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 EXCHANGE ACT OF 1934





For the fiscal year ended August 31, 2010





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





For the transition period from ___________ to ___________





Commission File No. 333-138298





MAXLIFE FUND CORP.


(Exact name of registrant as specified)





WYOMING

98-0505734(State or other jurisdiction of

incorporation or organization)

(IRS Employer Identification No.)





45 Sheppard Avenue East, Suite 900

North York, Ontario

Canada

M2N 5W9(Address of principal executive offices)

(Zip Code)





416-200-0657(Registrant’s telephone number, including area code)





Securities registered under Section 12(b) of the Exchange Act:Title of each class registered:
Name of each exchange on which registered:None
NoneSecurities registered under Section 12(g) of the Exchange Act:Common Stock, par value $.001

(Title of class)





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 preceding 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 xNo o





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).


Yes o No o





Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yeso No x





Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B not contained in this form, and no disclosure will be contained, to the best of the 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. o





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





Large accelerated filer                                                    o                                           Accelerated filer                                                      x


Non-accelerated filer                                                      o                                           Smaller reporting company                                    o


(Do not check if a smaller reporting company)





Revenues for year ended August 31, 2010: $275,000





Aggregate market value of the voting common stock held by non-affiliates of the registrant as of November 15, 2010, was: $69,120,907





Number of shares of the registrant’s common stock outstanding as of November 15, 2010 was: 16,253,168








TABLE OF CONTENTS





PART IITEM 1.
DESCRIPTION OF BUSINESS
1ITEM 1A.
RISK FACTORS
7ITEM 1B.
UNRESOLVED STAFF COMMENTS
10ITEM 2.
DESCRIPTION OF PROPERTY
10ITEM 3.
LEGAL PROCEEDINGS
10ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
10PART II

10ITEM 5.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
10ITEM 6.
SELECTED FINANCIAL DATA
11ITEM 7.
PLAN OF OPERATIONS
12ITEM 7A
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
16ITEM 8.
FINANCIAL STATEMENTS
F-ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
17ITEM 9A.
CONTROLS AND PROCEDURES
17ITEM 9B
OTHER INFORMATION
18PART III

19ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
19ITEM 11.
EXECUTIVE COMPENSATION
20ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
21ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
21ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
21PART IV

23ITEM 15.
EXHIBITS
23SIGNATURES

23





PART I





ITEM 1.    DESCRIPTION OF BUSINESS





Business Development





MaxLife Fund Corp. (the “Company”, “MaxLife”, “we”, “us” or “our”) was incorporated in the State of Wyoming on January 9, 2006.  On August 31, 2006, pursuant to the terms of a stock purchase agreement by and among us, 1254450 Ontario Ltd. (“1254450”), and the shareholders of 1254450 (“Shareholders”), we acquired all of the then issued and outstanding preferred and common shares of 1254450 for a total of $5,000 worth of our common stock to be issued at such time as our shares are approved for listing on a public market exchange.  Pursuant to the agreement 1254450 became our wholly owned subsidiary.





Business of Issuer





General





MaxLife Fund Corp. is concentrating on three major components of the Life Settlement sector; (1) to generate fee income by providing a turnkey investment solution for accredited investors wanting to own policies, (2) to obtain ownership in companies in the life settlement industry and (3) to build a large portfolio for institutional buyers and be involved as an intermediary. MaxLife is positioning itself to grow with the industry and expand its operation to become one of the leaders in the Life Settlement sector.  In prior reporting periods, we unsuccessfully attempted to market a financial product known as the “MX Series” to Israeli investors.  This product was based on life settlement policies owned by a trust administered with our assistance.  We believed that the sale of this product would enable us to generate fee income by providing a turnkey investment solution for accredited investors wanting to own life insurance policies.  We have discontinued, and have no current plans to resume, marketing of this product.




We have shifted our business structure toward a business model which focuses on acquisition or funding of life policies of individuals on behalf of strategic buyers.  MaxLife is looking to generate fees by facilitating such transactions. We are no longer looking to purchase or fund life policies of individuals for our own inventory. Our goal also is to earn fees by administering a large number of policies on behalf of clients and funds and earning a management and performance fee.





We have been in discussion with pension funds, provident funds, brokers and accredited investors regarding the industry and opportunities available. The structure of the fees will be different depending on the funds that will be raised and depending on the nature of the investor group. Some of our attempts to purchase these portfolios were either unacceptable and /or did not meet their criteria or objectives. They would not achieve the required rate of return or potential gains they are seeking. We do believe that the new territories and investor groups we are educating, as to this alternative asset class, will invest over the next few quarters.





Depending on the nature of the policyholder, we will provide one of two types of settlements. A “viatical settlement” is the sale of a life insurance policy by a terminally ill person to another party. By selling the policy, the insured (a viator) receives an immediate cash payment to use as he or she wishes. In this case, we take an ownership interest in the policy on behalf of clients, at a discount to its face value and receive the death benefit under the policy when the viator dies. A “life settlement” differs from a viatical settlement in that the insured is not terminally ill and focuses on healthy seniors. The life policy holder is typically 65 years of age or older, and has a life expectancy of ten years or less. Life settlements are an attractive transaction to persons who purchased life insurance for income protection or estate planning, but no longer need the insurance due to growth in their investment portfolios or other changes in life circumstances. Life settlements also appeal to persons who want to make immediate gifts to their beneficiaries. In these instances, the insured may feel the insurance is no longer needed.  Since the market for viatical settlements has grown to include life expectancies that are often associated with life settlements and the age and medical condition of many life settlers gives them a life expectancy that is the same as many viators, the distinction between these two market segments has diminished and the markets have largely merged. We expect to target both terminally ill policyholders as well as non-terminally ill policyholders over the age of 65.





We are a development company.  We will require additional funds to implement our business plan.  We are attempting to raise funds through a preferred share unit offering consisting of preferred shares and warrants. There is no assurance that we will be able to obtain additional funding through this or other equity offerings  or that such funding, if available, will be obtained on terms favorable to or affordable by us.




We believe our current resources are adequate to meet our obligations over the next twelve months.





1


Industry Analysis





We believe that life settlements are receiving significant attention from insurers whose policies are being transferred, from brokers and providers seeking financial gain from these transactions, and from lenders, mostly institutional, seeking to enhance their return by investing in viaticals and life settlements.





An insured whose life expectancy has deteriorated since policy issue is more attractive to a life settlement lender who is looking to minimize the wait to receive the policy death benefit. As a result of reviewing the insured’s medical records, the life settlement lender will have much more current information regarding the insured’s life expectancy that the insurer, which likely last reviewed the medical information when the policy was issued. However, at the present time, non-forfeiture regulations do not permit insurers to differentiate cash surrender values based on current life expectancy, creating the opportunity for life settlement providers to offer more for a policy, on a selective basis, than the insurer is able to pay.





The financial performance of a life settlement is driven by the relationship of the actual future lifetime of the insured after policy purchase and the expected future lifetime upon which the life settlement offer was calculated. The purchaser balances the present value of the death benefit, at an interest rate that provides it with an acceptable return for the risk being assumed, against the up-front payment for the policy, the amount of commissions, fees, and expenses required by the transaction, and the sum needed to fund continuing premium payments. Given that there is a reasonable distribution of the actual future lifespan of the insured’s around what was expected at policy purchase, the life settlement Lender will realize a return from the transactions that is at least close to what was targeted. On some of the policies that were purchased, returns greater than what was assumed will be achieved, which balance out lower-than-expected returns on others.





However, when individuals seek to evaluate a life settlement offer against the ultimate value to be found from keeping the policy, they do not know the length of their future lifetime. For some of them, keeping the policy will provide a greater financial reward. For others, accepting the life settlement will produce a better outcome. This suggests that the position adopted by some industry observers that it is always better to retain the policy is not correct.





Compensation





As with many life insurance product trends, the financial interest of producers is a powerful factor. Sales trends develop as agents and brokers learn new ways to serve their clients, and generate income for themselves in the process. Life settlement transactions supply life agents and brokers with a new tool to serve clients, and provide additional sources of income for themselves. These include fees generated from the settlement itself, which can be substantial and new commission streams that result from additional policies funded with the proceeds of the life settlement transaction.





There are no externally imposed compensation standards that control what a life settlement broker, who arranges the sale of a policy, and the life agent or financial advisor, who brings the particular client to the transaction, might receive. However, a competitive market generally brings its own discipline, and typical compensation levels are evolving.





Value of the Death Benefit





The strongest industry reaction has been to focus the attention of policy owners who might be considering a life settlement on the value of the policy death benefit. Their argument suggests that the life policy is likely one of the insured’s most valuable assets. If a current need for capital or a concern for the cash flow necessary to maintain premium payments is motivating the settlement, they would suggest selling other assets before the life policy, or working out an arrangement with the beneficiary or another interested party to assist with premium payments.





In any analysis of a life settlement, factors particular to the current situation of the individual insured provide the foundation for the discussion. One key issue is balancing current wants/needs and future considerations. It can be as simple as deciding if the insured wants to take advantage of the policy values or is willing to let them accrue to a third party following his/her death. Risk tolerance is an issue, as is the factor used to equate a current settlement offer versus future policy values.





A simple model demonstrates that the value received by holding the policy will vary relative to the settlement offer made on the policy. Keeping the policy may be better, or it may provide less than the settlement offer. Unfortunately, at the time the offer is made, the insured does not know which alternative will apply.


2


Other Insurable Interest Issues





Other programs, often with insurable interest issues or arbitrage opportunities similar to life settlements, are included in a discussion of life settlements. These include LILAC (life insurance life annuity contracts) programs, non-recourse premium financing, and blocks of new policies purchased with a settlement transfer in mind. Each is likely to erode profitability for the insurers involved.





By notifying their distributors they are not interested in issuing such policies, and by establishing appropriate underwriting techniques to avoid issuing such policies, insurers should be able to minimize the negative impact.





Coverage Types





Individually sold life policies are the primary source of life settlement transactions. The initial purpose of the insurance was often to provide financial protection. In others, the initial beneficiary, often the spouse has predeceased the insured. Absent a secondary purpose for the insurance, a life settlement may seem like a logical alternative.





Business insurance policies (buy-sell, keyman, etc.) can provide additional life settlement opportunities. Policies purchased to fund buy-sell programs may no longer be needed after one or more of the original owners have left the firm. Policies used to provide keyman coverage may become superfluous after the insured has retired or otherwise dropped out of active participation in the business.





Small and midsize executive benefit plans funded with life insurance contracts may be another group of likely targets for life settlements providers. This becomes more likely in situations where corporate operations are being restructured, such as following a sale or a bankruptcy, or where an infusion of cash is needed to address a pressing business issue. Self-administered plans, using individual rather than aggregate funding that do not maintain an ongoing relationship with the life agent or broker that sold the plan are more likely to be targets.





The potential reduction in the estate tax might make insurance purchased with that purpose in mind a likely target were it not for the fact that much of the life insurance purchased to fund estate taxes is owned by trusts. Working with a trustee is likely to introduce sufficient extra complication to the transaction to deter some life settlement providers. Others try to distinguish themselves by touting their ability to work with trustees.





Other business insurance programs where regulations, such as tax laws, have changed since the policies were purchased may also be likely candidates for life settlements. For example, many insured’s are unsure of how to handle policies purchased under the old split-dollar rules, now that some of those rules have changed.





Target Market





Emerging demographic trends serve as a facilitator for growth in life settlement activity. The oldest members of the Baby Boomer generation are now approaching 60 years old. This is not yet old enough to fit within the target market profile of life settlement providers, currently focused on ages over 70. However, anticipation of the potential of the Baby Boomer generation as a source of policies available for settlement has motivated life settlement providers to refine their business model in order to be in position to take advantage of this emerging demographic phenomenon. Not only will the Boomers provide a substantial increase in the senior population, but also they may be more receptive to life settlements when their ages become more attractive to life settlement providers to the extent that the current promotion of life settlements makes this option more familiar to them.





Minimally funded UL (universal life) contracts are the primary target of life settlement providers. The low funding level generates only small cash surrender values, making it easier for the settlement offer to look attractive to the insured. In addition, the flexible funding aspect of a UL contract allows the provider to adjust its premium-payment pattern to take future interest rates into consideration, optimizing the provider’s return. Aggressively priced UL contracts provide additional potential gain, in that lower mortality and/or higher lapse assumptions used in policy pricing, maximizing the arbitrage. One drawback of minimally funded UL contracts is that they have little cash value available for paying ongoing mortality charges, which increase sharply as the insured ages.





Whole life contracts are not as attractive, although they are subject to some life settlements. They generally have a much higher cash surrender value, increasing the amount the Lender must pay and/or reducing the excess value that a life settlement broker is able to provide. They also have much less flexibility in the amount and timing of future premium payments.





VUL (variable universal life) policies, to the extent that the policy has a fixed income option that produces returns comparable to what can be achieved with UL, can be attractive to life settlement providers. However, expense charges are normally higher than on UL, and, as a registered product, there is concern for the additional regulatory oversight. The VUL contract has the same flexibility in future premium payments that help to make UL the current product of choice. More settlements involving VUL are likely as fewer of the easier-to-settle UL policies remain available.


3


There is some life settlement activity on level-premium term products as well, although there are some additional hurdles that need to be addressed. Generally speaking, in order to avoid insured’s who might live beyond the guaranteed period, life settlement providers will not be interested unless the remaining period on the term contract is at least twice as long as the estimated life expectancy of the insured. Convertible term policies, where policy provisions permit the term contract to be exchanged for a permanent policy, can be sold. However, the life settlement provider will need to examine the policy form to which the term policy can be converted, the future premium stream on that policy, and the control the insurer has in approving the conversion.





Finally, convertible group products, where the insured is allowed to convert the group insurance to an individual policy, may be available for life settlement, assuming the insured has control of the election to convert the coverage and the transfer to a third party. The life settlement provider will need to be comfortable with the same list of things as with convertible term.





Market Size





The market can be described as follows:





●
The market for senior’s life settlements has continued to grow exponentially, gaining increased acceptance as a useful financial planning tool for individuals with unneeded life insurance.●
The number of people in the United States aged 65 and older is expected to double by the year 2030 to nearly 71 million people. Seniors will comprise roughly 20 percent of the U.S. population.(1)





●
Approximately $27 trillion of life insurance is currently in force. (2)●
90% of policies lapse or are surrendered annually. Hence, the majority of seniors’ policies do not remain in effect.(3)








●
In 2008, more than $16 billion in life settlement transactions occurred. (4)●
Every day in the United States, 6,000 people turn 65. (5)





●
47% of those over age 65 own life insurance.(6)●
59% of senior settlements clients are between the ages of 71-80. (7)





●
Since 2005, the average life settlement offer is three to five times the cash surrender. (8)





-
The low volatility of the underlying investment (the face value of life policies) means they are not impacted by fluctuating stocks and bond markets, rising interest rates or oil prices, global economic instability or business cycles.-
Life insurance policies are capital stable so when a policy is bought the benefit is known.





-
Yield is determined by time and not by market forces, so it’s not a question of if a return will be paid, but when it will be paid.-
Life settlements are not correlated to other financial markets so they differ from investing in shares, property, cash and fixed Interest.





(1)
Centers for Disease Control and Prevention and The Merck Company Foundation. The State of Aging and Health in America 2007(2)
Federal Reserve Bulletin, 2006





(3)
Life Insurance Settlement Association Web Site, 2009(4)
Life Insurance Settlement Association Web Site, 2009





(5)
The Alliance for Aging Research, 2008(6)
Bernstein Research Call, 2005





(7)
National Underwriter, 2008(8)
Life Insurance Settlement Association Web Site 2009





There is an additional segment of the market that operates below the radar screen, dealing in private transactions that are rarely noticed. Complete and accurate historical data were not available when earlier estimates of market size were made and that data is still not easy to obtain.


4


Lenders





Observers of the current situation in the life settlement market characterize it as lender capital prudently funding policies - i.e., that there is money currently available to fund policy purchases and there are available policies to be purchased. As such, and keeping the magnitude of the capital being invested in mind, it suggests just how far things have come since the late 1990s. Institutional Lenders, using a broad definition of that term that includes hedge funds, have replaced individuals and are a major factor of this evolution.  Investment bankers are involved, including Deutsche Bank and UBS making investments from their own funds and facilitating the process for groups of other Lenders. Several major U.S. life insurers are also significant Lenders in life settlements, providing them with an opportunity to offset potential underwriting losses if their own policies are purchased with investment gains from the business they purchase.





Insured mortality, the driver of life settlement profitability, is perceived to be uncorrelated to other major drivers of investment return, such as economic conditions, interest rates, or equity market performance. Historically, the high and uncorrelated returns that have been available have attracted a surfeit of capital.  Closed-end German investment funds are reported to be the largest group of Lenders in U.S. life settlements. German interest has been driven, in large part, by the favorable tax treatment participants receive on life insurance investments.  The tax regulations changed in mid year 2005 and even though the German funds have tried to use leverage to offset the higher taxes, the volume of new investment has dropped off.





In October 2005, the Financial Accounting Standards Board clarified the accounting treatment of life settlement transactions. Historically, life settlement Lenders had been required to value policies purchased using their cash surrender value. Because the policies are purchased for amounts in excess of surrender value, often several times the surrender value, this caused the purchaser to report a loss at the time of purchase. New accounting guidance permits the use of either an investment method or the fair value of the purchased policy. This is likely to open the market to additional institutions (trusts and pension funds, for example) that have been kept on the sidelines by internal investment restrictions.





Institutional Lenders and the more rigid management routines they bring are perceived to be good for the life settlement market. Because the identity of insured’s is often not revealed to the Lender, participants can have less concern for their own privacy and that some individual may profit from their death.





Securitization is a potentially important aspect of institutional Lender participation. Rating firms such as DBRS and AM Best have been working with large situations to rate such financial instruments for issuance of Bonds. “Death bonds,” as they have been referred to pejoratively, are asset-backed securities, with the death benefit from purchased life insurance policies as the revenue stream. Several securitizations of the life settlements have been attempted, with limited success to date. Getting credit reporting agencies to understand these bonds, buy into the underlying underwriting and pricing of the risks, and assign ratings to them is one hurtle. Completing the funding for the transaction on a timely basis is an additional concern. Dignity Partners completed a securitization of viatical policies in 1995, life settlement institutional sources of capital, which helps by bringing additional legitimacy to this maturing marketplace.





Life settlements are on the radar screen of many institutional Lenders. Those include major investment banks (including Deutsche Bank and UBS), with a mix if investments for their own account and the coordination of third - party investments. Hedge funds of various sizes and nationalities, and a number of major life insurers are other sources of life settlement capital. Faced with an uncertain economy and low interest rates, at least at the long - term end of the spectrum, investing in life settlements presents an attractive alternative.





The timing of the actual versus expected mortality is the major driver of returns on life settlement investments. This differs from the profitability to the insurer of the product itself, where the investment return on the assets underlying the product is a major determinant. The life settlement Lender receives the policy proceeds at the death of the insured, and recovers the amount advanced to fund the life settlement. The return on the amount invested will vary depending on the timing of the actual death relative to what had been assumed in determining the amount to pay for the policy. Because fluctuations in actual versus expected mortality are not related to other measures of economic activity, life settlements provide uncorrelated returns to Lenders.





Historically, 15% annual returns, or higher, were commonplace on life settlement investments. Increasing competition has caused returns to drop somewhat. However due to the current market conditions our research suggests that 12%-15% is achievable as of November 2009, but that some transactions priced to yield less than that. By adjusting the amount of the settlement payment for a given estimated life expectancy, the life settlement Lender can select the expected return on its investment, constrained, of course, by current marketplace conditions.





Life settlements, priced to yield 12% or 15% returns, are quite attractive when compared with the 5.25% yields currently available on A-rated 10-year corporate bonds. The likelihood that the actual return on a life settlement would drop to this level is small. For the return on a transaction with a seven-year life expectancy, priced to yield 12%, to drop to 5.25%, the insured would have to live for almost 13 years, which has a probability of approximately 15%.





5


Employees





We currently have no employees other than Bennett Kurtz, our sole officer and director.





Industry Regulation





General





When the life settlement market was first established, it was sparsely regulated. Due in part to abuses within the industry, which were well-publicized, the federal government and various states moved to regulate the market in the mid-1990’s. These regulations generally took two forms. One sought to apply consumer protection-type regulations to the market. This application was designed to protect policyholders and purchasers. Another sought to apply securities regulations to the market, which was designed to protect purchasers. Various states have also used their insurance regulations to attack instances of insurance fraud within the industry.





Consumer Protection Licensing





The consumer protection-type regulations arose largely from the draft of a model law and regulations promulgated by the National Association of Insurance Commissioners (NAIC). At least 39 states have now adopted some version of this model law or another form of regulation governing life settlement companies in some way. These laws generally require the licensing of providers and brokers, require the filing and approval of settlement agreements and disclosure statements, describe the content of disclosures that must be made to insured’s and sellers, describe various periodic reporting requirements for settlement companies and prohibit certain business practices deemed to be abusive.





Securities Regulations





Some states and the Securities and Exchange Commission have attempted to treat life settlements as securities under federal or state securities laws and have successfully done so in circumstances in which the transactions were structured as securities. Although we believe that a combination of consumer protection-type laws and existing insurance regulations provide an appropriate framework for regulation of the industry, we intend to conduct business under the assumption that life settlement products are securities.





Insurance Regulation





As a life settlement company, we facilitate the transfer of ownership in life insurance policies but do not participate in the issuance of policies.  We do not engage in the business of insurance and are not required to be licensed as an insurance company or insurance broker.  We do however, deal with insurance companies and professionals in our business and are indirectly affected by the regulations covering them. The insurance industry is highly regulated, and these regulations affect us in numerous ways.  We must understand the regulations as they apply to policy terms and provisions and the entitlement to, and collectability of, policy benefits.  We rely upon the protections against fraudulent conduct that these regulations offer and we rely upon the licensing of companies and individuals with whom we do business.





ITEM 1A. RISK FACTORS





In addition to other information in this annual report on Form 10-K and in the documents we are incorporating by reference, the following risk factors should be carefully considered in evaluating us and our business.  Such factors significantly affect or could significantly affect our business, operating results or financial condition.  This annual report on Form 10-K contains forward-looking statements that have been made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995.  Actual results could differ materially from those projected in the forward-looking statements as a result of the risk factors set forth below and elsewhere in this annual report on Form 10-K.





6


We Are Operating in Evolving Markets that May Be Volatile





Although the market has grown exponentially in the past few years, how and to what extent it will continue to develop is uncertain.  Because there are so few publicly reporting companies in this industry, measuring the market is difficult. As more insured’s become aware of life settlements as a financial planning option, we expect the size of the market to grow substantially. As we demonstrate our ability to originate, underwrite and place life settlements with our individual clients, any dramatic growth will depend heavily upon the entry of institutional purchasers and the increase in presentations of policies with face values in excess of $5 million. Whether we can maintain markets for such policies will depend on our ability to attract more institutional and accredited investors and convince these purchasers that we can originate sufficient numbers of qualified policies for purchase on behalf of such institutions and accredited investors and that our policy analysis and pricing practices are sound. Until we attract a sufficient number of institutional clients to provide for consistent and predictable demand in addition to the demand from our individual clients, our financial performance during any period may be materially affected by the entry or departure of one or more of our institutional clients from the market.





Our prospects must be considered in light of the risks, expenses and difficulties encountered by those attempting to operate in evolving markets. We cannot assure you that we will be successful in addressing the risks we face. The failure to do so could have a material adverse effect on our business, financial condition, and results of future operations.





Our Operating Results in One or More Future Periods Are Likely to Fluctuate and May Fail to Meet Expectations





Our net operating results have fluctuated in the past and may fluctuate significantly in the future depending on purchaser demand for life settlements, brokerage and referral fees, and unexpected increases in general and administrative expenses and competition for qualified policies. Because of these or other factors, our operating results may, in some future period, fall below market expectations. In such event, the market price of our securities might fall. Moreover, fluctuations in our operating results may also result in volatility in the market price of our securities.





Our Success Depends on Maintaining Relationships within Our Referral Networks





We rely primarily upon brokers to refer potential sellers of policies to us and upon financial planners, known as licensees, to refer client purchasers to us. These relationships are essential to our operations and we must maintain these relationships to be successful. We do not have fixed contractual arrangements with the brokers or financial planners, and they are free to do business with our competitors. In addition, the pool of brokers and referring financial planners is relatively small, which can increase our reliance on our existing relationships and impair attempts to reduce brokerage fees. We are also developing our own network of insurance and financial planning professionals, known as producers, to refer potential sellers to us, and we expect referrals from this source to grow. As with brokers, our ability to build and maintain these relationships will depend upon our closing rates and the level of compensation we pay to the referring professional. The compensation paid to the referring professional will affect the offer price to the seller and the compensation we receive. We must balance these interests successfully to build our referring network and attain greater profitability.





We Depend on Growth in the Life Settlement Market





Growth of the life settlement market and our expansion within the market may be affected by a variety of factors, including:





o
the inability to locate sufficient numbers of life settlers;





o
the inability to convince potential sellers of the benefits of life settlements;





o
the inability to attract sufficient qualified purchasers;





o
competition from other life settlement companies;





o
the occurrence of illegal or abusive business practices resulting in negative publicity about the market; and





o
the adoption of overly burdensome governmental regulation.





In addition, the life settlement market may evolve in ways we have not anticipated and we may be unable to respond in a timely or cost-effective manner. If the life settlement market fails to grow as quickly as or in the directions we have anticipated, our business, financial condition and results of operations would be materially adversely affected as it relates to our large-scale growth.


7


Regulators Have Expressed Concern About the Life Settlement Industry





The life settlement industry came under increased regulatory scrutiny in 2010.  The SEC expressed concern that there is inconsistent regulation of participants in the life settlements market, and recommended that life settlements be clearly defined as securities so that investors in these transactions are protected under the federal securities laws.  The Government Accountability Office warned consumers about participating in life-settlement transactions “due to a lack of clear, consistent state oversight.”  The FINRA, which regulates registered broker-dealers, has expressed concerns about member firm activity involving variable life settlement transactions.  These concerns are likely to result in increased governmental regulation, which could impede the Company’s ability to carry out its business plan.







Our Purchasers Depend on Our Ability to Buy and source the most opportunistic Life Settlement Policies and Predict Life Expectancies and Set Appropriate Price; If Our Investment Returns Are Not Competitive We May Lose Purchasers.





A purchaser’s investment return from a life settlement depends on three factors: the policy face amount, the settlement purchase price and the demise of the insured. We price settlements based on the policy face amount and the anticipated life expectancy of an insured. For viatical settlements, life expectancies are estimated based on a medical analysis of the insured. For life settlements, life expectancies are estimated from medical and actuarial data based on the historical experiences of similarly situated persons. The data is necessarily based on averages involving mortality and morbidity statistics. The outcome of a single settlement may vary significantly from the statistical average. It is impossible to predict any one insured’s life expectancy exactly. To mitigate the risk that an insured will outlive his or her predicted life expectancy, we price life settlements to yield competitive returns even if this life expectancy prediction is exceeded. In addition, life settlement purchasers must be able to bear a non-liquid investment for an indeterminate period of time.





If we underestimate the average life expectancies and price our transactions too high, our purchasers will not realize the returns they seek, demand may fall, and purchasers may invest their funds elsewhere. In addition, amounts escrowed for premiums may be insufficient to keep the policy in force and it is the responsibility of the purchasers to pay these additional premiums. If we overestimate the average life expectancies, the settlement prices we offer will fall below market levels, supply will decrease, and sellers may engage in business with our competitors or pursue other alternatives. Our ability to accurately predict life expectancies and price accordingly is affected by a number of factors, including:





o
the accuracy of our life expectancy estimations, which must sufficiently account for factors including an insured’s age, medical condition, life habits (such as smoking), and geographic location;





o
Our ability to anticipate and adjust for trends, such as advances in medical treatments, that affect life expectancy data; and





o
Our ability to balance competing interests when pricing settlements, such as the amounts paid to life settlers, the acquisition costs paid by purchasers, and the compensation paid to ourselves and our referral networks.





To foster the integrity of our pricing systems, we use both in-house and outside experts, including medical doctors and published actuarial data. We cannot assure you that, despite our experience in settlement pricing, we will not err by underestimating or overestimating average life expectancies or miscalculating reserve amounts for future premiums. If we do so, we could lose purchasers or policy sellers, and those losses could have a material adverse effect on our business, financial condition, and results of operations.





Government Regulation Could Negatively Impact Our Business





Further, changes in laws or governmental regulation could affect our brokers or clients, which could have a material adverse effect on our business.





Our Chairman and Chief Executive Officer Beneficially Owns 21.23% of Our Common Stock and, as a Result, Can Exercise Significant Influence over Our Company





Mr. Bennett Kurtz, our Chairman and Chief Executive Officer, is defined under SEC regulations as the beneficial owner of approximately 21.23% of our common stock, largely as the result of exercising voting power by proxy over shares held by 547667 Ontario Limited.  He will be able to control most matters requiring approval by our shareholders, including the election of directors and approval of significant corporate transactions. His voting control affects indirectly the process for nominating directors, since theoretically he could nominate and elect directors without board involvement.  This concentration of ownership may also have the effect of delaying or preventing a change in control of MaxLife, which in turn could have a material adverse effect on the market price of our common stock or prevent our shareholders from realizing a premium over the market price for their shares of common stock.





8


Our Stock Is Thinly Traded and the Stock Price May Be Volatile





Although our common stock was traded on the OTC Bulletin Board market during the period covered by this filing, our common stock has qualified for and traded on the OTCBB since June 29, 2007.  Our stock is not widely traded and our share prices may be volatile due to actual or anticipated variations in our quarterly operating results, positive or negative developments concerning our business, our industry or the general economy.





ITEM 1B. UNRESOLVED STAFF COMMENTS





None.





ITEM 2.    DESCRIPTION OF PROPERTY





We currently operate our business from our corporate headquarters located at 45 Sheppard Avenue, Suite 900, North York, Ontario M2N 5W9.  We operate from a premises on a month to month agreement which commenced in January 2009.





ITEM 3.    LEGAL PROCEEDINGS





There is no litigation pending or threatened by or against us.





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





None.








PART II





ITEM 5.    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS





Holders of Our Common Stock





As of November 15, 2010, we had approximately 16,253,168 shares issued and outstanding and 28 registered holders of our common stock.





The Company’s common shares, par value $0.001 (the “Shares”) were approved for trading on the Over-the-Counter Bulletin Board (OTC-BB) under the symbol MXFB on June 29, 2007.





The table set forth below reflects the reported high and low bid prices of the Common Stock for each quarter for the period indicated. These prices are all on the basis of the pre reverse stock split. Such prices are interdealer prices without retail markups, markdowns or commissions and may not represent actual transactions.





QUARTER ENDED

HIGH


LOWAugust 31, 2010

$
10.00


$
5.90May, 31, 2010

$
10.02


$
4.00February 28, 2010

$
11.50


$
7.90November 30, 2009

$
12.00


$
3.50August 31, 2009

$
19.00


$
12.00May 31, 2009

$
22.00


$
7.00February 29, 2009

$
20.00


$
14.75November 30, 2008

$
26.75


$
15.50August 31, 2008

$
29.55


$
14.72





Dividends





During the year ended August 31, 2010, the Company accrued quarterly dividends of $0.625 per share on its 26,400 issued and outstanding preferred stock totaling $66,000.  The preferred stock entitles the holders to receive a dividend equal to $0.625 per share to be paid on a quarterly basis.





The Company has been accruing dividends as they prioritized to use funds for working capital, such as professional fees and premium payments for owned Insurance policies. As funds become available through operations and/or funds raised the Company will revisit this matter.


9


Payment of dividends on common shares in the future will depend upon our earnings, capital requirements, and other factors, which our Board of Directors may deem relevant.





ITEM 6.    SELECTED FINANCIAL DATA





The following selected consolidated financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operation” and the Consolidated Financial Statements and related notes thereto that are included in this Report.





Year Ended 31 August,2010



2009



2008



2007Operating ResultsOperating revenues

$
275,000


$
-


$
330,000


$
-(Loss) Earnings

$
(285,070)


$
(591,855)


$
(632,882)


$
23,388Comprehensive loss

$
(263,460)


$
(547,710)


$
(667,035)


$
(21,823)Loss per weighted average number of shares outstanding

$
0.02


$
0.02


$
0.02


$
0.00





2010



2009



2008



2007Balance Sheet Data at Fiscal  Year EndTotal Assets

$
451,670


$
582,360


$
957,354


$
1,016,141Total  Liabilities

$
375,655


$
176,885


$
62,778


$
453,200Dividends paid on  preferred shares

$
66,000


$
66,000


$
16,500


$
-





ITEM 7.    PLAN OF OPERATIONS





Plan of Operations





During the next twelve months, we expect to take the following steps in connection with the further development of our business and the implementation of our plan of operations:





We will continue to make relationships with insurance brokers and their clients to seek out opportunistic policies and life settlements situations available.  We will attempt to raise additional financing for working capital and marketing efforts.  We will also seek investment partners in order to raise the necessary funds to acquire existing policies on behalf of clients and partners. Such partners include banks, hedge funds, investment funds and sophisticated investors.  We will be sourcing new relationships with companies in the sector with the objective of purchasing an ownership in their businesses. Many opportunities are arising as the market place is seeing distress situations of Hedge Funds that need to liquidate life settlement policies and portfolios due to the ongoing financial crisis. MaxLife will review such situations and is open to discussions to determine the opportunities that can be cultivated accordingly.





We have shifted our business structure toward a business model which focuses on acquisition or funding of life policies of individuals on behalf of strategic buyers.  MaxLife is looking to generate fees by facilitating such transactions. We are no longer looking to purchase or fund life policies of individuals for our own inventory. Our goal also is to earn fees by administering a large number of policies on behalf of clients and funds and earning a management and performance fee. In this regards, the current inventory of Life Settlement policies that MaxLife owns will also be put up for sale and MaxLife will maintain an performance fee as to future occurrences with such policies. With funds obtained from investment partners we will be in a position to purchase and administer policies and portfolios on their behalf and thereby earn fees for administration and profit participation.
 
 During the third Quarter of 2010, MaxLife sold a 50% ownership in 3 policies and was able to recoup the percentage of funds invested in those policies to date, with no capital lost. MaxLife still maintains a 50% interest on policies that if matured would realize gross funds of $1,350,000.





The addition of a stronger infrastructure will be required and we intend to hire management personnel and support staff.  This will enable us to segregate work responsibilities and meet the ongoing growth of the business.  We will be in a position to handle different territories both in Canada and the United States.





Additional financings will be available to us through our relationships and performance.  This will enable us to continue with our growth plans.  The internal organization will be reviewed to see that it can handle the influx of new business.  The administration of the policies will be pertinent and we will have to determine if we have sufficient staff to handle this responsibility.





10


The management team will be strengthened, if need be, to ensure that shareholder value is maximized and the business plan is being implemented properly.





Additional financing is available to the Company through the private placement of preferred share issuances to new and existing investors and shareholders.





The Company is committed to enter into financing arrangements that are both beneficial to shareholders and which will strengthen the Company’s business operations and opportunity to expand its business.





Results of Operations





Comparative Analysis for the year ended August 31, 2010 and 2009:





Revenue for the year ended August 31, 2010 was $275,000 and $0 for the year ended August 31, 2009.  Cost of Sales for the year ended August 31, 2010 was $267,688 and $0 for the year ended August 31, 2009.  Gross profit for the year ended August 31, 2010 was $7,312 and $0 for the year ended August 31, 2009.  The revenues and related cost of sales and gross profit in fiscal 2010 resulted from the sale of 50% beneficial interests in three life settlement policies in which the Company is the owner during the third quarter of 2010.





General and administrative expenses for the year ended August 31, 2010 were $24,800 and $97,396 for the year ended August 31, 2009.  The decrease during the year ended August 31, 2010 was primarily attributable to decreases in payments for travel, administrative office expenses and directors and officers insurance incurred in the business operations.





Professional fees for the year ended August 31, 2010 were $97,328 and $177,125 for the year ended August 31, 2009.  These fees are attributable to legal, accounting, tax, consulting and auditing services. The decrease in professional fees was attributable to the decrease in consulting, tax, accounting fees during the year ended August 31, 2010.





Stock based compensation for the year ended August 31, 2010 were $0 and $124,610 for the year ended August 31, 2009.  The decrease in stock based compensation was due to a reduced residual balance for amortization of stock options which commenced in April 2008.





For the year ended August 31, 2010, we had a net loss of $258,070 and net loss of $591,855 for the year ended August 31, 2009.   The decrease in operating expenses during the year ended August 31, 2010 was due to lower general and administrative expenses, professional fees and stock based compensation expenses during the period. The sale of a policy during the third quarter of 2010 contributed to the decrease in the net loss during the year ended August 31, 2010.





During the year ended August 31, 2010 and year ended August 31, 2009, we had no provision for income taxes due to the net operating losses incurred.





Capital Resources and Liquidity





We are still in the process of developing and implementing our business plan and raising additional capital. As such, management is taking action to obtain additional funding.





At August 31, 2010, we had negative working capital of approximately $246,073. It is the intent of management and significant stockholders, if necessary, to provide sufficient working capital necessary to support and preserve the integrity of the corporate entity. However, there is no legal obligation for either management or significant stockholders to provide additional future funding. .We have implemented a preferred share unit offering consisting of preferred shares plus warrants. The unit offering will be continued to be offered in order to obtain the financing we require.





During the third Quarter MaxLife sold a 50% ownership in 3 policies and was able to recoup the percentage of funds invested in those policies to date, with no capital lost. MaxLife still maintains a 50% interest on policies that if matured, would realize gross funds of $1,350,000.





Funds have been set aside to maintain payment for policies over the next 12 months. Certain payments are being accrued, (such as dividends and some wages) and other such costs as professional fees, can be paid by the current cash position.





The ability to sell the other 50% in the ownership in the 3 policies is available to the Company and will be revisited if and when required.


11




We currently are developing other life settlement and annuity products that management believes will give investors a sound investment with an attractive return.  We hope to market these products to accredited investors and through broker/ dealers, in full compliance with applicable securities laws, and with the benefit of all appropriate disclosures, within the next two quarters.





Cash flows from operating activities





Cash flows provided by (used in) operating activities for the year ended August 31, 2010 were $38,091 and ($371,211) for the year ended August 31, 2009.  The decrease in cash flows used in operating activities was primarily due to the increase sales of life insurance policies during the year during the third quarter of 2010, as well as reduced general and administrative costs and professional fees.





Cash flows from investing activities





There were no cash flows used in investing activities for the year ended August 31, 2010 and for the year ended August 31, 2009.





Cash flows from financing activities





There were no significant cash flows used in investing activities for the year ended August 31, 2010.





We will ensure that shareholder value is maximized, that our business plan is being implemented properly and the Company will be in a position to trade policies and capitalize on their previous purchases.





MaxLife is also reviewing other financing options as lines of credits or asset based loans to coincide with the equity raised.





Critical Accounting Policies





Max Life’s financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use if estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.





Our significant accounting policies are summarized in Note 2 of our financial statements. While all these significant accounting policies impact its financial condition and results of operations, Max Life views certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on Max Life’s consolidated financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates.





Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.





The Company believes that the following discussion addresses the Company’s most critical accounting policies, which are those that are most important to the portrayal of the Company’s financial condition and results of operations and require management’s most difficult, subjective and complex judgments.





Investment in Life Insurance Policies





Investment in life insurance policies are recorded in accordance Accounting Standards Codification (“ASC”) 325-30, Investments in Insurance Contracts   ASC 325-30 states that an investor may elect to account for its investments in life settlement contracts using either the investment method or the fair value method.  The election shall be made on an instrument by instrument basis and is irrevocable.  Under the investment method, an investor shall recognize the initial investment at the purchase price plus all initial direct costs.  Continuing costs (policy premiums and direct external costs, if any) to keep the policy in force shall be capitalized.  Under the fair value method, an investor shall recognize the initial investment at the purchase price.  In subsequent periods, the investor shall remeasure the investment at fair value in its entirety at each reporting period and shall recognize change in fair value earnings (or other performance indicators for entities that do not report earnings) in the period in which the changes occur.  The Company has elected to value its investments in life settlement contracts using the investment method.







12


Stock Based Compensation







ASC 718 – Stock Compensation establishes standards for the accounting for transaction in which an entity exchanges its equity instruments for goods for services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. ASC 718 focuses primarily on accounting for transactions in which an entity obtains employee services in shared-based payment transactions. ASC 718 requires that the compensation cost relating to share-based payment transactions be recognized in the consolidated financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued.







The warrants and stock options are valued using the Black-Scholes option pricing model using the following input variables and assumptions: exercise prices per share as noted above, stock price on the date of issuances; calculated volatility; calculated average term of maturity of five years; an estimated risk free rate based on the US treasury zero-coupon yield curve. The assumptions used by the Company in determining its stock based compensation may differ materially from actual results due to changing market and economic conditions, higher or lower calculated volatility rates or risk free rate of return. While the Company believes that the assumptions used are appropriate, differences in actual experience or changes in assumptions may materially affect the Company’s financial position or results of operations.





We cannot predict what future laws and regulations might be passed that could have a material effect on our results of operations. We assess the impact of significant changes in laws and regulations on a regular basis and update the assumptions and estimates used to prepare our financial statements when we deem it necessary.





We have not made any material changes to our critical accounting estimates or assumptions or the judgments affecting the application of those estimates or assumptions. We discuss our significant accounting policies, including those policies that are not critical, in our Consolidated Financial Statements.





Item 7A.  Quantitative and Qualitative Disclosures about Market Risk





The Company is subject to certain market risks, including changes in interest rates and currency exchange rates.  The Company does not undertake any specific actions to limit those exposures.





ITEM 8.    FINANCIAL STATEMENTS





13


MAXLIFE FUND CORP. AND SUBSIDIARY


(A Development Stage Company)




CONSOLIDATED FINANCIAL STATEMENTS




31 AUGUST 2010





PageREPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
F-1 to F-2CONSOLIDATED FINANCIAL STATEMENTSConsolidated Balance Sheets
F-3Consolidated Statements of Operations and Comprehensive Loss
F-4Consolidated Statements of Stockholders’ Equity
F-5Consolidated Statements of Cash Flows
F-6Notes to the Consolidated Financial Statements
F-7 - F-14







REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   To the Board of Directors and Stockholders of
 MaxLife Fund Corp. and Subsidiary
 
  We have audited Maxlife Fund Corp and Subsidiary’s(“the Company”) internal control over financial reporting as of August 31, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control over Financial Reporting.  Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.
   We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.  Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.  Our audit also included performing such other procedures as we considered necessary in the circumstances.  We believe that our audit provides a reasonable basis for our opinion.
  A company’s 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 generally accepted accounting principles.  A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
  A material weakness is a control deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.  The following material weaknesses have been identified and included in management’s assessment:
  -
Segregation of Duties– As a result of limited resources, we did not maintain proper segregation of incompatible duties. Namely the lack of an audit committee, an understaffed financial and accounting function, and the need for additional personnel to prepare and analyze financial information in a timely manner and to allow review and on-going monitoring and enhancement of our controls. The effect of the lack of segregation of duties potentially affects multiple processes and procedures.
 
  -
Maintenance of Current Accounting Records– This weakness specifically affects the payments and purchase cycle and therefore we failed to maintain effective internal controls over the completeness and cut off of accounts payable, expenses and other capital transactions.
 
  -
Application of GAAP – We did not maintain effective internal controls relating to the application of generally accepted accounting principles in accounting for transactions in a foreign currency.
  The material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2010 financial statements, and this report does not affect our report dated November 15, 2010 on those financial statements.
  In our opinion, because of the effect of the material weakness described above on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of August 31, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
  We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of MaxLife Fund Corp. and Subsidiary (A Development Stage Company) as of 31 August 2010 and 2009 and the related consolidated statements of operations, comprehensive loss, stockholders' equity and cash flows for the years ended 31 August 2010 and 2009 and for period from the date of inception (9 January 2006) to 31 August 2010.
  /s/ DNTW Chartered Accountants, LLP
 Markham, Canada
 Licensed Public Accountants
  November 15, 2010





F-1
 
  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   To the Board of Directors and Stockholders of
 MaxLife Fund Corp. and Subsidiary
  We have audited the accompanying consolidated balance sheets of MaxLife Fund Corp. and Subsidiary (A Development Stage Company) as of 31 August 2010 and 2009 and the related consolidated statements of operations, comprehensive loss, stockholders' equity and cash flows for the years ended 31 August 2010 and 2009 and for period from the date of inception (9 January 2006) to 31 August 2010.  These consolidated financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
  We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audits provide a reasonable basis for our opinion.
  In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of MaxLife Fund Corp. and Subsidiary (A Development Stage Company) as of 31 August 2010 and 2009, and the results of its operations for the years ended 31 August 2010 and 2009 and for the period from the date of inception (9 January 2006) to 31 August 2010 in conformity with accounting principles generally accepted in the United States of America.
  We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of MaxLife Fund Corp. and Subsidiary’s internal control over financial reporting as of 31 August 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated November 15, 2010 expressed an adverse opinion.
   /s/ DNTW Chartered Accountants, LLP
 Markham, Canada
 Licensed Public Accountants
  November 15, 2010
  F-2


MAXLIFE FUND CORP. AND SUBSIDIARY
 (A Development Stage Company)




CONSOLIDATED BALANCE SHEETS


AS OF 31 AUGUST


(Expressed in United States Dollars)


2010


2009ASSETSCurrent AssetsCash

$
81,048


$
48,917Available-for-sale securities, at fair value (cost - $24,638, 2009-$24,638)


44



136Accounts receivable


47,500



-Total Current Assets


128,592



49,053Long Term AssetsInvestment in life insurance policies


322,088



533,307Total Assets

$
450,680


$
582,360LIABILITIES AND STOCKHOLDERS’ EQUITYCurrent LiabilitiesAccounts payable and accrued liabilities

$
45,932


$
23,072Management salary payable


260,480



150,000Advances from stockholder


3,243



3,813Dividends payable on preferred stock


66,000



-Total Liabilities


375,655



176,885Stockholders’ EquityPreferred stock $25.00 par value; Authorized 100,000,000; Issued and outstanding 26,400  (31 August 2009 - 26,400); non-voting; dividends of $0.625 paid on a quarterly basis; non-convertible; redeemable at the option of the Company after two years


660,000



660,000Common stock $.001 par value; Authorized 200,000,000; Issued and outstanding 16,253,168  (31 August 2009 - 16,253,168)


16,253



16,253Additional paid-in capital


1,100,626



1,100,626Additional paid in capital - warrants


244,158



244,158Accumulated other comprehensive loss


(47,441
)


(41,061
)Deficit accumulated during the development stage


(1,898,571
)


(1,574,501
)Total Stockholders’ Equity


75,025



405,475Total Liabilities and Stockholders’ Equity

$
450,680


$
582,360
  The accompanying notes are an integral part of these financial statements.
  F-3


MAXLIFE FUND CORP. AND SUBSIDIARY
 (A Development Stage Company)


CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS


(Expressed in United States Dollars)




For the Year Ended

31 August 2010


For the YearEnded

31 August 2009


For the Period from

Inception (9 January 2006)to

31 August 2010SALE OF POLICIES


275,000



-



605,000COST OF POLICIES SOLD


267,688



-



570,938GROSS PROFIT


7,312



-



34,062EXPENSESManagement salary


150,000



141,578



321,578Professional fees


91,328



177,125



418,659General and administrative


24,800



97,396



262,216Interest and bank charges


2,379



751



5,484Stock based compensation


-



124,610



487,780Gain on foreign exchange


(1,154
)


(2,175
)


(745
)TOTAL OPERATING EXPENSES


267,353



539,285



1,494,972LOSS FROM OPERATIONS


(260,041
)


(539,285
)


(1,460,910
)REALIZED LOSS ON SALE OF AVAILABLE-FOR-SALE SECURITIES


-



(53,666
)


(16,474
)GOODWILL IMPAIRMENT LOSS


-



-



(35,269
)LOSS ON INVESTMENT IN JOINT VENTURE


-



(1,250
)


(1,250
)INTEREST INCOME


1,971



2,346



7,991NET LOSS

$
(258,070
)

$
(591,855
)

$
(1,505,912
)FOREIGN CURRENCY TRANSLATION ADJUSTMENT


(6,380
)


(13,828
)


(22,939
)UNREALIZED LOSS ON AVAILABLE-FOR-SALE SECURITIES, NET OF DEFERRED TAXES


-



57,973



(24,502
)COMPREHENSIVE LOSS

$
(264,450
)


(547,710
)


(1,553,353
)LOSS PER WEIGHTED NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED

$
(0.02
)

$
(0.02
)WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED


16,253,168



29,801,382
  The accompanying notes are an integral part of these financial statements.





F-4





MAXLIFE FUND CORP. AND SUBSIDIARY
 (A Development Stage Company)




CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY


FOR THE PERIOD FROM THE DATE OF INCEPTION (9 JANUARY 2006) TO 31 AUGUST 31, 2010


(Expressed in United States Dollars)


Preferred Stock


Common StockShares


Amount


Additional Paid-In Capital


Shares


Amount


Additional Paid-In Capital


Additional Paid-In Capital - Warrants


Accumulated other comprehensive Loss


Deficit accumulated during the development stage


Total stockholders' EquityIssuance of common stock at inception











30,000,000

$
30,000













$
30,000Issuance of common stock for cash











116,100


116


115,984











116,100Issuance of common stock for services











11,000


11


10,989











11,000Acquisition of 1254450 Ontario Ltd.

















5,000











5,000Foreign currency translation























(5,842
)




(5,842
)Net loss for the period


























(46,494
)

(46,494
)Balance, August 31, 2006











30,127,100

$
30,127

$
131,973




$
(5,842
)
$
(46,494
)
$
109,764Issuance of common stock for cash











170,068


170


499,830











500,000Financing fees

















(25,000
)










(25,000
)Unrealized loss on available-for-sale investments, net of taxes























(45,227
)




(45,227
)Foreign currency translation























16





16Net earnings


























23,388


23,388Balance, August 31, 2007











30,297,168


30,297

$
606,803




$
(51,053
)
$
(23,106
)
$
562,941Common stock issued for services











6,000


6


34,194











34,200Stock options issued

















328,970











328,970Financing fees

















(8,000
)










(8,000
)Unrealized loss on available-for-sale investments, net of taxes























(37,248
)




(37,248
)Fair market value of warrants attached to preferred stock




















244,158





(244,158
)Preferred stock issued for cash


26,400


660,000























660,000Foreign currency translation























3,095





3,095Net loss


























(632,882
)

(632,882
)Dividends paid


























(16,500
)

(16,500
)Balance, August 31, 2008


26,400

$
660,000


30,303,168


30,303

$
961,967

$
244,158

$
(85,206
)
$
(916,646
)
$
894,576Stock options issued

















124,609











124,609Common stock cancelled











(14,050,000
)

(14,050
)

14,050Unrealized loss on available-for-sale investments, net of taxes























57,973





57,973Foreign currency translation























(13,828
)




(13,828
)Net loss


























(591,855
)

(591,855
)Dividends paid


























(66,000
)

(66,000
)Balance, August 31, 2009


26,400

$
660,000





16,253,168


16,253

$
1,100,626

$
244,158

$
(41,061
)
$
(1,574,501
)
$
405,475Foreign currency translation























(6,380
)




(6,380
)Net loss


























(258,070
)

(258,070
)Dividends paid


























(66,000
)

(66,000
)Balance, August 31, 2010


26,400

$
660,000





16,253,168


16,253

$
1,100,626

$
244,158

$
(47,441
)
$
(1,898,571
)
$
75,025
  The accompanying notes are an integral part of these financial statements.


F-5




MAXLIFE FUND CORP. AND SUBSIDIARY
 (A Development Stage Company)


CONSOLIDATED STATEMENTS OF CASH FLOWS


(Expressed in United States Dollars)




For the Year Ended 31 August2010


For the Year Ended 31 August 2009


For the Period from Inception (9 January 2006) to 31 August 2010CASH FLOWS FROM OPERATING ACTIVITIESNet loss

$
(258,070
)

$
(591,855
)

$
(1,505,912
)Adjustments to reconcile net loss to net cash used in operating activities:Goodwill impairment loss


-



-



35,269Stock based compensation


-



124,610



453,580Unrealized loss on available-for-sale securities


-



-



(24,502
)Equity issued to acquire 1255450 Ontario Limited


-



-



5,000Issuance of common stock for services


-



-



75,200Loss on investment in joint venture


-



1,250



1,250Changes in operating assets and liabilities:Available-for-sale securities


(92
)


2,177



(44
)Proceeds on sale of policy


275,000



-



605,000Purchase of insurance policies and capitalized premiums


(63,781
)


(80,352
)


(904,061
)Accounts receivable


(47,500
)


-



(47,500
)Accounts payable and accrued liabilities


22,860



(5,014
)


40,967Management salary payable


110,480



120,000



260,480CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES


39,081



(371,211
)


(1,005,273
)CASH FLOWS FROM INVESTING ACTIVITIESCapital contribution  -  joint venture


-



-



(1,250
)Acquisition of 1255450 Ontario Limited


-



-



(21,739
)CASH FLOWS USED IN INVESTING ACTIVITIES


-



-



(22,989
)CASH FLOWS FROM FINANCING ACTIVITIESIssuance of preferred stock


-



-



660,000Advances to stockholder


(570
)


(880
)


(28,351
)Dividends paid


-



(66,000
)


(82,500
)Financing fees


-



-



(8,000
)Issuance of common stock


-



-



591,100CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES


(570
)


(66,880
)


1,132,249EFFECT OF FOREIGN CURRENCY TRANSLATION


(5,390
)


-



(22,939
)NET INCREASE (DECREASE) IN CASH


32,131



(451,919
)


81,048CASH, BEGINNING OF YEAR


48,917



500,836



-CASH, END OF YEAR

$
81,048


$
48,917


$
81,048




F-6


MAXLIFE FUND CORP. AND SUBSIDIARY
 (A Development Stage Company)
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE PERIOD FROM THE DATE OF INCEPTION (9 JANUARY 2006) TO 31 AUGUST 2010
 (Expressed in United States Dollars)




1.
NATURE OF OPERATIONS




MaxLife Fund Corp, Inc. and Subsidiary (the “Company”) was incorporated on 9 January 2006 under the laws of the State of Wyoming.




The Company is concentrating on three major components of the Life Settlement sector (i) to generate fee income by providing a turnkey investment solution for accredited investors wanting to own life insurance policies, (ii) to obtain ownership in companies in the life settlement industry and (iii) to build a large portfolio for institutional buyers and be involved as an intermediary. MaxLife is positioning itself to grow with the industry and expand its operation to become one of the leaders in the Life Settlement sector.




2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




The accounting policies of the Company are in accordance with accounting principles generally accepted in the United States of America.  Presented below are those policies considered particularly significant:




Principles of Consolidation




The Company includes, in consolidation, its wholly owned subsidiary, 1254450 Ontario Ltd. All significant intercompany transactions and balances have been eliminated upon consolidation.




Development Stage Company




The Company is considered to be in the development stage as defined in Accounting Standards Codification (“ASC”) 915, Development Stage Entities.The Company has devoted substantially all of its efforts to business planning and development by means of raising capital for operations. The Company has also not realized any significant revenues.




Available-for-sale-securities




Available-for-sale securities are reported at fair value and consist of securities not classified as trading securities or as held-to-maturity securities. Unrealized holding gains and losses on available-for-sale securities, net of deferred income taxes, are reported as a net amount in accumulated other comprehensive income within stockholders’ equity.  Gains and losses on the sale of available-for-sale securities are determined using the weighted average cost method.




Declines in the fair value of individual held-to-maturity and available-for-sale securities below their cost that are other than temporary would result in write-downs of the individual securities to their fair value. Such write-downs would be included in earnings.




Trade receivables
 
 The Company's accounts receivable and related allowance for doubtful accounts are analyzed in detail and all significant customers with delinquent balances are reviewed to determine future collectability. Reserves are established in the quarter in which the Company makes the determination that the account is deemed uncollectible. There was no provision for accounts receivables assessed during the years ended 31 August 2010 and 2009, respectively.





F-7
 MAXLIFE FUND CORP. AND SUBSIDIARY
 (A Development Stage Company)
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE PERIOD FROM THE DATE OF INCEPTION (9 JANUARY 2006) TO 31 AUGUST 2010
 (Expressed in United States Dollars)







2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




Investment in Life Insurance Policies
 
 Investment in life insurance policies are recorded in accordance with ASC 325-30, Investment in Insurance Contracts.  ASC 325-30 provides that a purchaser may elect to account for its investments in life settlement contracts using either the investment method or the fair value method. The election shall be made on an instrument-by instrument basis and is irrevocable.  Under the investment method, an investor shall recognize the initial investment at the purchase price plus all initial direct costs.  Continuing costs (policy premiums and direct external costs, if any) to keep the policy in force shall be capitalized.  Under the fair value method, an investor shall recognize the initial investment at the purchase price. In subsequent periods, the investor shall remeasure the investment at fair value in its entirety at each reporting period and shall recognize change in fair value earnings (or other performance indicators for entities that do not report earnings) in the period in which the changes occur. The Company has elected to value its investments in life settlement contracts using the investment method.




Fair Value of Financial Instruments




The carrying value of the Company’s notes receivables, advances and accounts payable approximates fair value because of the short-term maturity of these instruments.




Foreign Translation Adjustment
 
 The accounts of the Company were translated into United States dollars in accordance with the provisions of ASC 830, Foreign Currency Matters.  In accordance with the provisions of ASC 830, transaction gains and losses on these assets and liabilities are included in the determination of income for the relevant periods.  Adjustments resulting from the translation of the financial statements from their functional currencies to United States dollars are accumulated as a separate component of accumulated other comprehensive income and have not been included in the determination of income for the relevant periods.
 
 Income Taxes
 
 The Company accounts for income taxes pursuant to ASC 740, Income Taxes.  Deferred tax assets and liabilities are recorded for differences between the financial statements and tax basis of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates.  Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.  Income tax expense is recorded for the amount of income tax payable or refundable for the period increased or decreased by the change in deferred tax assets and liabilities during the period.
 
 Use of Estimates
 
 The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Examples include estimates of stock based compensation; the potential outcome of future tax consequences of events that have been recognized in our financial statements or tax returns; estimating the fair value and/or goodwill impairment for our reporting units; and determining when investment impairments are other-than-temporary.  Actual results could differ from those estimates.  These estimates are reviewed periodically, and, as adjustments become necessary, they are reported in earnings in the period in which they become known.


F-8
 MAXLIFE FUND CORP. AND SUBSIDIARY
 (A Development Stage Company)
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE PERIOD FROM THE DATE OF INCEPTION (9 JANUARY 2006) TO 31 AUGUST 2010
 (Expressed in United States Dollars)







2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




Earnings or Loss Per Share




The Company accounts for earnings per share pursuant ASC 260, Earnings per Share, which requires disclosure on the financial statements of “basic” and “diluted” earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the year.  Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to stock options and warrants for each year.
 
 There were no dilutive financial instruments for the year ended 31 August 2010 and 2009 or for the period from inception (9 January 2006) to 31 August 2010.




Comprehensive Income




The Company adopted SFAS No. 130, Reporting Comprehensive Income. SFAS No. 130 establishes standards for reporting and presentation of comprehensive income and its components in a full set of financial statements.  Comprehensive income is presented in the statements of changes in stockholders’ equity, and consists of net loss and unrealised gains (losses) on available for sale marketable securities;  foreign currency translation adjustments and changes in market value of future contracts that qualify as a hedge; and negative equity adjustments recognized in accordance with SFAS 87.  SFAS No. 130 requires only additional disclosures in the financial statements and does not affect the Company’s financial position or results of operations.


F-9
 MAXLIFE FUND CORP. AND SUBSIDIARY
 (A Development Stage Company)
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE PERIOD FROM THE DATE OF INCEPTION (9 JANUARY 2006) TO 31 AUGUST 2010
 (Expressed in United States Dollars)







2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





Recent Accounting Pronouncements




In June 2009 the Financial Accounting Standards Board (“FASB”) issued statement No. 168, The FASB Accounting Standards Codification and The Hierarchy of Generally Accepted Accounting Principles. The Codification became the source of authoritative generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The Codification supersedes all existing non-SEC accounting and reporting standards. All other nongrandfathered non-SEC accounting literature not included in the Codification is nonauthoritative. GAAP is not intended to be changed as a result of this statement, but will change the way the guidance is organized and presented. During the current year, the Company has implemented the Codification in the consolidated financial statements by providing references to the Accounting Standards Codification (“ASC”) topics.




In April 2010, the FASB issued Accounting Standards Update (“ASU”) No. 2010-13—Compensation—Stock Compensation (Topic 718),which addresses the classification of an employee share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. This Update provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The Company expects that the adoption of the amendments in this update will not have any significant impact on its financial position and results of operations.






F-10
 MAXLIFE FUND CORP. AND SUBSIDIARY
 (A Development Stage Company)
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE PERIOD FROM THE DATE OF INCEPTION (9 JANUARY 2006) TO 31 AUGUST 2010
 (Expressed in United States Dollars)





3.
INVESTMENT IN INSURANCE POLICIES
 
 As at 31 August 2010 the Company holds four life settlement policies with carrying amounts of $322,088 and face amounts totaling $1,350,000.
 
 On March 22, 2010, the Company sold a 50% interest in three life settlement policies in which the Company is the owner. The purchase price was for a total of $275,000 of which $227,500 was received and $47,500 will be received subsequent to the year end. The agreement states that the purchaser, will take ownership of the policies and MaxLife will retain a 50% interest in the face value of the policies. MaxLife will be responsible to pay 50% of subsequent premium costs and expenses in regards to these policies.





4.
ADVANCES FROM STOCKHOLDER




The advances from the shareholder are non-interest bearing, unsecured and have no specific terms of repayment.  The carrying value of the advances approximates the market value due to the short-term maturity of the financial instruments.




5.
CAPITAL STOCK




On 9 January 2006, the Company issued 30,000,000 shares of common stock to the founders of the corporation at the par value of $0.001 each.
 
 On 31 August 2006, the Company completed a private placement of 117,100 shares of common stock, with a par value of $0.001 at a price of $1.00 each.
 
 On 31 August 2006, the Company issued 11,000 shares of common stock to various individuals for legal services rendered.  The shares issued were valued at their fair market value of $1.00 which is the amount that would have been received if the shares had been issued for cash.  Management believes that the fair market value of the services received approximates this value.




On 29 August 2007, the Company issued 170,068 shares of common stock with a par value of $0.001 at a price of $2.94 each for an aggregate value of $500,000.




On 20 September 2007, the Company issued 6,000 shares of common stock in exchange for  services rendered by two individuals on the Board of Directors. The shares issued were valued at their fair market value of $5.70 which is the amount that would have been received if the shares had been issued for cash.  Management believes that the fair market value of the services received approximates this value.  For year ended 31 August 2009 $Nil (2008 - $34,200) of these services were rendered and included in stock based compensation.




In 18 August 2009, some of the founding shareholders agreed to cancel a total of 14,050,000 shares of common stock in order to increase the overall value of the Company.  As a result, common stock decreased by $14,050, the amount at which the shares were originally issued, and there was a corresponding increase in additional paid-in capital.


F-11
 MAXLIFE FUND CORP. AND SUBSIDIARY
 (A Development Stage Company)
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE PERIOD FROM THE DATE OF INCEPTION (9 JANUARY 2006) TO 31 AUGUST 2010
 (Expressed in United States Dollars )







6.
PREFERRED STOCK




On 18 March 2008, the Company filed articles of amendment to amend the par value of its preferred stock from $.001 to $25.00 per share.  The preferred stock have the following rights attached to them: non-voting, entitle the holders to receive a dividend equal to $0.625 per share to be paid on a quarterly basis; not convertible into shares of the Company’s common stock; provided all dividends have been paid to the shareholders, the preferred stock is redeemable by the Company after two years; in the event of any liquidation, dissolution or winding up of the Company, holders of the preferred stock shall have the same liquidation rights as the holders of the Company’s common stock, whereby there are no redemption provisions.




The preferred stock of the Company are currently offered in units (the “Unit”).  Each Unit consists of 1,200 shares of preferred stock plus warrants to purchase 600 shares of common stock. The warrants may be exercised at any time beginning six months from the date of issuance and ending on the fifth anniversary of the final closing of the offering of the preferred stock. The warrants are exercisable, in whole or in part, at exercise prices equal to the following:




One third (1/3) or 200 warrants per Unit shall be exercisable into common stock at $25.00 per share;




One third (1/3) or 200 warrants per Unit shall be exercisable into common stock at $30.00 per share;




One third (1/3) or 200 warrants per Unit shall be exercisable into common stock at $35.00 per share.




The warrants were issued on various dated throughout the year and valued as follows:




(A) 4,400 shares at an exercise price of $25.00 per share -  $18.94, $18.19, $20.19, $20.16




(B) 4,400 shares at an exercise price of $30.00 per share - $18.10, $17.39, $19.34, $19.32




(C) 4,400 shares at an exercise price of $35.00 per share - $17.35, $16.68, $18.58, $18.57




The total value of the warrants amounted to $244,158 (2008 - $244,158) and are included as an addition to additional paid-in capital - warrants.




The warrants were valued using the Black-Scholes option pricing model with the following input variables and assumptions: exercise prices of $25, $30 and $35 per share as noted above, stock price on the date of issuances of  $27.60, $26.30, $28.65, and $28.49 respectively; calculated volatility amounted to 84.56%; calculated average term of maturity of five years; an estimated risk free rate ranging from 2.95% to 3.68% based on the five year US treasury zero-coupon yield curve.





During the year ended 31 August 2009 the Company issued 26,400 shares of preferred stock for proceeds of $660,000, including 13,200 warrants to purchase 13,200 shares of common stock as discussed above.




During the year ended 31 August 2010 the company declared quarterly dividends of $0.625 (2009 - $0.625) per share on its 26,400 (2009 - 26,400)  issued and outstanding shares of preferred stock totaling $66,000 (2009 - $66,000).


F-12
 MAXLIFE FUND CORP. AND SUBSIDIARY
 (A Development Stage Company)
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE PERIOD FROM THE DATE OF INCEPTION (9 JANUARY 2006) TO 31 AUGUST 2010
 (Expressed in United States Dollars







7.
SUPPLEMENTAL CASH FLOW INFORMATION




During the year ended 31 August 2010 and 2009 and for the period from inception (9 January 2006) to 31 August 2010, there were no interest or taxes paid by the Company.




8.
INCOME TAXES


The Company has tax losses available to be applied against future years income as a result of the losses incurred since inception.  However, due to the losses incurred in the period and expected future operating results, management determined that it is more likely than not that the deferred tax asset resulting from the tax losses available for carryforward will not be realized through the reduction of future income tax payments.  Accordingly a 100% valuation allowance has been recorded for income tax losses available for carryforward.




The components of deferred income taxes have been determined at the combined Canadian federal and provincial statutory rate of 36.12% and US 15% statutory rate as follows:







2010


2009Deferred income tax asset:Income tax losses available for carryforward


326,642



235,869Unrealized loss on available-for-sale securities


-



1,838Valuation allowance


(326,642
)


(237,707
)Deferred income taxes

$
-


$
-




9.
COMMITMENT AND CONTINGENT LIABILITY





The Company is contingently liable for the payment of the premiums due on the insurance policies as described in Note 3.  Although the individual beneficiary is responsible for these payments, if they are not paid when they fall due, the Company must pay these premiums on the insured’s behalf within a 30 day grace period or the policy would lapse.  As of 31 August 2010, the policies premiums were up to date and the policies were in good standing.




10.
FINANCIAL INSTRUMENTS
 
 Foreign Currency Risk
  The Company is exposed to currency risks due to potential variation of the currencies in which it operates. Principal currencies include the United States dollar and Canadian dollar. We monitor our foreign currency exposure regularly to minimize our foreign currency risk exposure.




F-13
 MAXLIFE FUND CORP. AND SUBSIDIARY
 (A Development Stage Company)
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE PERIOD FROM THE DATE OF INCEPTION (9 JANUARY 2006) TO 31 AUGUST 2010
 (Expressed in United States Dollars







Concentrations of Credit




Disclosure of Information About Financial Instruments with Off-Balance-Sheet Risk and Financial Instrument with Concentration of Credit Risk, requires disclosure of any significant off-balance-sheet risk and credit risk concentration. The Company does not have significant off-balance-sheet risk or credit concentration. The Company maintains cash with major financial institutions. From time to time, the company may have funds on deposit with commercial banks that exceed federallyinsured limits. Management does not consider this to be a significant risk.


Liquidity Risk
  The company is exposed to liquidity risk as its continued operations are dependent upon obtaining additional capital or maturing or trading of invested policies to satisfy its liabilities as they come due.
  Predictive Risk
  Our investment return from a life settlement depends on the difference between the policy face amount and purchaser’s cost basis (consisting of the acquisition cost and premiums paid to maintain the policy) and the length of the holding period, and the demise of the insured. The anticipated life expectancy of an insured are estimated from standard medical and actuarial data based on the historical experiences of similarly situated persons. The data is based on averages involving mortality and morbidity statistics. The outcome of a single settlement may vary significantly from the statistical average. It is impossible to predict any one insured’s life expectancy exactly. To mitigate the risk that an insured will outlive his or her predicted life expectancy, we review all purchases of life settlement policies and the insured medical records and value the price of life settlements to yield competitive returns in line with our expected rate of return.
  11.
SUBSEQUENT EVENTS
 
 Events that have occurred subsequent to 31 August 2010 have been evaluated through the date of this audit report. There have been no subsequent events that occurred during such period that would require disclosure in these financial statements or would be required to be recognized in the financial statements as of or for the year ended 31 August 2010.


F-14


ITEM 9.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE





At no time have there been any disagreements with such accountants regarding any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.





ITEM 9A.    CONTROLS AND PROCEDURES





Evaluation of disclosure controls and procedures





Under the supervision and with the participation of our management, including our President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and Director (the “Certifying Officer”) we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based upon that evaluation, the Certifying Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective. We and our auditors identified material weaknesses discussed below in the Report of management on internal control over financial reporting.


14


Report of Management on Internal Control over Financial Reporting





Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:





(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;





(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors;





and





(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.





Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.





Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement to the Company’s annual or interim financial statements will not be prevented or detected.





In the course of management’s assessment, we have identified the following material weaknesses in internal control over financial reporting:





-
Segregation of Duties– As a result of limited resources, we did not maintain proper segregation of incompatible duties. Namely the lack of an audit committee, an understaffed financial and accounting function, and the need for additional personnel to prepare and analyze financial information in a timely manner and to allow review and on-going monitoring and enhancement of our controls. The effect of the lack of segregation of duties potentially affects multiple processes and procedures.





-
Maintenance of Current Accounting Records– This weakness specifically affects the payments and purchase cycle and therefore we failed to maintain effective internal controls over the completeness and cut off of accounts payable, expenses and other capital transactions.








-
Application of GAAP – We did not maintain effective internal controls relating to the application of generally accepted accounting principles in accounting for transactions in a foreign currency.


15


We are in the continuous process of improving our internal control over financial reporting in an effort to eliminate these material weaknesses through improved supervision and training of our staff, but additional effort is needed to fully remedy these deficiencies. Management has engaged a Certified Public Accountant as a consultant to assist with the financial reporting process in an effort to mitigate some of the identified weaknesses. The Company is still in its development stage and intends on hiring the necessary staff to address the weaknesses once full operations have commenced.





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 with respect to financial statement preparation and presentation.





ITEM 9B.  OTHER INFORMATION





None.





PART III





ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS: COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT





Our directors and officers, as of November 15, 2010, are set forth below. The directors hold office for their respective term and until their successors are duly elected and qualified. Vacancies in the existing Board are filled by a majority vote of the remaining directors. The officers serve at the will of the Board of Directors.





Name
Age
Positions and Offices HeldBennett Kurtz
50
President, Chief Executive Officer, Chief Financial Officer and DirectorDan Schmitt
43
DirectorRandy Delkus
43
Director





Set forth below is a brief description of the background and business experience of our executive officers and directors for the past five years:





Bennett Kurtz was previously President and CEO of Kurtz Financial Group, a corporate finance company offering a full range of consulting and investment banking services to companies seeking growth. Mr. Kurtz has been involved in financing Public Companies and taking private company’s public through reverse mergers.





Mr. Kurtz was involved in an early stage private placement for Ezenet Inc., which later raised $51,000,000. Previously he administered and managed a comprehensive mortgage portfolio in excess of $125,000,000.  He was responsible for underwriting and the syndication of mortgages to financial institutions and accredited investors. Mr. Kurtz also was responsible for managing and growing a chain of retail hearing aid centers, which he later sold.





Mr. Kurtz graduated from York University in 1983 with a BA degree in Administrative Studies.


16


Mr. Dan Schmitt is co-founder and Chief Executive Officer of Anthony, Allan & Quinn, Inc. ETAL (“AAQ”) Inc.  This integrated family of businesses, offered clients a broad range of services and technological solutions, including electronic medical records, outsourced business services, marketing and advertising initiatives.





Since its inception in 1993, AAQ grew from a single automotive marketing firm to a diversified holding company with combined revenues of over $100 million in 2003. By 1998, AAQ had become the 156th fastest growing company in the United States on Inc. Magazine’s Inc. 500 list.  In 1997, recognizing a tremendous need and opportunity for the application of document processing solutions to the healthcare industry, Mr. Dan Schmitt and his two AAQ partners co-founded ABF, to serve insurance companies, Managed Care Organizations, HMO’s, and Third Party Administrators.  ABF leveraged a combination of proprietary print, insert and Web-based technology to integrate directly with healthcare company claim systems.  By 2003, ABF had become the 23rd fastest growing company on the Inc. 500 and #1 in Missouri.  In July of 2003, ABF was sold to publicly-traded WebMD, for cash and stock of $260 million.





Mr. Schmitt was the leading force of AAQ and ABF business models and the architect of a methodology for creating new business initiatives.  He has since combined his expertise in business development, administration, finance, and marketing, to create The Incubation Factory – a privately funded business incubator.  In 2005, Mr. Schmitt opened the doors to “The Factory” in state of the art renovated 50,000 sq.ft. warehouse in downtown St. Louis.  The Incubation Factory is dedicated to the mission of growing businesses faster, smarter, and cheaper than ever thought possible. Mr. Schmitt serves as the Chief Operating Officer of The Incubation Factory.





Mr. Schmitt earned a B.A. in Marketing from the University of Northern Iowa in 1989.  He spends time consulting with each of the businesses while always keeping an eye to the next business opportunity.





Mr. Randy Delkus is a senior healthcare executive with experience in both for profit and not for profit sectors.  He received his B.S. in Nursing, Magna Cum Laude, from St. Louis University and also holds a Business degree from Southern Illinois University, specializing in Marketing and Management.  He completed his Masters in Business Administration at Webster University in St. Louis, graduating Magna Cum Laude.





Mr. Delkus is currently the President of Anthony, Allan & Quinn (AAQ) and The Incubation Factory (TIF), a go-to market business incubator that works with start up companies, universities, individual entrepreneurs and private and public industry; 75% of its current portfolio has a life sciences and/or healthcare focus.





Prior to AAQ, Mr. Delkus served as Chief Executive Officer for one of St. Louis’ most premier healthcare institutions.





Committees and Meetings





The board of directors is currently composed of three people. All board action requires the approval of a majority of the directors in attendance at a meeting at which a quorum is present.





We currently do not have standing audit, nominating or compensation committees. Our entire board of directors handles the functions that would otherwise be handled by each of the committees. We intend, however, to establish an audit committee, a nominating committee and a compensation committee of the board of directors as soon as practicable. We envision that the audit committee will be primarily responsible for reviewing the services performed by our independent auditors, evaluating our accounting policies and our system of internal controls. The nominating committee would be primarily responsible for nominating directors and setting policies and procedures for the nomination of directors. The nominating committee would also be responsible for overseeing the creation and implementation of our corporate governance policies and procedures. The compensation committee will be primarily responsible for reviewing and approving our salary and benefit policies (including equity plans), including compensation of executive officers.


17


Upon the establishment of an audit committee, the board will determine whether any of the directors qualify as an audit committee financial expert.





Family Relationships





There are no family relationship among any of our officers or directors.





Involvement in Certain Legal Proceedings





To the best of our knowledge, none of our directors or executive officers has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, or has been a party to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction or settlement. Except as set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our directors, director nominees or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.





CERTAIN LEGAL PROCEEDINGS





No director, nominee for director, or executive officer has appeared as a party in any legal proceeding material to an evaluation of his ability or integrity during the past five years.





COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT





We have not filed a Form 5 for the year ending August 31, 2010.





ITEM 11. EXECUTIVE COMPENSATION





The particulars of the compensation paid to the following persons:





(a)
our principal executive officer;(b)
each of our two most highly compensated executive officers who were serving as executive officers at the end of the years ended August 31, 2010 and 2009; and(c)
up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the years ended August 31, 2010, 2008 and 2007, who we will collectively refer to as the named executive officers of our company, are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer, other than our principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year:








18


SUMMARY COMPENSATION TABLE





Annual Compensation








Long-Term CompensationAwards


PayoutsName And

Principal Position
Year

Salary


Bonus


Other Annual

Compensation


Stock

Award(s)


Options

Awards


LTIP

Payouts


All Other

Compensation($)


($)


($)


($)


($)


($)


($)Bennett Kurtz, Chief
2008


30,000
(1)


0



0



0



82,242
(2)


0



0Executive Officer
2009


150,000
(1)














31,152
(2)2010


150,000
(1)


0



0



0



0



0



0Mr. Dan Schmitt Director
2008


0



0



0



0



82,242
(2)


0



02009


0



0



0



0



31,152
(2)2010


0



0



0



0



0



0



0Mr. Randy Delkus Director
2008


0



0



0



17,100
(3)


82,242
(2)


0



02009


0



0



0



0



31,152
(2)


0



02010Mr. Daniel E. Kahan
2008


0



0



0



17,100
(3)


82,242
(2) (4)


0



02009


0



0



0







31,152
(2) (4)


0



02010


0



0



0











0



0





(1)
In consideration of the services to be rendered hereunder, the Company hereby agrees to pay to Bennett Kurtz to serve as Chief Executive Officer of the Company $10,000 per month from June 1, 2008 to December 31, 2008 and then $12,500 per month commencing January 1, 2009 until December 31, 2009. $150,000 was accrued in the financial statements as at August 31, 2010.





(2)
On April 21, 2008 the Company executed stock option agreements with four directors of the Company in consideration for their appointment to the Board of Directors.  Under the terms of these agreements the Company granted to each director an option to purchase a total of 10,000 shares of the company’s common stock (“Option Shares”) in the following manner: (A) 2,500 shares at an exercise price of $20.00 per share, (B) 3,500 shares at an exercise price of $25.00 per share and (C) 4,000 shares at an exercise price of $35.00 per share. The grantee shall have the option to purchase all of the Option Shares after six months of the grant date of October 22, 2008.  The optionsexpire in five years from the grant date, on April 21, 2008.(3)
On September 20, 2007, the Company issued 6,000 shares of common stock in exchange for services rendered by two individuals on the Board of Directors. The shares issued were valued at their fair market value of $5.70 which is the amount that would have been received if the shares had been issued for cash.(4)
On January 8, 2009, Daniel Kahan resigned as a member of the Board of Directors of Maxlife Fund Corp. We have included information relating to compensation paid to Mr. Daniel E. Kahan during his tenure as a director during the period September 1, 2008 to January 8, 2009 (date of resignation).








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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT





Security Ownership of Certain Beneficial Owners and Management





The following table sets forth information regarding the number of shares of Common Stock beneficially owned on November 15, 2010, the Closing Date, by each person who is known by the Company to beneficially own 10% or more of the Company’s Common Stock, each of the Company’s directors and executive officers, and all of the Company’s directors and executive officers, as a group:





Title of Class
Name and Address of Beneficial Owner
Amount and Nature

of Beneficial Ownership
Percentage of Class (1)Common
574667 Ontario Limited (2)

32 Prue Avenue

Toronto, ON M6B 1R4
3,450,000
21.23%All officers and directors as a group (1 person)
3,450,000
21.23%





(1)
Based on 16,253,168 shares of our common stock outstanding.(2)
574667 Ontario Limited is controlled by Bennett Kurtz and there Mr. Kurtz is deemed as the beneficial owner of these shares.





ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.





None





ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES





Audit Fees





For the Company’s fiscal year ended August 31, 2010, we were billed approximately $29,000 (2009 – $22,698) for professional services rendered for the audit and quarterly reviews of our financial statements.





Audit-Related Fees





For the Company’s fiscal year ended August 31, 2010 and 2009 we did not incur any fees for services rendered for other audit related fees.





Tax Fees





For the Company’s fiscal year ended August 31, 2010 and 2009 we were billed approximately $4,000 (2009 - $12,751) for professional services rendered for tax compliance, tax advice, and tax planning.





All Other Fees





None.





20


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 be signed on its behalf by the undersigned thereunto duly authorized.





Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before our auditor is engaged by us or our subsidiaries to render any auditing or permitted non-audit related service, the engagement be:





-approved by our audit committee; or





-entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular  service,  the  audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee’s responsibilities to management.





We do not have an audit committee.  Our entire board of directors pre-approves all services provided by our independent auditors. The pre-approval process has just been implemented in response to the new rules. Therefore, our board of directors does not have records of what percentage of the above fees were pre-approved.  However, all of the above services and fees were reviewed and approved by the entire board of directors either before or after the respective services were rendered.





PART IV





ITEM 15. EXHIBITS





Exhibit Number
Exhibit Title31.1
Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes- Oxley Act of 2002.32.1
Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.








21





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 be signed on its behalf by the undersigned, there unto duly authorized.





MAXLIFE FUND CORP.By:
/s/ Bennett KurtzBennett KurtzPresident, Chief Executive Officer,

Chief Financial Officer,

Principal Accounting Officer, and Director





Dated: November 15, 2010





Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.








NAME
TITLE
DATE/s/ Bennett Kurtz
President, Chief Executive Officer,
November 15, 2010Bennett Kurtz
Chief Financial Officer, Principal Accounting Officer,

and Director