UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-KSB

[x]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE ACT OF
     1934

                  For the fiscal year ended December 31, 2000

                               Supreme Hospitality
                               -------------------
                 (Name of small business issuer in its charter)

              Nevada                                          88-0460457
              ------                                          ----------
 (State or other jurisdiction                              (I.R.S. Employer
  of incorporation or organization)                         Identification No.)

     41919 Skywood Drive Temecula, CA                          92591-1877
     --------------------------------                          ----------
 (Address of principal executive offices)                      (Zip Code)

Issuer's telephone number:  (909)-506-3435
                            --------------

Securities registered under Section 12(b) of the Exchange Act:

   Title of each class                 Name of each exchange on which registered
         None                                         None

Securities registered under Section 12(g) of the Exchange Act:

                                      None
             -------------------------------------------------------
                                (Title of class)

             -------------------------------------------------------
                                (Title of class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing  requirements  for the past 90 days. [X] Yes [ ] No

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

State issuer's revenues for its most recent fiscal year. $1,410,429.00
                                                         -------------

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  computed by reference to the price at which the common equity
was sold,  or the average bid and asked  price of such  common  equity,  as of a
specified  date within the past 60 days.  (See  definition  of affiliate in Rule
12b-2 of the Exchange Act.)  None.
                             ----

    (ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Check  whether the issuer has filed all  documents  and  reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court. [ ]Yes [ ] No

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuer's classes of common
equity,  as  of  the  latest  practicable  date:  10,000,000  of  Common  Shares
                                                  ------------------------------

                       DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference,  briefly describe them
and  identify  the part of the Form 10-KSB  (e.g.,  Part I, Part II,  etc.) into
which the document is incorporated:  (1) any annual report to security  holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities  Act"). The listed
documents should be clearly described for identification  purposes (e.g., annual
report to security holders for fiscal year ended December 24, 1990).  None
                                                                      ----

Transitional Small Business Disclosure Format (Check one): Yes ____; No (X)
                                                                        ---
<PAGE>

<TABLE>


                              TABLE OF CONTENTS
<S>                                                                             <C>                      <C>

  PART I      ...........................................................................................3

  ITEM 1.     DESCRIPTION OF BUSINESS....................................................................3

  ITEM 2.     DESCRIPTION OF PROPERTY....................................................................4

  ITEM 3.     LEGAL PROCEEDINGS..........................................................................5

  ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........................................5

  PART II     ...........................................................................................5

  ITEM 5.     MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTER....................................5

  ITEM 6.     MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION.................................6

  ITEM 7.     FINANCIAL STATEMENTS.......................................................................7

  ITEM 8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.......7

  PART III    ...........................................................................................7

  ITEM 9.     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS...............................7

  ITEM 10.    EXECUTIVE COMPENSATION.....................................................................8

  ITEM 11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.............................8

  ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............................................9

  ITEM 13.    EXHIBITS AND REPORTS ON FORM 8-K...........................................................9

  INDEPENDENT AUDITORS' REPORT .........................................................................11

  CONSOLIDATED BALANCE SHEET............................................................................12

  CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY.........................................................13

  CONSOLIDATED STATEMENT OF OPERATIONS..................................................................14

  CONSOLIDATED STATEMENT OF CASH FLOWS..................................................................15

  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS............................................................16

  ARTICLES OF INCORPORATION Exhibit 3.1.................................................................23

  AMENDMENT TO ARTICLES OF INCORPORATION Exhibit 3.2....................................................29

  BY-LAWS Exhibit 3.3...................................................................................33

  CONSENT OF BARRY L. FRIEDMAN, CPA Exhibit 23.1........................................................44

  GENERAL POWER ATTORNEY Exhibit 24.1...................................................................45

  MINUTES OF SPECIAL BOARD OF DIRECTORS MEETING Exhibit 99.1............................................46

  MINUTES OF SPECIAL MEETING OF BOARD OF DIRECTORS Exhibit 99.2.........................................49

</TABLE>


                                      -2-

<PAGE>


                                     PART I

ITEM 1.    DESCRIPTION OF BUSINESS

COMPANY HISTORY

The Company was organized  November 10, 1997,  under the State laws of Nevada as
GRUBSTAKE,  INC. The Company had no operations and in accordance with FASB No.7,
was considered a development  company until,  it acquired all of the outstanding
common   stock   of   Temecula   Valley   Inn,   Inc.   in  a   reverse   merger
(recapitalization).  On  December  1,  1998,  the  Company  changed  its name to
RICHWOOD,  INC. On April 17, 2000,  pursuant to the pending reverse merger,  the
Company  changed its name to Supreme  Hospitality.  On April 30, 2000,  Temecula
Valley Inn, Inc.  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. Supreme  Hospitality's  principal  executive office is located at,
41919 Skywood  Drive,  Temecula,  California  92591 and the telephone  number is
(909) 506-3435.

COMPANY DESCRIPTION

Supreme  Hospitality ("The Company" or "Supreme") is in the hospitality  (hotel)
business catering to the business,  leisure and vacation traveler.  On April 30,
2000,  the  Company  acquired  Temecula  Valley Inn  ("TVI")  as a wholly  owned
subsidiary.  TVI is a 90-room hotel built in 1998 located in the Temecula Valley
in Southern  California  between  Los  Angeles and San Diego.  TVI 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.  The  address  is 27660  Jefferson  Avenue,  Temecula,  CA  92590.  TVI has
developed its own website to take advantage of the growing  Internet  market and
the address is: www.temeculavalley.com.

The Company  currently serves the traveler who requires  perceived value for the
nightly rate he/she pays. Through active marketing to various corporations,  the
company has been successful  during its first year of operations of attracting a
reasonable  volume of  corporate  business.  On weekends,  the company  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 100% on average during
approximately the two years of operation.

The Company's  acquisition  growth strategy is to increase cash flow and enhance
shareholder  value by  building  or  acquiring  additional  hotels that meet the
Company's investment criteria.

The Company 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  funds.  An additional  property in the Temecula Valley is
included in 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
the  development,  building  and  improvements.  The  management  of the company
believes that the Temecula Valley area will continue to see unprecedented growth
not seen since the mid 1980's.  The Company is poised to take  advantage of that
growth, given it can meet its financing requirements.

The  Company  believes  that  through  the  acquisition  of land and  subsequent
development of these  properties that 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.

The Company, 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%.  The  Company  expects
increased  room revenues due to Days Inn of America  national and  international

                                      -3-

<PAGE>

marketing  programs.  The  company  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.  The company does not have any
products or services, which are affected by environmental laws.

SEASONALITY

The hotel industry is seasonal in nature. Generally,  hotel revenues are greater
in the second and third quarters than in the first and fourth quarters.  Through
diversity in the  geographic  location and in the primary  customer  base of the
company's  hotels,  the Company may be able to lessen,  but not  eliminate,  the
effects  of  seasonality.  Accordingly,  seasonality  can be  expected  to cause
significant quarterly fluctuations in the Company's revenues.

RESEARCH AND DEVELOPMENT

The Company has incurred no expenses related to company  sponsored  research and
development.

COMPETITION

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. The Company 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%.

PERSONNEL

Number of total employees are 18 and number of full-time employees are 14.

ITEM 2.    DESCRIPTION OF PROPERTY

Temecula Valley Inn (TVI) in Temecula,  California, is a ninety room three story
hotel.  TVI was  constructed  and opened for  business on December 5, 1998.  The
address is 27660 Jefferson Avenue, Temecula, CA 92590.

The mortgages on the property are as follows:


Note payable to Valley  Independent  Bank,  collateralized by the Company's real
property,  payable in monthly  installments  of $21,981,  including  interest at
prime plus 1%;  final  payment  due  April,  2006.  The prime rate at  September
30,2000 was 9.25%.                                                    $2,744,836

Note  payable  to  Temecula  Valley  Bank,  guaranteed  by  the  Small  Business
Administration, payable in monthly installments of $9,453, including interest at
prime plus 2%, final payment due February 2023,  collateralized by the Company's
real property. The prime rate at September 30, 2000 was 9.50%.          $980,997

Note  Payable  to Donald  Corp,  payable  in  monthly  installments  of  $4,825,
including  interest at 10%, final payment due February 2003,  collateralized  by
the Company's real estate. $486,901

Capital  lease  obligation  payable  to  Telerent  Leasing,  payable  in monthly
installments  of  $28,800,  including  interest  ranging  from  12.4% to  14.4%,
collateralized by assets leased from Telerent Leasing.                  $988,044


                                      -4-
<PAGE>


Note  Payable  to  Eastern   Municipal  Water   District,   payable  in  monthly
installments  of $2,454,  including  interest at 10%, final payment due November
2023; in the event of default water service could be discontinued.       $79,634

Unsecured note payable to City of Temecula, including interest at 8%. Payable in
full September 2000 but now extended to February 2001.                   $55,637

ITEM 3.    LEGAL PROCEEDINGS

Supreme  Hospitality  is not a  party  to any  pending  litigation  and  none is
contemplated or threatened.

ITEM 4.    SUBMISSION OF MATERS TO A VOTE OF SECURITY HOLDERS

None.

                                     PART II

ITEM 5.    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTER

The company's  common or preferred  stock is not presently  quoted on any public
market.

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 in executive  compensation,  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.

Dividend Policy:

To date,  Supreme  Hospitality  has not paid any cash  dividends on their common
stock.  Supreme 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 the
Company  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.

                                      -5-
<PAGE>


One Preferred  share is  convertible  into three shares of the Company'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.


ITEM 6.    MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

The Company  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 the Company (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 the Company is the
hospitality  business for both the business and leisure traveler,  and a 90 room
hotel was built and opened in 1998.  The  executive  offices of the  company are
located at 41919 Skywood Drive, Temecula, California 92591. Its telephone number
is (909) 506-3435.

The Company may obtain funds for addition 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 the Company's management before they have a chance to
analyze  any  ultimate  success  which is  heavily  dependent  on the  company's
management,  which will have virtually unlimited  discretion in new construction
or acquisition.

The Company plans to develop and construct  additional  properties in the future
and has as  option  to  purchase  for  $1,300,000  approximately  2.61  acres of
approved hotel property, including a complete package which consists of business
plan,  construction costs,  drawings,  etc. This property is located adjacent to
Interstate 5 and Hilltop Drive in Redding,  California.  This parcel is the last
available  hotel property in the immediate area. The current plan is to exercise
the purchase option and develop and build a 90-room hotel on this property. This
development  is  anticipated  to  be  the  next  development  the  Company  will
undertake.  The cost is  estimated  to be  $5,8000,000  for land,  building  and
improvements.  This  property is included in the  financial  projections  and is
scheduled to commence operations in the third quarter of 2001.

The Company 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 the Company believes that the Temecula Valley will continue to
see unprecedented growth not seen since the mid 1980's. The Company is poised to
take advantage of that growth, given it can meet its financial requirements.

The Company  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.

                                      -6-
<PAGE>


As is customary in the industry, the company may pay a finder's fee for locating
an  acquisition  prospect.  If any  such is  paid,  it will be  approved  by the
Company'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 the Company,  if such person
plays a material role in bringing in a transaction to the Company.

ITEM 7.    FINANCIAL STATEMENTS

The following  report and  financial  statements of the company are contained on
the pages indicated.

         Opinion Re: Legality                                          Page 13
         Balance Sheet                                                 Page 14
         Stockholder's Equity                                          Page 15
         Statement of Operations                                       Page 16
         Statement of Cash Flow                                        Page 17
         Notes to Financial Statements                                 Page 18

ITEM 8.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
           FINANCIAL DISCLOSURE

The Company has not changed  accountants and no  disagreements  on accounting or
financial disclosure practices have occurred.


                                    PART III

ITEM 9.    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS


Name                  Age               Position
----                  ---               ---------------------------------

Larry W. Lang         55                Chairman, Sole Director,
                                        President And Secretary/Treasurer
                                        (Principal and Financial and
                                        Accounting Officer)


Biography:

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.


                                      -7-
<PAGE>


KEY-MAN LIFE INSURANCE

The  Corporation  may purchase and maintain life insurance  covering the life of
Executive ("Key-man Insurance") in an amount determined by the Corporation.  The
Corporation shall be the sole owner and beneficiary of the Key-man Insurance and
may apply to the payment of premiums  thereunder any dividends declared and paid
thereon.  Executive  shall submit himself to such physical  examinations  as the
President of the  Corporation may deem necessary or desirable in connection with
the purchase and maintenance of the Key-man Insurance.

ITEM 10.   EXECUTIVE COMPENSATION

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.

ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information relating to the beneficial  ownership
of Company  common stock by those persons  beneficially  holding more than 5% of
the Company  capital stock, by the Company's  directors and executive  officers,
and by all of the Company's directors as a group, as of June 9th, 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
---------------------------- -----------------------    ---------------- -------

Common Stock                 Floyd & Glenda Janeway     3,000,000        30%
                             25060 Hancock Avenue
                             Suite # 179
                             Murrieta, CA 92562
---------------------------- -----------------------    ---------------- -------

Security ownership of Management:

Class                        Name & Address             No. Of Shares    Percent
---------------------------- -----------------------    ---------------- -------

Common Stock                 Larry W. & Diana Lang      3,000,000        30%
                             41919 Skywood Drive
                             Temecula, CA 92591
---------------------------- -----------------------    ---------------- -------


                                      -8-
<PAGE>


ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company neither owns nor leases any real or personal property. 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 the  Company  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 the Company and their other
business  interests.  The Company has not formulated a policy for the resolution
of such conflicts.

A construction  company owned by Supreme's  president was the general contractor
for the hotel,  TVI, which was completed in late 1998 at a cost of approximately
$2,400,000.  Approximately  $110,000  was paid to his  construction  company for
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.

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.


ITEM 13.   EXHIBITS AND REPORTS ON FORM 8-K

Reports on Form 8-k:  None.

The following Exhibits can be found on the following pages:

Articles of Incorporation:  Exhibit 3.1                                Page 25
By-Laws:  Exhibit 3.2                                                  Page 36
Opinion Re: Legality:  Exhibit 5.1                                     Page 13
Power of Attorney:  Exhibit 24.1                                       Page 33
Special Meeting Board of Directors:  Exhibit 99.1                      Page 34
Special Meeting Board of Directors:  Exhibit 99.2                      Page 48


                                      -9-

<PAGE>


SIGNATURES:
In  accordance  with  Section 13 or 15(d) of the Exchange  Act,  the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Supreme Hospitality
-------------------
(Registrant)

By:  /s/ Larry W.  Lang
     -------------------------------------
         Larry W. Lang
         Chairman, Sole Director, President
         And Secretary/Treasurer (Principal and
         Financial and Accounting Officer)*

Date:  April 12, 2001

In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.

By:  /s/ Larry W.  Lang
     -------------------------------------
         Larry W. Lang
         Chairman, Sole Director, President
         And Secretary/Treasurer (Principal and
         Financial and Accounting Officer)*

Date:  April 12, 2001




                                      -10-

<PAGE>



                          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 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 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





                                      -11-

<PAGE>

<TABLE>

<CAPTION>

                       SUPREME HOSPITALITY AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2000
              (SUBSTANTIALLY ALL ASSETS ARE PLEDGED AS COLLATERAL)

                                     ASSETS
<S>                                                                             <C>

CURRENT ASSETS:
         Cash                                                                   $     2,677
         Trade accounts receivable                                                   53,116
         Other                                                                        4,615
                                                                                -----------

         Total current assets                                                        60,408
                                                                                -----------


PROPERTY AND EQUIPMENT, AT COST,
less accumulated depreciation of $556,108                                         5,000,886
                                                                                -----------

OTHER ASSETS:
         Deferred Offering Costs                                                     81,000
         Loan fees, less accumulated amortization of $6,576                          21,034
         Initial franchise fee, less accumulated amortization of $667                24,333
         Other assets                                                                10,200
                                                                                -----------
                 Total other assets                                                 136,567
                                                                                -----------

                                                                                $ 5,197,861
                                                                                ===========
                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
         Trade accounts payable                                                 $   234,159
         Related party loans                                                        492,123
         Accrued  liabilities                                                       126,368
         Current maturities of long-term debt                                       287,309
                                                                                -----------
                 Total current liabilities                                        1,139,959

LONG-TERM DEBT, LESS CURRENT MATURITIES                                           4,936,555
                                                                                -----------
         Total liabilities                                                        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
         Paid-in capital                                                              1,500
         Pre-merger capital (deficit)                                              (691,927)
         Post-merger accumulated (deficit)                                         (189,226)
                                                                                -----------
         Total stockholders' equity (deficit)                                      (878,653)
                                                                                -----------
                                                                                $ 5,197,861
                                                                                ===========

</TABLE>


                                      -12-
<PAGE>

<TABLE>

<CAPTION>


                       SUPREME HOSPITALITY AND SUBSIDIARY
                  CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
               (DEFICIT) FOR THE TWO YEARS ENDED DECEMBER 31, 2000


                                         COMMON STOCK           PAID-IN       ACCUMULATED         TOTAL
                                         ------------                                               -----
                                     SHARES         AMOUNT      CAPITAL         (DEFICIT)
                                     ------         ------      -------       -----------
<S>                              <C>           <C>            <C>            <C>            <C>


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)
                                ===========    ===========    ===========    ===========    ===========

</TABLE>






                                      -13-

<PAGE>

                       SUPREME HOSPITALITY AND SUBSIDIARY
                      CONSOLIDATED STATEMENT OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999




                                           2000            1999
                                           ----            ----

REVENUES                              $  1,410,429    $  1,257,463
                                      ------------    ------------

OPERATING EXPENSES

Selling, general and administrative        885,726         868,604
Depreciation and amortization              273,580         270,045
Interest                                   619,007         540,176
                                      ------------    ------------

         Total operating expenses        1,778,313       1,678,825
                                      ------------    ------------

(LOSS) FROM OPERATIONS                $   (367,884)   $   (421,362)
                                      ------------    ------------

NET (LOSS) PER SHARE                  $      (0.04)   $      (0.04)

WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING-BASIC                10,000,000      10,000,000
                                      ============    ============







                                      -14-
<PAGE>

<TABLE>

<CAPTION>

                               SUPREME HOSPITALITY
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                               FOR THE YEARS ENDED
                           DECEMBER 31, 2000 AND 1999


                                                              2000         1999
                                                              ----         ----
<S>                                                        <C>          <C>

CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss                                                   $(367,884)   $(421,362)
Adjustments to reconcile net (loss) to net cash provide:

Depreciation and amortization                                273,580      270,045
Gain on disposition of vehicle                                (2,418)
(Increase) decrease in  assets
Trade accounts receivable                                    (27,314)     (11,698)
Other current assets                                             464       (5,079)
Increase(decrease) in  liabilities
Trade accounts payable                                       126,712       26,786
Accrued liabilities                                           65,277      (63,325)
                                                           ---------    ---------

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES              68,417     (204,633)


CASH FLOWS FROM INVESTING ACTIVITIES
Deferred offering costs                                      (81,000)
Purchase of Days Inn franchise                               (25,000)
Loan fees                                                                 (27,610)
Other                                                         (3,000)      (1,800)
                                                           ---------    ---------

NET CASH ( USED BY) INVESTING ACTIVITIES                    (109,000)     (29,410)
                                                           ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of equipment                                        (11,238)
Loan proceeds                                                123,664      445,991
Related party loans                                          168,387      (82,547)
Proceeds from sale of common, stock                            3,000
Loan repayments                                             (254,052)    (128,261)
                                                           ---------    ---------

NET CASH PROVIDED BY FINANCING ACTIVITIES                     29,761      235,183

NET INCREASE (DECREASE) IN CASH                              (10,822)       1,140
                                                           ---------    ---------

CASH, AT BEGINNING OF YEAR                                    13,499       12,359
                                                           ---------    ---------

CASH, AT END OF YEAR                                       $   2,677    $  13,499
                                                           =========    =========


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest                                     $ 608,763    $ 466,280
                                                           =========    =========

</TABLE>



                                      -15-
<PAGE>


                       SUPREME HOSPITALITY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES

The Company

Supreme  Hospitality  (the Company or  Supreme),  formerly  Grubstake,  Inc. and
Richwood,  Inc.  were  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.


                                      -16-
<PAGE>



                       SUPREME HOSPITALITY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES (continued)

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.

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.


                                      -17-
<PAGE>

                       SUPREME HOSPITALITY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.


NOTE 1 - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES (continued)

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
                                                        ----------


                                      -18-
<PAGE>


Total Cost                                              $5,556,994
Less accumulated depreciation                              556,108
                                                        ----------

Property and Equipment, net                             $5,000,886
                                                        ----------

                                                   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.


NOTE 1 - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES (continued)

Deferred Offering Costs (continued)
----------------------------------

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.


                                      -19-
<PAGE>


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

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
                                        ==========


                                      -20-
<PAGE>


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  late1998  at a cost of  approximately
$2,400,000.  Approximately  $110,000  was paid to his  construction  company for
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.

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.


                                      -21-
<PAGE>

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.

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.


                                      -22-