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, 2004

                       Commission File Number #000-1024048
                                 HOMELIFE, INC.
           (Name of small business issuer as specified in its charter)

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

     9475 Heil Avenue, Suite D
       Fountain  Valley, CA                                  92708
(Address of principal executive offices)                   (Zip code)

                            (714) 418-1414 (Issuer's
                     telephone number, including area code)

           Securities registered pursuant to Section 12(b) of the Act:
                                     (None)
           Securities registered pursuant to Section 12(g) of the Act:
                     Common Stock, par value $.001 per share

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

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

Registrant's revenues for its fiscal year ended May 31, 2004, were $769,230. As
of May 31, 2004, Registrant had 12,371,886 shares of its $.001 par value Common
Stock issued and outstanding with an aggregate market value of the common stock
held by non-affiliates of $212,638. This calculation is based upon the closing
sales price of $0.07 per share on May 31, 2004.

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

The following documents are incorporated herein by reference: none.


                                       i
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
PART I                                                                          PAGE
------                                                                          ----
<S>                                                                              <C>
Item 1     Description of Business                                                1

Item 2     Description of Property                                                6

Item 3     Legal Proceedings                                                      6

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

PART II

Item 5     Market for Registrant's Common Equity and Related Stockholder Matters  7

Item 6     Management's Discussion and Analysis                                   7

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
</TABLE>


                                       ii
<PAGE>

PART I

Item 1. Description of Business

A.    Business Development

      1.    Form and Year of Organization

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

      2.    Any bankruptcy, receivership or similar proceeding

      Not Applicable.

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

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

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

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

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

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

         In November 1997, HomeLife incorporated MaxAmerica Financial Services,
Inc. MaxAmerica Financial Services, Inc. provides mortgage-financing services to
the Company's real estate customers. MaxAmerica Financial Services, Inc. acts as
a mortgage brokerage while funding and processing the loans through Allstate
Funding. MaxAmerica Financial Services, Inc. has an agreement with Allstate
Funding to process and fund loans for MaxAmerica Financial Services, Inc.
Allstate Funding is not affiliated with the Company.


                                       1
<PAGE>

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

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

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

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

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

      In September 2001, the company sold certain assets of HomeLifeBuilders
Realty (Calgary) Ltd., a wholly owned subsidiary, for $38,700.

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

      o     Wholly-Owned Subsidiaries - active

      HomeLife Realty Services, Inc., MaxAmerica Financial Services, Inc.,
      HomeLife California Properties, Inc. (formerly named HomeLife Properties
      Inc.), and Real Estate School of Southern California

            Wholly Owned Subsidiaries - inactive

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

      o     Majority-Owned Subsidiaries

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

B.    Business of Issuer

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

      1. Principal Products and Services and their Market

            a. Services and Locations

      The Company maintains its corporate office in Fountain Valley, California
and maintains a regional office in Troy, Michigan. HomeLife operates through
various subsidiaries and companies servicing its franchised trade names. Through
its subsidiary, HomeLife Realty Services, Inc., the Company, services
approximately 36 real estate offices in the State of California. Through Red
Carpet Keim, the Company services approximately 32 real estate offices in the
State of Michigan and through its trade names, Red Carpet Real Estate Services,
Network Real Estate and National Real Estate Services, services approximately 30
real estate offices in various states. In addition to the above, the Company
offers the following real estate services through its various subsidiaries:


                                       2
<PAGE>

      o     Franchise Services - Name recognition, advertising, training, and
            recruiting for franchise offices.

      o     Mortgage Financing - through its subsidiary, MaxAmerica Financial
            Services, Inc.

      o     Retail Real Estate Brokerage Services - The Company owns and
            operates a full service retail real estate brokerage through its
            subsidiary HomeLife California Properties Inc.

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

            b. Franchise and Licensing Operations

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

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

      Franchises are operated in Arizona, California, Florida, Illinois,
Michigan, Nevada, South Carolina, Texas, and Wisconsin and comprise
approximately 98 offices. The franchise relationship is governed by the
franchise offering circular applicable to the state in which the franchisee
operates and according to the terms and conditions of the "Participating
Independent Broker Franchise Agreement". The terms of the franchise agreements
vary depending upon the market in which the franchisee operates. From time to
time, HomeLife offers incentive or bonus plans to attract new franchise members.
These programs may directly or indirectly decrease initial franchise fees of
those franchisees entitled to such bonuses or incentives.

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

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

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

            c. Mortgage Financing

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


                                       3
<PAGE>

            d. Retail Real Estate Brokerage Services

      The company is engaged in providing real estate brokerage services to
buyers and sellers of residential property through its subsidiary, HomeLife
California Properties Inc. These operations are similar to those of franchisee,
i.e. representing buyers and sellers in transactions, soliciting listings,
providing comparison reports, preparing real estate purchase and sale
agreements, marketing and advertising listed properties, assisting clients
through the marketing, appraisal, inspection and closing process, and related
services. The difference with HomeLife California Properties Inc. is that this
is a company-owned operation, as opposed to a franchise.

            e. Home Warranty Services

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

      2.    Distribution Methods

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

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

      3.    Status of Any Publicly Announced New Product or Service

      None.

      4.    Competition

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

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

      5.    Sources and Availability of Raw Materials

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


                                       4
<PAGE>

      6.    Dependence on One or Few Major Customers

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

      7.    Patents, Trademarks, Licenses and Franchises

      The Company owns more than 40 copyrights on unique marketing concepts,
which include printed materials for buying and selling property, point of sale
and sales follow up techniques. The Company licenses exclusive rights from
Jerome's Magic World, Inc., to use its exclusively developed animated characters
for its real estate service business for a period of eight years commencing
October 30, 1995 and ending October 30, 2003 at a cost of $10,000 per year. The
Company renewed the licensing agreement with the following costs: $1 for the
years ending October 30, 2004 & 2005 and $5,000 for the years ending October 30,
2006, 2007 & 2008 The Company will then have the option of renewing the
agreement at the fair market value. These characters include Jerome the Gnome,
Crok `N Roll, The Waz, King D Lish and Rock Head.

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

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

      8.    Need for Government Approval

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

      9.    Effect of any Existing or Proposed Government Approval

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


                                       5
<PAGE>

      10.   Research and Development Costs

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

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

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

      12.   Employees

      As of the date of this filing statement, HomeLife employs 5 full-time
employees. The Company hires independent contractors on an "as needed" basis
only. The Company has no collective bargaining agreements with its employees.
The Company has approximately 98 franchise offices.

ITEM 2 - PROPERTIES

      The company leases a 2,000 square foot office in Fountain Valley,
California. The lease term expires in June 2006. The company leases, on a month
to month basis, its other premise located in Troy, Michigan. Annual lease
payments exclusive of property taxes and insurance for all locations through
2006 are $60,750.

ITEM 3 - LEGAL PROCEEDINGS

      The company was involved in a lawsuit with the sellers of Builders Realty
      (Calgary) Ltd. to reduce the purchase price paid for Builders Realty
      (Calgary) Ltd. The sellers of Builders Realty (Calgary) Ltd. had filed a
      counter lawsuit for breach of contract.

      In connection with the above lawsuit, the company filed a claim against
      the solicitors who were responsible for setting up the original
      transaction between the company and the sellers of Builders Realty
      (Calgary) Ltd.

      In addition to the above lawsuits, the sellers of Builders Realty
      (Calgary) Ltd., through another business entity, filed a lawsuit against
      Builders Realty (Calgary) Ltd. for unpaid rents and commissions and
      damages incurred at rental offices.

      On July 31, 2003, several realtors formerly employed by Builders Realty
      (Calgary) Ltd. filed a lawsuit against the company seeking payment of
      unpaid commissions. These commissions the Company is holding in a trust
      fund as required by a court order.

      On July 19, 2004, all of the above mentioned lawsuits were settled at no
      additional expense to the Company.

      The company was involved in a lawsuit with a franchisee of Red Carpet
      Keim, a wholly-owned subsidiary of the company. A claim in the amount of
      $124,800 was filed on September 13, 2002 as a result of the deterioration
      in value of the individual's stock value of HomeLife, Inc. Additionally,
      the company has filed a counter claim against the franchisee for
      non-payment of royalty and franchise fees.

      This lawsuit was settled on August 20, 2004 in the amount of $85,000. This
      amount has been properly accrued in the current year financial statements.


                                       6
<PAGE>

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

      None.

                                     PART II

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

      A. Market Information

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

      The following table sets forth the high and low bid prices for the
Company's common stock for fiscal years 2003 and 2004 (ended May 31), by
quarter. The prices below reflect inter-dealer quotations, without retail
mark-up, mark-down or commissions and may not represent actual transactions:

--------------------------------------------------------------------------------
                 2003                    High                   Low
--------------------------------------------------------------------------------
Quarter ended
     August 31                           $ 0.15                 $ 0.07
     November 30                         $ 0.12                 $ 0.04
     February 28                         $ 0.07                 $ 0.01
     May 31                              $ 0.10                 $ 0.03
--------------------------------------------------------------------------------
                 2004
--------------------------------------------------------------------------------
Quarter ended
     August 31                           $ 0.04                 $ 0.03
     November 30                         $ 0.06                 $ 0.04
     February 29                         $ 0.08                 $ 0.04
     May 31                              $ 0.35                 $ 0.04
--------------------------------------------------------------------------------

      B.    Holders

      As of May 31, 2004, there were 1,014 holders of the Company's Common
Stock, as reported by the Company's transfer agent.

      C.    Dividends

      The Company has not paid any dividends on its Common stock. As of May 31,
2004 & 2003, the Company has dividends in arrears of $10,770 & $8,770,
respectively on its Class AA Preferred Stock.

      D.    Recent Sales of Unregistered Securities and Use of Proceeds

      The Company has not sold any unregistered securities for the years ending
May 31, 2004, 2003 and 2002.

ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS

      The following is management's discussion and analysis of HomeLife's
financial condition and results of operations for the fiscal years ended May 31,
2004 and 2003. Detailed information is contained in the financial statements
included with this document. This section contains forward-looking statements
that involve risks and uncertainties, such as statements of the Company's plans,
objectives, expectations and intentions. The cautionary statements made in this
document should be read as being applicable to all related forward-looking
statements wherever they appear in this document. The following table sets
forth, for the periods indicated, selected financial information for the
Company.


                                       7
<PAGE>

Overview

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

      From time to time, the Company has entered into strategic alliances with
various companies in order to explore the cross-marketing of their services to
customers of the Company or its franchises. To date, these strategic alliances
have not included any funding agreements or other liabilities on the part of the
Company. Since the end of its fiscal year 2000, HomeLife has formed a strategic
alliance with Allstate Funding. Allstate Funding provides loan processing and
underwriting for MaxAmerica Financial Services, Inc., the real estate mortgage
brokerage subsidiary of HomeLife.

      Management believes that certain key factors that are necessary for growth
rates are as follows:

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

Plan of Operation

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

Results of Operations

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

================================================================================
                                              Year Ended            Year Ended
                                             May 31, 2004          May 31, 2003
--------------------------------------------------------------------------------
Statement of Operations Data
     Revenue                                  $   769,230           $   928,808
     Net Loss                                 $  (123,043)          $  (310,364)
     Net Loss per share                       $      (.02)                 (.05)
--------------------------------------------------------------------------------
Balance Sheet Data                            $   157,740           $   185,095
     Current Assets
                                              $   131,683           $   199,780
     Total Property & Equipment, Net
                                              $   662,055           $   829,359
     Total Assets
                                              $   457,375           $   461,394
     Total Current Liabilities
                                              $(4,609,655)          $(4,486,612)
     Accumulated Deficit
                                              $   164,173           $    36,684
     Total Stockholder's Equity
================================================================================


                                       8
<PAGE>

Fiscal Year Ended May 31, 2004 compared to Fiscal Year Ended May 31, 2003

         Revenues. The Company generated gross sales of $769,230 for the fiscal
year ended May 31, 2004 compared to gross sales of $928,808 for the fiscal year
ended May 31, 2003. Revenue by business segment is shown below:

                                       For the year ended     For the year ended
                                          May 31, 2004           May 31, 2003
                                       ------------------     ------------------
                                         Amount       %        Amount        %
                                       --------     -----     --------     -----
Royalty fees                           $453,025      58.9     $477,172      51.4
Franchise fees                          120,320      15.6       30,980       3.3
Mortgage financing                           --        --       26,614       2.9
Home warranty sales                     125,197      16.3      207,883      22.4
Other                                    70,688       9.2      186,159      20.0
                                       --------     -----     --------     -----
TOTAL                                  $769,230     100.0     $928,808     100.0

      The largest decrease in revenue from fiscal year 2003 was from warranty
sales & other income. Due to a slow down in the Michigan real estate market and
strong competition, warranty sales were lower. Other income was also lower in
the current year due to fewer closed escrows from the retail real estate
brokerage.

      Royalty fees decreased from $477,172 in fiscal year 2003 to $453,025 for
fiscal year 2004. This 5% decrease relates to slightly fewer franchise offices
and lower sales in the current year. The current year total number of franchise
offices was 98 offices compared to 100 offices in the prior year. Overall sales
from the offices were down so in turn, royalty fees were lower.

      Franchise fees increased $89,340 from $30,980 in the prior fiscal year to
$120,320 in the current fiscal year. The increase in franchise fees is a result
of recognizing the deferred revenue from the purchased franchise rights which
were written off during the current year. There were no sales of master
franchise agreements during the current fiscal year.

      There was no mortgage financing income in the current year. The Company
currently does not have a dedicated representative to selling the mortgage
financing as they did in fiscal year 2003.

      Home warranty sales were $125,197 and $207,883 for the fiscal years ended
May 31, 2004 and 2003, respectively. The number of warranty contracts sold in
the current year was 295 compared to 474 in fiscal year 2003. The company sold
fewer contracts during fiscal year 2004 with an average cost per contract also
lower than in the prior year.


                                       9
<PAGE>

      Direct Costs. Direct costs for the year ended May 31, 2004 was $95,529
compared to $241,603 for the year ended May 31, 2003. Consistent with the
decrease in warranty sales and sales from other income, the direct costs are
lower in the current year due to lower warranty expense and sales commissions
associated with these revenues.

      Gross Profit Percentage. Gross profit percentage increased from 74% for
the year ended May 31, 2003 to 88% for the year ended May 31, 2004. This
increase is due to the lower cost of sales.

      Salaries and fringe benefits. Salaries and fringe benefits decreased
$95,544, from $316,788 for the fiscal year ended May 31, 2003, to $221,244 for
the fiscal year ended May 31, 2004. The decrease in salaries expense relates to
one employee in the California office that was replaced during the current year
with an employee with a lower salary and one fewer employee in the Michigan
office.

      General and administrative. General and administrative costs decreased to
$257,674 for the year ended May 31, 2004 from $334,388 for the year ended May
31, 2003. The decrease was primarily due to lower legal fees in the current
fiscal year as well as a company wide monitoring of expenditures.

      Occupancy costs. Occupancy costs are comparable for the two periods.

      Financial. Financial costs for the year ended May 31, 2004 was $32,090
compared to $12,658 for the year ended May 31, 2003. This increase is due to the
write off of uncollectible receivables as well as the accrual of interest on the
amount due to stockholder.

      Depreciation. Depreciation of fixed assets was 11% or $6,943 higher in the
current fiscal year than in the prior fiscal year. This results from current
year depreciation of leasehold improvements in the Michigan office.

      Impairment loss. In the current fiscal year, the company wrote off the
remainder, $20,000, of the purchased franchise rights in accordance with SFAS
144. An impairment loss of $40,000 was recognized during the prior fiscal year.

      Amortization. Amortization of intangibles was comparable for the two
periods.

      Liquidity and capital resources. The Company has 3,750 shares of Voice
Mobility Inc. as a marketable security, and lines of credit with two banks with
available credit of $95,000. The capital requirements of the Company are for
operating expenses and to service and use of its lines of credit. The Company
has recorded significant operating losses in the prior two years. These losses
are primarily due to amortization and depreciation, write down of goodwill, and
impairment of franchise rights purchased and the litigation settlement. The
company does not have any derivative instruments or hedging activities
therefore, the company believes that SFAS No. 133 will have no material impact
on the company's financial statements or notes thereto.

      The company has experienced recurring operating losses and has a working
capital deficiency of $299,635 as of May 31, 2004. Management has initiated
changes in operational procedures, reduced expenses and focused its efforts on
its core business. Management believes that, despite the losses incurred and the
deterioration in stockholders' equity, it has developed a plan, which, if
successfully implemented, can improve the operating results and financial
condition of the company. Furthermore, the company continues its attempt to
raise additional financings through private and public offerings.

      Foreign Franchisees. Foreign franchisees consist of the sale of a master
franchise agreement to an individual in Germany. Payments for this agreement
were scheduled to be made in 12 quarterly payments beginning in October 1999.
Only partial payments have been received, however, and the company is now in
negotiations with the obligor to restructure this obligation. Continued default
of this agreement will deprive the Company of the anticipated payments, but is
anticipated to have no adverse consequences to the operations of the Company,
since it has no commitments of capital of other resources to its foreign
franchisees. During the fiscal year 2001, the company sold master franchise
agreements in Portugal and China. During fiscal year 2002, the company received
payments on the master franchise agreements in Portugal and China. No payments
were received in the current fiscal or prior fiscal year. As of May 31, 2004,
the Company no longer holds these foreign franchise agreements.


                                       10
<PAGE>

      Application of Critical Accounting Policies. The Company's financial
statements and accompanying notes are prepared in accordance with generally
accepted accounting principles in the United States. Preparing financial
statements requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenue, and expenses. These estimates
and assumptions are affected by management's application of accounting policies.
Critical accounting policies for HomeLife include revenue recognition, goodwill
and accounting for income taxes.

      HomeLife recognizes revenue in accordance with Staff Accounting Bulletin
No. 101, "Revenue Recognition in Financial Statements". The Company recognizes
revenue when it is realized or realizable and earned. Income from the sale of
franchises is recognized over a 5-year period. Master franchise agreement fees
are recognized over 10 years. Royalty income stemming from the gross commissions
on the sales of real estate by the franchise offices is recognized at the date
of receipt; this is due to the complexity of attempting to forecast the actual
closing date of the properties. Warranty income is recognized over the term of
the contract which is usually 12 months; anticipated obligations which represent
incurred but not reported losses (IBNR) under these 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.

      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.

                           PART II - OTHER INFORMATION

ITEM 7. FINANCIAL STATEMENTS

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

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

      None.

ITEM 8A. CONTROLS AND PROCEDURES

      Based on the evaluation of the Company's disclosure controls and
procedures by Andrew Cimerman, the Company's Chief Executive Officer and Marie
M. May, the Company's Chief Financial Officer, as of a date within 90 days of
the filing date of this annual report, such officers have concluded that the
Company's disclosure controls and procedures are effective in ensuring that
information required to be disclosed by the Company in the reports that it files
or submits under the Securities and Exchange Act of 1934, as amended, is
recorded, processed, summarized and reported, within the time period specified
by the Securities and Exchange Commission's rules and forms.

      There were no significant changes in the Company's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.


                                       11
<PAGE>

                                    PART III

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

      The directors and officers of the company are as follows:

Name                           Age         Position
----                           ---         --------

Andrew Cimerman                56          President and Director

Terry A. Lyles, Ph.D.          45          Director

F. Bryson Farrill              76          Director

Charles Goodson                49          Vice President

Marie May                      37          Chief Financial Officer,
                                             Secretary and Director

Andrew Cimerman, 56, President and Director, has held the positions of Director
and President since April 1996. For 7 years prior thereto, he was the founder
and majority shareholder of HomeLife Securities, Inc. and its wholly owned
subsidiary HomeLife Realty Services, Inc. Mr. Cimerman is the founder, President
and majority shareholder of: Simcoe Fox Developments, Ltd., a private
development company located in Toronto, Ontario, Canada; HomeLife Cimerman Real
Estate Ltd., a Toronto based real estate company; Jerome's Magic World, Inc.,
the owner of certain animated characters; and, majority shareholder and
President of Realty World America, Inc. Mr. Cimerman owns HomeLife Realty
Services Inc., a Canadian affiliate which operates a real estate franchise
company in Canada. HomeLife Securities is a separate company from HomeLife, Inc.
and HomeLife Securities licenses certain "HomeLife" trademarks and service marks
to HomeLife, Inc. Mr. Cimerman brings over 30 years of real estate service
experience to the company, and is a strong and committed leader focused on the
growth and success of the company.

Terry A. Lyles, Ph.D, 45, Director joined the company as a director in August
1997. Dr. Lyles is a national and international speaker and trainer to
professional athletes, Fortune 500 Companies, schools, universities and public
audiences. Dr. Lyles' program is to reach people around the world with the
message of "balance and excellence." For the past 16 years, Dr. Lyles has
traveled across the United States and around the world conveying this profound
message of "Life Accountability" and "A Better You." Dr. Lyles has conducted a
weekly radio program "A Better You" since May 1, 1994, which is currently heard
by over 1 million people in 65 nations. Dr. Lyles holds a Ph.D degree in
Psychology from Wayne State University in Detroit, Michigan.

F. Bryson Farrill, 76, Director joined the company as a director in February
1997. Mr. Farrill has been in the securities industry for the past 35 years. Mr.
Farrill has held various senior positions, including that of President and
Chairman of McLeod, Young, Weir International, an investment dealer in Toronto,
Canada. He was also the Chairman of Scotia McLeod (USA) Inc. for eleven years.
Mr. Farrill's broad experience is not only utilized in the United States and
Canada but has served to direct the expansion of McLeod, Young, Weir Ltd. into
Europe and Asia through an extensive network of branch offices.

Charles Goodson, 49, Vice President & Director has been employed by the company,
or its subsidiary companies since March 1992. Mr. Goodson had 16 years of
commercial banking experience prior to joining HomeLife Realty Services. He is a
licensed realtor. Mr. Goodson earned his B.S. degree in Business Administration
from California State University, Northridge.

Marie M. May, 37, Chief Financial Officer, Secretary and Director has been with
the company since July 2000. Ms. May has 15 years experience in finance &
accounting mainly related to small emerging businesses. Prior to joining
HomeLife Ms. May was Chief Financial Officer for Medical Data International,
Inc, a provider of healthcare business information. Ms. May is a certified
public accountant and received her B.S. degree in Accounting from Pepperdine
University in 1989.


                                       12
<PAGE>

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

      Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of
the Company's Common Stock, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC"). Officers,
directors and greater than ten percent stockholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that during its 2003 fiscal year, all such filing requirements applicable to its
officers, directors, and greater than 10% beneficial owners were complied with.

ITEM 10-EXECUTIVE COMPENSATION.

      (a)   Summary of Compensation

The following officer of the Company received or accrued the following annual
cash salaries and other compensation:

                           Summary Compensation Table

<TABLE>
<CAPTION>
                               Annual Compensation                          Long Term Compensation
                       -----------------------------------      ----------------------------------------------
                                                                        Awards             Payouts
                                                                -------------------   -----------------------
                                                    Other
Name                                                Annual      Restricted
and                                                 Compen-      Stock       Options    LTIP       All Other
Principal Position      Year     Salary      Bonus  sation      Awards        SARs     Payouts   Compensation
------------------      ----     ------      -----  ------      ------        ----     -------   ------------
<S>                     <C>      <C>           <C>     <C>         <C>         <C>       <C>          <C>
Andrew Cimerman,        2004     $20,000       --      --          --          --        --           --
President, Director     2003     $20,000       --      --          --          --        --           --
                        2002     $20,000       --      --          --          --        --           --
</TABLE>

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

            None.

      (c)   Aggregate Options/SAR Grants

      While the company has not enacted a formal stock option plan for its
directors and senior executives, the company has granted certain directors and
officers options to purchase common stock of the company. Board of Directors
members, Mr. F. Bryson Farrill and Dr. Terry Lyles, were granted options to
purchase 50,000 shares of common stock of the company each. The exercise price
of the option is $3.00 per share. These options are fully vested and
exercisable. Former employee, Gabrielle Jeans, has been granted an option to
purchase 30,000 shares of common stock at the exercise price of $5.00 per share.
Ms. Jeans' options are also fully vested and exercisable. As of May 31, 2004,
all of the above mentioned stock options had expired without being exercised.

      (d)   Long Term Incentive Plan (LTIP)

            None.

      (e)   Compensation of directors

      There was no compensation of directors during the current or prior fiscal
years.


                                       13
<PAGE>

      (f)   Employment Agreements

      On October 25, 1995 the Company entered in an employment agreement with
Andrew Cimerman. The agreement was for a five year term, with an option to renew
it for another five years. The agreement was renewed during fiscal year 2001.
Mr. Cimerman's duties under the agreement include performing all those executive
and managerial duties that are necessary for running and directing the Company's
operations.

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

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

ITEM 11- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of May 31, 2004: (i) each stockholder
known by the Company to be the beneficial owner of more than five percent of the
outstanding Common Stock, (ii) each director of the Company and (iii) all
directors and officers as a group.

<TABLE>
<CAPTION>
Name and address of beneficial owner        Amount and nature of beneficial owner(1)    Percent of class
------------------------------------        ----------------------------------------    ----------------
<S>                                                    <C>                                   <C>
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%
</TABLE>

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

1.    Except as otherwise indicated, the Company believes that the beneficial
      owners of Common Stock listed above, based on information furnished by
      such owners, have sole investment and voting power with respect to such
      shares, subject to community property laws where applicable. Beneficial
      ownership is determined in accordance with the rules of the Securities and
      Exchange Commission and generally includes voting or investment power with
      respect to securities. Shares of Common Stock subject to options or
      warrants currently exercisable, or exercisable within 60 days, are deemed
      outstanding for purposes of computing the percentage of the person holding
      such options or warrants, but are not deemed outstanding for purposes of
      computing the percentage of any other person.

2.    c/o Company's address: 9475 Heil Avenue, Suite D, Fountain Valley, CA
      92708.

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

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


                                       14
<PAGE>

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

      Mr. Cimerman is also the sole shareholder of Jerome's Magic World, Inc.,
the owner of certain characters licensed to the company. The license of these
characters to the Company is for an eight year term expiring in October 2003, at
$10,000 per year to the Company. The license was renewed for five additional
years at $1 per year for the first two years and $5,000 per year for the
remaining three years. Mr. Cimerman is sole shareholder and President of
HomeLife Securities, Inc. HomeLife Securities, Inc. licenses certain "HomeLife"
trademarks and service marks to the Company. The term of the licensing agreement
is eight years commencing October 1995 at no cost to the Company. Thereafter,
the license was renewed for additional five years at no cost to the Company.

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

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


                                       15
<PAGE>

                                     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

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


                                       16
<PAGE>

ITEM 14-PRINCIPAL ACCOUNTANT FEES AND SERVICES.

      The following table sets forth the aggregate fees billed to HomeLife for
the years ended May 31, 2004 and May 31, 2003 by Rotenberg & Co., LLP:

                                                Year Ended May 31,
                                            ----------------------------
                                             2004                 2003
                                            -------              -------
Audit Fees                                  $12,500              $20,000
Audit-Related
Fees                                        $    --              $18,000
Tax Fees                                    $    --              $    --
All Other Fees                              $ 6,000              $ 7,000



Audit-related fees billed during the fiscal years ended May 31, 2004 and 2003
were for services related to consents and assistance with and review of
documents filed with the Securities and Exchange Commission. All income tax
preparation for the Company has been done in house.

On August 23, 2003, HomeLife, Inc.'s Audit Committee participated in and
approved the decision of Schwartz Levitsky Feldman llp to resign as the
Company's independent accountants effective immediately.

On August 23, 2003, the Company has engaged the firm of Rotenberg & Co., LLP as
the Company's independent auditors for the fiscal year ending May 31, 2003, and
as such, no fees had been billed by Rotenberg & Co., LLP through the year ended
May 31, 2003.

The Audit Committee has not adopted any polices or procedures for the
pre-approval of non-audit services. The Audit Committee has considered the role
of Rotenberg & Co., LLP in providing audit, audit-related, and other services to
HomeLife and has concluded that such services are compatible with Rotenberg &
Co., LLP's role as HomeLife's independent auditors for the years ended May 31,
2004 and 2003.


                                       17
<PAGE>

                                   SIGNATURES

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

HOMELIFE, INC.
Registrant


By: /s/ Andrew Cimerman                 Date: September 13 , 2004
   --------------------------------     ----------------------------------------
   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 13, 2004
   ---------------------------------    --------------------------
   Chief Executive Officer,
     President, Director

<PAGE>
                         HOMELIFE, INC. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                            AT MAY 31, 2004 AND 2003


<PAGE>

                         HOMELIFE, INC. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                            AT MAY 31, 2004 AND 2003


                                TABLE OF CONTENTS


Report of Independent Registered Public Accounting Firm                        1

Consolidated Balance Sheets                                                    2

Consolidated Statements of Operations                                          3

Consolidated Statements of Cash Flows                                          4

Consolidated Statements of Stockholders' Equity                                5

Notes to Consolidated Financial Statements                                6 - 21

<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
  and Shareholders
HomeLife, Inc. and Subsidiaries
(A Nevada Corporation)
Fountain Valley, California


      We have audited the accompanying consolidated balance sheets of HomeLife,
Inc. and Subsidiaries as of May 31, 2004 and 2003, and the related consolidated
statements of operations, changes in stockholders' equity, and cash flows for
each of the two years in the period ended May 31, 2004. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

      We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

      In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of HomeLife,
Inc. and Subsidiaries as of May 31, 2004 and 2003, and the results of its
operations and its cash flows for each of the two years in the period ended May
31, 2004, in conformity with accounting principles generally accepted in the
United States of America.

      The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
1 to the consolidated financial statements, the Company has suffered recurring
losses and, at May 31, 2004, has a significant working capital deficiency. Those
conditions raise substantial doubt about its ability to continue as a going
concern. Management's plans regarding those matters are also described in Note
1. The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.


Rotenberg & Co., LLP
Rochester, New York
August 20, 2004

<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AT MAY 31, 2004 AND 2003

                                                              2004          2003

ASSETS

       CURRENT ASSETS

           Cash                                         $  112,974    $  123,794
           Marketable securities, at fair value                900           900
           Accounts receivable, net (note 4)                 8,361        25,869
           Prepaid expenses and deposits                    35,505        34,532
                                                        ------------------------

                                                           157,740       185,095

       PROPERTY AND EQUIPMENT, NET (note 5)                131,683       199,780

       GOODWILL, NET (note 6)                              225,943       225,943

       OTHER ASSETS, NET (note7)                           146,689       198,541

       PURCHASED FRANCHISE RIGHTS (note 8)                      --        20,000
                                                        ------------------------

                                                        $  662,055    $  829,359
                                                        ========================

<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AT MAY 31, 2004 AND 2003

                                                          2004             2003

LIABILITIES AND STOCKHOLDERS' EQUITY

       CURRENT LIABILITIES

       Bank indebtedness (note 9)                 $     42,689     $     43,861
       Accounts payable                                320,088          256,748
       Reserve for warranty                             51,953           75,000
       Deferred revenue                                 42,645           85,785
                                                  -----------------------------

                                                       457,375          461,394

       DEFERRED REVENUE                                     --           88,740

       Due to Stockholder                               19,664          223,032

       MINORITY INTEREST                                20,843           19,509
                                                  -----------------------------

                                                       497,882          792,675
                                                  -----------------------------

       STOCKHOLDERS' EQUITY

       CAPITAL STOCK (note 10)                       1,037,372        1,031,109

       ADDITIONAL PAID IN CAPITAL (note 10)          3,731,741        3,487,472

       ACCUMULATED OTHER COMPREHENSIVE
            INCOME                                       4,715            4,715

       ACCUMULATED DEFICIT                          (4,609,655)      (4,486,612)
                                                  -----------------------------

                                                       164,173           36,684
                                                  -----------------------------

                                                  $    662,055     $    829,359
                                                  =============================

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

                                      - 2 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED MAY 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                     2004             2003

       REVENUE
<S>                                                          <C>              <C>
            Royalty and franchise fees                       $    573,345     $    508,152
            Warranty fees                                         125,197          207,883
            Mortgage financing fees                                    --           26,614
            Other income                                           70,688          186,159
                                                             -----------------------------

                                                                  769,230          928,808

       DIRECT COSTS                                                95,529          241,603
                                                             -----------------------------

                                                                  673,701          687,205
                                                             -----------------------------
       EXPENSES

            Salaries and fringe benefits                          221,244          316,788
            General and administrative                            257,674          334,388
            Occupancy                                              59,453           59,679
            Financial                                              32,090           12,658
            Depreciation                                           68,097           61,154
            Amortization                                           51,852           51,852
            Impairment loss on goodwill                                --          133,224
            Impairment loss on purchased franchise rights          20,000           40,000
            Litigation Settlement                                  85,000               --
                                                             -----------------------------

                                                                  795,410        1,009,743
                                                             -----------------------------

       LOSS BEFORE MINORITY INTEREST                             (121,709)        (322,538)

            Minority interest                                      (1,334)          12,174
                                                             -----------------------------


       NET LOSS                                              $   (123,043)    $   (310,364)
                                                             =============================

       BASIC AND FULLY DILUTED LOSS
          PER COMMON SHARE                                   $      (0.02)    $      (0.05)
                                                             =============================

       WEIGHTED-AVERAGE NUMBER
            OF COMMON SHARES                                    7,169,582        6,108,586
                                                             =============================
</TABLE>

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

                                      - 3 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MAY 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                     2004             2003

       CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                          <C>              <C>
            Net loss                                         $   (123,043)    $   (310,364)
            Adjustments to reconcile net loss to net
                cash from operating activities
            Amortization                                           51,852           51,852
            Bad Debts                                              15,730               --
            Depreciation                                           68,097           61,154
            Impairment loss on goodwill                                --          133,224
            Impairment loss on purchased franchise rights          20,000           40,000
            Change in value of minority interest                    1,334          (12,174)
            Changes in assets and liabilities
            Accounts receivable                                     1,778           (2,067)
            Prepaid expenses and deposits                            (973)             117
            Accounts payable                                       63,340           54,856
            Reserve for warranty                                  (23,047)          20,411
            Deferred revenue                                     (131,880)         (74,660)
            Due to stockholder                                     47,164           59,864
                                                             -----------------------------

                                                                   (9,648)          22,213
                                                             -----------------------------

       CASH FLOWS FROM INVESTING ACTIVITIES
            Purchases of property and equipment                        --           (1,876)
                                                             -----------------------------

       CASH FLOWS FROM FINANCING ACTIVITIES
            Repayments on bank indebtedness, net                   (1,172)         (10,018)
                                                             -----------------------------

       NET CHANGE IN CASH                                         (10,820)          10,319
            Cash, beginning of year                               123,794          113,475
                                                             -----------------------------

       CASH, END OF YEAR                                     $    112,974     $    123,794
                                                             -----------------------------

       SUPPLEMENTAL DISCLOSURE OF CASH
           FLOW INFORMATION
            Interest paid                                    $      4,797     $      3,401
                                                             =============================

            Income taxes paid                                $         --     $         --
                                                             =============================
</TABLE>

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

                                      - 4 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED MAY 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                                                                        Accumulated
                                                         Class A              Class AA        Additional                   Other
                                  Common Stock     Preferred Stock - 6%  Preferred Stock - 8%  Paid in    Accumulated  Comprehensive
                                Shares     Amount   Shares     Amount     Shares    Amount     Capital       Deficit       Income

<S>                          <C>          <C>       <C>      <C>             <C>   <C>       <C>          <C>             <C>
BALANCE, MAY 31, 2002         6,108,586   $ 6,109   10,000   $1,000,000       50   $25,000   $3,487,472   $(4,176,248)    $4,715

Net loss                             --        --       --           --       --        --           --      (310,364)        --
                             -----------------------------------------------------------------------------------------------------

BALANCE, MAY 31, 2003         6,108,586     6,109   10,000    1,000,000       50    25,000    3,487,472    (4,486,612)     4,715

Issuance of shares to
stockholder for expenses
paid and services rendered    6,263,300     6,263       --           --       --        --      244,269            --         --

Net loss                             --        --       --           --       --        --           --      (123,043)        --
                             -----------------------------------------------------------------------------------------------------

BALANCE, MAY 31, 2004        12,371,886   $12,372   10,000   $1,000,000       50   $25,000   $3,731,741   $(4,609,655)    $4,715
                             =====================================================================================================
</TABLE>

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

                                      - 5 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2004 AND 2003


1.    MANAGEMENT'S PLANS AND FUTURE OPERATIONS

      At May 31, 2004, adverse principal conditions and events are prevalent
      that require necessary action by management to enable the company to
      return to profitability and to reverse these adverse conditions and
      events. These conditions and events include recurring operating losses,
      working capital deficiencies, negative cash flow from operations and
      adverse key financial ratios. Management's plans to mitigate these adverse
      conditions and events include:

      a)    Subsequent to fiscal year end, 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 accompanying financial statements do not include any adjustments to
      the recoverability and classification of recorded asset amounts and
      classification of liabilities that might be necessary in the event that
      the Company is unable to continue as a going concern.

2.    BASIS OF CONSOLIDATED FINANCIAL STATEMENTS PRESENTATION

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

      a)    Wholly-owned subsidiaries

            HomeLife Realty Services, Inc., FamilyLife Realty Services, Inc.,
            MaxAmerica Financial Services, Inc., Red Carpet Broker Network,
            Inc., National Sellers Network, Inc., HomeLife Builders Realty
            (Calgary) Ltd. (certain of this subsidiary's assets were sold on
            August 31, 2001.), Aspen Benson & May LLC, HomeLife California
            Realty, Inc., HomeLife California Properties, Inc. (formerly known
            as HomeLife Properties Inc.), and Real Estate School of Southern
            California.

      b)    Majority-owned subsidiaries

            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, 2004 and 2003.

                                      - 6 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2004 AND 2003

3.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      i)    Principal Activities

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

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

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

            The company owns and operates a full service retail real estate
            brokerage through its subsidiary, 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 $15,275 and
            $17,450 at May 31, 2004 and 2003, 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.

                                      - 7 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2004 AND 2003


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

      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

      ix)   Goodwill

            During fiscal year 2002, the company adopted the Financial
            Accounting Standards Board issued Statements of Financial Accounting
            Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets."
            Under SFAS No. 142, goodwill and indefinite lived intangible assets
            are not amortized but are reviewed annually for impairment.
            Separable intangible assets that are not deemed to have an
            indefinite life will continue to be amortized over their useful
            lives. The amortization provisions of SFAS No. 142 apply to goodwill
            and intangible assets acquired after June 30, 2001. With respect to
            goodwill and intangible assets acquired prior to July 1, 2001, the
            Company began applying the new accounting rules effective June 1,
            2001. Consequently the company has changed its accounting policy of
            amortizing goodwill over 40 years to the amortization provisions of
            SFAS No. 142.

      x)    Amortization of Other Assets

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

            Trademarks and franchise rights                    10 years

      xi)   Impairment of Long-Term Assets

            In accordance with the provisions of SFAS No. 144, "Accounting for
            the Impairment or Disposal of Long-Lived Assets", the company's
            policy is to record an impairment loss against the balance of a
            long-lived asset in the period when it is determined that the
            carrying amount of the asset may not be recoverable. This
            determination is based on an evaluation of such factors as the
            occurrence of a significant event, a significant change in the
            environment in which the business assets operate or if the expected
            future non-discounted cash flows of the business was determined to
            be less than the carrying value of the assets. If impairment is
            deemed to exist, the assets will be written down to fair value.
            Management also evaluates events and circumstances to determine
            whether revised estimates of useful lives are warranted. As of May
            31, 2004, management expects its long-lived assets to be fully
            recoverable.

                                      - 8 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2004 AND 2003


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

      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, 2004 and 2003 was $19,664 and $223,032, 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% (5.00% and 5.25% at May 31, 2004 and 2003,
            respectively). Imputed interest expense for the years ended May 31,
            2004 and 2003 was $10,497 and $8,402, respectively.

      xiii) Revenue Recognition

            Income from the sale of franchises is recognized over a 5-year
            period. Master franchise agreement fees are recognized over 10
            years. Royalty income stemming from the gross commissions on the
            sales of real estate by the franchise offices is recognized at the
            date of receipt; this is due to the complexity of attempting to
            forecast the actual closing date of the properties. Warranty income
            is recognized over the term of the contract which is usually 12
            months; anticipated obligations which represent incurred but not
            reported losses (IBNR) under these 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.

                                      - 9 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2004 AND 2003


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

      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, 2004 and 2003.

            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.

                                     - 10 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2004 AND 2003


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

      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 10)

      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.

      xix)  Reclassifications

            Certain amounts in the prior year consolidated financial statements
            have been reclassified to conform with the current year
            presentation. The reclassifications made to the prior year have no
            impact on the net income (loss), or overall presentation of the
            consolidated financial statements.

4.    ACCOUNTS RECEIVABLE
                                                        2004          2003

      Accounts receivable                         $   23,636    $   43,319
      Less:  Allowance for doubtful accounts          15,275        17,450
                                                  ------------------------

      Accounts receivable, net                    $    8,361    $   25,869
                                                  ========================

                                     - 11 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2004 AND 2003


5.    PROPERTY AND EQUIPMENT
                                                        2004          2003

      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                         204,689       192,329
      Computer equipment and software                497,718       447,042
      Leasehold improvements                           9,441         4,380
      Automobile                                      19,865        19,865
                                                  ------------------------

                                                     731,713       663,616
                                                  ------------------------

      Net book value                              $  131,683    $  199,780
                                                  ========================

      Depreciation expense for the years ended May 31, 2004 and 2003 was $68,097
      and $61,154, respectively.

6.    GOODWILL

                                                        2004          2003

      Carrying value at beginning of year         $  225,943    $  359,167
      Less:  Impairment loss                              --       133,224
                                                  ------------------------

      Carrying value at end of year               $  225,943    $  225,943
                                                  ========================

      During the prior fiscal year, cash flows were less than expected for home
      warranty fees due to the loss of key personnel. As a result, based on an
      analysis of the present value of future cash flows, it was determined that
      the goodwill for the home warranty segment was impaired in full. The
      company recorded an impairment loss of $133,224 during the year ended May
      31, 2003. The remaining goodwill balance represents goodwill associated
      with the real estate franchise segment.

      No impairment losses were recorded during the year ended May 31, 2004.

                                     - 12 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2004 AND 2003


6.    GOODWILL (cont'd)

      During fiscal year ended May 31, 2002, the company adopted Statements of
      Financial Accounting Standards No. 142, Goodwill and Other Intangible
      Assets. This statement requires the Company to evaluate the carrying value
      of goodwill and intangible assets based on assumptions and estimates of
      fair value and future cash flow information. These assumptions and
      estimates may differ from actual results. If different assumptions and
      estimates are used, carrying values could be adversely impacted, resulting
      in writedowns that could adversely affect the Company's earnings.

      In accordance with the requirements of SFAS No. 142, the company has not
      amortized goodwill for the years ended May 31, 2004 and 2003.

7.    OTHER ASSETS
                                                        2004          2003

      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                139,783       131,167
      Franchise software                             416,374       373,138
                                                  ------------------------

                                                     556,157       504,305
                                                  ------------------------

      Net book value                              $  146,689    $  198,541
                                                  ========================

      Amortization expense for each of the years ended May 31, 2004 and 2003 was
      $51,852.

      The estimated annual amortization expense for the five years succeeding
      May 31, 2004 are as follows:

      2005                                        $     51,852
      2006                                              51,852
      2007                                               8,617
      2008                                               8,617
      2009                                               8,617
      Thereafter                                        17,134
                                                  ------------

                                                  $    146,689
                                                  ============

                                     - 13 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2004 AND 2003


8.    PURCHASED FRANCHISE RIGHTS
                                                        2004          2003

      Carrying value at beginning of year         $   20,000    $   60,000
      Less:  Impairment loss                          20,000        40,000
                                                  ------------------------

      Carrying value at end of year                       --    $   20,000
                                                  ========================

      Franchise rights were tested for impairment in accordance with SFAS No.
      144. Management determined it was unlikely that the franchise rights would
      be collected. Impairment losses of $20,000 and $40,000 were recognized
      during the years ended May 31, 2004 and 2003, respectively.

9.    BANK INDEBTEDNESS

      At May 31, 2004 and 2003, the company had two available lines of credit
      under bank loan agreements. The two credit lines total $95,000 of
      available credit, with a combined outstanding balance of $42,689 and
      $43,861, respectively. The unsecured operating credit lines bear interest
      at variable rates ranging from prime plus 2 1/2% to prime plus 6 1/2%
      (prime rate was 4.00% and 4.25% at May 31, 2004 and 2003, respectively).
      These lines were held by the corporate office in California.

      During the year ended May 31, 2003, a major stockholder paid off, in full,
      the line of credit held by the former Calgary office. The balance paid off
      by the stockholder is reflected in the Due to Stockholder line on the
      prior year Balance Sheet.

                                     - 14 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2004 AND 2003


10.   CAPITAL STOCK

      a)    Authorized

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

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

            100,000,000  Common shares of $0.001 par value

<TABLE>
<CAPTION>
            Issued
                                                                2004          2003

<S>                                                      <C>           <C>
                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 (6,108,586 - 2003)      12,372         6,109
                                                         -------------------------

                                                         $ 1,037,372   $ 1,031,109
                                                         =========================
</TABLE>

      b)    Shares issued since June 1, 2002 were as follows:

            i)    Common shares

            In March 2004, the company issued 6,263,300 shares of common stock
            to an existing stockholder in exchange for services rendered and
            company expenses personally paid by the stockholder, valued at
            $250,532.

            No shares of common stock were issued during the fiscal year ended
            May 31, 2003.

      c)    Preferred Stock Dividends

            At May 31, 2004 and 2003, the company had $10,770 and $8,770,
            respectively, of preferred stock dividends in arrears on its
            outstanding shares of Class AA Preferred Stock.

      d)    Contingent shares to be issued

            In the purchase agreement for the acquisition of Builders Realty
            (Calgary) Ltd., the company issued common stock as part of the
            purchase price. The value of the common stock issued was set at $5
            per share which was substantially higher than the current market
            value. The company agreed that if the actual market value of the
            stock did not reach $5 per share within one year, the stockholders
            of Builders Realty (Calgary) Ltd., would be issued either additional
            Common shares of HomeLife, Inc. or cash to complete the transaction
            (note 13).

                                     - 15 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2004 AND 2003


10.   CAPITAL STOCK (cont'd)

      e)    Warrant

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

            During the fiscal year ended May 31, 2002, replacement warrants were
            issued. The ten year warrants are for the purchase of an aggregate
            of 200,000 shares of common stock at $1.75 per share.

      f)    Stock options

            On September 18, 1998 the board of directors of the company adopted
            a stock option plan (the "plan") for its directors, employees, and
            consultants. The authorized number of shares of common stock of the
            company which may be granted under the plan is one million shares

            At May 31, 2004, there were no outstanding options under the stock
            option plan. All options that were outstanding as of May 31, 2003
            expired during the fiscal year ended May 31, 2004, without being
            exercised.

            At May 31, 2003, options to various employees of the company to
            acquire 130,000 Common stock had been granted under the stock option
            plan with the following terms:

            100,000 Common shares at $3 per share, granted in February, 1998,
            vested and exercisable for 5 years (these options were extended for
            one additional year during the year ended May 31, 2003).

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

                                     - 16 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2004 AND 2003


10.   CAPITAL STOCK (cont'd)

      f)    Stock options (cont'd)

            Pro-forma information regarding net income and earnings per share is
            required by SFAS No. 123 (as amended by SFAS No. 148), Accounting
            for Stock Based Compensation, and has been determined as if the
            company had accounted for its employee stock options based on fair
            values at the grant date for options granted. The company's
            pro-forma information for the years ended May 31, 2004 and 2003
            would have been as follows:

<TABLE>
<CAPTION>
                                                       2004           2004           2003           2003
                                              -------------  -------------  -------------  -------------

                                                As Reported      Pro-Forma    As Reported      Pro-Forma
                                              -------------  -------------  -------------  -------------

<S>                                              <C>            <C>            <C>            <C>
            Net loss                             $(123,043)     $(123,043)     $(310,364)     $(310,364)
            Basic and fully diluted loss
                 per Common share                $   (0.02)     $   (0.02)     $   (0.05)     $   (0.05)
</TABLE>

      g)    Earnings per share

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

            i.    Conversion of 10,000 Class A Preferred shares to Common shares
            ii.   Conversion of 50 Class AA Preferred shares to Common shares
            iii.  Exercise of warrant which entitles holder to acquire 200,000
                  Common shares at $1.75 per share
            iv.   Exercise of stock options to acquire 130,000 issuance of
                  Common shares
            v.    Common stock which may be required [note 10(c)]

11.   INCOME TAXES
                                                          2004             2003

      a)    Current                               $         --     $         --
            Deferred                                        --               --
                                                  -----------------------------

                                                  $         --     $         --
                                                  =============================

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

            Losses carried-forward                $  1,380,000     $  1,260,000
            Valuation allowance                     (1,380,000)      (1,260,000)
                                                  -----------------------------

                                                  $         --     $         --
                                                  =============================

      c)    At May 31, 2004, the company had non-capital losses available for
            carry-forward of approximately $2,800,000. These losses expire after
            May 31, 2024.

                                     - 17 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2004 AND 2003


12.   PROPOSED REORGANIZATION

      On October 1, 2002, the company entered into a reorganization agreement
      with Anza Capital, Inc. The reorganization agreement was conditioned upon
      the approval of the Board of Directors and shareholders of HomeLife Inc.,
      as well as the shareholders of Anza Capital, Inc. Had the agreement been
      approved, under the agreement, all assets of HomeLife Inc., with the
      exception of the public entity and the Red Carpet real estate brokerage
      trademark and associated franchise operations, would have been assigned to
      Family Life Realty Services, Inc., in exchange for the majority interest
      in HomeLife Inc. of Mr. Andrew Cimerman.

      This proposed reorganization was terminated in agreement by all parties on
      March 12, 2003.

13.   COMMITMENTS AND CONTINGENCIES

      The company was involved in a lawsuit with the sellers of Builders Realty
      (Calgary) Ltd. to reduce the purchase price paid for Builders Realty
      (Calgary) Ltd. The sellers of Builders Realty (Calgary) Ltd. had filed a
      counter lawsuit for breach of contract.

      In connection with the above lawsuit, the company filed a claim against
      the solicitors who were responsible for setting up the original
      transaction between the company and the sellers of Builders Realty
      (Calgary) Ltd.

      In addition to the above lawsuits, the sellers of Builders Realty
      (Calgary) Ltd., through another business entity, filed a lawsuit against
      Builders Realty (Calgary) Ltd. for unpaid rents and commissions and
      damages incurred at rental offices.

      On July 31, 2003, several realtors formerly employed by Builders Realty
      (Calgary) Ltd. filed a lawsuit against the company seeking payment of
      unpaid commissions. The Company is holding these commissions in a trust
      fund as required by a court order.

      On July 19, 2004, all of the above mentioned lawsuits were settled at no
      additional expense to the Company.

      The company was involved in a lawsuit with a franchisee of Red Carpet
      Keim, a wholly-owned subsidiary of the company. A claim in the amount of
      $124,800 was filed on September 13, 2002 as a result of the deterioration
      in value of the individual's stock value of HomeLife, Inc. Additionally,
      the company has filed a counter claim against the franchisee for
      non-payment of royalty and franchise fees.

      This lawsuit was settled on August 20, 2004 in the amount of $85,000. This
      amount has been accrued in the current year financial statements.

                                     - 18 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2004 AND 2003


14.   SEGMENTED INFORMATION

      Segmented information has been provided for the company on the basis of
      different services.

                                                  2004          2003

      a)    Revenue by industry

            Real estate franchise           $  573,345    $  508,152
            Mortgage financing                      --        26,614
            Home warranty                      125,197       207,883
            Other income                        70,688       186,159
                                            ------------------------

            Total                           $  769,230    $  928,808
                                            ========================

      b)    Net income (loss) by industry

            Real estate franchise           $ (147,279)   $ (248,756)
            Mortgage financing                    (450)          454
            Home warranty                       26,257       (64,262)
            Other                               (1,571)        2,200
                                            ------------------------

            Total                           $ (123,043)   $ (310,364)
                                            ========================

      c)    Identifiable assets by industry

            Real estate franchise           $  528,079    $  682,314
            Mortgage financing                  77,125        75,575
            Home warranty                       42,497        55,545
            Other                               14,354        15,925
                                            ------------------------

            Total                           $  662,055    $  829,359
                                            ========================

      d)    Amortization by industry

            Real estate franchise           $   51,852    $   51,852
                                            ------------------------

            Total                           $   51,852    $   51,852
                                            ========================

      e)    Depreciation by industry

            Real estate franchise           $   67,953    $   61,010
            Home warranty                          144           144
                                            ------------------------

            Total                           $   68,097    $   61,154
                                            ========================

                                     - 19 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2004 AND 2003


14.   SEGMENTED INFORMATION (cont'd)

                                                  2004          2003

      f)    Interest by industry

            Real estate franchise           $   15,294    $   11,803
                                            ------------------------

            Total                           $   15,294    $   11,803
                                            ========================

      g)    Significant non-cash transactions by industry

            Real estate franchise           $  270,532    $  112,283
            Home warranty                           --       133,224
                                            ------------------------

            Total                           $  270,532    $  245,507
                                            ========================

            Significant non-cash transactions for the fiscal year ended May 31,
            2004 included the issuance of shares of common stock to a majority
            stockholder in exchange for services performed and expenses
            personally paid by the stockholder, valued at $250,532, and the
            write-off by impairment of the purchased franchise rights, totaling
            $20,000.

            Significant non-cash transactions for the fiscal year ended May 31,
            2003 included the payment of outstanding liabilities and the line of
            credit from the former Calgary office operations by the majority
            stockholder, totaling $72,283, the write-off by impairment of the
            purchased franchise rights, totaling $40,000, and the write-off by
            impairment of the goodwill associated with the home warranty
            segment, totaling $133,224.

15.   COMMITMENTS

      The company has operating leases for premises which extend through May 31,
      2006. Future minimum rental payments as of May 31, 2004 under the
      operating lease agreements are as follows:

      2005                                     $  30,375
      2006                                        30,375
                                               ---------

                                               $  60,750
                                               =========

      Rent expense for the years ended May 31, 2004 and 2003 was $57,768 and
      $54,928, respectively.

                                     - 20 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2004 AND 2003


16.   SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

      a)    A major stockholder paid off all the outstanding payables and the
            revolving line of credit for the Builders Realty (Calgary) Ltd.
            subsidiary in exchange for a single payable to him during the year
            ended May 31, 2003, in the amount of $72,283.

      b)    During the fiscal year ended May 31, 2004, the company issued
            6,263,300 shares of common stock to an existing stockholder in
            exchange for services rendered and company expenses personally paid
            by the stockholder, valued at $250,532.

17.   RELATED PARTY TRANSACTIONS
                                                              2004          2003

      Licensing expense accrued or paid to a
        company controlled by the President             $    4,167    $   10,000
      President's salary expense accrued                $   20,000    $   20,000
      Issuance of 6,263,300 shares of common stock
        to President for accrued salary, accrued
        licensing fees, and expenses personally
        paid by President                               $  250,532    $       --

      During the fiscal year ended May 31, 2004, the company entered into a new
      Licensing Agreement with a company controlled by the President. The
      agreement is for a five-year term, effective November 1, 2003, with annual
      licensing fees due of $1 for the first two years, increasing to $5,000 for
      the final three years of the agreement.

                                     - 21 -
<PAGE>