**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, 2007**

**HOMELIFE,      INC.**

|   | **Nevada**                                                                            | **33-0680443**                                         |
|--------|---------------------------------------------------------------------------------------|--------------------------------------------------------|
|   | (State                or other jurisdiction of incorporation or organization)         | (I.R.S.                Employer Identification Number) |
|   |                                                                                  |                                                   |
|   | **1503                South Coast Drive, Suite 204****Costa                Mesa, CA** | **92626**                                              |
|   | (Address                of principal executive offices)                               | (Zip                code)                              |

**(714)      241-3030**

**Securities      registered pursuant to Section 12(b) of the Act:**

**Securities      registered pursuant to Section 12(g) of the Act:**

----

**TABLE      OF CONTENTS**

| **PART                I**   |                                                                                                      | **PAGE** |
|-----------------------------|-----------------------------------------------------------------------------------------------------------|----------|
|                        |                                                                                                      |     |
| Item                1       | Description                of Business                                                                    | 1        |
|                        |                                                                                                      |     |
| Item                2       | Description                of Property                                                                    | 7        |
|                        |                                                                                                      |     |
| Item                3       | Legal                Proceedings                                                                          | 7        |
|                        |                                                                                                      |     |
| Item                4       | Submission                of Matters to a Vote of Security Holders                                        | 7        |
|                        |                                                                                                      |     |
|                        |                                                                                                      |     |
| **PART                II**  |                                                                                                      |     |
|                        |                                                                                                      |     |
| Item                5       | Market                for Registrant’s Common Equity and Related Stockholder                Matters | 7        |
|                        |                                                                                                      |     |
| Item                6       | Management's                Discussion and Analysis                                                       | 8        |
|                        |                                                                                                      |     |
| Item                7       | Financial                Statements                                                                       | 11       |
|                        |                                                                                                      |     |
| Item                8       | Changes                In and Disagreements With Accountants On Accounting and                            |     |
|                        | Financial                Disclosure                                                                       | 11       |
|                        |                                                                                                      |     |
| Item                8A      | Controls                and Procedures                                                                    | 11       |
|                        |                                                                                                      |     |
|                        |                                                                                                      |     |
| **PART                III** |                                                                                                      |     |
|                        |                                                                                                      |     |
| Item                9       | Directors,                Executive Officers, Promoters and Control Persons;                              |     |
|                        | Compliance                with Section 16(a) of the Exchange Act                                          | 12       |
|                        |                                                                                                      |     |
| Item                10      | Executive                Compensation                                                                     | 13       |
|                        |                                                                                                      |     |
| Item                11      | Security                Ownership of Certain Beneficial Owners and                                        |     |
|                        | Management                                                                                                | 14       |
|                        |                                                                                                      |     |
| Item                12      | Certain                Relationships and Related Transactions                                             | 15       |
|                        |                                                                                                      |     |
|                        |                                                                                                      |     |
| **PART                IV**  |                                                                                                      |     |
|                        |                                                                                                      |     |
| Item                13      | Exhibits                and Reports on Form 8-K                                                           | 16       |
|                        |                                                                                                      |     |
| Item                14      | Principal                Accountant Fees and Services                                                     | 17       |

----

**PART      I**

**Item      1.**
**Description      of Business**

**A. **
**Business      Development**

**1.**
**Form      and Year of Organization**

**2.**
**Any      bankruptcy, receivership or similar proceeding**

**3.**
**Any      material reclassification, merger, consolidation, or purchase or sale of a      significant amount of assets not in the ordinary course of      business**

----

** **

** **

----

**B.**
**Business      of Issuer**

**1.      Principal Products and Services and their Market**

**a.      Services and Locations **

**o      **
***Franchise      Services***

**o      **
***Mortgage      Financing***

**o      **
***Retail      Real Estate Brokerage Services***

**o      **
***Home      Warranty***

----

**b.      Franchise and Licensing Operations **

**c.      Mortgage Financing **

**d.      Retail Real Estate Brokerage Services **

*i.e.*

----

**e.      Home Warranty Services **

**2.   **
**Distribution      Methods**

**3.   **
**Status      of Any Publicly Announced New Product or Service**

**4.   **
**Competition**

|   | **5.** | **Sources                and Availability of Raw                Materials** |
|--------|--------|-----------------------------------------------------------------------------|

|   | **6.** | **Dependence                on One or Few Major                Customers** |
|--------|--------|----------------------------------------------------------------------------|

*,      i.e.*

|   | **7.** | **Patents,                Trademarks, Licenses and Franchises** |
|--------|--------|-----------------------------------------------------------------|

----

|   | **8.** | **Need                for Government Approval** |
|--------|--------|-------------------------------------------------|

**.**

**9.   **
**Effect      of any Existing or Proposed Government Approval**

**10.   **
**Research      and Development Costs**

**11.   **
**Cost      and Effects of Compliance with Environment Laws and      Regulations**

**12.   **
**Employees**

----

**ITEM      2 - PROPERTIES**

**ITEM      3 - LEGAL PROCEEDINGS **

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

**PART      II**

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

**A.**
**Market      Information **

| **2006**                                                                                                                      | High                                                                                       | Low                                                                                        |
|-------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------|
| Quarter                endedAugust                31November                30February                28May                31 |  $                0.06$                0.13$                0.07$                0.06 |  $                0.04$                0.05$                0.06$                0.06 |
| **2007**                                                                                                                      |                                                                                       |                                                                                       |
| Quarter                endedAugust                31November                30February                28May                31 |  $                0.10$                0.07$                0.06$                0.07 |  $                0.06$                0.06$                0.06$                0.06 |

**B.   **
**Holders      **

**,**

----

**C.   **
**Dividends      **

|   | **D.** | **Recent                Sales of Unregistered Securities and Use of Proceeds** |
|--------|--------|--------------------------------------------------------------------------------|

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

**Overview**

**Plan      of Operation**

----

**Results      of Operations**

|                                                                                                                                                                                                                                                                                       |  Year                EndedMay                31, 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  Year                EndedMay                31, 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  Statement                of Operations DataRevenueNet                LossNet                Loss per share                                                                                                                                                                           |  $                                       497,471$                                     (437,018)$                                             (.04)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  $                                                         665,696$                         (178,065)$                                                (.01)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|  Balance                Sheet DataCurrent                AssetsTotal                Property & Equipment, NetTotal                AssetsTotal                Current LiabilitiesAccumulated                DeficitTotal                Stockholders’ Equity (Deficit)  |  $                                                         60,270$                                                 72$                                                       161,342$                                        372,833$                    (5,364,061)$                                      (596,695) |  $                                                           95,459$                                                             2,008$                                                         366,395$                                          334,520$                                     (4,927,043)$                                        (159,677) |

**Fiscal      Year Ended May 31, 2007 compared to Fiscal Year Ended May 31, 2006**

**Revenues.**
*:*

|                               |   | For                the year ended |    | For                the year ended |   |
|------------------------------------|--------|-----------------------------------|---------|-----------------------------------|--------|
|                               |   | May                31, 2007       |    | May                31, 2006       |   |
|                               |   |                              |    |                              |   |   |   |   |   |
|                               |   | Amount                            |    |  %                           |   | Amount |   |  % |   |
| Royalty                fees        |   | $                                 | 364,287 |                              |   | 73.2 |   | $ | 382,595 |   |   | 57.5 |   |
| Franchise                fees      |   |                              | 12,500  |                              |   | 2.5 |   |   | 99,500 |   |   | 14.9 |   |
| Home                warranty sales |   |                              | 76,330  |                              |   | 15.4 |   |   | 102,727 |   |   | 15.4 |   |
| Other                              |   |                              | 44,354  |                              |   | 8.9 |   |   | 80,874 |   |   | 12.2 |   |
| TOTAL                              |   | $                                 | 497,471 |                              |   | 100.0 |   | $ | 665,696 |   |   | 100.0 |   |

----

**Direct      Costs.**

**Gross      Profit Percentage**

**Salaries      and fringe benefits.**

**General      and administrative.**

**Occupancy      costs.**

**Financial.**

**Depreciation.**

**Amortization.**

**Impairment      of Goodwill.**

**Liquidity      and capital resources**

----

**Foreign      Franchisees**

**Application      of Critical Accounting Policies**

**PART      II - OTHER INFORMATION**

**ITEM      7. FINANCIAL STATEMENTS**

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

**ITEM      8A. CONTROLS AND PROCEDURES**

----

**PART      III**

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

| **Name** Andrew                Cimerman Terry                A. Lyles, Ph.D. F.                Bryson Farrill Charles                Goodson Marie                May | **Age** 59 48 79 52 40 | **Position** President                and Director Director Director Vice                President Chief                Financial Officer, Secretary and                Director |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Andrew      Cimerman, 59, President and Director, **

**Terry      A. Lyles, Ph.D, 48, Director**

----

**F.      Bryson Farrill, 79, Director**

**Charles      Goodson, 52, Vice President & Director**

**Marie      M. May, 40, Chief Financial Officer, Secretary and Director**

**(b)**
**Compliance      with Section 16(a) of the Securities Exchange Act of 1934**

**ITEM      10-EXECUTIVE COMPENSATIO**

**(a)**
**Summary      of Compensation **

**Summary      Compensation Table**

|   |
|--------|

|                                                |  Annual                Compensation |  Long                Term Compensation |
|-----------------------------------------------------|------------------------------------------|---------------------------------------------|
|                                                | Awards                                   | Payouts                                     |
|  NameandPrincipal                Position      |    Year                   |    Salary                    |    Bonus | Other                Annual Compen-sation |  Restricted                Stock Awards |   Options                SARs |   LTIP                Payouts | All                OtherCompensation |
| Andrew                Cimerman, President, Director | 200720062005                             | $20,000$20,000$20,000                       | --- | --- | --- | --- | --- | --- |

**(b)**
**Options/SAR      Grants in the last fiscal year**

----

**(c)**
**Aggregate      Options/SAR Grants**

**(d)**
**Long      Term Incentive Plan (LTIP)**

**(e)**
**Compensation      of directors**

**(f)**
**Employment      Agreements**

**(g)**
**Report      on re-pricing of stock options/SARs **

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

| **Name                and address of beneficial owner** |   | **Amount                and nature of beneficial****owner****(1)** |        | **Percent                of****class** |   |
|---------------------------------------------------------|--------|--------------------------------------------------------------------|-------------|----------------------------------------|--------|
|                                                    |   |                                                               |        |                                   |   |
| Andrew                Cimerman(2)                       |   |                                                               | 9,013,194(3 | )                                      |   | 72.8 | % |
| Marie                M. May(2)                          |   |                                                               | 60,000(1    | )                                      |   | 0.5 | % |
| Charles                Goodson(2)                       |   |                                                               | 0           |                                   |   | 0.0 | % |
| F.                Bryson Farrill(2)                     |   |                                                               | 10,000      |                                   |   | 0.1 | % |
| Terry                Lyles(2)                           |   |                                                               | 10,000      |                                   |   | 0.1 | % |
|                                                    |   |                                                               |        |                                   |   |   |   |
| All                Officers and Directors as a group    |   |                                                               | 9,093,194   |                                   |   | 73.5 | % |

| 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 op-tions or warrants, but are not deemed outstanding for purposes                of                computing the percentage of any other                person. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 2. | c/o                Company's address1503 South Coast Drive, Suite 204, Costa Mesa, CA                92626. |
|----|-------------------------------------------------------------------------------------------------------------|

| 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. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

**B.**
**Certain      Relationships and Related Transactions**

----

**PART      IV **

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

**(a)**
**Exhibits**

The      following documents are filed as exhibits to this Report:

| 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*                                                                                                                                                       |
| 27.1   | Financial                Data Schedule                                                                                                                                                     |
| 31     | Certification                pursuant to Section 302 of the Sarbanes-Oxley Act of                2002                                                                                      |
| 32     | Certification                pursuant to Section 18 U.S.C. Section 1350, as adopted pursuant to                Section                906 of the Sarbanes-Oxley Act of                2002 |

----

**ITEM      14-PRINCIPAL ACCOUNTANT FEES AND SERVICES.**

|                               |   |                                  |    |     |   |   |    |   |
|------------------------------------|--------|---------------------------------------|---------|----------|--------|--------|---------|--------|
|                               |   | **Year                Ended May 31,** |
|                               |   |                                  |
|                               |   | **2007**                              |    | **2006** |
|                               |   |                                  |    |     |
| AAudit                Fees         |   | $                                     | 12,000  |     |   | $      | 11,000  |   |
| AAudit-Related                Fees |   | $                                     | — |     |   | $      | — |   |
| TTax                Fees           |   | $                                     | — |     |   | $      | — |   |
| AAll                Other Fees     |   | $                                     | 7,500   |     |   | $      | 6,000   |   |

----

**SIGNATURES**

|                                                                                                                                                                                                                                           | HOMELIFE,                INC. |                                                      |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------|-----------------------------------------------------------|--------|
|                                                                                                                                                                                                                                           | Registrant                    |                                                      |   |   |
|                                                                                                                                                                                                                                           |                          |                                                      |   |   |
|                                                                                                                                                                                                                                           | By:                           | /s/                Andrew Cimerman                        | Date:  | September                7, 2007 |
|                                                                                                                                                                                                                                           |                          | 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                7, 2007 |
|                                                                                                                                                                                                                                           |                          | Chief              Executive Officer, President, Director |   |   |

----

| Date:                September 7, 2007 | /s/                Andrew Cimerman                                         |
|----------------------------------------|----------------------------------------------------------------------------|
|                                   | Name:                Andrew Cimerman                                       |
|                                   | Title:                President and Chief Executive                Officer |

----

| Date:                September 7, 2007 | s/                Marie M. May                |
|----------------------------------------|-----------------------------------------------|
|                                   | Name:                Marie M. May             |
|                                   | Title:                Chief Financial Officer |

----

----

**HOMELIFE,        INC. AND SUBSIDIARIES**

**CONSOLIDATED        FINANCIAL STATEMENTS**

**AT        MAY 31, 2007 AND 2006**

----

**HOMELIFE,        INC. AND SUBSIDIARIES**

**CONSOLIDATED        FINANCIAL STATEMENTS**

**AT        MAY 31, 2007 AND 2006**

**TABLE        OF CONTENTS**

| Report                  of Independent Registered Public Accounting Firm | F-3                                |
|--------------------------------------------------------------------------|------------------------------------|
|                                                                     |                               |
| Consolidated                  Balance Sheets                             | F-4                                |
|                                                                     |                               |
| Consolidated                  Statements of Operations                   | F-6                                |
|                                                                     |                               |
| Consolidated                  Statements of Cash Flows                   | F-7                                |
|                                                                     |                               |
| Consolidated                  Statements of Stockholders’ Equity   | F-8                                |
|                                                                     |                               |
| Notes                  to Consolidated Financial Statements              | F-9 -                    F-24 |

----

----

**HOMELIFE,          INC. AND SUBSIDIARIES**

**Consolidated          Balance Sheets**

**At          May 31, 2007 and 2006**

|                                                    |   |   |   | 2007   |   | 2006    |   |
|---------------------------------------------------------|--------|--------|--------|--------|--------|---------|--------|
|                                                    |   |   |   |   |   |    |   |
| ASSETS                                                  |   |   |   |   |   |    |   |
|                                                    |   |   |   |   |   |    |   |
|  CURRENT                    ASSETS                 |   |   |   |   |   |    |   |
|                                                    |   |   |   |   |   |    |   |
| Cash                                                    |   |   |   |   | $      | 21,436  |   | $ | 53,376 |   |
| Marketable                    securities, at fair value |   |   |   |   |   | 900     |   |   | 900 |   |
| Accounts                    receivable, net (note 4)    |   |   |   |   |   | 22,409  |   |   | 10,036 |   |
| Prepaid                    expenses and deposits        |   |   |   |   |   | 15,525  |   |   | 31,147 |   |
|                                                    |   |   |   |   |   |    |   |   |   |   |
|                                                    |   |   |   |   |   |    |   |   |   |   |
| Total                    Current Assets                 |   |   |   |   |   | 60,270  |   |   | 95,459 |   |
|                                                    |   |   |   |   |   |    |   |   |   |   |
| PROPERTY                    AND EQUIPMENT, NET (note 5) |   |   |   |   |   | 72      |   |   | 2,008 |   |
|                                                    |   |   |   |   |   |    |   |   |   |   |
| GOODWILL,                    NET (note 6)               |   |   |   |   |   | 100,000 |   |   | 225,943 |   |
|                                                    |   |   |   |   |   |    |   |   |   |   |
| OTHER                    ASSETS, NET (note7)            |   |   |   |   |   | 1,000   |   |   | 42,985 |   |
|                                                    |   |   |   |   |   |    |   |   |   |   |
|                                                    |   |   |   |   |   |    |   |   |   |   |
|                                                    |   |   |   |   |   |    |   |   |   |   |
| Total                    Assets                         |   |   |   |   | $      | 161,342 |   | $ | 366,395 |   |
|                                                    |   |   |   |   |   |    |   |   |   |   |

----

**HOMELIFE,          INC. AND SUBSIDIARIES**

**Consolidated          Balance Sheets**

**At          May 31, 2007 and 2006**

|                                                                          |   |   |   | 2007   |   | 2006       |   |
|-------------------------------------------------------------------------------|--------|--------|--------|--------|--------|------------|--------|
|                                                                          |   |   |   |   |   |       |   |
| LIABILITIES                    AND STOCKHOLDERS' EQUITY                       |   |   |   |   |   |       |   |
|                                                                          |   |   |   |   |   |       |   |
| CURRENT                    LIABILITIES                                        |   |   |   |   |   |       |   |
|                                                                          |   |   |   |   |   |       |   |
| Bank                    indebtedness (note 8)                                 |   |   |   |   | $      | 92,813     |   | $ | 81,397 |   |
| Accounts                    payable                                           |   |   |   |   |   | 219,212    |   |   | 165,890 |   |
| Reserve                    for warranty                                       |   |   |   |   |   | 37,501     |   |   | 46,953 |   |
| Deferred                    revenue                                           |   |   |   |   |   | 23,307     |   |   | 40,280 |   |
|                                                                          |   |   |   |   |   |       |   |   |   |   |
|                                                                          |   |   |   |   |   |       |   |   |   |   |
| Total                    Current Liabilities                                  |   |   |   |   |   | 372,833    |   |   | 334,520 |   |
|                                                                          |   |   |   |   |   |       |   |   |   |   |
| DUE                    TO STOCKHOLDER                                         |   |   |   |   |   | 364,361    |   |   | 170,709 |   |
|                                                                          |   |   |   |   |   |       |   |   |   |   |
| MINORITY                    INTEREST                                          |   |   |   |   |   | 20,843     |   |   | 20,843 |   |
|                                                                          |   |   |   |   |   |       |   |   |   |   |
|                                                                          |   |   |   |   |   |       |   |   |   |   |
| Total                    Liabilities                                          |   |   |   |   |   | 758,037    |   |   | 526,072 |   |
|                                                                          |   |   |   |   |   |       |   |   |   |   |
|                                                                          |   |   |   |   |   |       |   |   |   |   |
| STOCKHOLDERS’                    EQUITY (DEFICIT)                       |   |   |   |   |   |       |   |   |   |   |
|                                                                          |   |   |   |   |   |       |   |   |   |   |
| CAPITAL                    STOCK (note 9)                                     |   |   |   |   |   | 1,037,372  |   |   | 1,037,372 |   |
|                                                                          |   |   |   |   |   |       |   |   |   |   |
| ADDITIONAL                    PAID IN CAPITAL (note 9)                        |   |   |   |   |   | 3,731,741  |   |   | 3,731,741 |   |
|                                                                          |   |   |   |   |   |       |   |   |   |   |
| ACCUMULATED                    OTHER COMPREHENSIVE                            |   |   |   |   |   |       |   |   |   |   |
| INCOME                    (LOSS)                                              |   |   |   |   |   | (1,747     | )      |   | (1,747 | ) |
|                                                                          |   |   |   |   |   |       |   |   |   |   |
| ACCUMULATED                    DEFICIT                                        |   |   |   |   |   | (5,364,061 | )      |   | (4,927,043 | ) |
|                                                                          |   |   |   |   |   |       |   |   |   |   |
|                                                                          |   |   |   |   |   |       |   |   |   |   |
| Total                    Stockholders’ Deficit                          |   |   |   |   |   | (596,695   | )      |   | (159,677 | ) |
|                                                                          |   |   |   |   |   |       |   |   |   |   |
|                                                                          |   |   |   |   |   |       |   |   |   |   |
| Total                    Liabilities and Stockholders’ Equity (Deficit) |   |   |   |   | $      | 161,342    |   | $ | 366,395 |   |
|                                                                          |   |   |   |   |   |       |   |   |   |   |

----

**HOMELIFE,          INC. AND SUBSIDIARIES**

**Consolidated          Statements of Operations**

**Years          ended May 31, 2007 and 2006**

|                                            |   | 2007   |       | 2006   |   |
|-------------------------------------------------|--------|--------|------------|--------|--------|
|                                            |   |   |       |   |   |
| REVENUE                                         |   |   |       |   |   |
|                                            |   |   |       |   |   |
| Royalty                    and franchise fees   |   | $      | 376,787    |   | $      | 482,095 |   |
| Warranty                    fees                |   |   | 76,330     |   |   | 102,727 |   |
|                                            |   |   |       |   |   |   |   |
|                                            |   |   |       |   |   |   |   |
| Total                    Revenue                |   |   | 453,117    |   |   | 584,822 |   |
|                                            |   |   |       |   |   |   |   |
| DIRECT                    COSTS                 |   |   | 45,213     |   |   | 154,941 |   |
|                                            |   |   |       |   |   |   |   |
|                                            |   |   |       |   |   |   |   |
|                                            |   |   | 407,904    |   |   | 429,881 |   |
|                                            |   |   |       |   |   |   |   |
| EXPENSES                                        |   |   |       |   |   |   |   |
|                                            |   |   |       |   |   |   |   |
| Salaries                    and fringe benefits |   |   | 187,644    |   |   | 207,938 |   |
| General                    and administrative   |   |   | 431,731    |   |   | 287,522 |   |
| Occupancy                                       |   |   | 51,426     |   |   | 49,441 |   |
| Financial                                       |   |   | 48,611     |   |   | 29,617 |   |
| Depreciation                                    |   |   | 1,936      |   |   | 62,450 |   |
| Amortization                                    |   |   | 41,985     |   |   | 51,852 |   |
| Impairment                    of Goodwill       |   |   | 125,943    |   |   | - |   |
|                                            |   |   |       |   |   |   |   |
|                                            |   |   |       |   |   |   |   |
| Total                    Expenses               |   |   | 889,276    |   |   | 688,820 |   |
|                                            |   |   |       |   |   |   |   |
|                                            |   |   |       |   |   |   |   |
|                                            |   |   |       |   |   |   |   |
| NET                    LOSS FROM OPERATIONS     |   | $      | (481,372   | )      | $      | (258,939 | ) |
|                                            |   |   |       |   |   |   |   |
| Other                    Income                 |   |   | 44,354     |   |   | 80,874 |   |
|                                            |   |   |       |   |   |   |   |
| NET                    LOSS                     |   | $      | (437,018   | )      | $      | (178,065 | ) |
|                                            |   |   |       |   |   |   |   |
| BASIC                    AND FULLY DILUTED LOSS |   |   |       |   |   |   |   |
| PER                    COMMON SHARE             |   | $      | (0.04      | )      | $      | (0.01 | ) |
|                                            |   |   |       |   |   |   |   |
|                                            |   |   |       |   |   |   |   |
| WEIGHTED-AVERAGE                    NUMBER      |   |   |       |   |   |   |   |
| OF                    COMMON SHARES             |   |   | 12,371,886 |   |   | 12,371,886 |   |
|                                            |   |   |       |   |   |   |   |

----

**HOMELIFE,          INC. AND SUBSIDIARIES**

**Consolidated          Statements of Cash Flows**

**Years          ended May 31, 2007 and 2006 **

|                                                                 |   | 2007   |     | 2006   |   |
|----------------------------------------------------------------------|--------|--------|----------|--------|--------|
|                                                                 |   |   |     |   |   |
| CASH                    FLOWS FROM OPERATING ACTIVITIES              |   |   |     |   |   |
| Net                    loss                                          |   | $      | (437,018 | )      | $      | (178,065 | ) |
| Adjustments                    to reconcile net loss to net          |   |   |     |   |   |   |   |
| cash                    from operating activities                    |   |   |     |   |   |   |   |
| Amortization                                                         |   |   | 41,985   |   |   | 51,852 |   |
| Depreciation                                                         |   |   | 1,936    |   |   | 62,450 |   |
| Gain                    on Disposal of Assets                        |   |   | -        |   |   | (6,462 | ) |
| Impairment                    of Goodwill                            |   |   | 125,943  |   |   | - |   |
| Changes                    in assets and liabilities                 |   |   |     |   |   |   |   |
| Accounts                    receivable                               |   |   | (12,373  | )      |   | 4,310 |   |
| Prepaid                    expenses and deposits                     |   |   | 15,622   |   |   | 3,888 |   |
| Accounts                    payable                                  |   |   | 53,322   |   |   | 5,186 |   |
| Reserve                    for warranty                              |   |   | (9,452   | )      |   | (5,000 | ) |
| Deferred                    revenue                                  |   |   | (16,973  | )      |   | (2,365 | ) |
| Due                    to stockholder                                |   |   | 193,652  |   |   | 41,725 |   |
|                                                                 |   |   |     |   |   |   |   |
|                                                                 |   |   |     |   |   |   |   |
| Net                    Cash Flows from Operating Activities          |   |   | (43,356  | )      |   | (22,481 | ) |
|                                                                 |   |   |     |   |   |   |   |
|                                                                 |   |   |     |   |   |   |   |
| CASH                    FLOWS FROM INVESTING ACTIVITIES              |   |   |     |   |   |   |   |
| Purchases                    of property and equipment               |   |   | -        |   |   | - |   |
|                                                                 |   |   |     |   |   |   |   |
|                                                                 |   |   |     |   |   |   |   |
|                                                                 |   |   |     |   |   |   |   |
| CASH                    FLOWS FROM FINANCING ACTIVITIES              |   |   |     |   |   |   |   |
| Borrowings                    (repayments) on bank indebtedness, net |   |   | 11,416   |   |   | 497 |   |
|                                                                 |   |   |     |   |   |   |   |
|                                                                 |   |   |     |   |   |   |   |
|                                                                 |   |   |     |   |   |   |   |
| NET                    CHANGE IN CASH                                |   |   | (31,940  | )      |   | (21,984 | ) |
| Cash,                    beginning of year                           |   |   | 53,376   |   |   | 75,360 |   |
|                                                                 |   |   |     |   |   |   |   |
|                                                                 |   |   |     |   |   |   |   |
| CASH,                    END OF YEAR                                 |   | $      | 21,436   |   | $      | 53,376 |   |
|                                                                 |   |   |     |   |   |   |   |
| SUPPLEMENTAL                    DISCLOSURE OF CASH                   |   |   |     |   |   |   |   |
| FLOW                    INFORMATION                                  |   |   |     |   |   |   |   |
| Interest                    paid                                     |   | $      | 5,834    |   | $      | 5,143 |   |
|                                                                 |   |   |     |   |   |   |   |
|                                                                 |   |   |     |   |   |   |   |
| Income                    taxes paid                                 |   | $      | —  |   | $      | — |   |
|                                                                 |   |   |     |   |   |   |   |

----

**HOMELIFE,          INC. AND SUBSIDIARIES**

**Consolidated          Statements of Stockholders’ Equity**

**Years          ended May 31, 2007 and 2006**

|                                     |   |                            |       |                                                             |   |                            |   |                                 |    |        |   |                                                |   |    |    |
|------------------------------------------|--------|---------------------------------|------------|------------------------------------------------------------------|--------|---------------------------------|--------|--------------------------------------|---------|-------------|--------|-----------------------------------------------------|--------|---------|---------|
|                                     |   | Common                    Stock |       | Class                    APreferredStock                    - 8% |   | Stock                      - 6% |   | AdditionalPaid                    in |    | Accumulated |   | Accumulated                      OtherComprehensive |   |
|                                     |   | Shares                          |       | Amount                                                           |   | Shares                          |   | Amount                               |    | Shares      |   | Amount                                              |   | Capital |    | Deficit |   | Income |   |
|                                     |   |                            |       |                                                             |   |                            |   |                                 |    |        |   |                                                |   |    |    |   |   |   |   |
|                                     |   |                            |       |                                                             |   |                            |   |                                 |    |        |   |                                                |   |    |    |   |   |   |   |
|                                     |   |                            |       |                                                             |   |                            |   |                                 |    |        |   |                                                |   |    |    |   |   |   |   |
| BALANCE,                    MAY 31, 2005 |   |                            | 12,371,886 |                                                             | $      | 12,372                          |   |                                 | 10,000  |        | $      | 1,000,000                                           |   |    | 50      |   | $ | 25,000 |   | $ | 3,731,741 |   | $ | (4,748,978 | ) | $ | (1,747 | ) |
|                                     |   |                            |       |                                                             |   |                            |   |                                 |    |        |   |                                                |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                     |   |                            |       |                                                             |   |                            |   |                                 |    |        |   |                                                |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                    loss              |   |                            | —    |                                                             |   | —                         |   |                                 | — |        |   | —                                             |   |    | — |   |   | — |   |   | — |   |   | (178,065 | ) |   | — |   |
|                                     |   |                            |       |                                                             |   |                            |   |                                 |    |        |   |                                                |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                     |   |                            |       |                                                             |   |                            |   |                                 |    |        |   |                                                |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE,                    MAY 31, 2006 |   |                            | 12,371,886 |                                                             | $      | 12,372                          |   |                                 | 10,000  |        | $      | 1,000,000                                           |   |    | 50      |   | $ | 25,000 |   | $ | 3,731,741 |   | $ | (4,927,043 | ) | $ | (1,747 | ) |
|                                     |   |                            |       |                                                             |   |                            |   |                                 |    |        |   |                                                |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                     |   |                            |       |                                                             |   |                            |   |                                 |    |        |   |                                                |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                     |   |                            |       |                                                             |   |                            |   |                                 |    |        |   |                                                |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                     |   |                            |       |                                                             |   |                            |   |                                 |    |        |   |                                                |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                    loss              |   |                            | —    |                                                             |   | —                         |   |                                 | — |        |   | —                                             |   |    | — |   |   | — |   |   | — |   |   | (437,018 | ) |   | — |   |
|                                     |   |                            |       |                                                             |   |                            |   |                                 |    |        |   |                                                |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                     |   |                            |       |                                                             |   |                            |   |                                 |    |        |   |                                                |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE,                    MAY 31, 2007 |   |                            | 12,371,886 |                                                             | $      | 12,372                          |   |                                 | 10,000  |        | $      | 1,000,000                                           |   |    | 50      |   | $ | 25,000 |   | $ | 3,731,741 |   | $ | (5,364,061 | ) | $ | (1,747 | ) |
|                                     |   |                            |       |                                                             |   |                            |   |                                 |    |        |   |                                                |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

**HOMELIFE,          INC. AND SUBSIDIARIES**

**Notes          to Consolidated Financial Statements**

**May          31, 2007 and 2006**

|   | 1. | MANAGEMENT’S                    PLANS AND FUTURE OPERATIONS |
|--------|----|-------------------------------------------------------------------|

|   | a) | During                    recent prior fiscal years, the company settled certain lawsuits                    regarding                    the former Calgary operations and the current Michigan operations                    which                    will further reduce legal fees and management                    involvement |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |
|--------|--------|--------|
|   | b) | The company is currently focusing                  on: |
|--------|----|--------------------------------------------------------|

|   | - | attempting                    to raise additional funding through private and public                    offering, |
|--------|---|-------------------------------------------------------------------------------------------------------------------|

|   | - | investigating                    and pursing potential                    mergers/acquisitions, |
|--------|---|-------------------------------------------------------------------------------------------------|

|   | - | the                    core business of franchising                    nationwide |
|--------|---|-----------------------------------------------------------------------------------|

|   | - | the                    company is making efforts to reduce unnecessary operating expenses                    on a                    monthly basis |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |   | The                    Keim Group Ltd. (“Keim”) and MaxAmerica Home Warranty Company                    (“MaxAmerica”) - 93.33% 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                    for the years                    ended May 31, 2007 and 2006. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**HOMELIFE,            INC. AND SUBSIDIARIES**

**Notes            to Consolidated Financial Statements**

**May            31, 2007 and 2006**

|   | 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, HomeLife California Properties                      Inc. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | ii) | Significant                      Group Concentrations of Credit Risk |
|--------|-----|----------------------------------------------------------------------|

|   |   | The                      company’s accounts receivable are primarily from franchisees in the                      real                      estate brokerage industry. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |   |
|--------|--------|--------|

|   | iii) | Cash                      and Cash Equivalents |
|--------|------|------------------------------------------------|

|   |   | Cash                      and cash equivalents include cash on hand and any other highly                      liquid                      investments purchased with a maturity of three months or less.                      The company                      maintains cash and cash equivalents at financial institutions                      which                      periodically may exceed federally insured amounts. The carrying                      amount                      approximates fair value because of the short-term maturity                      of those                      instruments. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | iv) | Accounts                      Receivable and Allowance for Doubtful                      Accounts |
|--------|-----|---------------------------------------------------------------------------------------------------|

|   |   | Accounts                      receivable are stated net of allowance for doubtful accounts.                      The company                      estimates the allowance based on prior bad debt experience                      and a review of                      existing receivables. Based on these factors, there is an allowance                      for                      doubtful accounts of $35,000 and $10,575 at May 31, 2007 and                      2006,                      respectively. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | v) | Marketable                      Securities |
|--------|----|--------------------------------------------|

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

|   |   |   |
|--------|--------|--------|

|   | vi) | 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. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**HOMELIFE,            INC. AND SUBSIDIARIES**

**Notes            to Consolidated Financial Statements**

**May            31, 2007 and 2006**

|   | vii) | 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. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | viii) | Depreciation                      of Property and Equipment |
|--------|-------|-------------------------------------------------------------|

|   |   | Depreciation                      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 |

----

**HOMELIFE,            INC. AND SUBSIDIARIES**

**Notes            to Consolidated Financial Statements**

**May            31, 2007 and 2006**

|   | xii) | Due                      to Stockholder |
|--------|------|-----------------------------------------|

|   |   | Certain                      disbursements of the company have been paid by a major stockholder,                      and                      accordingly, a liability to the stockholder has been recorded.                      Also                      included in the account is the deferred portion of the President's                      salary,                      a major stockholder. The balance at May 31, 2007 and 2006 was                      $364,361 and                      $170,709, respectively. The amount due has an unstated interest                      rate and                      contains no formal repayment terms. Accordingly, the company                      has imputed                      interest at the prime rate plus 1% (9.25% and 9.00% at May                      31, 2007 and                      2006, respectively). Imputed interest expense for the years                      ended May 31,                      2007 and 2006 was $17,919 and $11,725,                      respectively. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | xiii) | Revenue                      Recognition |
|--------|-------|------------------------------------------|

|   |   | Income                      from the sale of franchises is recognized when received. 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 warranties 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. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | xiv) | 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. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**HOMELIFE,            INC. AND SUBSIDIARIES**

**Notes            to Consolidated Financial Statements**

**May            31, 2007 and 2006**

|   | xv) | 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 options                      is measured                      as the excess, if any, of the quoted market price of the company’s stock                      at the measurement date over the amount an employee must pay                      to acquire                      the stock. See note 10 (f) for a summary of the pro-forma EPS                      determined                      as if the company had applied SFAS No. 123. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | The                      company’s stock option plan prior to 1997 vested immediately. Therefore                      there were no expense amounts to be reflected in the current                      consolidated                      financial statements. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | The                      company has used 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 during the years ended May 31, 2007 and                      2006. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | In                      December 2002, the FASB issued SFAS No. 148, Accounting for                      Stock-Based                      Compensation - Transition and Disclosure - an amendment of                      FASB Statement                      No. 123 (SFAS 148). SFAS 148 amends FASB Statement No. 123,                      Accounting for                      Stock-Based Compensation (SFAS 123), to provide alternative                      methods of                      transition for a voluntary change to the fair value based method                      of                      accounting for stock-based employee compensation. In addition,                      SFAS 123                      has been amended to require disclosure of additional information                      concerning the effects of stock-based employee compensation                      on earnings.                      Finally, SFAS 148 amends APB Opinion 28, Interim Financial                      Reporting, to                      call for disclosure of SFAS 123 proforma information on a quarterly                      basis.                      SFAS 148 is effective for fiscal years ending after December                      15, 2002.                      Interim quarterly disclosures are required for reports containing                      condensed financial statements for periods beginning after                      December 15,                      2002. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | xvi) | Foreign                      Currency Translation |
|--------|------|---------------------------------------------------|

|   |   | Homelife                      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 effect 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 U.S. dollars at the rates on the respective                      dates or at any                      other certain rates. Adjustments resulting from the translation                      are                      included in accumulated other comprehensive income in stockholders’                      equity. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**HOMELIFE,            INC. AND SUBSIDIARIES**

**Notes            to Consolidated Financial Statements**

**May            31, 2007 and 2006**

|   | xvii) | Net                      Loss and Fully Diluted Net Loss Per Weighted Average Common                      Stock |
|--------|-------|-----------------------------------------------------------------------------------------------------------------|

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

|   |   | Fully                      diluted net loss per common stock is computed by dividing net                      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 (note 9) |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |   |
|--------|--------|--------|

|   | xviii) | Use                      of Estimates |
|--------|--------|---------------------------------------|

|   |   | The                      preparation of consolidated financial statements in conformity                      with                      generally accepted accounting principles 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. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                       |   | 2007   |   | 2006   |   |
|------------------------------------------------------------|--------|--------|--------|--------|--------|
|                                                       |   |   |   |   |   |
| Accounts                      receivable                   |   | $      | 57,409 |   | $      | 20,611 |   |
| Less:                      Allowance for doubtful accounts |   |   | 35,000 |   |   | 10,575 |   |
|                                                       |   |   |   |   |   |   |   |
|                                                       |   |   |   |   |   |   |   |
| Accounts                      receivable, net              |   | $      | 22,409 |   | $      | 10,036 |   |
|                                                       |   |   |   |   |   |   |   |

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**HOMELIFE,            INC. AND SUBSIDIARIES**

**Notes            to Consolidated Financial Statements**

**May            31, 2007 and 2006**

|                                                                                                                                                                |   |   |   | 2007   |   | 2006    |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|---------|--------|
|                                                                                                                                                                |   |   |   |   |   |    |   |
| Furniture                      and fixtures                                                                                                                         |   |   |   |   | $      | 230,759 |   | $ | 230,759 |   |
| Computer                      equipment and software                                                                                                                |   |   |   |   |   | 599,038 |   |   | 599,038 |   |
| Leasehold                      improvements                                                                                                                         |   |   |   |   |   | 13,734  |   |   | 13,734 |   |
| Automobile                                                                                                                                                          |   |   |   |   |   | 19,865  |   |   | 19,865 |   |
|                                                                                                                                                                |   |   |   |   |   |    |   |   |   |   |
|                                                                                                                                                                |   |   |   |   |   |    |   |   |   |   |
| Cost                                                                                                                                                                |   |   |   |   |   | 863,396 |   |   | 863,396 |   |
|                                                                                                                                                                |   |   |   |   |   |    |   |   |   |   |
|                                                                                                                                                                |   |   |   |   |   |    |   |   |   |   |
| Less:                      Accumulated depreciation                                                                                                                 |   |   |   |   |   |    |   |   |   |   |
|                                                                                                                                                                |   |   |   |   |   |    |   |   |   |   |
| Furniture                      and fixtures                                                                                                                         |   |   |   |   |   | 230,759 |   |   | 230,689 |   |
| Computer                      equipment and software                                                                                                                |   |   |   |   |   | 598,966 |   |   | 597,100 |   |
| Leasehold                      improvements                                                                                                                         |   |   |   |   |   | 13,734  |   |   | 13,734 |   |
| Automobile                                                                                                                                                          |   |   |   |   |   | 19,865  |   |   | 19,865 |   |
|                                                                                                                                                                |   |   |   |   |   |    |   |   |   |   |
|                                                                                                                                                                |   |   |   |   |   |    |   |   |   |   |
|                                                                                                                                                                |   |   |   |   |   | 863,324 |   |   | 861,388 |   |
|                                                                                                                                                                |   |   |   |   |   |    |   |   |   |   |
|                                                                                                                                                                |   |   |   |   |   |    |   |   |   |   |
| Net                      book value                                                                                                                                 |   |   |   |   | $      | 72      |   | $ | 2,008 |   |
|                                                                                                                                                                |   |   |   |   |   |    |   |   |   |   |
|                                                                                                                                                                |   |   |   |   |   |    |   |   |   |   |
| Depreciation                      expense for the years ended May 31, 2007 and 2006 was $1,864                      and $62,450,                      respectively. |   |   |   |   |   |    |   |   |   |   |
|                                                                                                                                                                |   |   |   |   |   |    |   |   |   |   |
| 6.                      GOODWILL                                                                                                                                    |   |   |   |   |   |    |   |   |   |   |
|                                                                                                                                                                |   |   |   |   |   |    |   |   |   |   |
|                                                                                                                                                                |   |   |   |   |   | 2007    |   |   | 2006 |   |
|                                                                                                                                                                |   |   |   |   |   |    |   |   |   |   |
| Carrying                      value at beginning of year                                                                                                            |   |   |   |   | $      | 225,943 |   | $ | 225,943 |   |
| Less:                      Impairment loss                                                                                                                          |   |   |   |   |   | 125,943 |   |   | - |   |
|                                                                                                                                                                |   |   |   |   |   |    |   |   |   |   |
|                                                                                                                                                                |   |   |   |   |   |    |   |   |   |   |
| Carrying                      value at end of year                                                                                                                  |   |   |   |   | $      | 100,000 |   | $ | 225,943 |   |
|                                                                                                                                                                |   |   |   |   |   |    |   |   |   |   |

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**HOMELIFE,            INC. AND SUBSIDIARIES**

**Notes            to Consolidated Financial Statements**

**May            31, 2007 and 2006**

|                                                                                                                                                                        |   | 2007   |    | 2006   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|
|                                                                                                                                                                        |   |   |    |   |   |
| Trademarks                      and franchise rights                                                                                                                        |   | $      | 200,000 |   | $      | 200,000 |   |
| Franchise                      software                                                                                                                                     |   |   | 502,846 |   |   | 502,846 |   |
|                                                                                                                                                                        |   |   |    |   |   |   |   |
|                                                                                                                                                                        |   |   |    |   |   |   |   |
| Cost                                                                                                                                                                        |   |   | 702,846 |   |   | 702,846 |   |
|                                                                                                                                                                        |   |   |    |   |   |   |   |
|                                                                                                                                                                        |   |   |    |   |   |   |   |
| Less:                      Accumulated amortization                                                                                                                         |   |   |    |   |   |   |   |
|                                                                                                                                                                        |   |   |    |   |   |   |   |
| Trademarks                      and franchise rights                                                                                                                        |   |   | 200,000 |   |   | 200,000 |   |
| Franchise                      software                                                                                                                                     |   |   | 501,846 |   |   | 459,761 |   |
|                                                                                                                                                                        |   |   |    |   |   |   |   |
|                                                                                                                                                                        |   |   |    |   |   |   |   |
|                                                                                                                                                                        |   |   | 701,846 |   |   | 659,761 |   |
|                                                                                                                                                                        |   |   |    |   |   |   |   |
|                                                                                                                                                                        |   |   |    |   |   |   |   |
| Net                      book value                                                                                                                                         |   | $      | 1,000   |   | $      | 42,985 |   |
|                                                                                                                                                                        |   |   |    |   |   |   |   |
|                                                                                                                                                                        |   |   |    |   |   |   |   |
| Amortization                      expense for each of the years ended May 31, 2007 and 2006 was                      $41,985 and                      $51,852,respectively. |   |   |    |   |   |   |   |
|                                                                                                                                                                        |   |   |    |   |   |   |   |
| The                      estimated annual amortization expense succeeding May 31, 2007                      are as                      follows:                            |   |   |    |   |   |   |   |
|                                                                                                                                                                        |   |   |    |   |   |   |   |
| 2008                                                                                                                                                                        |   |   |    |   |   | 1,000 |   |
|                                                                                                                                                                        |   |   |    |   |   |   |   |
|                                                                                                                                                                        |   |   |    |   |   |   |   |
|                                                                                                                                                                        |   |   |    |   |   |   |   |
|                                                                                                                                                                        |   |   |    |   | $      | 1,000 |   |

----

**HOMELIFE,            INC. AND SUBSIDIARIES**

**Notes            to Consolidated Financial Statements**

**May            31, 2007 and 2006**

----

**HOMELIFE,            INC. AND SUBSIDIARIES**

**Notes            to Consolidated Financial Statements**

**May            31, 2007 and 2006**

|                                                 |   | 2007   |      | 2006   |   |
|------------------------------------------------------|--------|--------|-----------|--------|--------|
|                                                 |   |   |      |   |   |
| 10,000                      Class A Preferred shares |   | $      | 1,000,000 |   | $      | 1,000,000 |   |
| 50                      Class AA Preferred shares    |   |   | 25,000    |   |   | 25,000 |   |
| 12,371,886                      Common shares        |   |   | 12,372    |   |   | 12,372 |   |
|                                                 |   |   |      |   |   |   |   |
|                                                 |   |   |      |   |   |   |   |
|                                                 |   | $      | 1,037,372 |   | $      | 1,037,372 |   |
|                                                 |   |   |      |   |   |   |   |

----

**HOMELIFE,            INC. AND SUBSIDIARIES**

**Notes            to Consolidated Financial Statements**

**May            31, 2007 and 2006**

|   | d.) |                         Warrant |
|--------|-----|-------------------------------------------|

----

**HOMELIFE,            INC. AND SUBSIDIARIES**

**Notes            to Consolidated Financial Statements**

**May            31, 2007 and 2006**

|   | e) |                           Stock options (cont’d) |
|--------|----|------------------------------------------------------------------|

|                                              |   | 2007                             |     | 2007      |   | 2006                             |   | 2006      |     |
|---------------------------------------------------|--------|----------------------------------|----------|-----------|--------|----------------------------------|--------|-----------|----------|
|                                              |   |                             |     |      |   |                             |   |      |     |
|                                              |   | As                      Reported |     | Pro-Forma |   | As                      Reported |   | Pro-Forma |     |
|                                              |   |                             |     |      |   |                             |   |      |     |
| Net                      loss                     |   | $                                | (437,018 | )         | $      | (437,018                         | )      | $         | (181,965 | ) | $ | (181,965 | ) |
| Basic                      and fully diluted loss |   |                             |     |      |   |                             |   |      |     |   |   |   |   |
| per                      Common share             |   | $                                | (0.04    | )         | $      | (0.04                            | )      | $         | (0.01    | ) | $ | (0.01 | ) |

|   | f) |                             Earnings per share |
|--------|----|----------------------------------------------------------|

|   |   | iii. |                        Exercise of warrant which entitles holder to acquire 200,000                      Common shares                      at $1.75 per share |
|--------|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                                     |   | 2007   |       | 2006   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|
|                                                                                                                                                                                                                                                                     |   |   |       |   |   |
| a)                        Current                                                                                                                                                                                                                                        |   | $      | —    |   | $      | — |   |
| Deferred                                                                                                                                                                                                                                                                 |   |   | —    |   |   | — |   |
|                                                                                                                                                                                                                                                                     |   |   |       |   |   |   |   |
|                                                                                                                                                                                                                                                                     |   |   |       |   |   |   |   |
|                                                                                                                                                                                                                                                                          |   | $      | —    |   | $      | — |   |
|                                                                                                                                                                                                                                                                     |   |   |       |   |   |   |   |
|                                                                                                                                                                                                                                                                     |   |   |       |   |   |   |   |
| b)                        The components of deferred income taxes are comprised as                        follows:                                                                                                                                                       |   |   |       |   |   |   |   |
|                                                                                                                                                                                                                                                                     |   |   |       |   |   |   |   |
| Losses                      carried-forward                                                                                                                                                                                                                              |   | $      | 1,577,200  |   | $      | 1,452,800 |   |
| Valuation                      allowance                                                                                                                                                                                                                                 |   |   | (1,577,200 | )      |   | (1,452,800 | ) |
|                                                                                                                                                                                                                                                                     |   |   |       |   |   |   |   |
|                                                                                                                                                                                                                                                                     |   |   |       |   |   |   |   |
| $                      —                                                                                                                                                                                                                                           |   |   |       |   | $      | — |   |
| c)                        At May 31, 2007, the company had operating losses available                        for                        carry-forward of approximately $3,293,000. These losses expire                        after May                        31, 2024. |   |   |       |   |   |   |   |

----

**HOMELIFE,            INC. AND SUBSIDIARIES**

**Notes            to Consolidated Financial Statements**

**May            31, 2007 and 2006**

|   | 11. | COMMITMENTS                      AND CONTINGENCIES |
|--------|-----|----------------------------------------------------|

----

**HOMELIFE,            INC. AND SUBSIDIARIES**

**Notes            to Consolidated Financial Statements**

**May            31, 2007 and 2006**

|                                                      |   | 2007   |     | 2006   |   |
|-----------------------------------------------------------|--------|--------|----------|--------|--------|
|                                                      |   |   |     |   |   |
| a)                        Revenue by industry             |   |   |     |   |   |
|                                                      |   |   |     |   |   |
| Real                      estate franchise                |   | $      | 376,787  |   | $      | 482,095 |   |
| Home                      warranty                        |   |   | 76,330   |   |   | 102,727 |   |
| Other                      income                         |   |   | 44,354   |   |   | 80,874 |   |
|                                                      |   |   |     |   |   |   |   |
|                                                      |   |   |     |   |   |   |   |
| Total                                                     |   | $      | 497,471  |   | $      | 665,696 |   |
|                                                      |   |   |     |   |   |   |   |
|                                                      |   |   |     |   |   |   |   |
| b)                        Net income (loss) by industry   |   |   |     |   |   |   |   |
|                                                      |   |   |     |   |   |   |   |
| Real                      estate franchise                |   | $      | (451,342 | )      | $      | (215,493 | ) |
| Home                      warranty                        |   |   | 14,324   |   |   | 37,428 |   |
| Other                                                     |   |   | -        |   |   | - |   |
|                                                      |   |   |     |   |   |   |   |
|                                                      |   |   |     |   |   |   |   |
| Total                                                     |   | $      | (437,018 | )      | $      | (178,065 | ) |
|                                                      |   |   |     |   |   |   |   |
|                                                      |   |   |     |   |   |   |   |
|                                                      |   |   |     |   |   |   |   |
| c)                        Identifiable assets by industry |   |   |     |   |   |   |   |
|                                                      |   |   |     |   |   |   |   |
| Real                      estate franchise                |   | $      | 43,626   |   | $      | 234,419 |   |
| Mortgage                      financing                   |   |   | 77,225   |   |   | 77,225 |   |
| Home                      warranty                        |   |   | 27,833   |   |   | 42,093 |   |
| Other                                                     |   |   | 12,658   |   |   | 12,658 |   |
|                                                      |   |   |     |   |   |   |   |
|                                                      |   |   |     |   |   |   |   |
| Total                                                     |   | $      | 161,342  |   | $      | 366,395 |   |
|                                                      |   |   |     |   |   |   |   |
|                                                      |   |   |     |   |   |   |   |
| d)                        Amortization by industry        |   |   |     |   |   |   |   |
|                                                      |   |   |     |   |   |   |   |
| Real                      estate franchise                |   | $      | 41,985   |   | $      | 51,852 |   |
|                                                      |   |   |     |   |   |   |   |
|                                                      |   |   |     |   |   |   |   |
| Total                                                     |   | $      | 41,985   |   | $      | 51,852 |   |
|                                                      |   |   |     |   |   |   |   |
|                                                      |   |   |     |   |   |   |   |
| e)                        Depreciation by industry        |   |   |     |   |   |   |   |
|                                                      |   |   |     |   |   |   |   |
| Real                      estate franchise                |   | $      | 1,864    |   | $      | 62,414 |   |
| Home                      warranty                        |   |   | 72       |   |   | 36 |   |
|                                                      |   |   |     |   |   |   |   |
|                                                      |   |   |     |   |   |   |   |
| Total                                                     |   | $      | 1,936    |   | $      | 62,450 |   |
|                                                      |   |   |     |   |   |   |   |

----

**HOMELIFE,            INC. AND SUBSIDIARIES**

**Notes            to Consolidated Financial Statements**

**May            31, 2007 and 2006**

|                                           |   |   |   | 2007   |   | 2006   |   |
|------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                           |   |   |   |   |   |   |   |
| f)                        Interest by industry |   |   |   |   |   |   |   |
|                                           |   |   |   |   |   |   |   |
| Real                      estate franchise     |   |   |   |   | $      | 23,753 |   | $ | 16,868 |   |
|                                           |   |   |   |   |   |   |   |   |   |   |
| Total                                          |   |   |   |   | $      | 23,753 |   | $ | 16,868 |   |
|                                           |   |   |   |   |   |   |   |   |   |   |

| 2008   |   | $      | 6,768  |   |
|--------|--------|--------|--------|--------|
|   |   |   |   |   |
|   |   | $      | 6,768  |   |
|   |   |   |   |   |

----

**HOMELIFE,            INC. AND SUBSIDIARIES**

**Notes            to Consolidated Financial Statements**

**May            31, 2007 and 2006**

|                                                                           |   | 2007   |   | 2006   |   |
|--------------------------------------------------------------------------------|--------|--------|--------|--------|--------|
|                                                                           |   |   |   |   |   |
|                                                                           |   |   |   |   |   |
| Licensing                      expense accrued or paid to a company controlled |   |   |   |   |   |
| by                      the President                                          |   | $      | 1      |   | $      | 1 |   |
| President's                      salary expense accrued                        |   | $      | 20,000 |   | $      | 20,000 |   |

----