:
/s/ Zujun Xu
     
Zujun Xu
Its Chairman of the Board and Chief Executive Officer
       
       
   
XY Acquisition Corporation
       
       
   
By:
/s/ Zujun Xu
     
Zujun Xu
Its Chairman of the Board and Chief Executive Officer
       
       
   
Home System Group, Inc.
     
     
   
By:
/s/ Cheung Kin Wai
     
Cheung Kin Wai
Its President
       
   
HSG Shareholders
       
       
     
/s/ Ye Bo Quan
     
Ye Bo Quan
       
     
/s/ Li Shu Bo
     
Li Shu Bo
       
     
/s/ Huang Jian Wei
     
Huang Jian Wei
       
     
/s/ Cheung Kin Wai
     
Cheung Kin Wai
       
     
/s/ Li Wei Qiu
     
Li Wei Qiu
 
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Simple (Hong Kong) Investment & Management Company Limited
       
   
By:
/s/ Guoqiong Yu
   
Name:
Guoqiong Yu
   
Title:
 
 
President
     
First Capital Limited
       
   
By:
/s/ Xu Xi Rong
   
Name:
Xu Xi Rong
   
Title:
President
       
     
Shenzhen Dingyi Investment Company Limited
       
   
By:
/s/ Hongyan Sun
   
Name:
Hongyan Sun
   
Title:
President
       
     
China US Bridge Capital Limited
       
   
By:
/s/ Xiaobin Liu
   
Name:
Xiaobin Liu
   
Title:
President
       
     
Value Global International Limited
       
   
By:
/s/ Zhiyong Xu
   
Name:
Zhiyong Xu
   
Title:
President
 

 
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SCHEDULE A

HSG SHAREHOLDERS

 
Name of HSG
Shareholder
HSG Common Stock
Ownership %
 
Shares of HSG
 
Shares of Supreme Realty
Investments, Inc. Common Stock
 
Cheung Kin Wai
 
Li Wei Qiu
 
Ye Bo Quan
 
Li Shu Bo
 
Huang Jian Wei
 
 
20%
 
26%
 
6.5%
 
6%
 
6.5%
 
10,000
 
13,000
 
3,250
 
3,000
 
3,250
 
1,600,000
 
2,080,000
 
520,000
 
480,000
 
520,000
 
Value Global International Limited
 
 
6%
 
3,000
 
480,000
 
Simple (Hong Kong) Investment & Management Company Limited
 
 
4%
 
2,000
 
320,000
 
First Capital Limited
 
 
8%
 
4,000
 
640,000
 
Shenzhen Dingyi Investment Company Limited
 
 
7%
 
3,500
 
560,000
 
China US Bridge Capital Limited
 
 
10%
 
5,000
 
800,000

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