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, 2006

                       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)

  1503 South Coast Drive, Suite 204
  Costa Mesa, CA                                                  92626
 (Address of principal executive offices)                       (Zip code)

                                 (714) 241-3030
                (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, 2006, were $665,696. As
of May 31, 2006,  Registrant had 12,371,886 shares of its $.001 par value Common
Stock issued and outstanding  with an aggregate market value of the common stock
held by non-affiliates  of $182,162.  This calculation is based upon the closing
sales price of $0.06 per share on May 31, 2006.

Transitional Small Business Disclosure Format (check one). Yes |_| No |X|

The following documents are incorporated herein by reference: none.

                                       i

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
PART I                                                                                PAGE

<S>           <C>                                                                      <C>
Item 1        Description of Business                                                  1

Item 2        Description of Property                                                  6

Item 3        Legal Proceedings                                                        6

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

PART II

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

Item 6        Management's Discussion and Analysis                                     7

Item 7        Financial Statements                                                    11

Item 8        Changes In and Disagreements With Accountants On Accounting and
              Financial Disclosure                                                    11

Item 8A       Controls and Procedures                                                 11

PART III

Item 9        Directors, Executive Officers, Promoters and Control Persons;
              Compliance with Section 16(a) of the Exchange Act                       12

Item 10       Executive Compensation                                                  13

Item 11       Security Ownership of Certain Beneficial Owners and
              Management                                                              14

Item 12       Certain Relationships and Related Transactions                          14

PART IV

Item 13       Exhibits and Reports on Form 8-K                                        16

Item 14       Principal Accountant Fees and Services                                  17
</TABLE>

                                       ii

<PAGE>


PART I

Item 1. Description of Business

      A. Business Development

            1. Form and Year of Organization

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

            2. Any bankruptcy, receivership or similar proceeding

      Not Applicable.

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

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

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

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

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

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

      In November 1997,  HomeLife  incorporated  MaxAmerica  Financial Services,
Inc. MaxAmerica Financial Services, Inc. provides mortgage-financing services to
the Company's real estate customers. MaxAmerica Financial Services, Inc. acts as
a mortgage  brokerage  while funding and processing  the loans through  Allstate
Funding.  MaxAmerica  Financial  Services,  Inc. has an agreement  with Allstate
Funding  to process  and fund  loans for  MaxAmerica  Financial  Services,  Inc.
Allstate  Funding is not  affiliated  with the Company.  In February  1998,  the
Company acquired  Builders Realty (Calgary) Ltd.  Builders Realty (Calgary) is a
two-office residential real estate company located in Calgary,  Alberta, Canada.
Builders  Realty  (Calgary)  Ltd.  changed its trade name to  HomeLife  Builders
Realty and operates as a wholly owned subsidiary of HomeLife, Inc.

                                       1
<PAGE>

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

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

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

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

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

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

      o     Wholly-Owned Subsidiaries - active

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

      Wholly Owned Subsidiaries - inactive

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

      o     Majority-Owned Subsidiaries

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

      The Board of Directors of  Homelife,  Inc.  have signed a letter of intent
dated  August 4, 2005 with R Capital  Partners,  Inc.  for the sale of  majority
control of Homelife,  Inc. and the subsequent acquisition by Homelife of 100% of
the issued and  outstanding  shares owned by shareholders of Price Oil, Inc. The
full sales price has been set at $250,000. Upon confirmation that the full sales
price has been received into escrow, Homelife shall complete a 1 for 5.2 reverse
stock  split of its common  shares  and  preferred  shares  such that a total of
2,379,208  total  shares of common stock shall be issued and  outstanding  and a
total of 9.6154  shares of its  Series AA  preferred  stock  shall be issued and
outstanding  subsequent to the reverse stock split.  Homelife  shall also have a
total of 200,000 warrants issued and outstanding  exercisable at $9.10 per share
(post reverse split) until 2012.

      Upon  completion of the reverse split the  shareholders  of Homelife shall
deliver  to  escrow  a  total  of  1,383,499  shares,  together  with  medallion
guaranteed  stock  powers  sufficient  to transfer  ownership of such shares and
Homelife shall immediately issue and deliver an additional  27,470,551 shares to
the escrow account for a total of 28,854,050.

                                       2
<PAGE>

      At the closing, escrow shall release the Homelife shares to the Price Oil,
Inc. shareholders,  R Capital or assigns. The purchase price will be released to
pay the liabilities and other  obligations of Homelife Realty Services,  Inc., a
wholly-owned subsidiary of Homelife and release the Price shares to Homelife.

      This  agreement  was  terminated  mutually by both  parties on October 31,
2005.

      On  September 7, 2006 the Company  entered  into an Agreement  and Plan of
Merger with MIT Holding,  Inc. This agreement  provides the  following:  (1) tax
free reorganization with MIT Holding,  Inc. whereby MIT becomes the wholly owned
subsidiary  of  HomeLife;  (2)  $250,000  payment to the  Company to pay present
laibilities;  (3) Andrew Cimerman will retain 240,000 shares of our common stock
after a 4.2 to 1 reverse stock split;  Mr. Cimerman will retire a certain amount
of shares since he will own more than 240,000  shares after the 4.2 to 1 reverse
stock  split  and  the  assets  will  be spun  off to him in  consideration  for
retirement of such shares.  The  transaction has a closing date of September 29,
2006,  with a final  closing date of October 31, 2006.  Closing will occur after
MIT's required financial statements are completed and the Company has undertaken
a fairneess opinion for the spin off of the assets to Mr. Cimerman.

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 Costa Mesa,  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
24 real estate offices in the State of California.  Through Red Carpet Keim, the
Company  services  approximately 36 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 28 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.

                                       3
<PAGE>

      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  88  offices.  The  franchise  relationship  is  governed  by  the
franchise  offering  circular  applicable  to the state in which the  franchisee
operates  and  according  to the  terms  and  conditions  of the  "Participating
Independent Broker Franchise  Agreement".  The terms of the franchise agreements
vary depending upon the market in which the  franchisee  operates.  From time to
time, HomeLife offers incentive or bonus plans to attract new franchise members.
These  programs may directly or indirectly  decrease  initial  franchise fees of
those franchisees entitled to such bonuses or incentives.

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

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

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

            c. Mortgage Financing

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

            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

                                       4
<PAGE>

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

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

            3. Status of Any Publicly Announced New Product or Service

      None.

            4. Competition

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

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

            5. Sources and Availability of Raw Materials

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

            6. Dependence on One or Few Major Customers

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

            7. Patents, Trademarks, Licenses and Franchises

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

                                       5
<PAGE>

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

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

            8. Need for Government Approval

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

            9. Effect of any Existing or Proposed Government Approval

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

            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 4  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 88 franchise offices.

ITEM 2 - PROPERTIES

      The company  leases a 1,100 square foot office in Costa Mesa,  California.
The lease term  expires in September  2007.  The company  leases,  on a month to
month basis, its other premise located in Troy, Michigan.  Annual lease payments
exclusive of property taxes and insurance for all locations  through fiscal year
2008 are $27,072.

                                       6
<PAGE>

ITEM 3 - LEGAL PROCEEDINGS

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

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

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

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

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

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

            This  lawsuit  was  settled  on  August  20,  2004 in the  amount of
            $85,000.  This amount was paid by the majority  shareholder  and has
            properly been reflected in the financial statements.

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  2005 and 2006  (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:

---------------------------------------- ---------------------- ----------------
                 2005                    High                   Low
---------------------------------------- ---------------------- ----------------
Quarter ended
     August 31                           $ 0.05                 $ 0.04
     November 30                         $ 0.05                 $ 0.05
     February 29                         $ 0.06                 $ 0.04
     May 31                              $ 0.04                 $ 0.04
---------------------------------------- ---------------------- ----------------

                                       7
<PAGE>

                               2006
---------------------------------------- ---------------------- ----------------
Quarter ended
     August 31                           $ 0.06                 $ 0.04
     November 30                         $ 0.13                 $ 0.05
     February 28                         $ 0.07                 $ 0.06
     May 31                              $ 0.06                 $ 0.06
---------------------------------------- ---------------------- ----------------

      B. Holders

      As of May 31,  2006,  there were 1,012  holders  of the  Company's  Common
Stock, as reported by the Company's transfer agent.

      C. Dividends

      The Company has not paid any dividends on its Common stock.  As of May 31,
2006 & 2005,  the  Company  has  dividends  in  arrears  of  $14,770 &  $12,770,
respectively on its Class AA Preferred Stock.

      D. Recent Sales of Unregistered Securities and Use of Proceeds

      The Company has not sold any unregistered  securities for the years ending
May 31, 2006, 2005 and 2004.

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,
2006 and 2005.  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:

                                       8
<PAGE>

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

Plan of Operation

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

Results of Operations

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

================================================================================

                                       Year Ended      Year Ended
                                       May 31, 2006   May 31, 2005

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

Statement of Operations Data
     Revenue                           $   665,696    $   627,391
     Net Loss                          $  (178,065)   $  (139,323)
     Net Loss per share                $      (.01)   $      (.01)
------------------------------------   -----------    -----------

Balance Sheet Data
     Current Assets                    $    95,459    $   125,641

     Total Property & Equipment, Net   $     2,008    $    64,458

     Total Assets                      $   366,395    $   510,879

     Total Current Liabilities         $   334,520    $   336,202

     Accumulated Deficit               $(4,927,043)   $(4,748,978)

     Total Stockholders' Equity        $  (159,677)   $    24,850
      (Deficit)

================================================================================

Fiscal Year Ended May 31, 2006 compared to Fiscal Year Ended May 31, 2005

         Revenues. The Company generated gross sales of $665,696 for the fiscal
year ended May 31, 2006 compared to gross sales of $627,808 for the fiscal year
ended May 31, 2005. Revenue by business segment is shown below:

                                       9
<PAGE>

                        For the year ended   For the year ended
                        May 31, 2006         May 31, 2005

                      Amount       %         Amount      %
                      --------   -----      --------   -----
Royalty fees          $382,595      57.5    $428,770      68.3
Franchise fees          99,500      14.9      53,237       8.5
Home warranty sales    102,727      15.4     105,311      16.8
Other                   80,874      12.2      40,491       6.4
                      --------   -----      --------   -----
TOTAL                 $665,696     100.0    $627,391     100.0

Overall revenue  increased 6% from fiscal year 2005 mainly due to franchise fees
and other income.

Royalty fees  decreased from $428,770 in fiscal year 2005 to $382,595 for fiscal
year 2006. This 11% decrease  relates to an overall slow down in the real estate
market and lower sales by the franchise offices in the current year. The current
year total number of franchise  offices remained at 88 offices at the end of the
fiscal year.

Franchise  fees  increased  $46,263  from  $53,237 in the prior  fiscal  year to
$99,500 in the current  fiscal year.  The increase in franchise fees is a result
of more franchises sold during the current year.  These new franchises  replaced
the  offices  that left the  company.  There  were no sales of master  franchise
agreements during the current fiscal year.

Home  warranty  sales were  $102,727 and $105,311 for the fiscal years ended May
31, 2006 and 2005,  respectively.  The number of warranty  contracts sold in the
current year was 302 which was comparable to 303 sold in fiscal year 2005. While
the company sold about the same number of contracts during fiscal year 2006, the
average cost per contract was lower than in the prior year.

      Direct  Costs.  Direct  costs for the year ended May 31, 2006 was $154,941
compared to 111,545 for the year ended May 31, 2005.  Direct costs are higher in
the current year although  revenue is lower due to the addition of  commissioned
sales  managers.  The Company is paying a commission  on franchise and brokerage
sales which begun  towards the end of the last  fiscal  year.  The higher  costs
results from a full year of these expenses.

      Gross Profit  Percentage.  Due to the increase in cost of sales during the
current year,  the gross profit  percentage has decreased to 77% from 82% in the
prior year.

      Salaries  and fringe  benefits.  Salaries  and fringe  benefits  increased
$8,755, from $199,183 for the fiscal year ended May 31, 2005 to $207,938 for the
fiscal year ended May 31, 2006. The increase in salaries  expense  relates to an
increase in wages paid to hourly employees in the Michigan office.

      General and administrative.  General and administrative costs increased to
$287,522  for the year ended May 31, 2006 from  $273,660  for the year ended May
31, 2005. This 5% increase was primarily due to additional  marketing  materials
purchased and business promotion expenses.

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

      Financial. Financial costs for the year ended May 31, 2006 was $29,617, an
increase  of $15,755  over the fiscal  year ended May 31,  2005.  This  increase
results mainly from accrued interest due to stockholder.

      Depreciation. Depreciation of fixed assets for the year ended May 31, 2006
was $62,450  compared to $67,225 for the year ended May 31, 2005.  This decrease
is a result of some fixed assets becoming fully depreciated in the current year.

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

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

                                       10
<PAGE>

The company has experienced recurring operating losses and has a working capital
deficiency of $236,499 as of May 31, 2006.  Management has initiated  changes in
operational  procedures,  reduced  expenses  and focused its efforts on its core
business.  Management  believes  that,  despite  the  losses  incurred  and  the
deterioration  in  stockholders'  equity,  it has  developed a plan,  which,  if
successfully  implemented,  can improve  the  operating  results  and  financial
condition  of the company.  Furthermore,  the company  continues  its attempt to
raise additional financings through private and public offerings.

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

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

HomeLife  recognizes  revenue in accordance with Staff  Accounting  Bulletin No.
101,  "Revenue  Recognition  in Financial  Statements".  The Company  recognizes
revenue when it is realized or  realizable  and earned.  Income from the sale of
franchises is recognized over a 5-year period.  Master franchise  agreement fees
are recognized over 10 years. Royalty income stemming from the gross commissions
on the sales of real estate by the  franchise  offices is recognized at the date
of receipt;  this is due to the  complexity of attempting to forecast the actual
closing date of the  properties.  Warranty income is recognized over the term of
the contract which is usually 12 months; anticipated obligations which represent
incurred  but not  reported  losses  (IBNR)  under  these  warranties  have been
recorded as reserve for  warranty  and are based on past loss  experience.  Real
estate  brokerage  income is  recognized  at the close of escrow.  Loan fees are
recognized  as income when the loan is closed and funded at the close of escrow.
Revenue received or receivable,  from the sale of franchises,  master franchises
and  warranties,  which is not  recognized  as income is recorded on the balance
sheet as deferred revenue.

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

                           PART II - OTHER INFORMATION

ITEM 7.   FINANCIAL STATEMENTS

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

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

      None.

                                       11
<PAGE>

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.   It  is  the  opinion  of
management that the internal controls currently in place are effective as of May
31, 2006.

                                    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         58       President and Director

Terry A. Lyles, Ph.D.   47       Director

F. Bryson Farrill       78       Director

Charles Goodson         51       Vice President

Marie May               39       Chief Financial Officer, Secretary and Director

Andrew Cimerman,  58, 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, 47,  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.

                                       12
<PAGE>

F. Bryson  Farrill,  78,  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, 51, Vice President & Director has been employed by the company,
or its  subsidiary  companies  since  March  1992.  Mr.  Goodson had 16 years of
commercial banking experience prior to joining HomeLife Realty Services. He is a
licensed realtor. Mr. Goodson earned his B.S. degree in Business  Administration
from California State University, Northridge.

Marie M. May, 39, Chief Financial Officer,  Secretary and Director has been with
the  company  since July  2000.  Ms.  May has 17 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.

ITEM 10-EXECUTIVE COMPENSATION.

                                       13
<PAGE>

      (a) Summary of Compensation
The following  officer of the Company  received or accrued the following  annual
cash salaries and other compensation:

                           Summary Compensation Table

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------

                        Annual Compensation                          Long Term Compensation
                        -------------------                          ----------------------
                                                                        Awards                    Payouts
                                                                        ------                    -------

                                                         Other                                             All Other
Name                                                     Annual      Restricted                            Compensation
and                                                      Compen-     Stock Awards      Options  LTIP
Principal Position      Year     Salary           Bonus  sation                          SARs   Payouts

<S>                     <C>        <C>               <C>    <C>         <C>             <C>     <C>                <C>
Andrew Cimerman,        2006       $20,000            -      -           -               -                           -
President, Director     2005       $20,000            -      -           -               -      -                    -
                        2004       $20,000            -      -           -               -                           -
                                                                                                -

                                                                                                -
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

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

            None.

      (c)   Aggregate Options/SAR Grants

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

      (d)   Long Term Incentive Plan (LTIP)

            None.

      (e)   Compensation of directors

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

      (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

                                       14
<PAGE>

            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, 2006: (i) each
stockholder  known by the Company to be the  beneficial  owner of more than five
percent of the outstanding  Common Stock,  (ii) each director of the Company and
(iii) all directors and officers as a group.

Name and address                  Amount and nature      Percent of class
of beneficial owner            of beneficial owner(1)

Andrew Cimerman(2)                      9,013,194(3)              72.8%
Marie M. May(2)                            60,000(1)               0.5%
Charles Goodson(2)                              0                  0.0%
F. Bryson Farrill(2)                       10,000                  0.1%
Terry Lyles(2)                             10,000                  0.1%

All Officers and Directors as a group   9,093,194                 73.5%

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

      (1.)  Except  as  otherwise  indicated,  the  Company  believes  that  the
beneficial owners of Common Stock listed above,  based on information  furnished
by such  owners,  have sole  investment  and voting  power with  respect to such
shares,  subject  to  community  property  laws  where  applicable.   Beneficial
ownership is  determined  in  accordance  with the rules of the  Securities  and
Exchange Commt 0 6 ssion 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  address1503  South Coast Drive,  Suite 204,  Costa Mesa, CA
      92626.
3.    249,594 of these shares are held in the name of Cimerman  Real Estate Ltd.
      Cimerman Real Estate Ltd. was created as a Real Estate Sales Company.  Mr.
      Cimerman  has certain  voting  powers  associated  with the shares held by
      Cimerman Real Estate Ltd., as 100% of the financial  benefits derived from
      the shares  held by Cimerman  Real Estate Ltd.  are for the benefit of Mr.
      Cimerman.

ITEM 12-CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

B.    Certain Relationships and Related Transactions

      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.  The  license was renewed for five  additional
years  at $1 per  year for the  first  two  years  and  $5,000  per year for the
remaining  three  years.  Mr.  Cimerman is sole  shareholder  and  President  of
HomeLife Securities,  Inc. HomeLife Securities, Inc. licenses certain "HomeLife"
trademarks and service marks to the Company. The term of the licensing agreement
is eight years  commencing  October 1995 at no cost to the Company.  Thereafter,
the license was renewed for additional five years at no cost to the Company.

                                       15
<PAGE>

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

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

                                       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, 2006 and May 31, 2005 by Rotenberg & Co., LLP:

                                 Year Ended May 31,
                                 ------------------

                           2006                    2005
                           ----                    ----

AAudit Fees                $11,000              $10,500
AAudit-Related
Fees                       $    --              $    --
TTax Fees                  $    --              $    --
AAll Other Fees            $ 6,000              $ 6,000

Audit-related  fees billed  during the fiscal  years ended May 31, 2006 and 2005
were for  services  related  to  consents  and  assistance  with and  review  of
documents  filed with the  Securities  and Exchange  Commission.  All income tax
preparation for the Company has been done in house.

The  Audit  Committee  has  not  adopted  any  polices  or  procedures  for  the
pre-approval of non-audit services.  The Audit Committee has considered the role
of Rotenberg & Co., LLP in providing audit, audit-related, and other services to
HomeLife and has concluded  that such services are  compatible  with Rotenberg &
Co., LLP's role as HomeLife's  independent  auditors for the years ended May 31,
2006 and 2005.

                                       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 11, 2006
              -----------------------               ----------------------------

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 11, 2006
                  --------------------               ---------------------------

Chief Executive Officer, President, Director

                                       19

                         HOMELIFE, INC. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                            AT MAY 31, 2006 AND 2005

<PAGE>

                         HOMELIFE, INC. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                            AT MAY 31, 2006 AND 2005

                                TABLE OF CONTENTS

Report of Independent Registered Public Accounting Firm                        1

Consolidated Balance Sheets                                                    2

Consolidated Statements of Operations                                          3

Consolidated Statements of Cash Flows                                          4

Consolidated Statements of Stockholders' Equity                                5

Notes to Consolidated Financial Statements                                6 - 21

<PAGE>

                  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

      We have audited the accompanying  consolidated balance sheets of HomeLife,
Inc. and Subsidiaries as of May 31, 2006 and 2005, and the related  consolidated
statements of operations,  changes in stockholders'  equity,  and cash flows for
each of the two years in the  period  ended  May 31,  2006.  These  consolidated
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

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

      In our opinion,  the consolidated  financial  statements referred to above
present fairly, in all material respects,  the financial position of the Company
as of May 31,  2006 and 2005,  and the  results of its  operations  and its cash
flows for each of the two years in the period ended May 31, 2006,  in conformity
with accounting principles generally accepted in the United States of America.

      The  accompanying  consolidated  financial  statements  have been prepared
assuming  HomeLife,  Inc. and Subsidiaries will continue as a going concern.  As
discussed in Note 1 to the consolidated  financial  statements,  the Company has
incurred  losses that have resulted in an  accumulated  deficit.  This condition
raises  substantial  doubt  about the  Company's  ability to continue as a going
concern.  Management's  plans regarding this matter are described in Note 1. The
consolidated  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 8, 2006

                                      F-1
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
At May 31, 2006 and 2005

                                                              2006         2005

ASSETS

       CURRENT ASSETS

    Cash                                                     $ 53,376   $ 75,360
    Marketable securities, at fair value                          900        900
    Accounts receivable, net (note 4)                          10,036     14,346
    Prepaid expenses and deposits                              31,147     35,035
                                                             -------------------
  Total Current Assets                                         95,459    125,641

PROPERTY AND EQUIPMENT, NET (note 5)                            2,008     64,458

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

OTHER ASSETS, NET (note7)                                      42,985     94,837
                                                             -------------------
  Total Assets                                               $366,395   $510,879


                                      F-2
<PAGE>


HOMELIFE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
At May 31, 2006 and 2005

                                                         2006              2005

LIABILITIES AND STOCKHOLDERS' EQUITY

         CURRENT LIABILITIES

Bank indebtedness (note 8)                           $    81,397    $    80,900
Accounts payable                                         165,890        160,704
Reserve for warranty                                      46,953         51,953
Deferred revenue                                          40,280         42,645
                                                     ---------------------------
Total Current Liabilities                                334,520        336,202

DUE TO STOCKHOLDER                                       170,709        128,984

MINORITY INTEREST                                         20,843         20,843
                                                     ---------------------------
Total Liabilities                                        526,072        486,029
                                                     ---------------------------
STOCKHOLDERS' EQUITY (DEFICIT)

CAPITAL STOCK (note 9)                                 1,037,372      1,037,372

ADDITIONAL PAID IN CAPITAL (note 9)                    3,731,741      3,731,741

ACCUMULATED OTHER COMPREHENSIVE
     INCOME (LOSS)                                        (1,747)         4,715

ACCUMULATED DEFICIT                                   (4,927,043)    (4,748,978)
                                                     ---------------------------
Total Stockholders' Equity (Deficit)                    (159,677)        24,850
                                                     ---------------------------
Total Liabilities and Stockholders'
        Equity (Deficit)                             $   366,395    $   510,879
                                                     ===========================

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

                                      F-3
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended May 31, 2006 and 2005

                                                         2006             2005

         REVENUE

              Royalty and franchise                $    482,095    $    482,007
              Warranty fees                             102,727         105,311
                                                   -----------------------------
         Total Revenue                                  584,822         587,318

         DIRECT COSTS                                   154,941         111,545
                                                   -----------------------------
                                                        429,881         475,773
                                                   -----------------------------
         EXPENSES

              Salaries and fringe be                    207,938         199,183
              General and administra                    287,522         273,660
              Occupancy                                  49,441          49,804
              Financial                                  29,617          13,862
              Depreciation                               62,450          67,225
              Amortization                               51,852          51,852
                                                   -----------------------------
         Total Expenses                                 688,820         655,586
                                                   -----------------------------
         NET LOSS FROM OPERATIONS                  $   (258,939)   $   (179,813)

         Other Income
                                                         80,874          40,490
                                                   =============================
         NET LOSS                                  $   (178,065)   $   (139,323)


         BASIC AND FULLY DILUTED LOSS
            PER COMMON SHARE                       $      (0.01)   $      (0.01)
                                                   =============================
         WEIGHTED-AVERAGE NUMBER
              OF COMMON SHARES                        12,371,886      12,371,886
                                                   =============================

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

                                      F-4
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended May 31, 2006 and 2005

                                                           2006           2005

CASH FLOWS FROM OPERATING ACTIVITIES
     Net loss                                            $(178,065)   $(139,323)
     Adjustments to reconcile net loss to net
         cash from operating activities
     Amortization                                           51,852       51,852
     Depreciation                                           62,450       67,225
     Gain on Disposal of Assets                             (6,462)          --
     Changes in assets and liabilities
     Accounts receivable                                     4,310       (5,985)
     Prepaid expenses and deposits                           3,888          471
     Accounts payable                                        5,186     (159,385)
     Reserve for warranty                                   (5,000)          --
     Deferred revenue                                       (2,365)          --
     Due to stockholder                                     41,725      109,320
                                                        ------------------------
Net Cash Flows from Operating Activities                   (22,481)     (75,825)
                                                        ------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
     Purchases of property and equipment                        --           --
                                                        ------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
     Borrowings (repayments) on bank indebtedness, net         497       38,211
                                                        ------------------------
NET CHANGE IN CASH                                         (21,984)     (37,614)
     Cash, beginning of year                                75,360      112,974
                                                        ------------------------
CASH, END OF YEAR                                        $  53,376    $  75,360
                                                        ------------------------
SUPPLEMENTAL DISCLOSURE OF CASH
    FLOW INFORMATION
     Interest paid                                       $   5,143    $   4,430
                                                         =======================
     Income taxes paid                                   $      --    $      --
                                                         =======================

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

                                      F-5
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Years ended May 31, 2006 and 2005

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

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

Net loss                         --            --       --            --      --        --            --      (139,323)        --
                         -----------------------------------------------------------------------------------------------------------
BALANCE, MAY 31, 2005    12,371,886   $    12,372   10,000   $ 1,000,000      50   $25,000   $ 3,731,741   $(4,748,978)   $ 4,715

Net loss                         --            --       --            --      --        --            --      (178,065)        --
                         -----------------------------------------------------------------------------------------------------------
BALANCE, MAY 31, 2006    12,371,886   $    12,372   10,000   $ 1,000,000      50   $25,000   $ 3,731,741   $(4,927,043)   $ 4,715
                         ===========================================================================================================
</TABLE>

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



                                      F-6
<PAGE>



HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2006 and 2005

1.    MANAGEMENT'S PLANS AND FUTURE OPERATIONS

      At May 31, 2006,  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 settled  certain  lawsuits
            regarding the former  Calgary  operations  and the current  Michigan
            operations  which will  further  reduce  legal  fees and  management
            involvement

      b)    The company is currently focusing on:

            -     attempting to raise  additional  funding  through  private and
                  public offering,
            -     investigating and pursing potential mergers/acquisitions,
            -     the core business of franchising nationwide
            -     the company is making efforts to reduce unnecessary  operating
                  expenses on a monthly basis

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

2.    BASIS OF CONSOLIDATED FINANCIAL STATEMENTS PRESENTATION

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

      a)    Wholly-owned subsidiaries

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

      b)    Majority-owned subsidiaries

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

            On  consolidation,  all  material  intercompany  accounts  have been
            eliminated.  Consolidation  commenced  with the  effective  dates of
            acquisition of the operations of the subsidiary  companies and these
            consolidated  financial  statements include the financial results of
            the subsidiaries for the years ended May 31, 2006 and 2005.

                                      F-7
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2006 and 2005

3.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      i)    Principal Activities

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

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

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

            The  company  owns and  operates a full  service  retail real estate
            brokerage  through its subsidiary,  HomeLife  California  Properties
            Inc.

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

      ii)   Significant Group Concentrations of Credit Risk

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

      iii)  Cash and Cash Equivalents

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

      iv)   Accounts Receivable and Allowance for Doubtful Accounts

            Accounts  receivable  are  stated  net  of  allowance  for  doubtful
            accounts.  The company  estimates the  allowance  based on prior bad
            debt experience and a review of existing receivables. Based on these
            factors,  there is an allowance for doubtful accounts of $10,575 and
            $15,275 at May 31, 2006 and 2005, respectively.

      v)    Marketable Securities

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

      vi)   Other Financial Instruments

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

                                      F-8
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2006 and 2005

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

      vii)  Long-term Financial Instruments

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

      viii) Depreciation of Property and Equipment

            Depreciation  of  property  and  equipment  is  provided  using  the
            straight-line method as follows:

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

      ix)   Goodwill

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

      x)    Amortization of Other Assets

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

            Trademarks and franchise rights                    10 years

      xi) Impairmet 6 12 nt of Long-Term Assets

            In accordance  with the provisions of SFAS No. 144,  "Accounting for
            the  Impairment  or Disposal of  Long-Lived  Assets",  the company's
            policy is to record an  impairment  loss  against  the  balance of a
            long-lived  asset  in the  period  when it is  determined  that  the
            carrying  amount  of  the  asset  may  not  be   recoverable.   This
            determination  is  based on an  evaluation  of such  factors  as the
            occurrence  of a  significant  event,  a  significant  change in the
            environment in which the business  assets operate or if the expected
            future  non-discounted  cash flows of the business was determined to
            be less than the  carrying  value of the assets.  If  impairment  is
            deemed to exist,  the  assets  will be written  down to fair  value.
            Management  also  evaluates  events and  circumstances  to determine
            whether revised  estimates of useful lives are warranted.  As of May
            31,  2005,  management  expects  its  long-lived  assets to be fully
            recoverable.

                                      F-9
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2006 and 2005

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

      xii)  Due to Stockholder

            Certain  disbursements  of the  company  have  been  paid by a major
            stockholder,  and  accordingly,  a liability to the  stockholder has
            been recorded.  Also included in the account is the deferred portion
            of the President's  salary, a major stockholder.  The balance at May
            31,  2006 and 2005 was  $170,709  and  $128,984,  respectively.  The
            amount due has an  unstated  interest  rate and  contains  no formal
            repayment  terms.  Accordingly,  the company has imputed interest at
            the prime  rate plus 1% (9.00%  and 7.00% at May 31,  2006 and 2005,
            respectively).  Imputed interest expense for the years ended May 31,
            2006 and 2005 was $11,725 and $6,731, respectively.

      xiii) Revenue Recognition

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

      xiv)  Income taxes

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

                                      F-10
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2006 and 2005

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

      xv)   Stock-Based Compensation

            In  December  1995,   SFAS  No.  123,   Accounting  for  Stock-Based
            Compensation,   was  issued.   It  introduced  the  use  of  a  fair
            value-based  method of accounting for stock-based  compensation.  It
            encourages,   but  does  not   require,   companies   to   recognize
            compensation expense for stock-based compensation to employees based
            on the new fair value accounting rules. Companies that choose not to
            adopt the new rules will  continue to apply the existing  accounting
            rules  contained  in  Accounting  Principles  Board  Opinion No. 25,
            Accounting  for Stock  Issued to  Employees.  However,  SFAS No. 123
            requires  companies  that  choose  not to adopt  the new fair  value
            accounting  rules to disclose  pro forma net income and earnings per
            share  under  the  new  method.   SFAS  No.  123  is  effective  for
            consolidated  financial  statements for fiscal years beginning after
            December 15, 1995. The company has adopted the disclosure provisions
            of SFAS No. 123 for employee stock based compensation.  Accordingly,
            compensation  cost for stock  options is measured as the excess,  if
            any,  of the  quoted  market  price  of the  company's  stock at the
            measurement date over the amount an employee must pay to acquire the
            stock. See note 10 (f) for a summary of the pro-forma EPS determined
            as if the company had applied SFAS No. 123.

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

            The company has used the fair value  approach  for stock option plan
            granted to  non-employees  according  to EITF  96-18.  There were no
            stock options  granted to  non-employees  during the years ended May
            31, 2006 and 2005.

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

      xvi)  Foreign Currency Translation

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

                                      F-11
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2006 and 2005

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

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

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

            Fully  diluted net loss per common stock is computed by dividing net
            loss for the year by the  weighted  average  number of common  stock
            outstanding during the year, assuming, except where the result would
            be  anti-dilutive,   that  all  convertible  Preferred  shares  were
            converted,  the contingent common stock were issued, the warrant was
            exercised, and the stock options granted were exercised (note 9)

      xviii) Use of Estimates

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

      xix)  Reclassifications

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

4.    ACCOUNTS RECEIVABLE 2006 2005

      Accounts receivable                                  $ 20,611      $29,621
      Less:  Allowance for doubtful accounts                 10,575       15,275
                                                           ---------------------
      Accounts receivable, net                             $ 10,036      $14,346
                                                           =====================

                                      F-12
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2006 and 2005

5.    PROPERTY AND EQUIPMENT 2006 2005

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

      Less: Accumulated depreciation

      Furniture and fixtures                                  230,689    217,689
      Computer equipment and software                         597,100    548,017
      Leasehold improvements                                   13,734     13,367
      Automobile                                               19,865     19,865
                                                             -------------------
                                                              861,388    798,938
                                                             -------------------
      Net book value                                         $  2,008   $ 64,458
                                                             ===================

      Depreciation expense for the years ended May 31, 2006 and 2005 was $62,450
      and $67,225, respectively.

6.    GOODWILL

                                                              2006        2005

      Carrying value at beginning of year                    $225,943   $225,943
      Less:  Impairment loss                                       --         --
                                                             -------------------
      Carrying value at end of year                          $225,943   $225,943
                                                             ===================

      The goodwill balance represents  goodwill  associated with the real estate
      franchise segment.

      No impairment losses were recorded during the years ended May 31, 2006 and
      May 31, 2005.

                                      F-13
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2006 and 2005

6.    GOODWILL (cont'd)

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

      In accordance  with the  requirements of SFAS No. 142, the company has not
      amortized goodwill for the years ended May 31, 2006 and 2005.

7.    OTHER ASSETS 2006 2005

      Trademarks and franchise rights                        $200,000   $200,000
      Franchise software                                      502,846    502,846
                                                             -------------------
      Cost                                                    702,846    702,846

      Less:  Accumulated amortization

      Trademarks and franchise rights                         200,000    183,018
      Franchise software                                      459,761    424,991
                                                             -------------------
                                                              659,761    608,009
                                                             -------------------
      Net book value                                         $ 42,985   $ 94,837
                                                             ===================

      Amortization expense for each of the years ended May 31, 2006 and 2005 was
      $51,852.

      The estimated  annual  amortization  expense for the five years succeeding
      May 31, 2005 are as follows:

      2007                                                           $     8,617
      2008                                                                 8,617
      2009                                                                 8,617
      2010                                                                 8,617
      Thereafter                                                           8,517
                                                                     -----------
                                                                     $    42,985
                                                                     ===========

                                      F-14
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2006 and 2005

8.    BANK INDEBTEDNESS

      At May 31, 2006 and 2005,  the company had two  available  lines of credit
      under  bank  loan  agreements.  The two  credit  lines  total  $95,000  of
      available  credit,  with a combined  outstanding  balance  of $81,397  and
      $80,900,  respectively. The unsecured operating credit lines bear interest
      at  variable  rate  ranging  from  prime  plus 2 1/2% to prime plus 6 1/2%
      (prime rate was 8.00% and 6.00% at May 31,  2006 and 2005,  respectively).
      These lines were held by the corporate office in California.


                                      F-15
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2006 and 2005

9.    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
                                                          2006           2005

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

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

            i)    Common shares

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

            No shares of common  stock were issued  during the fiscal year ended
            May 31, 2006.

      c)    Preferred Stock Dividends

            At May 31, 2006 and 2005,  the  company  had  $14,770  and  $12,770,
            respectively,  of  preferred  stock  dividends  in  arrears  on  its
            outstanding shares of Class AA Preferred Stock.

      d)    Contingent shares to be issued

            In the purchase  agreement for the  acquisition  of Builders  Realty
            (Calgary)  Ltd.,  the  company  issued  common  stock as part of the
            purchase  price.  The value of the common stock issued was set at $5
            per share which was  substantially  higher  than the current  market
            value.  The company  agreed that if the actual  market  value of the
            stock did not reach $5 per share within one year,  the  stockholders
            of Builders Realty (Calgary) Ltd., would be issued either additional
            Common shares of HomeLife,  Inc. or cash to complete the transaction
            (note 11).


                                      F-16
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2006 and 2005

9.    CAPITAL STOCK (cont'd)

      e)    Warrant

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

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

      f)    Stock options

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

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

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

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

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


                                      F-17
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2006 and 2005

9.    CAPITAL STOCK (cont'd)

      f)    Stock options (cont'd)

            Pro-forma information regarding net income and earnings per share is
            required  by SFAS No. 123 (as amended by SFAS No.  148),  Accounting
            for Stock  Based  Compensation,  and has been  determined  as if the
            company had accounted  for its employee  stock options based on fair
            values  at  the  grant  date  for  options  granted.  The  company's
            pro-forma  information  for the years  ended  May 31,  2006 and 2005
            would have been as follows:

<TABLE>
<CAPTION>
                                                       2006            2006           2005           2005
                                            ---------------  --------------  -------------  -------------

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

<S>                                              <C>             <C>            <C>            <C>
            Net loss                             $(181,965)      $(181,965)     $(139,323)     $(139,323)
            Basic and fully diluted loss
                 per Common share                $   (0.01)      $   (0.01)     $   (0.01)     $   (0.01)
</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

10.   INCOME TAXES 2006 2005

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

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

            Losses carried-forward                    $ 1,452,800   $ 1,380,000
            Valuation allowance                        (1,452,800)   (1,380,000)
                                                      --------------------------
                                                      $        --   $        --
                                                      ==========================

      c)    At May 31, 2006,  the company had  operating  losses  available  for
            carry-forward of approximately $2,982,000. These losses expire after
            May 31, 2024.

                                      F-18
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2006 and 2005

11.   COMMITMENTS AND CONTINGENCIES

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

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

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

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

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

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

      This lawsuit was settled on August 20, 2004 in the amount of $85,000. This
      was paid by a majority  shareholder  of the company and has been  properly
      reflected in the financial statements.

                                      F-19
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2006 and 2005

12.   SEGMENTED INFORMATION

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

                                                          2006           2005

      a)    Revenue by industry

            Real estate franchise                     $  482,095   $    482,007
            Home warranty                                102,727        105,311
            Other income                                  80,874         40,490
                                                      --------------------------
            Total                                     $  665,696   $    627,808
                                                      ==========================
      b)    Net income (loss) by industry

            Real estate franchise                     $ (215,493)  $   (158,750)
            Home warranty                                 37,428         21,522
            Other                                              -         (2,095)
                                                      --------------------------
            Total                                     $ (178,065)  $   (139,323)
                                                      ==========================
      c)    Identifiable assets by industry

            Real estate franchise                     $  234,419   $    378,004
            Mortgage financing                            77,225         77,632
            Home warranty                                 42,093         42,585
            Other                                         12,658         12,658
                                                      --------------------------
            Total                                     $  368,957   $    510,879
                                                      ==========================
      d)    Amortization by industry

            Real estate franchise                     $   51,852  $      51,852
                                                      --------------------------
            Total                                     $   51,852  $      51,852
                                                      ==========================
      e)    Depreciation by industry

            Real estate franchise                     $   62,414  $      67,189
            Home warranty                                     36             36
                                                      --------------------------
            Total                                     $   62,450  $      67,225
                                                      ==========================

                                      F-20
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2006 and 2005

12.   SEGMENTED INFORMATION (cont'd)

                                                           2006           2005

      f)    Interest by industry

            Real estate franchise                        $ 16,868       $ 11,161
                                                         -----------------------
            Total                                        $ 16,868       $ 11,161
                                                         =======================
13.   COMMITMENTS

      The company has operating leases for premises which extend through May 31,
      2008.  Future  minimum  rental  payments  as of May  31,  2006  under  the
      operating lease agreements are as follows:

      2007                                                              $ 20,304
      2008                                                                 6,768
                                                                        --------
                                                                        $ 27,072
                                                                        ========

      Rent  expense  for the years  ended May 31,  2006 and 2005 was $49,441 and
      $49,304, respectively.


                                      F-21
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2006 and 2005

14.   RELATED PARTY TRANSACTIONS 2006 2005

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

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

15.   SUBSQUENT EVENT

      On  September 7, 2006 the Company  entered  into an Agreement  and Plan of
      Merger with MIT Holding,  Inc. This agreement provides the following:  (1)
      tax free  reorganization  with MIT Holding,  Inc.  whereby MIT becomes the
      wholly owned  subsidiary of HomeLife;  (2) $250,000 payment to the Company
      to pay present laibilities; (3) Andrew Cimerman will retain 240,000 shares
      of our common  stock after a 4.2 to 1 reverse  stock split;  Mr.  Cimerman
      will retire a certain amount of shares since he will own more than 240,000
      shares after the 4.2 to 1 reverse  stock split and the assets will be spun
      off to him in consideration for retirement of such shares. The transaction
      has a closing date of September  29,  2006,  with a final  closing date of
      October  31,  2006.  Closing  will occur after  MIT's  required  financial
      statements  are  completed  and the  Company  has  undertaken  a fairneess
      opinion for the spin off of the assets to Mr. Cimerman.

                                      F-22