MAXLIFE FUND CORP. - FORM 10-Q - January 13, 2011

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EX-31.1 - CERTIFICATION - MAXLIFE FUND CORP.f10q1110ex31i_maxlifefund.htm
EX-32.1 - CERTIFICATION - MAXLIFE FUND CORP.f10q1110ex32i_maxlifefund.htm
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EX-31.2 - CERTIFICATION - MAXLIFE FUND CORP.f10q1110ex31ii_maxlifefund.htm
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
 
FORM 10-Q
_______________
 
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended November 30, 2010
 
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the transition period from ______to______.
 
MAXLIFE FUND CORP.
 (Exact name of registrant as specified in charter)
 
WYOMING
  
333-138298
  
 98-0505734
(State or other jurisdiction of
incorporation or organization)
  
(Commission File No.)
  
(IRS Employee Identification No.)

45 Sheppard Avenue East, Suite 900
North York, Ontario, Canada M2N 5W9
 (Address of principal executive offices)
 _______________
 
416-200-0657
(Registrant’s telephone number, including area code)
_______________
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).           Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer.  See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):
 
Large Accelerated Filer o                                                                                             Accelerated Filer x  
  
Non-Accelerated Filer o                                                                                               Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes o No x

As of January 11, 2011, there were 16,253,168 shares outstanding of the registrant’s common stock.
 
 
 
 
MAXLIFE FUND CORP.
 
FORM 10-Q
 
November 30, 2010
 
INDEX
 

PART I – FINANCIAL INFORMATION
 1
     
Item 1.
Financial Statements
  1
Item 2.
Management’s Discussion and Analysis of Financial Condition
  7
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
  10
Item 4.
Control and Procedures
  10
     
PART II – OTHER INFORMATION
 12
     
 Item 1
Legal Proceedings
  12
 Item 1A.
Risk Factors
  12
 Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
  12
 Item 3.
Defaults Upon Senior Securities
  12
 Item 4.
(Removed and Reserved)
  12
 Item 5.
Other Information
  12
 Item 6.
Exhibits
  12
     
SIGNATURE
 13

 
 
 
 
 

 
 
 
 
PART I – FINANCIAL INFORMATION
 

Item 1.  Financial Statements

30 NOVEMBER 2010
 
 
 
 
 
 
 
 
 
 
1
 

MAXLIFE FUND CORP. AND SUBSIDIARY
 
(A Development Stage Company)
 
CONSOLIDATED BALANCE SHEETS
 
AS AT
 
(Expressed in United States Dollars)

   
30 November 
2010
(Unaudited)
    
31 August
2010
(Audited)
  
ASSETS
            
             
Current Assets
            
  Cash
  
$
64,516
    
$
81,048
  
  Available-for-sale securities, at fair value (cost - $49,080, 31 August 2010-$24,638)
    
10,609
      
44
  
  Accounts receivable
    
41,000
      
47,500
  
Total Current Assets
    
116,125
      
128,592
  
Long Term Assets
                
  Investment in life insurance policies
    
330,047
      
322,088
  
  Total Assets
  
$
446,172
    
$
450,680
  
                 
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
                
                 
Current Liabilities
                
  Accounts payable and accrued liabilities
    
72,205
      
45,932
  
  Management salary payable
    
299,900
      
260,480
  
  Advances from stockholder
    
3,281
      
3,243
  
  Dividends payable on preferred stock
    
117,000
      
66,000
  
Total Liabilities
    
492,386
      
375,655
  
                 
Stockholders' (Deficit) Equity
                
  Preferred stock $25.00 par value; Authorized 100,000,000; Issued and outstanding 26,400  (31 August 2010 - 26,400); non-voting; dividends of $0.625 paid on a quarterly basis; non-convertible; redeemable at the option of the Company after two years
    
660,000
      
660,000
  
  Common stock $.001 par value; Authorized 200,000,000; Issued and outstanding 16,253,168  (31 August 2010 - 16,253,168)
    
16,253
      
16,253
  
  Additional paid-in capital
    
1,100,626
      
1,100,626
  
  Additional paid in capital - warrants
    
244,158
      
244,158
  
  Accumulated other comprehensive loss
    
(45,654
)
    
(47,441
)
  Deficit accumulated during the development stage
    
(2,021,597
)
    
(1,898,571
)
Total Stockholders' (Deficit) Equity
    
(46,214)
      
75,025
  
Total Liabilities and Stockholders' (Deficit) Equity
  
$
446,172
    
$
450,680
  
 
The accompanying notes are an integral part of these financial statements.
 
 
2
 
 
MAXLIFE FUND CORP. AND SUBSIDIARY
 
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
 
(Expressed in United States Dollars)
 
(Unaudited)
 
   
For the Three Months Ended
30 November
2010
    
For the Three
Months Ended
30 November
2009
    
For the Period
from Inception
(9 January 2006)
to 30 November
 2010
  
SALE OF POLICIES
    
-
      
-
      
605,000
  
COST OF POLICIES SOLD
    
-
      
-
      
570,938
  
GROSS PROFIT
    
-
      
-
      
34,062
  
                         
EXPENSES
                        
  Professional fees
    
58,480
      
55,540
      
477,139
  
  Management salaries
    
37,500
      
37,500
      
359,078
  
  General and administrative
    
11,336
      
14,476
      
273,552
  
  Interest and bank charges
    
648
      
514
      
6,132
  
  Stock based compensation
    
-
      
-
      
487,780
  
  Gain on foreign exchange
    
-
      
(953)
      
(745
)
TOTAL OPERATING EXPENSES
    
107,964
      
107,077
      
1,602,936
  
LOSS FROM OPERATIONS
    
(107,964
)
    
(107,077
)
    
(1,568,874
)
REALIZED GAIN (LOSS) ON SALE OF AVAILABLE-FOR-SALE SECURITIES
    
884
              
(15,590
)
GOODWILL IMPAIRMENT LOSS
    
-
      
-
      
(35,269
)
LOSS ON INVESTMENT IN JOINT VENTURE
    
-
      
-
      
(1,250
)
INTEREST INCOME
    
554
      
514
      
8,545
  
NET LOSS
  
$
(106,526
)
  
$
(106,563
)
  
$
(1,612,438
)
FOREIGN CURRENCY TRANSLATION ADJUSTMENT
    
17,061
      
1,999
      
(5,878
)
UNREALIZED LOSS ON AVAILABLE-FOR-SALE SECURITIES, NET OF DEFERRED TAXES
    
(15,274
) 
    
-
      
(39,777
)
COMPREHENSIVE LOSS
  
$
(104,739
)
    
(104,564
)
    
(1,658,093
)
LOSS PER WEIGHTED NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED
  
$
(0.01)
    
$
(0.00
)
        
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED
    
16,253,168
      
29,801,382
          
 
The accompanying notes are an integral part of these financial statements.
 
 
3
 
 
 
MAXLIFE FUND CORP. AND SUBSIDIARY
 
(A Development Stage Company)
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(Expressed in United States Dollars)
 
(Unaudited)
 
   
For the Three
Months Ended
30 November
2010
    
For the Three
 Months Ended
 30 November
2009
    
For the Period
 from Inception
(9 January 2006) to
30 November
2010
  
CASH FLOWS FROM OPERATING ACTIVITIES
                  
  Net loss
  
$
(106,526
)
  
$
(106,563
)
  
$
(1,612,438
)
  Adjustments to reconcile net loss to net cash used in operating activities:
                        
    Goodwill impairment loss
    
-
      
-
      
35,269
  
    Stock based compensation
    
-
      
-
      
453,580
  
    Unrealized loss on available-for-sale securities
    
15,274
      
-
      
39,777
  
    Equity issued to acquire 1255450 Ontario Limited
    
-
      
-
      
5,000
  
    Issuance of common stock for services
    
-
      
-
      
75,200
  
    Loss on investment in joint venture
    
-
      
-
      
1,250
  
    Realization of gain on available for sale securities
    
(884
) 
    
-
      
(884
) 
  Changes in operating assets and liabilities:
                        
    Accounts receivable
    
6,500
              
(41,000
)
    Purchases of available-for-sale securities
    
(37,524
) 
    
-
      
(63,060
)
    Proceeds from sale of available-for-sale securities
    
14,202
      
-
      
14,202
  
    Proceeds on sale of policy
    
-
      
-
      
605,000
  
    Purchase of insurance policies and capitalized premiums
    
(7,959
)
    
(16,783
)
    
(912,020
)
    Accounts payable and accrued liabilities
    
26,273
      
39,309
      
67,240
  
    Management salary payable
    
39,420
      
32,500
      
299,900
  
CASH USED IN OPERATING ACTIVITIES
    
(51,224
)
    
(51,537
)
    
(1,032,984
)
CASH FLOWS FROM INVESTING ACTIVITIES
                        
  Capital contribution  -  joint venture
    
-
      
-
      
(1,250
)
  Acquisition of 1255450 Ontario Limited
    
-
      
-
      
(21,739
)
CASH FLOWS USED IN INVESTING ACTIVITIES
    
-
      
-
      
(22,989
)
CASH FLOWS FROM FINANCING ACTIVITIES
                        
  Proceeds from bank indebtedness
    
-
      
645
      
-
  
  Issuance of preferred stock
    
-
      
-
      
660,000
  
  Advances to stockholder
    
-
      
(24
)
    
(28,313
)
  Dividends (paid) cancelled
    
34,500
      
-
      
(48,000
)
  Financing fees
    
-
      
-
      
(8,000
)
  Issuance of common stock
    
-
      
-
      
591,100
  
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
    
-
      
621
      
1,166,787
  
EFFECT OF FOREIGN CURRENCY TRANSLATION
    
192
      
1,999
      
(46,298
)
NET (DECREASE) INCREASE IN CASH
    
(16,532
)
    
(48,917
)
    
64,516
  
CASH, BEGINNING OF PERIOD
    
81,048
      
48,917
      
-
  
CASH, END OF PERIOD
  
$
64,516
    
$
-
    
$
64,516
  


 
4
 


MAXLIFE FUND CORP. AND SUBSIDIARY
                      (A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM THE DATE OF INCEPTION (9 JANUARY 2006) TO 31 AUGUST 2010
(Expressed in United States Dollars)

 
1.
NATURE OF OPERATIONS
 
MaxLife Fund Corp, Inc. (the "Company") was incorporated on 9 January 2006 under the laws of the State of Wyoming.
 
The Company is concentrating on three major components of the Life Settlement sector (i) to generate fee income by providing a turnkey investment solution for accredited investors wanting to own life insurance policies, (ii) to obtain ownership in companies in the life settlement industry and (iii) to build a large portfolio for institutional buyers and be involved as an intermediary. MaxLife is positioning itself to grow with the industry and expand its operation to become one of the leaders in the Life Settlement sector.
 
2.
BASIS OF PRESENTATION
 
The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the three month period ended 30 November 2010 are not necessarily indicative of the results that may be expected for the year ending 31 August 2011.  For further information, refer to the financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended 31 August 2010.
 
3.
INVESTMENT IN INSURANCE POLICIES
 
As of 30 November 2010 the Company holds four life settlement policies with carrying amounts of $330,047 and face amounts totaling $1,350,000.
 
On 22 March 2010, the Company sold a 50% interest in three life settlement policies in which the Company is the owner. The agreement states that the purchaser (a private entity, non- affiliated with MaxLife), will take ownership of the policies and MaxLife will retain a 50% interest in the face value of the policies. MaxLife will be responsible to pay 50% of subsequent premium costs and expenses in regards to these policies.
 
4.
ADVANCES FROM STOCKHOLDER
 
The advances from the stockholder are non-interest bearing, unsecured and are due on demand.  The carrying value of the advances approximates the market value due to the short-term maturity of the financial instruments.
  
5.
PREFERRED STOCK
 
During the three months ended ended 30 November 2010 the Company declared dividends on its 26,400 issued and outstanding preferred stock totaling $16,500 (31 August 2010 - $66,000).
 
 
5
 

MAXLIFE FUND CORP. AND SUBSIDIARY
                      (A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM THE DATE OF INCEPTION (9 JANUARY 2006) TO 31 AUGUST 2010
(Expressed in United States Dollars)
 

 
6.     COMMITMENT AND CONTINGENT LIABILITY
 
The Company is contingently liable for the payment of its share of premiums due on the insurance policies as described in Note 3.  Although the individual beneficiary is responsible for these payments, if they are not paid when they fall due, the Company must pay these premiums on the insured's behalf within a 30 day grace period or the policy would lapse.  As of 30 November 2010, the policies premiums were up to date and the policies were in good standing. 

7.
FINANCIAL INSTRUMENTS
 
The carrying value of the Company’s cash, accounts receivable, accounts payable and accrued liabilities, management salary payable and advances from stockholder approximates fair value because of the short term maturity of these instruments.

8.
SUBSEQUENT EVENTS

On December 16, 2010, (the “Effective Date”) the Company executed a Life Settlement Portfolio Purchase and Sale Agreement (the “Agreement”) with Trinity Life Settlement, LLC (“Trinity” or the “Seller”). Upon completion of necessary funding, the Company intends to purchase a portfolio of early life settlements for which the Seller has not received notice of the death of the insured(s) thereunder as of the Policy Closing. Pursuant to the Agreement, upon our purchase of the policies in the portfolio, Trinity will attach an annuity to each policy (the “Attachment”). In connection with the Attachment, Trinity will cover the premiums of the policies for the life of the insured.

According to the Agreement, Christiana Bank & Trust will serve as the Escrow Agent for the transactions set forth herein and all funds for the purchase of the policies shall be placed in an Escrow Account.  We shall have a period of six (6) months from the Effective Date (the “Purchase Price Funding Period”) to deposit the full purchase price.  Pursuant to the Agreement, we are obligated to deposit a sum equal to twenty-five percent (25%) of the purchase price within three (3) months of the Effective Date (the “Partial Purchase Price”) or the Agreement shall automatically terminate. Additionally, if we timely make the Partial Purchase Price deposit but fail to deposit the full purchase price within the Purchase Price Funding Period, the Seller shall be entitled to immediately terminate the Agreement and keep one hundred and fifty thousand dollars ($150,000) of the funds in the Escrow Account as reimbursement for the premium paid and other expenses (the “Reimbursement Fee”).  In the event the Seller is entitled to the Reimbursement Fee, any sums in the Escrow Account in excess of the Reimbursement Fee shall be returned to us. Unless terminated early in accordance with the above, the Agreement shall be valid for a ninety (90) day period commencing January 5, 2011.


 
6
 
 

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
Certain statements contained in this quarterly filing, including, without limitation, statements containing the words “believes,” “anticipates,” “expects” and words of similar import, constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Such factors include, among others, the following: international, national and local general economic and market conditions; demographic changes; the ability of the Company to sustain, manage or forecast its growth; the ability of the Company to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other factors referenced in this and previous filings.  Given these uncertainties, readers of this prospectus and investors are cautioned not to place undue reliance on such forward-looking statements.
 
Plan of Operations
 
During the next twelve months, we expect to take the following steps in connection with the further development of our business and the implementation of our plan of operations: 

We will continue to develop relationships with insurance brokers and their clients to seek out opportunistic policies and life settlements.  We will attempt to raise additional financing for working capital and marketing efforts.  We will also seek investment partners in order to raise the necessary funds to acquire existing policies on behalf of clients and partners. Such partners include banks, hedge funds, investment funds and sophisticated investors.  We will be sourcing new relationships with companies in the sector with the objective of purchasing an ownership in their businesses. We believe opportunities are arising as the market place is seeing distress situations of Hedge Funds that need to liquidate life settlement policies and portfolios due to the ongoing financial crisis. We will review such situations and is open to discussions to determine the opportunities that can be cultivated accordingly.

We have shifted our business structure toward a business model which focuses on acquisition or funding of life policies of individuals on behalf of strategic buyers.  We are attempting to generate fees by facilitating such transactions. We are no longer attempting to purchase or fund life policies of individuals for our own inventory. Further, our goal is to earn fees by administering policies on behalf of clients and funds and earning a management and performance fee. In this regard, the current inventory of life settlement policies that we own was put up for sale and we now have a 50% ownership in such policies. We will maintain a performance fee as to future occurrences with such policies.

We will prepare portfolio and policy details to disseminate to our network of brokers with the intention of increasing purchases of policies for clients and partners.  With funds obtained from banks and investment funds we will be in a position to purchase and administer policies and portfolios on their behalf and thereby earn fees for administration and profit participation.  We will also attempt to offer a product which gives investors the security they require in these times and we will charge for our expertise and services of sourcing, buying, and monitoring their investments.

The addition of a stronger infrastructure will be required and we intend to hire management personnel and support staff.  This will enable us to segregate work responsibilities and meet the ongoing growth of the business.  We anticipate being in a position to handle different territories both in Canada and the United States.
 
We believe additional financings will be available to us through our relationships and performance.  This will enable us to continue with our growth plans.  The internal organization will be reviewed to see that it can handle the potential influx of new business.  The administration of the policies will be pertinent and we will have to determine if we have sufficient staff to handle this responsibility.
 
 
 
7
 

 
On December 16, 2010, we executed an agreement which provides that we will purchase a portfolio of early life settlements upon a completion of the necessary funding. When wee purchase these policies in the portfolio, it stipulates that Trinity Life Settlements, LLC, will attach an annuity to each policy. By attaching an annuity to the Early Life Settlement policy, the premiums for policies are covered by the annuity provider, for the life of the insured.
 
We are developing a new life settlement products that will potentially yield to the investor an appropriate return and security. The Early Life Settlements product will have these attributes.
 
·  
Invest in seasoned, preferred-issue, term life insurance which is convertible to universal life
·  
Term policies are purchased from individuals aged 62-74 who no longer want coverage
·  
The policy is then converted and the investor assumes all rights and obligations and becomes the beneficiary
·  
Investment capital is used for acquisition and ongoing premiums until asset maturity or sale
 
We plan undertake a private offering of securities that will enable us to secure funding and enable to close on that transaction and other such similar portfolios we seek to purchase. This will be the major emphasis in our next 2 quarters.
 
Results of Operations for the three months ended November 30, 2010 and 2009
 
General and administrative expenses for the three months ended November 30, 2010 were $11,336 and $14,476 for the three months ended November 30, 2009.  The decrease during the three months ended November 30, 2010, was primarily attributable to decreases in payments for travel, administrative office expenses, and directors and officers insurance incurred in the business operations.

Professional fees for the three months ended November 30, 2010 were $58,480 and $55,540 for the three months ended November 30, 2009.  These fees are attributable to legal, accounting, tax, consulting and auditing services. The decrease in professional fees was attributable to the decrease in consulting, tax, and accounting fees during the three months ended November 30, 2010.

For the three months ended November 30, 2010, we had a net loss from operations of $106,526 and net loss of $107,077 for the three months ended November 30, 2009.   The decrease in operating expenses during the three months ended November 30, 2010, was due to lower general and administrative expenses, professional fees and stock based compensation expenses during the period.

During the three months ended November 30, 2010, and three months ended November 30, 2009, we had no provision for income taxes due to the net operating losses incurred.

Capital Resources and Liquidity

We continue the process of developing and implementing our business plan and raising additional capital. As such, management is taking action to obtain additional funding.

At November 30, 2010, we had negative working capital of approximately $376,261. It is the intent of management and significant stockholders, if necessary, to provide sufficient working capital necessary to support and preserve the integrity of the corporate entity. However, there is no legal obligation for either management or significant stockholders to provide additional future funding. We have implemented a preferred share unit offering consisting of preferred shares and warrants. The unit offering will be continued to be offered in order to obtain the financing we require.

Additional financing is potentially available to us through the private placement of preferred share issuances to new and existing investors and shareholders. We have developed a financial product, and we believe that revenues will be generated within the next few quarters which will be utilized to support our plan of operations and future growth plans.
 
 
8
 
 
 
Cash flows from operating activities

Cash flows used in operating activities for the three months ended November 30, 2010, were $51,224 and $51,537 for the three months ended November 30, 2009.  We purchased some marketable securities during the quarter with the intent to sell them over the next year for a profit.  We also paid less in premiums on our life insurance policies as we own 50% less than in the prior year.

Cash flows from investing activities

There were no cash flows used in investing activities for the three months ended November 30, 2010, and for the three months ended November 30, 2009.  

Cash flows from financing activities

During the three months ended November 30, 2010, we declared quarterly dividends of $0.625 per share annually on our 26,400 issued and outstanding preferred stock totaling $16,500.  We also had outstanding checks of $34,500 related to prior year dividend payments.  Since the Company’s cash flow was low, our preferred shareholders did not cash these checks.  During the current quarter, we cancelled the checks and added the $34,500 to dividends payable on preferred stock.

We are also reviewing other financing options such as lines of credits or asset based loans to coincide with the equity raised.
 
Critical Accounting Policies
 
Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

Refer to Note 2 of our August 31, 2010, audited financial statements (as filed with the SEC on Form 10-K on November 16, 2010), which summarizes our significant accounting policies. While all these significant accounting policies impact its financial condition and results of operations, our view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our consolidated financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates.
 
Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.

We believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective and complex judgments.
 
 
 
9
 
 
Investment in Life Insurance Policies
 
Investment in life insurance policies are recorded in accordance with ASC 325-30, Investments in Insurance Contracts.  Under ASC 325-30 an investor may elect to account for its investments in life settlement contracts using either the investment method or the fair value method.  The election shall be made on an instrument by instrument basis and is irrevocable.  Under the investment method, an investor shall recognize the initial investment at the purchase price plus all initial direct costs.  Continuing costs (policy premiums and direct external costs, if any) to keep the policy in force shall be capitalized.  Under the fair value method, an investor shall recognize the initial investment at the purchase price.  In subsequent periods, the investor shall remeasure the investment at fair value in its entirety at each reporting period and shall recognize change in fair value earnings (or other performance indicators for entities that do not report earnings) in the period in which the changes occur.  The Company has elected to value its investments in life settlement contracts using the investment method.
 
Stock Based Compensation
 
ASC 718 – Stock Compensation establishes standards for the accounting for transaction in which an entity exchanges its equity instruments for goods for services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. ASC 718 – Stock Compensation focuses primarily on accounting for transactions in which an entity obtains employee services in shared-based payment transactions. ASC 718 – Stock Compensation requires that the compensation cost relating to share-based payment transactions be recognized in the consolidated financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued.

We cannot predict what future laws and regulations might be passed that could have a material effect on our results of operations. We assess the impact of significant changes in laws and regulations on a regular basis and update the assumptions and estimates used to prepare our financial statements when we deem it necessary.

We have not made any material changes to our critical accounting estimates or assumptions or the judgments affecting the application of those estimates or assumptions. We discuss our significant accounting policies, including those policies that are not critical, in our Consolidated Financial Statements.
 
Off-Balance Sheet Arrangements
 
We do not have any outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are subject to certain market risks, including changes in interest rates and currency exchange rates.  We do not undertake any specific actions to limit those exposures.
 
Item 4.  Controls and Procedures.

Evaluation of disclosure controls and procedures

Under the supervision and with the participation of our management, including our President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and Director (the “Certifying Officer”) we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”). Based upon that evaluation, the Certifying Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective. We and our auditors identified material weaknesses discussed below in the Report of management on internal control over financial reporting.

Report of Management on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:
 
 
 
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(i)  
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

(ii)  
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

(iii)  
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement to the Company’s annual or interim financial statements will not be prevented or detected.

In the course of management’s assessment, we have identified the following material weaknesses in internal control over financial reporting:

· Segregation of Duties – As a result of limited resources, we did not maintain proper segregation of incompatible duties. Namely the lack of an audit committee, an understaffed financial and accounting function, and the need for additional personnel to prepare and analyze financial information in a timely manner and to allow review and on-going monitoring and enhancement of our controls. The effect of the lack of segregation of duties potentially affects multiple processes and procedures.
 
· Maintenance of Current Accounting Records – This weakness specifically affects the payments and purchase cycle and therefore we failed to maintain effective internal controls over the completeness and cut off of accounts payable, expenses and other capital transactions.

· Application of GAAP – We did not maintain effective internal controls relating to the application of generally accepted accounting principles in accounting for transactions in a foreign currency.

Changes in Internal Control Over Financial Reporting

We are in the continuous process of improving our internal control over financial reporting in an effort to eliminate these material weaknesses through improved supervision and training of our staff, but additional effort is needed to fully remedy these deficiencies. Management has engaged a Certified Public Accountant as a consultant to assist with the financial reporting process in an effort to mitigate some of the identified weaknesses. The Company is still in its development stage and intends on hiring the necessary staff to address the weaknesses once full operations have commenced.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
 
 
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PART II - OTHER INFORMATION
 
Item 1.   Legal Proceedings.
 
We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 1A. Risk Factors.

We believe there are no changes that constitute material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended August 31, 2010, filed with the SEC on November 16, 2010.

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds.
 
None.
 
Item 3.   Defaults Upon Senior Securities.
 
None.
 
Item 4.   (Removed and Reserved).
  
Item 5.   Other Information.
 
None.
 
Item 6.   Exhibits.
 
Exhibit No.     Description
 
31.1                 Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes Oxley Act of 2002

31.2                 Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes Oxley Act of 2002
 
32.1                 Certification of Chief Executive Officer pursuant to Section 906 of Sarbanes Oxley Act of 2002

32.2                 Certification of Chief Financial Officer pursuant to Section 906 of Sarbanes Oxley Act of 2002
 
 
 
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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
MAXLIFE FUND CORP.
Date: January 13, 2011
  
 
/s/ Bennett Kurtz
 
Bennett Kurtz
Chief Executive Officer
Chief Financial Officer

 
 
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MAXLIFE FUND CORP. Reports