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, 2003

                       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, 2003, were $928,808. As
of May 31, 2003,  Registrant had 6,108,586  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 $91,131.  This calculation is based upon the closing
sales price of $0.03 per share on May 31, 2003.

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

The following documents are incorporated herein by reference: none.

                                       i
<PAGE>

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

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

Item 1         Description of Business                                        1

Item 2         Description of Property                                        6

Item 3         Legal Proceedings                                              6

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

PART II
-------

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

Item 6         Management's Discussion and Analysis                           8

Item 7         Financial Statements                                          12

Item 8         Changes In and Disagreements With Accountants On
                 Accounting and Financial Disclosure                         12

Item 8A        Controls and Procedures                                       12

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                                        14

Item 11        Security Ownership of Certain Beneficial Owners and
                 Management                                                  15

Item 12        Certain Relationships and Related Transactions                15

PART IV
-------

Item 13        Exhibits and Reports on Form 8-K                              17

Item 14        Principal Accountant Fees and Services                        18

                                       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

     o    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 38 real estate offices in the State of

                                       2
<PAGE>

California.  Through Red Carpet Keim, the Company services approximately 30 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 32 real estate offices in various states. In addition to
the above,  the Company  offers the following real estate  services  through its
various subsidiaries:

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

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

     o    RETAIL REAL ESTATE BROKERAGE  SERVICES - The Company owns and operates
          a full service  retail real estate  brokerage  through its  subsidiary
          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  100  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.

                                       3
<PAGE>

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

               d. RETAIL REAL ESTATE BROKERAGE SERVICES

     The  company is engaged in  providing  real  estate  brokerage  services to
buyers and sellers of  residential  property  through its  subsidiary,  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.

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

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

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

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

     In addition to this proprietary  system,  the acquisition by the Company of
companies with both recognizable  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.

                                       4
<PAGE>

     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.

          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.
Thereafter,  the license is  automatically  renewable for additional  eight year
periods at the fair market value.  These  characters  include  Jerome the Gnome,
Crok `N Roll, The Waz, King D Lish and Rock Head.

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

     HomeLife   has   developed   its   Community   Marketing   SuperSystem,   a
lead-generating,  community-based  marketing system that eliminates cold calling
and door-knocking  used by traditional  realtors.  The marketing system involves
use of the  fictional  character  "Jerome  the Gnome" and an  accompanying  cash
sweepstakes.  Jerome is a child-friendly mascot, a "child magnet" who appeals to
children.  Real  estate  offices  hire a person to wear a life size  "Jerome the
Gnome" costume to act as HomeLife's  goodwill  ambassador at shopping malls, and
community events, such as business openings,  in parks and plazas to promote the
HomeLife  name.  The Jerome the Gnome  character  and  accompanying  sweepstakes
encourages  clients to complete  cards  listing  personal  information  and real
estate needs. The sweepstakes is an annual, national sweepstakes offering a 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.

                                       5
<PAGE>

          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.

          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  6  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 100 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 is obligated on a
lease for its other premise located in Troy, Michigan,  which expires in January
2004.  Annual lease  payments  exclusive of property taxes and insurance for all
locations through 2006 are $108,125.


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

     The company is involved  in a lawsuit  with the sellers of Builders  Realty
     (Calgary)  Ltd.  to reduce  the  purchase  price paid for  Builders  Realty
     (Calgary) Ltd. The sellers of Builders  Realty  (Calgary) Ltd. have filed a
     counter lawsuit for breach of contract.  Settlement discussions between the
     parties are in progress and a final settlement agreed to by both parties is
     expected during the next fiscal year.

     In connection with the above lawsuit, the company has 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.

                                       6
<PAGE>

     Further action with this case will be dependent on the outcome of the above
     mentioned lawsuit.

     In addition to the above lawsuits, the sellers of Builders Realty (Calgary)
     Ltd.,  through  another  business  entity,  have  filed a  lawsuit  against
     Builders Realty (Calgary) Ltd. for unpaid rents and commissions and damages
     incurred at rental offices.  Management is defending its position, with any
     further  action with this case being  dependent on the outcome of the above
     mentioned lawsuits.

     On July 31, 2003,  several  realtors  formally  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.  The  company's  defense  position in
     regards  to this  case  will  be  dependent  on the  outcome  of the  above
     mentioned lawsuits.

     The company is 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
     fees and  franchise  fees.  During  the year  ended May 31,  2003,  a court
     settlement offer was declined by the respective parties.  Subsequently, the
     parties have taken the above  mentioned  matter to binding  arbitration and
     expect to settle the matter during the next fiscal year.

     Should any  expenditures  be incurred by the company for the  resolution of
     any of the above mentioned lawsuits, they will be charged to the operations
     of the year in which such expenditures are incurred.

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  2002 and 2003  (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:

---------------------------------------------------------------------------
        2002                          High                       Low
---------------------------------------------------------------------------
Quarter ended
     August 31                       $ 0.20                     $ 0.10
     November 30                     $ 0.11                     $ 0.05
     February 28                     $ 0.09                     $ 0.05
     May 31                          $ 0.15                     $ 0.06
---------------------------------------------------------------------------
        2003
---------------------------------------------------------------------------
Quarter ended
     August 31                       $ 0.11                     $ 0.07
     November 30                     $ 0.13                     $ 0.06
     February 28                     $ 0.06                     $ 0.02
     May 31                          $ 0.05                     $ 0.03
---------------------------------------------------------------------------

     B.   HOLDERS

     As of May 31, 2003, there were 1,013 holders of the Company's Common Stock,
as reported by the Company's transfer agent.

                                       7
<PAGE>

     C.   DIVIDENDS

     The Company has not paid any  dividends  on its Common  stock.  The Company
currently intends to retain any earnings for use in its business,  and therefore
does not anticipate paying cash dividends in the foreseeable future. The Company
has accrued  $2,000 in Preferred  dividends on its Class AA Preferred  stock for
the period ended May 31, 2002 and May 31, 2003.

     D.   RECENT SALES OF UNREGISTERED SECURITIES AND USE OF PROCEEDS

     The Company has not sold any  unregistered  securities for the years ending
May 31, 2003, 2002 and 2001.

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,
2003 and 2002.  Detailed  information  is contained in the financial  statements
included with this document.  This section contains  forward-looking  statements
that involve risks and uncertainties, such as statements of the Company's plans,
objectives,  expectations and intentions. The cautionary statements made in this
document  should  be read as being  applicable  to all  related  forward-looking
statements  wherever  they appear in this  document.  The  following  table sets
forth,  for  the  periods  indicated,  selected  financial  information  for the
Company.

OVERVIEW

     HomeLife,  Inc. is a real estate services provider including franchisor and
licensor.  HomeLife, Inc. utilizes both its proprietary "Super System" marketing
system and its business  combinations  and acquisitions to fuel development as a
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

                                       8
<PAGE>

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, 2003            May 31, 2002
--------------------------------------------------------------------------------
Statement of Operations Data
     Revenue                               $    928,808            $  1,572,870
     Net Loss                              $   (310,364)           $   (219,216)
     Net Loss per share                    $       (.05)           $       (.04)
--------------------------------------------------------------------------------
Balance Sheet Data
     Current Assets                        $    185,095            $    172,826

     Total Property & Equipment, Net       $    199,780            $    259,058

     Total Assets                          $    829,359            $  1,101,444

     Total Current Liabilities             $    461,394            $    518,808

     Accumulated Deficit                   $ (4,486,612)           $ (4,176,248)

     Total Stockholder's Equity            $     36,684            $    347,048
================================================================================

FISCAL YEAR ENDED MAY 31, 2003 COMPARED TO FISCAL YEAR ENDED MAY 31, 2002

     REVENUES. The Company generated gross sales of $928,808 for the fiscal year
ended May 31, 2003  compared to gross  sales of  $1,572,870  for the fiscal year
ended May 31, 2002. Revenue by business segment is shown below:

                              For the year ended             For the year ended
                              May 31, 2003                   May 31, 2002

                               Amount        %                Amount         %
                            -----------    -----           -----------    -----
Real estate brokerage       $        --        0           $   411,776     26.2
Royalty fees                    477,172     51.4               599,152     38.1
Franchise fees                   30,980      3.3                93,142      5.9
Mortgage financing               26,614      2.9                23,693      1.5
Home warranty sales             207,883     22.4               219,873     14.0
Other                           186,159     20.0               225,234     14.3
                            -----------    -----           -----------    -----
TOTAL                       $   928,808    100.0           $ 1,572,870    100.0

The  largest  decrease  in revenue  from  fiscal  year 2002 was from real estate
brokerage. In the prior fiscal year, the Company sold certain assets of Builders
Realty (Calgary) which handled the real estate brokerage sales.

                                       9
<PAGE>

Royalty fees  decreased from $599,152 in fiscal year 2002 to $477,172 for fiscal
year 2003.  This  decrease of 20% relates to fewer  franchise  offices and lower
sales in the current  year.  The current year total number of franchise  offices
was 100 offices  compared to 110 offices in the prior year.  Overall  sales from
the offices were down so in turn, royalty fees were lower.

Franchise  fees  decreased  $62,162  from  $93,142 in the prior  fiscal  year to
$30,980 in the current  fiscal year.  The decrease in franchise fees is a result
of minimal new  franchise  sales during the current  fiscal year.  Additionally,
there were no sales of master  franchise  agreements  during the current  fiscal
year.

Revenue  from  mortgage  financing  was  $26,614 for the year ended May 31, 2003
compared to $23,693 for the year ended May 31, 2002. There was a slight increase
in the number of mortgage  loans  written in fiscal year 2003  constituting  the
increase in sales.

Home  warranty  sales were  $207,883 and $219,873 for the fiscal years ended May
31, 2003 and 2002,  respectively.  The number of warranty  contracts sold in the
current  year was 474 as compared to 621 in fiscal year 2002.  The company  sold
fewer  contracts  during  fiscal year 2003 but the average cost per contract was
higher than in the prior year.

     DIRECT  COSTS.  Direct  costs for the year ended May 31, 2003 was  $241,603
compared  to  $631,789  for the year  ended May 31,  2002.  Consistent  with the
decrease in  revenues  from broker  sales,  attributable  to the sale of certain
assets of Builders Realty  (Calgary),  the direct costs are lower in the current
year due to lower sales commissions associated with this revenue.

     GROSS PROFIT PERCENTAGE. Gross profit percentage increased from 60% for the
year ended May 31, 2002 to 74% for the year ended May 31, 2003. This increase is
primarily  due to lower real estate  commissions  earned and paid to brokers and
agents  in  fiscal  year  2003,  as a result  of the sale of  certain  assets of
Builders Realty (Calgary) in the prior fiscal year. The remaining  product lines
have higher margins than the brokerage income.

     SALARIES  AND  FRINGE  BENEFITS.  Salaries  and fringe  benefits  decreased
$21,800,  from  $338,588 for the fiscal year ended May 31, 2002, to $316,788 for
the fiscal year ended May 31, 2003. 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.

     GENERAL AND ADMINISTRATIVE.  General and administrative  costs decreased to
$332,388  for the year ended May 31, 2003 from  $477,989  for the year ended May
31,  2002.  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 decreased  $14,024 from fiscal year 2002.
This decrease results from the move of the California  office from Newport Beach
to Fountain  Valley and the reduction in office space for the regional office in
Michigan.  Both of these  moves  took place in the prior  year and  resulted  in
savings in the current year with lower rents for the full year.

     FINANCIAL.  Financial  costs for the year  ended May 31,  2002 was  $97,426
compared  to $12,658 for the year ended May 31,  2003.  There was an increase in
the allowance for doubtful accounts in the prior year which was not necessary in
the current year.

     DEPRECIATION.  Depreciation  of fixed assets was 10% or $7,127 lower in the
current fiscal year than in the prior fiscal year. This results from some assets
that became fully depreciated in the prior fiscal year.

     WRITEDOWN OF GOODWILL.  In the current  fiscal year, the company wrote down
goodwill of $133,224  associated  with Max America Home  Warranty in  accordance
with SFAS 142.

     IMPAIRMENT  LOSS.  During the prior  fiscal  year,  the Company  received a
franchise right in lieu of payment of a note  receivable  from a franchisee.  An
impairment loss of $40,000 was recognized during the current fiscal year. During
the prior fiscal year, the company recognized an impairment loss of $79,500.

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

     PREFERRED DIVIDENDS.  Preferred Dividends were $2,000 in the year ended May
31, 2003 and 2002. There were noconversions of preferred stock into common stock
during the current fiscal year.

                                       10
<PAGE>

     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.  In the prior
fiscal year, the Company recorded a loss on its marketable security as the share
price has  declined in the public  market from the  purchase  share  price.  The
Company has recorded significant  operating losses in the prior two years. These
losses  are  primarily  due to  amortization  and  depreciation,  write  down of
goodwill,  and impairment of franchise  rights  purchased.  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 $276,299 as of May 31, 2003.  During the prior  fiscal year,  the
company  disposed  of  certain  assets of  Builders  Realty  (Calgary)  Ltd.,  a
wholly-owned  subsidiary  that  had  suffered  recurring  losses.  In  addition,
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 the prior  fiscal  year,  the company
received  payments on the master franchise  agreements in Portugal and China. No
payments were received in the current  fiscal year.  Payment is expected  during
fiscal year 2004.

     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.

During the prior  fiscal  year,  the company  adopted the  Financial  Accounting
Standards Board issued Statements of Financial  Accounting  Standards (SFAS) No.
142, "Goodwill and Other Intangible  Assets." Under the new rules,  goodwill and
indefinite  lived  intangible  assets are no longer  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.

                                       11
<PAGE>

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.

                                    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               55            President and Director

Terry A. Lyles, Ph.D.         44            Director

F. Bryson Farrill             75            Director

Charles Goodson               48            Vice President

Marie May                     36            Chief Financial Officer, Secretary
                                            and Director

                                       12
<PAGE>

ANDREW CIMERMAN,  55, 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, 44,  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,  75,  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,  48, VICE  PRESIDENT has been employed by the company,  or its
subsidiary  companies  since March 1992.  Mr. Goodson had 16 years of commercial
banking  experience prior to joining HomeLife Realty Services.  He is a licensed
realtor.  Mr. Goodson  earned his B.S.  degree in Business  Administration  from
California State University, Northridge.

MARIE M. MAY, 36, CHIEF FINANCIAL OFFICER,  SECRETARY AND DIRECTOR has been with
the  company  since July  2000.  Ms.  May has 14 years  experience  in finance &
accounting  mainly  related  to small  emerging  businesses.  Prior  to  joining
HomeLife Ms. May was Chief  Financial  Officer for Medical  Data  International,
Inc, a provider  of  healthcare  business  information.  Ms. May is a  certified
public  accountant and received her B.S.  degree in Accounting  from  Pepperdine
University in 1989.

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

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

                                       13
<PAGE>

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:

<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE
--------------------------------------------------------------------------------------------------------------------------
                         Annual Compensation                         Long Term Compensation
                         -------------------                         ----------------------
                                                                     Awards                      Payouts
                                                                     ------                      -------
<S>                      <C>      <C>         <C>     <C>            <C>           <C>           <C>          <C>
Name
and                                                   Other          Restricted
Principal Position                                    Annual         Stock         Options       LTIP         All Other
                         Year     Salary      Bonus   Compensation   Awards        SARs          Payouts      Compensation
Andrew Cimerman,         2003     $20,000        --         --           --          --             --              --
President, Director      2002     $20,000        --         --           --          --             --              --
                         2001     $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.

     The following table describes the above options:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                        SHARES           VALUE         NUMBER OF UNEXERCISED      VALUE OF UNEXERCISED IN-THE-MONEY
NAME                                  ACQUIRED ON       REALIZED     OPTIONS/SARS OF FY-END(#)        OPTIONS/SARS OF FY-END ($)
                                      EXERCISE (#)        ($)        EXERCISABLE/UNEXERCISABLE        EXERCISABLE/UNEXERCISABLE
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>                <C>                <C>                                <C>
F. Bryson Farrill, Director             50,000             0                  50,000                             $3.00
-----------------------------------------------------------------------------------------------------------------------------------
Terry Lyles, Ph.D., Director            50,000             0                  50,000                             $3.00
-----------------------------------------------------------------------------------------------------------------------------------
Gabrielle Jeans, Former employee        30,000             0                  30,000                             $5.00
-----------------------------------------------------------------------------------------------------------------------------------
Total                                  130,000             0                 130,000                                --
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       14
<PAGE>

     (d)  LONG TERM INCENTIVE PLAN (LTIP)

     None.

     (e)  COMPENSATION OF DIRECTORS

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

     (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, 2003: (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.

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

Andrew Cimerman(2)                           2,749,894(3)              48%
Marie M. May(2)                                 60,000(1)               1%
Charles Goodson(2)                                   0                  0%
F. Bryson Farrill(2)                            60,000(4)               1%
Terry Lyles(2)                                  60,000(4)               1%

All Officers and Directors as a group        3,129,894                 51%

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

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.
4.   Includes 50,000 options to purchase Common Stock

                                       15
<PAGE>

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

B.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

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

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

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

     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.

                                       16
<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
99.1      A certification of the Chief Executive Officer pursuant to Section 906
          of the Sarbanes-Oxley Act of 2002,18 U.S.C. Section 1350
99.2      A certification of the Chief Financial Officer pursuant to Section 906
          of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350

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

     (b)  REPORTS ON FORM 8-K

     On  August  29,  2003,  the  Company  filed a Form 8-K  Report  to show the
resignation of Schwartz,  Levitsky, Feldman llp as their independent accountants
and the immediate  appointing of Rotenberg and  Company,LLP  as the  independent
accountants.

                                       17
<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, 2003 and May 31, 2002 by  Schwartz,  Levitzky,  Feldman
llp:

                                        YEAR ENDED MAY 31,
                             -----------------------------------------
                                  2003                         2002
                             ------------                 ------------
Audit Fees                   $     20,000                 $     22,500
Audit-Related Fees           $     18,000                 $     10,900
Tax Fees                     $         --                 $         --
All Other Fees               $      7,000                 $      2,675

Audit-related  fees billed  during the fiscal  years ended May 31, 2003 and 2002
were for  services  related  to  consents  and  assistance  with and  review  of
documents filed with the Securities and Exchange  Commission.  Other fees billed
were for general consultation during the applicable fiscal years. 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 roles
of Schwartz,  Levitzky, Feldman llp and Rotenberg & Co., LLP in providing audit,
audit-related,  and other  services  to  HomeLife  and has  concluded  that such
services are compatible with Schwartz,  Levitzky,  Feldman llp's and Rotenberg &
Co.,  LLP's role as HomeLife's  independent  auditors for the year ended May 31,
2002 and 2003, respectively.

                                       18
<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 15, 2003
          -------------------                            -------------------
          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 15, 2003
          -------------------                            -------------------
          Chief Executive Officer, President, Director

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the filing of HomeLife  Inc.'s (the "Company")  Annual Report
on Form  10-KSB  for the  period  ending May 31,  2003 with the  Securities  and
Exchange Commission on the date hereof (the "Report"),  I, Andrew Cimerman,  the
President and Chief Executive  Officer of the Company,  certify,  pursuant to 18
U.S.C.  Section 1350, as adopted  pursuant to Section 906 of the  Sarbanes-Oxley
Act of 2002, that:

     (1)  The Report fully  complies with the  requirements  of section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
          material respects,  the financial  condition and results of operations
          of the Company.

                                         /s/ Andrew Cimerman
                                         -------------------
                                         Andrew Cimerman
                                         President and
                                         Chief Executive Officer

Date:  September 15, 2003

                                       19
<PAGE>

               CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the filing of HomeLife  Inc.'s (the "Company")  Annual Report
on Form  10-KSB for the period  ending May 31,  2003,  with the  Securities  and
Exchange  Commission  on the date hereof (the  "Report"),  I, Marie M. May,  the
Chief Financial Officer of the Company,  certify,  pursuant to 18 U.S.C. Section
1350,  as adopted  pursuant  to Section 906 of the  Sarbanes-Oxley  Act of 2002,
that:

     (1)  The Report fully  complies with the  requirements  of section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
          material respects,  the financial  condition and results of operations
          of the Company.

                                         /s/ Marie M. May
                                         ----------------
                                         Marie M. May
                                         Chief Financial Officer

Date:  September 15, 2003

                                       20
<PAGE>

                         HOMELIFE, INC. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                            AT MAY 31, 2003 AND 2002

<PAGE>

                         HOMELIFE, INC. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                            AT MAY 31, 2003 AND 2002

                                TABLE OF CONTENTS

Independent Auditors' Report                                            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 - 22

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

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

     We have audited the  accompanying  consolidated  balance sheet of HomeLife,
Inc.  and  Subsidiaries  as of  May  31,  2003,  and  the  related  consolidated
statements of changes in stockholders'  equity,  operations,  and cash flows for
the year then ended.  These financial  statements are the  responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial  statements based on our audit. The financial  statements of HomeLife,
Inc. and  Subsidiaries  as of May 31, 2002, were audited by other auditors whose
report  dated  August  1,  2002,  expressed  an  unqualified  opinion  on  those
statements.

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

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

     The accompanying  financial statements have been prepared assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 to the
financial statements,  the Company has suffered recurring losses and, at May 31,
2003, 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  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.

/s/ Rotenberg & Co., LLP

Rotenberg & Co., LLP
Rochester, New York
  September 4, 2003

<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AT MAY 31, 2003 AND 2002

                                                         2003          2002
ASSETS

     CURRENT ASSETS

          Cash                                      $    123,794   $    113,475
          Marketable securities, at fair value               900            900
          Accounts receivable, net (note 4)               25,869         23,802
          Prepaid expenses and deposits                   34,532         34,649
                                                    ---------------------------
                                                         185,095        172,826

     PROPERTY AND EQUIPMENT, NET (note 5)                199,780        259,058

     GOODWILL, NET (note 6)                              225,943        359,167

     OTHER ASSETS, NET (note7)                           198,541        250,393

     PURCHASED FRANCHISE RIGHTS (note 8)                  20,000         60,000
                                                    ---------------------------
                                                    $    829,359   $  1,101,444
                                                    ---------------------------

<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AT MAY 31, 2003 AND 2002

                                                         2003          2002
LIABILITIES AND STOCKHOLDERS' EQUITY

     CURRENT LIABILITIES

          Bank indebtedness (note 9)                $     43,861   $     83,077
          Accounts payable                               247,978        238,207
          Reserve for warranty                            75,000         54,589
          Preferred dividends payable                      8,770          6,770
          Deferred revenue                                85,785        136,165
                                                    ---------------------------
                                                         461,394        518,808

     DEFERRED REVENUE                                     88,740        113,020

     DUE TO STOCKHOLDER                                  223,032         90,885

     MINORITY INTEREST                                    19,509         31,683
                                                    ---------------------------
                                                         792,675        754,396
                                                    ---------------------------

STOCKHOLDERS' EQUITY

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

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

     ACCUMULATED OTHER COMPREHENSIVE
       INCOME (note 14)                                    4,715          4,715

     ACCUMULATED DEFICIT                              (4,486,612)    (4,176,248)
                                                    ---------------------------
                                                          36,684        347,048
                                                    ---------------------------
                                                    $    829,359   $  1,101,444
                                                    ===========================

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

                                       F-2
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED MAY 31, 2003 AND 2002

                                                         2003          2002
     REVENUE

          Royalty and franchise fees                $    508,152   $    692,294
          Warranty fees                                  207,883        219,873
          Mortgage financing fees                         26,614         23,693
          Real estate brokerage                               --        411,776
          Other income                                   186,159        225,234
                                                    ---------------------------
                                                         928,808      1,572,870

     DIRECT COSTS                                        241,603        631,789
                                                    ---------------------------
                                                         687,205        941,081
                                                    ---------------------------
     EXPENSES

          Salaries and fringe benefits                   316,788        338,588
          General and administrative                     332,388        477,989
          Occupancy                                       59,679         73,703
          Financial                                       12,658         97,426
          Depreciation                                    61,154         68,281
          Amortization                                    51,852         51,852
          Impairment loss on goodwill                    133,224             --
          Impairment loss on purchased
             franchise rights                             40,000         79,500
                                                    ---------------------------
                                                       1,007,743      1,187,339
                                                    ---------------------------

     LOSS BEFORE GAIN ON DISPOSAL OF SUBSIDIARY         (320,538)      (246,258)
     GAIN ON DISPOSAL OF SUBSIDIARY (note 2c)                 --         26,330
                                                    ---------------------------

     LOSS BEFORE MINORITY INTEREST                      (320,538)      (219,928)
          Minority interest                               12,174          2,712
                                                    ---------------------------

     NET LOSS                                           (308,364)      (217,216)
     Preferred dividends                                  (2,000)        (2,000)
                                                    ---------------------------

     NET LOSS APPLICABLE TO COMMON
       SHARES                                       $   (310,364)  $   (219,216)
                                                    ===========================

     BASIC AND FULLY DILUTED LOSS
       PER COMMON SHARE                             $      (0.05)  $      (0.04)
                                                    ===========================

     WEIGHTED-AVERAGE NUMBER
       OF COMMON SHARES                                6,108,586      5,834,887
                                                    ===========================

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

                                       F-3
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MAY 31, 2003 AND 2002

                                                         2003          2002
     CASH FLOWS FROM OPERATING ACTIVITIES
          Net loss                                  $   (308,364)  $   (217,216)
          Adjustments to reconcile net loss to net
              cash from operating activities
          Amortization                                    51,852         51,852
          Depreciation                                    61,154         68,281
          Impairment loss on goodwill                    133,224             --
          Impairment loss on purchased franchise
            rights                                        40,000         79,500
          Change in value of minority interest           (12,174)        (2,712)
          Loss on trading securities                          --          4,350
          Gain on disposal of subsidiary assets               --        (26,330)
          Shares issued for services                          --         34,250
          Warrants issued for services                        --          8,564
          Changes in assets and liabilities
          Accounts receivable                             (2,067)       111,095
          Notes receivable                                    --          6,006
          Prepaid expenses and deposits                      117         22,939
          Accounts payable                                52,856       (122,331)
          Reserve for warranty                            20,411          9,686
          Deferred revenue                               (74,660)      (111,626)
          Due to stockholder                              59,864         50,885
                                                    ---------------------------
                                                          22,213        (32,807)
                                                    ---------------------------

     CASH FLOWS FROM INVESTING ACTIVITIES
               Purchases of property and equipment        (1,876)            --
               Proceeds from sale of subsidiary
                 assets                                       --         38,700
                                                    ---------------------------
                                                          (1,876)        38,700
                                                    ---------------------------

     CASH FLOWS FROM FINANCING ACTIVITIES
          Advances from (repayments on)
            bank indebtedness, net                       (10,018)        32,847
                                                    ---------------------------

     EFFECT OF FOREIGN CURRENCY
          EXCHANGE RATE CHANGES                               --            854
                                                    ---------------------------

     NET CHANGE IN CASH                                   10,319         39,594
          Cash, beginning of year                        113,475         73,881
                                                    ---------------------------

     CASH, END OF YEAR                              $    123,794   $    113,475
                                                    ---------------------------

     SUPPLEMENTAL DISCLOSURE OF CASH
       FLOW INFORMATION
          Interest paid                             $      3,401   $     13,887
                                                    ===========================
          Income taxes paid                         $         --   $         --
                                                    ===========================

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

                                       F-4
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED MAY 31, 2003 AND 2002
<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      Share     Amount     Capital       Deficit      Income

<S>          <C> <C>      <C>         <C>          <C>      <C>               <C>  <C>        <C>          <C>           <C>
BALANCE, MAY 31, 2001     5,463,586   $  5,205     10,000   $1,000,000        50   $ 25,000   $3,195,562   $(3,707,032)  $  3,861

Issuance of Common
  stock (note 10)           645,000        645         --           --        --         --       42,169           --          --
Write off of subscription
  receivable (note 10)           --        259         --           --        --         --      249,741     (250,000)         --
Foreign currency
  translation                    --         --         --           --        --         --           --           --         854
Net loss applicable to
  common shares                  --         --         --           --        --         --           --     (219,216)         --
                         --------------------------------------------------------------------------------------------------------

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 applicable to
  common shares                  --         --         --           --        --         --           --     (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
                         ========================================================================================================
</TABLE>

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

                                       F-5
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2003 AND 2002

1.   MANAGEMENT'S PLANS AND FUTURE OPERATIONS

     At May 31, 2003, 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)   During the prior fiscal year,  the company closed the operations of an
          unprofitable  subsidiary,  HomeLife Builders Realty (Calgary) Ltd, and
          sold certain assets.

     b)   During the prior fiscal  year,  certain  cost  cutting  measures  were
          implemented  to  significantly  reduce office  rental  costs,  payroll
          expenses and certain SEC filing  costs in the Michigan and  California
          offices.

     c)   During the prior fiscal year,  the company  settled  certain  lawsuits
          regarding Network and International  Estates which will further reduce
          legal fees and management involvement.

     d)   The company is currently focusing on:
          -    the core business of franchising,
          -    the home warranty business,
          -    attempting to raise additional funding through private and public
               offering,
          -    investigating and pursing potential mergers/acquisitions.

     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.  [see note 2c]),  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, 2003 and 2002.

                                       F-6
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2003 AND 2002

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

     c)   Business dispositions by the company were as follows:

          On August 31,  2001,  the  company  sold  certain  assets of  HomeLife
          Builders  Realty  (Calgary) Ltd. for $38,700.  The company  recorded a
          gain on the sale of the subsidiary's assets of $26,330.

          There  were no  business  dispositions  during  the year ended May 31,
          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,  amounts due to banks
          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 $17,450 and $57,450 at May 31,
          2003 and 2002, respectively.

     v)   Marketable Securities

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

                                       F-7
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2003 AND 2002

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

     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.

     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 the prior  fiscal  year,  the  company  adopted  the  Financial
          Accounting  Standards Board issued Statements of Financial  Accounting
          Standards  (SFAS) No. 142,  "Goodwill  and Other  Intangible  Assets."
          Under the new rules,  goodwill and indefinite lived intangible  assets
          are no longer  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

                                       F-8
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2003 AND 2002

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

     xi)  Impairment of Long-Term Assets

          In accordance  with the  provisions of SFAS No. 121 Accounting for the
          Impairment  of Long  Lived  Assets  and for  Long-Lived  Assets  to be
          disposed  of, 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,
          2003,   management   expects  its   long-lived   assets  to  be  fully
          recoverable.

     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, 2003
          and 2002 was $223,032 and $90,885, 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%. Imputed interest expense for the years ended May 31, 2003 and 2002
          was $8,402 and $-0-, 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.

                                       F-9
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2003 AND 2002

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  option  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 FAS No. 123.
          The company's stock option plan prior to 1997 which vested immediately
          and  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, 2003 and 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.

     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.

                                      F-10
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2003 AND 2002

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

     xix) Recent Accounting Pronouncements

          In June 2002, the Financial Accounting Standards Board ("FASB") issued
          SFAS No. 146,  Accounting for Costs  Associated  with Exit or Disposal
          Activities  (SFAS 146).  SFAS 146 addresses  financial  accounting and
          reporting for costs  associated  with exit or disposal  activities and
          nullifies   Emerging   Issues  Task  Force  (EITF)  Issued  No.  94-3,
          "Liability  Recognition for Certain Employee  Termination Benefits and
          Other Costs to Exit an Activity (including Certain Costs Incurred in a
          Restructuring)".  This statement  requires  recognition of a liability
          for a  cost  associated  with  exit  or  disposal  activity  when  the
          liability  is  incurred,  as opposed to when the entity  commits to an
          exit plan under EITF No. 94-3.  This statement also  establishes  that
          fair value is objective for initial measurement of the liability.  The
          provisions  of this  statement  are  effective  for  exit or  disposal
          activities  that are initiated  after  December 31, 2002.  The Company
          does not expect the  provisions of SFAS 146 to have a material  impact
          on the Company's financial position or results of operations.

          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.

     xx)  Reclassifications

          Certain  amounts  in the prior  year  financial  statements  have been
          reclassified to conform with the current year presentation.

4.   ACCOUNTS RECEIVABLE
                                                         2003          2002

Accounts receivable                                 $     43,319   $     81,252
Less:  Allowance for doubtful accounts                    17,450         57,450
                                                    ---------------------------
Accounts receivable, net                            $     25,869   $     23,802
                                                    ===========================

                                      F-11
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2003 AND 2002

5.   PROPERTY AND EQUIPMENT
                                                         2003          2002

     Furniture and fixtures                         $    230,759   $    230,759
     Computer equipment and software                     599,038        597,162
     Leasehold improvements                               13,734         13,734
     Automobile                                           19,865         19,865
                                                    ---------------------------
     Cost                                                863,396        861,520
                                                    ---------------------------

     Less: Accumulated depreciation

     Furniture and fixtures                              192,329        178,689
     Computer equipment and software                     447,042        399,628
     Leasehold improvements                                4,380          4,280
     Automobile                                           19,865         19,865
                                                    ---------------------------

                                                         663,616        602,462
                                                    ---------------------------

     Net book value                                 $    199,780   $    259,058
                                                    ===========================

     Depreciation  expense for the years ended May 31, 2003 and 2002 was $61,154
     and $68,281, respectively.

6.   GOODWILL

                                                         2003          2002

     Cost                                           $    393,617   $    393,617
     Less:  Impairment loss                              133,224             --
                                                    ---------------------------

                                                         260,393        393,617
     Less:  Accumulated amortization                      34,450         34,450
                                                    ---------------------------

                                                    $    225,943   $    359,167
                                                    ===========================

     During the year ended May 31, 2003,  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, 2002.

                                      F-12
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2003 AND 2002

6.   GOODWILL (cont'd)

     During the year ended May 31,  2002,  the  Company  adopted  Statements  of
     Financial  Accounting  Standards No. 141, Business  Combinations,  No. 142,
     Goodwill  and Other  Intangible  Assets  and No.  144,  Accounting  for the
     Impairment or Disposal of Long-Lived  Assets.  These statements require 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, 2003 and 2002.

7.   OTHER ASSETS

                                                         2003          2002

     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                     131,167        122,549
     Franchise software                                  373,138        329,904
                                                    ---------------------------
                                                         504,305        452,453
                                                    ---------------------------
     Net book value                                 $    198,541   $    250,393
                                                    ===========================

     Amortization  expense for each of the years ended May 31, 2003 and 2002 was
     $51,852.

     The estimated annual amortization expense for the five years succeeding May
     31, 2003 are as follows:

     2004                                                          $     51,852
     2005                                                                51,852
     2006                                                                51,852
     2007                                                                 8,617
     2008                                                                 8,617
     Thereafter                                                          25,751
                                                                   ------------
                                                                   $    198,541
                                                                   ============

                                      F-13
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2003 AND 2002

8.   PURCHASED FRANCHISE RIGHTS
                                                         2003          2002

     Purchased franchise rights                     $     60,000   $    139,500
     Less:  Impairment loss                               40,000         79,500
                                                    ---------------------------
                                                    $     20,000   $     60,000
                                                    ===========================

     During the prior fiscal  year,  the company  received a franchise  right in
     lieu of payment of a note receivable from a franchisee.

     Monthly  royalty  fees are to be received  from each of the offices in this
     area.  The royalty fees are based on a percent of the gross  revenue of the
     respective  offices.  The franchise rights were tested for impairment.  The
     cash flows from these  rights are lower due to expected  collectibility  of
     the royalty  fees.  Thus  impairment  losses of $40,000  and  $79,500  were
     recognized during the years ended May 31, 2003 and 2002, respectively.

9.   BANK INDEBTEDNESS

     At May 31, 2003,  the company had two available  lines of credit under bank
     loan agreements.  The two lines amount to $95,000 of available credit, with
     a combined  outstanding  balance of $43,861,  and were unsecured  operating
     credit lines bearing  interest at variable  rates ranging from prime plus 2
     1/2% to prime plus 6 1/2%. These lines were held by the corporate office in
     California and are guaranteed by a major stockholder of the company. 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 now  reflected in the Due to  Stockholder  line on the
     Balance Sheet.

     At May 31, 2002, the company had three available lines of credit under bank
     loan  agreements.  Two of the lines amount to $95,000 of available  credit,
     with  a  combined  outstanding  balance  of  $53,879,  and  were  unsecured
     operating  credit lines  bearing  interest at variable  rates  ranging from
     prime  plus 2 1/2% to  prime  plus 6 1/2%.  These  lines  were  held by the
     corporate  office in  California.  The third  line of  credit  amounted  to
     $29,198  (Canadian  $50,000)  and was  held  by the  Calgary  office.  This
     operating  credit  facility bears interest at the bank's prime lending rate
     plus  2%  per  annum  with  interest  payable  monthly.  All  three  credit
     facilities are guaranteed by a major shareholder of the company.

                                      F-14
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2003 AND 2002

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

          Issued
                                                         2003          2002

          10,000 Class A Preferred shares           $  1,000,000   $  1,000,000
          50 Class AA Preferred shares                    25,000         25,000
          6,108,586  Common shares                         6,109          6,109
                                                    ---------------------------

                                                    $  1,031,109   $  1,031,109
                                                    ===========================

     b)   Shares issued since June 1, 2001 were as follows:

          i)   Common shares

               The company issued 265,000 HomeLife Inc. shares in exchange for a
               promissory note  receivable of $250,000.  On October 8, 1999, the
               promissory   note  receivable  in  the  amount  of  $250,000  was
               guaranteed by 100,000 shares of Pioneer Growth Corp. ("Pioneer").
               The value of these  Pioneer  shares have been  guaranteed  by the
               issuer of the  promissory  note for  $250,000  (the  "guaranty").
               Should the value of the Pioneer  shares be less than  $250,000 on
               the due date of the promissory note,  October 8, 2000, the issuer
               of the note has the option to make up the  difference in cash, or
               make up the  difference  with  HomeLife  Inc.'s  common  stock by
               providing  one share of  HomeLife,  Inc's  common  stock for each
               dollar that is deficient.

               On November 1, 2000,  the company agreed to accept full ownership
               rights to a company,  Consolidated  International  Telecom,  Inc.
               ("Consolidated"),  in exchange for the 100,000 shares of Pioneer,
               the guaranty and to extend the repayment  date of the  promissory
               note from October 8, 2000 to December  31, 2001.  The company has
               no  expectation  of  receipt  of  payment  of  this  subscription
               receivable  of  $250,000  and has  written off this amount in the
               prior fiscal year.

                                      F-15
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2003 AND 2002

10.  CAPITAL STOCK (cont'd)

          i)   Common shares (cont'd)

               On November  13,  2002,  the company  entered  into a  settlement
               agreement  whereby  agreeing to accept 150,000 shares of stock in
               Berkshire Asset  Management,  Inc. Based on the fair market value
               of the stock  received,  the company has determined that there is
               no asset to record.

                                                         Capital        Paid in
                                             Number       stock         capital

During the year ended May 31, 2002,
105,000 Common shares were issued in
consideration of services rendered at
the fair market value of services
received                                     105,000     $    105      $  7,145

During the year ended May 31, 2002,
540,000 Common shares were issued for
acquisition of assets (note 14d)             540,000          540        26,460

During the year ended May 31, 2002,
replacement warrants were issued                  --           --         8,564
                                            -----------------------------------

                                             645,000     $    645      $ 42,169
                                            ===================================

     c)   Contingent shares to be issued

          In the  purchase  agreement  for the  acquisition  of Builders  Realty
          (Calgary)  Ltd.,  the  company  issued  common  stock  as  part of the
          purchase price. 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).

     d)   Warrant

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

          During the prior fiscal year,  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.  The company recorded these
          replacement warrants in the amount of $8,564 as expense.

                                      F-16
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2003 AND 2002

10.  CAPITAL STOCK (cont'd)

     e)   Stock options

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

     f)   Stock option plan

          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

          Pro-forma  information  regarding net income and earnings per share is
          required by SFAS No. 123, Accounting for Stock Based Compensation, and
          has been  determined  as if the company had accounted for its employee
          stock  options  based on fair  values  at the grant  date for  options
          granted.  The company's  pro-forma  information for the year ended May
          31,  2003 and 2002  would  have been as  follows:
<TABLE>
<CAPTION>
                                                  2003             2003             2002             2002
                                          ------------     ------------    -------------    -------------
                                           As Reported        Pro-Forma      As Reported        Pro-Forma
                                          ------------     ------------    -------------    -------------

          <S>                             <C>              <C>              <C>              <C>
          Net loss for common shares      $   (310,364)    $   (310,364)    $   (219,216)    $   (219,216)

          Basic and fully diluted loss
            per Common share              $      (0.05)    $      (0.05)    $      (0.04)    $      (0.04)
</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)]

                                      F-17
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2003 AND 2002

11.  INCOME TAXES
                                                         2003          2002
     a)   Current                                   $         --   $         --
          Deferred                                            --             --
                                                    ---------------------------
                                                    $         --   $         --
                                                    ===========================

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

          Losses carried-forward                    $  1,260,000   $    950,000
          Valuation allowance                         (1,260,000)      (950,000)
                                                    ---------------------------
                                                    $         --   $         --
                                                    ===========================

     c)   At May 31, 2003,  the company had  non-capital  losses  available  for
          carry-forward of approximately  $2,800,000.  These losses expire after
          May 31, 2023.

12.  PROPOSED REORGANIZTION

     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.  CONTINGENT LIABILITIES

     The company is involved  in a lawsuit  with the sellers of Builders  Realty
     (Calgary)  Ltd.  to reduce  the  purchase  price paid for  Builders  Realty
     (Calgary) Ltd. The sellers of Builders  Realty  (Calgary) Ltd. have filed a
     counter lawsuit for breach of contract.  Settlement discussions between the
     parties are in progress and a final settlement agreed to by both parties is
     expected during the next fiscal year.

     In connection with the above lawsuit, the company has 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.
     Further action with this case will be dependent on the outcome of the above
     mentioned lawsuit.

     In addition to the above lawsuits, the sellers of Builders Realty (Calgary)
     Ltd.,  through  another  business  entity,  have  filed a  lawsuit  against
     Builders Realty (Calgary) Ltd. for unpaid rents and commissions and damages
     incurred at rental offices.  Management is defending its position, with any
     further  action with this case being  dependent on the outcome of the above
     mentioned lawsuits.

     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.  The  company's  defense  position in
     regards  to this  case  will  be  dependent  on the  outcome  of the  above
     mentioned lawsuits.

                                      F-18
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2003 AND 2002

13.  CONTINGENT LIABILITIES (cont'd)

     The company is 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.  During the year ended May 31, 2003, a court settlement
     offer was declined by the  respective  parties.  Subsequently,  the parties
     have taken the above mentioned matter to binding  arbitration and expect to
     settle the matter during the next fiscal year.

     Should any  expenditures  be incurred by the company for the  resolution of
     any of the above mentioned lawsuits, they will be charged to the operations
     of the year in which such expenditures are incurred.

14.  COMPREHENSIVE INCOME

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

                                                         2003          2002

     Net loss                                       $   (308,364)  $   (217,216)
     Other comprehensive gain
     Foreign currency translation adjustments                 --            854
                                                    ---------------------------
     Comprehensive loss                             $   (308,364)  $   (216,362)
                                                    ===========================

15.  SEGMENTED INFORMATION

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

     a)   Revenue by Geographic Area
                                                         2003          2002

          United States of America                  $    928,808   $  1,135,939
          Canada                                              --        436,931
                                                    ---------------------------
                                                    $    928,808   $  1,572,870
                                                    ===========================

     b)   Net loss by Geographic Area

          United States of America                  $   (308,364)  $   (219,336)
          Canada                                              --          2,120
                                                    ---------------------------
                                                    $   (308,364)  $   (217,216)
                                                    ===========================

                                      F-19
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2003 AND 2002

15.  SEGMENTED INFORMATION (cont'd)

                                                         2003          2002
     c)   Identifiable Assets by Geographic Area

          United States of America                  $    829,359   $  1,101,444
          Canada                                              --             --
                                                    ---------------------------
                                                    $    829,359   $  1,101,444
                                                    ===========================

     d)   Amortization by Geographic Area

          United States of America                  $     51,852   $     51,852
          Canada                                              --             --
                                                    ---------------------------
                                                    $     51,852   $     51,852
                                                    ===========================

     e)   Depreciation by geographic area

          United States of America                  $     61,154   $     68,281
          Canada                                              --             --
                                                    ---------------------------
                                                    $     61,154   $     68,281
                                                    ===========================

     f)   Interest by geographic area

          United States of America                  $     11,803   $     13,887
          Canada                                              --             --
                                                    ---------------------------
                                                    $     11,803   $     13,887
                                                    ===========================

     g)   Revenue by industry

          Real estate franchise                     $    508,152   $    692,294
          Real estate brokerage                               --        411,776
          Mortgage financing                              26,614         23,693
          Home warranty                                  207,883        219,873
          Other income                                   186,159        225,234

                                                    ---------------------------
     Total                                          $    928,808   $  1,572,870
                                                    ===========================

                                      F-20
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2003 AND 2002

15.  SEGMENTED INFORMATION (cont'd)

                                                         2003          2002

     h)   Net loss by industry

          Real estate franchise                     $   (246,756)  $   (206,412)
          Real estate brokerage                               --          2,120
          Mortgage financing                                 454         (1,302)
          Home warranty                                  (64,262)       (12,888)
          Other                                            2,200          1,266
                                                    ---------------------------
          Total                                     $   (308,364)  $   (217,216)
                                                    ===========================

     i)   Identifiable assets by industry

          Real estate franchise                     $    682,314   $    908,305
          Real estate brokerage                               --             --
          Mortgage financing                              75,575         75,120
          Home warranty                                   55,545        104,295
          Other                                           15,925         13,724
                                                    ---------------------------
          Total                                     $    829,359   $  1,101,444
                                                    ===========================

     j)   Amortization by industry

          Real estate franchise                     $     51,852   $     51,852
          Real estate brokerage                               --             --
          Home warranty                                       --             --
                                                    ---------------------------
          Total                                     $     51,852   $     51,852
                                                    ===========================

     k)   Depreciation by industry

          Real estate franchise                     $     61,010   $     68,137
          Real estate brokerage                               --             --
          Home warranty                                      144            144
                                                    ---------------------------
          Total                                     $     61,154   $     68,281
                                                    ===========================

     l)   Interest by industry

          Real estate franchise                     $     11,803   $     13,887
          Real estate brokerage                               --             --
          Home warranty                                       --             --
                                                    ---------------------------
          Total                                     $     11,803   $     13,887
                                                    ===========================

                                      F-21
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2003 AND 2002

16.  COMMITMENTS

     The company has operating  leases for premises which extend through May 31,
     2006. Future minimum rental payments as of May 31, 2003 under the operating
     lease agreements are as follows:

     2004                                                            $   47,375
     2005                                                                30,375
     2006                                                                30,375
                                                                     ----------
                                                                     $  108,125
                                                                     ==========

     Rent  expense  for the years  ended May 31,  2003 and 2002 was  $54,928 and
     $69,169, respectively.

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

     a)   The  company  issued  105,000  common  shares  in lieu of  payment  of
          expenses during the year ended May 31, 2002.

     b)   The  company  received  franchise  rights in lieu of  payment of notes
          receivable of $139,500 during the year ended May 31, 2002.

     c)   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.

18.  RELATED PARTY TRANSACTIONS

                                                         2003          2002

     Licensing expense accrued or paid to
       a company controlled by the President        $     10,000   $     10,000
     Purchase of franchise rights (note 8)          $         --   $     60,000
     President's salary expense accrued             $     20,000   $     20,000

                                      F-22
<PAGE>