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

                                  Form 10-KSB/A

                                 Amendment No. 1

[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 of                        (I.R.S. Employer
    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)


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
                                                          -------------

<PAGE>

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>

<CAPTION>

                                TABLE OF CONTENTS
                To jump to a section, click on the section name.
<S>                                                                             <C>                     <C>

   PART I...............................................................................................4
      DESCRIPTION OF BUSINESS...........................................................................4
      DESCRIPTION OF PROPERTY...........................................................................5
      LEGAL PROCEEDINGS.................................................................................5
      SUBMISSION OF MATERS TO A VOTE OF SECURITY HOLDERS................................................5
   PART II..............................................................................................5
      MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTER...........................................6
      MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION........................................6
      FINANCIAL STATEMENTS..............................................................................8
      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE..............8
   PART III.............................................................................................8
      DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS......................................8
      EXECUTIVE COMPENSATION............................................................................9
      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT....................................9
      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................................................10
      EXHIBITS AND REPORTS ON FORM 8-K.................................................................10
      EXHIBITS SCHEDULE................................................................................10
      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
   SIGNATURE PAGE......................................................................................22

</TABLE>


<PAGE>


PART I


DESCRIPTION OF BUSINESS


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.

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.

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, in the company's SB-2/A filed June, 2001.

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.


<PAGE>


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 as exhibit 99.7,
filed with the company's SB-2/A filed June, 2001.

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.


DESCRIPTION OF PROPERTY


Temecula Valley Inn is located at 27660 Jefferson Avenue, Temecula, CA 92590.

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  in the amount of  $484,173,  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.


LEGAL PROCEEDINGS


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


SUBMISSION OF MATERS TO A VOTE OF SECURITY HOLDERS


None.


<PAGE>

                                     PART II


MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTER


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
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.


MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION


The following discussion should be read in connection with Supreme Hospitality's
financial  statements  and related  notes  thereto  included  elsewhere  in this
report.

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.

<PAGE>


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.

Because we are past due in our real estate taxes we are in  technical  violation
of both bank loans. Our auditor and Mr. Lang have had verbal  commutations  with
the banks which have replied that although the arrears are a serious matter, the
arrears do not trigger a default of the loans. 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 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, with the company's SB-2/A filed June 2001.

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.

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 filed April 2001 with the company's SB-2/A. 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.

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.

<PAGE>


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.


FINANCIAL STATEMENTS


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

         Independent Auditor's Report                   Page 11
         Balance Sheet                                  Page 12
         Stockholder's Equity                           Page 13
         Statement of Operations                        Page 14
         Statement of Cash Flow                         Page 15
         Notes to Financial Statements                  Page 16


CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND  FINANCIAL
DISCLOSURE


Form  8-k  was  filed  on  4/30/2001,  signifying  a  change  in the  certifying
accountant effective March 1, 2001. The company has engaged Braverman & Company,
P.C.  as the  Company's  new  principal  independent  accountants  to audit  the
Company's  consolidated  financial  statements for the year ending  December 31,
2000. No disagreements on accounting or financial  disclosure practices occurred
during the fiscal year ended December 31,2000.




                                    PART III


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.

<PAGE>

<TABLE>

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.

<CAPTION>

EXECUTIVE COMPENSATION

<S>                                       <C>          <C>           <C>        <C>                  <C>

Name and                                                                        Other                All
Principal                                                                       Annual               Other
position                                  Year         Salary        Bonus      Compensation         Compensation
----------------------------------------- ------------ ------------- ---------- -------------------- -----------------
Larry W. Lang                             1999
Chairman, Sole Director, President And    2000         $30,000(I)
Secretary/Treasurer, Principal and        2001
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.


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information  relating t 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
---------------------------- -------------------------- -------------------------- --------------------------

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

<PAGE>



CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


Supreme  Hospitality  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 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 for a hotel site in year
2000  indicates  that a fair  market  value  would be at a minimum of $10.00 per
square  foot  $ 1,  137,000.00  to  a  maximum  of  $12.00  per  square  foot  $
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.


EXHIBITS AND REPORTS ON FORM 8-K


Reports on Form 8-k:
Form  8-k  was  filed  on  4/30/2001,  signifying  a  change  in the  certifying
accountant effective March 1, 2001. The company has engaged Braverman & Company,
P.C.  as the  Company's  new  principal  independent  accountants  to audit  the
Company's  consolidated  financial  statements for the year ending  December 31,
2000.


EXHIBITS SCHEDULE

The  exhibits  marked  with  an "*"  were  filed  with  the  company's  original
registration statement June 2000, or the SB-2/fith amendment, April 2001.


Exhibit         Description

*3.1           Articles of Incorporation
*3.2           Amended Articles of Incorporation
*3.3           By-Laws




<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 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
June 9, 2001












<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>



<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>








<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
                                      ============    ============








<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>




<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.

<PAGE>

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.

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.

<PAGE>


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
                                                               ---------

                                                        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.

<PAGE>


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.

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

<PAGE>

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  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.

<PAGE>


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.

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.



<PAGE>


SIGNATURE PAGE
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:  June 12, 2001