As filed with the Securities and Exchange Commission on July 16, 2001
Registration No. 333-45210
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2/A
AMENDMENT NO. 7
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
SUPREME HOSPITALITY
(Name of small business issuer in its charter)
Nevada 9995 88-0460457
- -------------------------------- ---------------------------- ------------------
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification
Number)
41919 Skywood Drive, Temecula, California 92591 (909) 506-3435
- --------------------------------------------------------------------------------
(Address of principal executive offices) Telephone Number
Nevada Legal Forms & Books, Inc.
3020 W. Charleston Blvd., Las Vegas, NV 89102
(Name, address and phone number for agent for service)
Copies of all communications to:
Orsini & Rose Law Firm, P.A.
5340 Central Avenue
St. Petersburg, FL 33707
Telephone: (727) 323-9633
Facsimile: (727) 328-2691
Approximate date of proposed sale to the public: As soon as practicable after
the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the securities Act
registration statement number of the earlier effective registration statement
for the same offering [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [x]
- ---------------------------------------------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
- --------------------------- ---------------------- ----------------------- ------------------ ----------------
Title of each Proposed Proposed Dollar Amount of
class of securities maximum offering maximum aggregate amount to registration
to be registered price per unit offering price be registered fee
- --------------------------- ---------------------- ----------------------- ------------------ ----------------
1,000,000 preferred shares $6.30 $6,300,000 $6,300,000 $1,663.20 [1]
3,756,000 common shares [2]
1,040,000 common shares [3] .0001 $104 $104 $5 [1]
[1] Estimated solely for purposes of calculating the registration fee under
Rule 457(c).
[2] To be offered with conversion of our Preferred Stock and accrued dividends
to our common stock.
[3] Common shares of selling security holders. There is no current market for
the securities and the price at which the shares held by the selling
security holders will be sold is unknown. Pursuant to Rule 457(f)(2) the
registration fee is based upon the par value, $.0001 per share, of the
registrant's common stock.
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON DATES AS MAY BE
NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER
AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES
ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON DATES
AS THE COMMISSION, ACTING UNDER SAID SECTION 8(a), MAY DETERMINE.
2
PART I
PROSPECTUS
Supreme Hospitality
Offering is for 1,000,000 shares of preferred stock.
We are offering up to a total of 1,000,000 shares of 10% convertible preferred
stock at $6.30 per share. The shares are being offered for a period not to
exceed two years. There is no minimum amount of preferred stock required to be
sold in the offering. There is no escrow fund.
This prospectus also covers 3,000,000 shares of our common stock reserved for
issuance upon exercise of the right to convert the preferred shares at any time
after twelve months, to common shares. It also covers 756,000 shares of our
common stock to be used to pay interest to holders of the preferred shares.
This prospectus relates to the offer and sale of 1,040,000 shares of common
stock of Supreme Hospitality, par value $.0001 per share, by 341 security
holders.
Supreme Hospitality is not listed or trading with any securities exchange.
THE SECURITIES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. YOU
SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE HEADING "RISK FACTORS"
BEGINNING ON PAGE 8 OF THIS PROSPECTUS.
Number of Preferred Shares Price to Public Broker Commission Net proceeds after Commission
To Us
- ---------------------------- ---------------- ------------------ -----------------------------
1,000 shares $6,300.00 $630.00 $5,670.00
Maximum 1,000,000 shares $6,300,000.00 $630,000.00 $5,670,000.00
- ---------------------------- ---------------- ------------------ -----------------------------
We currently have no arrangements with underwriters or broker-dealers to sell
our shares.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is ____________________.
3
TABLE OF CONTENTS
To jump to a section, double-click on the section name.
PART I...........................................................................................3
PROSPECTUS....................................................................................3
SUMMARY INFORMATION AND RISK FACTORS..........................................................6
OUR BUSINESS.................................................................................6
THE PRIMARY OFFERING.........................................................................6
THE SELLING SECURITY HOLDER OFFERING.........................................................6
RISK FACTORS..................................................................................8
I. RISKS RELATED TO SUPREME HOSPITALITY.....................................................8
II. RISKS RELATED TO THIS OFFERING..........................................................9
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS.............................................10
USE OF PROCEEDS..............................................................................10
DETERMINATION OF OFFERING PRICE..............................................................10
DILUTION.....................................................................................10
SELLING SECURITY HOLDERS.....................................................................10
PLAN OF DISTRIBUTION.........................................................................17
LEGAL PROCEEDINGS............................................................................19
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.................................19
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...............................19
DESCRIPTION OF SECURITIES....................................................................20
COMMON STOCK................................................................................20
NON-CUMULATIVE VOTING.......................................................................20
CASH DIVIDENDS..............................................................................20
REPORTS.....................................................................................20
PREFERRED STOCK.............................................................................20
LIQUIDATION PREFERENCE......................................................................21
VOTING RIGHTS...............................................................................21
CONVERSION RIGHTS...........................................................................21
LITIGATION..................................................................................21
PENNY STOCK REGULATION......................................................................21
INTEREST OF NAMED EXPERTS AND COUNSEL........................................................22
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES..........22
ORGANIZATION WITHIN LAST FIVE YEARS..........................................................22
DESCRIPTION OF BUSINESS......................................................................23
AVAILABLE INFORMATION........................................................................24
MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS..................................25
OVERVIEW....................................................................................25
RESULTS OF OPERATIONS.......................................................................25
DESCRIPTION OF PROPERTY......................................................................26
DEMOGRAPHICS.................................................................................27
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...............................................29
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.....................................29
EXECUTIVE COMPENSATION.......................................................................30
FINANCIAL STATEMENTS.........................................................................30
INDEPENDENT AUDITORS' REPORT................................................................32
CONSOLIDATED BALANCE SHEETS..................................................................33
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (DEFICIT)......................................34
CONSOLIDATED STATEMENTS OF OPERATIONS........................................................35
CONSOLIDATED STATEMENT OF CASH FLOWS.........................................................36
4
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING................................................37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS...................................................38
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS................................................44
5
SUMMARY INFORMATION AND RISK FACTORS.
This summary highlights important information about our business and about this
offering. Because it is a summary, it doesn't contain all the information you
should consider before investing in the common stock. So please read the entire
prospectus.
OUR BUSINESS
Our administrative office is located 41919 Skywood Drive, Temecula, California
92591, phone numbers voice (909) 506-3435. Our registered statutory office is
located at Nevada Legal Forms & Books, Inc., 3020 W. Charleston Blvd., Las
Vegas, NV 89102. Our fiscal year end is December 31. We are a Nevada
C-corporation.
Supreme Hospitality is in the hospitality, hotel, business catering to the
business, leisure and vacation traveler. On April 30, 2000, Supreme Hospitality
acquired Temecula Valley Inn as a wholly owned subsidiary. Temecula Valley Inn
is located in the Temecula Valley in Southern California between Los Angeles and
San Diego. It is one of the premier hotel properties in the valley. Though
cyclical in nature, Temecula Valley Inn's occupancy rates have continued to
grow.
THE PRIMARY OFFERING
Preferred Shares
o We are offering up to 1,000,000 shares of convertible preferred stock,
par value $0.0001.
o The preferred shares are convertible, one preferred share for three
common shares any time after twelve months of purchase and
automatically on its thirty-six month anniversary.
o The preferred shares are being offered at $6.30 per share.
o We are offering the preferred shares for a period not to exceed two
years.
o We will use the proceeds to fund Supreme Hospitality's plan of
operation.
o There are no preferred shares outstanding prior to the offering.
o 1,000,000 preferred shares would be outstanding if we sale 100% of the
offering.
We will be required to retain broker-dealers to sell our shares in certain
states. We anticipate that we will be required to pay broker-dealers sales
commissions averaging 8%, although we reserve the right to pay sales commissions
up to 10%. In no event will our sales commission expenses combined with other
offering expenses exceed 20% of the gross proceeds of this offering. The chart
used on the prospectus cover page assumes that all shares are sold by
broker-dealers at a maximum commission of 10%. It is anticipated that not all of
the shares will be sold by a broker-dealer. Accordingly, the net proceeds to us
may be higher than indicated in this chart.
THE SELLING SECURITY HOLDER OFFERING
o This prospectus relates to the registration of 1,040,000 common shares
for sale of the securities held by 341 security holders of Supreme
Hospitality.
o These security holders will be able to sell their shares on terms to
be determined at the time of sale, directly or through agents, dealers
or representatives to be designated from time to time.
o Supreme Hospitality will not receive any proceeds from the sale of the
securities by the selling security holders.
The shares will become tradable on the effective date of this prospectus. The
selling security holders will receive the proceeds from the sale of their shares
and Supreme Hospitality will not receive any of the proceeds from such sales.
The selling security holders, directly or through agents, dealers or
representatives to be designated from time to time, may sell their shares on
terms to be determined at the time of sale. See Plan of Distribution. The
6
selling security holders reserve the sole right to accept or reject, in whole or
in part, any proposed purchase of the shares being offered for sale.
7
RISK FACTORS
The units being offered herein are highly speculative and involve a high degree
of risk. Before making an investment in Supreme Hospitality, prospective
investors should give careful attention to the following risk factors inherent
in and affecting the business of Supreme Hospitality.
I. RISKS RELATED TO SUPREME HOSPITALITY
1. Supreme Hospitality has a limited operating history and therefore, evaluating
future performance and this prospectus is difficult.
Supreme Hospitality was formed on October 30, 1997 and acquired Temecula Valley
Inn as its first operating hotel on April 30,2000. Prior to its acquisition by
Supreme Hospitality, Temecula Valley Inn was constructed and opened for business
in 1998. Because of its limited operating history, it will be difficult to
predict or evaluate future profitability of Supreme Hospitality.
2. Supreme Hospitality has incurred operating losses and could continue to do so
which would result in little or no future dividends to shareholders:
Supreme Hospitality has incurred net losses and experienced negative cash flow
during its two-year operating history. It could continue to incur losses in the
future and result in little or no dividends to shareholders. See financial
information.
3. Supreme Hospitality may not be able to compete with larger hotel/motel chains
in acquiring new investments which could limit Supreme Hospitality's future
growth:
Supreme Hospitality may be competing for investment opportunities with entities
that have substantially greater marketing and financial resources than Supreme
Hospitality. These entities may be able to accept more risk than Supreme
Hospitality prudently can manage. Competition may generally reduce the number of
suitable investment opportunities offered to Supreme Hospitality and increase
the bargaining power of property owners seeking to sell. This could greatly
affect Supreme Hospitality's ability to acquire new properties and could reduce
future growth.
4. Supreme Hospitality will acquire interests only in hotel properties thereby
concentrating its investments in a single industry which could increase its risk
of failure:
Supreme Hospitality's current strategy is to acquire interests in hotel
properties. Supreme Hospitality will not seek to invest in assets selected to
reduce the risks associated with investments in the hotel industry, and will be
subject to risks inherent in concentrating investments in a single industry.
5. Supreme Hospitality may not have access to sufficient equity of debt capital
to pursue its acquisition strategies and therefore would be unable to continue
its future growth:
Supreme Hospitality intends to continue to pursue its current growth strategy,
which includes building or acquiring and improving hotel properties. There is a
risk that Supreme Hospitality will not have access to sufficient equity of debt
capital to pursue its acquisition strategies indefinitely. Supreme Hospitality's
ability to continue to make hotel acquisitions will depend primarily on its
ability to obtain additional private or public equity of debt financing. There
can be no assurance that such financing will be available to make future
investments.
6. The loss of Mr. Lang, sole director and president of Supreme Hospitality
could cause Supreme Hospitality to fail:
Shareholders have no right or power to take part in the management of Supreme
Hospitality except through the exercise of voting rights on certain specified
matters. The Board of Directors is responsible for managing Supreme Hospitality.
Supreme Hospitality's future success, including particularly the implementation
of Supreme Hospitality's acquisition growth strategy, is substantially dependent
on the active participation of Mr. Lang. The loss of services for this
individual could cause Supreme Hospitality to fail.
7. Supreme Hospitality may not be able to readily liquefy its Real Estate
investments at an advantageous or necessary time causing Supreme Hospitality to
lose its investment:
8
Real estate investments are relatively illiquid. The ability of Supreme
Hospitality to vary its portfolio in response to changes in economic and other
conditions will be limited. Also, no assurances can be given that the market
value of any of the hotels will not decrease in the future. There can be no
assurance that Supreme Hospitality will be able to dispose of an investment when
it finds disposition advantageous or necessary or that the sale price realized
in any disposition will recoup or exceed the amount of Supreme Hospitality's
investment therein.
8. Because we are past due on our real estate taxes the loans with our banks
could be called due and we could lose our assets and/or real and personal
property collateralized by the notes.
We are in technical violation of our banks loans due to the past due status on
our real estate taxes. Even though we have verbal communications with the banks
that this violation does not trigger a default, verbal statements from the banks
are not binding on them and the banks could still call the loan notes due and we
could lose our assets and/or real and personal property which is collateralized
by the notes.
II. RISKS RELATED TO THIS OFFERING
1. Because there is no public trading market for Supreme Hospitality's preferred
stock, you may not be able to resell your shares:
There is currently no public trading market for Supreme Hospitality's preferred
stock or common stock, and there is no guarantee that a market will ever
develop. Therefore there is no central place, like a stock exchange or
electronic trading system, to resell your shares. If you do want to resell your
shares, you will have to locate a buyer and negotiate your own sale. Therefore,
you may not be able to resell your shares.
We believe there is an anticipated public market for our common and preferred
shares and we plan on registering the shares with an exchange as soon as
practicable after the effective date of this Registration Statement.
2. You may be investing in a company that does not have adequate funds to
conduct its operations and suffer the loss of your investment:
There is no minimum number of shares that must be sold, there is no escrow fund
and Supreme Hospitality will not refund any funds to you. It is possible that
Supreme Hospitality may not raise enough funds for the acquisition of new
properties and to conduct our on-going operations. If that happens, you will
suffer a loss in the amount of your investment.
3. The selling security holders may sell their securities at any time and at any
price they determine causing the public market for the common stock to drop:
After effectiveness of this registration statement, the non-affiliated selling
security holders may offer and sell their shares at a price and time determined
by them without subject to Rule 144. The timing of sales and the price at which
the shares are sold by the selling security holders could cause the public
market for the common stock, should one develop, to drop. See Plan of
Distribution-Sales by Selling Security holders.
4. Selling security holders can sell their stock at prices below the primary
offering which could reduce the amount of money Supreme Hospitality raises in
the offering:
All of the selling security holders shares of Supreme Hospitality will become
tradable on the effective date of the registration statement and the selling
security holders will compete with Supreme Hospitality to sell their shares. The
selling security holders can sell their stock at prices below the primary
offering which could reduce the amount of money Supreme Hospitality raises in
the offering.
5. Unless Supreme Hospitality's stock reaches and maintains a market price of
$5.00 or greater, the penny stock regulation may impair shareholder's ability to
sell Supreme Hospitality's stock:
If trading in Supreme Hospitality's stock begins, its common stock may be deemed
a penny stock. Penny stocks generally are equity securities with a price of less
than $5.00 per share, other than securities registered on certain national
securities exchanges. Penny stocks are subject to penny stock rules that impose
additional sales practice requirements on broker-dealers who sell the securities
to persons other than established customers and accredited investors. Due to
these additional requirements shareholders may be impaired in their ability to
sell Supreme Hospitality's stock unless Supreme Hospitality's stock reaches
$5.00 or greater. See Description of Securities-Penny Stock Regulation.
9
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 12E of the
Securities Exchange Act of 1934, as amended. Although the beliefs that the
expectations reflected in such forward-looking statements are based upon
reasonable assumptions, it can give no assurance that its expectations will be
achieved.
USE OF PROCEEDS
This is a best efforts offering and Supreme Hospitality may receive no or a very
small amount of the proceeds. The net proceeds to be received by Supreme
Hospitality from the sale of 1,000,000 preferred shares offered by Supreme
Hospitality is approximately $5,537,665 after deducting $762,335 in offering
fees payable by Supreme Hospitality. This best efforts offering may not sell
100% of the offering therefore should Supreme Hospitality receive less than 25%
of the total offering the monies will first be allocated toward the offering
fees and second towards the operating capital.
- ----------- ----------- ---------- ---------- ----------- -------------
Percentage Proceeds Offering Operating Debt Proposed
of Proceeds Received Fees Capital Retirement Acquisitions
25% $1,575,000 $289,835 $500,000 $785,165 0
50% $3,150,000 $447,335 $500,000 $2,202,665 0
75% $4,725,000 $604,835 $500,000 $3,000,000 $620,165
100% $6,300,000 $800,000 $500,000 $3,000,000 $2,000,000
- ----------- ----------- ---------- ---------- ----------- -------------
Supreme Hospitality believes the net proceeds of this offering will be
sufficient to fund its plan of operation. From time to time in the ordinary
course of business, Supreme Hospitality evaluates the acquisition of products,
businesses, and technologies that complement Supreme Hospitality's business, for
which a portion of the net proceeds may be used. Currently, Supreme Hospitality
is involved in discussions with respect to developing another hotel. Pending the
use of the net proceeds for the above purpose, Supreme Hospitality intends to
invest such funds in short-term interest-bearing securities or other
instruments, as Supreme Hospitality deems appropriate.
DETERMINATION OF OFFERING PRICE
On June 14, 2000, the registration statement for 10,000,000 shares of common
stock and 1,000,000 shares of preferred stock was filed with the U.S. Securities
and Exchange Commission on Form 10-SB of the 1934 Securities Act, File #
000-30803. Prior to June 2000, none of the securities have been publicly traded
as no public market has existed. The Board of Directors and the key management
personnel determined the public offering price of the preferred stock by adding
the debt to be retired plus the offering fees and operating capital and dividing
by the shares offered.
Retire Debt $ 3,000,000
Acquisition of land and subsequent development $ 2,000,000
Operating capital $ 500,000
Offering Fees $ 800,000
Total $ 6,300,000
-------------
Shares offered 1,000,000 $6.30 per share
DILUTION.
Does not apply
SELLING SECURITY HOLDERS
Supreme Hospitality is registering for offer and sale by the holders of
1,040,000 shares of common stock held by 341 Supreme Hospitality security
holders. Supreme Hospitality is paying for all the expenses of the registration.
10
We will receive no proceeds of this offering. The selling security holders may
offer all or part of their shares for sale on a continuous basis pursuant to
Rule 415 under the 1933 Act. See Risk Factors.
All of the selling security holders' shares registered in this prospectus will
become tradable on the effective date of the registration statement of which
this prospectus is a part.
The following table sets forth the shares held by each person who is a selling
security holders as of the date of this prospectus.
The following table is derived from our books and records, as well as from those
of our transfer agent. No selling security holder is affiliated with us. No
selling security holder has held any position or office or has had a material
relationship with Supreme Hospitality within the past three years. The table
lists the name, address, amount of common stock owned and percentage of class of
the beneficial ownership of the securities of Supreme Hospitality as of the date
of this prospectus.
Percentage
Shares Shares Owned
Owned Registered After the
Name of Security Holder Address of Beneficial Owner Currently for Resale Offering
- ------------------------------------------------------------------------------------------------------------------------------------
1 Jon Ruco, Ltd. 18026 Cerca Azul Dr., San Antonio TX 78259 181,400 181,400 0%
2 First Dominion Financial Group, Inc. 1800 E. Sahara, Suite 107, Las Vegas NV 89101 181,600 181,600 0%
3 Anthony Tomasso 2240 Woolbright Rd, Suite 354, Boynton Beach,
FL 33426 1,667 1,667 0%
4 Hayden Financial Corp 21560 Toledo Rd., Boca Raton, FL 33433 51,700 51,700 0%
5 Wayne Gronquist 1104 Nueces Street, Austin, TX 78701 667 667 0%
6 Terence J. & Synda M. Kollman 106 Rockwell Street, Harrison, NY 10528 200 200 0%
7 Lev-Ari Communications, Inc. 147-17 Newport Ave., Neponsit, NY 11694 100 100 0%
8 John C. & Chestine Vester 3241 Sapphire ST., Bedford, TX 76021 100 100 0%
9 Jernan Corp. 810 S. E. 4th Ave., Pompano Beach, FL 33060 100 100 0%
10 Kim A. Whittaker 53 Emerson Road, Winchester, MA 01890 100 100 0%
11 Myrna Cedrone 20 Clark St., Randolpy, MA 02368 100 100 0%
12 Brian Wherry 21553 Toledo Road, Boca Raton, FL 33433 100 100 0%
13 Greg Papazian 53 Emerson Road, Winchester, MA 01890 100 100 0%
14 Carol Jambura 2100 West 100th Ave, #240, Thornton, CO 80221 100 100 0%
15 Yaakov Friedman 619 North Lake Drive, Lakewood NJ 08701 100 100 0%
16 Margaret M. De La Garza 2915 Aftonshire Way, #2308, Austin, TX 78748 200 200 0%
17 Kathy Tomasso 2240 Woolbright Rd, Suite 354, Boynton Beach,
FL 33426 100 100 0%
18 Steve Lohman 303 E. Main St., Kent, OH 44240 200 200 0%
19 The Curtis Family Trust, Dated Nov 9, 1999 200 200 0%
John R. Curtis & Charlotte H. Curtis,
Trustee(s) 1000 Winderley Pl, Apt 147, Maitland,
FL 32751-4171
20 Dean E. McCall 5234 95th St., Lubbock, TX 79424 100 100 0%
21 Michael J. De La Garza 115 S. Cortez Ave., Winter Springs,
FL 32708-2947 100 100 0%
22 John M. Hubinger 100 100 0%
825 Falconhead Dr., Falconhead CC Burneyville, OK 73430
23 Martha H. Blue 1200 Barlow, Southlake, TX 76092 100 100 0%
24 Gretchen M. Hubinger 5500 Crestwood, Kansas City, MO 64110 100 100 0%
25 Carolyn Hubinger Kane 435 E. St., Colma, CA 94014 100 100 0%
26 Barbara H. Jones P. O. Box 1163, St. Francisville, LA 70775 100 100 0%
27 Joseph P. Wilkins 7322 Oak Manor, #23, San Antonio, TX 78229 200 200 0%
28 Kevin D. Wiley 2030 Grove Ave., Quincy, IL 62301 100 100 0%
29 N.V. One Partnership 147-2C South Main St., Stowe, VT 05672 50,800 50,800 0%
30 Hayden Gartzman 21560 Toledo Rd., Boca Raton, FL 33433 200 200 0%
31 Gary Tashjian 12 Homer Rd., Arlington, MA 02116 100 100 0%
32 Max Ades 115 Marlborough St, Boston, MA 02116 100 100 0%
33 Gerard Pomert 93 Third St. Newport, RI 02840 100 100 0%
34 Pat Prendergast 2929 Greenbriar, 7212, Houston, TX 77098 100 100 0%
35 Kelly Dath 8167 Sands Point Dr., Houston, TX 77036 100 100 0%
36 Patricia Dath 10910 West Rd., #402, Houston, TX 77064 100 100 0%
37 Stephen Grabowiecki 37 Wallace Row, Wallingford, CT 06492 100 100 0%
11
38 Richard E. Grabowiecki 37 Wallace Row, Wallingford, CT 06492 100 100 0%
39 Anna M. Delehant 54 Allen Rd., Horth Haven, CT 06473 100 100 0%
40 Ellen & Richard A. Grabowiecki 37 Wallace Row, Wallingford, CT 06492 100 100 0%
41 Dawn Mongeon 54 Park St., Wallingford, CT 06492 100 100 0%
42 John Delehant, Jr. 2052 Middletown Ave, Northford, CT 06472 100 100 0%
43 Thomas Delehant 142 Jail Hill Rd., Hadd, CT 06438 100 100 0%
44 Ernest Marrette 34 Gale Ave., Meriden, CT 06450 100 100 0%
45 Adriana S. Tomasso 2240 Woolbright Rd, Suite 354, Boynton Beach,
FL 33426 100 100 0%
46 Regina T. Tomasso 2240 Woolbright Rd, Suite 354, Boynton Beach,
FL 33426 100 100 0%
47 Krista K. Tomasso 2240 Woolbright Rd, Suite 354, Boynton Beach,
FL 33426 100 100 0%
48 Anthony Tomasi 1 Simos Lane, West Haven, CT 06516 100 100 0%
49 Leatrica M. Jackson 16503 Quail Briar, Missouri City, TX 77489 100 100 0%
50 Anthony D. L. Jackson 16503 Quail Briar, Missouri City, TX 77489 100 100 0%
51 Randie M. Jackson 2204 Tangerine Dr., Haines City, FL 33844 100 100 0%
52 Randie Ty Jackson 16503 Quail Briar, Missouri City, TX 77489 100 100 0%
53 Randle M. Jackson, IV 16503 Quail Briar, Missouri City, TX 77489 100 100 0%
54 Gary E. Matthews 3734 Boulevard Hills,Atlanta, GA 30339 100 100 0%
55 Diana Lacey-Matthews 3734 Boulevard Hills,Atlanta, GA 30339 100 100 0%
56 Ruth DeCarlo 238 Ilex Court, Villa Rica, GA 30180 100 100 0%
57 Martin E. Hull 4851 Coranada Ave., San Diego, CA 92107 200 200 0%
58 Lyman A. Matthews 2305 Hayes Rd., #8812, Houston, TX 77077 100 100 0%
59 John C. Graper 32 Balboa Way, Hot Spring Village, AR 71909 100 100 0%
60 Olethia H. Matthews 32 Balboa Way, Hot Spring Village, AR 71909 100 100 0%
61 Carol A. Cummins 7115 Silver Star Drive, Houston, TX 77086 100 100 0%
62 Janice Peterson 5111 Barton Creek, Pasadena, TX 77505 100 100 0%
63 Gary E. Parks Cust for Matthew E. Parks TUGMA 5858 Westheimer, Suite 702, Houston, TX 77057 100 100 0%
64 Howard A. Covens 1810 Potomac Dr, Apt 6, Houston, TX 77057-2952 100 100 0%
65 Donald Fitzpatrick 111 Eustis Ave, Newport, RI 02840 100 100 0%
66 Marc Jablon 2232 E. Senoron Blvd., Spopka, FL 32703 100 100 0%
67 Karl Soderstrom 536 Sabal Lake Dr., Apt 100, Longwood, FL 32779 100 100 0%
68 Warren White 3346 Ronald St, Deltona, FL 32738 100 100 0%
69 Megan Beebe 601 N. Goodrich Dr, Deltona, FL 32725 100 100 0%
70 Jeanne Whitehead 601 N. Goodrich Dr, Deltona, FL 32725 100 100 0%
71 Carolyn White 3346 Ronald ST., Deltona, FL 32738 100 100 0%
72 Peter Pappas Rev. Trust
UA DTD 5/18/95 432 NW 111 Ave., Coral Springs, FL 33071 100 100 0%
73 Kim Braunin 1861 W. Oakland Park Blvd, Ft. Lauderdale,
FL 33311 100 100 0%
74 Joyce R. Ward 16405 Shagbark Pl, Tampa, FL 33618-1213 100 100 0%
75 Randall W. Rice 19823 Wyndham Lakes Dr., Odessa, FL 33556 100 100 0%
76 Leigh Rice 3702 Thornwood Dr., Tampa, FL 33618 100 100 0%
77 Timeca Cade 7 Birch Tree Rd., Colonie, NY 12205 100 100 0%
78 Timon Cade 7 Birch Tree Rd., Colonie, NY 12205 100 100 0%
79 Timala Cade 7 Birch Tree Rd., Colonie, NY 12205 100 100 0%
80 Ajanee Cade 7 Birch Tree Rd., Colonie, NY 12205 100 100 0%
81 Ajanti Cade 7 Birch Tree Rd., Colonie, NY 12205 100 100 0%
82 Cuwani Cade Willingham 7 Birch Tree Rd., Colonie, NY 12205 100 100 0%
83 Brian Schottcoffel 16214 New Field Dr., Houston, TX 77082 100 100 0%
84 Malachi Meredith 16214 New Field Dr., Houston, TX 77082 100 100 0%
85 Cheryl Meredith 16214 New Field Dr., Houston, TX 77082 100 100 0%
86 Timothy Cade 7 Birch Tree Rd., Colonie, NY 12205 100 100 0%
87 Sandra L. Cade 7 Birch Tree Rd., Colonie, NY 12205 100 100 0%
88 Velton Cade 424 Sandcreek Rd., Apt 424, Albany, NY 12205 100 100 0%
89 Terri Cade 60 Daytona Avenue, Albany, NY 12203 100 100 0%
90 Timothy Damon Cade 60 Daytona Avenue, Albany, NY 12203 100 100 0%
91 Mark France 16039 Highlander Dr., Houston, TX 77082 100 100 0%
92 Daphne L. Simmons 16622 Quail Briar, Missouri City, TX 77489 100 100 0%
93 Jerod T. Higgins 16622 Quail Briar, Missouri City, TX 77489 100 100 0%
94 Mark Freeman 142 Habitat Cir., Decatur, GA 30034 100 100 0%
95 Donald R. Yu 6363 Christie Ave., #411, Emeryville, CA 94608 100 100 0%
12
96 Kimberly Crenshaw 1710 Alee, Mobile, AL 36605 100 100 0%
97 Sandra Crenshaw 1710 Alee, Mobile, AL 36605 100 100 0%
98 Lerin Crenshaw 1710 Alee, Mobile, AL 36605 100 100 0%
99 Rebel Rozmen 5234 95th St., Lubbock, TX 79424 100 100 0%
100 Neal Diamond P. O. Box 542013, Houston, TX 77254 100 100 0%
101 Gary E. Parks 5858 Westheimer, Sutie 702, Houston, TX 77057 100 100 0%
102 Gary E. Parks Cust Amy M. Parks, TUGMA 5858 Westheimer, Suite 702, Houston, TX 77057 100 100 0%
103 Andrew Ackeman 16 Sherman St.,Newport, RI 02840 100 100 0%
104 Richard R. Blakeman 5355 Town Center Rd., Boca Raton, FL 33486 100 100 0%
105 Nicholas & Kathleen Bompignano 34 Avenue A., Port Washington, NY 11050 100 100 0%
106 John R. Maginnis 4281 N. E. 18th Ave., Pompano Beach, FL 33064 100 100 0%
107 Christopher L. Atkins 2 Tudor City PL, New York, NY 10017 100 100 0%
108 Tim Kulhanek 4197 County Road W., Rhinelander, WI 54501 100 100 0%
109 Thomas G. Laros, Jr. 6441 Lavendale, Dallas, TX 75230 100 100 0%
110 Abbey Gartzman 989 Sierra Vista Lane, Valley Cottage, NY 10989 100 100 0%
111 Rae Gartzman 21560 Toledo Road, Boca Raton, FL 33433 100 100 0%
112 Dan Austin P. O. Box 81025, Billings, MT 59108 100 100 0%
113 Shauna Spieler 3146 Canyon Dr, Billings, MT 59102 100 100 0%
114 Carol Austin 4424 Harvest Lane, Billings, MT 58106 100 100 0%
115 Scott Johannes HC 33, Box 3034-J, Wasilla, AK 99654 100 100 0%
116 Merilyn E. Lewis 136 Verona Rd, DeBary, FL 32713 100 100 0%
117 Big Apple Consulting, Inc. 2232 E. Senoron Blvd., Spopka, FL 32703 100 100 0%
118 Carolyn Montgomery 13255 CR 727, Webster, FL 33591 100 100 0%
119 Kenneth Blake 400 Summit Ridge, #202, Longwood, FL 32779 100 100 0%
120 Janet Williams 1283 Chessington Circle, Heathrow, FL 32746 100 100 0%
121 Donald R. Mitchell 525 Melrose Ave, Winter Park, FL 32769-5047 100 100 0%
122 Steven C. Montgomery 13255 CR 727, Webster, FL 33591 100 100 0%
123 Daniel Baldridge 447 BlueBird St., Apopka, FL 32703 100 100 0%
124 Scott B. Gnatt 162 River Bend Dr., #E, Altamonte Springs, FL
32714 100 100 0%
125 Matt Maguire 484 Autumn Oaks Place, Lake Mary, FL 32746 100 100 0%
126 John Costello 11508 N. Grady Ave., Tampa, FL 3324 100 100 0%
127 Maureen Sperling 7500 NW 17th St., Apt 304, Plantation, FL 33313 100 100 0%
128 Alison Goldberg 7500 NW 17th St., Apt 304, Plantation, FL 33313 100 100 0%
129 Cara Bompignano 1638 E. 54th St., Brooklyn, NY 11234 50,100 50,100 0%
130 OBriens Main Street Investment Club 3410 Valencia Rd, Tampa, FL 33618 100 100 0%
131 Michael T. Husum 11744 N. De La Mabry Hwy, Tampa, FL 33618 100 100 0%
132 Bernie O'Brian 11744 N. Dale Mabry Hwy, Tampa, FL 33624 100 100 0%
133 Arthor Richards 3410 Valencia Rd., Tampa, FL 33618 100 100 0%
134 Gina M. Bompignano 3410 Valencia Rd, Tampa, FL 33618 100 100 0%
135 Lany Sengsouriya 320 Grant St., #212, Alameda, CA 94501 100 100 0%
136 Jennifer K. Yu 6363 Christie Ave., #324, Emeryville, CA 94608 100 100 0%
137 Jean K. Yu 6363 Christie Ave., #324, Emeryville, CA 94608 100 100 0%
138 Kathryn Beavers P. O. Box 373, Bandera, TX 78003 100 100 0%
139 Carmen Bush 9607 Hidden Mist Cir, San Antonio, TX 78250 100 100 0%
140 Herbert M. Garvin APDO 724, Zaragoza Pte. #35 45920 Ajijic,
Jalisco, Mexico 100 100 0%
141 Charles F. Ickes, Jr. 1868 Harbor Ln, Naples, FL 34104 100 100 0%
142 Nancy J. Eddleblute 1868 Harbor Ln., Naples, FL 34104 100 100 0%
143 Heidi Ickes 5665 Whitaker Rd, #201A, Naples, FL 34112 100 100 0%
144 Brandi L. Ickes 2766 Chaddsford Cir, Apt 100, Oviedo, FL
32763-7243 100 100 0%
145 Missi L. Ickes 1219 Solana Rd., #16, Naples, FL 34103 100 100 0%
146 Joseph B. De La Garza 10855 Terra Vista Pkwy, #13 Rancho Cucamonga, CA
91730 100 100 0%
147 Ellen Samuel 810 SE 4th Ave, Pompano Beach, FL 33060 100 100 0%
148 Nan Samuel 810 S. E. 4th Ave., Pompano Beach, FL 33060 100 100 0%
149 Cecilia E. De La Garza 10855 Terra Vista Pkwy, #13, Rancho Cucamonga,
CA 91730 100 100 0%
150 Theresa Saenz 6214 Ben Milam Cir, San Antonio, TX 78238 100 100 0%
151 Reynaldo Saenz 6214 Ben Milam Cir, San Antonio, TX 78238 100 100 0%
152 Sharon T. Montgomery 3106 Brazos, #4, Houston, TX 77006 200 200 0%
153 Joseph De La Garza 1235 E Sunshine Dr, San Antonio, TX 78228-2945 100 100 0%
154 Henry Coons 500 Old Farms Road, Avon, CT 06001 100 100 0%
13
155 Mary Anne Luppino 2050 NE 27 Ave., Pompano, FL 33062 100 100 0%
156 Philana D. Yu 31 Soaring Hawk, Irvine, CA 92614 100 100 0%
157 David R. Yu 31 Soaring Hawk, Irvine, CA 92614 100 100 0%
158 Gordon McMeen 138 Armiijo Ct., Corrales, NM 87048 100 100 0%
159 Jane Butel 138 Armiijo Ct., Corrales, NM 87048 100 100 0%
160 Lee Barron Wernick 19 Condor Road, Sharon, MA 02067 100 100 0%
161 Lislie P. Lagoni 21345 Las Pilas Road, Woodland Hills, CA 91364 100 100 0%
162 Debra Sanders P O Box 3419, Livermore, CA 94551 100 100 0%
163 Amy Senkowicz 915 Greenbriar Dr, Boynton Beach, FL 33435 100 100 0%
164 Gerald L Schweigert 303 E. Main St., Kent, OH 44240 100 100 0%
165 Leslie Goldstein 21536 Toledo Rd., Boca Raton, FL 33433 100 100 0%
166 Goeffrey M. Strauch 303 E. Main St., Kent, OH 44240 100 100 0%
167 Theresa Gattey 21560 Toledo Rd., Boca Raton, FL 33433 100 100 0%
168 Robert Gartzman 21560 Toledo Road, Boca Raton, FL 33433 100 100 0%
169 Pamela Langlois 1107-C S. 1st St., Jacksonville Beach, FL 32250 100 100 0%
170 Michael Patterson 1107-C S. 1st St., Jacksonville Beach, FL 32250 100 100 0%
171 Michael Ysais 2915 Aftonshire Way, #2308, Austin, TX 78748 100 100 0%
172 Kathryn M. Gaudiosi 34 Elisabeth Lane, Collegeville, PA 19426-3908 100 100 0%
173 Mary C. De La Garza 2100 West 100th Ave, #240, Thornton, CO 80221 100 100 0%
174 David W. Subry 8020 Holland Ct, Apt A, Arvada, CO 80005-2288 200 200 0%
175 Marie Larizza 640 Camellia Terrace Ct N, Neptune Beach,
FL 32266-3244 100 100 0%
176 Robert Russakoff 640 N. Camellia Terr. Ct., Neptune Beach,
FL 32266 100 100 0%
177 Charlotte M. Sciubba 10 Buckeye Ct, Homosassa, FL 34446 100 100 0%
178 Chestine Vester 3241 Sapphire Street, Bedford, TX 76021 100 100 0%
179 Carmine J. Ferraro 11 Weather Hill Rd, Hamburg, NJ 07419 100 100 0%
180 Frank Fortunat III 11 Weather HIll Rd., Hamburg, NJ 07419 100 100 0%
181 Vincent C DeRico Trst for Charles DeRico
III minr 34 Elisabeth Lane, Collegeville, PA 19426-3908 100 100 0%
182 Vincent C DeRico trust for Dominic De
Rico minor 34 Elisabeth Lane, Collegeville, PA 19426-3908 100 100 0%
183 Vincent C. De Rico, general partner 100 100 0%
N. V. One Partnership 147-2C South Main Street, Stowe, VT 05672
184 Vincent C. De Rico, general partner 100 100 0%
AIFS Associates: I 39 Clarke Street, Newport, RI 02840
185 Vincent C. De Rico 147-2C South Main Street, Stowe, VT 05672 100 100 0%
186 George Johns 533 Laurel Ave., #A, St. Paul, MN 55102 100 100 0%
187 William C. Minix 16335 Paiter St., Houston, TX 77053 100 100 0%
188 Susan Kubitz 4107 Foxbrush Ln, Sugar Land, TX 77479 100 100 0%
189 David Kubitz 4107 Foxbrush Ln, Sugar Land, TX 77479 100 100 0%
190 Brandi Kubitz 4107 Foxbrush Ln, Sugar Land, TX 77479 100 100 0%
191 Ashley Kubitz 4107 Foxbrush Ln, Sugar Land, TX 77479 100 100 0%
192 Daniel Contreras 16235 Espinosa Dr., Houston, TX 77083 100 100 0%
193 Bounty Films 101 Gillespie Dr., Suite 9106, Franklin,
TN 37067 100 100 0%
194 Curt Dewitz 101 Gillespie Dr., Suite # 9106, Franklin,
TN 37067 100 100 0%
195 Natasha Dewitz 101 Gillespie Dr., #9106, Franklin, TN 37067 100 100 0%
196 Janny Grein P. O. Box 351, Eureka Springs, AR 72632 100 100 0%
197 Bill Grein P. O. Box 351, Eureka Springs, AR 72632 100 100 0%
198 Kathleen McCabe 665 Balsam, Lakewood, CO 80215 100 100 0%
199 Richard Cedrone 4849 N. W. 29th Ct., #412, Lauderdale Lakes,
FL 33313 100 100 0%
200 Eric Reish 1768 S. Humbolot St., Denver, CO 80210 100 100 0%
201 Tara Redmond 5056 Wateka Dr., Dallas, TX 75209 100 100 0%
202 Jon Sanger 18081 Midway Rd., #2622, Dallas, TX 75287 100 100 0%
203 Jamie E. Moring 4100 Gallant Ct., Flower Mound, TX 75028 100 100 0%
204 Jacqueline Small 1723 Creekview Dr., Glenn Heights, TX 75154 100 100 0%
205 Charlotte Reeves 3710 Chinook St., Irving, TX 75062 100 100 0%
206 Cynthia Anstett 10521 Channel, Dallas, TX 75229 100 100 0%
207 Michelle Wolfe 18081 Midway Rd., #2622, Dallas, TX 75287 100 100 0%
208 Lynn Vester 3241 Sapphire St, Bedford, TX 76021 100 100 0%
209 Lisa Trojacek 3241 Sapphire St, Bedford, TX 76021 100 100 0%
210 Gary Vester 3241 Sapphire ST., Bedford, TX 76021 100 100 0%
211 Kenneth Vester 3241 Sapphire ST., Bedford, TX 76021 100 100 0%
14
212 Michelle Martin 21567 Toledo Rd., Boca Raton, FL 33433 100 100 0%
213 Grant Edmondson 16 Bellevue Ave., Newport, RI 02840 100 100 0%
214 Dennis J. Blair 16 Bellevue Ave., Newport, RI 02840 100 100 0%
215 Mark Burrage 1414 Spring, Davenport, IA 52806 100 100 0%
216 Ann Burrage 1414 Spring, Davenport, IA 52806 100 100 0%
217 Kim L. Botthof 21 Arlington Rd., Melrose, MA 02176 100 100 0%
218 Peggy M. Botthof 932 Judson 3 East, Evanston, IL 60202 100 100 0%
219 Michael B. Botthof 21 Arlington Rd, Melrose, MA 02176 100 100 0%
220 James T. Koo 26982 Beaver Ln., Los Altos Hills, CA 94022 100 100 0%
221 Nancy Seren-Doris 9132-C S.W. 20th St., Boca Raton, FL 33428 100 100 0%
222 Thomas Doris 9132-C S. W. 20th St., Boca Raton, FL 33428 100 100 0%
223 Michael aka Jame M. Wnynot Seren 9132-C S. W. 20th St., Boca Raton, FL 33428 100 100 0%
224 Nicolas Eran Gronquist 1611 Sylvan Dr, Austin, TX 78741 100 100 0%
225 Wayne Gronquist Trst for Justin Myles Gronquist 1104 Nueces Street, Austin, TX 78701 100 100 0%
226 Sophie M. Gronquist 681 Springhill Dr., Hurst, TX 76053 100 100 0%
227 Mark A. Gronquist 4905 West Frances Place, Austin, TX 78731 100 100 0%
228 Stanley E. Weber 5702 Penick Dr., Austin, Tx 78741 200 200 0%
229 Stanley E. Weber 5702 Penick Dr., Austin, Tx 78741 100 100 0%
230 Julie A. Sass 1331 Falls Ave., Cuyahoga Falls, OH 44223 100 100 0%
231 Beveril Mormile 556 N. W. 15th Court, Boca Raton, FL 33486 100 100 0%
232 Anthony Mormile 556 N. W. 15th Ct, Boca Raton, FL 33486 100 100 0%
233 John A. Gattey 21560 Toledo Rd., Boca Raton, FL 33433 100 100 0%
234 Julie Yetter 7605 Creston Ln, Austin, TX 78752 100 100 0%
235 Rebecca DeGraw 8005 Isaac Pryor Dr, Austin, TX 78749-1660 100 100 0%
236 Robert C. Hart 9 Runnymede Lane, Madison, CT 06443 100 100 0%
237 Peter Ling 451 W. Longden Ave., Arcadia, CA 91007 100 100 0%
238 Deanna Pasley 551 Central Park Place, Brentwood, CA 94513 100 100 0%
239 Patricia Reilly 2803 Ostrom Ave., Long Beach, CA 90815 100 100 0%
240 Henry S. Hall 2 Main Street, Liberty, ME 04949 100 100 0%
241 Susannah Homer 5 Main Street, Liberty, ME 04949 100 100 0%
242 Steven E. Bryant 2649 NE 13th Ave, Pompano Beach, FL 33064 100 100 0%
243 Adrianne Reese 306 Fallview Dr., McDonough, GA 30253 100 100 0%
244 LaRaymond Smith 356 Randall Drive, Clarksville, TN 37042 100 100 0%
245 Johnny Kindle 356 Randall St., Clarkville, TN 37042 100 100 0%
246 Deborah R. Kindle 356 Randall St., Clarkville, TN 37042 100 100 0%
247 Joyce E. Reese P. O. Box 16716, Atlanta, GA 30321 100 100 0%
248 Darren M. McLeod 1940 Fisher Rd., Apt 41-D, Atlanta, GA 30315 100 100 0%
249 Tina Y. Garmon 2408 Wales Drive Austell, GA 30106 100 100 0%
250 Almeida Jones 2850 The Meadows Way, College PK, GA 30349 100 100 0%
251 Alicia Cook 2850 The Meadows Way, College PK, GA 30349 100 100 0%
252 Anita Thomas 201 Ravine Ave., 3-M, Yonkers, NY 10701 100 100 0%
253 Amy Miller 12660 Medfield, #316, Houston, TX 77082 100 100 0%
254 Mathias Follis 12660 Medfield, #316, Houston, TX 77082 100 100 0%
255 Brandon Miller 12660 Medfield, #316, Houston, TX 77082 100 100 0%
256 Tzan Parker 2305 Hayes Rd., Houston, TX 77077 100 100 0%
257 Roland B. Clark 2220 Marina Way, #115, Kemah, TX 77565 100 100 0%
258 Alberta M. Cade P. O. Box 16716, Atlanta, GA 30321 100 100 0%
259 Todd Z. Crenshaw 1710 Alee, Mobile, AL 36605 100 100 0%
260 Shannon Crenshaw 1710 Alee, Mobile, AL 36605 100 100 0%
261 Crenshaw Zelmen 1710 Alee, Mobile, AL 36605 100 100 0%
262 Katherine Lynn Johnson 2006 Brown, Missouri City, TX 77489 100 100 0%
263 Robert P. Theroux 424 Thames St., Newport, RI 02840 100 100 0%
264 Blair B. Jones 501 N.W. 15th Ct, Boca Raton, FL 33486 100 100 0%
265 Alan C. Bennett 10655 NW 12th Manor, Plantation, FL 33322 100 100 0%
266 Lillian M. Peeples 424 16th St., Silvis, IL 61282 100 100 0%
267 Steve Priddy 2379 Briarwest, #108, Houston, TX 77077 100 100 0%
268 Shannon C. Supak 9800 Pagewood Ln., #2505, Houston, TX 77042 100 100 0%
269 Steven W. McCoy 9800 Pagewood Ln., #2505, Houston, TX 77042 100 100 0%
270 Tom McClure 1631 Poinsettia Dr., Ft. Lauderdale, FL 33305 100 100 0%
15
271 Corey P. Larder 6454 S. Gibraltar Cir., Aurora, CO 80016 100 100 0%
272 Jolie M. Larder 6454 S. Gibraltar Cir., Aurora, CO 80016 100 100 0%
273 Joallan M. Larder 6454 S. Gibraltar Cir, Aurora, CO 80016 100 100 0%
274 Stinson D. Haas 19285 Indian Summer Lane, Monument, CO 80132 100 100 0%
275 Carol S. Haas 19285 Indian Summer Lane, Monument, CO 80132 100 100 0%
276 Hy Ochberg 502 Park Avenue, #6D, New York, NY 10022 100 100 0%
277 Philippe Neimetz, C/O WPH Consultants LTD. 80 Broad St., 35th Floor, New York,
NY 10004-2209 100 100 0%
278 Joseph V. Ossoria 111 Havemeyer Place, Greenwich, CT 06830 100 100 0%
279 Walter De Canio 80 Broad St. Penthouse, New York, NY 10004 100 100 0%
280 Heather Stanfield 959 Grove Place, Costa Mesa, CA 92627 100 100 0%
281 Robert G. Reese 24502 Moonfire Dr., Dana Point, CA 92629 100 100 0%
282 Peter D. Finch P. O. Box 17119, Irvine, CA 92623 100 100 0%
283 Andy Bregman 226 Doshers Dr, Fort Mill, SC 29708 100 100 0%
284 Jeffrey Malken 10320 N. W. 16th Ct., Coral Springs, FL 33071 100 100 0%
285 David E. Harrington, Jr. 33 Towering Pines Dr, Spring, TX 77381-2593 200 200 0%
286 Richard S.Fleischner 7904 N. W. 72 Ave, Tamarac, FL 33321 100 100 0%
287 Sirena M. King 10901 Village Bend, #1104, Houston, TX 77072 100 100 0%
288 Paul Stafford 348 Appian Way, Union City, CA 94587 100 100 0%
289 Sonny Garaza 1395-C McQuesten Dr., San Jose, CA 95122 100 100 0%
290 Guy D. Weathers 1648 Milroy Place, San Jose, CA 95124 100 100 0%
291 Dennis F. Gabel 548 N. Lincoln Ave, Manteca, CA 95336 200 200 0%
292 Brian L. Hassig, C/O Bob Gartzman 21560 Toledo Road, Boca Raton, FL 33433 100 100 0%
293 Anselmo V. Lau 1507 Roosevelt Ave, Redwood City, CA 94061 100 100 0%
294 David E. Castro 643 Connie Ave, San Mateo, CA 94402 100 100 0%
295 Johnnie De La Garza, trustee for Leah S. Moet 18026 Cerca Azul Dr., San Antonio TX 78259 100 100 0%
296 Joseph L. Escobar 7554 Magnolia, Houston, TX 77023 100 100 0%
297 Mireya Villanueva 2623 Ivy St., Houston, TX 77026 100 100 0%
298 Katherine Roy 5 Main St., Liberty, ME 04949 100 100 0%
299 William G. Stoute 1205 Hillside Ave, #D, Austin, TX 78704 100 100 0%
300 James C. & Patricia Davis 10220 Pack Saddle Ct., Ft. Worth, TX 78108 1,000 1,000 0%
301 Howard & Florence Hungerford 1744 Bechelli Lane, Redding, CA 96002 25,000 25,000 0%
302 James C. Davis 10220 Pack Saddle Ct., Ft. Worth, TX 78108 2,000 2,000 0%
303 Jerry D. Morris 689 Johnson Lane, Red Oak, TX 75154 2,000 2,000 0%
304 Douglas and/or LaVonne Lang 14320 Miracle Court, Grabill, IN 46741 12,500 12,500 0%
305 Daniel D. Sierras 3847 Paris Street, Hemet, CA 92545 1,000 1,000 0%
306 Robert E. or Ann M. Schneider 39569 Kucera Ct., Murrieta, CA 92563-5400 100 100 0%
307 AJ & CT Robles Revocable Trust 1210 Crestlake Ave, Ventura, CA 93004 500 500 0%
308 Kenneth W. and Linda Faust Rt 1, Box 241 A, Grapeland, TX 75844 1,000 1,000 0%
309 Nancy K. Stuckey Rt 3, Box 8-S, Grapeland, TX 75844 1,500 1,500 0%
310 Holly R. Stuckey Rt 3, Box 8-S, Grapeland, TX 75844 25 25 0%
311 Jacob W. Buford 402 Oak Forrest, Angleton, TX 77515 100 100 0%
312 Johnnie S. Brock Route 4, Box 73-A, Grapeland, TX 75844 500 500 0%
313 J. D. Holt Route 4, Box 73-A, Grapeland, TX 75844 1,000 1,000 0%
314 William P. or Hope E. Burrows 41909 Skywood Drive, Temecula, CA 92591 500 500 0%
315 Pr Mark R. or Sharon R. McLagan 824 Brisa Del Mar, El Paso, TX 79912 500 500 0%
316 Mary B. Patterson 3626 Oakwood Drive, Dension, TX 75020 200 200 0%
317 Charles S. or Charlene L. Hilliard 920 Edmondson, Lewisville, TX 75077 500 500 0%
318 Russ or Michelle Melcher 153 14th Ave South, Columbus, NE 68601 1,750 1,750 0%
319 Daniel J. and Laura L. Cadena 29663 Squaw Valley Dr., Sun City, CA 92586-3479 150 150 0%
320 Laura L. Cadena 29663 Squaw Valley Dr., Sun City, CA 92586-3479 150 150 0%
321 Adelina Rivera 42200 Main Street-C58, Temecula, CA 92590 1,000 1,000 0%
322 First Dominion Financial, Ltd. 1800 E. Sahara, Suite 107, Las Vegas NV 89101 356,363 356,363 4%
323 Eugene R. Holtz 30596 Milano Road, Temecula, CA 92591-1933 1,000 1,000 0%
324 Harry G. or Elena J. McComas 31400 Britton Circle, Temecula, CA 92591 250 250 0%
325 Roy G. or Ilene M. Hackman 200 Ford Rd - Space 115, San Jose, CA 95138 500 500 0%
326 Rebecca Hackman 200 Ford Rd - Space 115, San Jose, CA 95138 500 500 0%
327 Cheyenne Hackman 200 Ford Rd - Space 115, San Jose, CA 95138 100 100 0%
328 Fawn Hackman 200 Ford Rd - Space 115, San Jose, CA 95138 100 100 0%
329 Ariana Hackman 200 Ford Rd - Space 115, San Jose, CA 95138 100 100 0%
16
330 John or Leanne Litaway 24036 Colmar Lane, Murrieta, CA 92562 100 100 0%
331 Dustin and Sherri Lijeham 19610 Clubhouse Dr., #10-222 2,500 2,500 0%
332 Joel or Sandra Baier RR1, Box 179, Delmont, SD 57330-9789 200 200 0%
333 Joshua Michael Elmore 749 Forest Drive, Wilkesboro, NC 28697 2,128 2,128 0%
334 Lisa Lang 14827 SW Millikan Way, #1312, Beaverton,
OR 97006 100 100 0%
335 Sandra K. Chavanu 1718 27th Street, Columbus, NE 68601 250 250 0%
336 Patricia J. Beckner P. O. Box 1185, Columbus, NE 68602 500 500 0%
337 Ryan and/or Jenna Melcher 1908 16th Ave., Central City, NE 68626 1,500 1,500 0%
338 Harrel Davis 40596 Via Jalapa, Murrieta, CA 92562 40,000 40,000 0%
339 Arthur Lang & Dorothy Lang J/T P. O. Box 624, Grapeland, TX 75844-0624 2,500 2,500 0%
340 Ann Elmore 749 Forest Drive, Wilkesboro, NC 28697 5,000 5,000 0%
341 Susan Hungerford 14308 44th Street, S.E., Snohomish, WA 98290 25,000 25,000 0%
total 1,040,000 0%
0% represents less than 1% of Supreme Hospitality's outstanding shares of common
stock.
Mr. Rudy W. De La Garza is a major shareholder of First Dominion Financial, LTD
and Jon Ruco, LTD. First Dominion Financial, LTD holds 356,363 common shares of
record and Jon Ruco, LTD holds 181,400 common shares of record, collectively
537,763 common shares or 5.4% of its class.
Neither Mr. De La Garza nor First Dominion Financial, LTD nor Jon Ruco, LTD has
any affiliation with First Dominion Financial Group, Inc.
Security holders, Douglas and/or La Vonne Lang, Lisa Lang and Authur Lang &
Dorothy Lang J/T are related to the CEO Larry W. Lang.
Supreme Hospitality will not receive any proceeds from the sale of any shares by
the selling security holders. Supreme Hospitality is bearing all expenses in
connection with the registration of the selling security holders' shares.
The shares owned by the selling security holders are being registered pursuant
to Rule 415 of the General Rules and Regulations of the Securities and Exchange
Commission which Rules pertain to delayed and continuous offerings and sales of
securities. In regard to the selling security holders' shares offered under Rule
415, Supreme Hospitality has made certain undertakings in Part II of the
registration statement of which this prospectus is a part pursuant to which, in
general, Supreme Hospitality has committed to keep this prospectus current
during any period in which offers or sales are made pursuant to Rule 415.
PLAN OF DISTRIBUTION
We are offering up to a total of 1,000,000 shares of convertible preferred stock
on a best efforts, no minimum, 1,000,000 shares maximum. The shares may be
converted one, 1, preferred share for three, 3, common shares at any time after
twelve months of purchase and automatically on its thirty-six month anniversary.
The offering price is $6.30 per share. There is no minimum number of shares that
we have to sell. There will be no escrow account. We will immediately use all
money received from the offering and there will be no refunds. The offering will
be for a period of two years from the effective date.
Supreme Hospitality will effect offers and sales of shares through printed
copies of this Memorandum delivered personally or by mail or electronically by
Supreme Hospitality.
Any money we receive will be immediately appropriated by us for the uses set
forth in the Use of Proceeds section of this prospectus. No funds will be placed
in an escrow account during the offering period and no money will be returned
once we have accepted the subscription.
We will sell the shares in this offering through Larry W. Lang, one of our
officers and director. Mr. Lang will receive no commission from the sale of any
shares. Mr. Lang will not register as a broker-dealer under Section 15 of the
Securities Exchange Act of 1934 in reliance upon Rule 3a4-1. Rule 3a4-1 sets
forth those conditions under which a person associated with an issuer may
participate in the offering of the issuer's securities and not be deemed to be a
broker-dealer. The conditions are that:
1. The person is not subject to a statutory disqualification, as that
term is defined in Section 3(a)(39) of the Act, at the time of his
participation; and,
17
2. The person is not compensated in connection with his participation
by the payment of commissions or other remuneration based either directly
or indirectly on transactions in securities; and,
3. The person is not at the time of their participation, an associated
person of a broker-dealer; and,
4. The person meets the conditions of Paragraph (a)(4)(ii) of Rule
3a4-1 of the Exchange Act, in that he (A) primarily performs, or is
intended primarily to perform at the end of the offering, substantial
duties for or on behalf of the Issuer otherwise than in connection with
transactions in securities; and (B) is not a broker or dealer, or an
associated person of a broker or dealer, within the preceding twelve (12)
months; and (C) do not participate in selling and offering of securities
for any Issuer more than once every twelve (12) months other than in
reliance on Paragraphs (a)(4)(i) or (a)(4)(iii).
Mr. Lang is not subject to disqualification, is not being compensated, and is
not associated with a broker-dealer. Mr. Lang is and will continue to be one of
our officers and directors at the end of the offering and has not been during
the last twelve months and is currently not a broker/dealer or associated with a
broker/dealer. Mr. Lang has not during the last twelve months and will not in
the next twelve months offer or sell securities for another corporation.
Only after the SEC declares our registration statement effective, we intend to
advertise, through tombstones, and hold investment meetings in various states
where the offering will be registered. We will not utilize the Internet to
advertise our offering. We will also distribute the prospectus to potential
investors at the meetings and to our friends and relatives who are interested in
us and a possible investment in the offering.
In order to comply with the securities laws of certain states, if applicable,
the Securities offered hereby will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states
Securities may not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption from the registration or
qualification requirement is available and complied with.
Offering Period and Expiration Date
This offering will start on the date of this prospectus and continue for a
period of two years.
Procedures for Subscribing
If you decide to subscribe for any shares in this offering, you must
1. Execute and deliver a subscription agreement
2. Deliver a check or certified funds to us for acceptance or
rejection.
All checks for subscriptions must be made payable to Supreme Hospitality.
Right to Reject Subscriptions
We have the right to accept or reject subscriptions in whole or in part, for any
reason or for no reason. We will return all monies from rejected subscriptions
immediately to the subscriber, without interest or deductions. Subscriptions for
securities will be accepted or rejected within 48 hours after we receive them.
We will pay all costs and expenses in connection with this offering, including
but not limited to all expenses related to the costs of preparing, reproducing
or printing this memorandum, legal expenses, and other expenses incurred in
qualifying or registering the offering for sale under state laws as may be
necessary, as well as the fees and expenses of our attorneys and accountants. It
is anticipated that the total of all costs and expenses in connection with this
offering will be approximately $132,335.00. This includes:
Attorney fees $10,000.00
CPA fees 62,037.00
Consultant fees 55,000.00
SEC filing fee 1,668.00
NASD filing fee 1,130.00
Transfer agent 500.00
Material fees (postage, copies) 2,000.00
Total $132,335.00
=========================================================================
18
Sales by Non-Affiliated Selling Security holders
After effectiveness of this prospectus, the non-affiliated selling security
holders may offer and sell their shares at a price and time determined by them
without regard to Rule 144. The 2,000,000 shares registered in this prospectus
for the selling security holders are held by non-affiliates of Supreme
Hospitality.
Section 4(3) of the Securities Act provides an exemption from the registration
provisions of the Securities Act for transactions by a dealer for transactions
occurring within 40 days of the effective date of a registration statement for
the securities or prior to the expiration of 40 days after the first date upon
which the security was offered to the public.
LEGAL PROCEEDINGS
There are no legal proceedings currently pending.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Name Age Position
- ---------------- ------------ --------------------------------------------
Larry W. Lang 54 Chairman, Sole Director, President And
Secretary/Treasurer
(Principal Financial and Accounting Officer)
Mr. Larry Lang is a registered Professional engineer in 17 states. Mr. Lang
through his company Mexam, Inc., provided structural engineering consulting to a
number of companies. He has over 30 years experience. He was responsible for the
joist design for the Ontario Mill Mall in Ontario California as well as the
casino, New York, New York, in Las Vegas, Nevada. Mr Lang obtained his general
Contractor's License in California in April 1998 and through his construction
company Lang Construction & Dev., Inc. was the general contractor responsible
for the building of Temecula Valley Inn. Mr. Lang has been involved in the
hospitality industry for the last four years. Mr. Lang acquired the land,
designed and constructed Temecula Valley Inn.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information relating to the beneficial ownership
of Supreme Hospitality's common stock by those persons beneficially holding more
than 5% of Supreme Hospitality's capital stock, by Supreme Hospitality's
directors and executive officers, and by all of Supreme Hospitality's directors
as a group, as of December, 2000.
Security ownership of certain beneficial owners:
Class Name & Address No. Of Shares Percent
- ----------------- ---------------------- -------------------- ---------------
Common Stock Louise Davis 3,000,000 30%
40596 Via Jalapa
Murrieta, CA 92562
- ----------------- ---------------------- -------------------- ---------------
Security ownership of Management
- ----------------- ---------------------- -------------------- ---------------
Class Name & Address No. Of Shares Percent
- ----------------- ---------------------- -------------------- ---------------
Common Stock Larry W. & Diana Lang 2,960,000 30%
41919 Skywood Drive
Temecula, CA 92591
- ----------------- ---------------------- -------------------- ---------------
Common Stock Floyd & Glenda Janeway 3,000,000 30%
25060 Hancock Avenue
Suite # 179
Murrieta, CA 92562
- ----------------- ---------------------- -------------------- ---------------
Common Stock Rudy W. De La Garza 537,763 collectively 5.4%
- ----------------- ---------------------- -------------------- ---------------
19
DESCRIPTION OF SECURITIES
COMMON STOCK
Our authorized capital common stock consists of 50,000,000 shares of common
stock, $.0001 par value per share. As of the date of this prospectus, there are
10,000,000 shares of common stock issued and outstanding, which are held of
record by approximately 341 holders.
Holders of our common stock are entitled to one vote for each share on all
matters submitted to a shareholder vote. Holders of common stock do not have
cumulative voting rights. Therefore, holders of a majority of the shares of
common stock voting for the election of directors can elect all of the
directors. Holders of common stock are entitled to share in all dividends that
the board of directors, in its discretion, declares from legally available
funds. In the event of our liquidation, dissolution or winding up, each
outstanding share entitles its holder to participate in all assets that remain
after payment of liabilities and after providing for each class of stock, if
any, having preference over the common stock.
Holders of our common stock have no conversion, preemptive or other subscription
rights, and there are no redemption provisions for the common stock. The rights
of the holders of common stock are subject to any rights that may be fixed for
holders of preferred stock, when and if any preferred stock is authorized and
issued. All outstanding shares of common stock are, and the shares underlying
all option and warrants will be, duly authorized, validly issued, fully paid and
non-assessable upon our issuance of these shares.
All shares of common stock now outstanding are fully paid for and non-assessable
and all shares of common stock which are the subject of this offering, when
issued, will be fully paid for and non-assessable. We refer you to our Articles
of Incorporation, Bylaws and the applicable statutes of the State of Nevada for
a more complete description of the rights and liabilities of holders of our
securities.
NON-CUMULATIVE VOTING
Holders of shares of our common stock do not have cumulative voting rights,
which means that the holders of more than 50% of the outstanding shares, voting
for the election of directors, can elect all of the directors to be elected, if
they so choose, and, in that event, the holders of the remaining shares will not
be able to elect any of our directors. After this offering is completed, the
present stockholders will still own approximately 90% of our outstanding shares.
After preferred share in this offering are converted for common shares of
Supreme Hospitality, the present stockholders will own approximately 80% of our
outstanding shares.
CASH DIVIDENDS
As of the date of this prospectus, we have not paid any cash dividends to
stockholders. The declaration of any future cash dividend will be at the
discretion of our board of directors and will depend upon our earnings, if any,
our capital requirements and financial position, our general economic
conditions, and other pertinent conditions. It is our present intention not to
pay any cash dividends on our common stock in the foreseeable future, but rather
to reinvest earnings, if any, in our business operations.
REPORTS
After we complete this offering, we will not be required to furnish you with an
annual report. Further, we will not voluntarily send you an annual report. We
will be required to file reports with the SEC under section 15(d) of the
Securities Act. The reports will be filed electronically. The reports we will be
required to file are Forms 10-KSB, 10-QSB, and 8-K. You may read copies of any
materials we file with the SEC at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The
SEC also maintains an Internet site that will contain copies of the reports we
file electronically. The address for the Internet site is www.sec.gov.
20
PREFERRED STOCK
Our authorized preferred stock consists of 1,000,000 shares of stock, $.0001 par
value per share. As of the date of this prospectus, there are no shares of
preferred stock outstanding. Our preferred stock ranks senior to all of our
other equity securities, including common stock. Dividends, when, as and if
declared by the board of directors, shall be paid out of funds at the time
legally available for such purpose. The preferred stock will bear simple
interest at an annual rate of 10% and the interest will be paid in common stock
at market price upon conversion.
LIQUIDATION PREFERENCE
In the event of a liquidation, dissolution or winding up of our business,
whether voluntary or involuntary, the holders of shares of the preferred stock
shall be entitled to receive out of our assets available for distribution to our
stockholders, an amount equal to $1.00 per share, plus any accrued dividends and
unpaid thereon to the date of liquidation, before any payment shall be made or
any assets distributed to the holders of our common stock or any class or series
of our capital stock ranking junior as to liquidation rights to the preferred
stock.
VOTING RIGHTS
Supreme Hospitality shares of 10% series A preferred stock carry no voting
rights except as required by law. Nevada law requires all shares of a series
must have voting powers, designations, preferences, limitations, restrictions
and relative rights identical with those of other shares of the same series.
CONVERSION RIGHTS
The preferred stock shall, at the option of the holder, be convertible, at any
time later than one year after the share is purchased, in whole or in part, into
two fully paid and non-assessable shares of common stock. If, three years after
the date of purchase, the holder of the preferred share has not exercised his,
her, or its right of conversion, the share shall automatically convert into
three fully paid and non-assessable shares of common stock.
LITIGATION
We are not a party to any pending litigation and none is contemplated or
threatened.
PENNY STOCK REGULATION
Penny stocks generally are equity securities with a price of less than $5 per
share other than securities registered on certain national securities exchanges
or listed on the Nasdaq Stock Market, provided that current price and volume
information with respect to transactions in such securities are provided by the
exchange or system. The penny stock rules impose additional sales practice
requirements on broker-dealers who sell such securities to persons other than
established customers and accredited investors, generally those with assets in
excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together
with their spouse. For transactions covered by these rules, the broker-dealer
must make a special suitability determination for the purchase of such
securities and have received the purchaser's written consent to the transaction
prior to the purchase. Additionally, for any transaction involving a penny
stock, unless exempt, the rules require the delivery, prior to the transaction,
of a disclosure schedule prescribed by the SEC relating to the penny stock
market. The broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing recent price
information on the limited market in penny stocks. Because of these penny stock
rules, broker-dealers may be restricted in their ability to sell Supreme
Hospitality's common stock. The foregoing required penny stock restrictions will
not apply to Supreme Hospitality's common stock if such stock reaches and
maintains a market price of $5 or greater.
NEVADA LAW NRS 78.195
Issuance of more than one class or series of stock; rights of stockholders.
If a corporation desires to have more than one class or series of stock, the
articles of incorporation must prescribe, or vest authority in the board of
directors to prescribe, the classes, series and the number of each class or
series of stock and the voting powers, designations, preferences, limitations,
restrictions and relative rights of each class or series of stock. If more than
one class or series of stock is authorized, the articles of incorporation or the
21
resolution of the board of directors passed pursuant to a provision of the
articles must prescribe a distinguishing designation for each class and series.
The voting powers, designations, preferences, limitations, restrictions,
relative rights and distinguishing designation of each class or series of stock
must be described in the articles of incorporation or the resolution of the
board of directors before the issuance of shares of that class or series.
1. All shares of a series must have voting powers, designations,
preferences, limitations, restrictions and relative rights
identical with those of other shares of the same series and,
except to the extent otherwise provided in the description of the
series, with those of other series of the same class.
2. Unless otherwise provided in the articles of incorporation, no
stock issued as fully paid up may ever be assessed and the
articles of incorporation must not be amended in this particular.
3. Any rate, condition or time for payment of distributions on any
class or series of stock may be made dependent upon any fact or
event which may be ascertained outside the articles of
incorporation or the resolution providing for the distributions
adopted by the board of directors if the manner in which a fact
or event may operate upon the rate, condition or time of payment
for the distributions is stated in the articles of incorporation
or the resolution.
4. If the corporation is authorized to issue more than one class of
stock or more than one series of any class, the voting powers,
designations, preferences, limitations, restrictions and relative
rights of the various classes of stock or series thereof and the
qualifications, limitations or restrictions of such rights must
be set forth in full or summarized on the face or back of each
certificate which the corporation issues to represent the stock,
or on the informational statement sent pursuant to NRS 78.235,
except that, in lieu thereof, the certificate or informational
statement may contain a statement setting forth the office or
agency of the corporation from which a stockholder may obtain a
copy of a statement setting forth in full or summarizing the
voting powers, designations, preferences, limitations,
restrictions and relative rights of the various classes of stock
or series thereof. The corporation shall furnish to its
stockholders, upon request and without charge, a copy of any such
statement or summary.
5. The provisions of this section do not restrict the directors of a
corporation from taking action to protect the interests of the
corporation and its stockholders, including, but not limited to,
adopting or executing plans, arrangements or instruments that
deny rights, privileges, power or authority to a holder of a
specified number of shares or percentage of share ownership or
voting power.
INTEREST OF NAMED EXPERTS AND COUNSEL.
None
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES.
Regarding indemnification for liabilities arising under the Securities Act of
1933, which may be permitted to directors or officers under Nevada law, we are
informed that, in the opinion of the Securities and Exchange Commission,
indemnification is against public policy, as expressed in the Act and is,
therefore, unenforceable.
ORGANIZATION WITHIN LAST FIVE YEARS
Grubstake, Inc. was incorporated in Nevada on November 10, 1997 and at that time
had no operations and was considered a development stage company as defined in
FASB No.7. Grubstake, Inc. was formed specifically to be a clean public shell
for the purpose of either merging with or acquiring an operating company with
assets and some operating history. The president and only director was Ms. Anne
Angell. Twenty-five thousand common shares of the company were issued to The
Bearer. On December 1, 1998 Grubstake, Inc. changed its name to Richwood, Inc.
Temecula Valley Inn had been the sole proprietorship of Larry and Diana Lang for
the period from its inception in 1997 through December 31, 1999. On January 1,
2000, all of the assets and liabilities relating to the hotel operation know as
Temecula Valley Inn were transferred to a newly formed S-corporation, Temecula
Valley Inn, Inc.
Temecula Valley Inn, Inc.'s activities were the construction and subsequent
operation of a ninety-room, 3-story hotel located in Temecula, California, which
was opened to the public in December 1998 under the name of Temecula Valley Inn.
22
On March 22, 2000 First Dominion Financial, LTD a major shareholder of Richwood,
Inc., formally Grubstake, Inc. entered into a consultant agreement with Temecula
Valley Inn, Inc. The fee for the services provided was $73,500. The total fee
was payable as follows: $24,500.00 on signing the agreement, $24,500.00. to be
paid when the form 10SB12G/A Registration Statement was filed with the
Securities and Exchange Commission and on the completion and transfer of stock
as per agreement for the exchange of common stock and the balance of $24,500.00
is to be paid when the stock for the merged company is initially quoted on the
Over-the-Counter Bulletin Board exchange. The agreement was later verbally
modified to include the filing of the form SB-2 for the Registration of
Securities to Be Sold to the Public by Small Business Issuers with the
Securities and Exchange Commission. There was no monetary agreement for the
exchange of stock. The purpose of the agreement was for First Dominion
Financial, LTD to consult Temecula Valley Inn, Inc. on becoming a publicly
trading company through a reverse merger and the completion of the documents
required. This consulting agreement was filed as exhibit 99.8.
On April 17, 2000, Richwood, Inc., formally Grubstake, Inc. simultaneously
changed its name to Supreme Hospitality, and the Board of directors, Mrs. Anne
Angell, elected Larry W. Lang to its Board of Directors and Mrs. Anne Angell
resigned. Mr. Larry Lang is now on the Board of Directors of both Supreme
Hospitality and Temecula Valley Inn, Inc. and agreed to the terms and condition
of the agreement for the exchange of common stock. First Dominion Financial,
LTD, Jon Ruco, LTD, First Dominion Financial Group, Inc. are major shareholders
of Supreme Hospitality formerly Richwood, Inc., formerly Grubstake, Inc. No
shareholders of Grubstake, Inc., Richwood, Inc. or Supreme Hospitality received
any fee for their role as a shareholder in the exchange of stock with Temecula
Valley Inn, Inc.
Rudy W. De La Garza of First Dominion Financial, LTD a major shareholder of
Supreme Hospitality negotiated for the exchange of common stock with Larry W.
Lang a major shareholder of Temecula Valley Inn, Inc.
On April 30, 2000, Temecula Valley Inn, Inc. through a re-capitalization,
reverse merger, became a wholly owned subsidiary of Supreme Hospitality in a
qualifying reorganization under Section 368 (a)(1)(B) of the Internal Revenue
Code of 1986. The Board of Directors and the key management personnel determined
the stock for stock exchange ratio. Temecula Valley Inn, Inc. traded 100% of its
common shares for 9,000,000 shares of Supreme Hospitality. In affect Temecula
Valley Inn, Inc. traded 10% of its stock for a shell company with over 335
shareholders of record. We believe the shareholders base would be necessary for
support of our stock when the stock begins trading on an exchange.
The board of directors of Supreme Hospitality believes the exchange of stock
with Temecula Valley Inn, Inc. makes good business sense and would add value to
the shareholders equity by being part of a fully operating company.
The board of directors of Temecula Valley Inn, Inc. believes the large
shareholders base of Supreme Hospitality would add value to the company's future
growth and be necessary for support of our stock when the stock begins trading
on an exchange.
DESCRIPTION OF BUSINESS
You should read this prospectus summary together with the entire prospectus,
including the more detailed information in our financial statements and
accompanying notes appearing elsewhere in this prospectus. Unless otherwise
indicated, all information contained in this prospectus relating to our shares
of common and preferred stock is based upon information as of March 21,2001.
Company Description
Grubstake, Inc. was organized November 10, 1997, under the laws of the State of
Nevada. On December 1, 1998, Grubstake, Inc. changed its name to Richwood, Inc.
and on April 17, 2000, to Supreme Hospitality.
Temecula Valley Inn, Inc. became a wholly owned subsidiary of Supreme
Hospitality through a re-capitalization on April 30, 2000. See Organization in
the Last Five Years above.
Neither Supreme Hospitality nor any of its formally known companies have been in
bankruptcy, receivership or similar proceedings.
Supreme Hospitality is in the hospitality, hotel business catering to the
business, leisure and vacation traveler. Its wholly owned subsidiary Temecula
Valley Inn, Inc. owns and operates the Temecula Valley Inn. Temecula Valley Inn
has 16 full time employees and 2 part-time employees. Currently, the executive,
Larry Lang, is not taking any compensation.
23
Temecula Valley Inn is the newest hotel built in the Temecula Valley. Being only
two years old it is considered one of the premier hotel properties in the
valley. The architectural design with the massive Porte Cachare, the three-story
framework and the elegant flood lighting in the evenings gives the hotel a
majestic and grandeur appearance. The hotel also features interior corridor
entrance for guest safety and convenience. The rooms are 13' wide instead of the
normal 12' wide that is utilized in all of the other hotel/motel units in the
surrounding area. The hotel furnishes refrigerators, hair dryers, coffee pots
and 25" color televisions with remote in every room. There is only one other
hotel in Temecula that offers the amount of extra amenities to its guests.
Temecula Valley Inn has been given the highest honors in the Days Inns Franchise
group. They have classified the hotel as a five sunburst, Chairman's Award
rating. It was selected as only one of ten out of a total of 1,925 hotels to
represent the Days Inn with the picture of the hotel on the cover of the
International directory.
Though cyclical in nature, Temecula Valley Inn's occupancy rates have continued
to grow. The occupancy average rate for 1999 was 47.30% while in 2000 the
average was 50.10%, an increase of 5.92%. As of March 31, 2001 the occupancy
average rate was 65.09% compared to March 31, 2000 at 43.11% representing an
increase of 51% for the first quarter. The average daily rate for 1999 was
$79.65 per room while in 2000 it was $81.78 per room, an increase of 2.67%. As
of March 31, 2001 the average daily rate was down at $73.61 compared to March
31, 2000 at $83.86, or a decrease of 12%. An indicator more commonly used in the
industry is the revenue per available room rate. This rate shows 1999 at $37.67
and year 2000 at $40.97, an increase of 8.75% for the year and as of March 31,
2001 a rate of 47.91 compared to the same time in 2000 at $36.15 for an increase
of 33%.
Supreme Hospitality currently serves the traveler who requires perceived value
for the nightly rate he/she pays. Through active marketing to various
corporations, Supreme Hospitality has been successful during its first year of
operations of attracting a reasonable volume of corporate business. On weekends,
Supreme Hospitality attracts customers who are typically in town to attend
various community functions including, but not limited to, the Balloon and Wine
Festival and the Rod Run. During the summer months there are activities in the
area almost every weekend. Occupancy rates during these weekends approached
approximately 100% on average during the two years of operation.
There are 11 hotels and motels with 810 rooms, in the community area including
Temecula Valley Inn. The property has excellent visibility and easy access from
Interstate 15. There are numerous restaurants within walking distance of the
hotel. Supreme Hospitality utilizes the services of Resolutions to assist in the
booking of rooms. This firm charges 12% for reservations they make. The website
generates approximately 15% of business, whereas walk-ins average 20%, corporate
business averages 40%, AARP & AAA combined provide 25%.
Temecula Valley Inn has developed its own website to take advantage of the
growing Internet market. The hotel's web address is www.temeculavalley.com. The
hotel is insured by Legion insurance company at 4,000,000 for the building,
1,500,000 personal Property and 2,000,000 business income lost, all with a
$1,000 deductible. This insurance policy can be located as exhibit 99.10 titled
Temecula Valley Inn Insurance Policy.
Supreme Hospitality's acquisition growth strategy is to increase cash flow and
enhance shareholder value by building or acquiring additional hotels that meet
Supreme Hospitality's investment criteria.
Supreme Hospitality, on July 1, 2000 entered into a franchise agreement with
Days Inn of America. The franchise fee is 8 1/2% of gross room revenues, payable
monthly. The first two months were charged at a reduced rate of 2%. Supreme
Hospitality expects increased room revenues due to Days Inn of America's
national and international marketing programs. Supreme Hospitality does not have
the need for any government approval of its services. There is no government
regulation on the business. There was no research and development activity.
Supreme Hospitality does not have any products or services, which are affected
by environmental laws. The franchise agreement can be located on page 48 of this
document, exhibit 99.7.
Competitive Conditions
The hotel industry is highly competitive and hotels experience competition
primarily from other upscale hotels in its immediate vicinity. However there is
also competition with hotel properties in the same geographic market. Supreme
Hospitality will also be in competition with hotels which may have substantially
greater marketing and financial resources than Supreme Hospitality.
AVAILABLE INFORMATION
Supreme Hospitality has filed with the Securities and Exchange Commission
("SEC") a Registration Statement on Form 10-SB ("Registration Statement") under
the Securities Act of 1933, as amended ("Securities Act"), with respect to the
24
Securities. This Prospectus, which constitutes part of the Registration
Statement, omits certain of the information contained in the Registration
Statement and the exhibits thereto on file with the SEC pursuant to the
Securities Act and the rules and regulations of the SEC hereunder. The
Registration Statement, including exhibits thereto, may be inspected and copied
at the public reference facilities maintained by the SEC at 450 Fifth Street,
NW, Room 1024, Washington, DC. 20549. Copies may be obtained at the prescribed
rates from the public reference Section of the SEC at its principal office in
Washington, DC. Statements contained in this Prospectus as to the contents of
any contract or any document referred to are not necessarily complete, and in
each instance reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference.
Supreme Hospitality is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), and in accordance
therewith will file reports and other information with the SEC. Such reports and
other information can be inspected and copied at the location described above.
Copies of such materials can be obtained by mail from the Public Reference
Section of the SEC at 450 Fifth Street, NW, Room 1024, Washington, DC. 20549, at
prescribed rates.
MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS
The following discussion should be read in connection with Supreme Hospitality's
financial statements and related notes thereto included elsewhere in this
Prospectus.
OVERVIEW
Supreme Hospitality was organized for the purpose of creating a corporate
vehicle to seek, investigate and, if such investigation warrants, acquire an
interest in one or more business opportunities presented to it by persons or
firms who or which desire to seek perceived advantages of a publicity held
corporation. On April 30, 2000 Supreme Hospitality acquired Temecula Valley Inn,
a Nevada Corporation as a wholly owned subsidiary of Supreme Hospitality in an
exchange of Common Stock, Sub Curia. The primary activity of Supreme Hospitality
is the hospitality business for both the business and leisure traveler.
RESULTS OF OPERATIONS
Total revenues, ending December 31, 1999, were $1,257,463, compared to the year
2000, ending December 31, 2000, which were $1,410,429. Total revenues, ending
March 31, 2000, were $315,203, compared to the period ending March 31, 2001 of
$400,368. The small increase in revenues for both periods is minute and needs no
further discussion.
Total Operating Expenses, ending December 31, 1999, were $1,678,825, compared to
the year ending December 31, 2000, which were $1,778,313. The main reason for
this slight increase in operating expenses is the increase in interest in the
year 2000. In the year ending December 31, 1999 the total interest in operating
expenses was $540,176, compared with the year ending December 31, 2000 which had
a total interest amount of $619,007. Loss from operations, ending December 31,
1999 were $421, 362, compared to the year ending December 31, 2000, which were
$367,884.
Due to unexpected higher cost of start-up and one year of city road construction
on our only entrance, which inhibited our projected cliental, we became past due
in our real estate taxes. The amount of these past due taxes is $104,000 which
includes interest and penalties for the period from December 1999 through May
2000. We are now in technical violation of both bank loans. Our auditor and Mr.
Lang have had verbal commutations with the banks which have replied, and we
quote, that although the arrears are a serious matter, the arrears do not
trigger a default of the loans, end of quote. However, because verbal statements
from the banks are not binding on them, the banks could still call the notes
due. Furthermore, as the loan payments are currently maintained, and Supreme
Hospitality timely and fully explains its reasons for any technical violations,
the banks will not call the loan due. Due to the banks response and the fact
that we are and have been current with our bank loans, we do not perceive the
arrears a risk at this time. The bank notes can be found as exhibit 99.9, Valley
Independent Bank Note and exhibit 99.11, Temecula Valley Bank Note.
Due to the increase in revenue we have experienced during the first quarter of
this year, we are meeting all our financial obligations and feel we will
continue to do so in the future. We have been able to set aside a fund to be
used for the repayment of the back taxes due, and expect to be current by the
end of this year.
25
Supreme Hospitality may obtain funds for additional hotel construction or
acquisition by private placement, equity or debt issues. Persons purchasing
securities in these placements and other shareholders will likely not have the
opportunity to participate in the decision relating to any acquisition.
Investors will entrust their investment monies to Supreme Hospitality's
management before they have a chance to analyze any ultimate success which is
heavily dependent on Supreme Hospitality's management, which will have virtually
unlimited discretion in new construction or acquisition.
Relating to the Temecula Valley Inn, depreciation is provided on the financial
statements on the straight-line method. For tax purposes, MACRS is used. For
both, the following estimated useful lives are:
Building and Improvements 40 years
Land Improvements 15-40 years
Furniture and Equipment 7-10 years
On the Temecula hotel, the realty tax rate on the building and land is 1.12925%
plus fixed charges of $5,904. The annual taxes are $82,820. There are no
proposed improvements on this property.
Supreme Hospitality plans to develop and construct a hotel in the future in
Redding, California. It has an option to purchase approximately 2.61 acres of
approved hotel property for $1,300,000 including a complete package, which
consists of a business plan, construction costs, drawings, etc. See Exhibit
99.6, Option Agreement. This property is located adjacent to Interstate 5 and
Hilltop Drive in Redding, California. This parcel is the last available hotel
property in this immediate area. The cost is estimated to be $5,800,000 for
land, building and improvements. Supreme Hospitality has not paid any money for
the option. The option price is $1,300,000. The contract to purchase the land
was signed in May 2000 and is effective for 12 months. Larry Lang has verbally
agreed to extend the Option through May 2002. The current owner of the land is
Larry Lang, a major stockholder of Supreme Hospitality. The current plan is to
exercise the purchase option on the Redding property and develop and build a
90-room hotel on this property. This development is anticipated to be the next
development Supreme Hospitality will undertake.
The small business does not own the above-described property and therefore, has
no interest, mortgages, liens or encumbrances against such properties. The
monies will be obtained through the raising of additional equity funds. At this
time Supreme Hospitality does not have the appropriate funds for this option and
has not investigated any other means for acquiring these funds. In the event
Supreme Hospitality should be unable to raise the funds from the offering
herein, Supreme Hospitality may have to relinquish this offering.
Supreme Hospitality has identified other properties in the Temecula valley of
Southern California to acquire, develop and build hotels. This will be done
through the raising of additional funding. An additional property in the
Temecula Valley is included on the financial projections commencing operations
in the third quarter of 2002. Development cost for a 120-room hotel is estimated
at $7,800,000 for land development, building and improvements.
The management of Supreme Hospitality believes that the Temecula Valley will
continue to see unprecedented growth not seen since the mid 1980's. Supreme
Hospitality is poised to take advantage of that growth, given it can meet its
financial requirements.
Supreme Hospitality believes that through the acquisition of the land and
subsequent development of these properties, shareholder value will be increased.
The management team has the expertise to identify prime properties and negotiate
a fair price for the land and develop it and build a quality facility, which
will increase in value.
As is customary in the industry, Supreme Hospitality may pay a finder's fee for
locating an acquisition prospect. If any such is paid, it will be approved by
Supreme Hospitality's Board of Directors and will be in accordance with the
industry standards. Such fees are customarily between 1% and 5% of the size of
the transaction, based upon a sliding scale of the amount involved. Such fees
are typically in the range of 5% of a $1,000,000 transaction ratably down to 1%
in a $4,000,000 transaction. Management has adopted a policy that such a
finder's fee or real estate brokerage fee could, in certain circumstances, be
paid to any employee, officer, director or 5% shareholder of Supreme
Hospitality, if such person plays a material role in bringing in a transaction
to Supreme Hospitality.
DESCRIPTION OF PROPERTY
Temecula Valley Inn is located at 27660 Jefferson Avenue, Temecula, CA 92590.
26
The mortgages on the property are as follows:
Supreme Hostility's president and his wife are the only persons obligated to
repay the following long-term debt. They quitclaimed their interests in the real
estate to Supreme Hospitality, which was a violation of the banks' loan
covenants. The banks anticipate that they will eventually require loan
assumptions by Supreme Hospitality however no action has been taken to date. For
financial presentation purposes, all of the following loans are presented as
debt of Supreme Hospitality since the majority of them are collateralized by
real and personal property of Supreme Hospitality.
Note payable to a bank, payable in monthly installments of $21,961 including
interest at prime plus 1%, final payment due April, 2006 of $2,744,836,
collateralized by first position on substantially all of the assets owned by
Supreme Hospitality or hereinafter acquired.
The interest rate at December 31, 2000 was 10.50%. Because the bank has not
requested an increase in the total monthly amount since inception of the loan as
a result of the increasing prime rate, there has been no reduction in loan
principal since May 2000. As of December 31, 2000, total accrued interest on the
loan exceeded the monthly payments required by a total of $16,185, which has
been included in accrued liabilities.
Note payable to a bank in the amount of $978,972, guaranteed by the Small
Business Administration, payable in monthly installments of $9,444, including
interest based on 8.5 % prime plus 2%, plus or minus adjustments quarterly for
interest rate changes, final amortized balance due February 2023, collateralized
by a second position on substantially all of the assets owned by Supreme
Hospitality or hereinafter acquired. The prime rate on December 31, 2000 was
9.50%.
Note payable to an individual Donald W. Coop and Jennean Coop, Husband and Wife,
as Community Property in the amount of $500,000 payable in monthly installments
of $4,825, including interest at 10%, final payment due February 2003,
collateralized by a third position on Supreme Hospitality's real property. The
note has been filed as exhibit 99.12
DEMOGRAPHICS
Temecula's demographic profile shows it to be a very rapidly growing, ethnically
diverse place, where relatively young, well-educated families are raising
children, and succeeding economically.
Since 1990-1997, the city has grown from 27,099 to 43,100 people. The 59.0%
growth rate is the fastest of any Inland Empire community with over 40,000
residents.
Temecula's expanding economy has given it the wherewithal to devote an
increasing amount of community resources to education, parks and law
enforcement. The city has 23 parks covering 199 acres, one of the premier
varietal wine growing areas of California including twelve wineries that have a
wide range of grapes and is one of the safest cities in California having a
crime rate 50% below that of the next safest Inland Empire city as represented
by 1996 studies.
Location:
Temecula is located 85 miles southeast of Los Angeles, 487 miles south of San
Francisco, and 55 miles north of San Diego.
Economic Growth & Trends:
1970 1980 1990 1998
Population-County 459,074 663,116 1,170,413 1,441,036
Taxable sales-County $828,578 $3,274,017 $9,522,631 $11,972,371
Population-City 2,773 8,234 27,099 46,558
Taxable Sales-City N/A N/A $119,900 $831,094
Housing Units-City N/A N/A 9,130 13,947
Median Household
Income-City N/A N/A $44,270 $63,248
School Enrollment (K-12) N/A N/A 7,595 14,614
27
Ethnic Distribution:
White 80.8%
Hispanics 14.2%
Black 1.5%
Asian/pacific Islander 2.4%
American Indian 0.5%
Other Race 0.5%
TOTAL 100.0%
Climate:
AVERAGE TEMPERATURE RAIN HUMIDITY
Period Min Mean Max Inches 4a.m. Noon 4p.m.
- -----------------------------------------------------------------------------------------------------------
January 46.0 61.0 69.9 1.35 55 40 55
April 51.7 62.0 72.2 0.75 60 30 50
July 62.5 73.4 84.2 0.05 45 40 35
October 52.4 64.3 76.2 0.46 50 30 45
- -----------------------------------------------------------------------------------------------------------
Year 57.2 64.7 73.4 10.44 52 40 45
Transportation:
Rail: None
Truck: Two (2) carriers are located in Temecula
Over night delivery To: Los Angeles, San Francisco, San Diego and Phoenix.
Air: French Valley Airport, owned by Riverside County, is
a general aviation facility. Approximately one hour
drive to San Diego, Ontario, John Wayne and Palm
Springs Airports.
Bus: Greyhound to Riverside, San Diego, Los Angeles,
Riverside Transit Agency local and intercity bus
service.
Ports: Nearest ports at Los Angeles-Long Beach, 85 miles
northeast, and San Diego, 55 miles south.
Highways: I-215 north to Riverside I-15 north to Corona, Orange
County and Los Angeles I-15 south to San Diego County
State Route 79 east to Palm Springs
Community Facilities:
Health: 72 physicians/surgeons
46 dentists
10 optometrists
20 chiropractors
2 major hospitals are found just north of the city -
Inland Valley Regional Medical Center - Rancho
Springs Medical Center
Education: 10 elementary schools
3 middle schools
2 high schools
1 continuation high school
1 independent study high school
9 private schools
28
Cultural: 36 churches 10 banks
1 library 2 savings and loans
7 newspapers 1 museum
1 cable network (TCI) 3 theaters with 9 screens
Recreation: 15 wineries
3 public golf courses
1 private golf course
Vail Lake (12 miles east)
Skinner Lake (12 miles northeast)
150 miles of equestrian trails
Hotels/motels: 11 hotels and motels, with 810 room, in the community area
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Grubstake, Inc. later to be called Richwood, Inc., later to be called Supreme
Hospitality was founded by Anne Angell. Ms. Angell received no value from the
issuer and has no options or rights of any kind to be received. There were no
predecessors to Ms. Angell.
An officer of the corporation provides office services without charge. Such
costs are immaterial to the financial statements and accordingly, have not been
reflected therein. The officers and directors of Supreme Hospitality are
involved in other business activities and may in the future, become involved in
other business opportunities. If a specific business opportunity becomes
available, such persons may face a conflict in selecting between Supreme
Hospitality and their other business interests. Supreme Hospitality has not
formulated a policy for the resolution of such conflicts.
Regarding the Redding property: An appraisal was completed in February 1998 on
the two parcels of land in Redding, CA, APN 117-170-07 & 08. The parcels,
approximately 2.61 acres, appraised for $855,000.00 or $7.52 per square foot.
Checking on comparable properties in the Redding area with real state agent
Craig McQuire of Real Estate by Craig and Carol has indicated to us that a fair
market value would be at a minimum of $10.00 per square foot or $ 1, 137,000.00
to a maximum of $12.00 per square foot or $ 1,364,000.00. This does not include
any development fees.
Mr. Lang purchased the property in November 1996 with an overall cost incurred
of $ 1,086,000. Additional costs have been and will be incurred by Mr. Lang in
order to bring the property in a condition for construction of a hotel.
The cost of development fees, drawings, use permit and a final construction
package is estimated to be approximately $ 175,000.00.
Therefore the property can be estimated to be worth approximately a minimum of
$1,312,000.00 which includes the development fees and construction package.
Floyd and Glenda Janeway who are owners of 3,000,000 shares of Supreme
Hospitality held a company which acted as a project manager for the hotels
construction and was paid $58,000 for supervision services.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Supreme Hospitality's common or preferred stock is not presently quoted on any
public market.
Common Stock
At inception, Supreme Hospitality originally had authorized and issued 25,000
shares of no par value common stock. On April 17, 2000 the articles of
incorporation were amended to provide for 50,000,000 authorized shares at $.0001
par value and a forward stock split of 40 to 1, resulting in 1,000,000 issued
and outstanding shares as of the merger date. An additional 9,000,000 common
shares were then issued to the Temecula Valley Inn shareholders in a
re-capitalization of Supreme Hospitality.
In connection with the employment contract of Supreme Hospitality's president,
as more fully described in executive compensation, the Board of Directors
approved an annual, non-qualified option for him to acquire, at fair market
29
value at the date of grant, a minimum of 1 percent of Supreme Hospitality's
outstanding shares during the term of his employment contract. The number of
shares to be granted shall be determined by the Board of Directors. All shares
granted shall have an exercise period of 36 months following the date of grant.
No options were granted as of December 31, 2000.
Dividend Policy:
To date, Supreme Hospitality has not paid any cash dividends on their common
stock. Supreme Hospitality currently intends to retain all of their future
earnings for use in their business and, therefore, does not expect to pay
dividends in the near future.
Preferred Stock
There are 1,000,000 shares of Preferred Stock issued with a par value of $0.0001
per share. No other series of Preferred Stock has been authorized or issued. The
Preferred Stock will rank senior to the Common Stock with respect to the payment
of dividends and amounts upon liquidation, dissolution or winding up of Supreme
Hospitality without the consent of any holder of Preferred Stock. The Preferred
Shareholders shall have no voting rights. No other series of Preferred Stock has
been authorized or issued.
One Preferred share is convertible into three shares of Supreme Hospitality's
common stock at any time after the first twelve months of purchase during the
three-year period at the option of the shareholder. The conversion is automatic
on the third year record date if not converted earlier by the shareholder.
Dividend Policy:
The Preferred shares yield a 10% per annum dividend, which is paid in common
shares at the market price upon conversion. The 10% annual common stock dividend
is determined by multiplying the preferred share offering price and dividing it
by the market price per share. This will determine the number of common shares
to the shareholder upon conversion.
EXECUTIVE COMPENSATION
Name and Other All
Principal Annual Other
position Year Salary Bonus Compensation Compensation
- ----------------------------------------- ------------ ------------- ---------- ------------- ------------
Larry W. Lang 1999 $000(I) $0000 $000 $000
Chairman, Sole Director, President And 2000 $30,000(I) $000 $000 $000
Secretary/Treasurer, Principal and 2001 $000(II) $000 $000 $000
Financial Accounting Officer
- ----------------------------------------- ------------ ------------- ---------- ------------- ------------
No other officer, director, or employee received in excess of $100,000 in salary
and benefits in 2000, nor do we expect to pay any officer, director, or employee
in excess of $100,000 in salary and benefits in 2001.
I: Larry W. Lang earned $3,000 per month as a consultant for the period from
April 1999 through April 2000, pursuant to a written agreement. He received no
compensation from Supreme Hospitality in 1999 and in 2000 received a total of
$30,000 for his services.
II: Commencing October 1, 2000, and expiring on December 31, 2010, the Board of
Directors approved an employment contract for its president, that provides for,
among other benefits, annual compensation of $120,000 through December 31, 2001,
and thereafter, a minimum of a 10 percent increase per annum. In addition, the
president is to receive annually, 10 percent of pre-tax income of Supreme
Hospitality and stock options as more fully described above. There are a number
of fringe benefits provided in the contract during the contract term, including
the use of an automobile, disability compensation based on annual compensation,
and a $500,000 life insurance policy payable to beneficiaries designated by the
president. The employment contract was filed with Supreme Hospitality's SB-2/A
as exhibit 99.5 April 2001. To date Larry W. Lang has not received any
compensation from Supreme Hospitality for the year 2001.
30
FINANCIAL STATEMENTS
The required financial statements can be found on the following pages:
Independent Auditor's Report Page 32
Balance Sheet Page 33
Stockholder's Equity Page 34
Statement of Operations Page 35
Statement of Cash Flow Page 36
Weighted Average Number of Shares Outstanding Page 37
Notes to Financial Statements Page 38
31
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Supreme Hospitality
Temecula, California
We have audited the accompanying balance sheet of Supreme Hospitality as of
December 31, 2000, and the related statements of operations, changes in
stockholders' equity, and cash flows for each of the years in the two years then
ended. 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 U.S. generally accepted auditing
standards. 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 audit provides 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 Supreme Hospitality as of
December 31, 2000, and the results of its operations and its cash flows for each
of the years in the two years then ended in conformity with U.S. generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming the company
will continue as a going concern. As discussed in note 1 to the financial
statements, the company is dependent upon its ability to develop additional
sources of capital, and/or achieve profitable operations. These conditions raise
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.
/s/ Braverman & Company, P.C.
- ------------------------------
Braverman & Company, P.C.
Prescott, Arizona
March 19, 2001
32
SUPREME HOSPITALITY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(SUBSTANTIALLY ALL ASSETS ARE PLEDGED AS COLLATERAL)
ASSETS
MARCH 31, December 31,
CURRENT ASSETS: 2001 2000
------------------- -------------------
(unaudited)
Cash $ 55,256 $ 2,677
Trade accounts receivable 67,022 53,116
Other 3,848 4,615
------------------- -------------------
Total current assets 126,126 60,408
------------------- -------------------
PROPERTY AND EQUIPMENT, AT COST,
less accumulated depreciation of $622,889 and $556,108 4,939,878 5,000,886
------------------- -------------------
OTHER ASSETS:
Deferred Offering Costs 81,750 81,000
Loan fees, less accumulated amortization of $6,576 19,789 21,034
Initial franchise fee, less accumulated amortization of $667 23,333 24,333
Other assets 10,178 10,200
------------------- -------------------
Total other assets 135,050 136,567
------------------- -------------------
$ 5,201,054 $ 5,197,861
=================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Trade accounts payable $ 244,673 $ 234,159
Related party loans 634,288 492,123
Accrued liabilities 169,637 126,368
Current maturities of long-term debt 278,686 287,309
------------------- -------------------
Total current liabilities 1,327,284 1,139,959
LONG-TERM DEBT, LESS CURRENT MATURITIES 4,875,952 4,936,555
------------------- -------------------
Total liabilities 6,203,236 6,076,514
------------------- -------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $.0001 par value; authorized 1,000,000
shares; none outstanding -
Common stock; $.0001 par value; authorized 50,000,000
shares; 10,000,000 outstanding 1,000 1,000
Paid-in capital 1,500 1,500
Accumulated (deficit) (1,004,682) (881,153)
------------------- -------------------
Total stockholders' equity (deficit) (1,002,182) (878,653)
------------------- -------------------
$ 5,201,054 $ 5,197,861
=================== ===================
33
SUPEREME HOSPITALITY AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (DEFICIT)
FOR THE TWO YEARS ENDED DECEMBER 31, 2000
AND THREE MONTHS ENDED MARCH 31, 2001
COMMON STOCK PAID-IN ACCUMULATED
-----------------------------------
SHARES AMOUNT CAPTIAL (DEFICIT) TOTAL
----------------------------------- -------------- ---------------- ---------------
(audited)
Balances, December 31, 1998 25,000 $ 2,500 $ - $ (2,670) $ ( 170)
Net (loss) for the year (85) (85)
----------------------------------- -------------- ---------------- ---------------
Balances, December 31, 1999 25,000 2,500 - (2,755) (255)
Forward stock split, change
from no par value to par
value of $.0001 per share 975,000 (2,400) 2,400 -
Recapitalization 9,000,000 900 (900) -
Pre-merger capital (deficit) (689,172) (689,172)
Net (loss) for the period
April 30 to December 31, 2000 (189,226) (189,226)
----------------------------------- -------------- ---------------- ---------------
Balances, December 31, 2000 10,000,000 $ 1,000 $ 1,500 $ (881,153) $ (878,653)
(unaudited)
Net (loss) for the three months
ended March 31, 2001 (123,529) (123,529)
----------------------------------- -------------- ---------------- ---------------
Balances, March 31, 2001 (unaudited) 10,000,000 $ 1,000 $ 1,500 $ (1,004,682) $ (1,002,182)
=================================== ============== ================ ===============
34
SUPEREME HOSPITALITY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------------- --------------------------------------
2000 1999 2001 2000
------------------- ------------------ --------------------------------------
(unaudited) (unaudited)
REVENUES $ 1,410,429 $ 1,257,463 $ 400,368 $ 315,203
------------------- ------------------ --------------------------------------
OPERATING EXPENSES:
Selling, general and administrative 885,726 868,604 312,436 191,357
Depreciation and amortization 273,580 270,045 68,025 68,487
Interest 619,007 540,176 143,436 149,923
------------------- ------------------ --------------------------------------
Total operating expenses 1,778,313 1,678,825 523,897 409,767
------------------- ------------------ --------------------------------------
(LOSS) FROM OPERATIONS $ (367,884) $ (421,362) $ (123,529) $ (94,564)
------------------- ------------------ --------------------------------------
NET (LOSS) PER SHARE $ (0.04) $ (0.05) $ (0.01) $ (0.01)
=================== ================== ======================================
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING-BASIC 9,666,667 9,000,000 10,000,000 9,000,000
=================== ================== ======================================
35
SUPREME HOSPITALITY
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED
DECEMBER 31, THREE MONTHS ENDED
2000 1999 2001 2000
---- ---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES (unaudited) (unaudited)
Net Loss ($367,884) ($421,362) ($123,530)
Adjustments to reconcile net (loss) to net cash provided:
Depreciation and amortization 273,580 270,045 68,025 68,487
Gain on disposition of vehicle (2,418)
(Increase) decrease in assets
Trade accounts receivable (27,314) (11,698) (13,906) (4,378)
Other current assets 464 (5,079) 767 (979)
Increase(decrease) in liabilities
Trade accounts payable 126,712 26,786 10,514 31,624
Accrued liabilities 65,277 (63,325) 34,647 5,218
--------- --------- --------- ---------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 68,417 (204,633) (23,483) 5,409
--------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Deferred offering costs (81,000) (705) (24,500)
Purchase of Days Inn franchise (25,000)
Loan fees (27,610)
Other (3,000) (1,800) 1,022 3,000
--------- --------- --------- ---------
NET CASH ( USED BY) INVESTING ACTIVITIES (109,000) (29,410) 272 (21,500)
--------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of equipment (11,238) (5,772)
Loan proceeds 123,664 445,991
Related party loans 168,387 (82,547) 142,165 57,372
Proceeds from sale of common, stock 3,000
Loan repayments (254,052) (128,261) (60,603) (53,770)
--------- --------- --------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 29,761 235,183 75,790 3,602
--------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH (10,822) 1,140 52,579 (12,489)
CASH, AT BEGINNING OF YEAR 13,499 12,359 2,677 13,499
--------- --------- --------- ---------
CASH, AT END OF YEAR $ 2,677 $ 13,499 $ 55,256 $ 1,010
========= ========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest $ 608,763 $ 466,280 $ 100,642 $ 70,686
========= ========= ========= =========
36
Supreme Hospitality
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
1999 and 2000
Balances, December 31, 1999 25,000
Forward stock split, change
from no par value to par
value of $.0001 per share 975,000
Recapitalization 9,000,000
Pre-merger capital (deficit)
Net (loss) for the period
April 30 to December 31, 2000
-------------
Balances, December 31, 2000 10,000,000
1999
----
shares issue in 2000 to acq sub 9,000,000
2000
----
shares issued prior to recapitalization
as of April 30, 2000 9,000,000 x 4 36,000,000
May after recapital. 10,000,000 10,000,000
June 10,000,000 10,000,000
July 10,000,000 10,000,000
August 10,000,000 10,000,000
September 10,000,000 10,000,000
October 10,000,000 10,000,000
November 10,000,000 10,000,000
December 10,000,000 10,000,000
total 116,000,000
divided by 12 9,666,667
37
SUPREME HOSPITALITY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000
NOTE 1 - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES
The Company
Supreme Hospitality (the Company or Supreme), formerly Grubstake, Inc. and
Richwood, Inc. was incorporated in Nevada on November 10, 1997. Until it
acquired all of the outstanding common stock of Temecula Valley Inn, Inc. (TVI)
in a recapitalization (reverse merger), the Company had no operations and was a
development stage company as defined in FASB No.7. On April 17, 2000, pursuant
to the pending recapitalization, the Company changed its name to Supreme
Hospitality, and on April 30, 2000, TVI became a wholly owned subsidiary of
Supreme in a qualifying reorganization under Section 368 (a)(1)(B) of the
Internal Revenue Code of 1986.
TVI's activities were the construction and subsequent operation of a
ninety-room, 3-story hotel located in Temecula, California, which was opened to
the public in December 1998 under the name of Temecula Valley Inn. In July of
2000, the hotel, pursuant to a franchise agreement, operated under the name of
Days Inn.
Principles of Consolidation
The Company's consolidated financial statements include the financial statements
of Supreme and TVI for all periods presented. All significant intercompany
accounts and transactions have been eliminated.
Financial Statement Presentation
The historical cost basis of all assets and liabilities of TVI have been carried
forward, similar to the accounting treatment given in a "pooling of interests".
TVI is considered the accounting acquirer because it became the owner of
substantially all of the outstanding common stock of the acquired "shell"
company. Pre-merger losses of TVI, net of $3,000 of common stock, have been
classified as "pre-merger capital (deficit)" in the accompanying financial
statements, since such losses have been passed through and utilized by the
former owners of TVI when it was initially a proprietorship through December 31,
1999, and an S corporation in 2000, until the date of merger. Unless otherwise
indicated, all references to the Company include Supreme and TVI. The
corporation's year-end is December 31.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts and the disclosure of
contingent amounts in the Company's financial statements and the accompanying
notes. Actual results could differ from those estimates. Certain prior year
amounts have been reclassified to conform to the current year presentations.
Incorporation and Taxable Status of TVI
TVI had been a sole proprietorship for the period from its inception in 1997
through December 31, 1999. On January 1, 2000, all of the assets and liabilities
relating to the hotel operation were transferred to a newly formed "S"
corporation under the provision of Section 351 of the Internal Revenue Code of
1986. Therefore, no income tax provision is provided or applicable for the
operating results of TVI prior to April 30, 2000, since those operations were
included in the personal tax returns of the former owners of TVI and taxed based
on their personal tax strategies.
As of and subsequent to the merger date, an income tax provision is applicable
for the tax effects of transactions reported in the financial statements for
taxes currently due, plus deferred taxes related to the difference between the
basis of the property and equipment for financial and income tax reporting.
Revenue Recognition
Room and other revenues are recognized when earned.
Concentrations
Less than a majority of the customers of the hotel are corporate customers.
There is no concentration of corporate customers in any one industry segment,
and no one customer or corporation constitutes 10% or more of total revenues.
38
Cash Equivalents
The Company considers all highly liquid investments with the original maturities
of three months or less to be cash equivalents.
Loan Fees
Loan fees relating to permanent financing incurred in 1999 were capitalized and
are being amortized ratably over the remaining life of the related loan. Loan
fee amortization for 2000 and 1999 was $3,944 and $2,632, respectively.
Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107, disclosures about fair
value of financial instruments, defines the fair value of a financial instrument
as the amount at which the instrument could be exchanged in a current
transaction between willing parties. The carrying values of the Company's
financial instruments, which include cash, accounts receivable, accounts payable
and accruals, approximate fair values due to the short-term maturities of such
instruments. The fair value of the Company's long-term debt, which approximates
carrying value, is estimated based on the current rates offered to the Company
for debt of the same remaining maturities.
Income Taxes
Income taxes are provided for using the liability method of accounting in
accordance with Statement of Financial Accounting Standards No. 109 "Accounting
for Income Taxes". A deferred tax asset or liability is recorded for all
temporary difference between financial and tax reporting of which depreciation
is the most significant. Deferred tax expense (benefit) results from the net
change during the year of deferred tax assets and liabilities. Valuation
allowances are established, when necessary, to reduce deferred tax assets to the
amount expected to more likely than not realized in future tax returns. Tax law
and rate changes are reflected in income in the period such changes are enacted.
Since merger, the Company has continued to sustain operating losses. For income
tax purposes the post merger operating loss was approximately $158,000 resulting
in a deferred tax asset of $60,000, which has been completely offset by a
valuation allowance of $60,000. Therefore as of December 31, 2000, no tax
benefit or deferred tax asset has been provided in the accompanying consolidated
financial statements since management cannot determine, at the present time,
that it is more likely than not that such benefit will be utilized in future
periods. The operating loss is available for a period of 20 years to offset
future taxable income.
Loss Per Share
- --------------
Net loss per share is provided in accordance with Statement of Financial
Accounting Standards No. 128 (SFAS No.128) "Earnings Per Share". Basic loss per
share is computed by dividing net loss available to common stockholders by the
weighted average number of common shares outstanding during the period. For
presentation purposes, all shares outstanding have been considered outstanding
since inception.
Going Concern
The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company's ability to
continue in existence is dependent on its ability to develop additional sources
of capital, and/or achieve profitable operations. The accompanying financial
statements do not include any adjustments that might result from the outcome of
these uncertainties. Management's plan is to sell additional equity and
eliminate its debt, thereby providing positive cash flow through its existing
operations.
Composition of Certain Financial Captions
Property and Equipment
- ----------------------
Property and equipment are stated at historical cost and are depreciated
using the straight-line method over the useful lives indicated:
Land and land improvements $2,120,916
Building 2,376,918
Furniture and equipment 1,059,160
---------
Total Cost $5,556,994
Less accumulated depreciation 556,108
---------
Property and Equipment, net $5,000,886
---------
39
Useful lives in years
---------------------
Building 40
Land improvements 15-20
Furniture, fixtures and equipment 3-10
Depreciation expense for the years ended December 31, 2000 and 1999 was $268,969
and $267,413, respectively
Other Assets
- ------------
Included in other assets is the cost of the Days Inn initial franchise fee of
$25,000, which is being amortized ratably over the 15-year period of the
franchise agreement, commencing in 2000. Amortization expense for 2000 was $667.
Franchise royalties and reservation system user fees totaling 8.8 percent of
gross room revenues are expensed as incurred.
Deferred Offering Costs
- -----------------------
Supreme entered into an agreement with a consulting firm in March 2000 which
provides, among other things, that the firm will arrange for the acquisition of
a shell company, obtain a trading symbol and market maker for the sale of the
Company's stock, and arrange for the filing and successful completion of a
registration statement with the Securities and Exchange Commission for the sale
of the Company's common stock.
As of December 31, 2000, Supreme paid in full all consulting fees of $73,500,
which were capitalized as a deferred offering cost along with other related
registration costs incurred, pending the successful completion of a proposed
public offering. If the offering is successful, all deferred costs incurred will
be charged against the net proceeds of the offering. If unsuccessful, deferred
offering costs will be written off
NOTE 2 - LONG -TERM DEBT
The Company's president and his wife are the only persons obligated to repay the
following long-term debt. They quitclaimed their interests in the real estate to
the Company, which was a violation of the banks' loan covenants. The banks
anticipate that they will eventually require loan assumptions by the Company,
however, no action has been taken to date. For financial presentation purposes,
all of the following loans are presented as debt of the Company since the
majority of them are collateralized by real and personal property of the
Company.
Note payable to a bank, payable in monthly installments of $21,961 including
interest at prime plus 1%, final payment due April, 2006 of $2,744,836,
collateralized by first position on substantially all of the assets owned by the
Company or hereinafter acquired. $2,744,836
The interest rate at December 31, 2000 was 10.50%. Because the bank has not
requested an increase in the total monthly amount since inception of the loan as
a result of the increasing prime rate, there has been no reduction in loan
principal since May 2000. As of December 31, 2000, total accrued interest on the
loan exceeded the monthly payments required by a total of $16,185, which has
been included in accrued liabilities.
Note payable to a bank, guaranteed by the Small Business Administration, payable
in monthly installments of $9,444, including interest based on 8.5 % prime plus
2%, plus or minus adjustments quarterly for interest rate changes, final
amortized balance due February 2023, collateralized by a second position on
substantially all of the assets owned by the Company or hereinafter acquired.
The prime rate at December 31, 2000 was 9.50%. 978,972
Note payable to an individual, payable in monthly installments of $4,825,
including interest at 10%, final payment due February 2003, collateralized by a
third position on the Company's real property. 484,173
Capitalized lease obligation, payable in monthly installments of $28,854,
including interest ranging from 12.4% to 14.4% and sales taxes, final payment
due February 2004, collateralized by leased assets of the hotel. 893,845
40
Unsecured installment notes payable to two finance companies, $3,236 payable
monthly, including interest at 12.34% to 16.52% per annum, due 2005. 122,038
----------
Total long-term debt 5,223,864
Less current maturities 287,309
----------
Long-term debt, net of current maturities $4,936,555
==========
NOTE 2 - LONG -TERM DEBT (continued)
Maturities of long-term debt for the five years following December 31, 2000 are
as follows:
2001 $ 287,309
2002 325,253
2003 820,070
2004 95,698
2005 41,847
Thereafter 3,653,687
=========
5,223,864
NOTE 3 - CAPITAL LEASE
The Company leases furniture and equipment, building and land improvements under
a capital lease. The economic substance of the lease is that the Company is
financing the acquisition of the assets through the lease, and accordingly,
these assets are capitalized as follows:
Land improvements $ 137,715
Building improvements 114,247
Furniture and equipment 1,041,858
-----------
1,293,820
Less accumulated depreciation 370,025
---------
$ 923,795
The following is a schedule of future annual minimum lease payments required
under the lease together with their net present value as of December 31, 2000:
December 31, Amount
------------ -------------
2001 $ 346,245
2002 346,245
2003 346,245
2004 52,789
-------------
Total minimum lease payments 1,091,524
Amount representing interest (197,679)
-------------
Present value of net minimum lease payments 893,845
Current portion (246,442)
-------------
Long-term capital lease obligation $ 647,403
=============
NOTE 4 - RELATED PARTIES
A construction company owned by Supreme's president was the general contractor
for the hotel, which was completed in late 1998 at a cost of approximately
$2,400,000. Approximately $110,000 was paid to his construction company for
41
supervision and reimbursement of costs incurred of which less than 50 percent
was compensation. The project manager for the hotel's construction was a company
owned by one of three shareholders of TVI which was paid approximately $58,000
for supervision services.
NOTE 4 - RELATED PARTIES (continued)
Since inception the president of the Company has provided financing to maintain
the positive cash flow of the Company, substantially through personal and
related party corporate loans, the majority of which were interest bearing from
8 to 10 percent per annum. As of December 31, 2000, these related party loans
totaled $492,123 the majority of which are considered due within one year.
During the year 2000 net loans from related parties totaled $168,387.
Included in the loans payable to related parties at December 31, 2000 are two
loans that were obtained from a water district and the city prior to 2000. The
latter of these loans is collateralized by an interest in the Company's real
estate, whereas the other loan provides for termination of the water supply to
the hotel in the event the loan becomes delinquent. Although the Company was
delinquent in the monthly payments to the city, the city agreed to take no
action provided the loan, which was due September 1, 2000, is paid off at the
rate of $10,000 a month, commencing April, 2001. The balance of that loan at
December 31, 2000 was $55,637.
The president and his wife are also the obligated on all long-term debt, as more
fully explained in Note 2 of the notes to financial statements.
NOTE 5 - COMMON STOCK
At inception, the Company originally had authorized and issued 25,000 shares of
no par value common stock. On April 17, 2000 the articles of incorporation were
amended to provide for 50,000,000 authorized shares at $.0001 par value and a
forward stock split of 40 to 1, resulting in 1,000,000 issued and outstanding
shares as of the merger date. An additional 9,000,000 common shares were then
issued to the TVI shareholders in a recapitalization of the Company.
In connection with the employment contract of the Company's president, as more
fully described below, the Board of Directors approved an annual, non-qualified
option for him to acquire, at fair market value at the date of grant, a minimum
of 1 percent of the Company's outstanding shares during the term of his
employment contract. The number of shares to be granted shall be determined by
the Board of Directors. All shares granted shall have an exercise period of 36
months following the date of grant. No options were granted as of December 31,
2000.
NOTE 6 - EMPLOYMENT CONTRACT
Commencing October 1, 2000, and expiring on December 31, 2010, the Board of
Directors approved an employment contract for its president, that provides for,
among other benefits, annual compensation of $120,000 through December 31, 2001,
and thereafter, a minimum of a 10 percent increase per annum. In addition, the
president is to receive annually, 10 percent of pre-tax income of the Company
and stock options as more fully described above. There are a number of fringe
benefits provided in the contract during the contract term, including the use of
an automobile, disability compensation based on annual compensation, and a
$500,000 life insurance policy payable to beneficiaries designated by the
president.
Prior to the above employment contract, the President received $3,000 per month
as a consultant for the period from April 1999 through April of 2000, pursuant
to a written agreement.
NOTE 7 - OPTION AGREEMENT
In May 2000 the Company received an option from its president to acquire 2.61
acres of approved hotel property owned by him and located in Redding, California
for $1,300,000, including predevelopment, use permit and building drawings. If
acquired, a larger 3-story hotel would be constructed. The option expires in May
2001. The entire project is estimated to cost $5,850,000.
NOTE 8 - PAST DUE STATUS AND LOAN VIOLATIONS
Substantially all of the accounts payable at December 31, 2000, totaling
$234,159 were past due based on their payment terms of which $104,000 consisted
of real estate taxes, interest and penalties for the period from December, 1999
through May, 2000. The past due status and penalties added to real estate taxes
are technical violations of both bank loans, however, the Company has verbal
assurances that as long as the loan payments are currently maintained, and the
Company timely and fully explains its reasons for any technical violations, the
banks will not call the loan.
42
NOTE 9 - SUBSEQUENT EVENTS
The Company incurred substantial additional stock offering costs, principally
auditing fees, subsequent to December 31, 2000, to enable it to comply with the
filing requirements, on Form SB-2, of the Securities and Exchange Commission for
the proposed offering of its securities.
43
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Supreme Hospitality has not changed accountants and no disagreements on
accounting or financial disclosure practices has occurred.
PART II.
INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under our Articles of Incorporation and Bylaws of the corporation, we may
indemnify an officer or director who is made a party to any proceeding,
including a law suit, because of his position, if he acted in good faith and in
a manner he reasonably believed to be in our best interest. No officer or
director may be indemnified, however, where the officer or director committed
intentional misconduct, fraud, or an intentional violation of the law.
We may advance expenses incurred in defending a proceeding. To the extent that
the officer or director is successful on the merits in a proceeding as to which
he is to be indemnified, we must indemnify him against all expenses incurred,
including attorney's fees. With respect to a derivative action, indemnity may be
made only for expenses actually and reasonably incurred in defending the
proceeding, and if the officer or director is judged liable, only by a court
order. The indemnification is intended to be to the fullest extent permitted by
the laws of the State of Nevada.
Regarding indemnification for liabilities arising under the Securities Act of
1933, which may be permitted to directors or officers under Nevada law, we are
informed that, in the opinion of the Securities and Exchange Commission,
indemnification is against public policy, as expressed in the Act and is,
therefore, unenforceable.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
We will pay all costs and expenses in connection with this offering, including
but not limited to all expenses related to the costs of preparing, reproducing
or printing this memorandum, legal expenses, and other expenses incurred in
qualifying or registering the offering for sale under state laws as may be
necessary, as well as the fees and expenses of our attorneys and accountants. It
is anticipated that the total of all costs and expenses in connection with this
offering will be approximately $132,335.00. This includes:
Attorney fees $10,000.00
CPA fees 62,037.00
Consultant fees 55,000.00
SEC filing fee 1,668.00
NASD filing fee 1,130.00
Transfer agent 500.00
Material fees (postage, copies) 2,000.00
Total $132,335.00
=========================================================================
RECENT SALES OF UNREGISTERED SECURITIES.
No unregistered securities have been sold by Temecula Valley Inn, Inc., or
Supreme Hospitality formally know as Richwood, Inc. formally know as Grubstake,
Inc.
EXHIBITS SCHEDULE
The exhibits marked with an "*" were filed with the company's original
registration statement June 2000, or the SB-2/fith & sixth amendments. The
remaining exhibits are filled with this amendment.
Exhibit Description Page
*3.1 Articles of Incorporation
*3.2 Amended Articles of Incorporation
*3.3 By-Laws
5.1 Opinion Re: Legality 45
23.1 Consent 46
*99.1 Special Meeting Board of Directors
*99.2 Agreement for the exchange of Common Stock
*99.3 Subscription Agreement
44
*99.4 Meeting of Board of Directors
*99.5 Employment Contract of Chief Executive
*99.6 Option Agreement
99.7 Franchise Agreement
99.8 Consulting Agreement
99.9 Valley Independent Bank Note
99.10 Temecula Valley Inn Insurance Policy
99.11 Temecula Valley Bank Note
99.12 Coop Note 47
99.13 Signature Page 48
UNDERTAKINGS
The undersigned Registrant undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to section 13 or section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission (the "Commission") such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or preceding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
45
EXHIBIT 5.1 OPINION RE: LEGALITY
March 30, 2001
Board of Directors
Supreme Hospitality
41919 Skywood Drive
Temecula, CA 92591-1877
Gentlemen,
You have requested the opinion of this firm as to certain matters in
connection with the offer and sale (the "Offering") of Supreme Hospitality, Inc.
(the "Company") Common Stock, par value $0.0001 per share ("Common Stock") and
Preferred Stock, par value $0.0001 per share ("Preferred Stock"). We have
reviewed the Company's Company Charter, Registration Statement on Form SB-2
("Form SB-2"), as well as applicable statutes and regulations governing the
Company and the offer and sale of the Common Stock.
We are of the opinion that upon the declaration of effectiveness of
the Form SB-2 the Common and Preferred Stock, when sold, will be legally issued,
fully paid and non-assessable.
This Opinion has been prepared for the use of the Company in
connection with its registration statement on Form SB-2, and we hereby consent
to the filing of this Opinion as an exhibit to such registration statement and
to our firm being referenced under the caption "Opinions of Experts."
Very truly yours,
/s/ Scott T. Orsini
--------------------
Scott T. Orsini
46
EXHIBIT 23.1 CONSENT
To Whom It May Concern: July 12, 2001
The firm of Braverman & Company, P.C., Certified Public Accountant consents to
the inclusion of their report of March 19, 2001, on the Financial Statements of
Supreme Hospitality, as of March 19, 2001, in any filings that are necessary now
or in the near future with the U.S. Securities and Exchange Commission.
Very truly yours,
/s/ Braverman & Company
- ------------------------------
Braverman & Company, P.C.
Prescott, Arizona
July 12, 2001
47
Exhibit 99.12
ESCROW NO.: 6911-LT
NOTE SECURED BY DEED OF TRUST
INSTALLMENT NOTE -INTEREST INCLUDED
$500,000.00 TEMECULA, CALIFORNIA FEBRUARY 24, 1998
IN INSTALLMENTS AND AS HEREIN STATED, FOR VALUE RECEIVED, I/WE, PROMISE TO PAY
TO
DONALD W. COOP AND JENNEAN COOP, HUSBAND AND WIFE, AS COMMUNITY PROPERTY
OR ORDER, AT TEMECULA, CALIFORNIA, OR AT PLACE DESIGNATED BY THE HOLDER(S)
HEREOF, THE PRINCIPAL SUM OF FIVE HUNDRED
Thousand And 00/100 Dollars ($500,000.00) bearing interest at the rate of 10.0%
per cent per annum commencing February 25, 1998. Interest only will accrue from
February 25, 1998 and will be all due and payable on December 31, 1998. Then,
Principal and interest will be payable in installments of $4,825.11 (Four
Thousand Eight Hundred Twenty-Five and 11/100 Dollars) (20 year amortization),
or more, on the same day of each and every calendar month, commencing on March
25, 1999 and continuing until February 25, 2003 at which time the entire unpaid
principal balance, together with interest due thereon, shall become all due and
payable.
This note is subject to section 2966 of the Civil Code, which provides that the
holder of this note shall give written notice to the trustor, or his successor
in interest, of prescribed information at least 90 and not more than 150 days
before any balloon payment is due.
The Deed of Trust securing this note contains the following: "This Deed of Trust
is given and accepted upon the express provision that should the property
hereinbefore described, or any part hereof, be conveyed or alienated by Trustor,
either voluntarily or by operation of law, without Beneficiary's written
consent, then all sums secured hereby shall, at Beneficiary's option, become
immediately due and payable."
In the event any payment is not paid within 15 days of the due date, Trustor
shall pay to Beneficiary a LATE CHARGE of 6 % in addition to each payment due
and unpaid.
This Note is given and accepted as a portion of the purchase price.
Each payment shall be credited first on interest then due and the remainder, if
any, on principal; and interest shall thereupon cease upon the principal so
credited. Should default be made in the payment of any installment when due,
then at any time during the continuance of such default the entire balance of
principal and interest shall, at the option of the holder of this note become
due and payable. Principal and interest payable in lawful money of the United
States of America. I also agree to pay any and all costs of collection and a
reasonable attorney's fee in case this note be not paid when due and an attorney
be employed to enforce collection. This note is secured by a Deed of Trust to
Spring Mountain Group, a California Corporation as Trustee, affecting the
property located at: Vacant Land, Temecula, CA
- ------------------------------- -------------------------------
Larry W. Lang Diana Lang
DO NOT DESTROY THIS NOTE: When paid, said original Note, together with the Deed
of Trust securing same, must be surrendered to Trustee for cancellation and
retention before reconveyance will be made.
48
EXHIBIT 99.13 SIGNATURE PAGE
Signatures
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Temecula, State of California on July 12, 2001.
Supreme Hospitality
By: /s/ Larry W. Lang
- -----------------------
Larry W. Lang
Chairman, Sole Director, President
And Secretary/Treasurer (Principal and
Financial Accounting Officer)
49