UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





Form
10-K





(Mark
One)





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





For the
fiscal year ended December 31,
2008





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





For the
transition period from _____ to _____





Commission
file number 0-28475





Merilus,
Inc.


(Name of
registrant as specified in its charter)





Nevada                                                                                     87-0635270


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





44 West Broadway, #1850,
Salt Lake City,
Utah                                                             84101


(Address
of principal executive
offices)                                       
                                (Zip
Code)





Issuer’s
telephone number (801)
949-1020





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





Title of
each
class                                                                           Name
of each exchange on which registered


None                                                                      
                                            Not
Applicable





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





Common Stock, par value
$0.001 per share





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act Yes
[  ]      No   [
X]





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act Yes [X
]         No   [   ]





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
past 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days.    Yes [X] No
[   ]





Indicate
by check mark if disclosure of delinquent filers in response to Item 405 of
Regulation S-K is not contained herein, and not 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-K or any amendment to this
Form 10-K.    [X ]





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See definitions of “large accelerated filer,” “accelerated
filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.





Large Accelerated filer  ̈                                                                                                                     Accelerated
filer  ̈


Non-accelerated filer   ̈ (Do not check if a
smaller reporting
company)                                      Smaller
reporting company x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).Yes [X]   No
[  ]




1


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
last sold, or the average bid and asked prices of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter: The Registrant=s shares
trade on the OTCBB with $0.11 bid and $0.75 ask.  The bid on March 25,
2009, was $0.11 giving the shares held by non-affiliates a market value of
$38,490.  The shares trade very sporadically and the bid price on any
given day may not be indicative of the actual price a stockholder could receive
for their shares.





As
ofApril 10, 2009, the Registrant had 1,686,692 shares of common stock issued and
outstanding.





DOCUMENTS
INCORPORATED BY REFERENCE





If the following documents are
incorporated by reference, briefly describe them and identify the part of the
Form 10-K (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: None





2


PART
I





Item
1. Business





Merilus,
Inc. (“Company”) was incorporated in Nevada in May 1985 and its initial business
endeavors were not successful. During the year 2000 the Company filed a
definitive information statement pursuant to Section 14c of the Securities Act
of 1934, to disclose that it had entered into a reorganization agreement with
the intent to acquire all of the issued and outstanding shares of Merilus
Technologies, Inc. ("MTI"), a British Columbia, Canada corporation. The Company
had issued warrants for the purchase of 2,000,000 shares of its common stock at
an exercise price of $1.00 per share and upon entering into the reorganization
agreement, the warrants were exercised and the Company received $2,000,000,
which was given to MTI in exchange for notes receivable. Terms of the
reorganization agreement included the establishment of a trust into which the
Company issued 1 share of preferred stock that represented 3,767,500
“exchangeable shares” of the Company’s common stock. Upon surrender by MTI
stockholders of their MTI stock, the Company would issue its common stock to the
MTI stockholder. By end of the year 2001, the Company had issued 828,300 shares
of its common stock, which represented approximately 22% of the exchangeable
shares. MTI filed for bankruptcy protection and was liquidated under the laws of
Canada.  There are potentially 146,060 shares which could still be
converted under the terms of the agreement with MTI.





Subsequently,
the Company has had no revenue producing operations and is considered a
development stage enterprise. The Company is currently seeking an acquisition or
merger with an operating entity and has received loans from a stockholder,
issued shares of its common stock, and may raise capital through the issuance of
its common stock to further these efforts. The Company does not propose to
restrict its search for a business opportunity to any particular industry or
geographical area and may, therefore, seek such business opportunity in
essentially any business in any industry. The Company has unrestricted
discretion in seeking and participating in a business opportunity, subject to
the availability of such opportunities, economic conditions, and other factors.
The selection of a business opportunity in which to participate is complex and
risky and the Company has only limited resources that it may use to find good
business opportunities. There can be no assurance that the Company will be able
to identify and acquire any business opportunity which will ultimately prove to
be beneficial to the Company and its stockholders.





The
activities of the Company are subject to several significant risks that arise
primarily as a result of the fact that the Company has no specific business and
may acquire or participate in a business opportunity based on the decision of
management. The Company will select a potential business opportunity based on
management's business judgment and potentially could act without the consent,
vote or approval of the Company's stockholders. The risks faced by the Company
are further increased as a result of its lack of resources and its inability to
provide a prospective business opportunity with significant capital. See Item
6(a) Plan of Operations in this report.





Item
2. Property





The
Company does not maintain an administrative office but utilizes the home
office  of the Company=s president,
Alex Demitriev, for business correspondence. Without current operations, the
Company does not believe that it is necessary to have a business
office.





Item
3. Legal Proceedings





None.





Item
4. Submission of Matters to a Vote of Security Holders





No
matters were submitted to a vote of stockholders of the Company during the
fourth quarter of the fiscal year ended December 31, 2008.





PART
II





Item
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.





Market
information – The principal market for the Company's common stock is the
Pink Sheets. The following high and low bid prices for the Company's Common
Stock  are based on over-the-counter quotations that reflect
inter-dealer prices, without retail mark-up, mark-down or commissions, and may
not necessarily represent actual transactions. Furthermore, the Company’s common
stock has traded sporadically and in small volume. Consequently, the information
provided below may not be indicative of the Company's common stock price under
different conditions.  The bid and ask price after for the June 2007
quarter forward, reflect post split shares.





3




Quarter
      Ended
              
              High
      Bid
              
              Low
      BidDecember
      2008
              
              $      0.45
              
              $      0.13September
      2008
              
              $      0.45
              
              $      0.15June
      2008
              
              $      1.00
              
              $      0.15March
      2008
              
              $      0.27
              
              $      0.20December
      2007
              
              $      0.43
              
              $      0.26September
      2007
              
              $      0.55
              
              $      0.35June
      2007
              
              $      1.20
              
              $      0.20March
      2007
              
              $      0.01
              
              $    0.001December
      2006
              
              $      0.01
              
              $    0.001September
      2006
              
              $      0.01
              
              $    0.001June
      2006
              
              $      0.01
              
              $    0.001March
      2006
              
              $      0.01
              
              $    0.001




The
prices above are based on very limited volume and wide spreads between the bid
and ask prices.  Additionally, the Company completed a 1 for 20
reverse split  effective in June 2007 and quotes for  June
2007 forward reflect such reverse split.  Investors should not rely on
the historical quotes as a guide to the direction of the Company’s stock given
the low volume and wide spreads.





Holders
– At March 25, 2009, the Company had approximately 950 stockholders of record
and beneficial owners based on information obtained from the Company’s transfer
agent.





Dividends
– Since its inception, the Company has not paid any dividends on its common
stock and the Company does not anticipate that it will pay dividends in the
foreseeable future.





Item
6.  Selected Financial Data





Summary of Financial
Information





We had no
revenues in 2008 or 2007.  We had a net loss of $19,877 for the year
ended December 31, 2008.  At December 31, 2008, we had cash and cash
equivalents of $964 and a negative working capital of $40,120.





The
following table shows selected summarized financial data for the Company at the
dates and for the periods indicated. The data should be read in conjunction with
the financial statements and notes included herein beginning on page
F-1.





STATEMENT OF OPERATIONS DATA:
The amounts don’t line up with the last line of the description.





For the Year Ended
                  December 31, 2008
                For the Year Ended
                  December 31, 2007Revenues
                $                                         
                    -
                $                                 
                    -General
      and Administrative Expenses
                17,118
                26,886Net
      Loss
                19,877
                86,364Basic
      Loss per Share
                0.00
                0.13Diluted
      Loss per Share
                0.01
                0.07Weighted
      Average Number of Shares Outstanding
                1,787,238
                656,475Weighted
      Average Number of Fully Diluted Shares Outstanding
                1,331,501
                1,256,475BALANCE SHEET
      DATA:December 31, 2008
                December 31, 2007Total
      Current Assets
                $                                            
            964
                $                               
              1,124Total
      Assets
                964
                1,124Total
      Current Liabilities
                41,084
                61,367Working
      Capital
                (40,120)
                (60,243)Stockholders’
      Equity (Deficit)
                (40,120)
                (60,243)






4




Item
7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations.





Special Note Regarding
Forward-Looking Statements





This
annual report contains certain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 with respect to the Plan of
Operations provided below, including information regarding the Company’s
financial condition, results of operations, business strategies, operating
efficiencies or synergies, competitive positions, growth opportunities, plans
and objectives of management. The statements made as part of the Plan of
Operations that are not historical facts are hereby identified as
"forward-looking statements."





a) Plan
of Operations





Overview:





The
Company has not had revenues from operations in each of the last two fiscal
years and is considered a development stage enterprise. The Company’s current
operations have consisted of taking such action, as management believes
necessary, to prepare to seek an acquisition or merger with an operating entity.
The Company has obtained loans from a stockholder and has issued stocks of its
common stock to its president for services rendered. The Company may also issue
stocks of its common stock to raise equity capital. A stockholder of the Company
has financed the Company's current operations, which have consisted primarily of
maintaining in good standing the Company's corporate status and in fulfilling
its filing requirements with the Securities and Exchange Commission, including
the audit of its financial statements. Beyond the financial arrangements herein,
the Company has not entered into a definitive agreement with this stockholder,
or anyone else, regarding the receipt of future funds to meet its capital
requirements. However, management anticipates that whatever reasonable financial
requirements may be necessary to further its plan of operations, this
stockholder will continue to provide such financial resources to the Company as
needed during the next twelve months.





Nevertheless,
the Company’s financial statements contained in this report have been prepared
assuming that the Company will continue as a going concern. As discussed in the
footnotes to the financial statements and elsewhere in this report, the Company
is in the development stage and has not established any source of revenue to
sustain operations. These factors raise substantial doubt that the Company will
be able to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.





A major
stockholder of the Company has provided funds to keep the Company operating,
cover costs associated with bringing the Company current on its reporting
obligations and fund ongoing expenses.  The stockholder had agreed to
fund up to $30,000.  On March 28, 2008, the stockholder agreed to
convert the debt into 600,000 sharess of common stock of the Company. On March
31, 2008, this same stockholder entered into a non-convertible unsecured note
payable in the amount of $6,855 bearing interest at 18% per annum, due May 31,
2008. Subsequently, this stockholder has provided additional capital to the
Company which, at December 31, 2008, totaled $14,845 and accrued interest
amounted to $1,433. This stockholder has entered into a verbal agreement with
the Company to provide additional capital as may be needed to fund the Company’s
operations as discussed herein at a rate of 18% per annum. Furthermore, this
stockholder has agreed not to make demand for immediate payment on the Company
for payment of this note.





In 2005,
Denny W. Nestripke accepted the position of the Company's sole officer and
director.  During January of 2006 Mr. Nestripke received 37,500 post
split shares of the Company’s common stock valued at $0.003, the prevailing
market price during the period, for services rendered, valued
at  $2,250.  On December 7, 2006, Mr. Nestripke
resigned  and Alex Demitriev was appointed in his place.  In
April 2009, Mr. Demitriev received 200,000 shares for his services as director
and sole officer of the Company.These shares were valued at the prevailing bid
price of the Company’s common stock as reflected on the OTCBB of $0.11 or a
total of $22,000.





Risks
associated with the plan of operations:





In its
search for a business opportunity, management anticipates that the Company will
incur additional costs for legal and accounting fees to locate and complete a
merger or acquisition. Other than previously discussed, the Company does not
have any revenue producing activities whereby it can meet these financial
requirements and anticipates that its cash position by the end of the first
quarter of 2009 will be minimal. On December 31, 2008, the Company’s obligations
exceeded its cash position by $40,120 and the company may further obligate
itself as it pursues its plan of operations. There can be no assurance that the
Company will receive any benefits from the efforts of management to locate
business opportunities.





The
Company does not propose to restrict its search for a business opportunity to
any particular industry or geographical area and may, therefore, attempt to
acquire any business in any industry. The Company has unrestricted discretion in
seeking and participating in a business opportunity, subject to the availability
of such opportunities, economic conditions, and other factors. Consequently, if
and when a business opportunity is selected, such business opportunity may not
be in an industry that is following general business trends.






5





The
selection of a business opportunity in which to participate is complex and
risky. Additionally, the Company has only limited resources and this fact may
make it more difficult to find good opportunities. There can be no assurance
that the Company will be able to identify and acquire any business opportunity
which will ultimately prove to be beneficial to the Company and its
stockholders. The Company will select any potential business opportunity based
on management's business judgment. At the present time, only Mr. Demitriev
serves in management and allowing only one individual to exercise his business
judgment in the selection of a business opportunity for the Company presents a
significant risk to the Company's stockholders. The Company may acquire or
participate in a business opportunity based on the decision of management that
potentially could act without the consent, vote, or approval of the Company's
stockholders.





Since its
inception, the Company has not generated any revenue and it is unlikely that any
revenue will be generated until such time as the Company locates a business
opportunity to acquire or with which it can merge. However, the Company is not
restricting its search to those business opportunities that have profitable
operations. Even though a business opportunity is acquired that has revenues or
gross income, there is no assurance that profitable operations or net income
will result therefrom. Consequently, even though the Company may be successful
in acquiring a business opportunity, such acquisition does not assume that a
profitable business opportunity is being acquired or that stockholders will
benefit through an increase in the market price of the Company's common
stock.





The
acquisition of a business opportunity, no matter what form it may take, will
almost assuredly result in substantial dilution for the Company's current
stockholders. Inasmuch as the Company only has its equity securities (its common
and preferred stock) as a source to provide consideration for the acquisition of
a business opportunity, the Company's issuance of a substantial portion of its
authorized but unissued common stock is the most likely method for the Company
to consummate an acquisition. The issuance of any shares of the Company's common
stock will dilute the ownership percentage that current stockholders have in the
Company.





The
Company does not intend to employ anyone in the future, unless its present
business operations were to change. Mr. Demitriev does not have a contract to
remain with the Company over any certain time period and may resign his position
prior to the time that a business opportunity is located and/or business
reorganization takes place.





At the
present time, management does not believe it is necessary for the Company to
have an administrative office and utilizes the home office of the Company's
president for business correspondence. The Company intends to reimburse
management for any out of pocket costs.





Liquidity and Capital
Resources





As of
December 31, 2008, the Company had a negative $40,120 in working capital with
assets of $964 and liabilities of $41,084.  If the Company cannot find
a new business, it will have to seek additional capital either through the sale
of its stocks of common stock or through a loan from its officer, stockholders
or others. The Company has  ongoing expenses primarily associated with
maintaining its corporate status and professional fees associated with
accounting and legal costs.





Management
anticipates that the Company will incur more costs including legal and
accounting fees to locate and complete a merger or acquisition.  At
the present time the Company does not have the assets to meet these financial
requirements. Additionally, the Company does not have substantial assets to
entice potential business opportunities to enter into transactions with the
Company.





It is
unlikely that any revenue will be generated until the Company locates a business
opportunity that it may acquire or with which it may
merge.  Management of the Company will be investigating various
business opportunities.  These efforts may cost the Company not only
out of pocket expenses for its management but also expenses associated with
legal and accounting costs.  There can be no guarantee that the
Company will receive any benefits from the efforts of management to locate
business opportunities.





If
and when the Company locates a business opportunity, management of the Company
will give consideration to the dollar amount of that entity's profitable
operations and the adequacy of its working capital in determining the terms and
conditions under which the Company would consummate such an
acquisition.  Potential business opportunities, no matter which form
they may take, will most likely result in substantial dilution for the Company's
stockholders as it has only limited capital and no operations.





Results of
Operations





For the
years ended December 31, 2008 and 2007, the Company had a net loss of $19,877
and $86,364, respectively.  The Company anticipates losses to remain
at the 2008  level or slightly higher until a business opportunity is
found. The Company had no revenue during the years ended December 31, 2008 and
2007. The Company does not anticipate any revenue until it locates a new
business opportunity.





c)
Off-balance sheet arrangements.





The
Company does not have any off-balance sheet arrangements and it is not
anticipated that the Company will enter into any off-balance sheet
arrangements.






6




Item
8. Financial Statements and Supplementary Data





The
Company’s financial statements are presented immediately following the signature
page to this Form 10-K.





Item
9. Changes In and Disagreements With Accountants on Accounting and Financial
Disclosure





The
Company has had no disagreements with its principal independent accountants with
respect to accounting practices or procedures or financial
disclosure.





Item
9A(T). Controls and Procedures





Evaluation
of Disclosure Controls and Procedures





Our
management, which consists of one person and with the assistance of an outside
CPA firm, evaluated the effectiveness of our disclosure controls and procedures
as of the end of the period covered by this report. Based on that evaluation,
our President and CFO concluded that our disclosure controls and procedures as
of the end of the period covered by this report were effective such that the
information required to be disclosed by us in reports filed under the Exchange
Act is (i) recorded, processed, summarized and reported within the time
periods specified in the SEC’s rules and forms and (ii) accumulated and
communicated to our management, including our President and CFO, as appropriate
to allow timely decisions regarding disclosure. A controls system cannot provide
absolute assurance, however, that the objectives of the controls system are met,
and no evaluation of controls can provide absolute assurance that all control
issues and instances of fraud, if any, within a company have been
detected.  This evaluation was made in light of the fact the Company
has no operations or revenue and limited cash on hand.




Management’s
Annual Report on Internal Control over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rule 13a-15(f) under the
Exchange Act). Our internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United
States.




Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Therefore, even those systems determined to be
effective can provide only reasonable assurance of achieving their control
objectives.




Our
management, which consists of one officer, with the participation of the outside
CPA firm, evaluated the effectiveness of our internal control over financial
reporting as of December 31, 2008.  In making this assessment,
our management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”) in Internal Control -
Integrated Framework.   Further, our management considered the lack of
operations and revenue, the limited cash on hand, the limited transactions which
occur on a monthly basis and the use of an outside CPA firm which reconciles all
financial transactions prior to being delivered to our auditors.  Based on
this evaluation, our management, consisting of our sole officer, concluded that,
as of December 31, 2008, our internal control over financial reporting was
effective.  However, management recognized the weaknesses of
inadequate segregation of duties consistent with control objectives due to our
small size and limited resources but believes the use of an outside CPA firm, in
addition to our auditors, helps mitigate this potential
weakness.





This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by the
Company’s registered public accounting firm pursuant to temporary rules of the
Security and Exchange Commission that permit the Company to provide only
management’s report in this annual report.





Changes
in internal control over financial reporting





There
have been no changes in internal control over financial reporting.





Item
9B. Other Information





None






7





PART
III





Item
10. Directors, Executive Officers, and Corporate Governance





The
following table sets forth the name, age, and position of each executive officer
and director and the term of office.





Name                                           Age           Position                                                      Director or Officer
Since


Alex
Demitriev                            43              President,
Secretary, Treasurer,


Director                                                      2006





Set forth
below is certain biographical information regarding the Company's executive
officer and director.





Mr.
Demitriev has been self employed over the last five years owning a part interest
in an art gallery in Park City, Utah as well as engaging in the importation of
art, primarily from Russia.  Mr. Demitriev also is an investor in real
estate projects in Utah and several foreign countries.  At the present
time, Mr. Demitriev has not entered into any employment or other compensation
arrangements with Merilus, Inc. and will serve on a part-time, as needed basis.
During 2009 Mr. Demitriev received 200,000 shares of the Company’s common stock
valued at the Company’s prevailing bid price as reflected on the OTCBB of $0.11
or $22,000.  Mr. Demitriev is not an officer or director in any other
companies that file reports with the SEC.  Mr. Demitriev is 43 years
old and has had no prior relationship with Merilus, Inc.





To the
knowledge of management, during the past five years, no present or former
director, or executive officer of the Company:





(1) Has
filed a petition under the federal bankruptcy laws or any state insolvency law,
nor had a receiver, fiscal agent or similar officer appointed by a court for the
business or property of such person, or any partnership in which he or she was a
general partner at or within two years before the time of such filing, or any
corporation or business association of which he or she was an executive officer
at or within two years before the time of such filing;





(2) Was
convicted in a criminal proceeding or named subject of a pending criminal
proceeding (excluding traffic violations and other minor offenses);





(3) Was
the subject of any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining him from or otherwise limiting, the following
activities:





(i)
Acting as a futures commission merchant, introducing broker, commodity trading
advisor, commodity pool operator, floor broker, leverage transaction merchant,
associated person of any of the foregoing, or as an investment advisor,
underwriter, broker or dealer in securities, or as an affiliate person, director
or employee of any investment company, or engaging in or continuing any conduct
or practice in connection with such activity;





(ii)
Engaging in any type of business practice;





(iii)
Engaging in any activity in connection with the purchase or sale of any security
or commodity or in connection with any violation of federal or state securities
laws or federal commodities laws;





(4) Was
the subject of any order, judgment, or decree, not subsequently reversed,
suspended, or vacated, of any federal or state authority barring, suspending, or
otherwise limiting for more than 60 days the right of such person to engage in
any activity described above under this Item, or to be associated with persons
engaged in any such activity;





(5) Was
found by a court of competent jurisdiction in a civil action or by the
Securities and Exchange Commission to have violated any federal or state
securities law, and the judgment in such civil action or finding by the
Securities and Exchange Commission has not been subsequently reversed,
suspended, or vacated.





(6) Was
found by a court of competent jurisdiction in a civil action or by the Commodity
Futures Trading Commission to have violated any federal commodities law, and the
judgment in such civil action or finding by the Commodity Futures Trading
Commission has not been subsequently reversed, suspended or
vacated.





Compliance With Section
16(A) Of The Exchange Act





The
Company is not aware of any late reports filed by officers, directors and ten
percent stockholders.






8





Item
11. Executive Compensation





Summary Compensation
Table





The
following tables set forth certain summary information concerning the
compensation paid or accrued for each of the Company's last three completed
fiscal years to the Company's or its principal subsidiaries= chief
executive officer and each of its other executive officers that received
compensation in excess of $100,000 during such period (as determined at December
31, 2008, the end of the Company's last completed fiscal year):





Summary
Compensation Table


Name
      and
                Principal
      Position
              Year
              Salary
              Bonus
              Stock
                Awards
              Option
                Awards
              Non-Equity
                Incentive
      Plan
                Compensation
              All
                OtherCompensation
              TotalAlex
      Demitriev
              2008
              -0-
              -0-
              -0-
              -0-
              -0-
              -0-
              -0-Denny
      Nestripke
              2007
                2006
              -0-
                -0-
              -0-
                -0-
              -0-
                -0-
              -0-
                -0-
              -0-
                -0-
              -0-
                -0-
              -0-
                -0-




Cash
Compensation – No cash compensation  was paid to any director
or executive officer of the Company during the fiscal years ended December 31,
2008, 2007, and 2006.





Bonuses
and Deferred Compensation – None





Compensation
Pursuant to Plans – None





Pension
Table – None





Other
Compensation – None





Compensation
of Directors – None





Termination of Employment
and Change of Control Arrangement





There are
no compensatory plans or arrangements, including payments to be received from
the Company, with respect to any person named in Cash Compensation set out above
which would in any way result in payments to any such person because of his
resignation, retirement, or other termination of such person's employment with
the Company or its subsidiaries, or any change in control of the Company, or a
change in the person's responsibilities following a changing in control of the
Company.





Item
12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters





The
following table sets forth as ofApril 10, 2009, the name and the number of
sharess of the Company's common stock, par value $0.001 per share, held of
record or beneficially by each person who held of record, or was known by the
Company to own beneficially, more than 5% of the 1,686,692 issued and
outstanding shares of the Company's common stock, and the name and stockholdings
of each director and of all officers and directors as a group.





Amount and Nature of


Title of
Class         Name of Beneficial
Owner                  Beneficial Ownership
(1)                  Percent of
Class


Common                Micvic,
LLC                                                      336,780                                              19.97%


4764 South 900 East


Salt Lake City, UT


Common                Michelle
Turpin                                               
936,780                                             
55.54%


4764 South 900 East


Salt Lake City, UT


Common                Denny
Nestripke                                               236,500                                              14.02%


PO Box 581072


Salt Lake City, UT 84158






9





Name of Officer,
Director               Amount
and Nature of


Title of
Class         and
Nominee                                    Beneficial Ownership
(1)              Percent of
Class


Common                 Alex
Demitriev                                         200,000                                           
11.86%


Common                 All
Officers and Directors


as a
Group                                              200,000                                             11.86%





(1) All
shares are owned directly, beneficially and of record; and each stockholder has
sole voting, investment, and dispositive power, unless otherwise
noted.


(2) Ms.
Turpin owns 600,000 and through her management and ownership of Micvic, LLC is
beneficially deemed to own the 336,780 shares held by Micvic,
LLC.  The owners of Micvic, LLC are Michelle Turpin and Victor
Schwarz.





ITEM
13. Certain Relationships and Related Transactions and Director
Independence.





Transactions with management
and others





A
stockholder, Michelle Turpin, of the Company paid, on behalf of the Company, and
advanced other costs through a series of promissory notes.  In 2007,
the Company consolidated the promissory notes into one note with a credit line
up to $30,000 which was convertible into up to 600,000 stocks of common
stock.  In 2008, after the Company had borrowed the entire $30,000
under the line of credit, the stockholder converted the promissory note into the
600,000 stocks of common stock.





Denny W.
Nestripke, received 37,500 stocks of the Company’s common stock valued at $0.06
(the prevailing market price during the period of his service), for services
rendered through the filing of this report. The services provided by Mr.
Nestripke were largely related to the preparation of financial statements, the
preparation and review of filings being made with the United States Securities
and Exchange Commission, other regulatory filings (such as tax returns), and the
performance of other duties associated with the Company's plan of operations
(see Item 6 of this report).





Item
14. Principal Accountant Fees and Services





(1) Audit
Fees - The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the Company’s principal accountant for the
audit of the annual financial statements and review of financial statements
included in the Form 10-QSB or services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
for those fiscal years are8,075for 2008, $4,950 for 2007 and $2,375 for
2006.





(2) Audit-Related
Fees - The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the Company’s principal accountant that are
reasonably related to the performance of the audit or review of the financial
statements and are not reported in (1) Audit
Fees:     $0for 2008, $1,500 for 2007 and $2,425 for
2006.





(3) Tax
Fees - The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the Company’s principal accountant for tax
compliance, tax advice, and tax planning:     0for
2008, $0 for 2007 and $0 for 2006.





(4) All Other Fees - The
aggregate fees billed in each of the last two fiscal years for products and
services provided by the Company’s principal accountant, other than the services
reported in (1) Audit Fees; (2) Audit-Related Fees; and (3) Tax
Fees:     $0 for 2008, $0 for 2007 and $0 for
2006.





(5) The
Company does not have an audit committee





(6) Not
Applicable





ITEM
15. Exhibits





Financial
Statements – the following financial statements are included in this
report:





Title of
Document                                                                           
    Page





Report of
Independent Registered Public Accounting
Firm          
F-1


Balance
Sheet                                                                                    
    F-2


Statements
of
Operations                                                                     F-3


Statements
of Stockholders=
(Deficit)                                                 F-4


Statements
of Cash
Flows                                                                    F-7


Notes to
Financial
Statements                                                             F-8-10






10




Financial
Statement Schedules – There are no financial statement schedules are
included as part of this report





Exhibits
– The following exhibits are included as part of this report:





Exhibit                                Reference


Number                                Number                      Title of
Document                                                                           Location





3.01                      3                      Articles
of
Incorporation                                                                                     Incorporated
by reference*





3.02                      3                      Amended
Articles of
Incorporation                                                                   Incorporated
by reference**





3.03                      3                      Amended
Articles of
Incorporation                                                                   Incorporated
by reference***





3.04                      3                      Bylaws                                                                                                              
      Incorporated by reference*





4.01                      4                      Specimen
Stock
Certificate                                                                                   Incorporated
by reference*





31.01                      31                      CEO
certification Pursuant to 18 USC


Section
1350, as adopted pursuant to


Section
302 of Sarbanes-Oxley Act of
2002                                      
     This Filing





31.02                      31                      CFO
certification Pursuant to 18 USC


Section
1350, as adopted pursuant to


Section
302 of Sarbanes-Oxley Act of
2002                                            This
Filing





32.01                      32                      CEO
and CFO Certification pursuant to Section
906                                    This
Filing





*  Incorporated
by reference from the Company's registration statement on Form 10-SB filed with
the Commission, SEC file no.000-28475.





**  Incorporated
by reference from the Company's definitive 14C filed on July 31, 2000, with the
Commission, SEC file no.000-28475.





***  Incorporated
by reference from the Company's definitive 14C filed on January 9, 2001, with
the Commission, SEC file no.000-28475.





SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to by signed on its behalf by
the undersigned, thereunto duly authorized.





Merilus, Inc.





By: /s/ Alex Demitriev


Alex Demitriev, Principal Executive
and Financial Officer





Date: April 10, 2009





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





By: /s/ Alex Demitriev


Alex Demitriev, Principal Executive
and Financial Officer





Date: April 10, 2009





11




















Douglas
W. Child, CPA
 Marty D.
Van Wagoner, CPA
 J. Russ
Bradshaw, CPA
 William
R. Denney, CPA
 Roger B.
Kennard, CPA
 Russell
E. Anderson, CPA
 Scott L.
Farnes





REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





Officers
and Directors


Merilus,
Inc.





We have
audited the accompanying  balance sheets of Merilus, Inc. ( a Nevada
development stage company) as of December 31, 2008 and 2007, and the
related  statements of
operations,  stockholders’  (deficit), and cash flows for
the  years ended December 31, 2008 and 2007, and for the period of May
7, 1985 (date of inception)  through  December 31, 2008.
These financial statements are the responsibility of the Company’s
management.  Our responsibility is to express an opinion on these
financial statements based on our audits.




We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States of America).  Those
standards require that we plan and perform the audits to obtain reasonable
assurance about whether the  financial statements are free of material
misstatement. The company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
company’s internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.





In
our opinion, the  financial statements referred to above present
fairly, in all material respects, the financial position of Merilus, Inc. as
of  December 31, 2008 and 2007, and the results of its
operations, and its
 cash flows for the  years ended December 31, 2008 and 2007, and for
the period of May 7, 1985 (date of
inception)  through  December 31, 2008,  in
conformity with accounting principles generally accepted in the
 United States of America.




The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 1 to
the  financial statements, the Company has cash flow constraints, an
accumulated deficit, and has suffered recurring losses from operations. These
factors, among others, raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 1. The  financial statements do not include any
adjustments that might result from the outcome of this uncertainty.





/s/  Child,
Van Wagoner & Bradshaw, PLLC


Child,
Van Wagoner & Bradshaw, PLLC


Certified
Public Accountants


Salt Lake
City, Utah


April 10,
2009
  1284 W.
Flint Meadow Dr. #D
 Kaysville,
Utah 84037
 Telephone
801.927.1337
 Facsimile
801.927.1344
 
 
 
 5296 S.
Commerce Dr. #300
 Salt Lake
City, Utah 84107
 Telephone
801.281.4700
 Facsimile
801.281.4701
 
 
 
 Suite A,
5/F
 Max Stock
Centre
 373
King’s Road
 North
Point, Hong Kong
 Telephone
852.21.555.333
 Facsimile
852.21.165.222
 
 
 www.cpaone.net
   F -
1





Merilus, Inc.( a
      development stage enterprise )Balance
      SheetsDecember
      31,2008
                                    
                                    2007Assets:Current
      Assets:Cash
      in bank
                                    $
                                    964
                                    
                                    $
                                    1,124Total
      Assets
                                    $
                                    964
                                    
                                    $
                                    1,124Liabilities
      and Stockholders' Deficit:Current
      Liabilities:Accounts
      payable
                                    $
                                    24,806
                                    
                                    $
                                    29,568Related
      party payable
                                    
                                    -
                                    
                                    
                                    305Related
      party note payable
                                    
                                    14,845
                                    
                                    
                                    28,694Related
      party interest payable
                                    
                                    1,433
                                    
                                    
                                    2,800Total
      Liabilities
                                    
                                    41,084
                                    
                                    
                                    61,367Stockholders'
      Deficit:Preferred
      stock, $1.00 par value, 1 share authorized,0
      shares issued and outstanding
                                    
                                    -
                                    
                                    
                                    -Common
      stock, $0.001 par value, 100,000,000 sharesauthorized,
      1,486,692 and 686,692 shares issued andoutstanding
      at December 31, 2008 and 2007, respectively
                                    
                                    1,486
                                    
                                    
                                    686Paid
      in capital
                                    
                                    3,309,779
                                    
                                    
                                    3,270,579Deficit
      accumulated during the development stage
                                    
                                    (3,351,385)
                                    
                                    
                                    (3,331,508)Total
      Stockholders' Deficit
                                    
                                    (40,120)
                                    
                                    
                                    (60,243)Total
      Liabilities and Stockholders' Deficit
                                    $
                                    964
                                    
                                    $
                                    1,124The
      accompanying notes are an integral part of these financial
      statements.








F -
2





Merilus,
      Inc.( a
      development stage enterprise )Statements
      of OperationsFrom
      the dateof
      inception(May
      7, 1985)For
      the Years Ended December 31,
                                                        
                                                        through2008
                                                        
                                                        2007
                                                        
                                                        December
      31, 2008Revenue
                                                        $
                                                        -
                                                        
                                                        $
                                                        -
                                                        
                                                        $
                                                        -Expenses:General
      and administrative
                                                        
                                                        17,118
                                                        
                                                        
                                                        26,886
                                                        
                                                        
                                                        166,579Conversion
      feature of note payable
                                                        
                                                        -
                                                        
                                                        
                                                        57,387
                                                        
                                                        
                                                        57,387Loss
      on investment
                                                        
                                                        -
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        3,121,853Interest
      expense
                                                        
                                                        2,759
                                                        
                                                        
                                                        2,091
                                                        
                                                        
                                                        5,566Total
      Expense
                                                        
                                                        19,877
                                                        
                                                        
                                                        86,364
                                                        
                                                        
                                                        3,351,385Net
      Loss
                                                        $
                                                        (19,877)
                                                        
                                                        $
                                                        (86,364)
                                                        
                                                        $
                                                        (3,351,385)Net
      loss per stockof
      common stock
                                                        $
                                                        (0.02)
                                                        
                                                        $
                                                        (0.13)Net
      loss per fully diluted stockof
      common stock
                                                        $
                                                        (0.01)
                                                        
                                                        $
                                                        (0.07)Weighted
      average numberof
      common stocks outstanding
                                                        
                                                        1,187,238
                                                        
                                                        
                                                        656,475Weighted
      average number of fullydiluted
      common stocks outstanding
                                                        
                                                        1,331,501
                                                        
                                                        
                                                        1,256,475The
      accompanying notes are an integral part of these financial
      statements.






F -
3





Merilus,
      Inc.( a
      development stage enterprise )Statements
      of Stockholders' (Deficit)From
      the date of inception (May 7, 1985) through December 31,
    2008DeficitAccumulatedDuring
      thePreferred
                                    
                                    Common
                                    
                                    Paid
      in
                                    
                                    DevelopmentStocks
                                    
                                    Amount
                                    
                                    Stocks
                                    
                                    Amount
                                    
                                    Capital
                                    
                                    StageBalance,
      May 7, 1985 - date of inception
                                    -
                                    
                                    $                                 -
                                    
                                    -
                                    
                                    $                                      -
                                    
                                    $                                   -
                                    
                                    $                  
                        -Common
      Stock issued for cash throughDecember
      1991 ($0.12 / stock)
                                    -
                                    
                                    -
                                    
                                    187,500
                                    
                                    188
                                    
                                    22,312
                                    
                                    -Common
      Stock issued for cash throughDecember
      1992 ($0.10 / stock)
                                    -
                                    
                                    -
                                    
                                    50,000
                                    
                                    50
                                    
                                    4,950
                                    
                                    -Common
      Stock issued for cash throughDecember
      1999 ($0.18 / stock)
                                    -
                                    
                                    -
                                    
                                    100,000
                                    
                                    100
                                    
                                    17,400
                                    
                                    -Net
      Operating Loss from the date of inceptionthrough
      December 31, 1999
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    (45,500)Balance,
      December 31, 1999
                                    -
                                    
                                    -
                                    
                                    337,500
                                    
                                    338
                                    
                                    44,662
                                    
                                    (45,500)Issuance
      and exercise of warrants for thepurchase
      of common stock, November 2000($20.00
      / stock)
                                    -
                                    
                                    -
                                    
                                    100,000
                                    
                                    100
                                    
                                    1,999,900
                                    
                                    -Issuance
      of preferred stock in trust incontemplation
      of acquiring stocks of MerilusTechnologies,
      Inc., December 2000
                                    1
                                    
                                    1
                                    
                                    -
                                    
                                    -
                                    
                                    (1)
                                    
                                    -Net
      operating loss for the year
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    (7,775)Balance,
      December 31, 2000
                                    1
                                    
                                    1
                                    
                                    437,500
                                    
                                    438
                                    
                                    2,044,561
                                    
                                    (53,275)Stocks
      of common stock issued for cash,June
      2001 ($20.00 / stock)
                                    -
                                    
                                    -
                                    
                                    30,000
                                    
                                    30
                                    
                                    599,970
                                    
                                    -Stocks
      of common stock issued for cash,November
      2001 ($17.00 / stock)
                                    -
                                    
                                    -
                                    
                                    9,125
                                    
                                    9
                                    
                                    155,119
                                    
                                    -Stocks
      of common stock issued for legal services,November
      2001 ($17.00 / stock)
                                    -
                                    
                                    -
                                    
                                    1,750
                                    
                                    2
                                    
                                    29,748
                                    
                                    -Stocks
      of common stock issued for cash,December
      2001 ($10.00 / stock)
                                    -
                                    
                                    -
                                    
                                    37,500
                                    
                                    38
                                    
                                    374,962
                                    
                                    -Issuance
      of stocks of common stock pursuant toan
      exchange agreement, December 2001($0.02
      / stock)
                                    -
                                    
                                    -
                                    
                                    41,415
                                    
                                    41
                                    
                                    (41)
                                    
                                    -Issuance
      of stocks of common stock for services,December
      2001 ($5.10 / stock)
                                    -
                                    
                                    -
                                    
                                    1,250
                                    
                                    1
                                    
                                    6,374
                                    
                                    -Termination
      of trust agreement
                                    (1)
                                    
                                    (1)
                                    
                                    -
                                    
                                    -
                                    
                                    1
                                    
                                    -Net
      operating loss for the year
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    (3,157,978)Balance,
      December 31, 2001
                                    -
                                    
                                    -
                                    
                                    558,540
                                    
                                    559
                                    
                                    3,210,694
                                    
                                    (3,211,253)Net
      operating loss for the years 2002, 2003
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    -and
      2004
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    (2,723)Balance,
      December 31, 2004
                                    -
                                    
                                    -
                                    
                                    558,540
                                    
                                    559
                                    
                                    3,210,694
                                    
                                    (3,213,976)Payment
      of accounts payable by stockholder
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    375
                                    
                                    -Net
      operating loss for the year
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    (7,803)Balance,
      December 31, 2005
                                    -
                                    
                                    -
                                    
                                    558,540
                                    
                                    559
                                    
                                    3,211,069
                                    
                                    (3,221,779)Issuance
      of stocks of common stock for services,February
      2006, ($0.06 / stock)
                                    -
                                    
                                    -
                                    
                                    37,500
                                    
                                    37
                                    
                                    2,213
                                    
                                    -Net
      operating loss for the year
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    (23,365)Balance,
      December 31, 2006
                                    -
                                    
                                    -
                                    
                                    596,040
                                    
                                    596
                                    
                                    3,213,282
                                    
                                    (3,245,144)Issuance
      of stocks resulting from a 1 for 20reverse
      split whereby stockholders owning100
      stocks or more would not be diluted below100
      stocks, May 2007
                                    -
                                    
                                    -
                                    
                                    90,652
                                    
                                    90
                                    
                                    (90)
                                    
                                    -Effect
      of convertible note payable to stockholder
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    57,387Net
      operating loss for the year
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    (86,364)Balance,
      December 31, 2007
                                    -
                                    
                                    -
                                    
                                    686,692
                                    
                                    686
                                    
                                    3,270,579
                                    
                                    (3,331,508)Issuance
      of stocks of common stock for note andaccrued
      interest, March 2008, ($0.05 / stock)
                                    -
                                    
                                    -
                                    
                                    600,000
                                    
                                    600
                                    
                                    29,400
                                    
                                    -Issuance
      of stocks of common stock for accountspayable,
      October 2008, ($0.05 / stock)
                                    -
                                    
                                    -
                                    
                                    200,000
                                    
                                    200
                                    
                                    9,800
                                    
                                    -Net
      operating loss for the year
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    -
                                    
                                    (19,877)Balance,
      December 31, 2008
                                    -
                                    
                                    $                                 -
                                    
                                    1,486,692
                                    
                                    $                              1,486
                                    
                                    $                    3,309,779
                                    
                                    $                
        (3,351,385)The
      accompanying notes are an integral part of these financial
      statements.







F - 4, 5,
& 6





Merilus,
      Inc.( a
      development stage enterprise )Statements
      of Cash FlowsFrom
      the dateof
      inception(May
      7, 1985)For
      the Year Ended December 31,
                                                      
                                                      through2008
                                                      
                                                      2007
                                                      
                                                      December
      31, 2008Operating
      Activities:Net
      loss from operations
                                                      $
                                                      (19,877)
                                                      
                                                      $
                                                      (86,364)
                                                      
                                                      $
                                                      (3,351,385)Stock
      issued for services
                                                      
                                                      -
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      38,375Effect
      of convertible notepayable
      to stockholder
                                                      
                                                      -
                                                      
                                                      
                                                      57,387
                                                      
                                                      
                                                      57,387Adjustment
      to reconcile net lossto
      net cash position:Accounts
      payable
                                                      
                                                      (2,262)
                                                      
                                                      
                                                      14,467
                                                      
                                                      
                                                      24,806Payable
      to related party
                                                      
                                                      9,979
                                                      
                                                      
                                                      2,390
                                                      
                                                      
                                                      15,584Loss
      on investments
                                                      
                                                      -
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      3,121,853Net
      cash used for operatingactivities
                                                      
                                                      (12,160)
                                                      
                                                      
                                                      (12,120)
                                                      
                                                      
                                                      (93,380)Investing
      Activities:Investment
      in MerilusTechnologies,
      Inc.
                                                      
                                                      -
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      (3,130,128)Net
      cash used for investingactivities
                                                      
                                                      -
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      (3,130,128)Financing
      Activities:Proceeds
      from issuance ofcommon
      stock
                                                      
                                                      -
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      3,175,128Loans
      from stockholder
                                                      
                                                      12,000
                                                      
                                                      
                                                      12,800
                                                      
                                                      
                                                      40,694Donation
      of capital
                                                      
                                                      -
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      8,650Net
      cash provided fromfinancing
      activities
                                                      
                                                      12,000
                                                      
                                                      
                                                      12,800
                                                      
                                                      
                                                      3,224,472Net
      increase (decrease) in cash
                                                      
                                                      (160)
                                                      
                                                      
                                                      680
                                                      
                                                      
                                                      964Net
      cash position at start of period
                                                      
                                                      1,124
                                                      
                                                      
                                                      444
                                                      
                                                      
                                                      -Net
      cash position at end of period
                                                      $
                                                      964
                                                      
                                                      $
                                                      1,124
                                                      
                                                      $
                                                      964Supplemental
      Schedule of NoncashInvesting
      and Financing TransactionsConversion
      of related party notepayable
      into common stock
                                                      $
                                                      30,000
                                                      
                                                      $
                                                      -
                                                      
                                                      $
                                                      30,000Conversion
      of accounts payableinto
      common stock
                                                      $
                                                      10,000
                                                      
                                                      $
                                                      -
                                                      
                                                      $
                                                      30,000The
      accompanying notes are an integral part of these financial
      statements.






F -
7




Merilus,
Inc.


(a
development stage enterprise)


Notes to
Financial Statements


December
31, 2008





Note 1 –
Organization and Summary of Significant Accounting Policies





Development stage
enterprise – Merilus, Inc. (the “Company”) was incorporated under the
laws of the State of Nevada on May 7, 1985. During the year 2000 the Company
entered into a reorganization agreement (“Agreement”) with the intent to acquire
all of the issued and outstanding shares of a development stage enterprise,
Merilus Technologies, Inc. (“MTI”), a British Columbia corporation. This
transaction was not consummated as contemplated and in 2003 MTI filed for
bankruptcy. Since its inception the Company has not been engaged in profitable
operations and is considered a development stage enterprise as defined by
Statement of Financial Accounting Standards (“SFAS”) No. 7. The Company’s
current business plan is to acquire an operating entity through a reverse
acquisition.





Basis of presentation
– During 1999 the Company forward split its outstanding shares of common stock
on a basis of 200 for 1 and during the year 2000 the Company again forward split
its common stock on a basis of 10 for 1. During May 2007 the Company reverse
split its common stock on a basis of 1 for 20 with the provision that no
stockholder shall receive less than 100 shares. As a result, 90,652 shares of
post split common stock were issued to existing stockholders. The accompanying
financial statements retroactively reflect the effects of the forward and
reverse splits of the Company’s common stock.





Going Concern --These financial statements have been prepared in contemplation of the
Company continuing as a going concern. The Company has not generated any revenue
from operations in each of the last two fiscal years and has not, since its
inception, undertaken any profitable operations. The Company's ability to meet
its ongoing financial requirements has been dependent on loans from a
stockholder. On March 28, 2008, the Company issued 600,000 shares of its common
stock in payment of $30,000 of principal and accrued interest. The Company
continues to be obligated to this stockholder in the amount of $16,278 as of
December 31, 2008 and assumes that an ongoing loan arrangement will continue
into the future; however, no assurance thereof can be given. Furthermore, the
Company is dependent on the services of its sole officer and director without
compensation. A change in these circumstances would have a material adverse
effect on the Company's plan of operations.





Use of estimates –
These financial statements are prepared in conformity with accounting principles
generally accepted in the United States of America and require that management
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities. The use of
estimates and assumptions may also affect the reported amounts of revenues and
expenses. Actual results could differ from those estimates or
assumptions.





Net loss per share of common
stock – The loss per share of common stock is computed by dividing the
net loss during the periods presented by the weighted average number of shares
outstanding during those same periods. The net loss per fully diluted share of
common stock is computed by dividing the net loss during the periods presented
by the weighted average number of shares outstanding and the 600,000 shares of
common stock that are issued upon the conversion of a convertible note payable
in March 2008. The issuance of these shares of common stock has an anti-dilutive
effect on the net loss per share of common stock.





Income taxes –The
Company has no deferred taxes arising from temporary differences between income
for financial reporting and for income tax purposes. The Company has a net
operating loss carry forward at December 31, 2008, of approximately $193,000
that expires if unused through various years until 2028. The Company’s
utilization of any net operating loss is unlikely as a result of its intended
development stage activities.





The
Company adopted the provisions of FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes, on January 1, 2007.  As a result of the
implementation of Interpretation 48, the Company recognized approximately no
increase in the liability for unrecognized tax benefits.





The
Company has no tax positions at December 31, 2007 and 2008 for which the
ultimate deductibility is highly certain but for which there is uncertainty
about the timing of such deductibility.





F -
8


Merilus,
Inc.


(a
development stage enterprise)


Notes to
Financial Statements (continued)


December
31, 2008





Note 1 –
Organization and Summary of Significant Accounting Policies
(continued)





The
Company recognizes interest accrued related to unrecognized tax benefits in
interest expense and penalties in operating expenses.  During the
years ended December 31, 2007 and 2008, the Company recognized no interest and
penalties.  The Company had no accruals for interest and penalties at
December 31, 2007 and 2008.





Note 2 –
Capital Stock





Preferred stock – One
share of preferred stock was authorized and issued in conjunction with the
Agreement. Pursuant to the terms of the Agreement, the preferred share
represented 3,767,500 shares of the Company’s common stock (“Exchangeable
Shares”) to be issued upon surrender of MTI common stock by the MTI
stockholders. By the end of 2001, MTI stockholders had surrendered sufficient
MTI common stock to allow the Company to issue 828,300 shares of its common
stock, which represented approximately 22% of the Exchangeable Shares. At
December 31, 2008, the preferred share remains authorized but is not
outstanding.





Common stock – During
May 2007, stockholders of the Company authorized a 1 for 20 reverse split of the
Company’s outstanding common stock with the provision that no stockholder shall
receive less than 100 shares. As a result, 90,652 shares of post split common
stock were issued to existing stockholders, which represented an increase of
15.2% in the total number of common shares outstanding. These shares of common
stock were valued at par value because the Company received no consideration
from the issuance thereof. The total number of authorized shares of common stock
and the par value of the common stock did not change.





Note 3 –
Related Party Transactions





The
Company entered into an unsecured convertible promissory note bearing interest
at 6% per annum with a stockholder. On November 5, 2007, the Company
renegotiated the terms and entered into a new unsecured convertible note and
letter of credit (“Convertible Note”) with this stockholder in an amount of up
to $30,000, bearing interest at 18% per annum. The negotiation of the
Convertible Note was not at arm’s length and the Company recognized an expense
of $57,387 at the time that this note was issued relating to the beneficial
conversion feature, which allowed the holder to convert the principal sum and
accrued interest into shares of common stock. On March 28, 2008, the Convertible
Note was converted into 600,000 shares of the Company’s common stock at a price
of $0.05 per share, which represented a reduction of $25,880 of principal and
$4,120 of interest. On March 31, 2008, the Company entered into an unsecured
note payable (“Unsecured Note”) with this stockholder that contained no
conversion provision, in the amount of $6,855 bearing interest at 18% per annum
with a due date of May 31, 2008. Subsequently, additional cash was provided to
the Company by the stockholder and at December 31, 2008, the Unsecured Note
remains unpaid and a total of $14,845 in principal and $1,433 in accrued
interest is due the stockholder.





On
October 10, 2008, a $10,000 account payable to a former officer and director,
and stockholder of the Company was satisfied by the issuance of 200,000 shares
of the Company’s common stock ($0.05 per share). At the same time, this
individual entered into an engagement letter with the Company to provide
accounting and record keeping services.





In April
2009, the Company issued 200,000 shares of common stock to its sole officer and
director for services rendered. These shares were valued at the prevailing bid
price for the Company’s common stock as reflected on the OTCBB of $0.11, or a
total of $22,000.





F -
9


Merilus,
Inc.


(a
development stage enterprise)


Notes to
Financial Statements (continued)


December
31, 2008





Note 4 –
Contingent Liabilities





To the
extent that the Company was a party to any financial transactions that were not
discharged through MTI’s bankruptcy proceedings, including the obligations
associated with the issuance of the one stock of preferred stock, or that may
not have been listed as part of MTI’s bankruptcy, the Company may have
contingent liabilities. To the best of management's knowledge and belief the
accompanying financial statements accurately reflect the financial position of
the Company as of the dates presented and no contingent liabilities
exist.





Note 5 –
Subsequent Events





In March
2009, the Company issued 200,000 shares of common stock to its sole officer and
director for services rendered. These shares were valued at the prevailing bid
price for the Company’s common stock as reflected on the OTCBB of $0.11, or a
total of $22,000.