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, 2005

                       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)                         or 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, 2005, were $627,391. As
of May 31, 2005, 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 $121,508. This calculation is based upon the closing
sales price of $0.04 per share on May 31, 2005.

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

The following documents are incorporated herein by reference: none.

<PAGE>

                                TABLE OF CONTENTS


PART I                                                                      PAGE
                                                                            ----
Item 1      Description of Business                                          1

Item 2      Description of Property                                          6

Item 3      Legal Proceedings                                                6

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


PART II

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

Item 6      Management's Discussion and Analysis                             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


                                       ii
<PAGE>

PART I

Item 1.           Description of Business

         A.       Business Development

                  1.       Form and Year of Organization

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

                  2.       Any bankruptcy, receivership or similar proceeding

         Not Applicable.

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

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

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

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

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

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

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


                                       1
<PAGE>

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

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

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

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

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

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

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

         o        Wholly-Owned Subsidiaries - active

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

                  Wholly Owned Subsidiaries - inactive

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

         o        Majority-Owned Subsidiaries

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

       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.

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.

         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.


                                       3
<PAGE>

         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

         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


                                       4
<PAGE>

         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.

         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


                                       5
<PAGE>

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 $47,376.


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.


                                       6
<PAGE>

         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 2004 and 2005 (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:

         ----------------------------------------------------------------------
                  2004                   High                   Low
         ----------------------------------------------------------------------
         Quarter ended
              August 31                  $ 0.04                 $ 0.03
              November 30                $ 0.06                 $ 0.04
              February 29                $ 0.08                 $ 0.04
              May 31                     $ 0.35                 $ 0.04
         ----------------------------------------------------------------------
                  2005
         ----------------------------------------------------------------------
         Quarter ended
              August 31                  $ 0.05                 $ 0.04
              November 30                $ 0.05                 $ 0.05
              February 28                $ 0.06                 $ 0.04
              May 31                     $ 0.04                 $ 0.04
         ----------------------------------------------------------------------

         B.     Holders

         As of May 31, 2005, 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, 2005 & 2004, the Company has dividends in arrears of $12,770 & $10,770,
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, 2005, 2004 and 2003.


                                       7
<PAGE>

ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS

         The following is management's discussion and analysis of HomeLife's
financial condition and results of operations for the fiscal years ended May 31,
2005 and 2004. Detailed information is contained in the financial statements
included with this document. This section contains forward-looking statements
that involve risks and uncertainties, such as statements of the Company's plans,
objectives, expectations and intentions. The cautionary statements made in this
document should be read as being applicable to all related forward-looking
statements wherever they appear in this document. The following table sets
forth, for the periods indicated, selected financial information for the
Company.

Overview

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

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

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

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

Plan of Operation

         HomeLife's business plan is to acquire, as the franchisor or master
franchisor, regional real estate brokerage companies throughout North America.
The newly acquired companies will have the choice of retaining their regional
identities, or changing their name to a HomeLife brand. This allows the
companies to enjoy the benefits of its regional identity while at 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.

Recent Developments

           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.


                                       8
<PAGE>

         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.

         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.

Results of Operations

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

================================================================================
                                          Year Ended               Year Ended
                                         May 31, 2005             May 31, 2004
--------------------------------------------------------------------------------
Statement of Operations Data
   Revenue                               $   627,808              $   769,230
   Net Loss                              $  (139,323)             $  (123,043)
   Net Loss per share                    $      (.01)             $      (.02)
--------------------------------------------------------------------------------
Balance Sheet Data
   Current Assets                        $   125,641              $   157,740
                                         $    64,458              $   131,683
   Total Property & Equipment, Net
                                         $   510,879              $   662,055
   Total Assets
                                         $   336,202              $   457,375
   Total Current Liabilities
                                         $(4,748,978)             $(4,609,655)
   Accumulated Deficit
                                         $    24,850              $   164,173
   Total Stockholder's Equity
================================================================================

Fiscal Year Ended May 31, 2005 compared to Fiscal Year Ended May 31, 2004

         Revenues. The Company generated gross sales of $627,391 for the fiscal
year ended May 31, 2005 compared to gross sales of $769,230 for the fiscal year
ended May 31, 2004. Revenue by business segment is shown below:

                       For the year ended            For the year ended
                       May 31, 2005                  May 31, 2004

                       Amount              %         Amount            %
                       ------              -         -------           -
Royalty fees           $ 428,770         68.3        $  453,025      58.9
Franchise fees            53,237          8.5           120,320      15.6
Home warranty sales      105,311         16.8           125,197      16.3
Other                     40,490          6.4            70,688       9.2
                       ----------       -----        -----------    -----
TOTAL                  $ 627,808        100.0        $  769,230     100.0


                                       9
<PAGE>

The largest decrease in revenue from fiscal year 2004 was from franchise fees.
Due to a slow down in the Michigan real estate market, franchise fees were
lower. Other income was also lower in the current year due to fewer closed
escrows from the retail real estate brokerage.

Royalty fees decreased from $453,025 in fiscal year 2004 to $428,770 for fiscal
year 2005. This 5% decrease relates to fewer franchise offices and lower sales
in the current year. The current year total number of franchise offices was 88
offices compared to 98 offices in the prior year. Overall sales from the offices
were down so in turn, royalty fees were lower.

Franchise fees decreased $67,083 from $120,320 in the prior fiscal year to
$53,237 in the current fiscal year. The decrease in franchise fees is a result
of fewer offices and sales from these offices. There were no sales of master
franchise agreements during the current fiscal year.

Home warranty sales were $105,311 and $125,197 for the fiscal years ended May
31, 2005 and 2004, respectively. The number of warranty contracts sold in the
current year was 303 compared to 295 in fiscal year 2004. While the company sold
slightly more contracts during fiscal year 2005, the average cost per contract
was lower than in the prior year.

         Direct Costs. Direct costs for the year ended May 31, 2005 was $111,545
compared to $95,529 for the year ended May 31, 2004. 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 had not happened in previous years.

         Gross Profit Percentage. Due to the increase in cost of sales during
the current year, the gross profit percentage has decreased to 82% from 88% in
the prior year.

         Salaries and fringe benefits. Salaries and fringe benefits decreased
$22,061, from $221,244 for the fiscal year ended May 31, 2004 to $199,183 for
the fiscal year ended May 31, 2005. The decrease in salaries expense relates to
one employee in the California office that was paid a lower salary during the
current year and one fewer employee in the Michigan office.

         General and administrative. General and administrative costs increased
to $273,660 for the year ended May 31, 2005 from $257,674 for the year ended May
31, 2004. This 6% increase was primarily due to the move and additional
marketing materials purchased.

         Occupancy costs. Occupancy costs are 16% lower in the current year as a
result of the California office move.

         Financial. Financial costs for the year ended May 31, 2005 was $13,862
compared to $32,090 for the year ended May 31, 2004. This decrease is due to
lower interest paid on the equipment leases and fewer write offs of
uncollectible receivables than in the prior year.

         Depreciation. Depreciation of fixed assets was comparable for the two
periods.

         Impairment loss. In the prior fiscal year, the company wrote off the
remainder, $20,000, of the purchased franchise rights in accordance with SFAS
144. Accordingly, there was no impairment loss 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 amortization and depreciation, write down of goodwill, and
impairment of franchise rights purchased and the litigation settlement. The
company does not have any derivative instruments or hedging activities
therefore, the company believes that SFAS No. 133 will have no material impact
on the company's financial statements or notes thereto.


                                       10
<PAGE>

The company has experienced recurring operating losses and has a working capital
deficiency of $210,561 as of May 31, 2005. 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.


                                    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                57          President and Director

Terry A. Lyles, Ph.D.          46          Director

F. Bryson Farrill              77          Director

Charles Goodson                50          Vice President

Marie May                      38          Chief Financial Officer, Secretary
                                           and Director

Andrew Cimerman, 57, 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, 46, 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, 77, 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, 50, 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, 38, Chief Financial Officer, Secretary and Director has been with
the company since July 2000. Ms. May has 16 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.

         (a)      Summary of Compensation

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

<TABLE>
<CAPTION>
                                                  Summary Compensation Table
---------------------------------------------------------------------------------------------------------------------------
                        Annual Compensation                          Long Term Compensation
                        -------------------                             Awards                Payouts
                                                                     ----------------------   -------
                                                         Other                                             All Other
Name                                                     Annual      Restricted                            Compensation
and                                                      Compen-     Stock
                                                         sation      Awards        Options    LTIP
Principal Position      Year     Salary           Bonus                            SARs       Payouts
<S>                     <C>        <C>               <C>    <C>         <C>          <C>        <C>             <C>
Andrew Cimerman,        2005       $20,000            -      -           -            -          -               -
President, Director     2004       $20,000            -      -           -            -          -               -
                        2003       $20,000            -      -           -            -          -               -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

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

                None.


                                       13
<PAGE>

         (c)    Aggregate Options/SAR Grants

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

         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, 2005: (i) each stockholder
known by the Company to be the beneficial owner of more than five percent of the
outstanding Common Stock, (ii) each director of the Company and (iii) all
directors and officers as a group.

<TABLE>
<CAPTION>
Name and address of beneficial owner        Amount and nature of beneficial owner(1)             Percent of class
<S>                                                    <C>                                              <C>
Andrew Cimerman(2)                                     9,013,194(3)                                     72.8%
Marie M. May(2)                                           60,000(1)                                      0.5%
Charles Goodson(2)                                             0                                         0.0%
F. Bryson Farrill(2)                                      10,000                                         0.1%
Terry Lyles(2)                                            10,000                                         0.1%

All Officers and Directors as a group                  9,093,194                                        73.5%
</TABLE>


                                       14
<PAGE>

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

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

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

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


                                       15
<PAGE>

                                     PART IV

ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K

      (a)       Exhibits

           The following documents are filed as exhibits to this Report:

3.1      Articles of Incorporation of HomeLife, Inc., a Nevada corporation,
         dated October 9, 1995*
3.2      Certificate of Amendment of Articles of Incorporation of HomeLife,
         Inc., a Nevada corporation, dated July 2, 1997*
3.3      Certificate of Amendment of Articles of Incorporation of HomeLife,
         Inc., a Nevada corporation, dated September 1, 1998*
3.4      Bylaws of HomeLife, Inc., dated October 10, 1995*
4.1      Certificate of Designated Class A Preferred Stock*
4.2      Certificate of Designated Class AA Preferred Stock*
10.1     Lease Agreement dated November 1, 1996 for the office located in
         Calgary, Alberta, Canada*
10.2     Lease Agreement dated September 1, 1997 for the office located in
         Airdrie, Alberta, Canada*
10.3     Lease Agreement dated January 15, 1999 for the office located in
         Newport Beach, California*
10.4     Lease Agreement dated April 12, 1990 for the office located in Newport
         Beach, California*
10.5     First Addendum to Lease dated April 12, 1990 for the property located
         in Newport Beach, California*
10.6     Second Addendum to Lease dated July 8, 1993 for the property located in
         Newport Beach, California*
10.7     Third Addendum to Lease dated July 17, 1996 for the property located in
         Newport Beach, California*
10.8     Builder's Realty Stock Purchase Agreement dated February 27, 1998*
10.9     Agreement for Purchase of Network Real Estate, Inc. Licensing Agreement
         and Trademarks, dated June 12, 1998*
10.10    Stock Purchase Agreement, dated July 23, 1998*
10.11    Asset Purchase Agreement, dated January 16, 1997*
10.12    Option Agreement, dated July 10, 1996*
10.13    Asset Purchase Agreement, dated April 13, 1998*
10.14    Loan Purchase Agreement, dated July 7, 1998*
10.15    Agreement and Plan of Acquisition, dated April 15, 1996*
10.16    Agreement and Plan of Acquisition, dated April 15, 1996*
10.18    Form of Participating Independent Broker Franchise Agreement*
10.19    Form of Broker Membership Agreement*
10.20    Stock Purchase Agreement, dated September 10, 1998*
10.21    Employment Agreement between HomeLife, Inc. and Andrew Cimerman*
10.22    Trademark License Agreement between HomeLife, Inc. and Jerome's Magic
         World, Inc.*
10.23    HomeLife Higher Standards Asset Purchase Agreement, dated January 20,
         1999*
10.24    Acquisition Agreement between Bright Financial Corporation and
         MaxAmerica Financial Services, Inc.*
21       List of Subsidiaries*
27.1     Financial Data Schedule
31.1     Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2     Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1     Certification pursuant to Section 18 U.S.C. Section 1350, as adopted
         pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2     Certification pursuant to Section 18 U.S.C. Section 1350, as adopted
         pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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


                                       16
<PAGE>

ITEM 14-PRINCIPAL ACCOUNTANT FEES AND SERVICES.

         The following table sets forth the aggregate fees billed to HomeLife
for the years ended May 31, 2005 and May 31, 2004 by Rotenberg & Co., LLP:


                                 Year Ended May 31,
                      -----------------------------------------
                           2005                    2004
                      -----------------------------------------
Audit Fees            $     10,500               $   12,500
Audit-Related
Fees                  $         --               $       --
Tax Fees              $         --               $       --
All Other Fees        $      6,000               $    6,000

Audit-related fees billed during the fiscal years ended May 31, 2005 and 2004
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,
2005 and 2004.


                                       17
<PAGE>

                                   SIGNATURES

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

HOMELIFE, INC.
Registrant


By: /s/ Andrew Cimerman                         Date:    August 31 , 2005
   --------------------------------             --------------------------------
   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:    August 31, 2005
   -------------------------------              --------------------------------
Chief Executive Officer, President,
Director

<PAGE>

                         HOMELIFE, INC. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                            AT MAY 31, 2005 AND 2004

<PAGE>

                         HOMELIFE, INC. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                            AT MAY 31, 2005 AND 2004


                                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 - 23

<PAGE>

                  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

         We have audited the accompanying consolidated balance sheets of
HomeLife, Inc. and Subsidiaries as of May 31, 2005 and 2004 and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for the years ended May 31, 2005 and 2004. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of HomeLife,
Inc. and Subsidiaries as of May 31, 2005 and 2004, and the results of its
operations and its cash flows for each of the two years in the period ended May
31, 2005, in conformity with accounting principles generally accepted in the
United States of America.

         The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
1 to the consolidated financial statements, the Company has suffered recurring
losses and, at May 31, 2005, has a significant working capital deficiency. Those
conditions raise substantial doubt about its ability to continue as a going
concern. Management's plans regarding those matters are also described in Note
1. The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.


/s/ Rotenberg & Co., LLP

Rotenberg & Co., LLP
Rochester, New York
August 31, 2005

<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
At May 31, 2005 and 2004

<TABLE>
<CAPTION>
                                                                                      2005                2004
                                                                                      ----                ----
<S>                                                                               <C>                <C>
ASSETS

       CURRENT ASSETS

           Cash                                                                   $ 75,360           $ 112,974
           Marketable securities, at fair value                                        900                 900
           Accounts receivable, net (note 4)                                        14,346               8,361
           Prepaid expenses and deposits                                            35,035              35,505

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

         TOTAL CURRENT ASSETS                                                      125,641             157,740

       PROPERTY AND EQUIPMENT, NET (note 5)                                         64,458             131,683

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

       OTHER ASSETS, NET (note7)                                                    94,837             146,689

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

         TOTAL ASSETS                                                            $ 510,879           $ 662,055

                                                                                =================================
</TABLE>

<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
At May 31, 2005 and 2004

<TABLE>
<CAPTION>
                                                                                      2005                2004
                                                                                      ----                ----
<S>                                                                          <C>                 <C>
LIABILITIES AND STOCKHOLDERS' EQUITY

         CURRENT LIABILITIES

         Bank indebtedness (note 9)                                          $      80,900       $      42,689
         Accounts payable                                                          160,704             320,088
         Reserve for warranty                                                       51,953              51,953
         Deferred revenue                                                           42,645              42,645
                                                                             ---------------------------------

         TOTAL CURRENT LIABILITIES                                                 336,202             457,375

         DUE TO STOCKHOLDER (note 3)                                               128,984              19,664

         MINORITY INTEREST                                                          20,843              20,843
                                                                             ---------------------------------

         TOTAL LIABILITIES                                                         486,029             497,882
                                                                             ---------------------------------

         STOCKHOLDERS' EQUITY

         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                                                                 4,715               4,715

         ACCUMULATED DEFICIT                                                    (4,748,978)         (4,609,655)
                                                                             ---------------------------------

         TOTAL STOCKHOLDERS' EQUITY                                                 24,850             164,173
                                                                             ---------------------------------

         TOTAL LIABILITIES AND
              STOCKHOLDERS' EQUITY                                           $    510,879        $     662,055
                                                                             =================================
</TABLE>

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


                                      - 2 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended May 31, 2005 and 2004

<TABLE>
<CAPTION>
                                                                                      2005                2004
                                                                                      ----                ----
<S>                                                                           <C>                 <C>
         REVENUE

              Royalty and franchise fees                                      $    482,007        $    573,345
              Warranty fees                                                        105,311             125,197
              Other income                                                          40,490              70,688
                                                                              --------------------------------

         TOTAL REVENUE                                                             627,808             769,230

         DIRECT COSTS                                                              111,545              95,529
                                                                              --------------------------------

         GROSS PROFIT                                                              516,263             673,701
                                                                              --------------------------------

         EXPENSES

              Salaries and fringe benefits                                         199,183             221,244
              General and administrative                                           273,660             257,674
              Occupancy                                                             49,804              59,453
              Financial                                                             13,862              32,090
              Depreciation                                                          67,225              68,097
              Amortization                                                          51,852              51,852
              Impairment loss on purchased franchise rights                             --              20,000
              Litigation Settlement                                                     --              85,000
                                                                              --------------------------------

         TOTAL EXPENSES                                                            655,586             795,410
                                                                              --------------------------------

         LOSS BEFORE MINORITY INTEREST                                            (139,323)           (121,709)

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

         NET LOSS                                                             $   (139,323)       $   (123,043)
                                                                              ================================
         BASIC AND FULLY DILUTED LOSS
            PER COMMON SHARE                                                  $      (0.01)       $      (0.02)
                                                                              ================================

         WEIGHTED-AVERAGE NUMBER
              OF COMMON SHARES                                                  12,371,886           7,169,582
                                                                              ================================
</TABLE>

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


                                      - 3 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended May 31, 2005 and 2004

<TABLE>
<CAPTION>
                                                                                           2005           2004
                                                                                           ----           ----
<S>                                                                                   <C>            <C>
         CASH FLOWS FROM OPERATING ACTIVITIES
              Net loss                                                                $(139,323)     $(123,043)
              Adjustments to reconcile net loss to net
                  cash from operating activities
              Amortization                                                               51,852         51,852
              Bad Debts                                                                      --         15,730
              Depreciation                                                               67,225         68,097
              Impairment loss on purchased franchise rights                                  --         20,000
              Change in value of minority interest                                           --          1,334
              Changes in assets and liabilities:
              Accounts receivable                                                        (5,985)         1,778
              Prepaid expenses and deposits                                                 471           (973)
              Accounts payable                                                         (159,385)        63,340
              Reserve for warranty                                                           --        (23,047)
              Deferred revenue                                                               --       (131,880)
              Due to stockholder                                                        109,320         47,164

                                                                                      ------------------------
         Total Cash Flows from Operating Activities                                     (75,825)        (9,648)

         CASH FLOWS FROM INVESTING ACTIVITIES
              Purchases of property and equipment                                            --             --
                                                                                      ------------------------

         CASH FLOWS FROM FINANCING ACTIVITIES
              Borrowings (repayments) on bank indebtedness, net                          38,211         (1,172)
                                                                                      ------------------------

         NET CHANGE IN CASH                                                             (37,614)       (10,820)
              Cash, beginning of year                                                   112,974        123,794
                                                                                      ------------------------

         CASH, END OF YEAR                                                            $  75,360      $ 112,974
                                                                                      ------------------------
         SUPPLEMENTAL DISCLOSURE OF CASH
             FLOW INFORMATION:
              Interest paid                                                           $   4,430      $   4,797

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

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

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


                                      - 4 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Years ended May 31, 2005 and 2004

<TABLE>
<CAPTION>
                                                    Class A                Class AA       Additional                    Accum. 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, 2003     6,108,586   $ 6,109   10,000   $1,000,000       50    $ 25,000   $3,487,472   $(4,486,612)       $4,715

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

Net loss                         --        --       --           --       --          --           --      (123,043)           --
                         -----------------------------------------------------------------------------------------------------------
BALANCE, MAY 31, 2004    12,371,886   $12,372   10,000   $1,000,000       50    $ 25,000   $3,731,741   $(4,609,655)       $4,715


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
                         ==========================================================================================================
</TABLE>

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


                                      - 5 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2005 and 2004


    1.   MANAGEMENT'S PLANS AND FUTURE OPERATIONS

         At May 31, 2005, 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 current 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, 2005 and 2004.


                                      - 6 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2005 and 2004


    3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         i)     Principal Activities

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

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

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

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

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

           ii)  Significant Group Concentrations of Credit Risk

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

           iii) Cash and Cash Equivalents

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

            iv) Accounts Receivable and Allowance for Doubtful Accounts

                Accounts receivable are stated net of allowance for doubtful
                accounts. The company estimates the allowance based on prior bad
                debt experience and a review of existing receivables. Based on
                these factors, there is an allowance for doubtful accounts of
                $15,275 at May 31, 2005 and 2004.

            v)  Marketable Securities

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

           vi)  Other Financial Instruments

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


                                      - 7 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2005 and 2004


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

         vii)   Long-term Financial Instruments

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

         viii)  Depreciation of Property and Equipment

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

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

         ix)    Goodwill

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

         x)     Amortization of Other Assets

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

                Trademarks and franchise rights                      10 years

         xi)    Impairment of Long-Term Assets

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


                                      - 8 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2005 and 2004


    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, 2005 and 2004 was $128,984 and $19,664,
                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% (7.00% and 5.00% at
                May 31, 2005 and 2004, respectively). Imputed interest expense
                for the years ended May 31, 2005 and 2004 was $6,731 and
                $10,497, respectively.

       xiii)    Revenue Recognition

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

       xiv)     Income taxes

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


                                      - 9 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2005 and 2004


    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, 2005 and 2004.

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

         xvi)   Foreign Currency Translation

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


                                     - 10 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2005 and 2004


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

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

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

                Fully diluted net loss per common stock is computed by dividing
                net loss for the year by the weighted average number of common
                stock outstanding during the year, assuming, except where the
                result would be anti-dilutive, that all convertible Preferred
                shares were converted, the contingent common stock were issued,
                the warrant was exercised, and the stock options granted were
                exercised (note 10)

         xviii) Use of Estimates

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

         xix)   Reclassifications

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

    4.   ACCOUNTS RECEIVABLE
                                                             2005          2004
                                                             ----          ----

           Accounts receivable                           $ 29,621       $23,636
           Less:  Allowance for doubtful accounts          15,275        15,275
                                                         ----------------------

           Accounts receivable, net                      $ 14,346       $ 8,361
                                                         ======================


                                     - 11 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2005 and 2004


       5.  PROPERTY AND EQUIPMENT
                                                              2005          2004
                                                              ----          ----

           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                          217,689       204,689
           Computer equipment and software                 548,017       497,718
           Leasehold improvements                           13,367         9,441
           Automobile                                       19,865        19,865
                                                         -----------------------

                                                           798,938       731,713
                                                         -----------------------

           Net book value                                $  64,458     $ 131,683

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

           Depreciation expense for the years ended May 31, 2005 and 2004 was
           $67,225 and $68,097, respectively.

       6.  GOODWILL

                                                              2005          2004
                                                              ----          ----

           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,
           2005 and May 31, 2004.


                                     - 12 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2005 and 2004

       6.  GOODWILL (cont'd)

                In accordance with the requirements of SFAS No. 142, the company
                has not amortized goodwill for the years ended May 31, 2005 and
                2004.

       7.  OTHER ASSETS

<TABLE>
<CAPTION>
                                                                                      2005                2004
                                                                                      ----                ----
<S>                                                                              <C>                 <C>
           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                                         183,018             139,783
           Franchise software                                                      424,991             416,374
                                                                                 -----------------------------
                                                                                   608,009             556,157
                                                                                 -----------------------------
           Net book value                                                        $  94,837           $ 146,689
                                                                                 =============================
</TABLE>

                Amortization expense for each of the years ended May 31, 2005
                and 2004 was $51,852.

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

                2006                                     $51,852
                2007                                       8,617
                2008                                       8,617
                2009                                       8,617
                2010                                       8,617
                Thereafter                                 8,617
                                                         -------
                TOTAL OTHER ASSETS                       $94,937
                                                         =======


                                     - 13 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2005 and 2004


       8.  BANK INDEBTEDNESS

                At May 31, 2005 and 2004, 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 $80,900 and $42,689, 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 6.00% and 4.00%
                at May 31, 2005 and 2004, respectively). These lines were held
                by the corporate office in California.

                Annual maturities of the bank indebtedness for the five years
                succeeding May 31, 2005 are as follows:

                                 2006   $     0
                                 2007         0
                                 2008         0
                                 2009         0
                                 2010    25,000


                                     - 14 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2005 and 2004

       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

<TABLE>
<CAPTION>
                                                                              2005                2004
                                                                              ----                ----
<S>                                                                    <C>                 <C>
                10,000 Class A Preferred shares                        $ 1,000,000         $ 1,000,000
                    50  Class AA Preferred shares                           25,000              25,000
                 12,371,886  Common shares                                  12,372              12,372
                                                                       -------------------------------
                TOTAL CAPITAL STOCK                                    $ 1,037,372         $ 1,037,372
                                                                       ===============================
</TABLE>

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

                i) Common shares

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

                No shares of common stock were issued during the fiscal year
                ended May 31, 2005.

           c)   Preferred Stock Dividends

                At May 31, 2005 and 2004, the company had $12,770 and $10,770,
                respectively, of preferred stock dividends in arrears on its
                outstanding shares of Class AA Preferred Stock.

           d)   Contingent shares to be issued

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


                                     - 15 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2005 and 2004


       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


                                     - 16 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2005 and 2004


       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, 2005
                and 2004 would have been as follows:

<TABLE>
<CAPTION>
                                                            2005            2005           2004           2004
                                                 ---------------  --------------  -------------  -------------
                                                     As Reported       Pro-Forma    As Reported      Pro-Forma
                                                 ---------------  --------------  -------------  -------------
<S>                                                   <C>             <C>            <C>            <C>
                 Net loss                             $(139,323)      $(139,323)     $(123,043)     $(123,043)
                 Basic and fully diluted loss
                      per Common share                $   (0.01)      $   (0.01)     $   (0.02)     $   (0.02)
</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 Common shares

                v. Common stock which may be required [note 10(c)]

       10. INCOME TAXES

<TABLE>
<CAPTION>
                                                                                         2005             2004
                                                                                         ----             ----
<S>                                                                               <C>              <C>
           a)   Current                                                           $       --       $        --
                Deferred                                                                  --                --
                                                                                  ----------------------------
                                                                                  $       --       $        --
                                                                                  ============================

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

                Losses carried-forward                                            $ 1,380,000      $ 1,260,000
                Valuation allowance                                                (1,380,000)      (1,260,000)
                                                                                  ----------------------------
                                                                                  $       --       $        --
                                                                                  ============================
</TABLE>

           c)   At May 31, 2005, the company had non-capital losses available
                for carry-forward of approximately $2,800,000. These losses
                expire after May 31, 2024.


                                     - 17 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2005 and 2004


       12. 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. The
                amount was accrued and shown as an expense for the year ended
                May 31, 2005.


                                     - 18 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2005 and 2004


       13. SEGMENTED INFORMATION:

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

                                                             2005          2004
                                                             ----          ----

           a)   Revenue by industry

                Real estate franchise                    $482,007      $573,345
                Home warranty                             105,311       125,197
                Other income                               40,490        70,688
                                                        -----------------------
                Total                                    $627,808      $769,230
                                                        =======================

           b)   Net income (loss) by industry

                Real estate franchise                   $(158,750)    $(147,729)
                Home warranty                              21,522        26,257
                Other                                      (2,095)       (1,571)
                                                        -----------------------
                Total                                   $(139,323)    $(123,043)
                                                        =======================

           c)   Identifiable assets by industry

                Real estate franchise                    $378,004      $528,079
                Mortgage financing                         77,632        77,125
                Home warranty                              42,585        42,497
                Other                                      12,658        14,354
                                                        -----------------------
                Total                                    $510,879      $662,055
                                                        =======================

           d)   Amortization by industry

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

           e)   Depreciation by industry

                Real estate franchise                     $67,189       $67,953
                Home warranty                                  36           144
                                                        -----------------------
                Total                                     $67,225       $68,097
                                                        =======================


                                     - 19 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2005 and 2004


       13. SEGMENTED INFORMATION   (cont'd)

                                                             2005          2004
                                                             ----          ----

           f)   Interest by industry

                Real estate franchise                   $   11,161    $  15,294
                                                        -----------------------
                Total                                   $   11,161    $  15,294
                                                        =======================

           g)   Significant non-cash transactions by industry

                Real estate franchise                   $       --    $ 270,532
                                                        -----------------------
                Total                                   $       --    $ 270,532
                                                        =======================

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

       14. COMMITMENTS

                The company has operating leases for premises which extend
                through May 31, 2008. Future minimum rental payments as of May
                31, 2005 under the operating lease agreements are as follows:

                2006                                             $20,304
                2007                                              20,304
                2008                                               6,768
                                                                 -------
                                                                 $47,376
                                                                 =======

                Rent expense for the years ended May 31, 2005 and 2004 was
                $49,304 and $57,768, respectively.


                                     - 20 -
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2005 and 2004


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

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

           16.  RELATED PARTY TRANSACTIONS

<TABLE>
<CAPTION>
                                                                                      2005                2004
                                                                                      ----                ----
<S>                                                                              <C>                  <C>
                Licensing expense accrued or paid to a company controlled
                     by the President                                            $       1            $  4,167
                President's salary expense accrued                               $  20,000            $ 20,000
                Issuance of 6,263,300 shares of common stock to President
                     for accrued salary, accrued licensing fees, and expenses
                     personally paid by President                                $      --            $250,232
</TABLE>

                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.

           17. DISPUTED LIABILITY

                The accounts payable balance includes a liability of
                approximately $95,000 owed to the corporation's former
                accountant for professional services rendered. The prior
                accountant claims that the balance owed is approximately
                $130,000. The disputed amount is currently being negotiated and
                may be settled at a compromise. The potential liability for the
                disputed amount has not been recorded within this financial
                statement. Settlement could result in an additional professional
                service expense of $35,000.

           18.  SUBSEQUENT EVENT

                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.

                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.


                                      -21-
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2005 and 2004


           19.  RECENTLY ISSUED PRONOUNCEMENTS

                In December 2004, the FASB issued SFAS No. 123R, "Share-Based
                Payment" ("SFAS 123R"). SFAS 123R revises FASB Statement No. 123
                "Accounting for Stock-Based Compensation" and supersedes APB
                Opinion No. 25 "Accounting for Stock Issued to Employees". SFAS
                123R requires all public and non-public companies to measure and
                recognize compensation expense for all stock-based payments for
                services received at the grant-date fair value, with the cost
                recognized over the vesting period (or the requisite service
                period). SFAS 123R is effective for small business issuers for
                fiscal years beginning after December 15, 2005. As such, the
                Company is required to adopt these provisions at the beginning
                of the fiscal year ended May 31, 2007. The Company is currently
                evaluating the impact of SFAS 123R on its consolidated financial
                statements.

                In November 2004, the Financial Accounting Standards Board
                ("FASB") issued Statement of Financial Accounting Standard
                ("SFAS") No. 151 "Inventory Costs - an amendment of ARB No. 43,
                Chapter 4" ("SFAS 151"). This statement amends the guidance in
                ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the
                accounting for abnormal amounts of idle facility expense,
                freight, handling costs, and wasted material (spoilage). SFAS
                151 requires that those items be recognized as current-period
                charges. In addition, this Statement requires that allocation of
                fixed production overheads to costs of conversion be based upon
                the normal capacity of the production facilities. The provisions
                of SFAS 151 are effective for fiscal years beginning after June
                15, 2005. As such, the Company is required to adopt these
                provisions at the beginning of the fiscal year ended May 31,
                2007. The Company is currently evaluating the impact of SFAS 151
                on its consolidated financial statements.

                In December 2004, the FASB issued SFAS No. 152 "Accounting for
                Real Estate Time-Sharing Transactions - an amendment of FASB
                Statements No. 66 and 67" ("SFAS 152"). This statement amends
                FASB Statement No. 66 "Accounting for Sales of Real Estate" to
                reference the financial accounting and reporting guidance for
                real estate time-sharing transactions that is provided in AICPA
                Statement of Position 04-2 "Accounting for Real Estate
                Time-Sharing Transactions" ("SOP 04-2"). SFAS 152 also amends
                FASB Statement No. 67 "Accounting for Costs and Initial Rental
                operations of Real Estate Projects" to state that the guidance
                for incidental operations and costs incurred to sell real estate
                projects does not apply to real estate time-sharing
                transactions, with the accounting for those operations and costs
                being subject to the guidance in SOP 04-2. The provisions of
                SFAS 152 are effective in fiscal years beginning after June 15,
                2005. As such, the Company is required to adopt these provisions
                at the beginning of the fiscal year ended May 31, 2007. The
                Company is currently evaluating the impact of SFAS 152 on its
                consolidated financial statements.

                In December 2004, the FASB issued SFAS No. 153, "Exchanges of
                Nonmonetary Assets - an amendment of APB Opinion No. 29" ("SFAS
                153"). SFAS 153 replaces the exception from fair value
                measurement in APB Opinion No. 29 for nonmonetary exchanges of
                similar productive assets with a general exception from fair
                value measurement for exchanges of nonmonetary assets that do
                not have commercial substance. A nonmonetary exchange has
                commercial substance if the future cash flows of the entity are
                expected to change significantly as a result of the exchange.
                SFAS 153 is effective for all interim periods beginning after
                June 15, 2005. As such, the Company is required to adopt these
                provisions at the beginning of the fiscal quarter ended November
                30, 2005. The Company is currently evaluating the impact of SFAS
                153 on its consolidated financial statements.


                                      -22-
<PAGE>

HOMELIFE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 2005 and 2004


           19.  RECENTLY ISSUED PRONOUNCEMENTS continued......

                In May 2005, the FASB issued SFAS No. 154, "Accounting Changes
                and Error Corrections - a replacement of APB Opinion No. 20 and
                FASB Statement No. 3" ("SFAS 154"). SFAS 154 changes the
                requirements for the accounting for and reporting of a change in
                accounting principle. These requirements apply to all voluntary
                changes and changes required by an accounting pronouncement in
                the unusual instance that the pronouncement does not include
                specific transition provisions. SFAS 154 is effective for fiscal
                years beginning after December 15, 2005. As such, the Company is
                required to adopt these provisions at the beginning of the
                fiscal year ended May 31, 2007. The Company is currently
                evaluating the impact of SFAS 154 on its consolidated financial
                statements.


                                      -23-