================================================================================
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                   FORM 10-KSB

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
                                      1934

                     FOR THE FISCAL YEAR ENDED MAY 31, 2000

                       Commission File Number #000-1024048

                                 HOMELIFE, INC.
           (Name of small business issuer as specified in its charter)

     NEVADA                                         33-0680443
     (State or other jurisdiction of                (I.R.S. Employer
     incorporation or organization)                 Identification Number)

     4100 NEWPORT PLACE, SUITE 730
     NEWPORT BEACH, CA                              92660
     (Address of principal executive offices)       (Zip code)

                                 (949) 660-1919
                (Issuer's telephone number, including area code)

           SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
                                     (None)

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                     Common Stock, par value $.001 per share

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

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

Registrant's  revenues for its fiscal year ended May 31, 2000, were  $3,450,918.
As of May 31,  2000,  Registrant  had  5,637,358  shares  of its $.001 par value
Common Stock issued and outstanding with an aggregate market value of the common
stock held by  non-affiliates  of $591,308.  This  calculation is based upon the
closing sales price of $0.22 per share on May 31, 2000.

Transitional Small Business Disclosure Format (check one).   Yes [ ]     No [X]

The following  documents  are  incorporated  herein by  reference:  Registration
Statement on Form 10-SB,  filed with the SEC on November 2, 1999 is incorporated
in Part IV, Item 13(a).

                                       i
<PAGE>

                                TABLE OF CONTENTS
                                -----------------

PART I                                                                      PAGE
------                                                                      ----

Item 1     Description of Business                                             1

Item 2     Description of Property                                             6

Item 3     Legal Proceedings                                                   6

Item 4     Submission of Matters to a Vote of Security Holders                 7

PART II
-------

Item 5     Market for Common Equity and Related Stockholder Matters            7

Item 6     Management's Discussion and Analysis                                8

Item 7     Financial Statements                                               13

Item 8     Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosure                                13

PART III
--------

Item 9     Directors, Executive Officers, Promoters and Control
           Persons; Compliance with Section 16(a) of the Exchange Act         13

Item 10    Executive Compensation                                             15

Item 11    Security Ownership of Certain Beneficial Owners and
           Management                                                         17

Item 12    Certain Relationships and Related Transactions                     17

PART IV
-------

Item 13    Exhibits and Reports on Form 8-K                                   19

                                       ii
<PAGE>

                                     PART I

ITEM 1.   DESCRIPTION OF BUSINESS
-------   -----------------------

     A.   BUSINESS DEVELOPMENT

          1.   FORM AND YEAR OF ORGANIZATION

     HomeLife,  Inc. ("HomeLife") was incorporated in 1995 under the laws of the
state of Nevada.  The terms "HomeLife" or the "Company" shall refer to HomeLife,
Inc. and all of its controlled subsidiary  corporations.  The Company provides a
broad range of services to its franchisees,  licensees and consumers in the real
estate  marketplace.   HomeLife  utilizes  both  its  proprietary  "SuperSystem"
marketing  system and business  combinations  and acquisitions to grow as a real
estate services company.

          2.   ANY BANKRUPTCY, RECEIVERSHIP OR SIMILAR PROCEEDING

     Not Applicable.

          3. ANY MATERIAL RECLASSIFICATION,  MERGER, CONSOLIDATION,  OR PURCHASE
OR SALE OF A SIGNIFICANT AMOUNT OF ASSETS NOT IN THE ORDINARY COURSE OF BUSINESS

     The Company's growth is largely  attributable to business  combinations and
acquisitions.  The Company was initially incorporated in 1995 for the purpose of
merging with Management Dynamics,  Inc. a publicly owned New Jersey corporation.
Upon completing this merger,  in November 1995,  HomeLife  purchased 100% of the
issued and outstanding shares and partnership interests respectively of HomeLife
Realty Services, Inc. and HomeLife Realty U.S. Limited Partnership  (California)
in exchange for common and preferred shares of the Company.  At the time of this
acquisition,  the Company assumed contracts of the purchased entities to provide
franchise services, as the franchisor, to approximately 60 real estate franchise
offices.

     In August  1996,  HomeLife  Realty  Services  acquired  93.33%  and  82.72%
respectively  of the  outstanding  stock of  Michigan-based  Red Carpet Keim and
Guardian Home Warranty Company. With this acquisition,  the Company acquired the
franchise  name "Red  Carpet"  for the state of  Michigan,  and began  providing
franchise  services,  as franchisor,  to approximately 60 real estate offices of
Red Carpet Keim.  Guardian  Home Warranty  Company,  a provider of home warranty
coverage, changed its name to MaxAmerica Home Warranty Company in March 1999.

     In November 1996, the Company incorporated FamilyLife Realty Services, Inc.
in Michigan as a wholly owned subsidiary.

     In January 1997,  FamilyLife  Realty Services,  Inc. acquired the assets of
Salt Lake City  based  franchisor,  S & S  Acquisition  Corp.  This  acquisition
included:  (a) the  trademarks  "Red Carpet" for all states other than Michigan,
and "National Real Estate Services";  (b) the licensing agreements of Red Carpet
Real Estate Services and National Real Estate Services,  adding approximately 58
real  estate  franchise  offices  for  which  the  Company  provides  franchisor
services;  and (c) real estate computer  technology  entitled House by Mouse and
Virtual  Assistant.  House by Mouse is an Internet based  software  system which
real estate professionals and consumers may utilize to identify residential real
estate listings  according to geographical  and other profile data,  obtained by
the Company's real estate offices. Virtual Assistant is an Internet based system
utilized  by  HomeLife's   agents  to  create  marketing   brochures  and  other
literature.

     In August of 1997,  the Company  acquired  the real estate  operations  and
licensing  agreements and trademarks of Network Real Estate, Inc., including its
12 Northern  California real estate brokerage  offices and its "high-end" luxury
division of "International Estates," a Network Real Estate, Inc. trade name.

     In November 1997, HomeLife incorporated MaxAmerica Financial Services, Inc.
MaxAmerica Financial Services,  Inc. provides mortgage financing services to the
Company's real estate customers.  MaxAmerica Financial Services,  Inc. acts as a
mortgage  brokerage  while funding and  processing  the loans  through  Allstate
Funding.  MaxAmerica Financial Services, Inc. has a Joint Venture Agreement with
Allstate Funding wherein  Mortgage Capital  Resources agrees to process and fund
loans for MaxAmerica Financial Services, Inc. Allstate Funding is not affiliated
with the Company.

     In February  1998,  the Company  acquired  Builders  Realty  (Calgary) Ltd.
Builders  Realty  (Calgary)  is a two office  residential  real  estate  company
located in Calgary,  Alberta, Canada. Builders Realty (Calgary) Ltd. changed its
trade name to HomeLife Builders Realty and operates as a wholly owned subsidiary
of HomeLife, Inc.

                                       1
<PAGE>

     In April 1998, the company incorporated National Sellers Network,  Inc., as
a Nevada  corporation,  to function as a real estate  licensing  company for the
National Real Estate Services trade name.  National Sellers  Network,  Inc. is a
wholly  owned  subsidiary  of the  Company.  Also in  April  1998,  the  company
incorporated  Red Carpet  Broker  Network,  Inc.,  as a Nevada  corporation,  to
function  as a real  estate  licensing  company  for the Red Carpet  Real Estate
Services  trade name.  Red Carpet Real  Estate  Services,  Inc. is also a wholly
owned subsidiary of the Company.

     In August 1998, the Company  incorporated  HomeLife  Properties,  Inc. as a
Nevada  corporation  to  function as a buyer and seller of real  property.  This
company  currently  has  no  operations  and is a  wholly  owned  subsidiary  of
HomeLife.

     In September  1998,  the company  acquired the  investment  banking firm of
Aspen,  Benson & May, LLC. Aspen,  Benson & May, LLC currently has no operations
and the Company does not anticipate  operating through this subsidiary during at
least the next 12 months.

     In November 1998, the Company sold a master franchise in Germany.

     In January of 1999, the Company's Builders Realty (Calgary) Ltd. subsidiary
purchased the assets and business of HomeLife  Higher  Standards,  a real estate
brokerage firm in Calgary, Alberta, Canada.

     As a consequence of the foregoing,  the company presently  operates through
the following:

     o    Wholly-Owned Subsidiaries
          -------------------------

          HomeLife Realty Services,  Inc.,  FamilyLife  Realty  Services,  Inc.,
          MaxAmerica Financial Services,  Inc., Red Carpet Broker Network, Inc.,
          National Sellers Network, Inc., Builders Realty (Calgary) Ltd. , Aspen
          Benson & May LLC.,  HomeLife  California  Realty,  Inc.  and  HomeLife
          Properties, Inc.

     o    Majority-Owned Subsidiaries
          ---------------------------

          The Keim Group Ltd. and MaxAmerica Home Warranty  Company - 93.33% and
          82.72% respectively.

B.   BUSINESS OF ISSUER

     The company  offers  consumer-oriented  real estate  brokerage  and finance
services  through  subsidiaries  and franchises.  It presently  operates in nine
states in the United States and the province of Alberta, Canada.

     1.   PRINCIPAL PRODUCTS AND SERVICES AND THEIR MARKET

          A.   SERVICES AND LOCATIONS

     The Company  maintains its corporate  office in Newport Beach,  California,
and maintains regional offices in Troy, Michigan and Calgary,  Alberta,  Canada.
HomeLife  operates  through  various  subsidiaries  and companies  servicing its
franchised tradenames.  Through its subsidiary,  HomeLife Realty Services, Inc.,
the  Company,  services  approximately  43 real  estate  offices in the State of
California.  Through Red Carpet Keim, the Company services approximately 52 real
estate offices in the State of Michigan and through its  tradenames,  Red Carpet
Real Estate  Services,  Network Real Estate and National  Real Estate  Services,
services  approximately  72 real estate offices in various  states.  The Company
also  operates  two full  service  real  estate  brokerage  offices in  Calgary,
Alberta,  Canada, employing 62 agents, under the name "Builders Realty (Calgary)
Ltd.".  In addition to the above,  the Company  offers the following real estate
services through its various subsidiaries:

     o    FRANCHISE  SERVICES - Name  recognition,  advertising,  training,  and
          recruiting for franchise offices.

     o    MORTGAGE  FINANCING - through  its  subsidiary,  MaxAmerica  Financial
          Services, Inc.

     o    RETAIL REAL ESTATE BROKERAGE  SERVICES - The Company owns and operates
          a full service  retail real estate  brokerage  through its  subsidiary
          Builders Realty (Calgary) Ltd.

     o    HOME WARRANTY - HomeLife  provides home warranty  coverage through its
          subsidiary MaxAmerica Home Warranty Company.

                                       2
<PAGE>

          B.   FRANCHISE AND LICENSING OPERATIONS

     HomeLife  operates  its  real  estate  services  through  franchises.   The
franchise  allows  independently  operated real estate  offices to have national
brand name recognition and to share in regional advertising. HomeLife franchisor
management periodically visits each real estate office to conduct in-house sales
and  marketing  training.  The  franchisor  also trains the real  estate  office
manager on how to recruit new sales personnel.

     Franchises  are granted to licensed  brokers to operate  under the business
system and plan  developed by HomeLife and to use one of the following  HomeLife
trademarks for such operations:  HomeLife,  HomeLife (Words & Design),  HomeLife
Realty Services and HomeLife Realty,  and such other and substitute trade names,
trademarks,  service  marks,  graphics and logotypes as may from time to time be
designated by HomeLife.

     Franchises  are  operated  in  Arizona,   California,   Florida,  Illinois,
Michigan,  Nevada,  New York, South Carolina,  Texas, and Wisconsin and comprise
approximately  167  offices.  The  franchise  relationship  is  governed  by the
franchise  offering  circular  applicable  to the state in which the  franchisee
operates  and  according  to the  terms  and  conditions  of the  "Participating
Independent Broker Franchise  Agreement".  The terms of the franchise agreements
vary depending upon the market in which the franchisee  operates.  However,  the
typical initial  franchise fee is $12,500 with each additional  office's initial
fee being $5,000. From time to time, HomeLife offers incentive or bonus plans to
attract new  franchise  members.  These  programs  may  directly  or  indirectly
decrease initial franchise fees of those franchisees entitled to such bonuses or
incentives.

     The  Franchise  Agreement  also requires the payment of "Other Fees." These
fees  include  monthly  franchise  fees on a fixed  fee or  percentage  of gross
revenues basis,  termed royalty fees and advertising  contributions.  Other fees
also include transfer fees,  training fees,  interest on overdue accounts,  fees
related to accounting and bookkeeping system materials,  and renewal fees. There
are  also  fees  that  may be  incurred  under  special  circumstances  such  as
indemnification  responsibilities,  insurance  costs,  costs  of  enforcing  the
franchise agreements and audit costs.

     In addition to the above fees, the franchisee has certain obligations under
the Franchise  Agreement  including but not limited to compliance with standards
and policies set forth in operating manuals,  territorial  development and sales
quotas,  initial and on-going training and certain advertising and participation
requirements.  In exchange for the franchisee's  obligations and fees,  HomeLife
provides training programs, the use of its marketing system, its business system
and  plan,   on-going   education,   advertising  and  general  support  to  its
franchisees.

     HomeLife  also  operates  its  business  through  licensing of the HomeLife
trademarks.  According  to  the  terms  of  the  standard  licensing  agreement,
licensees  are obligated to pay a membership  fee to HomeLife's  Red Carpet Real
Estate Services in exchange for the right to use certain  trademarks and service
marks and to operate its  business  under the Red Carpet trade name to HomeLife,
and HomeLife is obligated to provide these  licensees  with the right to use its
proprietary trademarks and service marks.

          C.   MORTGAGE FINANCING

     The company offers  mortgage  brokerage  services  through it's  subsidiary
MaxAmerica  Financial  Services,  Inc. Loan  referrals  are  generated  from the
Company's  real  estate  franchise  offices,  as well as through  mortgage  loan
brokers. In this regard,  MaxAmerica  Financial  Services,  Inc. has established
relationships  with a  number  of  loan  funding  sources  to  which  it  refers
residential  loan  applicants.  Prior to such  referral,  the Company  qualifies
prospective  borrowers to assure  compliance  with  existing  loan  underwriting
criteria,  selects the appropriate  financing  referral,  and assists clients in
preparing loan application packages.

          D.   RETAIL REAL ESTATE BROKERAGE SERVICES

     The  company is engaged in  providing  real  estate  brokerage  services to
buyers and sellers of  residential  property  through its  subsidiary,  Builders
Realty  (Calgary) Ltd., which comprises 2 offices in Calgary,  Alberta,  Canada.
These operations are similar to those of franchisee,  i.e.  representing  buyers
and sellers in transactions,  soliciting listings, providing comparison reports,
preparing real estate  purchase and sale  agreements,  marketing and advertising
listed   properties,   assisting  clients  through  the  marketing,   appraisal,
inspection  and closing  process,  and related  services.  The  difference  with
Builders  Realty  (Calgary) Ltd. is that this is a company-owned  operation,  as
opposed to a franchise.

                                       3
<PAGE>

          E.   HOME WARRANTY SERVICES

     The company  offers home  warranty  coverage  through its  MaxAmerica  Home
Warranty Company. Home warranty coverage is typically purchased by the seller of
the home,  for the  benefit  of the  purchaser.  This  coverage  protects  major
appliances  in the home for a period of up to one year from the date of purchase
of the  home.  Repairs  or  replacements  are  contracted  out to  local  repair
companies.

     2.   DISTRIBUTION METHODS

     The Company's niche in the market is maintained  through the development of
its proprietary  marketing system. This community based marketing system, called
the  "SuperSystem"  replaces the outdated  marketing methods of cold calling and
door  knocking  to  obtain  real  estate  listings  and  potential  buyers.  The
SuperSystem is made available to the Company's  corporately owned and franchised
brokerage  offices.  The  elimination  of cold  calling  and door  knocking  has
attracted two types of  franchisees;  franchisees  new to operating a franchise;
and  those  who  terminated  other  franchise   agreements  with  the  Company's
competitors to become a franchisee of the Company.

     Management believes that the real estate market will continue to experience
sustained   growth.   HomeLife's   business  plan  includes  focusing  upon  the
acquisition of three types of real estate brokerage firms:

          o    the  continuing  acquisition of real estate  brokerage  companies
               with 2 to 20 offices,

          o    real estate  companies who are  financially  weak and lack a good
               marketing system, and

          o    real estate  companies  without  strong  name brand  recognition,
               which could utilize the existing trademarks of HomeLife.

     In addition to this proprietary  system,  the acquisition by the Company of
companies with both recognizable  tradenames,  such as Red Carpet,  and existing
franchise  locations has enabled the company to gain  immediate  market share in
its office locations.

     3.   STATUS OF ANY PUBLICLY ANNOUNCED NEW PRODUCT OR SERVICE

     None.

     4.   COMPETITION

     HomeLife faces competition from numerous companies,  some of which are more
established, benefit from greater market recognition, have greater financial and
marketing resources, and a broader geographical base than the Company.

     The real  estate  franchise  industry  is large and  composed of many other
companies.  Companies such as Century 21,  Prudential,  Coldwell Banker,  Better
Homes and Gardens,  ERA, and RE/Max,  provide  services  similar to the services
provided by HomeLife.  Such  competition may diminish the Company's market share
or its ability to gain entry into certain markets,  and may consequently  have a
material adverse effect on the Company.

     Management believes that the Company has the following  advantages over its
competition:

     *    A unique lead generating system provided to its franchisees.

     *    Lower cost of the Company's  products to franchisees and the increased
          benefit realized from the placement of its advertising dollars.

     *    Consistent  use and  acquisition  of new  technology  to  provide  its
          services to its franchisees.

                                       4
<PAGE>

     5.   SOURCES AND AVAILABILITY OF RAW MATERIALS

     The Company is not dependent on any raw materials.  As a service  business,
it relies  primarily  on the  efforts of its  employees  and agents to  generate
sales.  All  software  which  comprises a material  component of its services is
developed through various outside contractors.

     6.   DEPENDENCE ON ONE OR FEW MAJOR CUSTOMERS

     The company  offers its  services  primarily  to  consumers  in the various
regional  markets where it maintains a presence,  i.e.  individual  home owners,
purchasers and buyers. As a consequence,  its business  activities are primarily
transactional  in nature and not dependent  upon  long-term  relationships  with
customers.  Further, as a retail-based  business, its customer base is broad and
diverse.

     7.   PATENTS, TRADEMARKS, LICENSES AND FRANCHISES

     The Company owns more than 40 copyrights on unique marketing concepts which
include printed materials for buying and selling property, and point of sale and
sales follow up techniques. The Company licenses exclusive rights, from Jerome's
Magic World, Inc., to use its exclusively  developed animated characters for its
real estate service business for a period of eight years commencing  October 30,
1995 and ending October 30, 2003 at a cost of $10,000 per year. Thereafter,  the
license is automatically renewable for additional eight year periods at the fair
market value.  These characters include Jerome the Gnome, Crok `N Roll, The Waz,
King D Lish and Rock Head.

     The Company  licenses the following  trademarks  from HomeLife  Securities,
Inc.:  "Blueprint to Selling Your Home,"  "Blueprint to Buying a Home,"  "Family
Life Realty  Services,"  "Family  HomeLife Realty  Services,"  "Family  HomeLife
Realty  Services"  (words  only),  "Focus  20/20"  (words and  design),  "Higher
Standards" (words only), "HomeLife" (words only), "HOMELIFE" (words and design),
"HomeLife Higher Standards" (words and design),  "HomeLife Realty Services," and
"It's What Everyone's  Looking For" (words only). These marks are licensed for a
period  of eight  years at no cost to the  company.  The  license  commenced  on
October 30, 1995 and expires on October 30, 2003. Thereafter, the license may be
renewed at fair market value for additional eight year periods.

    HomeLife   has   developed   its   Community   Marketing   SuperSystem,    a
lead-generating,  community-based  marketing system that eliminates cold calling
and door-knocking  used by traditional  realtors.  The marketing system involves
use of the  fictional  character  "Jerome  the Gnome" and an  accompanying  cash
sweepstakes.  Jerome is a child-friendly mascot, a "child magnet" who appeals to
children.  Real  estate  offices  hire a person to wear a life size  "Jerome the
Gnome" costume to act as HomeLife's  goodwill  ambassador at shopping malls, and
community events, such as business openings,  in parks and plazas to promote the
HomeLife  name.  The Jerome the Gnome  character  and  accompanying  sweepstakes
encourages  clients to complete  cards  listing  personal  information  and real
estate needs.  The  sweepstakes is an annual,  national  sweepstakes  offering a
$25,000 cash prize.  Through Jerome the Gnome,  the Company  attracts  families,
helping them identify their real estate needs,  spreading goodwill and promoting
HomeLife as the "Family Values  Company".  The system was developed over several
years and test  marketed  successfully  in 80 real  estate  offices in  Southern
California.  Thousands  of buyer  and  seller  leads  were  generated  for these
affiliates,  who in turn  offer  customers  the  opportunity  to buy,  sell,  or
re-finance their home or property.

     8.   NEED FOR GOVERNMENT APPROVAL

     The Company's  franchise  operations  are subject to various state laws and
regulations  concerning  the disclosure  obligations  of  franchisors  and other
aspects of the relationship between franchisor and franchisee.  In addition, all
personnel  who provide  real  estate  brokerage  and/or  mortgage  services  are
generally  required to be licensed by the states and/or  provinces in which such
services are performed. Otherwise, no government approval is required for any of
the Company's current operations.

     9.   EFFECT OF ANY EXISTING OR PROPOSED GOVERNMENT APPROVAL

     As noted above the company is required to comply with state laws  governing
franchise  operations,  and the Company's  professional  staff is required to be
licensed  by  state  real  estate  authorities.  Otherwise,  except  for  normal
government  regulation that any business  encounters,  the Company's business is
not affected by any government regulations.

                                       5
<PAGE>

     10.  RESEARCH AND DEVELOPMENT COSTS

     HomeLife  has no research or  development  costs  outside of the expense of
developing  software  for its internet  applications,  which are expensed in the
year they occur.

     11.  COST AND EFFECTS OF COMPLIANCE WITH ENVIRONMENT LAWS AND REGULATIONS

     The  Company  is not  involved  in a  business  which  involves  the use of
materials in a manufacturing  stage where such materials are likely to result in
the violation of any existing  environmental rules and/or regulations.  Further,
the Company  does not own any real  property  which would lead to liability as a
land owner.  Therefore,  the Company does not anticipate  that there will be any
costs associated with the compliance of environmental laws and regulations.

     12.  EMPLOYEES

     As of  the  date  of  this  registration  statement,  HomeLife  employs  16
full-time employees. The Company hires independent contractors on an "as needed"
basis  only.  The  Company  has no  collective  bargaining  agreements  with its
employees.  The Company has  approximately  167 franchise  offices.  The Company
plans on hiring  additional  staff in the immediate future and in the long term,
as needed, based on its growth rate.

     13.  RECENT ACCOUNTING PRONOUNCEMENTS

     In  1998,  the  AICPA  Accounting   Standards  Executive  Committee  issued
Statement of Position No. 98-5 (SOP 98-5),  "Reporting  on the Costs of Start-up
Activities".  SOP 98-5 was issued to provide guidance on financial  reporting of
start-up costs and organization  costs and requires such costs to be expensed as
incurred.  SOP 98-5 is effective for financial  statements  for years  beginning
after December 15, 1998. The company adopted the new requirements of SOP 98-5 in
fiscal  year  2000 and  wrote  off  organization  costs  with net book  value of
$48,955.

ITEM 2 - PROPERTIES
-------------------

     The company leases a 2,630 square foot office in Newport Beach, California.
The lease term expires in June, 2001. The company is obligated on leases for its
other premises located in Troy, Michigan, which expires in January, 2002 and for
two HomeLife Builders Realty offices located in Calgary,  Alberta,  Canada.  The
HomeLife Builders Realty leases expire in October, 2001 and August, 2002. Annual
lease  payments  exclusive of property  taxes and  insurance  for all  locations
through 2002 is $214,767.

ITEM 3 - LEGAL PROCEEDINGS
--------------------------

     The company is currently involved in two lawsuits.

     The company is involved in a lawsuit with Network Real Estate, Inc., a real
estate broker,  where Network Real Estate,  Inc. has filed an action against the
company  claiming  that the company has failed to pay Network Real Estate,  Inc.
the  remaining  balance of $80,000  pursuant to the  Agreement  for  purchase of
Network Real Estate, Inc. licensing agreements and trademarks. On March 7, 2000,
the company  filed a  cross-complaint  against  Network  Real  Estate,  Inc. and
International  Estates,  Inc,  claiming that they failed to provide ownership of
International   Estates   trademark   pursuant  to  the  agreement.   Settlement
negotiations  are in progress and if finalized as proposed,  the company will be
dismissed  from the  complaint  by Network  Real  Estate,  Inc. and Network Real
Estate,  Inc. will pursue the company's  claims against  International  Estates,
Inc.  Pursuant to the  settlement  negotiations,  Network Real Estate,  Inc. did
submit 146,667 common shares for cancellation  totaling to $58,667 on October 1,
1999. In  management's  opinion,  this matter will not have a material effect on
the financial position of the company.

     On April 15, 1999, the Company, as plaintiff,  filed an action in the Court
of Queen's  Bench of  Alberta,  Canada.  The action is  against  the  sellers of
Builders Realty  (Calgary)  Ltd.,  seeking to reduce the purchase price paid for
Builders  Realty  (Calgary) Ltd.,  namely 36,000 shares of the Company's  common
stock,  totalling  $158,040  and  $158,040  cash for a total  purchase  price of
$316,000.  The  defendants,  Cecil Avery and Joyce Travis,  have filed a counter
lawsuit for damages of $238,275  (CN$356,699).  In  management's  opinion,  this
matter will not have a material affect on the financial position of the company.

     Management  believes that there are no other  material  litigation  matters
pending or threatened against the company.

                                       6
<PAGE>

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

     None.

                                     PART II
                                     -------

ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
------------------------------------------------------------------------------

     A.   MARKET INFORMATION

     The Company's common stock is traded in the over-the-counter bulletin board
under the symbol HMLF.

     The  following  table  sets  forth  the  high  and low bid  prices  for the
Company's  common  stock for  fiscal  years  1999 and 2000  (ended  May 31),  by
quarter.  The prices  below  reflect  inter-dealer  quotations,  without  retail
mark-up, mark-down or commissions and may not represent actual transactions:

     --------------------------------------------------------------------
                   1999                 High               Low
     --------------------------------------------------------------------
     Quarter ended
          August 31                     $ 2.85             $ 1.25
          November 30                   $ 1.45             $ 0.31
          February 28                   $ 0.66             $ 0.31
          May 31                        $ 0.57             $ 0.32
     --------------------------------------------------------------------
                   2000
     --------------------------------------------------------------------
     Quarter ended
          August 31                     $ 0.42             $ 0.31
          November 30                   $ 0.34             $ 0.20
          February 28                   $ 0.30             $ 0.17
          May 31                        $ 1.05             $ 0.17
     --------------------------------------------------------------------

     B.   HOLDERS

     As of May 31, 2000, there were approximately 1,006 holders of the Company's
Common Stock, as reported by the Company's transfer agent.

     C.   DIVIDENDS

     The Company has not paid any  dividends  on its Common  stock.  The Company
currently intends to retain any earnings for use in its business,  and therefore
does not anticipate paying cash dividends in the foreseeable future. The Company
has paid $3,120 in Preferred  dividends on its Class AA Preferred  stock for the
period  ended May 31, 1999,  and $2,520 in  Preferred  dividends on its Class AA
Preferred stock for the period ended May 31, 2000. The reduction in dividends is
due to the conversion of Preferred stock into Common stock.

     D.   RECENT SALES OF UNREGISTERED SECURITIES AND USE OF PROCEEDS

     The  Company  has not sold any  unregistered  securities  over the 12 month
period ended May 31, 2000.

     Earlier  sales of  unregistered  securities  are disclosed in the Company's
Form 10-SB.

                                       7
<PAGE>

ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS
---------------------------------------------

     The  following  is  management's  discussion  and  analysis  of  HomeLife's
financial condition and results of operations for the fiscal years ended May 31,
2000 and 1999.  Detailed  information  is contained in the financial  statements
included with this document.  This section contains  forward-looking  statements
that involve risks and uncertainties, such as statements of the Company's plans,
objectives,  expectations and intentions. The cautionary statements made in this
document  should  be read as being  applicable  to all  related  forward-looking
statements  wherever  they appear in this  document.  The  following  table sets
forth,  for  the  periods  indicated,  selected  financial  information  for the
Company.

OVERVIEW

     HomeLife,  Inc. is a real estate services provider including franchisor and
licensor.  HomeLife, Inc. utilizes both its proprietary "Super System" marketing
system and its business  combinations  and acquisitions to fuel development as a
fast growing real estate services  company.  The Company has experienced  growth
primarily  through its  acquisitions  of and  combinations  with  various  other
companies.  This  includes the  acquisition  in August 1996 of the Keim Group of
Companies and MaxAmerica Home Warranty Company  (Michigan) adding 60 real estate
offices and a home warranty company in Michigan.  In 1997, the Company purchased
certain assets of S & S Acquisition Corp., providing the company with Red Carpet
Real Estate  Services and National Real Estate  Services,  adding 58 real estate
offices.  The  acquisition  of the real estate  computer  technology of House by
Mouse and Virtual Assistant provided the Company with the ability to enhance its
Internet  communication  services to its  franchises.  In July 1997, the Company
acquired the licensing  agreements,  trademarks and franchise offices of Network
Real Estate,  Inc. This  acquisition  provided the Company with an additional 12
offices in Northern  California and access to the "high-end"  luxury division of
"International  Estates". In February 1998, the Company acquired Builders Realty
(Calgary),  Ltd., providing access to the Alberta,  Canada market in both retail
real estate and mortgage loans. On September 15, 1998, the Company purchased the
stock of the  investment  banking firm of Aspen,  Benson and May, LLC for Common
stock.

     From time to time,  the Company has entered into  strategic  alliances with
various companies in order to explore the  cross-marketing  of their services to
customers of the Company or its franchises.  To date, these strategic  alliances
have not included any funding agreements or other liabilities on the part of the
Company.  Since the end of its last fiscal year,  HomeLife has formed  strategic
alliances with Home Value Check,  LLC, and Allstate  Funding.  Home Value Check,
LLC  provides  Internet  based  appraisals  for  lenders  and  consumers  of the
Company's  services.  Allstate Funding provides loan processing and underwriting
for MaxAmerica  Financial  Services,  Inc., the real estate  mortgage  brokerage
subsidiary of HomeLife.

     Management   believes  the  growth   fueled  by  these   acquisitions   and
combinations will continue to fuel growth in 2000. However,  certain key factors
that are necessary in maintaining  and exceeding the current growth rates are as
follows:

     o    Acquiring national recognition by acquiring regional franchises;
     o    Targeting high achieving-high market share regional brokerage houses;
     o    Continually updating its marketing techniques; and
     o    Improving services available to its franchises.

PLAN OF OPERATION

     HomeLife's  business  plan  is to  acquire,  as the  franchisor  or  master
franchisor,  regional real estate brokerage companies  throughout North America.
The newly acquired  companies  will have the choice of retaining  their regional
identities,  or  changing  their  name to a  HomeLife  brand.  This  allows  the
companies to enjoy the benefits of its regional  identity while at the same time
securing the support of a publicly traded national real estate company. HomeLife
also intends to introduce  mortgage  banking as a service to agents and brokers.
The Company  intends to enter into the  business by way of merger,  acquisition,
joint  venture or  strategic  alliance.  It also intends to provide a variety of
ancillary  real estate  related  products and services to the industry  over the
next five years.  Such services will include beginning to offer title and escrow
services;  and  entering  into other  areas such as an Internet  shopping  mall.
Expanding  into  ancillary  services will allow the Company to use its franchise
network to market other products and services to the existing  customers.  While
the Company has currently implemented some of these plans, there is no assurance
that the  Company  will  complete  all of these  plans or that it will  continue
providing such services.

                                       8
<PAGE>

RESULTS OF OPERATIONS

     The following table sets forth, for the years indicated, selected financial
information for the Company:

================================================================================
                                                Year Ended          Year Ended
                                               May 31, 2000        May 31, 1999
                                                 (audited)           (audited)
--------------------------------------------------------------------------------
Statement of Operations Data
     Revenue                                    $ 3,450,918         $ 4,154,125
     Net Loss                                   $  (761,413)        $  (960,120)
     Net Loss per share                         $      (.15)        $      (.23)
--------------------------------------------------------------------------------
Balance Sheet Data
     Current Assets                             $   612,027         $   984,507
     Total Property & Equipment, Net            $   414,679         $   480,993
     Total Assets                               $ 2,292,943         $ 3,135,293
     Total Current Liabilities                  $   626,977         $   882,844
     Accumulated Deficit                        $(2,989,096)        $(2,227,683)
     Total Stockholder's Equity                 $ 1,230,114         $ 1,660,605
================================================================================

FISCAL YEAR ENDED MAY 31, 2000  (AUDITED)  COMPARED TO FISCAL YEAR ENDED MAY 31,
1999 (AUDITED)

     REVENUES.  The Company  generated  gross sales of $3,450,918 for the fiscal
year ended May 31, 2000  compared to gross  sales of  $4,154,125  for the fiscal
year ended May 31, 1999. Revenue by business segment is shown below:

                              For the year ended          For the year ended
                              May 31, 2000                May 31, 1999

                              Amount             %        Amount             %
                              ------             -        ------             -
Real estate brokerage       $2,036,892          59.0    $2,632,251          63.4
Royalty fees                   679,365          19.7       720,574          17.3
Franchise fees                 112,128           3.2        61,600           1.5
Mortgage financing              90,520           2.6       199,451           4.8
Home warranty sales            255,522           7.5       228,353           5.5
Other                          276,491           8.0       311,896           7.5
                            ----------    ----------    ----------    ----------
TOTAL                       $3,450,918         100.0    $4,154,125         100.0

The  largest  decrease  in revenue  from  fiscal  year 1999 was from real estate
brokerage.  This decrease of $595,359 from  $2,632,251 for the fiscal year ended
May 31, 1999 to $2,036,892  for the fiscal year ended May 31, 2000 accounted for
the majority of the overall  decrease in revenue  between the years.  During the
current  year,  the Company lost  approximately  10 brokers to retirement in the
Calgary office of Builders Realty. The total number of brokers in that office at
May 31, 2000 was 62 who generated lower sales than in the prior year.

Royalty fees  decreased from $720,574 in fiscal year 1999 to $679,365 for fiscal
year 2000.  This  decrease of 6% relates to some  royalty fees that were reduced
upon renewal in accordance  with industry  practices as well as fewer  franchise
offices in the current year. The current year total number of franchise  offices
was 167 offices compared to 180 offices in the prior year.

Franchise fees were $112,128 and $61,600 for the fiscal years ended May 31, 2000
and 1999, respectively. Although the number of franchises sold were 14 in fiscal
year 2000 and 12 in fiscal year 1999, the prior year franchise revenue was lower
due to a write down related to the master franchise in Germany.

                                       9
<PAGE>

Revenue from mortgage financing was $108,931 or 55% lower for the year ended May
31,  2000  compared to 1999.  The Company  financed 25 loans in fiscal year 2000
compared to 85 loans  financed in fiscal  year 1999.  The  decrease in number of
loans financed and  associated  revenue was due to the loss of an in house sales
representative  responsible for selling the mortgage financing. The position was
vacant for almost half of the fiscal year and replaced shortly before the fiscal
year end.

Home  warranty  sales were  $259,350 and $228,353 for the fiscal years ended May
31, 2000 and 1999, respectively.  This increase of $30,997, or 14%, results from
an  increase in the number of  warranty  contracts  sold from 712 in fiscal year
1999  to  753  in  fiscal  year  2000.   The  Company  hired  an  outside  sales
representative in fiscal year 2000 which accounted for the increase in number of
contracts sold.

     DIRECT COSTS.  Direct costs for the year ended May 31, 2000 was  $2,127,237
compared to  $2,791,997  for the year ended May 31,  1999.  Consistent  with the
decrease  in  revenues  mainly  attributable  to  lower  real  estate  brokerage
revenues,  direct  costs  is  lower  in the  current  year  due to  lower  sales
commissions associated with this revenue.

     GROSS PROFIT PERCENTAGE. Gross profit percentage increased from 33% for the
year ended May 31, 1999 to 38% for the year ended May 31, 2000. This increase is
primarily  due to lower real estate  commissions  earned and paid to brokers and
agents in fiscal year 2000.  Lower  commissions  were earned in the current year
due to the decrease in real estate brokerage sales.

     SALARIES AND FRINGE BENEFITS.  Salaries and fringe benefits were comparable
at  $637,485  and  $641,981  for the fiscal  years  ended May 31, 2000 and 1999,
respectively.  Although  the Company has three more full time  employees at year
end than in the prior year,  the timing of their  hiring has brought the expense
to a comparable amount with prior year.

     GENERAL AND ADMINISTRATIVE. General and administrative costs decreased from
$1,158,249  for the year ended May 31, 1999 to  $894,568  for the year ended May
31, 2000.  The decrease  was  primarily  due to a decrease in the use of outside
consultants and an overall monitoring of Company expenses.

     OCCUPANCY  COSTS.  Occupancy costs increased $9,618 or 6%, from fiscal year
1999.  This  increase  results from annual  increases as stated in the occupancy
lease agreements.

     FINANCIAL.  Financial  costs for the year ended May 31,  2000 were  $57,268
compared to $103,923 for the year ended May 31, 1999. Prior year financial costs
were  higher  due  to  the  write  down  of  promotional   marketing  materials,
approximately $103,000.

     AMORTIZATION.  Amortization  of intangibles for the year ended May 31, 2000
increased  $87,650 to $328,864  from  $241,214  for the year ended May 31, 1999.
This increase in the current year is the result of the Company adopting SOP 98-5
and due to the  reduction in the estimate of the useful lives of the  trademarks
and franchise rights from 20 years to 10 years in 1999. The adoption of SOP 98-5
amounted to a write off of organization costs with net book value of $48,955 and
the change in the  estimate  amounted to  approximately  an  additional  $36,000
amortized during the current year.

     MINORITY  INTEREST.  The reduction in net loss due to minority interest was
$11,462 for the year ended May 31, 2000 due to a combined  net loss for Keim and
MaxAmerica Home Warranty.  In the prior year, these two companies combined for a
net profit,  which generated minority interest as an expense item,  reducing the
net income amount.

     PREFERRED DIVIDENDS.  Preferred Dividends were $2,520 in the year ended May
31, 2000 versus  $3,120 for the year ended May 31, 1999.  This  decrease of $600
was due to the conversion of preferred stock into common stock.

     LIQUIDITY AND CAPITAL RESOURCES.  HomeLife's primary source of liquidity is
positive cash flow from its current operations.  In addition it has 3,750 shares
of Voice  Mobility Inc. as a marketable  security,  and lines of credit with two
banks in the amounts of CN$50,000 and $25,000.  The capital  requirements of the
Company  are for  operating  expenses  and to  service  and use of its  lines of
credit. The Company has recorded a loss on its marketable  security as the share
price has  declined in the public  market from the  purchase  share  price.  The
Company has  recorded  significant  operating  losses in the prior three  years.
These losses are primarily due to amortization  and depreciation of acquisitions
made in prior years,  loss on investments made in prior years, and write down of
marketing materials purchased in prior years. Cash flow is cumulatively positive
for the past three years,  and it is projected  that  operations  for the coming
years can be funded out of future  cash  flows.  The  company  does not have any
derivative  instruments or hedging  activities  therefore,  the company believes
that  SFAS No.  133 will have no  material  impact  on the  company's  financial
statements or notes thereto.

                                       10
<PAGE>

     FOREIGN  OPERATIONS.  Foreign  operations  consist  of the sale of a master
franchise agreement to an individual in Germany. Payment for this agreement were
scheduled to be made in 12 quarterly  payments  beginning in October 1999.  Only
partial  payments  have  been  received,  however,  and  the  company  is now in
negotiations with the obligor to re-structure this obligation. Continued default
of this agreement will deprive the Company of the anticipated  payments,  but is
anticipated  to have no adverse  consequences  to the operations of the Company,
since it has no  commitments  of  capital  of  other  resources  to its  foreign
operations.

YEAR  ENDED MAY 31,  1999  (AUDITED)  COMPARED  TO THE YEAR  ENDED MAY 31,  1998
(RESTATED).

        REVENUES.  The Company  generated gross sales of $4,154,125 for the year
ended May 31, 1999 compared to gross sales of $1,968,628  for the year ended May
31, 1998. Revenue by business segment is shown below:

                               For the year ended          For the year ended
                               May 31, 1999                May 31, 1998

                               Amount            %         Amount            %
                               ------            -         ------            -
Real estate brokerage        2,632,251          63.4       647,279          32.9
Royalty fees                   720,574          17.3       788,446          40.0
Franchise fees                  61,600           1.5       126,500           6.4
Mortgage financing             199,451           4.8             0             0
Home warranty sales            228,353           5.5       261,552          13.3
Other                          311,896           7.5       144,851           7.4
                            ----------    ----------    ----------    ----------
TOTAL                        4,154,125         100.0     1,968,628         100.0
                            ==========    ==========    ==========    ==========

This  significant  increase in revenue of  $2,185,497  was  primarily  due to an
increase in real estate commission from Builders Realty  (Calgary),  Ltd., which
was  acquired  late  in  1998.  At  the  time  of  the  acquisition  there  were
approximately  80  sales   representatives   associated  with  Builders  Realty,
(Calgary) Ltd. In May 1999, there were approximately 70 sales representatives in
the office. This decrease in sales representatives was the result of the loss of
approximately 50 sales  representatives over that period, offset by the addition
of 40 sales representatives from the acquisition of HomeLife Higher Standards in
January 1999.

Royalty fees decreased from $788,446 for the year ended May 31, 1998 to $720,574
for the year  ended May 31,  1999.  Although  the  number of  franchise  offices
remained  approximately  the  same  at 180  offices,  the  royalty  fees on some
contracts  were reduced by  approximately  10% upon renewal in  accordance  with
industry practices.

Franchise  fees  decreased  from  $126,500  for fiscal  year 1998 to $61,600 for
fiscal year 1999.  This  decrease  was  primarily  due to the sale of two master
franchises  for $65,000 in 1998 with no comparable  sales in 1999. The number of
franchises sold was 12 in 1998 and 1999.

Revenue  from  mortgage  financing  was $199,451 for the year ended May 31, 1999
from the financing of 85 loans.  There was no mortgage financing revenue for the
year ended May 31,  1998.  Loan fees are  recognized  as income when the loan is
closed and funded at the close of escrow.

Home warranty  sales  decreased from $261,552 for the year ended May 31, 1998 to
$228,353  for the year  ended May 31,  1999.  Although  the  number of  warranty
contracts  sold  increased  from 601 in 1998 to 712 in 1999, the average cost of
the contract  decreased,  resulting in lower home warranty  sales for 1999.  The
decrease in the average cost per contract was an effort to stay  competitive  in
the market while attempting to generate higher volume.

     GROSS PROFIT PERCENTAGE.  Gross profit percentage  decreased from 59.0% for
the year  ended May 31,  1998 to 32.8% for the year  ended  May 31,  1999.  This
decrease is primarily  due to higher real estate  commissions  earned and higher
real  estate  commissions  paid to  brokers  and  agents  in 1999.  Real  estate
commissions  paid to brokers are  approximately  95% of real estate  commissions
earned,  and the higher the real estate  commissions earned are, as a percentage
of total sales, the lower the gross profit percentage.

     DIRECT COSTS.  Direct costs for the year ended May 31, 1999 was  $2,791,997
compared  to  $805,542  for the  year  ended  May 31,  1998.  This  increase  of
$1,986,455 was primarily due to the increase in sales commissions paid to agents
of HomeLife  Builders  Realty,  as a result of higher  real  estate  commissions
generated.

                                       11
<PAGE>

     SALARIES AND FRINGE  BENEFITS.  Salaries  and fringe  benefits for the year
ended May 31, 1999 were $641,981 compared to $479,165 for the year ended May 31,
1998.  This increase of $162,816 was primarily the result of paying  salaries to
employees of Builders  Realty,  (Calgary) Ltd., for a full year in 1999,  versus
paying salaries for a partial year in 1998.

     GENERAL AND ADMINISTRATIVE.  General and administrative  costs for the year
ended May 31, 1999 were  $1,158,249  versus  $477,393 for the year ended May 31,
1998.  This  increase of $680,856 was primarily due to an increase in the use of
outside consultants,  an increase in computer expenses, a write down of $150,498
of a note receivable.

     OCCUPANCY  COSTS.  Occupancy  costs  for the year  ended  May 31,  1999 was
$166,263  compared to $108,559 for the year ended May 31, 1998. This increase of
$57,704  was  primarily  the result of rent paid for a full year in 1999  versus
paying rent for a partial year in 1998 for Builders Realty, (Calgary) Ltd .

     FINANCIAL.  Financial  costs for the year ended May 31, 1999 were  $103,923
compared to $67,806 for the year ended May 31, 1998. The increase in fiscal year
1999  mainly  relates  to a write  down of  approximately  $103,000  related  to
promotional marketing materials.

     AMORTIZATION.  Amortization  of intangibles for the year ended May 31, 1999
was $241,214 compared to $194,112 for the year ended May 31, 1998. This increase
of $47,102 was primarily  the result of  amortizing  the cost of the purchase of
Builders  Realty,  (Calgary) Ltd. for a full year in 1999 versus  amortizing the
cost for a partial  year in 1998 and  changing  the  estimate  of the  remaining
useful life of all trademarks and franchise rights from 20 years to 10 years.

     MINORITY INTEREST. The reduction in net income due to minority interest was
$7,498 for the year ended May 31, 1999 versus  $9,177 for the year ended May 31,
1998. This decrease of $1,679 was due to lower revenues for The Keim Group Ltd.,
partially offset by higher revenues from MaxAmerica Home Warranty Company.

     PREFERRED  DIVIDENDS.  Preferred  dividends were $3,120 in fiscal year 1999
versus  $13,000  for fiscal  year 1998.  This  decrease of $9,880 was due to the
conversion of Preferred stock into Common stock.

                                       12
<PAGE>

                           PART II - OTHER INFORMATION

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

     The Financial  Statements that constitute Item 7 are included at the end of
this report beginning on Page F-1.

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

     HomeLife,  engaged the accounting firm of Schwartz  Levitsky Feldman llp as
its accountant in May 1999. We had no previous  relationship with the accounting
firm, and did not consult with them in any manner. The previous  accounting firm
was  Biller,  Frith-Smith  &  Archibald.  The  change  in  accounting  firms was
primarily due to the illness, and incapacitation of a partner at the predecessor
firm. The accountant's report of the past two years contained no adverse opinion
or disclaimer  of opinion.  The decision to change  accountants  was made by the
management  of the  Company,  and  approved  by the  Board of  Directors  of the
Company.  There was no  disagreement  with the former  accountant  on accounting
principles or practices or auditing scope or procedure.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
--------------------------------------------------------------------------------
WITH SECTION 16(A) OF THE EXCHANGE ACT
--------------------------------------

     The directors and officers of the company are as follows:

NAME                      AGE       POSITION
----                      ---       --------

Andrew Cimerman           52        President and Director

Terry A. Lyles, Ph.D.     41        Director

F. Bryson Farrill         72        Director

Charles Goodson           45        Vice President

Marie May                 33        Chief Financial Officer and Secretary

ANDREW CIMERMAN,  52, PRESIDENT AND DIRECTOR, has held the positions of Director
and President  since April 1996. For 7 years prior  thereto,  he was the founder
and  majority  shareholder  of HomeLife  Securities,  Inc.  and its wholly owned
subsidiary HomeLife Realty Services, Inc. Mr. Cimerman is the founder, President
and  majority   shareholder  of:  Simcoe  Fox  Developments,   Ltd.,  a  private
development company located in Toronto,  Ontario, Canada; HomeLife Cimerman Real
Estate Ltd., a Toronto based real estate  company;  Jerome's Magic World,  Inc.,
the  owner  of  certain  animated  characters;  and,  majority  shareholder  and
President of Realty  World  America,  Inc. Mr.  Cimerman  owns  HomeLife  Realty
Services  Inc.,  a Canadian  affiliate  which  operates a real estate  franchise
company in Canada. HomeLife Securities is a separate company from HomeLife, Inc.
and HomeLife Securities licenses certain "HomeLife" trademarks and service marks
to  HomeLife,  Inc.  Mr.  Cimerman  brings over 30 years of real estate  service
experience to the company,  and is a strong and committed  leader focused on the
growth and success of the company.

TERRY A. LYLES,  PH.D, 41,  DIRECTOR  joined the company as a director in August
1997.  Dr.  Lyles  is a  national  and  international  speaker  and  trainer  to
professional athletes, Fortune 500 Companies,  schools,  universities and public
audiences.  Dr.  Lyles'  program  is to reach  people  around the world with the
message  of  "balance  and  excellence."  For the past 16 years,  Dr.  Lyles has
traveled  across the United States and around the world  conveying this profound
message of "Life  Accountability"  and "A Better You." Dr. Lyles has conducted a
weekly radio program "A Better You" since May 1, 1994,  which is currently heard
by over 1  million  people  in 65  nations.  Dr.  Lyles  holds a Ph.D  degree in
Psychology from Wayne State University in Detroit, Michigan.

F. BRYSON  FARRILL,  72,  DIRECTOR  joined the company as a director in February
1997. Mr. Farrill has been in the securities industry for the past 33 years. Mr.
Farrill has held various  senior  positions,  including  that of  President  and
Chairman of McLeod, Young, Weir International,  an investment dealer in Toronto,
Canada.  He was also the Chairman of Scotia  McLeod (USA) Inc. for eleven years.
Mr.  Farrill's  broad  experience  is not only utilized in the United States and
Canada but has served to direct the expansion of McLeod,  Young,  Weir Ltd. into
Europe and Asia through an extensive network of branch offices.

                                       13
<PAGE>

CHARLES  GOODSON,  45, VICE  PRESIDENT has been employed by the company,  or its
subsidiary  companies  since March 1992.  Mr. Goodson had 16 years of commercial
banking  experience prior to joining HomeLife Realty Services.  He is a licensed
realtor.  Mr. Goodson  earned his B.S.  degree in Business  Administration  from
California State University, Northridge.

MARIE M. MAY,  33,  CHIEF  FINANCIAL  OFFICER  AND  SECRETARY  has been with the
company since July 2000. Ms. May has 11 years experience in finance & accounting
mainly related to small emerging  businesses.  Prior to joining HomeLife Ms. May
was Chief Financial Officer for Medical Data  International,  Inc, a provider of
healthcare  business  information.  Ms. May is a certified public accountant and
received her B.S. degree in Accounting from Pepperdine University in 1989.

(B)  COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers  and  directors,  and  persons  who own more  than ten  percent  of the
Company's  Common  Stock,  to file reports of ownership and changes in ownership
with the Securities and Exchange  Commission  ("SEC").  Officers,  directors and
greater than ten percent stockholders are required by SEC regulations to furnish
the Company  with copies of all Section  16(a) forms they file.  Based solely on
its  review  of  the  copies  of  such   forms   received   by  it,  or  written
representations from certain reporting persons, the Company believes that during
its 2000 fiscal year, all such filing  requirements  applicable to its officers,
directors, and greater than 10% beneficial owners were complied with.

                                       14
<PAGE>

ITEM 10 - EXECUTIVE COMPENSATION
--------------------------------

     (A)  SUMMARY OF COMPENSATION

     The following  officers of the Company  receive the  following  annual cash
salaries and other compensation:

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                            Annual Compensation                       Long Term Compensation
                            -------------------                       ----------------------
                                                                      Awards                   Payouts
                                                                      ------                   -------
                                                           Other
Name                                                       Annual     Restricted
and                                                        Compen-    Stock        Options     LTIP       All Other
Principal Position          Year      Salary      Bonus    sation     Awards       SARs        Payouts    Compensation
----------------------------------------------------------------------------------------------------------------------
<S>                         <C>       <C>           <C>       <C>        <C>          <C>         <C>        <C>
Andrew Cimerman,            2000      $20,000       -         -          -            -           -             -
President, Director

Charles Goodson Vice        2000      $84,000       -         -          -            -           -             -
President

Marie M. May, Chief         2000      $30,000       -         -          -            -           -             -
Financial Officer,
Secretary

F. Bryson Farrill,          2000        *(1)        -         -          -            -           -           4,000
Director

Terry A. Lyles, Director    2000        *(1)        -         -          -            -           -           4,000

All Officers and            2000      $134,000      -         -          -            -           -           8,000
Directors as a group
----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Mr. Farrill and Mr. Lyles each have an option to purchase  50,000 shares of
     the  company's  common  stock.  These  options are fully  vested and may be
     exercised at the price of $3.00 per share.

     (B)  OPTIONS/SAR GRANTS IN THE LAST FISCAL YEAR

          None.

                                       15
<PAGE>

     (C)  AGGREGATE OPTIONS/SAR GRANTS

     While the  company  has not  enacted  a formal  stock  option  plan for its
directors and senior  executives,  the company has granted certain directors and
officers  options to purchase  common stock of the  company.  Board of Directors
members,  Mr. F. Bryson  Farrill and Dr.  Terry Lyles,  were granted  options to
purchase  50,000 shares of common stock of the company each.  The exercise price
of  the  option  is  $3.00  per  share.  These  options  are  fully  vested  and
exercisable.  Former  employee,  Gabrielle  Jeans, has been granted an option to
purchase 30,000 shares of common stock at the exercise price of $5.00 per share.
Ms. Jeans' options are also fully vested and exercisable.

     The following table describes the above options:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
                                        Shares           Value       Number of Unexercised       Value of Unexercised In-the-money
Name                                  Acquired On      Realized    Options/sars of Fy-end (#)        Options/sars of Fy-end ($)
                                      Exercise (#)        ($)      Exercisable/unexercisable         Exercisable/unexercisable
----------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                 <C>              <C>                                 <C>
F. Bryson Farrill, Director             50,000             0                 50,000                             $3.00
----------------------------------------------------------------------------------------------------------------------------------
Terry Lyles, Ph.D., Director            50,000             0                 50,000                             $3.00
----------------------------------------------------------------------------------------------------------------------------------
Gabrielle Jeans, Former employee        30,000             0                 30,000                             $5.00
----------------------------------------------------------------------------------------------------------------------------------
Total                                  130,000             0                130,000                                --
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     (D)  LONG TERM INCENTIVE PLAN (LTIP)

     None.

     (E)  COMPENSATION OF DIRECTORS

     During the current fiscal year, F. Bryson Farrill,  and Terry Lyles, Ph.D.,
both directors,  were each issued 10,000 shares of the Company's common stock as
compensation  for their  services.  These  shares were issued at the fair market
value,  which amounted to $.40 per share for a total of $4,000  compensation  to
each director.

     (F)  EMPLOYMENT AGREEMENTS

     On October 25, 1995 the Company  entered in an  employment  agreement  with
Andrew Cimerman.  The agreement is for a five year term, with an option to renew
it for another five years.  Mr.  Cimerman's  duties under the agreement  include
performing  all those  executive  and  managerial  duties that are necessary for
running and directing the Company's operations.

     (G)  REPORT ON RE-PRICING OF STOCK OPTIONS/SARS

     Over the  last  fiscal  year,  the  Company  has not  re-priced  any of its
previously granted stock options/SARs.

                                       16
<PAGE>

ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
------------------------------------------------------------------------

     The following  table sets forth certain  information  regarding  beneficial
ownership of the Company's Common Stock as of May 31, 2000: (i) each stockholder
known by the Company to be the beneficial owner of more than five percent of the
outstanding  Common  Stock,  (ii) each  director  of the  Company  and (iii) all
directors and officers as a group.

NAME AND ADDRESS                AMOUNT AND NATURE               PERCENT OF CLASS
OF BENEFICIAL OWNER             OF BENEFICIAL OWNER(1)

Andrew Cimerman(2)                    2,949,594(3)                      52%
Marie M. May(2)                               0                          0
Charles Goodson(2)                            0                          0
F. Bryson Farrill(2)                     60,000(4)                       1%
Terry Lyles(2)                           60,000(4)                       1%

All Officers and
Directors as a group                  3,069,594                         54%

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

1.   Except as otherwise  indicated,  the Company  believes that the  beneficial
     owners of Common Stock listed above, based on information furnished by such
     owners,  have sole investment and voting power with respect to such shares,
     subject to community property laws where applicable.  Beneficial  ownership
     is determined in accordance  with the rules of the  Securities and Exchange
     Commission and generally  includes voting or investment  power with respect
     to  securities.  Shares of Common  Stock  subject to  options  or  warrants
     currently   exercisable,   or  exercisable   within  60  days,  are  deemed
     outstanding  for purposes of computing the percentage of the person holding
     such options or warrants,  but are not deemed  outstanding  for purposes of
     computing the percentage of any other person.
2.   c/o Company's  address:  4100 Newport Place,  Suite 730,  Newport Beach, CA
     92660.
3.   249,594 of these  shares are held in the name of Cimerman  Real Estate Ltd.
     Cimerman Real Estate Ltd. was created as a Real Estate Sales  Company.  Mr.
     Cimerman  has  certain  voting  powers  associated  with the shares held by
     Cimerman Real Estate Ltd., as 100% of the financial  benefits  derived from
     the shares  held by Cimerman  Real  Estate Ltd.  are for the benefit of Mr.
     Cimerman.
4.   Includes 50,000 options to purchase Common Stock

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

B.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Mr.  Cimerman is President and majority  shareholder  of HomeLife  Cimerman
Real Estate  Ltd.  HomeLife  Cimerman  Real Estate  Ltd.'s  business  activities
consist of real estate  sales in Toronto,  Canada.  The  activities  of HomeLife
Cimerman  Real  Estate  Ltd.  are  managed  by  the  on-site  management.  These
activities do not demand a large portion of Mr. Cimerman's time and effort.  Any
corporate  opportunities  that would be  available  to both the  Company  and to
HomeLife Cimerman Real Estate Ltd. is presented to HomeLife's Board of Directors
for consideration  and for approval by a disinterested  majority of the Board of
Directors.

     The President and majority  shareholder of the Company,  Andrew Cimerman is
the sole  shareholder  and President of Realty World America,  Inc. Realty World
America,   Inc.  is  a  real  estate  services  company  providing  services  to
franchises.  Any  transactions  undertaken  by Mr.  Cimerman on behalf of Realty
World  America,  Inc.  which may  constitute a corporate  opportunity  are first
presented to the company's  board of directors  for approval by a  disinterested
majority.

     Mr.  Cimerman is also the sole  shareholder of Jerome's Magic World,  Inc.,
the owner of certain  characters  licensed to the company.  The license of these
characters to the Company is for an eight year term expiring in October 2003, at
$10,000 per year to the Company. Thereafter it is renewable for additional eight
year terms at the fair  market  value.  Mr.  Cimerman  is sole  shareholder  and
President  of HomeLife  Securities,  Inc.  HomeLife  Securities,  Inc.  licenses
certain "HomeLife"  trademarks and service marks to the Company. The term of the
licensing  agreement  is eight years  commencing  October 1995 at no cost to the
Company. Thereafter, the license is renewable for additional eight year terms at
the fair market value.

     Mr.   Cimerman  is  President  and  majority   shareholder  of  Simcoe  Fox
Developments.  Simcoe Fox Developments'  business  activities consist of holding
real estate investment property.  The activities of Simcoe Fox Developments does
not demand a large portion of Mr. Cimerman's time and effort,  and any corporate
opportunities  that would be  available  to both the  company  and to Simcoe Fox
Developments is presented to HomeLife's Board of Directors for consideration and
for approval by a disinterested majority of the Board of Directors.

                                       17
<PAGE>

     The Company was formed  through the purchase of HomeLife  Realty  Services,
Inc., and HomeLife Realty U.S. Limited  Partnership  from Andrew  Cimerman,  the
current President of the Company. Mr. Cimerman received 10,000 shares of Class A
Preferred  stock with certain  voting power and with a face value of  $1,000,000
for the sale of HomeLife US Partnership to the Company,  and 2,500,000 shares of
Common stock for the sale of HomeLife Realty Services, Inc. to the Company.

                                       18
<PAGE>

                                     PART IV
                                     -------

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

     (A)  EXHIBITS

3.1    Articles of Incorporation of HomeLife, Inc., a Nevada corporation,  dated
       October 9, 1995*
3.2    Certificate of Amendment of Articles of Incorporation of HomeLife,  Inc.,
       a Nevada corporation, dated July 2, 1997*
3.3    Certificate of Amendment of Articles of Incorporation of HomeLife,  Inc.,
       a Nevada corporation, dated September 1, 1998*
3.4    Bylaws of HomeLife, Inc., dated October 10, 1995*
4.1    Certificate of Designated Class A Preferred Stock*
4.2    Certificate of Designated Class AA Preferred Stock*
10.1   Lease Agreement dated November 1, 1996 for the office located in Calgary,
       Alberta, Canada*
10.2   Lease  Agreement  dated  September  1,  1997 for the  office  located  in
       Airdrie, Alberta, Canada*
10.3   Lease  Agreement dated January 15, 1999 for the office located in Newport
       Beach, California*
10.4   Lease  Agreement  dated April 12, 1990 for the office  located in Newport
       Beach, California*
10.5   First Addendum to Lease dated April 12, 1990 for the property  located in
       Newport Beach, California*
10.6   Second  Addendum to Lease dated July 8, 1993 for the property  located in
       Newport Beach, California*
10.7   Third  Addendum to Lease dated July 17,1996 for the  property  located in
       Newport Beach, California*
10.8   Builder's Realty Stock Purchase Agreement dated February 27, 1998*
10.9   Agreement for Purchase of Network Real Estate,  Inc. Licensing  Agreement
       and Trademarks, dated June 12, 1998*
10.10  Stock Purchase Agreement, dated July 23, 1998*
10.11  Asset Purchase Agreement, dated January 16, 1997*
10.12  Option Agreement, dated July 10, 1996*
10.13  Asset Purchase Agreement, dated April 13, 1998*
10.14  Loan Purchase Agreement, dated July 7, 1998*
10.15  Agreement and Plan of Acquisition, dated April 15, 1996*
10.16  Agreement and Plan of Acquisition, dated April 15, 1996*
10.18  Form of Participating Independent Broker Franchise Agreement*
10.19  Form of Broker Membership Agreement*
10.20  Stock Purchase Agreement, dated September 10, 1998*
10.21  Employment Agreement between HomeLife, Inc. and Andrew Cimerman*
10.22  Trademark License  Agreement  between  HomeLife,  Inc. and Jerome's Magic
       World, Inc.*
10.23  HomeLife  Higher  Standards Asset Purchase  Agreement,  dated January 20,
       1999*
10.24  Acquisition Agreement between Bright Financial Corporation and MaxAmerica
       Financial Services, Inc.*
21     List of Subsidiaries*

---------------------------
*Incorporated  by reference from  Registration  Statement on Form 10-SB filed by
the Company on November 2, 1999.

     (B)  REPORTS ON FORM 8-K

     The Company has not filed any Form 8-K Report over the last fiscal year.

                                       19
<PAGE>

                                   SIGNATURES

     In accordance  with Section 13 or 15(d) of the  Securities  Exchange Act of
1934, as amended (the "Exchange  Act") the  Registrant  caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

HOMELIFE, INC.
Registrant

By: /s/ Andrew Cimerman                         Date:  September 8, 2000
    -----------------------------                      -----------------
    Chief Executive Officer,
    President, Director

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


By: /s/ Andrew Cimerman                         Date:  September 8, 2000
    -----------------------------                      -----------------
    Chief Executive Officer,
    President, Director

                                       20
<PAGE>

                                 HOMELIFE, INC.

                        CONSOLIDATED FINANCIAL STATEMENTS

                       AS OF MAY 31, 2000 AND MAY 31, 1999

                  TOGETHER WITH REPORT OF INDEPENDENT AUDITORS

<PAGE>

                                 HOMELIFE, INC.

                        CONSOLIDATED FINANCIAL STATEMENTS

                       AS OF MAY 31, 2000 AND MAY 31, 1999

                  TOGETHER WITH REPORT OF INDEPENDENT AUDITORS


                                TABLE OF CONTENTS


Report of Independent Auditors                                                 1

Consolidated Balance Sheets                                                    2

Consolidated Statements of Operations                                          3

Consolidated Statements of Cash Flows                                          4

Consolidated Statements of Stockholders' Equity                                5

Notes to Consolidated financial statements                                6 - 27

<PAGE>

SCHWARTZ LEVITSKY FELDMAN LLP
CHARTERED ACCOUNTANTS
TORONTO, MONTREAL, OTTAWA

                         REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of
Homelife, Inc.

We have audited the accompanying  consolidated balance sheets of Homelife,  Inc.
(incorporated  in  Nevada)  as  of  May  31,  2000  and  1999  and  the  related
consolidated  statements of operations,  cash flows and changes in stockholders'
equity  for  each  of the  years  then  ended  May  31,  2000  and  1999.  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  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  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  consolidated  financial  position  of
Homelife,  Inc. as of May 31, 2000 and 1999 and the consolidated  results of its
operations  and its cash flows for each of the years then ended,  in  conformity
with generally accepted accounting principles in the United States of America.


Toronto, Ontario                                   Schwartz Levitsky Feldman llp
August 4, 2000                                             Chartered Accountants


     | 1167 Caledonia Road
     | Toronto, Ontario M6A 2X1
     | Tel: 416 785 5353
     | Fax: 416 785 5663

<PAGE>

HOMELIFE, INC.
Consolidated Balance Sheets
As at May 31, 2000 and 1999
(Amounts expressed in U.S. dollars)
                                                          2000            1999
                                                            $               $
ASSETS
CURRENT ASSETS

   Cash                                                  248,064         327,637
   Marketable securities, at fair value                   20,625         194,875
   Accounts receivable (note 3)                          116,700         168,033
   Notes receivable (note 4)                             176,000         215,803
   Prepaid expenses and deposits (note 5)                 50,638          78,159
                                                     ---------------------------
                                                         612,027         984,507

PROPERTY AND EQUIPMENT (note 6)                          414,679         480,993

GOODWILL (note 7)                                        643,790         661,273

OTHER ASSETS (note 8)                                    372,630         666,203

CASH HELD IN TRUST (note 9)                              249,817         342,317
                                                     ---------------------------

                                                       2,292,943       3,135,293
                                                     ===========================

<PAGE>

HOMELIFE, INC.
Consolidated Balance Sheets
As at May 31, 2000 and 1999
(Amounts expressed in U.S. dollars)
                                                          2000            1999

                                                            $               $
LIABILITIES
CURRENT LIABILITIES

Bank indebtedness (note 10)                              14,000          16,960
Accounts payable (note 11)                              346,597         459,662
Advances from a stockholder (note 12)                        -          143,472
Note payable                                                 -           10,000
Reserve for warranty                                     58,461          51,500
Dividends payable                                         5,770           4,170
Deferred revenue                                        202,149         197,080
                                                    ---------------------------
                                                        626,977         882,844
                                                    ---------------------------

DEFERRED REVENUE                                        154,119         206,149

TRUST LIABILITY (note 9)                                249,817         342,317

MINORITY INTEREST                                        31,916          43,378
                                                    ---------------------------
                                                      1,062,829       1,474,688
                                                    ---------------------------

STOCKHOLDERS' EQUITY

CAPITAL STOCK (note 13)                               1,036,629       1,043,288

ADDITIONAL PAID IN CAPITAL (note 13)                  3,182,304       2,846,093

ACCUMULATED OTHER COMPREHENSIVE
   INCOME (LOSS)(note 16)                                   277          (1,093)

DEFICIT                                              (2,989,096)     (2,227,683)
                                                    ---------------------------

                                                      1,230,114       1,660,605
                                                    ---------------------------

                                                      2,292,943       3,135,293
                                                    ===========================

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                                                               2
<PAGE>

HOMELIFE, INC.
Consolidated Statements of Operations
For the years ended May 31, 2000, 1999 and 1998
(Amounts expressed in U.S. dollars)

                                        2000            1999            1998
                                          $               $               $
REVENUE

Royalty and franchise fees              791,493         782,174         914,946
Warranty fees                           255,522         228,353         261,552
Mortgage financing fees                  90,520         199,451              -
Real estate brokerage                 2,036,892       2,632,251         647,279
Other income                            276,491         311,896         144,851
                                     ------------------------------------------
                                      3,450,918       4,154,125       1,968,628

DIRECT COSTS                          2,127,237       2,791,997         805,542
                                     ------------------------------------------
                                      1,323,681       1,362,128       1,163,086
                                     ------------------------------------------
EXPENSES

Salaries and fringe benefits            637,455         641,981         479,165
General and administrative              894,568       1,158,249         477,393
Occupancy                               175,881         166,263         108,559
Financial                                57,268         103,923          67,806
Amortization                            328,864         241,214         194,112
                                     ------------------------------------------
                                      2,094,036       2,311,630       1,327,035
                                     ------------------------------------------

LOSS BEFORE MINORITY INTEREST          (770,355)       (949,502)       (163,949)

Minority interest                        11,462          (7,498)         (9,177)
                                     ------------------------------------------

LOSS BEFORE INCOME TAXES               (758,893)       (957,000)       (173,126)

Income taxes (note 14)                       -               -               -
                                     ------------------------------------------

NET LOSS                               (758,893)       (957,000)       (173,126)

Preferred dividends                      (2,520)         (3,120)        (13,000)
                                     ------------------------------------------

NET LOSS APPLICABLE TO COMMON
   SHARES                              (761,413)       (960,120)       (186,126)
                                     ==========================================
BASIC AND FULLY DILUTED LOSS
   PER COMMON SHARE                       (0.15)          (0.23)          (0.05)
                                     ==========================================
WEIGHTED-AVERAGE NUMBER
     OF COMMON SHARES                 4,940,155       4,255,557       3,944,707
                                     ==========================================

                                                                               3
<PAGE>

HOMELIFE, INC.
Consolidated Statements of Cash Flows
For the years ended May 31, 2000, 1999 and 1998
(Amounts expressed in U.S. dollars)
<TABLE>
<CAPTION>
                                                               2000         1999        1998
                                                                 $            $            $
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                          <C>          <C>          <C>
Net loss                                                     (758,893)    (957,000)    (173,126)
Adjustments to reconcile net loss to net cash provided
    by (used in) used in operating activities
Depreciation and amortization                                 328,864      241,214      194,112
Minority interest                                             (11,462)       7,498        9,177
Loss on trading securities                                     90,731      103,125           --
Stock based compensation                                           --       38,500       79,341
Changes in reserve for warranty                                 6,961        7,600      (10,100)
Decrease in accounts receivable                                51,333       63,677      395,449
(Increase) decrease in notes receivable                        39,803      235,357     (711,160)
(Increase) decrease in prepaid expenses                        27,521      212,722     (172,023)
Increase (decrease) in accounts payable                      (113,065)     234,994       59,080
(Increase) decrease in deferred revenue                       (46,961)        (932)     246,770
                                                           ------------------------------------
                                                             (385,168)     186,755      (82,480)
                                                           ------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment                           (10,162)     (44,088)     (14,702)
Sale of marketable securities                                  83,519           --           --
Acquisition of goodwill                                            --           --     (158,040)
Acquisition of trademarks                                          --      (42,061)          --
                                                           ------------------------------------
                                                               73,357      (86,149)    (172,742)
                                                           ------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash provided by (required for) bank indebtedness              (2,960)      16,960       (4,478)
Cash required for notes payable                               (10,000)          --       (9,792)
Cash (required for) provided by advances from stockholder    (143,472)     (24,904)     180,332
Cash provided by issuance of capital stock                    388,220       22,275       82,500
Cash required for dividends                                      (920)      (9,930)      (2,020)
                                                           ------------------------------------
                                                              230,868        4,401      246,542
                                                           ------------------------------------
EFFECT OF FOREIGN CURRENCY
     EXCHANGE RATE CHANGES                                      1,370       (1,093)          --
                                                           ------------------------------------

NET INCREASE (DECREASE) IN CASH                               (79,573)     103,914       (8,680)
Cash, beginning of year                                       327,637      223,723      232,403
                                                           ------------------------------------

CASH, END OF YEAR                                             248,064      327,637      223,723
                                                           ------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH
    FLOW INFORMATION
Interest paid                                                   2,387          254        3,004
                                                           ====================================

Income taxes paid                                              16,000           --        5,089
                                                           ====================================
</TABLE>

                                                                               4
<PAGE>

HOMELIFE, INC.
Consolidated Statements of Stockholders Equity
For the years ended May 31, 2000, 1999 and 1998
(Amounts expressed in U.S. dollars)

<TABLE>
<CAPTION>
                                                                Class A              Class AA
                                           Common Stock   Preference Stock-6%  Preferred Stock-8%  Paid in  Accumulated  Cumulative
                                         Shares    Amount  Shares    Amount     Shares    Amount   Capital     Deficit   translation
                                                      $                 $                    $        $           $           $
<S>                                     <C>         <C>    <C>      <C>          <C>    <C>       <C>        <C>           <C>
BALANCE, MAY 31, 1997                   3,920,785   3,920  10,000   1,000,000      --         --  2,424,804  (1,081,437)       --

Issuance of common stock (note 13)        576,690      61      --          --      --         --    207,321          --        --
Issuance of preferred stock (note 13)          --      --      --          --     325    162,500         --          --        --
Compensation and licensing arrangement         --      --      --          --      --         --     30,000          --        --
Net loss applicable to common shares           --      --      --          --      --         --         --    (186,126)       --
                                        --------------------------------------------------------------------------------------------
BALANCE, MAY 31, 1998                   4,497,475   3,981  10,000   1,000,000     325    162,500  2,662,125  (1,267,563)       --

Issuance of common stock (note 13)         66,750      67      --          --      --         --     30,708          --        --
Compensation and licensing
  arrangement                                  --      --      --          --      --         --     30,000          --        --
Conversion of preferred stock
  to common stock (note 13)               239,707     240      --          --    (247)   123,260         --          --
Foreign currency translation                   --      --      --          --      --         --         --          --    (1,093)
Net loss applicable to common shares           --      --      --          --      --         --         --    (960,120)       --
                                        --------------------------------------------------------------------------------------------
BALANCE, MAY 31, 1999                   4,803,932   4,288  10,000   1,000,000      78     39,000  2,846,093  (2,227,683)   (1,093)

Issuance of common stock (note 13)        820,756     828      --          --      --         --    298,724          --        --
Compensation and licensing arrangement         --      --      --          --      --         --     30,000          --        --
Conversion of preferred stock to
  common stock (note 13)                   12,670      13      --          --     (15)    (7,500)     7,487          --        --
Foreign currency translation                   --      --      --          --      --         --         --          --     1,370
Net loss applicable to common shares           --      --      --          --      --         --         --    (761,413)       --
                                        --------------------------------------------------------------------------------------------
BALANCE, MAY 31, 2000                   5,637,358   5,129  10,000   1,000,000      63     31,500  3,182,304  (2,989,096)      277
                                        ============================================================================================
</TABLE>

                                                                               5
<PAGE>

HOMELIFE, INC.
Notes to Consolidated financial statements
May 31, 2000
(Amounts expressed in U.S. dollars)

1.   BASIS OF CONSOLIDATED FINANCIAL STATEMENTS PRESENTATION

     These consolidated  financial  statements  consolidate,  using the purchase
     method, the accounts of the company and its subsidiaries listed below:

     a)   Wholly-owned subsidiaries

          HomeLife Realty Services,  Inc.,  FamilyLife  Realty  Services,  Inc.,
          MaxAmerica Financial Services,  Inc., Red Carpet Broker Network, Inc.,
          National Sellers  Network,  Inc.,  Homelife  Builders Realty (Calgary)
          Ltd, Aspen Benson & May Investment Bankers LLC.,  Homelife  California
          Realty, Inc. and Homelife Properties, Inc.

     b)   Majority-owned subsidiaries

          The Keim Group Ltd.  ("Keim") and  MaxAmerica  Home  Warranty  Company
          ("MaxAmerica") - 93 1/3% and 82.72% respectively.

          On  consolidation,   all  material  intercompany  accounts  have  been
          eliminated.  Consolidation  commenced  with  the  effective  dates  of
          acquisition of the  operations of the  subsidiary  companies and these
          consolidated financial statements include the financial results of the
          subsidiaries to May 31, 2000, 1999 and 1998.

          Business  acquisitions  by the  company  since  June 1,  1997  were as
          follows:

          a)   Effective  on August 20,  1997,  the  company  acquired  the real
               estate  operations,   including  the  licencing   agreements  and
               trademarks,  of Network Real Estate,  Inc., a real estate broker,
               for $100,000 as follows:

               Cash                                                $     10,000
               Note payable, 8%, due October 25, 1997                    10,000
               160 Class AA convertible, redeemable preferred
                  shares of the company carrying 8% cumulative
                  dividend; convertible after 12 months from
                  date of issue (see note 13)                            80,000
                                                                   ------------
                                                                        100,000

               Less:  146,667 common shares submitted for
                  cancellation on October 1, 1999 totaling
                  $58,667.  Accordingly trademarks recorded
                  were reduced by $58,667 (see note 13 and 15)          (58,667)
                                                                   ------------
                                                                   $     41,333
                                                                   ============

               The company had the option of buying back the Class AA  Preferred
               shares  at $5 per  share  prior to  August  20,  1998 but did not
               exercise the option.

               The assets  acquired  were  recorded  as  trademarks  and will be
               amortized over 10 years on a straight-line basis

                                                                               6
<PAGE>

HOMELIFE, INC.
Notes to Consolidated financial statements
May 31, 2000
(Amounts expressed in U.S. dollars)

1.   BASIS OF CONSOLIDATED FINANCIAL STATEMENTS PRESENTATION (cont'd)

     b)   On February  27,  1998,  the  company  acquired  all issued  shares of
          Builders  Realty  (Calgary)  Ltd., a Canadian real estate broker,  for
          $316,080 as follows:

          Cash                                                     $    158,040
          36,000 Common shares of the company                           158,040
                                                                   ------------
                                                                   $    316,080
                                                                   ============

          The company agreed to issue  additional  common shares to stockholders
          should  the  market  price per  common  share be less than $5 after 12
          months from date of issue,  so that the market  value of total  common
          shares issued for this  acquisition  would be $158,040.  (see notes 13
          and 15)

          The assets acquired were recorded as follows:

          Net tangible current assets                              $     25,900
          Goodwill                                                      290,180
                                                                   ------------
                                                                   $    316,080
                                                                   ============

          The goodwill will be amortized over 40 years on a  straight-line  line
          basis.

     c)   On September 15, 1998, the company  purchased all the issued shares of
          an inactive holding company,  Aspen Benson and May Investment  Bankers
          LLC.,  for  common  stock in the  amount  of  $77,500  to be issued in
          January 2000. At the time of purchase, Aspen Benson and May Investment
          Bankers LLC. had negligible assets and revenue.

          Effectively,  the acquisition  allowed the company to pay the vendor a
          salary of $77,500 from  September 10, 1998 to December 31, 1999 by the
          issuance of the company's common stock.

          The company has  recorded a salary  expense of $45,000 in May 31, 1999
          and  $32,500  in  May  31,  2000,  with  the  corresponding  liability
          satisfied by the issuance of common stock in January 2000.

          The  number of common  shares  to be issued  was based on the  average
          month end stock price for the company for  September  1998 to December
          1999.

     d)   On January 20, 1999, Builders Realty (Calgary) Ltd. purchased the real
          estate  brokerage   business   including   licensing   agreements  and
          trademarks of HomeLife Higher Standards,  a franchise owned by a party
          unrelated to the company,  operating in Calgary,  Alberta, Canada, for
          $42,061  cash in fourteen  monthly  instalments  of $2,714 and a final
          payment of $4,065.

          The assets acquired were recorded as follows:

          Trademarks                                               $     42,061
                                                                   ============

          These  trademarks  will be amortized over 10 years on a  straight-line
          basis.

                                                                               7
<PAGE>

HOMELIFE, INC.
Notes to Consolidated financial statements
May 31, 2000
(Amounts expressed in U.S. dollars)

1.   BASIS OF CONSOLIDATED FINANCIAL STATEMENTS PRESENTATION (cont'd)

     e)   During the fiscal year May 31, 1998, the company acquired,  by cash of
          $5,000 in total,  all  issued  shares of  several  newly  incorporated
          companies.  These new companies include MaxAmerica Financial Services,
          Inc. which will be originating real estate loans,  Homelife California
          Realty,  Inc.  which will be a full  service  real  estate  operation,
          Homelife Properties,  Inc. which will be a real estate holding company
          and Red Carpet  Broker  Network,  Inc. and National  Sellers  Network,
          Inc., which will be licensing real estate brokerages

          Business  acquisitions  by the  company  prior to June 1, 1997 were as
          follows:

          a)   Prior to June 1, 1997, the company acquired the following:

               The net  assets of  Homelife  U. S.  Partnership,  a real  estate
               operation, for $1,000,000.

               All the issued shares of Homelife Realty  Services,  Inc., a real
               estate operation, for $250,000.

               93 1/3% and 82.72%  respectively  of the issued  common shares of
               The  Keim  Group,   Ltd.  and  Guardian  Home  Warranty   Company
               (subsequently  re-named  MaxAmerica Home Warranty Company),  real
               estate and home warranty operations, for $766,250.

               The  net  assets  of  S &  S  Acquisition  Corp.  a  real  estate
               operation, for $400,000.

               All the issued  shares of  Familylife  Realty  Services,  Inc., a
               newly  incorporated  company to engage in real estate operations,
               for $1,000.

               Homelife U.S.  Partnership and Homelife Realty Services Inc. were
               entities  owned  by a  company  controlled  by the  president  of
               Homelife,  Inc.  The  assets  acquired  below  are  reflected  at
               historical   cost  and  no  goodwill   was   reflected  on  these
               acquisitions.

          b)   The combined assets acquired were as follows:

               Current assets                                      $    162,000
               Note receivable                                          494,899
               Prepaid printed advertising materials                    320,000
               Property and equipment                                   369,696
               Goodwill                                                 409,142
               Trademarks and franchise rights                          661,513
                                                                   ------------
                                                                   $  2,417,250
                                                                   ============

               The combined consideration given was as follows:

               Cash                                                $    583,893
               10,000 Class A Preferred shares - par value of $100    1,000,000
               2,616,662 Common shares -
                  - par value of $0.001                                   2,617
                  - paid in capital                                     830,740
               Warrant (see note 13)                                         --
                                                                   ------------
                                                                   $  2,417,250
                                                                   ============

                                                                               8
<PAGE>

HOMELIFE, INC.
Notes to Consolidated financial statements
May 31, 2000
(Amounts expressed in U.S. dollars)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     i)   Principal Activities

          HomeLife, Inc. together with its subsidiaries is a leading provider of
          services to the real estate and mortgage loan industries.  The company
          engages in the following activities:

          The company  franchises full service real estate brokerage offices and
          provides  operational and  administrative  services to its franchisees
          under the  names,  HomeLife  Realty  Services,  National  Real  Estate
          Service,  Red Carpet Real Estate  Services,  Red Carpet Keim,  Network
          Real Estate and International Estates Inc.

          The  company is a mortgage  financing  services  provider  through its
          subsidiary, MaxAmerica Financial Services, Inc.

          The  company  owns and  operates a full  service  retail  real  estate
          brokerage through its subsidiary, Builders Realty (Calgary) Ltd.

          The  company is a  provider  of home  warranty  coverage  through  its
          subsidiary, Guardian Home Warranty Company.

     ii)  Significant Group Concentrations of Credit Risk

          The company's  accounts  receivable and notes receivable are primarily
          from franchisees in the real estate brokerage industry.

     iii) Cash and Cash Equivalents

          Cash and cash equivalents  include cash on hand,  amounts due to banks
          and any other highly liquid  investments  purchased with a maturity of
          three months or less.  The  carrying  amount  approximates  fair value
          because of the short maturity of those instruments.

     iv)  Marketable Securities

          Marketable  securities  represent  trading  securities which have been
          reflected at their fair market value at the year end.

     v)   Other Financial Instruments

          The  carrying  amount of the  company's  other  financial  instruments
          approximates  fair  value  because  of the  short  maturity  of  these
          instruments  or the current  nature of  interest  rates borne by these
          instruments.

     vi)  Long-term Financial Instruments

          The fair value of each of the company's long-term financial assets and
          debt  instruments  is  based  on  the  amount  of  future  cash  flows
          associated with each instrument  discounted  using an estimate of what
          the  company's  current  borrowing  rate for  similar  instruments  of
          comparable maturity would be.

                                                                               9
<PAGE>

HOMELIFE, INC.
Notes to Consolidated financial statements
May 31, 2000
(Amounts expressed in U.S. dollars)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

     vii) Amortization of Property and Equipment

          Amortization   of  property  and  equipment  is  provided   using  the
          straight-line method as follows;

          Furniture and fixtures                    7 years
          Computer equipment and software           7 years
          Leasehold improvements                    7 years
          Automobile                                4 years

     viii) Goodwill

          Goodwill  is the  excess  of cost over the  value of  tangible  assets
          acquired. It is amortized on the straight-line basis over 40 years.

     ix)  Amortization of Other Assets

          Amortization  of other assets is on a  straight-line  basis over their
          estimated useful lives as follows:

          Trademarks and franchise rights          10 years (20 years in 1998)

     x)   Impairment

          The  company's  policy is to record an  impairment  loss  against  the
          balance of a long-lived asset in the period when it is determined that
          the  carrying  amount  of  the  asset  may  not be  recoverable.  This
          determination  is  based  on an  evaluation  of  such  factors  as the
          occurrence  of a  significant  event,  a  significant  change  in  the
          environment  in which the business  assets  operate or if the expected
          future  non-discounted cash flows of the business was determined to be
          less than the carrying value of the assets. If impairment is deemed to
          exist, the assets will be written down to fair value.  Management also
          evaluates  events  and  circumstances  to  determine  whether  revised
          estimates  of  useful  lives  are  warranted.  As  of  May  31,  2000,
          management expects its long-lived assets to be fully recoverable.

     xi)  Revenue Recognition

          Income from the sale of franchises is recognized over a 5-year period.
          Master  franchise  agreement fees are recognized over 10 years Royalty
          income stemming from the gross commissions on the sales of real estate
          by the franchise offices is recognized at the date of receipt; this is
          due to the  complexity of  attempting  to forecast the actual  closing
          date of the properties. Warranty income is recognized over the term of
          the contract which is usually 12 months; anticipated obligations which
          represent incurred but not reported losses (IBNR) under these warranty
          have been  recorded as reserve for warranty and are based on past loss
          experience. Real estate brokerage income is recognized at the close of
          escrow. Loan fees are recognized as income when the loan is closed and
          funded at the close of escrow.  Revenue  received or receivable,  from
          the sale of franchises, master franchises and warranties, which is not
          recognized  as income is  recorded  on the  balance  sheet as deferred
          revenue.

                                                                              10
<PAGE>

HOMELIFE, INC.
Notes to Consolidated financial statements
May 31, 2000
(Amounts expressed in U.S. dollars)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

     xii) Income taxes

          The company  accounts for income tax under the provisions of Statement
          of Financial  Accounting Standards No. 109, which requires recognition
          of deferred tax assets and  liabilities  for the  expected  future tax
          consequences  of events that have been  included  in the  consolidated
          financial  statements  or  tax  returns.  Deferred  income  taxes  are
          provided  using the  liability  method.  Under the  liability  method,
          deferred  income taxes are  recognized for all  significant  temporary
          differences  between the tax and financial  statement  bases of assets
          and  liabilities.  In addition,  the company is required to record all
          deferred tax assets,  including  future tax benefits of capital losses
          carried  forward,  and to  record  a  "valuation  allowance"  for  any
          deferred  tax assets  where it is more  likely than not that the asset
          will not be realized.

     xiii) Stock-Based Compensation

          In  December  1995,   SFAS  No.  123,   Accounting   for   Stock-Based
          Compensation,  was issued. It introduced the use of a fair value-based
          method of accounting for stock-based compensation.  It encourages, but
          does not  require,  companies to  recognize  compensation  expense for
          stock-based  compensation  to  employees  based on the new fair  value
          accounting  rules.  Companies  that  choose not to adopt the new rules
          will  continue to apply the  existing  accounting  rules  contained in
          Accounting  Principles  Board  Opinion  No. 25,  Accounting  for Stock
          Issued to Employees.  However,  SFAS No. 123 requires  companies  that
          choose not to adopt the new fair value  accounting  rules to  disclose
          pro forma net income and earnings per share under the new method. SFAS
          No. 123 is effective for consolidated  financial statements for fiscal
          years  beginning  after December 15, 1995. The company has adopted the
          disclosure  provisions  of SFAS  No.  123  for  employee  stock  based
          compensation.  Accordingly,  compensation  cost for  stock  option  is
          measured as the  excess,  if any,  of the quoted  market  price of the
          Company's  stock at the  measurement  date over he amount an  employee
          must pay to acquire  the  stock.  See note 13 (f) for a summary of the
          pro-forma  EPS  determined  as if the company had applied FAS No. 123.
          The company's stock option plan prior to 1997 which vested immediately
          and  therefore  there are no expense  amounts to be  reflected  in the
          current consolidated  financial  statements.  The company will use the
          fair value  approach for stock  option plan  granted to  non-employees
          according  to EITF  96-18.  There  were no stock  options  granted  to
          non-employees in fiscal years 2000 and 1999.

     xiv) Foreign Currency Translation

          Builders Realty (Calgary) Ltd., a wholly-owned  subsidiary,  maintains
          its books and records in Canadian dollars.  Balance sheet accounts are
          translated using closing exchange rates in affect at the balance sheet
          date and income and expenses  accounts are translated using an average
          exchange   rate   prevailing   during  each   reporting   period.   No
          representation  is made that the Canadian  dollar  amounts  could have
          been, or could be,  converted  into United States dollars at the rates
          on the  respective  dates or at any other certain  rates.  Adjustments
          resulting  from the  translation  are  included  in  foreign  currency
          translation in stockholders' equity.

                                                                              11
<PAGE>

HOMELIFE, INC.
Notes to Consolidated financial statements
May 31, 2000
(Amounts expressed in U.S. dollars)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

     xv)  Net Income  (loss) and Fully  Diluted Net Income  (loss) Per  Weighted
          Average Common Stock

          Net income  (loss) per common stock is computed by dividing net income
          (loss) for the year by the  weighted  average  number of common  stock
          outstanding during the year.

          Fully  diluted  net  income  (loss) per common  stock is  computed  by
          dividing net income (loss) for the year by the weighted average number
          of common stock outstanding  during the year,  assuming,  except where
          the result  would be  anti-dilutive,  that all  convertible  preferred
          shares were converted,  the contingent  common stock were issued,  the
          warrant was  exercised and the stock  options  granted were  exercised
          (see note 13).

     xvi) Use of Estimates

          The  preparation of  consolidated  financial  statements in conformity
          with generally accepted accounting  principles in the United States of
          America  requires  management to make estimates and  assumptions  that
          affect  certain   reported  amounts  of  assets  and  liabilities  and
          disclosures  of contingent  assets and  liabilities at the date of the
          consolidated financial statements and the reported amounts of revenues
          and expenses during the reporting period.  Actual results could differ
          from those estimates.

     xvii) Recent Accounting Pronouncements

          In  1998,  the  company  adopted  the  provisions  of  SFAS  No.  130,
          "Reporting  Comprehensive Income" and SFAS No. 131, "Disclosures About
          Segments of an Enterprise and Related  Information." SFAS 130 requires
          companies  to  disclose  comprehensive  income  in their  consolidated
          financial  statements.  In addition  to items  included in net income,
          comprehensive  income  includes  items  currently  charged or credited
          directly to  stockholders'  equity,  such as the change in  unrealized
          appreciation  (depreciation)  of securities.  SFAS 131 established new
          standards for  reporting  operating  segments,  products and services,
          geographic areas and major customers.  Segments are defined consistent
          with the basis  management used  internally to assess  performance and
          allocate resources.

          On March 4, 1998, the AICPA Accounting  Standards  Executive Committee
          issued Statement of Position No. 98-1 (SOP 98-1),  "Accounting for the
          Cost of Computer Software developed or obtained for internal use." SOP
          98-1 was issued to address diversity in practice regarding whether and
          under what  conditions the costs of  internal-use  software  should be
          capitalized.   SOP  98-1  is  effective  for  consolidated   financial
          statements for years  beginning  after December 15, 1998. In 1999, the
          company adopted the new  requirements of SOP 98-1 which did not have a
          significant effect on net earnings during that year.

          In 1998, the AICPA  Accounting  Standards  Executive  Committee issued
          Statement of Position No. 98-5 (SOP 98-5),  "Reporting on the Costs of
          Start-up  Activities".  SOP 98-5 was  issued to  provide  guidance  on
          financial  reporting  of  start-up  costs and  organization  costs and
          requires such costs to be expensed as incurred.  SOP 98-5 is effective
          for  consolidated  financial  statements  for  years  beginning  after
          December 15, 1998.  The company  adopted the new  requirements  of SOP
          98-5 in the fiscal year 2000 and wrote off organization costs with net
          book value of $48,955.

                                                                              12
<PAGE>

HOMELIFE, INC.
Notes to Consolidated financial statements
May 31, 2000
(Amounts expressed in U.S. dollars)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

     xvii) Recent Accounting Pronouncements (cont'd)

          In June 1998 SFAS No.  133,  as amended,  "Accounting  for  Derivative
          Instruments and Hedging  Activities"  was issued,  to be effective for
          fiscal  quarters  and fiscal years  beginning  after June 15, 2000 but
          this was  extended to fiscal years  beginning  January 1, 2001 by SFAS
          No.  137.  The company  does not have any  derivative  instruments  or
          hedging  activities,  therefore the company believes that SFAS No. 137
          will have no material impact on the company's  consolidated  financial
          statements or notes thereto.

3.   ACCOUNTS RECEIVABLE
                                                             2000         1999
                                                               $            $

     Accounts receivable                                   121,950      195,523
     Less:  Allowance for doubtful accounts                 (5,250)     (27,490)
                                                        -----------------------

     Accounts receivable, net                              116,700      168,033
                                                        =======================

4.   NOTES RECEIVABLE
                                                             2000         1999
                                                               $            $

     Note receivable from a franchisee arising from the
     sale of an existing franchise agreement. The note
     is unsecured and bears interest at a rate of 3%
     per year. The note is payable on demand.              176,000      200,000

     Note receivable from a franchisee arising from the
     sale of a master franchise agreement. Note is
     unsecured and non-interest bearing. The note is
     discounted at the rate of 6% and is payable in
     annual instalments due through the year 2003. The
     note receivable was been written down to net
     realizable value. The note receivable was received
     during the year.                                           --        5,303

     Notes receivable from franchisees for franchise
     fees. These notes are unsecured, non-interest
     bearing and payable in instalments over one year.
     The notes receivable has been written off during
     the year.                                                  --       10,500
                                                        -----------------------
                                                           176,000      215,803

     Less:  Current portion                                176,000      215,803
                                                        -----------------------
                                                                --           --
                                                        =======================

                                                                              13
<PAGE>

HOMELIFE, INC.
Notes to Consolidated financial statements
May 31, 2000
(Amounts expressed in U.S. dollars)

5.   PREPAID EXPENSES AND DEPOSITS
                                                             2000         1999
                                                               $            $

     Promotional materials and supplies                     42,302       50,120
     Prepaid expenses                                           -        13,451
     Deposits                                                8,336       14,588
                                                        -----------------------
                                                            50,638       78,159
                                                        =======================

6.   PROPERTY AND EQUIPMENT
                                                             2000         1999
                                                               $            $

     Furniture and fixtures                                336,147      277,579
     Computer equipment and software                       625,926      625,599
     Leasehold improvements                                 28,398        9,270
     Automobile                                             19,865       19,865
                                                        -----------------------
     Cost                                                1,010,336      932,313
                                                        =======================

     Less: Accumulated amortization

     Furniture and fixtures                                233,956      157,606
     Computer equipment and software                       324,177      272,525
     Leasehold improvements                                 17,659        1,324
     Automobile                                             19,865       19,865
                                                        -----------------------
                                                           595,657      451,320
                                                        -----------------------
     Net book value                                        414,679      480,993
                                                        =======================

     Amortization for the year amounted to $76,476 ($127,806 in 1999).

                                                                              14
<PAGE>

HOMELIFE, INC.
Notes to Consolidated financial statements
May 31, 2000
(Amounts expressed in U.S. dollars)

7.   GOODWILL
                                                             2000         1999
                                                               $            $

     Cost                                                  699,322      699,322
     Less:   Accumulated amortization                       55,532       38,049
                                                        -----------------------
                                                           643,790      661,273
                                                        =======================

     Amortization for the year amounted to $17,483 ($17,482 in 1999).


8.   OTHER ASSETS
                                                             2000         1999
                                                               $            $

     Trademarks and franchise rights                       702,846      761,513
     Organization costs                                    106,462      106,462
                                                        -----------------------
     Cost                                                  809,308      867,975
                                                        -----------------------
     Less:   Accumulated amortization
             Trademarks and franchise rights               330,216      144,265
             Organization costs                            106,462       57,507
                                                        -----------------------
                                                           436,678      201,772
                                                        -----------------------
     Net book value                                        372,630      666,203
                                                        =======================

     Amortization for the year amounted to $234,906 ($95,926 in 1999).

9.   CASH HELD IN TRUST AND TRUST LIABILITY

     Cash held in trust are deposits  received in connection with the opening of
     escrow  accounts for the sale of real estate.  The deposits are recorded as
     trust  liabilities  and are  refunded  when the real  estate is sold or the
     escrow is closed according to the terms of the escrow agreement.

                                                                              15
<PAGE>

HOMELIFE, INC.
Notes to Consolidated financial statements
May 31, 2000
(Amounts expressed in U.S. dollars)

10.  BANK INDEBTEDNESS

     At May 31, 2000 and 1999, the company's  available line of credit under the
     bank loan agreement amounted to $33,400 (CDN$50,000).  The operating credit
     facility  bears interest at the bank's prime lending rate plus 2% per annum
     with  interest  payable  monthly.  As security,  the company has provided a
     general assignment of book debts, a general security agreement constituting
     a first  charge  over all  present  and  future  personal  property  of the
     company,  a  subordination  agreement  with  respect to amounts owed by the
     borrower to the  shareholders of $33,400  (CDN$50,000),  and a guarantee by
     the major shareholder of the company of $33,400 (CDN$50,000).

     At May 31, 2000, the Company had an available line of credit under the bank
     loan  agreement  amounting  to  $25,000.  The  unsecured  operating  credit
     facility bears interest at rate of 16% per annum.

     There were $14,000 funds borrowed as at year end

11.  ACCOUNTS PAYABLE

                                                             2000         1999
                                                               $            $

     Trade payable                                         262,126      377,375
     Accrued expenses                                       84,471       82,287
                                                        -----------------------
                                                           346,597      459,662
                                                        =======================

12.  ADVANCES FROM A STOCKHOLDER

     The advances  were from the company's  president and majority  stockholder,
     were non-interest  bearing,  were without specific terms of repayment.  Had
     the  advances  been  valued  at the  current  value  of cash  flows  at the
     company's  current  rate of  borrowing,  the  advances  would be  valued at
     $164,125  in 1999.  Interest  of $8,218  would have been  imputed for 1999.
     During the year, 502,594 common shares were issued towards repayment of the
     advances from the stockholder.

                                                                              16
<PAGE>

HOMELIFE, INC.
Notes to Consolidated financial statements
May 31, 2000
(Amounts expressed in U.S. dollars)

13.  CAPITAL STOCK

     a)   Authorized

          100,000 Class A Preference  shares of no par value,  6% non cumulative
          dividend,  voting,  convertible  to common shares at the option of the
          shareholder  at a price equal to the face value of the Class A shares.
          Each Class A Preferred  share  carries  1,000 votes as compared with 1
          vote for each common share

          2,000  Class AA  preferred  shares of $500 par  value,  8%  cumulative
          dividend,  non-voting,  redeemable  at  face  value  by  the  company,
          convertible  after 12 months from the date of issuance,  at the option
          of the  shareholder,  to common shares at a price equal to the 125% of
          the face  value of the  Class AA shares as  compared  with the  market
          price of the common stock.

          10,000,000 Common shares of $0.001 par value

          Issued
                                                             2000         1999
                                                               $            $
          10,000   Class A Preferred shares              1,000,000    1,000,000
              63   Class AA Preferred shares (78-1999)      31,500       39,000
       5,637,358   Common shares (4,803,932-1999)            5,129        4,288
                                                        -----------------------
                                                         1,036,629    1,043,288
                                                        =======================

                                                                              17
<PAGE>

HOMELIFE, INC.
Notes to Consolidated financial statements
May 31, 2000
(Amounts expressed in U.S. dollars)

13.  CAPITAL STOCK (cont'd)

     b)   Shares  issued  during the years ended in May 31, 2000,  1999 and 1998
          were as follows:

                                                               Capital  Paid in
                                                    Number      stock   capital
                                                                  $        $
          i)   Class AA Preferred shares

               On August 20, 1997, 160 Class AA
               Preferred shares were issued to
               acquire the business of Network
               Real Estate Inc. (see note 1)           160     80,000      --

               During the year ended May 31,
               1998, 165 class AA Preferred
               shares were issued for cash             165     82,500      --
                                                  ------------------------------
                                                       325    162,500      --
                                                  ==============================

               On October 7, 1998, 247 Class AA
               Preferred shares were converted
               to 239,707 common shares at
               their face value                       (247)  (123,500)     --
                                                  ==============================

               On September 30, 1999, 15 Class
               AA preferred shares were
               converted to 12,670 common
               shares at their face value              (15)    (7,500)     --
                                                  ==============================

                                                                              18
<PAGE>

HOMELIFE, INC.
Notes to Consolidated financial statements
May 31, 2000
(Amounts expressed in U.S. dollars)

13.  CAPITAL STOCK (cont'd)

     b)   Shares  issued  during the years ended in May 31, 2000,  1999 and 1998
          were as follows:

                                                               Capital   Paid in
                                                    Number      stock    capital
                                                                  $         $
          ii)  Common shares

               On February 27, 1998, the
               company issued 36,000 common
               shares for $158,040 to acquire
               the issued shares of Builders
               Realty (Calgary) Ltd. (see
               note 1)                              36,000         36   158,004

               During the year ended May 31,
               1998, 25,690 common shares were
               issued in consideration of
               services rendered at the fair
               market value of the shares
               issued                               25,690         25    49,317

               During the year ended May 31,
               1998, 250,000 common shares were
               issued for promissory notes,
               non-interest bearing, payable on
               October 8, 2000, totaling
               $485,000                            250,000        250   484,750

               During the year ended May 31,
               1998, 265,000 common shares were
               issued for promissory notes,
               non-interest bearing, payable on
               October 8, 2000, totaling
               $250,000                            265,000        265   249,735

               Promissory note receivable,
               due October 8, 2000                      --       (250) (484,750)

               Promissory note receivable,
               due October 8, 2000                      --       (265) (249,735)
                                                  ------------------------------

                                                   576,690         61   207,321
                                                  ==============================

               On October 8, 1999, the Company signed an agreement with a former
               director who had the $250,000  promissory  note  disclosed in (b)
               (ii).   The  agreement   allowed  the  Company  to  exchange  the
               promissory  note for  100,000  shares  of  Pioneer  Growth  Corp.
               ("Pioneer"),  a company  non-affiliated with the former director.
               However,  the former director could re-acquire the Pioneer shares
               within one year by paying  $250,000  in cash,  or  returning  the
               265,000 shares of HomeLife  common stock initially  acquired.  In
               addition,  the former  director has  guaranteed  the value of the
               Pioneer  shares would be at least $250,000 on October 8, 2000, or
               he would make up the difference in value in cash or by exercising
               his option to return HomeLife shares equal to the amount.

               In light of the option  provided to the former director to return
               all of part of the HomeLife shares initially  acquired as well as
               his right to  re-acquire  the Pioneer  shares,  the Company  will
               continue  to reflect the  promissory  note  receivable  until the
               option and the right  expires  on October 8, 2000.  At that time,
               the Company will either record the Pioneer  shares as an asset at
               their fair  value,  or the cash  received in place of the Pioneer
               shares.   Any  shares  of  HomeLife  common  shares  received  in
               settlement of the note will be cancelled.

               In the event that the issuer fails to make up for any  diminution
               in the fair value of the Pioneer shares,  the Company will cancel
               a proportionate  number of its common shares previously issued to
               issuer. If the Company continues to own Pioneer shares subsequent
               to October 8, 2000,  the Company will reflect any changes in fair
               value through earnings on a quarterly basis.

                                                                              19
<PAGE>

HOMELIFE, INC.
Notes to Consolidated financial statements
May 31, 2000
(Amounts expressed in U.S. dollars)

13.  CAPITAL STOCK (cont'd)

     ii)  Common shares   (cont'd)
                                                               Capital   Paid in
                                                    Number      stock    capital
                                                                  $         $
          During the year ended May 31, 1999,
          7,250 common shares were issued in
          accordance with the agreement for the
          acquisition of Keim and MaxAmerica
          (note 1)                                   7,250          7        (7)

          During the year ended May 31, 1999,
          10,000 common shares were issued in
          consideration of services rendered at
          the fair market value of the shares
          issued                                    10,000         10     8,490

          During the year ended May 31, 1999.
          49,500 common shares were issued. The
          fair market value of the shares at
          the time of issue was $22,275             49,500         50    22,225
                                                  ------------------------------
                                                    66,750         67    30,708
                                                  ==============================
          On October 7, 1998, the company
          issued 239,707 common shares for
          $123,500 on the conversion of 247
          Class AA preferred shares                239,707        240   123,260
                                                  ==============================

                                                                              20
<PAGE>

HOMELIFE, INC.
Notes to Consolidated financial statements
May 31, 2000
(Amounts expressed in U.S. dollars)

13.  CAPITAL STOCK (cont'd)

     ii)  Common shares (cont'd)
                                                               Capital   Paid in
                                                    Number      stock    capital
                                                                  $         $
          On October 1, 1999, the company
          cancelled 146,667 common shares for
          the value of $58,667 (note 1 (a))       (146,667)      (147)  (58,520)

          During the year ended May 31, 2000,
          502,594 common shares were issued
          towards repayment of advances from
          the stockholder (note 12)                502,594        502   142,970

          During the year ended May 31, 2000,
          472,614 common shares were issued in
          consideration of services rendered at
          the fair market value of the shares
          issued                                   472,614        473   214,275

          During the year ended May 31, 2000,
          5,000 common shares were issued. The
          fair market value of the shares at
          the time of issue was $1,100.              5,000          5     1,095

          During the year ended May 31, 2000,
          12,785 common shares were cancelled.
          The fair market value of the shares
          at the time of cancellation was
          $2,173.                                  (12,785)       (12)   (2,161)

          Net subscription receivable/(payable)         --          7     1,065
                                                  ------------------------------
                                                   820,756        828   298,724
                                                  ==============================
          On September 30, 1999, the company
          issued 12,670 common shares for
          $7,500 on the conversion of 15 Class
          AA preferred shares                       12,670         13     7,487
                                                  ==============================

                                                                              21
<PAGE>

HOMELIFE, INC.
Notes to Consolidated financial statements
May 31, 2000
(Amounts expressed in U.S. dollars)

13.  CAPITAL STOCK (cont'd)

     c)   Contingent shares to be issued

          In the  purchase  agreement  for the  acquisition  of Builders  Realty
          (Calgary)  Ltd.,  the  Company  issued  common  stock  as  part of the
          purchase  price (see note 1). The value of the common stock issued was
          set at $5 per share  which was  substantially  higher than the current
          market  value.  The company  agreed that if the actual market value of
          the stock did not reach $5 per share within one year, the stockholders
          of Builders Realty (Calgary) Ltd.,  would be issued either  additional
          common  shares of Homelife,  Inc. or cash to complete the  transaction
          (see note 15).

     d)   Warrant

          On  January  16,  1997,  the  company  granted  a  warrant  to  S  & S
          Acquisition  Corp. as part of the consideration for the acquisition of
          its assets.  The warrant entitles S & S Acquisition  Corp. to acquire,
          from January 31, 1998 to January 31, 2002, up to 200,000 common shares
          of the  company at $6 per share.  The number of common  shares and the
          price per share are adjusted  proportionately with the increase in the
          number of common shares issued by the Company.  As the market value of
          the common  share of the company was  significantly  lower than $6 per
          share, no value was assigned to the warrant by the company.

     e)   Stock options

          On September 18, 1998, the board of directors of the company adopted a
          stock  option plan (the  "plan")  for its  directors,  employees,  and
          consultants.  An  authorized  number of shares of common  stock of the
          company which may be granted under the plan is one million shares. The
          terms of the options  were to be  determined  by the  president of the
          company, subject to the approval by the shareholders.

                                                                              22
<PAGE>

HOMELIFE, INC.
Notes to Consolidated financial statements
May 31, 2000
(Amounts expressed in U.S. dollars)

13.  CAPITAL STOCK (cont'd)

     f)   Stock option plan

          As at May 31,  2000,  options to various  employees  of the company to
          acquire  130,000  common stock had been granted under the stock option
          plan with the following terms:

          100,000  common  shares at $3 per share,  granted in  February,  1998,
               vested and exercisable for 5 years

          30,000  common  shares at $5 per share,  granted in  September,  1998,
               vested and - exercisable for 5 years

          Pro-forma  information  regarding net income and earnings per share is
          required by FAS No. 123 -  "Accounting  for Stock Based  Compensation"
          and has  been  determined  as if the  company  had  accounted  for its
          employee  stock  options  based on fair  values at the grant  date for
          options  granted.  The Company's  pro-forma  information  for the year
          ended May 31, 2000 and 1999 would have been as follows:

<TABLE>
<CAPTION>
                                              2000        2000         1999        1999
                                       ----------- -----------  ----------- -----------
                                       AS REPORTED   PRO-FORMA  AS REPORTED   PRO-FORMA
                                       ----------- -----------  ----------- -----------
                                                $           $            $           $

<S>                                      <C>         <C>          <C>        <C>
          Net loss                       (761,413)   (761,413)    (960,120)  (1,082,974)
          Basic and fully diluted loss
                per common share            (0.15)      (0.15)       (0.23)      (0.25)
</TABLE>

          The fair value of each option  grant used for  purposes of  estimating
          the  pro-forma  amounts  summarized  above is based on the grant  date
          using  the  Black-Scholes  option  pricing  model  and  the  following
          assumptions:  the  risk-free  interest  rates  used  was 5%,  expected
          dividends was 0%; expected life was 5 years;  and expected  volatility
          ranged from 54% to 59%. The weighted-average  grant date fair value of
          options   granted   during  1999  was  $5.00;   and  1998  was  $3.00.
          Compensation  cost for stock options granted in fiscal year 1998 would
          have been less than $6,000 and was not considered material.

     g)   Earnings per share

          The fully diluted  earnings per share does not include the issuance of
          shares which would be anti-dilutive arising from the following:

          i.    Conversion of 10,000 Class A preferred shares to common shares
          ii.   Conversion of 63 Class AA preferred shares to common shares
          iii.  Exercise of warrant  which  entitles  holder to acquire  200,000
                common shares at $6 per share
          iv.   Exercise of stock options to acquire 130,000  issuance of common
                shares
          v.    Common stock which may be required [note 13(c)]

                                                                              23
<PAGE>

HOMELIFE, INC.
Notes to Consolidated financial statements
May 31, 2000
(Amounts expressed in U.S. dollars)

14.  INCOME TAXES
                                               2000          1999          1998
                                                 $             $             $

     a)   Current                                -             -             -
          Deferred                               -             -             -
                                           -------------------------------------
                                                 -             -             -
                                           =====================================

     b)   The components of deferred income taxes are comprised as follows:

          Losses carried-forward            665,000       465,000       165,000
          Valuation allowance              (665,000)     (465,000)     (165,000)
                                           -------------------------------------
                                                 -             -             -
                                           =====================================

     c)   At May 31, 2000.  The company had  non-capital  losses  available  for
          carry-forward of approximately  $1,950,000.  These losses expire after
          May 31, 2007.


15.  CONTINGENT LIABILITIES

     i)   The company is involved in a lawsuit with Network Real Estate, Inc., a
          real estate  broker,  where  Network  Real  Estate,  Inc. has filed an
          action against the company claiming that the company has failed to pay
          Network Real Estate, Inc. the remaining balance of $80,000 pursuant to
          the  Agreement  for purchase of Network Real  Estate,  Inc.  licensing
          agreements  and  trademarks  [see note 1 (a)].  On March 7, 2000,  the
          company filed a cross-complaint  against Network Real Estate, Inc. and
          International  Estates,  Inc,  claiming  that they  failed to  provide
          ownership  of  International   Estates   trademark   pursuant  to  the
          agreement. Settlement negotiations are in progress and if finalized as
          proposed,  the company will be dismissed from the complaint by Network
          Real  Estate,  Inc.  and Network  Real  Estate,  Inc.  will pursue the
          company's claims against  International  Estates, Inc. Pursuant to the
          settlement negotiations,  Network Real Estate, Inc. did submit 146,667
          common shares for cancellation  totaling to $58,667 on October 1, 1999
          [see note 1 (a)]. In management's opinion, this matter will not have a
          material effect on the financial position of the company.

     ii)  The  company is  involved  in a lawsuit  with the  sellers of Builders
          Realty  (Calgary)  Ltd. to reduce the purchase price paid for Builders
          Realty  (Calgary) Ltd. The sellers of Builders  Realty  (Calgary) Ltd.
          have filed a counter lawsuit for damages of $238,275 (Cdn$356,699). In
          management's  opinion,  this matter will not have a material affect on
          the financial position of the company.

                                                                              24
<PAGE>

HOMELIFE, INC.
Notes to Consolidated financial statements
May 31, 2000
(Amounts expressed in U.S. dollars)

16.  COMPREHENSIVE INCOME

     The company has adopted statement of financial accounting standards No. 130
     "Reporting  Comprehensive  Income" as of January 1, 1998 which requires new
     standards  for  reporting  and  display  of  comprehensive  income  and its
     components in the consolidated  financial statements.  However, it does not
     affect  net  income  or  total  stockholders'  equity.  The  components  of
     comprehensive income are as follows:

                                              2000          1999          1998
                                                $             $             $

     Net loss                              (758,893)     (957,000)     (173,126)
     Other comprehensive (loss) gain
     Foreign currency translation
       adjustments                            1,370        (1,093)          -
                                           -------------------------------------
     Comprehensive loss                    (757,523)     (958,093)     (173,126)
                                           =====================================

17.  SEGMENTED INFORMATION

     Segmented  information  has been  provided  for the company on the basis of
     different  geographic areas and different services.  The revenue for Canada
     is substantially all derived from real estate brokerage.

     a)   Revenue by Geographic Area
                                                2000         1999        1998
                                                  $            $           $

          United States of America           1,165,289    1,324,230   1,280,735
          Canada                             2,285,629    2,829,895     687,893
                                            ------------------------------------
                                             3,450,918    4,154,125   1,968,628
                                            ====================================

     b)   Net loss by Geographic Area

          United States of America            (712,402)    (885,022)   (177,923)
          Canada                               (46,491)     (71,978)      4,797
                                            ------------------------------------
                                              (758,893)    (957,000)   (173,126)
                                            ====================================

     c)   Identifiable Assets by Geographic Area

          United States of America           1,995,601    2,646,270   3,553,672
          Canada                               297,342      489,023     556,350
                                            ------------------------------------
                                             2,292,943    3,135,293   4,110,022
                                            ====================================

                                                                              25
<PAGE>

HOMELIFE, INC.
Notes to Consolidated financial statements
May 31, 2000
(Amounts expressed in U.S. dollars)

17.  SEGMENTED INFORMATION (cont'd)
                                             2000          1999          1998
                                               $             $             $
     d)   Amortization by Geographic Area

          United States of America          318,965       221,416       188,917
          Canada                              9,899        19,798         5,197
                                         ---------------------------------------
                                            328,864       241,214       194,114
                                         =======================================

     e)   Revenue by industry

          Real Estate Franchise             791,493       782,174       914,946
          Real Estate Brokerage           2,036,892     2,632,251       647,279
          Mortgage Financing                 90,520       199,451            --
          Home Warranty                     255,522       228,353       261,663
          Other Income                      276,491       311,896       144,851
                                         ---------------------------------------
          Total                           3,450,918     4,154,125     1,968,628
                                         =======================================

     f)   Net loss by industry

          Real Estate Franchise            (797,357)   (1,005,003)     (156,909)
          Real Estate Brokerage             (46,491)      (71,978)        4,794
          Mortgage Financing                 12,986          (114)      (37,000)
          Home Warranty                      62,245       130,622        22,547
          Other                               9,724       (10,527)       (6,558)
                                         ---------------------------------------
          Total                            (758,893)     (957,000)     (173,126)
                                         =======================================

     g)   Identifiable assets by industry

          Real Estate Franchise           1,731,695     2,130,027     3,399,137
          Real Estate Brokerage             297,342       489,023       556,350
          Mortgage Financing                 55,983       151,624         1,803
          Home Warranty                     143,778       344,630       141,865
          Other                              64,145        19,989        10,867
                                         ---------------------------------------
          Total                           2,292,943     3,135,293     4,110,022
                                         =======================================

     h)   Amortization by industry

          Real Estate Franchise             317,452       204,563       172,108
          Real Estate Brokerage               9,899        19,798         5,195
          Mortgage Financing                     --         5,412         5,356
          Home Warranty                       1,513        11,441        11,453
                                         ---------------------------------------
          Total                             328,864       241,214       194,112
                                         =======================================

                                                                              26
<PAGE>

HOMELIFE, INC.
Notes to Consolidated financial statements
May 31, 2000
(Amounts expressed in U.S. dollars)

18.  COMMITMENTS

     The company has operating  leases for premises  which extend through August
     31,  2002.  Future  minimum  rental  payments  as of May 31, 2000 under the
     operating lease agreements are as follows:

     2001                                $  134,371
     2002                                    82,838
     2003                                     5,653
                                         ----------
                                         $  222,862
                                         ==========

19.  UNCERTAINTY DUE TO THE YEAR 2000 ISSUE

     The Year 2000 Issue arises because many computerized systems use two digits
     rather than four to identify a year.  Date-sensitive  systems may recognize
     the  year  2000 as 1900  or some  other  date,  resulting  in  errors  when
     information  using  year 2000  dates is  processed.  In  addition,  similar
     problems  may  arise in some  systems  which use  certain  dates in 1999 to
     represent  something  other  than a date.  Although  the change in date has
     occurred,  it is not possible to conclude that all aspects of the Year 2000
     Issue that may affect the entity,  including  those  related to  customers,
     suppliers, or other third parties, have been fully resolved.

20.  SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING CTIVITIES

     a)   The  company  repaid  advances  from the  shareholder  of  $143,472 by
          issuing 502,594 common shares.

     b)   The company cancelled  146,667 common shares,  reducing its trademarks
          acquired totalling $58,667.

21.  RELATED PARTY TRANSACTIONS
                                                         2000            1999
                                                           $               $
     Licensing expense paid to a company controlled
       by the President                                  10,000          10,000

     Advances from a stockholder (note 12)                    -         143,472

     Notes receivable - franchise (note 4)              176,000         215,803

22.  FINANCIAL STATEMENT PRESENTATION

     Certain  reclassifications of 1999 and 1998 amounts have been made in order
     to facilitate comparison with the current year.

                                                                              27